Businesses are designed to work. A customer walks into your store, selects a few products, and completes their purchase. As a store owner you might learn their name, give them free products, or learn about their personal life. But what if this wasn’t the only way to build loyalty. What if you accidentally double charged their credit card or that product they bought turned out to be broken? Most people would say this should never happen, that as a business owner or manager you need to have fail-safes in place to prevent issues like these from popping up. They’re not wrong, you don’t want to be the office that incorrectly charges all their clients or the store with shoddy products. Unfortunately some mistakes can’t be avoided and that’s where the service recovery paradox comes into play.
The service recovery paradox (SRP) says a customer will be happier and retain greater loyalty to a company after that business corrects a problem within their service versus if the customer never experienced that problem to begin with. At first it’s sounds like the SRP is advocating for businesses to fail but the reality is far from it.
The SRP is reliant on a customers confidence in a business being a key pillar in generating and retaining their loyalty. When a company drops the ball and makes a mistake there’s a short window of opportunity to show the customer that they can be trusted to fix the issue. If successful this can lead to increased confidence and trust in the business — where they wouldn’t have had the opportunity if the mistake had never been made in the first place.
The tricky part is understanding how to recover and communicating various recovery plans to employees at your organization. These can range from providing discounts, to free products/amenities/services, or bumping them to the top of the list for a new product or offering.
Not all solutions require payment or refund. Sometimes fixing the issue in a timely fashion, listening to the customer, and apologising is all you need to do. With large businesses making direct communication extra difficult, just being acknowledged is enough to impress the customer sometimes.
Additionally you might be wondering if there’s a financial reason to employ the SRP and in-fact there is. From a dollar and cents perspective, some very small (or overly complicated) problems aren’t worth the time and effort to address. In these infrequent cases it can be better to address the issue as customers bring it to your attention. Because you already understand the issue and your inability to solve the core problem you can have a standard service recovery protocol in place.
This is not an excuse to provide a bad service but can help when a problem is too large or bureaucratic to be solved easily. For instance, let’s say there’s construction on a stores sidewalk and entrance to the sidewalk is temporarily not ADA friendly. This isn’t a problem the store can solve on their own but there are various solutions that could improve their image in the eyes of those most affected. If it’s a quick order style restaurant they can take orders and transact outside while also providing a free drink coupon for when the construction is over. If it’s a pet store they can provide free delivery for the days of the construction and provide coupons or a small free product with every delivery.
Service recovery works great for offices and business-to-business companies, too. The most important thing to keep in mind is that people make mistakes and companies are generally a bunch of people coordinated towards achieving a goal. Nobody’s perfect and we all make mistakes — all you have to do is understand how to recover from it.