What Is the Service Recovery Paradox and How It Enhances Your Brand Reputation

You did your best to provide the best products and went out of your way to please customers. But like the world’s most beloved brands, you might also have dissatisfied customers. Fortunately, you can use service recovery strategies to identify and handle those issues. So instead of ruining your reputation, you can turn things around by employing effective customer service recovery strategies and significantly enhancing your brand prestige.

What Are the Consequences of a Service Failure?

A service failure occurs when a brand fails to meet customer expectations. Unfortunately, it cannot be 100 percent avoided. It may arise at any given time due to lapses, incompetence, negligence, or unforeseen and unavoidable circumstances.

By and large, the causes of most service failures are:

• The management failed to create solid plans and strategies for crucial aspects of the business to reduce the chances of service failures.
• The management team, including managers, lacked leadership skills. As a result, they failed to motivate, supervise and correct the actions and critical processes of the company to ensure high customer satisfaction.
• The employees of a company play an integral role in customer satisfaction. But unfortunately, some of them may lack the motivation or training to do their job, while others have a poor attitude.

Often, service failures cause a profound psychological impact because customers perceive them as personal. As a result, they assign blame to the company or an external factor beyond the company’s control. But there are instances when some customers would blame themselves.

After a service failure, dissatisfied customers can take one or more of these actions:

• Do nothing.
• Contact the brand to complain and seek a solution.
• Complain privately by word of mouth.
• Share their negative experience on social media or review sites.
• File a complaint with a consumer claims tribunal.
• Take legal action.

Remember that customer loyalty will likely fall when customers form a negative opinion. For this reason, businesses must know how to improve customer service or suffer from customer attrition.

What Is the Importance of Service Recovery?

Service recovery refers to the action you take to eliminate the customer’s dissatisfaction caused by your product or service. In other words, it is the practice of turning a bad customer experience into a positive one.

Generally, there are three reasons why an improvement in customer service is necessary to reverse a service failure:

• Resolving an issue is not only a moral responsibility. It is most likely also a requirement of consumer protection laws and regulations.
• Eliminating customer after-sales pain points using an effective customer service improvement plan reduces negative publicity, which turns away potential customers.
• Identifying the cause of customer dissatisfaction and providing a solution helps the brand make the necessary changes to improve customer service.

Brands that take solid customer service recovery steps can also trigger the customer service paradox described in the next section.

What Is the Service Recovery Paradox?

In 1992, McCollough and Bharadwaj coined the term “Service Recovery Paradox.” This phenomenon refers to customers who think more highly or feel better about a brand after the brand corrects a problem with its product or service, compared to how they regard the brand if there was never a problem.

Source: dixa.com

Generally, there are two approaches to service failure recovery. To illustrate, think of a group of customers in a restaurant. One of the dishes served was undercooked. So, the customer lets the server know the problem.

The traditional approach is for the server to return the dish to the kitchen. Then, depending on the restaurant’s policy, the cook can re-cook or replace the entire plate. In this instance, the restaurant merely fixed the problem.

A more innovative approach is to view service recovery as a retention tool. Besides fixing the problem, for example, the restaurant may provide a complimentary dessert for the inconvenience. Going the extra mile bodes well for the restaurant because the customer will most likely be impressed and become a fan due to the seamless customer service.

Compared to diners who had no issue, the once dissatisfied customer would feel elated and may even share the positive experience in person or on social media – this is one of the many service recovery examples that shows the customer service paradox’s advantage.

How To Improve Customer Service

A customer service improvement plan is necessary because it can also be a retention strategy. Here are customer service tips or service recovery steps to take.

1. Identify Potential Service Failures

Businesses can expect an improvement in customer service by anticipating possible causes of problems. First, the company should review each department. A manufacturer, for instance, can check the critical processes involved in producing products and identify gaps that may lead to defects. Meanwhile, the procurement department must ensure that the raw materials they receive from suppliers comply with their specifications.

The company should also consider the various stages of the buyer’s journey. For example, review the marketing message during the customer acquisition stage. Is the company making exaggerated claims? Overselling raises customer expectations to unreasonable levels that are impossible to meet.

Outside the company, brands must also identify problems reported by customers. While dissatisfied customers may contact a company through its official communication channels, many also post on social media and review sites.

A third-party reputation management provider can help improve customer experience significantly. Tim Clarke, the Senior Reputation Manager of Rize Reviews, said, “We ask for feedback at the right time and, most importantly, help the client respond to the upset customer. Our email alerts and private feedback forms capture the service failures before they result in bad reviews or negative testimonials.”

2. Develop Service Recovery Strategies

In all typical service recovery examples, handling complaints to improve customer experience usually involves these steps:

1. Offer a sincere apology that customers can perceive as genuine.
2. Empower the staff to take ownership of the problem so they can provide a seamless customer service response. Identify the root cause of the problem but not only by relying on the customer. The customer service staff should also investigate their side of the matter.
3. After identifying the cause of the problem, offer a solution acceptable to the customer. Solving customer problems requires a high degree of problem-solving skills. Therefore, companies need to hire employees that meet that criteria.
4. Offer something extra as compensation for the inconvenience. For instance, a free service or gift can go a long way towards restoring customer happiness with your brand.
5. The company should follow up with the customer after a service recovery, which is essential to a successful service improvement plan. It is a way for the company to show they care by checking how satisfied customers are with their service team.

Based on these processes, a company can put in place comprehensive strategies to ensure an improvement in customer service. In addition, the company should also improve its key processes, ensuring there’d be no more cause of future issues.

3. Provide Customer Service Recovery Training

Customer loyalty will likely fall when the company employees are not in sync. So besides poor productivity, the lack of cohesion may even be the cause of many problems.

A solution is to organize a regular meeting of the department heads and other key employees and emphasize the importance of working cohesively towards ensuring a positive customer experience. These meetings are also a way to break the silo mentality.

The sales and customer support teams must know their limits to avoid making empty promises. They must also be competent in performing their jobs and managing customer expectations. A company can achieve this by providing continuous training.

The customer service team, in particular, must have leeway in resolving issues and offering compensations to trigger the service recovery paradox.

One of the best customer service tips is to create process documentation. This way, the company can standardize its response, especially to typical problems. While creating and maintaining such documentation is a hassle, it can also help improve the efficiency of the service staff. Not only that, but it can also reduce the time it takes to onboard new employees in the future.

Customer Service Improvement and Online Reputation

There are compelling reasons why you need to know how to improve customer service.

1. Turn Negative Reviews Into Positive

Consumers today spend time researching a brand and its products or services online. So it’s no surprise that some will leave a positive or negative post or review, depending on their experience.

If a company can show how they respond to each negative feedback, other people would see a proactive company that cares for its customers. Hence, they are more likely to trust and do business.

“More positive reviews on top review sites like Google and Facebook can help boost the reputation of a company,” Clarke said. “We also help them cut down on bad reviews and show off the best testimonials on their website and social channels. Review response is key because it shows publicly that our clients [businesses] care about service failure or bad reviews.”

2. Improve Customer Retention Rate

Consumers understand that even the best and most reputable brands cannot guarantee customer satisfaction after delivering a product or service. What matters most in a service failure is how the company responds.

Usually, customers feel satisfied once a company resolves their issue promptly. But they will likely become loyal if the company can make them feel valued by offering gifts or discounts on future purchases. Top-notch customer service can dramatically improve the customer retention rate.

3. Improve Customer Lifetime Value Profitability

Around 90 percent of customers are willing to trust a brand again after a service failure. But, of course, that only happens if the company handles the problem to the customer’s delight.

At any rate, these customers will continue to patronize the company, making repeat purchases. This way, the company can profit more from a loyal customer base.

Also worth mentioning is that loyal customers are unofficial brand ambassadors. Speaking to or posting about their positive experience helps improve the company’s online reputation. In addition, people from their network become aware and may become customers.

4. Lower Costs and Higher Profits

Acquiring new customers costs five to 25 times more than retaining customers. Moreover, a five percent increase in customer retention rate can increase revenues by up to 25 percent. These figures illustrate the importance of keeping customers and why there is no lack of service recovery examples.

So, whenever there are complaints, a company that chooses to turn the other cheek will lose future profits. In their case, they would need to spend more on customer acquisition to keep their business running. In the long term, though, a bad reputation in customer service might prove to be too much of a hurdle to overcome.

Take Advantage of Customer Service Recovery Paradox

When you practice proven customer service tips, the result is more happy customers. You will experience increased retention rates and more loyal customers making repeat purchases – a clear case of the service recovery paradox.

Problems inevitably occur, leading to poor customer experience. Therefore, to avoid damaging your reputation, you should have a system in place where you can find dissatisfied customers. This way, you can resolve their issues and demonstrate to the public your commitment to providing the best customer service, earning their trust and business.

For a free consultation on how our online reputation management team can help you mitigate risks and enhance your brand image, call 866.325.0303.