The Excellent Economics Of Service Recovery

Most customer service and CX professionals intuitively understand that their companies need to do a good job in recovering from an experience miscue. An unhappy customer is never a good thing. So we decided to do a quantitative analysis of the relationship between service recovery and consumer spending. As you can see in the chart below:

  • Any improvement in service recovery has a positive effect on future spending patterns.
  • Moving service recovery from very poor to neutral limits the amount of decrease in future spending.
  • Moving service recovery from neutral to very good not only limits decreases in spending, but also increases the number of people that will spend more in the future.
  • Companies that do a very good job with service recovery have more customers planning to increase spending than decrease spending.

Companies that want to improve their service recovery should follow our C.A.R.E.S. model:

  • Communication (clearly communicate the process and set expectations)
  • Accountability (take responsibility for fixing the problem or getting an answer)
  • Responsiveness (don’t make the customer wait for your communication or a solution)
  • Empathy (acknowledge the impact that the situation has on the customer)
  • Solution (at the end of the day, make sure to solve the issue or answer the question)

The bottom line: Mistakes are inevitable, so recovery is critical.

Written by 

I am an experience management transformist, helping organizations improve business results by engaging the hearts and minds of their customers, employees, and partners. My "job" is Head of the Qualtrics XM Institute. The Institute is still being established, but our goal is to help organizations around the world thrive by mastering Experience Management (XM). As part of this focus, I examine strategy, culture, interaction design, customer service, branding and leadership practices. And, as many people know, I love to speak about these topics in almost any forum. Prior to joining Qualtrics, I was managing partner of Temkin Group (leading CX research, advisory, and training firm), co-founder and chair of the Customer Experience Professionals Association (CXPA.org), and a VP at Forrester Research. I'm a fanatical student of business, so this blog provides an outlet for sharing insights from my ongoing educational journey. Check out my LinkedIn profile: www.linkedin.com/in/brucetemkin

One thought on “The Excellent Economics Of Service Recovery”

  1. Hi Bruce,

    This is very consistent with what we have found time and time again in every sector we work. The more important the purchase (i.e., high involvement) the stronger the effect. While we should work to resolve issues before they even occur, but “normal accidents” do occur even in the best companies and running down those “silent sufferers” and taking care of them is critical. There was a time when they told there friends, now they can post in social media in tell hundreds of thousands.

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