Jan. 18, 2017
Brands can use service failures as an opportunity to build customer relationships
Even the best companies make mistakes. What matters is how organizations amend their missteps after they occur.
Surprisingly, even some of the best responses suggest ignorance of basic motivation principles, which costs those companies customers. On the other hand, a service failure may be the best thing to happen in a buyer-seller relationship, if the response is the right one.
When most companies stumble, their natural reaction is just to correct the original error. A couple of years ago, I purchased a new computer. After waiting several days for the system to arrive, I methodically set it up. Regrettably, the computer wouldn’t boot, which launched me on a lengthy phone call with technical support. After a couple of hours of futile troubleshooting, the agent decided I should return the system, which the company would replace with a new one, after receiving and inspecting my return.
At first blush, that response seems appropriate. I purchased a new computer and eventually did receive one that worked. But the company’s mistake cost me more than just the price I paid. Besides the aggravation, there was significant time spent setting up two systems, troubleshooting with technical support, repacking the faulty computer, shipping it back, and waiting for the new computer to arrive.
Over the years, I’ve had similar experiences with many companies in a variety of industries, so I suspect most consumers can recount comparable stories. For instance, a group of friends is dining out, and the kitchen makes the wrong entrée for one member of the party. Of course, the waiter apologizes and promises to bring the right dish as soon as possible. Meanwhile the others sheepishly start eating their meals, even as their friend sits awkwardly by. Ten grueling minutes later, she receives her dinner, after several others have almost finished theirs.
How Restaurants Changed Customer Satisfaction
The restaurant may have corrected the problem, but it really didn’t make things right. Dining out is often a social event, and patrons pay for that communal experience to be delivered well, as much as they pay for the food. In this example, the restaurant failed to provide a significant portion of the party’s expected benefits. If it doesn’t give the group something extra, or reduce the amount of the check, the people are justified to feel they’ve been short-changed.
We go to a restaurant expecting to receive all of the benefits of a satisfying dining experience (food, atmosphere, service, etc.) in return for accepting a set of tangible and intangible costs (parking, waiting time, the check, etc.). When there’s a service breakdown, our value ratio is significantly reduced, while the restaurant’s ratio changes very little. Plus, our perceived inequity is exacerbated by the knowledge that the culpable party lost the least.
What Companies Should do to Make Things Right
So, what should companies do to truly make things right? In short, they need to get the buyer-seller ratios back into balance, which means doing more than just fixing the initial error. Correcting the original problem is a good start, but it doesn’t equalize the ratios because the same set of consumer benefits is now divided by a larger collection of costs. Companies must, therefore, either add additional benefits or reduce consumers’ costs in order to really make things right.
Without these kinds of equalizing actions, consumers are likely to remain disgruntled, lessening the chance of repeat purchases and possibly leading to negative word of mouth. In contrast, when organizations rebalance the benefit-cost ratios, the narrative completely changes. Instead of withdrawing or complaining, consumers start sharing their outstanding customer service experiences, for example, “I only paid $XXX for this computer,” or “The restaurant gave us free desserts!”
Handled properly, a service failure can actually be a very good thing. The strongest relationships are usually ones in which significant conflict has been successfully resolved. It might seem like such clashes would weaken relationships, which they can, but if the parties genuinely reconcile, their mutual commitments typically become even stronger because they know that when things go bad, the other will be there for them.
When a service failure inevitably occurs, a company can rebound by rebalancing the slighted customer’s value ratio—giving her more than just what she should have received in the first place. Such exceptional responses not only keep customers and quell complaints, they give people a uniquely positive experience that they are eager to share, recounting how a company really did make things right.
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