Acquiring customers in today’s sales and marketing landscape is competitive and costly. Retaining the customers you currently have through exemplary customer service is a much more cost-efficient way to stay in business.
What is the 'service recovery paradox'?
The paradox is based on the idea that turning a bad situation around can actually make customers a whole lot happier than if they’d just experienced your regular service.
How is this possible?
Imagine this: you’re the owner of a restaurant. A couple is perusing the menu. They order a specific bottle of wine. You check the cellar and unfortunately you don’t have any in stock. Instead of returning empty-handed, you offer them a more expensive bottle at no extra cost.
If you were that couple, how would you feel? On the one hand, you were really looking forward to the wine. On the other hand, the owner has generously made sure that its unavailability doesn’t ruin your night out. In fact, the owner has gone one step further and used the situation to add value to your experience at the restaurant.
It would be pretty difficult to walk away from dinner feeling hard-done-by, even though technically it should’ve been a disappointing situation.
The ‘service recovery paradox’ in action
Firstly a word of warning – don't start intentionally understocking or underperforming just so that you can recover. It won’t be genuine and your customers will sense the lack of authenticity a mile away. Rather, remember this principle when something does go wrong and recover like a pro with these key pointers:
Listen to the customer
The key word is 'listen.' Listening is different to hearing. Listening is about expressing empathy and trying to really understand what the customer might be thinking or feeling, and then tailoring your service to their concerns.
Use 'active listening’ in your interactions with the customer
The easiest way to do this is to restate what the customer has said. This will show them that you’ve understood what they’ve said and ensure that you’re both on the same page in terms of finding a solution. If you happen to have misheard something, it gives them a chance to clarify what they’ve said and it will help avoid an uncomfortable situation later on.
Don’t wait for the customer to tell you they’re angry. If you spot a tricky situation on the horizon, be proactive and suggest alternatives before the customer is upset. Perhaps you could offer a free dessert on the house, or a discount on the bill. Try not to think of this solution as giving things away for free, but rather you’re nurturing a customer who may come back and spend more money down the track. It also helps ward off bad reviews or negative sentiment, as the customer is more likely to be positive when they speak to family and friends.
I got a bad review - what should I do?
It’s not uncommon for disgruntled customers to vent their rage on social media or review sites. You can’t prevent them from doing this but you can be ready with a controlled response.
Golden Rule: You Must Reply
However, that doesn’t mean you can reply with any old message. Your reply needs to be professional, tactful and diplomatic. Perhaps you could craft something like this:
"I’m really sorry to hear that you had a disappointing experience. We always strive to provide the best possible experience for all of our customers. We would love to talk with you about your experience in greater detail so that we can make some improvements."
Nothing more needs to be said – you have apologised, stated your position and offered them an opportunity to respond. If, and how, they choose to do so is up to them. Whatever happens, don’t engage in an online battle - the reputation of your business will come off second best.
You can make negative customer experiences work for you using the ‘service recovery paradox’. Don’t forget to engage with the customer proactively and use active listening to ensure they feel heard and understood. Not only will you be able to find a solution and defuse the situation, but you’ll have happy customers who will (hopefully) return to your business and share positive sentiment among their networks.
Nat is the Communications Manager at Valiant Finance. She has a double degree in Journalism and Law, and a background in the fintech space, hailing from Asia's largest fintech hub, Stone & Chalk.