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.

About Bruce Temkin, CCXP
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 these 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.

One Response to The Excellent Economics Of Service Recovery

  1. Dave Fish says:

    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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