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 am a customer experience transformist, helping large organizations improve business results by changing how they deal with customers. As part of this focus, I examine strategy, culture, interaction design, customer service, branding and leadership practices. I am also a fanatical student of business, so this blog provides an outlet for sharing insights from my ongoing educational journey. Simply put, I am passionate about spotting emerging best practices and helping companies master them. And, as many people know, I love to speak about these topics in almost any forum. My “title” is Managing Partner of the Temkin Group, a customer experience research and consulting firm that helps organizations become more customer-centric. Our goal is simple: accelerate the path to delighting customers. I am also the co-founder and Emeritus Chair of the Customer Experience Professionals Association (CXPA.org), a non-profit organization dedicated to the success of CX professionals.

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