Customer Obsession - Service Recovery
by Rick Sidorowicz
The concept of Customer Obsession takes customer service beyond 'lip service' to make it a fundamental element of your business model, core values, 'culture' and operating strategy. The purpose is to provide your customers the most memorable service experience and in the process achieve a significant and powerful differentiation from your competitors. Customer Obsession is first and foremost a 'value' and an 'ethic'. You can't do customer obsession. It's not a program. And if you are looking at it that way the best it can be is another version of 'lip service'. It is a 'value' and an 'ethic' in the sense that you have decided you are customer obsessed. It is fundamental as it is the way you look at the world. It is 'right' just because you say so - and believe it to be the most honest, ethical and effective way to do business. In the first two articles of this series we examined the power of the "memorable experience" and "no sale is ever final," and how to begin the process of cultural change. In this article we will discuss "service recovery" - a most powerful approach that can bring customer obsession to life in your organization. 'Service recovery' deals with the handling of customer dissatisfaction, customer complaints, returns and any customer problems or difficulties with your firm's service. Creating a service recovery 'process' grounded in the ethic of customer obsession can very quickly engage the imagination of your associates and service providers, and bring your values to life on the front lines. Throughout this series I encourage you to rely on your personal experiences of 'service' to validate the concepts presented. Do they ring true to you in your experience? Do they make sense - common sense? Please follow the logic of service recovery for a moment. Assume a customer is fully satisfied with a purchase. Everything is OK and fully met her expectations. How many people will she tell of that experience? One or two, possibly three or four? It probably depends on the circumstances of the conversation i.e. if asked for a referral, if a comment is made by another on the product selected, if comparisons of products or experiences are being discussed, etc. I think it's safe to expect that customer will tell a few others of that experience. Back to the impact of a memorable positive experience ... Assume a customer has a very positive and memorable experience with you. The experience somehow exceeded his expectations, whatever they were. Perhaps the server was more attentive and thorough than expected, or the price was better than expected, or he received a double latte with room to go while he waited, or delivery and set-up was no charge. How many people will he tell about that experience? Definitely more than the first example, but how much more? Given that service that exceeds your expectations is quite rare, I suggest that the positive referrals will be at least a ten-fold increase over the first example - and it will be an unqualified number of referrals. I suggest that he will tell many others of that positive and memorable experience. And if that person expects good service as the price of admission these days, and that expectation is
exceeded by great or memorable service, he will absolutely rave about you and give active and positive referrals. You create "raving fans" by exceeding expectations - but we know that ... sort of. So we have a satisfied customer telling a few others about that 'satisfactory' experience. Let's say that number is two to four. And we can 'get' that a customer whose expectations are exceeded ... perhaps "wowed" ... will tell many. Let's say that number is ten to twenty. (Test this out now how many would you tell? How many have you told?) What about another likely and very common possibility? A customer has a negative experience with you, and (hint) all negative experiences are very memorable. The product didn't work. It wasn't delivered when needed and promised. The customer was ignored. Your associate was rude. The customer had a problem that wasn't rectified. How many people will she tell about that experience? And how 'active' do you think she will be in giving negative referrals for your business? I suggest she will actively tell a lot of others about her 'problem' with you for a very long time. It's like never forgetting vs always remembering. I suggest that the number of memorable negative referrals will be at least twice that of memorable positive experiences. Test it out. Satisfed customer tells two others. Wowed customer tells ten others. Dissatisfied customer tells twenty others, or perhaps fifty others. Wow! Just imagine for a moment, how many others a customer will tell about the negative experience with you if they have taken the time and expense in most cases to write a letter to complain or call. (And imagine the frustration on top of it all in dealing with your 'customer care' hotlines the silly music and repetitive smiley face voices - while you wait on hold, stew and then fume!) I suggest that the customer that has had a negative (and very memorable) experience with you and attempts to contact you will tell ... hundreds of others about you, and that may be a conservative number! What a state of affairs! We're tolerated if do deliver good service, mildly promoted if we exceed our customers' expectations and punished very severely if we don't. We're almost tempted to keep everything very mediocre - to avoid the worst case scenerio. Let's just give everyone a mediocre script to perform, build in a few buffers to attempt to placate the complainers, and keep our fingers crossed and hope we stay out of trouble. Sound familiar? It's lip service! Trouble is ... we - you and I and almost everyone we know - expects better. More and more people everyday are raising their expectations and view 'lip service' to 'customer service' with contempt - and that's a mild word. But there's more. Assume you have a customer that has had a very negative experience with your firm. They have been through it all and they are very, very angry and frustrated. They expect more 'lip service' from you. They now hold you in contempt. Imagine if you will, that you own up to the mistake and fix the problem to the customer's complete satisfaction. How many people will he tell about that experience? Not many unfortunately, because there is one extremely important ingredient missing. An apology may be enough for some people some of the time. Fixing the problem may also be enough for most people most of the time. But the some or most people and some or most of the time again sounds just like ... lip service (bingo!) and that unfortunately is not enough today!
From a value of customer obsession we need to go beyond. All service recovery - in terms of dealing effectively with customer complaints, returns, problems and deficiencies requires a simple three step intervention by your front line associates.
Step 1 - The Apology and Accountability
"I am very, very sorry that our product didn't meet your expectations, or wasn't delivered on time, or fell apart, or was too complicated to assemble, or your spouse didn't like it." You are genuinely sorry aren't you? Or do you expect to have a certain number of defects and problems to deal with? (In which case you have a very, very serious fundamental problem with your product or service!) Whose problem is it? Is it the customer's? Absolutely not! Your product or service didn't work! Period! Whose problem? It's your %$&@ problem! Isn't it? How about - "I apologize sincerely for not meeting your needs, and I will do anything I need to - to make it right to your complete satisfaction."
Step 2 - Make it Right
Probe and explore with the customer what "making it right" means for them. (Hint - very hard to script for 'lip service' - it's based on the unique circumstances and requires a decision of your front line based on their values and ethics i.e. customer obsession. An exchange? No problem! A repair - no problem! A refund - no problem! No receipt? No problem (see No Sale is Ever Final.) The operating words are:
Whatever it takes!
no problem!
At this point in the service recovery process most customers will have appreciated your interest in their satisfaction and will come to terms with what they require to 'make it right.' To get to this point may of itself be a 'wow' factor for many ... but there is more..
Step 3 - The Wow Factor!
This is a mandatory step in service recovery from a fundamental position of customer obsession. You have apologized. You have taken full accountability for your problem. You have explored and agreed with the customer on how to make it right to their complete satisfaction. Only one thing left to do. Wow the customer! "I am very pleased that I was able to correct the problem to your complete satisfaction. Please accept this gift certificate as a token of our appreciation." (Wow!) Or - "I apologize for you having to drive back again to rectify this situation. Please accept this $10 for your trouble." (Wow!) Or - "I will deliver this to you later this evening." (Wow!) Or - "Please have a latte or lunch while you wait for the repairs." (Wow!) Or - whatever it takes to absolutely WOW your customer - and it's not about money. It's about whatever it takes, in this unique situation, to demonstrate to your customer that you are accountable for their complete satisfaction, you value them as your customer, you have pride in the products and services you provide, you regret the inconvenience you have caused them and ... you care.
Assume you have a customer that has had a very negative experience with your firm. They have been through it all and they are very, very angry and frustrated. They expect more 'lip service' from you. They call, or walk into your establishment. The first person they meet greets them with a smile. The customer says she has a problem. She is very angry. The associate probes and interacts to discover the problem. The customer becomes less angry as there appears to be someone that is genuinely interested in solving her problem. The associate apologizes for causing the customer an inconvenience and takes full accountability to make it right and solve the problem to the customer's complete satisfaction. The customer senses that this is not the typical 'problem solving' experience. They discuss a few options and alternatives based on the customer's needs and concerns. They make it right to the customer's complete satisfaction. The customer appears to be fully satisfied with the outcome of the situation. The associate then 'wows' the customer with a unique response based on the unique needs of the situation - delivery, a coffee, $10 for your trouble, a movie pass, cab fare, lunch, a gift certificate - whatever it takes! How many people do you think your customer will tell about that experience? It was originally a very memorable negative experience - a disaster, that through an effective customer obsessed service recovery intervention turned into a wonderful, very positive and unexpected wow experience! Do you think she will tell a few as in being satisfied? Or many as if her expectations were exceeded in the first place? Or perhaps a lot - as in the example of being dissatisfied? Your originally very dissatisfied and now wowed customer will tell ...
everyone!
A customer that has had a very negative experience and through a customer obsessed service recovery process is 'wowed' will tell almost everyone they know of their new 'recovered' positive and extremely memorable experience. Test it out for yourself. How many of these experiences have you had? (Likely very rare.) How many people have you told about that experience? (Likely everyone!) I suggest that it is a service encounter that you will always remember! And it is very 'active' in that you tell everyone and anyone about that unique and memorable experience, for a very long time. I have a friend who swears by Black and Decker. She bought a lawnmower that didn't work and wrote a letter to complain. An Exec VP called to apologize (Wow!) and they sent her the latest new and improved supercharged model instead (Wow!) It was over ten years ago and she is still a 'raving fan' - more like an evangelist for anything Black and Decker. She now owns everything Black and Decker! I have a friend who bought a suit at Tip Top Tailors and it was promised for pick up by noon. It wasn't finished. He was very disappointed and angry. The associate apologized and addressed the issue immediately. They needed an hour to complete the alterations and the associate asked him if he could wait for the work to be done or would prefer to have it delivered. (Wow!) My friend said he could have lunch and then come back in a hour to pick up his suit. The associate asked him to bring in his receipt for lunch and he would reimburse him for the inconvenience. (Wow!) My friend asked, "For how much?" The associate advised, "Whatever you were planning to have
for lunch." (Wow!) I think he said he had a burger, NY fries and a Coke. He now has an almost fanatical point of view of where to shop for clothing, and he comes in for a new wardrobe every single season! A customer complained of an experience in a store where she believed she was treated very poorly. She did not complete her purchase and vowed never to return to that store again. The VP Ops returned her call and apologized and asked if she would accept a recovery solution from the store team. She specified she did not want to be contacted personally by anyone in the store. The feedback was given to the store team to resolve - a most difficult service recovery challenge. The team of associates decided to send a card of apology to the customer, signed by all associates. And in respect of her decision not to return to their store they included a gift certificate and the locations of the nearest stores where it could be applied. (Wow!) Also respecting her wishes they delivered a fruit basket (and this was not a fruit store) left with a neighbour to avoid any direct encounter which they understood would be a source of embarrassment to her. (Major wow!) The customer returned to the store and met every associate, accepting their apology and thanking them for their sensitivity and their wonderful gift. She has subsequently spent thousands of dollars in the store and is an active and vocal spokesperson for the retail enterprise. A customer obsessed service recovery intervention is one of the most powerful tools of cultural change. Imagine for a moment how the dreaded customer complaint or return (which typically sends associates and VPs underground) turns into an opportunity - where... and please listen slowly here ... associates line up and can't wait to deal with a customer 'problem.' Imagine the power - for your associates and your enterprise - of being able to use your creative talents to recover and wow and create customers for life. We are only as strong as our weakest links, and how we deal with our failures and shortcomings demonstrates to the world who we are and what we stand for. From an 'ethic' of customer obsession every mistake, every screw-up, every dissatisfied customer provides a wonderful opportunity to live up to our values and ethics and truly be 'of service.' Service recovery is a key intervention and point of great leverage to bring a customer obsessed strategy to life on the front lines of your organization. Stay tuned for more on how to 'make it so' for your enterprise. http://www.refresher.com/!obsession3.html
Service Recovery: Create Loyal Customers for Life
05/ 04/ 2005 by John Tschohl
Service recovery is a foreign concept to many businesses. They don't understand it, so they don't practice it. As a result, they are struggling to survive. Simply put, service recovery is putting a smile on a customer's face after you've made a mistake. It's solving a customer's problem or complaint and sending him out the door feeling as if he's just done business with the greatest company on earth. It is bringing a customer back from the brink of defection—and doing so in 60 seconds or less. Service recovery is the step that should follow a mistake. You must apologize, take responsibility for the error or the inconvenience and give the customer something of value as compensation, something that says, "We value you as a customer and want you to continue to do business with us." What product or service can you give that will cost you little or nothing but that has value in the eyes of your customers? A hotel can upgrade a disgruntled guest to a suite. A restaurant can give offer a free appetizer. A cell phone company can offer 500 free minutes.
Advertising is aimed at the masses; service recovery is aimed at the individual. Put another way, advertising will bring a customer to you—once. It is the customer experience that will bring a customer back to you. That experience must include service recovery. Why? Because every company—no matter how excellent their products or employees—occasionally makes a mistake. Show me a company that has never made a mistake in serving a customer, and I'll show you a company that is in deep denial. When you effectively practice service recovery, you are creating customers who will be so satisfied that they will tell anyone who will listen about the wonderful service your company provided. Nothing is as powerful as a personal recommendation from a satisfied customer. Service recovery—solving customers’ problems and sending them away singing your praises—creates word-of-mouth advertising that is 10 times more powerful than advertising—and 20 times cheaper. With service recovery, you can turn an angry customer, who would bad mouth your company to everyone and anyone who will listen, into a loyal customer who will spread the word about your wonderful service and who will return to you time and time again. Service recovery will put you and your organization ahead of the competition. It will prevent customer defection, which will increase your sales and profits. It also will prevent employee defection. When employees are trained in customer service and are empowered to make decisions that will satisfy their customers, they are happier in their jobs. With service recovery, your customers—and your employees—wouldn't dream of leaving you. What separates service leaders from the rest of the pack is how they respond to mistakes. Here are some of the things they do best: • They will do whatever it takes to solve a customer's problem. They understand the importance of service recovery to their bottom lines. • They drive superior customer service strategically. That means everyone, from the CEO on down, walks the talk and reinforces the importance of customer service. • They make sure their policies, procedures and systems are customer-friendly, ranging from the hours the company is open to the rules governing customer payments. • They hire good people and treat them well, investing time and money to train and coach them in the art of customer service. • They empower their employees, giving them the authority to bend and break the rules, to use their common sense and to take care of the customer. Those companies understand that empowerment is the backbone of service recovery. Employees must have the authority to do whatever it takes, on the spot, to take care of a customer to that customer's satisfaction—not to the satisfaction of the company. Most executives believe their employees are empowered. And most employees would agree—as long as they follow the policies and procedures set forth by the company. What that means is that there really is no empowerment. Empowerment is a difficult concept for many bureaucrats to introduce. They would much rather institute policies and procedures that eliminate the need for employees to make decisions about how to serve the customer. What they don't realize is that those policies and procedures prevent employees from doing their jobs well and providing the type of service that will keep customers coming back to do business with the company. If you want to be a service leader and retain your customers, you must eliminate policies and procedures that prevent employees from effectively serving the customer. Then you must create specific procedures around service recovery that force employees to handle customer complaints effectively. By doing so you will create a loyal customer base—and a bottom line—that will be the envy of your competitors.
http://www.nfib.com/object/IO_21944.html
SERVICE RECOVERY—USE IT AND YOU WILL HAVE CUSTOMERS WHO ARE LOYAL FOR LIFE By John Tschohl Service recovery is a foreign concept to many businesses. They don’t understand it, so they don’t practice it. As a result, they are struggling to survive.
Simply put, service recovery is putting a smile on a customer’s face after you’ve made a mistake. It’s solving a customer’s problem or complaint and sending him out the door feeling as if he’s just done business with the greatest company on earth. It is bringing a customer back from the brink of defection—and doing so in 60 seconds or less. Service recovery is the step that should follow a mistake. You must apologize, take responsibility for the error or the inconvenience, and give the customer something of value as compensation, something that says, “We value you as a customer and want you to continue to do business with us.” What product or service can you give that will cost you little or nothing but that has value in the eyes of your customers? A hotel can upgrade a disgruntled guest to a suite. A restaurant can give offer a free appetizer. A cell phone company can offer 500 free minutes. Advertising is aimed at the masses; service recovery is aimed at the individual. Put another way, advertising will bring a customer to you—once. It is the customer experience that will bring him back to you. That experience must include service recovery. Why? Because every company—no matter how excellent their products or employees— occasionally makes a mistake. Show me a company that has never made a mistake in serving a customer, and I’ll show you a company that is in deep denial. When you effectively practice service recovery, you are creating a customer who will be so satisfied that she will tell anyone who will listen about the wonderful service your company provided her. Nothing is as powerful as a personal recommendation from a satisfied customer. Service recovery—solving a customer’s problem and sending him away singing your praises—creates word-of-mouth advertising that is 10 times more powerful than advertising—and 20 times cheaper. With service recovery, you can turn an angry customer, who will bad mouth your company to everyone and anyone who will listen, into a loyal customer who will spread the word about your wonderful service and who will return to you time and time again. Service recovery will put you and your organization ahead of the competition. It will prevent customer defection, which will increase your sales and profits. It also will prevent employee defection. When employees are trained in customer service and are empowered to make decisions that will satisfy their customers, they are happier in their jobs. With service recovery, your customers—and your employees—wouldn’t dream of leaving you. What separates service leaders from the rest of the pack is how they respond to mistakes. They will do whatever it takes to solve a customer’s problem—and take that customer from hell to heaven in 60 seconds or less. They understand the importance of service recovery to their bottom lines. Service leaders—like Amazon, Dell, Vail Resorts, Delta Dental, Southwest Airlines, General Electric, Commerce Bank, and Land’s End—have mastered the critical elements that drive a service-focused business.
• • • •
They drive superior customer service strategically. That means everyone, from the CEO on down, walks the talk and reinforces the importance of customer service. They make sure their policies, procedures, and systems are customer-friendly, ranging from the hours the company is open to the rules governing customer payments. They hire good people and treat them well, investing time and money to train and coach them in the art of customer service. They empower their employees, giving them the authority to bend and break the rules, to use their common sense, to take care of the customer.
Those companies understand that empowerment is the backbone of service recovery. Employees must have the authority to do whatever it takes, on the spot, to take care of a customer to that customer’s satisfaction—not to the satisfaction of the company. Most executives believe their employees are empowered. And most employees would agree—as long as they follow the policies and procedures set forth by the company. What that means is that there really is no empowerment. Empowerment is a difficult concept for many bureaucrats to introduce. They would much rather institute policies and procedures that eliminate the need for employees to make decisions about how to serve the customer. What they don’t realize is that those policies and procedures prevent employees from doing their jobs well and providing the type of service that will keep customers coming back to do business with the company. If you want to be a service leader and retain your customers, you must eliminate policies and procedures that prevent employees from effectively serving the customer. Then you must create specific procedures around service recovery
that force employees to handle customer complaints effectively. By doing so you will create a loyal customer base— and a bottom line—that will be the envy of your competitors. John Tschohl is an international service strategist and speaker. Described by Time and Entrepreneur magazines as a customer service guru, he has written several books on customer service, including eService, Achieving Excellence Through Customer Service, The Customer is Boss, and Ca$hing In: Make More Money, Get a Promotion, Love Your Job. John also has developed more than 26 customer service training programs that have been distributed and presented throughout the world. His bimonthly strategic newsletter is available online at no charge. You can reach John at www.customerservice.com.
9201 East Bloomington Freeway, Minneapolis, MN, USA 55420-3437 Phone:(952) 884-3311 Fax:(952)884-8901 If you have any comments, please let us know:
[email protected]
http://www.customer-service.com/articles/service_recovery.aspx
Companies give front-line employees more power
By Gary Stoller, USA TODAY
Chris Byrd was disgusted by a dirty Michigan hotel room on a business trip in April. But hairs in the bathroom and crumbs in a chair didn't deter him from booking there a few weeks later. The Arizona pharmaceutical research consultant is one of many travelers who have made an instant turnaround from angry customer to loyal fan. A Hampton Inn apology and a $350 refund for his three-night stay short-circuited his vow to never return and won him over. The hotel chain used a customer service technique that a growing number of hotels, airlines and rental-car companies are now embracing. It's called "service recovery": empowering employees to immediately solve a problem and give something of value to a disgruntled customer. "It can take a customer from hell to heaven in 60 seconds or less," says John Tschohl, whose book about service recovery, Loyal for Life, will be published this summer. "It puts a smile on a customer's face after a company has screwed up and sends him out the door feeling as if he's just done business with the greatest company on earth." Byrd's turnabout took longer than 60 seconds, because he checked out without mentioning the dirty room to anyone. Hampton Inn contacted him after he received a customer satisfaction e-mail and expressed his displeasure. "I wouldn't have come back if they didn't come up with an offer," he says. Service recovery works best when a front-line employee apologizes, fixes a problem and offers something of value before an unhappy customer leaves the premises, says Chip Bell, co-author of Knock Your Socks Off Service Recovery. That's what happened to Tom Taylor, an auditor in Lansing, Mich., who checked in after midnight to a Hampton Inn in Greenville, S.C., last month. Taylor says he complained to the front-desk person because directions on the hotel's Web site were wrong, two room lights weren't plugged in, a shower's hot and cold water were reversed and the air conditioning was too cold. The hotel clerk instantly
offered two nights for free, but he says he accepted only one because the compensation was excessive. The chain's senior vice president, Phil Cordell, says every employee is empowered to resolve problems, including giving a dissatisfied customer a free stay. "You don't have to call an 800 number," he says. "Just mention it at the front desk or to any employee — a housekeeper, maintenance person or breakfast hostess — and, on the spot, your stay is free." Each year, he says, Hampton Inn refunds half of 1% of its total room revenue to dissatisfied guests. It pays off, Cordell says, because for every $1 refunded, the hotel gets back an average of $7 in business from a new customer or a dissatisfied one who wouldn't have returned without the refund. Service recovery is not a new concept. Studies were done decades ago, showing its effectiveness in keeping bank customers from closing their accounts, says Judy Siguaw, dean of the Cornell-Nanyang Institute of Hospitality Management in Singapore. Some hotels talked about service recovery in the late 1970s, but the industry started focusing more on it in recent years, she says. Airline, hotel and rental-car executives say they've come to realize the power of service recovery. "You can truly turn the customer into an ambassador for the brand," says JetBlue President David Barger. New airlines led the way Customer service experts say Southwest, JetBlue and other new airlines have fanned the service-recovery flame. "Price alone is not a competitive weapon," says author Tschohl. "Southwest and JetBlue understand the service strategy and have empowered their employees to provide the best possible service to their customers." Barger says JetBlue has "put some tools in the toolbox for front-line employees." The tools include a voucher for up to $100 off a future flight for passengers delayed more than two hours because of a JetBlue problem and a voucher for the price of the ticket for delays exceeding five hours. Travel company executives say they now understand that it's more cost-effective to regain the trust of a dissatisfied customer than to spend advertising dollars looking for new ones. "We much prefer to hold onto our customers than to constantly create new ones," says Celia Stokes, Independence Air's vice president of marketing. Don Himelfarb, chief administrative officer of Dollar and Thrifty rental car, suggests that the Internet might also be a reason the travel industry is paying more attention to service recovery. "The Internet has leveled the playing field," he says. Consumers can easily compare companies' rates or fares, so "you can't leave yourself open to be at a competitive disadvantage in customer service." Tschohl says travelers shouldn't get giddy about the increased focus on service recovery. All industries are "weak" at it, he says, including many travel companies that claim to practice it but don't deliver when push comes to shove. "I can count on one hand how many times a company in the travel business said it was their fault."
Frequent fliers also are skeptical. Laura Robb, a propane industry auditor in Sedalia, Mo., says no airline, hotel or rental-car company has bent over backward to resolve one of her disputes. Most of her disputes, she says, were not settled immediately on site and were resolved after she contacted company headquarters. Nearly all airlines, hotels and rental-car companies interviewed by USA TODAY say they now train their employees to use service recovery. To succeed at it, they agree, low-level employees must be empowered to settle a disgruntled customer's dispute on the spot without calling in a supervisor. Then they must apologize, show empathy and do what they can to fix the problem. "If you don't apologize and don't make customers know you care, it's very difficult to recover the customer afterward," says Mary Blundell, Midwest Airlines' director of service excellence. Customer service experts say such steps are essential and might win over some consumers, but travel companies are missing the boat if they don't also give something of value to regain a customer's trust and cement a lifetime relationship. "Time is money in today's time-crunched society, and an apology doesn't pay for my time," says Bonnie Knutson, professor of marketing at Michigan State University's School of Hospitality Business. "They have to compensate for the time wasted." Airline and hotel executives say they've empowered their front-line people to give freebies to unhappy customers, including vouchers for discounts off future tickets, free meals, free movies and drinks. But many companies say giveaways, including free airline seats and hotel rooms, are rarely necessary and try to avoid issuing them. Some say 'fix the problem' Barry Biffle, Spirit Airlines' chief marketing officer, says an apology and fixing a problem can be enough to win over a customer. A $100 voucher or a free meal, he says, won't appease a family of four with two young children who are told that seats aren't available to sit together on a flight. The way to make them happy is to figure out a way to let them sit together, Biffle says. Any efforts toward service recovery, though, couldn't have come at a better time for travelers. Many have endured years of reduced airline customer service, flight delays and cancellations, shrinking frequent-flier benefits and the hassles of increased post-Sept. 11 attacks security screening. "Travel is not fun anymore," says Knutson. At Hilton Garden Inn, Vice President Mark Nogle says the service-recovery program is as important as the frequent-stay program, which hotels have used successfully for decades to ensure repeat customers. The chain last fall began a new policy called "Own the Goodbye," which requires hotel managers to call guests before checkout to see whether they are satisfied with their stay. "Not everyone takes the time to fill out a comment card," says Nogle. "We also saw people were having issues but didn't report them to us." Two
of the most common issues: billing problems and an insufficient amount of hot water in a shower. Managers are trained to correct a problem before a guest leaves and are empowered to give something to make amends. It could be a free breakfast, a free taxi ride, a deduction off a room bill or, "if someone has truly had a bad experience," a free night's stay, Nogle says. At the 162-room Hilton Garden Inn at Los Angeles airport, general manager Barbara Bejan says her hotel handles about 2,500 guests per month and might give a free room twice each month to unhappy guests. Wyndham Hotels & Resorts started giving empowerment training to all its employees in 1998, says Vice President Kathi Kulesza. "It was a culture shift to tell someone it's OK to give something away." Front-desk employees can give away up to one free room night without management approval, but that rarely needs to be done, she says. Dissatisfied customers can be won over by other offers, including removing a dry cleaning, movie or restaurant charge, or offering a free meal or spa service. The Ritz-Carlton empowers all its employees to settle a customer dispute up to $2,000 per day. Vice President Diana Oreck says hotel standards are so high and service-recovery training is so rigorous that no employee has ever had to provide a $2,000 credit. At Dollar and Thrifty rental car, counter agents are trained to immediately settle disputes by asking customers what they think would be a fair settlement, Himelfarb says. The agents can settle a problem up to a monetary limit, which Himelfarb wouldn't reveal. He says the average customer transaction is about $175, so "it's not out of the question to give someone $50 or $100" credit. Do customers scam? Airline and hotel executives say they're not worried about being scammed by customers who complain just to get something in return. "About 1% of the traveling population may be like that," Oreck says. "It's a small blip on the radar screen." Tschohl estimates that 1% to 3% of customers might be trying to get something they don't deserve, but he says companies shouldn't worry about it. They're still benefiting because they're recovering 97% of their customers with legitimate complaints, he says. It's important to win over those with complaints, because today's hotel guest is "far more demanding and far less loyal" than those in the past, says Knutson. "There's far more competition. If you don't get what you want in Hotel A, you can walk across the street to Hotel B."
Frequent flier Frank Crawford, an accounting firm president from Oklahoma City, says he'll bolt to a competitor and even pay more rather than be treated unfairly by an airline, hotel or rental-car agency. Says Crawford: "Customer service is the key to loyalty, and loyalty is the key to profitability." http://www.usatoday.com/money/companies/management/2005-06-26-serviceusat_x.htm
Definition:
Turning potentially negative situations into positive ones.
Question:
What tools are available to staff that can be used to save a potentially negative situation?
Resources: • RELATE model of service recovery
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• Manager's Tips 'n' Tools Issue 5
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http://www.hopkinsmedicine.org/service/aboutse/servicerecovery.html
Service Recovery Practices
The goal of service recovery is to identify customers with issues and then to address those issues to the customers' satisfaction to promote customer retention. However, service recovery doesn't just happen. It is a systematic business process that must be designed properly and implemented in an organization. Perhaps more importantly, the organizational culture must be supportive of idea that customers are important and their voice has value. Research has shown that customers who have had a service failure resolved quickly and properly are more loyal to a company than are customers who have never had a service failure -- significantly more loyal. Service Recovery practices are a critical element in a Customer Loyalty Program. Think about your own experiences with service or product problems. Did you get a quick acknowledgement of the problem, speedy resolution of the problem, and -- perhaps -- compensation for your troubles? (Imagine if you got a truly sincere apology and not some phony empathy?) Weren't you more likely to buy from that company again because of the confidence you now had in their business practices? That's the key value to effective service recovery and complaint handling: customer retention. One way to think about service recovery is that it is a positive approach to complaint handling. Complaint handling has serious negative connotations; whereas, service recovery has positive connotations. Complaint handling is placating people, minimizing a negative. Service recovery practices
are a means to achieve the potential, latent value a customer holds for a company by fostering an ongoing positive relationship. Service recovery has a secondary value. It creates positive word-of-mouth about your company and minimizes the bad spin that lack of service recovery practices can create. Next, we'll present how to frame the argument for building Service Recovery Practices, and then we'll examine the stages of maturity an organization may display for this vital feedback process.
Why Does Service Recovery get No Respect?
So why isn't service recovery part of every organizations' business processes? No easy answer exists. Perhaps it's the contention between operations and marketing. Customer acquisition is sexy. Marketing conducts expensive research, fine tunes the 4Ps that comprise its marketing strategy (Product, Place, Promotion, and Price), and penetrates new customer bases through its sales and marketing programs. Companies spend big bucks on achieving sales growth and expanding market share. Service Recovery isn't sexy. It's an operational task that involves negotiating with angry customers. The budget typically falls in the customer service department -- one of those loathsome cost centers that drain profit. Isn't it easier to just dismiss these upset customers and move on to greener fields? In some cases, it probably is easier and appropriate. Some customers cannot be recovered, only ameliorated so they don't bad-mouth the organization. This may seem like heresy from a self-proclaimed customer service nut, but customers are not always right. (Great Brook had a person from a Pacific island nation contact us to buy our Customer Survey book. They weren't willing to pay prior to shipment; they wanted to be invoiced. And they wanted an electronic copy of the book. We declined their business.) However, most customers can be recovered through simple application of the Golden Rule. And those recovered and retained customers become profit centers. They buy more and they give positive The Pyramid of Service Recovery Progression
recommendations to friends and colleagues, which is the most important form of “advertising.” For a rough calculation on the potential value of a Service Recovery Program in your organization find out the annual sales volume per customer, then apply the operating profit margin to find the profit per customer. Next, find out the annual customer churn, that is, how many customers stopped buying from
you -- especially long-standing customers. Multiply, the churn by the profit margin and you have the potential value of the Service Recovery Program's annual budget. You'll probably find that even reducing a small amount of the churn will more than pay for the program. And this doesn't even include the reduced sales from customers who didn't leave but still have issues with the organization!
What are the Stages of Service Recovery Maturity?
Service Recovery in an organization progresses through a series of stages, shown in the nearby diagram. Where do you stand? Stage 1, Moribund. There is no complaint handling. Angry customers are ignored. Drugstore.com is an example of a company with totally moribund service recovery practices. Letters to VPs and even the CEO about a damaged shipment go unanswered. Stage 2: Reactive. Customer complaints are heard, and a response is made. But it's a haphazard process with no defined goals for the response and no one owning this business process. Stage 3: Active Listening. At this stage, the response to issues voiced by customers is structured. Specific people have the responsibility to respond to complaints and guidelines are in place for the response. However, it is still reactive. Stage 4. Solicitous. The critical change from Stage 3 to 4 is the move from reactive to proactive solicitation of customers with issues. The reason this is so important is that most customers don't bother to complain. They just move on to other suppliers of products. Haven't we all done this? It's a lot of work to complain! The solicitous role is accomplished by encouraging customer to voice their complaints. Event surveys (also known as transactional or transaction-driven survey) are a commonly used technique to get issues voiced. The survey design must be such that more than just high level measurement of customer satisfaction is captured. The design must allow for action to be taken. The desire for anonymity complicates the task. (Our Survey Workshops help attendees create such actionable survey instruments.) Stage 5: Infused. The pinnacle of Service Recovery Practices is achieved when the complaint identification merges with business process improvement or six sigma programs to support root cause identification and resolution. The owners of business processes that cause customer issues are notified of the occurrences to prompt reexamination of the process design. In essence, we see two levels of feedback loops. First, feedback from the customer to the organization. Second, feedback from the customer-facing groups to its business partners within the organization. While company culture is clearly critical to implementing this level of feedback management, certain technologies can infuse this information sharing into business practice. http://www.greatbrook.com/service_recovery.htm
Lessons Learned from Service Recovery
I recently wrote about the value of service recovery programs in sports enterprises. Ironically, I was writing that article while in the midst of a customer service and service recovery incident. The process or lack thereof - that occurred illustrates some key lessons for organizations: The need for properly conceived feedback programs The need for proper and consistent execution of the feedback programs, especially in their complaint handing processes. Briefly, let me recount the sequence of events - and non-events. This will help demonstrate the value that customer feedback and service recovery can bring to an organization as well as the ramifications of poor design and execution.
Like most business travelers, I frequent one or two hotel chains to build up the benefits under the loyalty programs. During June, conference engagements led me to stay in two of the top-line properties in one of these chains. The name of one of those brands, Ritz Carlton, evokes the very essence of the gold standard in customer service.
As with the higher priced hotel brands, broadband internet access at this Ritz hotel had to be purchased for $9.95 per day. (An aside… why is it free at the cheaper hotels?) I purchased the service from both hotels, and I had almost the identical problem in each place. Several emails got rejected by the mail server of the recipient of the email messages. The reject messages indicated that the outgoing email server was the problem. In one case the mail server was on a spam watch list and in the other case the mail server was flagged as one that has been compromised and could be spreading viruses. Since email is a critical communication device for my business, I had this awful feeling in the pit of my stomach. What happened to my ISP's mail servers??? The good news is that the problem was not my ISP's outgoing mail servers, but rather the servers of the ISP service the hotels had contracted. (The rejection messages had the ISPs' IP addresses in it, so I could trace the problem.) My concern went beyond the messages for which I got a rejection notice. How many other messages got rejected but no notice was sent to me? I don't feel it's an overstatement to say that the hotels' internet access service was defective. (Isn't this equivalent to a hotel room TV that doesn't work or a clogged sink drain?) The story doesn't stop there. Since this was a difficult problem to describe in any specificity to those who don't understand mail servers (which I really don't!), I chose to raise the issue in writing to the hotel. On the first day in this Ritz hotel, I used the Contact Us form on their website to make the issue known, indicating I was a current guest with my name and room number. The message was supposed to be directed to the specific hotel with a promise of a response within 24 hours according to the web site. Since I knew something about this hotel's elaborate service recovery program - I use a business school teaching case on the hotel in my MBA classes - I was interested to see what would happen. What happened? Nothing. Later that month in the second hotel, a top-line Marriott in Plano Texas, I used the comment card in the hotel room to write down the issue, again with my name and room number. The card promises it will be reviewed that day by the manager or a key staff member. I dropped it at the front desk the first morning out of three I was there. What happened? Again, nothing. Absolutely nothing. (In this latter trip, I conversationally mentioned the problem to my client for whom I was conducting one of my Survey Design Workshops. The folks there told me to expect exactly the response that I got. The hotel had a reputation with that local business -- and others -- for not being responsive. In fact, they usually steer visitors to another nearby hotel. After these experiences most customers would have just defected to another hotel chain for future stays, but I am not the typical customer. I do not take “nothing” as a response. I did pay for the service after all. I also admit readily that I am tenacious in part to see how companies respond. I have a researcher's mindset. Also, I preach the value of customer feedback, and it would be hypocritical of me not to practice what I preach. So, I pushed onward with my feedback! The Ritz Carlton had a survey comment card. I typed up a half page description of my experiences and included it with my survey. The survey even had questions about whether I had experienced a problem and its resolution. I also sent this letter to the Ritz COO whose name was on the comment card. That got a response. I got a phone message from the hotel asking me to call back so they “could get my email back up and running.” Huh? The barn door had closed weeks earlier. The person I did speak with offered me an upgrade the next time I am at that hotel, but the likelihood I'll be in that area again is small. So the compensation offer is essentially meaningless. I wasn't sure to whom to write at the headquarters of Plano Marriott. (While the two hotel brands have common ownership, they have separate headquarters.) But by the happenstance of frequent travel, a few years back I sat next to a fairly senior person with this company. We had a delightful conversation -one of those rare flights that was actually too short -- and stayed in touch. I wrote her asking to whom I should direct my comments. She took ownership for the problem and put me in touch with a senior person who has responsibility for the information technology (IT) at the hotels. He and I had a good chat, and he quickly uncovered the root cause of the problems. In both cases the hotels were using ISP providers that were not on the approved corporate list. They had negotiated with these vendors on their own. This IT director thanked me for giving him the ammunition to make his case about the need for the hotels to adhere to standards. While I like Marriotts, my confidence has been shaken. And previously I had had very positive service recovery experiences with the chain. I even wrote about that in my Customer Survey Guidebook. But in that case, it was a one-to-one interaction, and the employee offered compensation on the spot. Marriott's
company's culture supports and promotes such empowerment. In the Ritz Carlton situation, the information system that supports complaint solicitation had apparently failed. In Plano Marriott, the company's culture of responding to and addressing customer issues is apparently not well embedded at the top of that hotel's hierarchy. Most of us have stories like this, but stories have little value unless we learn from them. What are the Lessons Learned from this anecdote? Charging for defective products. Most obviously, if a company is going to charge for a premium service, it should not be defective. Customer complaint solicitation systems. Having systems to solicit failure situations is critical. Both hotels had these solicitation mechanisms. Act on the solicited information. Most critical is to be sure that solicited feedback from a customer complaint should not be ignored! Is there any better way to turn a customer into a lost customer than to ask for feedback, promise a response, and then ignore it? Act promptly. After the fact offers to fix a problem are next to meaningless. Compensate appropriately. If you are going to attempt service recovery by offering some form of compensation, it needs to be something that is truly of use to the customer. If you devise compensation schemes based on minimizing the direct cost of the compensation, you are bound to offer little of value to the customer. (I discussed Ralston's Purina's compensation matrix in another article.) True programs that build customer loyalty. Customer loyalty is not secured with reward programs that provide rebates for frequent use. Customer loyalty is secured by 1) delivering true value in quality products and services, 2) cultivating customer relationships that demonstrate concern and empathy, then 3) providing rewards of value. Tell me about your experiences with the customer complaint, service recovery, and rewards programs -or tell me how your company handles these customer feedback and loyalty processes. http://www.greatbrook.com/effective_complaint_handling.htm
A Sporting Service Recovery
Customer retention through increased customer loyalty is key to increased profitability since acquiring new customers is more expensive than keeping current ones. The obvious question is: how can this loyalty be attained. Customer loyalty is taxed most when a customer has a complaint. However, a problem is also an opportunity. Research (see references below) has shown that customers who have had a problem resolved effectively through a company's service recovery actions are in fact more loyal than those who have not had a problem. So, a customer complaint is a bad news / good news situation. However, another caveat: poor handling of a customer issue will just further exacerbate customer dissatisfaction.
Service recovery is more than complaint handling. It is recovering a customer's positive feelings about a company after a bad experience and taking action to resolve the root cause of the problem. Complaint handling connotes just addressing the negative. Service recovery means turning the issue into a positive -- both for the customer and for the company through the learning opportunity. I like to explore companies' service recovery practices in my own economic transactions, and I'm always asking about others' experiences. Awhile ago I received an inquiry about service recovery practices from Chris Gibbs, the Director of Client Services for the Toronto Maple Leafs Sports and Entertainment. “Service recovery in a sports franchise?” was the thought that hit me. My background -- aside from my university teaching -- is after-sales support services for technical products, and that industry has been my focus for customer satisfaction and loyalty work. However, web searches and keyword advertising has led to a broadened focus for my Survey Design Workshops, since the ads have garnered inquiries across industries and across organizational functions.
So, this opportunity to examine service recovery practices in another industry -- particularly the sports industry -- piqued my interest. What service recovery lessons could a sports franchise provide? Intrigued, I took the opportunity presented by a trip to Toronto to visit with Chris. Earlier this year, I also the chance to hear Pete Winemiller, VP of Service Development for the Seattle SuperSonics and Seattle Storm speak at the Customer Care Institute's conference. The two organizations share approaches, but with some difference in application. Toronto Maple Leafs Sports and Entertainment presents both hockey - the Maple Leafs -- and basketball - the Raptors - as well as concerts and other events that use the Air Canada Centre, which it owns and operates. Gibbs' focus is on the fan experience. His goal is to make the game or event an enjoyable experience (even if the home team loses). The stadium should not be a distraction, but should be a positive part of the experience. They must meet the fans' “basic expectations” - a clean building, fast food service, and friendly staff -- but hopefully move beyond that to create “delighted” customers who will “spread the good word about our building and sports teams.” Equally importantly, they want to avoid “fan outrage” that may result when the fan feels he has been treated unfairly or have his personal security violated. Similarly, the SuperSonics CEO Howard Schultz says, “We want to the most fan-centric organization in professional sports.” Not first class or world class, but “world famous” according to Winemiller Schultz stresses to his staff that they are not in the basketball business, but in the people business. “Companies don't `make' money; they get it from their customers.” Winemiller's team focuses on the “driveway to driveway experience” and to give fans “magic moments [not] tragic moments.” Service Recovery in a Sports Franchise But how does service recovery come into play with a sports team? Fans can have problems, anything from a spilled drink to a noisy obnoxious neighbor, a bad view or a more involved problem. Gibbs has three rules for handling recover situations: “recover quickly, recover effectively, and improve the situation.” To accomplish this, he has three levels of handling customer issues at the Air Canada Centre. 1) Front line employees. Employees, the ushers, are empowered to handle a problem in their area. In essence, they own customer satisfaction in their section of the stadium. You might think that if a fan spills a drink or a child drops her hot dog, tough luck. Make them buy another. More business! (That was my expectation based on childhood memories at Fenway Park.) Instead, the ushers will get a replacement food item for the patron and get the mess cleaned up. In Gibb's mind, this is an inexpensive opportunity to buy considerable fan goodwill and create “fan delight.” An usher may also arrange for a father and son who have tickets in the nose-bleed sections to sit in the lower boxes during practice. It's these “little things that make the difference.” When dealing with the irate fan, Gibbs wants his employees to be skillful in defusing the issue by a) explaining the rationale behind any policies, not just hiding behind the blanket statement, b) by being flexible in implementing policies where logical, such as allowing a parent to bring food and juice for an infant, c) showing concern and empathy. 2) Customer Service. Some problems require the action of the Centre's customer service department, for example, if someone has a bad sight line at a concert at the Centre or that rather effusive (and possibly abusive) neighbor. Customer Service will relocate the person as best as possible, sometimes using the wheelchair locations that create some seating buffer. Once, a customer accidentally ripped his pants, splitting a seam. They got the fan into a back room and mended the pants. (I'm sure there was a TV in the waiting room so no action was missed.) 3) Senior Staff. Some problems require decisions at Gibbs' level. For example, at a Julio Iglesias concert, they received a huge number of complaints from one section due to the sound quality. The whole section was granted complimentary tickets for the next Iglesias concert in Toronto. Then there were the three guys from Israel who traveled all the way to Toronto to see the Raptors, but missed the game because they miscalculated the time zone change. Gibbs' group played travel agent for the fans, changing their airplane tickets, getting them a cheap hotel, and giving them tickets to the next Raptors home game. For the SuperSonics, there is a similar emphasis on the front line for problem resolution. Since “70% of customers will provide repeat business if a problem is resolved eventually, but 95% will do business again if the problem is resolved on the spot,” the employees “have the green light to make your guest experience gold… The front line is the bottom-line all the time.”
In fact, the SuperSonics don't refer to the fans as customers, but rather as “guests” because of the connotations that word brings to how they should be treated. Winemiller pointed out that the second definition of “customer” in the American Heritage dictionary is “An individual with whom one must deal: a tough customer.” In fact, the SuperSonics don't have a Customer Service department; rather, they have a Guest Care department. This all reminds me of an article written many years ago by Tom Petzinger for his The Front Lines column in the Wall Street Journal, The Beer Man at Camden Yards. This beer vendor was a cut above all others. (At Camden Yards beer is served in the stands by vendors.) He had devised equipment that allowed him to pour beer twice as a fast. He knew all the season ticket holders in his sections and would greet people who came on borrowed tickets. What particularly astonished Tom was that he even chatted with the fans who didn't drink beer. Everyone was his customer since all the fans contributed to each others' enjoyment of the game. Amazingly, he didn't collect money when he served. Instead, he's come back in the late innings after beer serving had ended and collected. He trusted his patrons - and they were probably looser with tips at that point. Talk about an empowered employee taking ownership of customer satisfaction! The Critical Role of Employees Following the lessons of the Service Profit Chain, Gibbs quite openly states that the key to his success lies in his people. His goal is to get employees to own the fan experience. Tactically, his goal is to grow the number of employees who think this way and to practice the 3 Fs: Find, Fix, and Follow-up. But employee behaviors and practices don't turn on a dime. Old ways die hard, especially when in a union environment. Gibbs has approached this challenge by winning over employees one at a time by showing the impact that good practices can have. Employees have a website where their work schedule is posted. This provides a mechanism for putting the positive points before the employees' eyes on a regular basis. They have plaques on the wall with thank you letters from fans. Chris focuses on so-called “teachable points of view” (TOVs). TOVs are particularly difficult to instill in part-time employees who don't have a long-term bond to the organization. Teaching through example is the approach that has worked best. Gibbs also employ “mystery shoppers” who report on their experiences as a customer. To keep the cost of this research reasonable, they recruit customers and have employees to do the reporting. Mystery shoppers use a 70-question feedback form with coverage in 10 critical measurement areas. Interestingly, they don't use the results as a club against bad employees. Instead, they publicly reward those employees who got a 100% rating, and privately communicate with those employees who didn't receive the full score. This keeps the cultural message positive. They want to “catch people doing things right, not just doing things wrong.” According to Gibbs, “Measure what you need. Reward what you want repeated.” They also use this and other feedback “to learn from our failures or successes.” For the SuperSonics, their challenges are perhaps greater since almost all of the 500-person staff at Key Arena works for the Arena and not for the SuperSonics, which rents the Arena. Their goal is to change employees' “attitude of indifference… [to an] attitude of invitation” since “business goes where it's invited but stays where it's appreciated.” They have “Think Big” ideas that prompt “Act Small” actions for the employees. RAVE is their motto which is “Respect And Value Everyone.” Plus they want their employees to CLICK with their guests. Communicate courteously. Listen to learn - learn from every question a guest asks. Initiate immediately - deliver fast, waits just make the situation worse. Create connections - connect with your guests. Know your stuff - product knowledge, e.g., cost of concessions and ATM locations. The goal is to become CLICK certified: Winemiller also cited a UCLA study on how we communicate. The actual words only represented 7% of the communicated message. The tone of voice and nonverbal expression delivered most of the message at 38% and 55%, respectively. His point is that people do what they're shown to do, not what they're told, and they work on communicating a totally positive message. Winemiller tells his employees, “It's not doing one thing 100% better. It's doing 100 things 1% better.” He asks everyone on this staff what 1 idea would they commit to improving 1% for the next year and to write it on a card with the CLICK logo worn hung from a lanyard. He wears one himself.
Managing the Customer's Role in the Service Experience In the classes I teach on service management, we stress that to deliver quality service, a service provider must manage all the different sources of variability, such as the variable arrival pattern of customers, the variable length of service delivery, and the variability that uncertain and unpredictable customers bring to the operation. These are the challenges that set service managers apart from their manufacturing peers. Perhaps the most difficult variability to manage is the customer-to-customer interaction. Ever been at the movies when someone talks throughout the movie - on a cell phone! - or on a plane where the person in the row in back of you constantly kicks your seat back? Think of the fan-to-fan interactions possible at a sporting event. Fan relocation is common, and the Gibbs' group at the Air Canada Centre has gotten good at handling this. Why? They've learned from their history. Plus, there's repetition. The same fans season ticket holders - return again and again. The real challenge lies with concerts held at the Centre. Each concert is unique to some extent. Sound systems are arranged differently, and you don't have the same fans seated next to each other repeatedly. So, even with lots of experience, unpredictable problems with seating will demand resolution on an individual basis. They will relocate fans with obstructed view seats on the spot where possible. The customer's role in the service experience poses an interesting question for service managers who must handle service recovery. Is the customer always right? Gibbs feels that for tangible products, the customer is always right assuming they did their due diligence to learn what they bought. But with services, the customer's role in the service experience has to be added to the calculus. The customer is not always right. So they have a debate about when the customer is owed an apology and when he is not. Service Recovery Outcomes What's the result of their service recovery practices? The Maple Leafs have a 97% season ticket renewal rate. The Maple Leafs are a Toronto -- a Canadian - institution, so the fan loyalty would be high. But loyalty can change quickly. In my home town, Boston, the Bruins were perennial sell outs even when the Celtics had championship teams. Lately, though, attendance has fallen precipitously -- and with the strike resolved who knows were attendance will go. A better team would certainly have helped, but would better service recovery practices also have helped? In Toronto the Maple Leafs have the Blue Jays' experience from which to learn. In the early 1990s, the Blue Jays sold out regularly, but when the team on the field weakened, so did attendance. Did the Blue Jays take their fans for granted? Maybe that's part of why they recently bought their ball park to better control the fan experience. The Maple Leafs want to be sure their fans don't feel taken for granted. Each year tickets for seasons ticket holders are delivered in some handsome gift set, e.g., in a beautiful wooden box with other Maple Leaf mementos to demonstrate an appreciation for the fans. Lessons from the Sports World What lessons can be drawn from these examples of service recovery in a sports environment? Positive customer satisfaction is more than the lack of customer dissatisfaction. Meeting the basic expectations does not bond customers to an enterprise. Service recovery promotes a proactive attitude toward improving customer satisfaction. The key tenets of service recovery: Listen, Resolve, Compensate, and Learn. Empowered employees - who want to use their empowerment - are key to a service recovery program. The culture must be ready for service recovery since employees must own it and drive it. Leadership - and leading by example - is critical to establishing the proper culture. Service recovery, while typically funded from an operational budget, is really a marketing program. This type of program can deliver a very high ROI through its effects on customer retention. Articles on Service Recovery Here are useful articles and links on service recovery “The Profitable Art of Service Recovery,” Christopher W.L. Hart, James L. Heskett, W. Earl Sasser, Jr., Harvard Business Review, 1990, Reprint #90407. (also available from Amazon) “Recovering and Learning from Service Behavior," Stephen S. Tax & Stephen W. Brown, MIT Sloan Management Review, Fall 1998, pp 75-88, Reprint 4016. “Putting the Service Chain to Work,” James Heskett & Thomas O. Jones, Harvard Business Review, March/April 1994, vol 72. The Service Profit Chain, James L. Heskett, W. Earl Sasser, Leonard A. Schlesinger, Free Press, 1997.
The Value Profit Chain, James L. Heskett, W. Earl Sasser, Leonard A. Schlesinger, Free Press, 2003. “Understanding Customer Delight and Outrage,” Benjamin Schneider, David E. Bowen, MIT Sloan Management Review, Fall 1999, pp 75-88. Knock Your Socks Off Service Recovery, Ron Zemke, Chip R. Bell, AMA Delivering Knock Your Socks Off Service, Kristin Anderson, Ron Zemke, AMA, 1998. Also, a couple of vendors have software applications that help manage the complaint handling process to effect positive service recovery http://www.greatbrook.com/complaint_handling.htm
Then Sweet Again
The essence of service recovery is fairness. A customer has an issue with a company's products or services and is looking for the company to treat him fairly. An intelligent company recognizes that treating customers fairly has long term benefits. Customers who know a company will handle legitimate complaints with fairness will be more loyal to the company than if they had no problem in the first place. These loyal, long-term customers are the most profitable. On the other hand, poor complaint handling and service recovery add fuel to the fire. A company can turn a positive into a negative by not fully understanding all aspects of fairness. My recent interaction with Subaru of America demonstrates a good service recovery turned sour, as I'll explain. My addendum at the end shows how they turned the service recovery sweet again.
But what is “fairness”? Stephen Tax and Stephen Brown in their 1998 Sloan Management Review article, “Recovering and Learning from Service Failure,” present three dimensions to fairness: Fair Outcomes: Distributive Justice. The adequacy of any compensation offered for the problem the customer experienced. Fair Processes: Procedural Justice. The policies applied and speed with which the issue was handled. Fair Interactions: Interactional Justice. How you were treated during the process to resolve the problem. Amy Smith, Ruth Bolton, and Janet Wagner (Marketing Science Institute, Report No. 98-100, “A Model of Customer Satisfaction with Service Encounters Involving Failure and Recovery”) make the point that the nature of the original problem dictates the most appropriate type of response. If the problem was service related, then the Interactional dimension -- and possibly Procedural also -- to the recovery is most important since the original problem likely related to how the customer was treated. If a customer didn't get what they paid for, then the Distributive justice dimension becomes paramount. The customer expects fair compensation. Offering compensation for poor service may be unnecessary. An apology -offered quickly and initiated by the company -- may suffice. However, all three elements of fairness may well be in play during the recovery process. Lack of fairness in one dimension can destroy all the benefits gained from appropriate action on the other two. Let me illustrate with a personal example of my service recovery experience with Subaru of America and Subaru of New England. I belong to the Subaru "cult." I've owned no other car for 30 years. I live in New England, and they're proven to be good, reliable winter cars. However, my 2000 Legacy wagon had a host of problems occur - you guessed it -- just after the 60,000-mile warranty expired. The final problem at 72,000 miles was the differential seizing, a repair costing well over $3000. Ouch! Plus, I was in Portland, Maine, 2 hours from home, but fortunately within 1/2 mile of the Maine Mall Motors Subaru dealership. I contacted Subaru Customer Care in Cherry Hill, NJ, and the service recovery experience was pretty good. It did take them a week to make a decision on what compensation they would offer, but they did offer to cover effectively half the repair cost. The slowness was because Subaru of New England had to be involved in the decision-making. I'll add that I had to call them to get status updates. Updates and the speed of decision were important because the repair shop could not initiate any repairs until Subaru of American made its determination. Why? Because the parts and labor would be billed differently. (Now isn't that silly?) These accounting practices seriously impacted the delivery speed of the repair service.
My Customer Care agent also offered me an “Owner Loyalty Incentive” of $750 toward the purchase of a new Subaru bought within a year. (I put that in quotes for a reason explained below.) Here is my initial evaluation along the three fairness dimensions using a 5-star scale: Fair Outcomes: Distributive Justice. Fair Processes: Procedural Justice. Fair Interactions: Interactional Justice. Pretty good compensation all included. However, as I reflected on the underlying cause of the problem, I actually felt more was justified. The procedures were in place and clear (to them). However, the decision-making process was slow. The slowness compounded the original problem since I was without a car for a longer period of time. I was treated respectfully as a long term, loyal customer. However, I did not get updates in the promised timeframe, and I had to call to get the updates.
MMM MMM MMMM
I called this a “soured” service recovery, yet a score of 3 out of 5 stars isn't terrible. The bittersweet element came at the very conclusion of the process. I decided I would buy a new 2007 Subaru Legacy Wagon, since Subaru will no longer be building this model. Here's the power of good service: I bought the car at Maine Mall Motors, despite the 2-hour drive, in large part because that dealership had treated me so well when my car broke down. (Let me add that I love the car. I can't believe how many small improvements they made in the design from my 2000 Legacy with little to no change in price.) With new car in hand, I had to send in my bill of sale to get my “Owners Loyalty Incentive.” I enclosed a letter, thanking them but also explaining in writing the full history of my service experiences and why I now felt that the differential problem caused likely by uneven tire wear was truly the result of misleading information in the owners manual, poor advice and lack of advice by Subaru service people. At the end I gently nudged for a roof rack and corner moldings, a few hundred bucks more in compensation. A week later I got the check with a cover letter. It was a form letter that never referenced my letter. I found that odd. Then I turned over the check. Above the signature line was this stamped statement:
The “Owner Loyalty Incentive” was not an owner loyalty incentive. It was a legal settlement. The misrepresentation -- or lack of proper representation -- is what truly bothered me. The agent never positioned the “incentive” as a legal settlement, and the form cover letter even refers to it as a "goodwill gesture." In that moment they turned this from a decent, personal interaction that engendered deeper loyalty to a negative, arms-length legal transaction. The manner of doing this, this sleight of hand, I found truly offensive. (I'll liken it to Radar O'Reilly on M*A*S*H slipping papers in front of Colonel Blake for his signature.) I had revise my above evaluation on the 5-star scale for one dimension: Fair Interactions: Interactional Justice. I was treated respectfully as a long term, loyal customer. However, I did not get updates in the promised timeframe, and I had to call to get the updates. And they misrepresented the nature of the “Owner Loyalty Incentive.”
M
Concurrent with this article I wrote to the senior management of Subaru of American and Subaru of New England. (See my note below on their response.) The critical message to them related this misrepresentation (likely promulgated by their lawyers): Every bit of goodwill that you earned by treating me right was lost in that instant. The positive Outcome and Procedural aspects of the service recovery were overwhelmed by that last Procedural action. When my 2007 Legacy needs to be retired, will I look at Subarus? Yes. Will I look at other cars? Yes. Service Recovery turned sour. How sad that we let lawyers mess up good business practices. September 2007. An update... Subaru Customer Care took my letter to heart in a fashion that I have never seen with any other company to which I have written. Rather than just utter some hollow words -- what I call "hollow empathy" -- they acknowledged my point of view and have revised their procedures regarding the owners loyalty incentives. How often have you ever heard of a company doing that? My faith in the company has been reaffirmed. Based upon my latest interaction, I have to change my ratings to 5 or 4 stars in all three phases of Service Recovery. And I still love my new Legacy Wagon. I can only hope when this one needs to be retired, they have reinstituted this model.
-- Fred Van Bennekom, Dr.B.A., Principal, Great Brook http://www.greatbrook.com/service_recovery_soured.htm