Two weeks before Kristen DeTienne moved into her new home, she called the phone company to pre-install a new line. The company didn’t come through, and she went for weeks without a phone.
“The organization later faced a class-action lawsuit, and I got a rebate check as part of the settlement,” says DeTienne, a professor of organizational leadership and strategy. “Customer service problems can be very expensive for companies, and a lot of times they don’t think about the long-term costs and the loss of loyalty these problems create.”
As an expert in the field of customer recovery—the way companies try to make customers happy once there’s been a service failure—DeTienne studies what companies can do to hold on to their best clients.
“The thing that’s fascinating to me as a business researcher is that most companies don’t do anything about this,” DeTienne says. “Managers know they are relying on frontline employees to provide their product or service and yet they don’t usually train the employee on what to do when there’s a failure.”
Companies with successful service-recovery systems increase future business, can command a premium price on products and services, get better word-of-mouth advertising, and reduce overall costs, DeTienne says.
“Bad service is something everyone can relate to—we’ve all had an experience with an obnoxious employee or had to call to correct an error on a bill,” explains DeTienne, citing as an example the time a waitress accidentally spilled a tray of drinks down her back at an important business lunch. “What we often can’t relate to is the great way a company recovers from a service failure and wins our future business.”
Too often, recovery efforts are inadequately handled, much like DeTienne’s was in this case: the restaurant gave her a coupon for a free appetizer on her next visit. Research conducted by DeTienne and fellow Marriott School professor Kristie Seawright suggests that companies need to establish systems to ensure they are providing two key types of value to unhappy customers.
Customers who have had a bad experience tend to look at how they are treated by a company from both a psychological perspective—how responsive, courteous, and respectful customers feel the company is—and a tangible perspective, or what the company does to appease customers.
“We had a student who paid for flowers to be delivered on Mother’s Day,” DeTienne reports. By accident, the flowers weren’t delivered. The florist profusely apologized for the oversight—that was the psychological. Then, he recovered by delivering a different bouquet of flowers to the mother’s house every day for a week—that was the tangible.”
DeTienne encourages customers to help companies be more responsive after a service failure. She recommends the following four actions:
- Bring problems to a company’s attention. “There are a lot of companies that want to keep you as a future customer, and if they don’t know you are dissatisfied, they won’t do anything about it,” DeTienne says. “I’m using a rental car right now because my car is in the shop. The rental car’s windshield wiper fluid is out, the wiper on the driver’s side doesn’t hit the windshield, and the tires are bald. This is dangerous in wet or snowy weather. I will explain to the company that this is a liability for them and suggest what they need to do to fix it.”
- Tell a company about any additional inconveniences. “Often companies are not aware of additional inconveniences caused by their service failures,” DeTienne says. “They know the new TV you bought from them broke, but they don’t know you had all of your friends over to watch the game when the picture went out.”
- Clearly state what the company can do to make things right. “Oftentimes they’ll do what’s necessary to keep your business, but they need to fully understand your expectations,” DeTienne says.
- Be civil and respectful when discussing service failures. “One of the reasons I’m interested in service recovery is because years ago I was working for the customer service line of a newspaper. When people missed their newspapers, I was the person they called,” DeTienne says. “I understood the situation the same whether they cursed at me or used a friendly tone of voice. I think it’s important to be very clear about what the problem was, the inconvenience it caused you, and what you expect them to do to recover—be kind in your behavior, as well.”
Because no system is perfect, managers should have an established plan to handle problems that creep through. What measures should companies take to improve service-recovery efforts?
First, says DeTienne, managers should review their current system to figure out where service problems will inevitably arise and devise ways to prevent them, if possible. These problems may be specific to a company’s operations or may include one or more of the nine common turnoffs that DeTienne says are the main causes of customer dissatisfaction.
Second, companies should figure out a way to categorize their most valuable customers.
“One-third of a company’s customers account for two-thirds of their profit,” says DeTienne. “If a company doesn’t know who those customers are, they are in big trouble when it comes time to recover them. They might be focusing their efforts on an infrequent customer who doesn’t really add much to the bottom line.”
Simple ways a company can start collecting customer data include tracking credit card numbers, monitoring checking account numbers, instituting frequent customer plans, and training employees to record customer expectations during contact.
Third, companies should perform the appropriate recovery effort that matches customer requirements. According to DeTienne, the most profitable patrons tend to be loyal, repeat customers who are often less sensitive to changes in price and tend to be willing to pay a premium for a product or service. Within this group, some customers require a high level of recovery and others don’t. A successful recovery program will match these profitable customers with the recovery effort that will satisfy or delight them, causing them to return.
“It doesn’t mean that you shouldn’t try to recover all of your customers. You have to make sure that everyone is getting a fair fix,” DeTienne says. “But you need to be especially sure that the highly profitable customers aren’t getting away.”
All customer recovery plans should ensure that customers perceive a high-quality service recovery effort that focuses on psychological and tangible dimensions, DeTienne says.
“I was in the grocery story the other day; there were very long lines. They gave me a 100 Grand candy bar with a little saying attached to it that read: ‘We’re sorry you had to wait a long time, but we think you’re grand,’” DeTienne explains. “It was simple, but it told me they noticed there were long lines, they didn’t expect me to wait that long, and if I have to, they are going to apologize. If companies can figure out what their failures are going to be and how they can make customers feel good about them, they are going to keep those customers in the long run.”
Top Customer Turnoffs
Communication
- Lack of courtesy, friendliness, or attention by rude or grumpy sales people
- Unhelpful employees who lack knowledge
- Unkempt employees with annoying mannerisms
Value
- Overpriced product or service, poor guarantees, or a failure to back up products
- Low-quality product that’s not as good as expected
- Slow service
Systems Concerns
- Environment that’s dirty, messy, or cluttered
- Low selection or poor availability of a product
- Inconvenient location, poor layout, lack of parking, or difficult building access
Source: Kristen DeTienne and Paul Timm, “How Well Do Businesses Predict Customer Turnoffs? A Discrepancy Analysis,” Journal of Marketing Management, Fall/Winter 1995.
Customer Classification: Angels, Royalty, Paupers, and Prima Donnas
Face it, recovering an irate or disappointed customer can be costly. To minimize the amount of time, effort, and money spent on recovery efforts, companies should consider placing customers into categories based on profitability and expectations. Frontline employees can then be trained to tailor service recovery efforts to meet or exceed the expectations of customers as necessary. Here’s an example of one possible classification system:
Replace this with graphic image: | Low | Expectations High Expectations | High Profitability ANGEL ROYALTY | Low Profitability PAUPER PRIMA DONNA
Angels are profitable customers who require limited and reasonable recovery efforts to retain their loyalty. These efforts should go beyond merely satisfying these ideal customers and focus on delighting them.
Royalty has high expectations but contributes significantly to the bottom line. Therefore, recovery efforts should be taken where delight can be reached through reasonable cost. While efforts to delight royalty would be excessive, this group should at least be satisfied.
Paupers have low expectations and low recovery costs, but they contribute little to a firm’s profitability. Because of this, they should simply be satisfied. When they can be delighted at little additional cost, companies may want to slightly increase the recovery level.
Prima Donnas can be hard to satisfy due to their excessive demands and are rarely worth the cost of recovering. Still, companies would be wise to at least meet a prima donna’s pre-failure service expectations.
Source: Kristie Seawright, Kristen DeTienne, and Aaron Brough, “Cost-Effective Service Recovery: Knowing Which Customers to Keep,” International Journal of Applied Marketing, 2005.
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Article written by Grant Madsen
Art by Pascal Blanchet
About The Author
Grant Madsen is a media relations manager for BYU’s University Communications. He earned a BA in communications from BYU in 1998.