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.

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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'm an experience (XM) management catalyst; helping organizations improve results by engaging the hearts and minds of their employees, customers, and partners. I enjoy researching and speaking about leading-edge XM topics. I lead the Qualtrics XM Institute, which is the world's best job. We're igniting a global community of XM Professionals who are inspired and empowered to radically improve the human experience. To achieve this goal, my team focuses on thought leadership, training, and community building. My work is driven by a set of fundamental beliefs: 1) Everything starts and ends with human beings, so you need to understand how people think, feel, and behave; 2) XM is a discipline that needs to be woven throughout an organization's entire operating fabric; and 3) Building the XM discipline requires a combination of culture, competency, and technology.

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