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 from 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.
Be proactive
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.
Nathalie 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.
Related Posts
A successful finance application starts with a healthy credit score. Click for seven practical tips to improve yours today.
Does working remotely work? The stats are in! Here’s how our idea of work-life balance has changed, and whether it will stick.
Finances hit hard by Covid? Click to learn more about hitting pause on your mortgage repayments, and other ways to relieve financial pressure.
Who saw 2020 turning out like this? No one. But that can only damper our spirits for so long.
COVID forcing you to rethink your business model? Here are five practical steps you can take to cope with new challenges and changing needs.
While no one planned for COVID-19, there’s a plan in place to keep SMEs afloat. Here's what you need to know.
A minor setback can be challenging, but there's no reason to let it derail your business goals. Here are a couple of coping strategies to keep you moving.
Put your best foot forward by preparing strong answers to these 4 questions.
A little preparation goes a long way. Get ahead on the finance front with our quick tips to help you with the 3 key areas of your loan application.
Cut through the confusion. There's so much talk around credit scores and what they mean; it can be hard to seperate fact from fiction.
The time arrives in most small businesses when you’re required to borrow money. So, how do you get 'business finance ready'?
We sat down with Neil Slonim, The Bank Doctor, to find out what he thinks about Australia's fast-growing online SME lending market.
Finding the right business loan doesn’t have to be difficult. See how we helped Mark’s Wholesale Steel Business find the right business loan for them.
How do you attract new customers to your business? Where do loyal customers come from? It all starts with your SMB online strategy.
The path from personal trainer to business owner can be both challenging and rewarding. Check out our top tips for making the transition.
Want to reach your customers online? Are you ready to digitise your small business? First up: get smart about social.
Don't let angry customers stay angry. Protect your business' reputation with these simple tips and tricks for delivering exemplary customer service.
Every business is unique. Every business loan is different. What features are most important to you? Consider these 4 things before applying for finance.
Have you explored your trade finance options? Premiering your business on the world stage may be within reach.
Your guide to smart inventory management for every season.
Get more customers and keep them. Here's the low-down on setting up your very own customer loyalty program.
You've explored your business finance options. What do you do next? How can you be sure you're comparing loans effectively and getting the best deal?
Want to expand your team but don't know where to start? Here's our guide to hiring great employees, featuring tips from industry leaders.
A Unique Selling Proposition (USP) is fundamental for any business looking to grow. Learn how to develop your USP and stand out from the crowd.
Are you invoicing your B2B customers with longer payment terms? Is it hurting your cash flow? Debtor finance could be a lifesaver between payments.
With so many business finance options to choose from, how do you know whether working capital is right for your business? Start by reading this.
Are you ready to refinance? Reviewing your business loan every 2 - 3 years can save your SME a lot of money. Here's what you need to know.
2018 is your year. Here are 7 quick tips and tricks to get back in the driver's seat when it comes to battling business debt.
Improve your chances of locking down the perfect business loan. Here are 19 business funding mistakes to avoid when you're applying for commercial finance.
Setting up a business is hard enough, without getting stung with unexpected costs. Here are the things you should be thinking about before you dive in.
Getting the best rate is all about asking the right questions. Have you done your research? Here's where to start and why.
"Ok, I'm eligible for the R&D tax incentive. But how do I actually claim it?" Here's what you need to know.
You could be missing out on a tax offset of 45 cents in every dollar. Check your eligibility for the R&D tax incentive today.
Need to raise cash for your business? We explore the use of debt versus equity, and how to decide which one is best for your business.
Reward points can add value to your business, but it's not one-size-fits all. Here's what you need to know.
Here's the million dollar question: will you start up a company or will you establish yourself as a sole trader? Get the full story.
Valiant Finance is a small business dedicated to supercharging the growth of other small businesses through access to funding. Here's what we've learned.