Could screwing up, and making it right, be the best thing you do for customer loyalty?

It sounds like a joke, right? Why would anyone be more loyal to a company that messes up, even if they make it right later on?

Many people out in the world would agree – once trust has been damaged once, you’ve made a permanent and indelible mark on your reputation with a client, shifting the balance of your relationship for a long time.

Well, that might not be so. In fact, many have claimed for years that recovering after a fumble may improve your relationship with clients. It’s a theory called the service recovery paradox.

There’s always been a bit of debate about just how much of the phenomenon is fable and how much is fact, but a recent meta-analysis in the Journal of Service, taking in data on the subject from a wide range of sources, gave us some interesting results.

The paradox explained

Sometimes, your service fails beneath where customers think your service level should be. This could be down to a variety of factors, some of them inside and outside of your control.

First, the company has to fix the problem, restoring service to at least to the level before the failure occurred.

Once the service dissatisfaction is gone, the company can build trust, and build the perceived value of the company according to customers. For some clients, this will make them see your company as more valuable to them than they did before they experienced a dip in service, and be more loyal to your company. In turn, increasing their value to you as repeat customers.

That’s the claim made by the service recovery paradox.

Reality bites

The findings of the study we cited above and others, unfortunately, found that while they could find evidence of the paradox working, it’s not something you should bank on.

Both the meta-analysis, an inductive analysis of all available information to the researchers, along with previous studies, paint a tenuous picture for the customer recovery paradox, with too many contingencies and moving parts to be considered reliable.

A previous study from Mangini found that the customer service paradox relied on:

  • Customers having not experienced previous service failure.
  • That the service failure was not thought of as severe by the customer, and;
  • That the failure was largely out of the company’s control.

Even when these criteria were met, and this effect is produced, the meta-analysis found that the paradox did increase satisfaction somewhat, but didn’t impact buying intentions, word of mouth behaviour, or the brand image.

However – you still have to recover that service. Like many of the things we talk about on this blog, there’s no silver bullet out there, or in this case a convenient paradox to make it easy. But keeping customers in the fold is more important than ever, and paradox or not it’s important to get a grip on it.

Service failure and recovery is a bit of a big subject to get into here, but there’s three big things you can start thinking about this week now to make it easier.

Making amends

Words and demeanour

Too often, companies scramble to offer effusive apologise and prostrate themselves on the good will of their customers. They believe that one mistake, even if they recover from it, should be treated as fatal.

The result is customer service teams that flail from one crisis to the next. Treating every small fire as a towering inferno, and passing that sense of insecure panic on to their customers.

Knowing that your own mistakes aren’t the end of the world, and that for some customers they might even be made happier than when they initially complained, should change the mind-set to helping unhappy customers.

Approach the situation with confidence that you’re a quality provider, that you’re in control of the problem your customer has, and that you can fix it and make amends for the inconvenience. And equip your staff to carry that into their interactions with customers.

Access and actions

Your company needs dissatisfied customers talking to your recovery staff. This is to demonstrate as early as possible that you’re in control, that you can make the problem right, and that you can make repair the problem.

Service recovery hinges on being able to talk to customers, and vice versa. Customers can talk amongst themselves, they can quietly leave, they can even complain on public forums like Trustpilot.

You can try to intercept as much third-party negativity as possible, but your service recovery effort is only effective when you’re in direct contact.

That means having clear, well-signposted and well-maintained channels for complaint, manned by knowledgeable, conscientious employees. Not having these in place makes it impossible to run effective service recovery, and takes the idea that customers will be more loyal to your company, regardless of any paradoxes, off the table.

Amends

Rewards make excellent service recovery tools, particularly when dealing with individuals’ complaints. Over a long period, an occasional cash-value reward as a sign of gratitude or, sometimes, apology is a great investment. It’s a relatively small outlay for you but isn’t easily forgotten by customers.

This is particularly effective when you can personalise how you reward. It’s not practical to try and warehouse a gift fit for everyone, so it’s most likely that you’ll be using a multi-choice product like a gift card or reward code. You can’t “personalise” the gift itself, but you can personalise the message around it.

For instance – if you know a customer uses your insurance company to insure a vintage vehicle, you can deduce they have a passion for cars. While you’re delivering them a reward, it might be prudent to point out the customer can enjoy their gift at a track day.

You’re not just showing that you’re reticent about a service failure, you’re showing that you see and appreciate that there’s a human being behind the account number and complaint.

Summary

If you’re not sold on the science when it comes to the service recovery paradox, you’re not alone. There’s definitely more research to be done into the phenomena, but it’s an idea worth talking about.

However, regardless of your opinion on customer service phenomena, service recovery should be a priority. Especially as the world heads into uncertain economic times – money and time spent keeping customers now is money exceptionally well spent.