service recovery paradox customer thermometer blog

We all experience problems with suppliers.  Things go wrong – that’s just life. As a business, you have to learn to accept that. Of course, it’s how you deal with those problems which sets one business apart from another.

Admitting fault, making clear efforts to resolve issues, and offering compensation for the inconvenience are common resolutions to customer problems. But had you thought about the impact that your handling of the situation might have on customer satisfaction? It’s likely not just a case of fixing an error – it’s making or breaking the relationship your customer has with your business.

We hear about the service recovery paradox every week from our customers in the anecdotal conversations we have with them. You probably experience it in your business, but may not have ever considered it as a concept before. Don’t worry, we’ve got it covered!

What is the service recovery paradox?

It’s a proven fact that customers can often be more loyal to your business after they have experienced a service failure, than if it had never happened in the first place.

‘If there is a positive disconfirmation, that is, if perceptions of service recovery performance are greater than expectations, a paradox might emerge (secondary satisfaction becomes greater than prefailure satisfaction). Otherwise, in the case of a negative disconfirmation, there is a double negative effect, as service failure is followed by a flawed recovery.” (Augusto de Matos, Henrique and Rossi)

The graph below explains this visually.

customer service recovery paradox customer thermometer

The graph shows customer loyalty over time.

When things go wrong, you can see that line taking a big dip as a problem occurs and that loyalty starts to disappear.

If your business deals with it well, you can clearly what happens to loyalty growth. What do we mean by dealing with it well? How can you do that?

This service recovery paradox can only occur when a business faces up to a problem, it empowers staff to take action, it apologizes, it offers discounts as appropriate and it’s done everything in its  power to make that customer happy again.

Service recovery examples

In a world where we are all busy trying to reduce the number of complaints, this little known concept should have us questioning whether we should be encouraging complaints instead! (If you click that link – you’ll be able to download our quick read ebook all about encouraging complaints.)10 reasons to encourage customer complaints

The very best businesses know that everyone makes a mistake sometimes. 5 star hotels, luxury goods brands, leading airlines – they usually do a fantastic job, but occasionally when something does go wrong, the differentiating factor is that they do something about it immediately, often without being asked or without the customer necessarily even having to complain.

Companies with the best customer service understand the paradox: customers are often more loyal after a service failure (so long as the recovery has been swift and good) than customers who have not experienced a service failure at all.

The service recovery paradox creates positive stories about your business that they go on to tell their friends and colleagues.

For example:

  • The ski resort that bought people stuck on a broken chair lift for an hour in the cold a hot drink and gave them free ski passes.
  • The company who included a free toy car in a furniture delivery for a little boy who had to wait for his new bed 2 weeks longer than promised.

These swift recovery actions usually cost very little but create incredibly powerful word of mouth advertising and referral.

Factors in the service recovery paradox

There are, of course, factors that influence the paradox and its likelihood to work – customers are not always going to stay after an efficient and effective problem resolution. It can be frustrating but here are some possible factors behind churn that you should bear in mind.

Scale

If the customer’s issue is perceived by them to be a large scale problem, they are less likely to be happy with the recovery. It’s understandable – if it’s a weighty issue then the customer is more likely to feel negatively about the experience. In this case, a strong service recovery will help tackle customer dissatisfaction, but it might mean that the issue needs looking at internally to try and prevent any unnecessary customer complaints in the future.

Stability

“Stability attributions refer to customers’ inferences about whether similar failures are likely to occur in the future, given the customers’dissatisfaction with a product or service. When customers experience a service failure, they ask themselves whether the failure has temporary (i.e., unstable) or permanent (i.e., stable) causes, and if they think that the problem has stable causes (i.e., it is likely to occur again), then they will try to avoid this service provider in the future.”

Augusto de Matos, Henrique and Rossi

With the above quote in mind, it’s worth trying to consider from the customer’s point of view of how optimistic they are of a smooth running service in future. In your service recovery, and in your broader customer experience strategy, consider how to resolve problems in such a way that the customer will not feel concerned of it being repeated.

Customer retention is much higher when customers feel that a business has offered stable service; even though a problem has occurred, there’s been clear steps taken to prevent any reoccurrence and the customer is reassured.

Control

Simply put, if a customer perceives that the business could have prevented the issue from occurring (having control over the situation), then they’re more likely to distrust the business and a service recovery will not be achieved. It’s best, if an issue was out of your control, to be honest with your customer(s) and to advise them of this. Studies have shown that they are far more likely to be forgiving of a business that controls effectively what they can and manages those problems that they cannot.

At the end of the day, your customers will understand that mistakes can happen, but it is their perception of these problems that is key.

cx quote warren buffett customer thermometer

How can you take advantage of this concept?

Of course, we are not advocating going out and messing up for your customers just so that you can fix it brilliantly! But the service recovery paradox does make it critically important to find out whether your customers are happy or disappointed – ideally as soon as possible after a product was delivered or a service took place.

It’s time to stop thinking that complaints are a bad thing. Customers who want to tell you how they feel about your business should be actively encouraged. In our experience, customers are VERY happy to provide feedback. The key to getting it is to give them the right mechanism and to get the timing right too.

Why not have a think about how thoughtful your business could be and what powerful corrective actions you could take, if you could understand how every one of your customers felt.

This is exactly why we’re so passionate about the power of Customer Thermometer. With it, you can check how happy customers are, in real time, without bothering them with long surveys. Simply send, fix and delight!

Enter your email address below and we’ll send you a sample Thermometer email survey. Watch your inbox in the next couple of minutes and don’t forget to click a response!