Everyone makes mistakes. When you screw up and say, “I am sorry. Our mistake.” it is good customer service but NOT Service Recovery.
Most organizations never admit mistakes and less than 1% practice Service Recovery. Keeping customers is critical to your growth. Gaining a new customer is expensive. When you lose one it is super expensive. Not many customers know the lifetime value of a customer, so if a customer has a problem with a $25 purchase most employees say big deal. It’s only $25. The lifetime value of that customer could be $1,200, $3,500, or even $11,000.
To employees, it is insignificant if the customer never comes back but the cost to your company is huge. In my book, Achieving Excellence Through Customer Service. I show you how to measure the lifetime value of a customer and give an example that is for millions of dollars. I would not be surprised if the lifetime value of your customers is easily over $12,000.
Employees often feel the customer is my enemy. Especially when something gets screwed up – the customer gets excited and often raises their voice or even uses bad language. Is your employee trained to flip that situation around in 60 seconds or less so they keep the customer? Too often the employee does not want to lose face and admit the problem or take responsibility. If every time something goes wrong an employee knew the lifetime value of the customer they would be more inclined to keep the customer and practice Service Recovery. The average Ritz-Carlton customer will spend $250,000 with the Ritz over their lifetime.
4 Steps to Service Recovery
For Service Recovery to work magic, the front-line employee needs to implement it. It has to happen on the front line. Here are the 4 steps:
- Act Quickly: All this has to happen in 60 seconds or less.
- Take Responsibility: Don’t pass it up the chain of command. Just say, “We screwed up. I am sorry.” (In reality, I can count on one hand the number of times an employee has ever done this.) In the U.S. I suspect at least 80% of employees lie. They will say anything to just get you off their back.
- Be Empowered: You have to make a decision in favor of the customer in seconds.
- Compensate: Every organization has products and services of high value and low cost your employees can give away when a mistake is made. This is your chance to overwhelm the customer where they say, OMG. So cool. Wow. Thanks. If you are too cheap it has no value. Identify 5-10 things that meet that criteria. You want to turn the customer on within 60 seconds so instead of them saying, “I WILL never use your firm again”, they instead put a post on Facebook telling their friends about what just happened and how awesome you are.
Here are a few examples
- At a restaurant. I am sorry your meal was late. It’s our fault. Can I give each of you a free dessert of your choice? Value may be $6 and real cost $1
- At a software firm. I am sorry the software is not working right. Let me upgrade you to our new software package. You are our most valuable customer. Your real cost is nothing.
- At a hotel. We must have really screwed up your reservation. I am going to upgrade you to a suite for your inconvenience. Your real cost is nothing.
- At a retail store. I am sorry the new chain saw is not working right. Let me fix it and expand your warranty by another year. Your real cost is nothing.
If you want to set a limit go ahead. The Ritz Carlton empowers its employees to spend up to $2,000 to solve customer problems without asking for a manager. What is your limit?
If you’re interested in training your staff on Service Recover, we have a program called Loyal For Life that is implemented within one session of 2-3 hours (3-4 hours in developing countries). It includes a user-friendly leader guide with video so your staff can easily facilitate the program. Each participant receives a participant book, Certificate of completion, and Service Recovery technique card. You can order an introductory start-up package, which includes enough participant material to train 25 employees for only $1,199 and free shipping worldwide.
I also have a book called, Loyal For Life that you can buy from Amazon or SQI.
Each month I publish a new media release. In May it was on Service Recovery. Here is a link to all media releases.
