When does service recovery paradox work/fail?

Adam Ramshaw’s POV on proactive service recovery

The purpose of this blog is to both share views, and create dialog about issues related to business and life.  Our recent post on NPS (Net Promoter Scores) generated a number of comments, including one from Adam Ramshaw.  Adam was generous in offering to write a follow-up article for Results Count.  It is with pride and pleasure we post Adam’s insights on NPS and opportunities related to service recovery.

When does the Service Recovery Paradox work … and when does it fail?

One of the reasons that I like the Transactional Net Promoter Score approach is that it allows for proactive service recovery.

Transactional NPS focuses on each service moment of truth and asks the customer about their experience at that exact time.  This allows you to drill down into each customer touch point and quantify its ability to generate or destroy customer loyalty.  As a bonus, if you run the process in the right way, you can generate a service recovery notification for sub-standard customer experiences.

This allows you to run a service recovery process and, hopefully, become the proud recipient of increased customer loyalty though the service recovery paradox. 

Is the service recovery paradox real, or myth? 

Do customers who have had an issue resolved really generate more loyalty than those that have never had an issue?

Luckily we have the help of academia to answer that question: yes indeed the service recovery paradox is real, but it does not work equally well in every situation.

Magnini et. al. in their paper “The service recovery paradox: justifiable theory or smoldering myth?” set out to determine if, when and how the service recovery paradox operates.  Their findings are instructive not just on how to leverage this idea, but also in reminding us that it is not a saviour for bad service. 

What is most interesting about their research is that the service recovery effect is moderated by several attributes of the failure.  Their key findings in this area include:

• It doesn’t work as well for customers who have prior failures:  This is logical.  If the organisation has repeated service failures then the customer will not be satisfied with repeated service recoveries.  The implications of this are clear.  Service recovery processes are special event responses and should not be relied upon to deliver good service.


• It doesn’t work as well for big failures:  If a customer misses a major personal event due to a delayed flight, no amount of discounted flight coupons is going to raise their level of satisfaction.  


• If works just as well for old customers as new customers: Long term customers who experience a service recovery will have their loyalty improved about the same amount as new customers.


• It works better if the customer believes it was beyond your control:  Where a customer can see, or you can show them, that the issue was beyond your control, a service recovery process has a better chance of improving customer loyalty.  So if you can provide a third party explanation of the failure you may be better off. 

Take for example delayed flights by airlines.  Saying, as airlines seem to do all the time these days, “this flight is late because it was late departing” is less likely to invoke the service recovery paradox than saying “this flight is late because of bad weather”.   The implication here is that staff should be taught to manage customer expectations when the service issue is truly beyond company control.

• If works better if customers perceive the issue was not reasonably foreseeable:  If your local supermarket doesn’t have enough aisles open late Sunday afternoon, when everyone does their last minute shopping for the week ahead, customers are less likely to be wowed by your service recovery. 

It seems to me that all of these findings are consistent and lead to a clear view of service recovery.  Service recovery is like your favourite donut: it is a sometimes event, not an everyday event. 

Long term you need to work on your customer experience management processes to ensure that you deliver consistent and reliable service to your customers.  If occasionally you do make a mistake,  customers will forgive you, subject to the areas noted above. And, proactive service recovery will lift customer loyalty.  However, do not rely on service recovery processes as your service processes.

Adam Ramshaw  aramshaw@genroe.com.au  is a principal of Genroe, a consultancy specializing in customer experience management. If you want to learn more about how Genroe improves your customer experience download our free 4 Steps to Customer Experience Management whitepaper.

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Comments

[Indian T.v Serials]

Well I’ve had good and bad experiences from American Airlines. As an Executive Platinum member they’ve always been great to me, and often go above and beyond. I was involved in an accident on the way to the airport in November last year and called up AA. They were excellent at sorting out alternative flights etc all without any additional cost to me (despite flying on cheap tickets). I think a lot depends on who you speak to and how you approach the situation.

[Chris Petersen]

Hey Joel ... thanks for your comment.

Couldn't agree more with your point about referral marketing based on exceptional experience.

Adam's post provides timely insights into how to address your point: "quickly addressing any area of your business that is not performing".

Both aspects of consumer service are incredibly important in today's age of real time social media.

Cheers, Chris

[Joel Norton]

Hi Adam, great post, thank you.

I agree with your closing remark that it's much better to focus on delivering an excellent customer experience in the first place, rather than try to fix something after the fact.

Customer experience is becoming increasingly important - not just to keep our customers loyal but also as a form of winning new customers. Referral marketing is becoming increasingly important, and first and foremost it stems from delivering an exceptional experience every time. If you identify an area in your business that is not performing, you need to address it quickly.

Cheers, Joel