Strong Service Recovery Reduces Customer Losses From 63% to 24%

Lots of people talk about the power of service recovery, and now we have the data to prove its value. Not only does a good response to a bad experience cut down on sales loss, but it also increases loyalty for some customers.

In the Temkin Group report What Happens After a Good or Bad Experience, 2016, we examine consumers’ spending patterns after they have a bad experience with a company. As you can see in the following chart:

  • The power of service recovery. It’s undeniable that a good service recovery after a bad experience provides excellent results. When the service recovery is very poor, 63% of consumers cut back their spending while only 2% increased their spending. If the service recovery is very good, there’s a 10x improvement in consumers who increase their spending and more than a 39 %-point reduction in consumers who reduced their spending.
  • The limitation of service recovery. The advantages of service recovery really kick in when the company reaches at least a “4” on our 7-point scale of goodness. But it takes at least a “6” on the scale to have as many customers increasing their spending as decreasing their spending. That’s a pretty high hurdle.

1610ultimate_criticaltorecover

The bottom line: It’s better to avoid problems than to recover from them.

P.S. Figure is from our CX Data Snippets that can be used in presentations

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

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