Give your customer loyalty bounce by managing customer complaints better

Give your customer loyalty bounce by managing customer complaints better

I was preparing recently for an upcoming client seminar on how their service strategy and how they manage complaints should be an essential part of their growth strategy.

We all know about complaints that we actually get and I have shared a few thoughts on how we handle complaints before: How you think about complaints will determine how you deal with them and Leadership: When it comes to customer complaints are you setting the right example? are a couple of examples.

I’ve also written about the complaints that we don’t get in: Are You Not Getting Many Customer Complaints But Are Still Losing Customers? which features the ‘Complaints Iceberg’.

But, what was concerning me was how to quantify the effect of being better at managing AND going out and looking for the unspoken complaints that are mentioned in the ‘Complaints Iceberg’.

Then, I came across an idea called the Service recovery paradox, which (according to Wikipedia) states that:

“a good recovery can turn angry and frustrated customers into loyal customers. In fact it can create even more goodwill than if things had gone smoothly in the first place.”

ServiceRecoveryParadoxon

The research on this that I can find (here and here) shows somewhat mixed results but that the service recovery paradox is most likely to occur when:

  • The cause of a complaint is not considered to be severe
  • The customer has no history of complaining; and
  • The customer does not think that the company had much control over the cause of the complaint.

For my client, in a typical year approximately 10% of all of their customer revenue does not renew and I am now wondering how much they could boost loyalty and retain those clients by looking for and handling complaints better.

A lot, I would guess. It’s all about managing the bounce, right?

What do you think of this Service recovery paradox? Do you think it exists in your experience?

Thanks to jonhefel for the image.

16 comments On Give your customer loyalty bounce by managing customer complaints better

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  • Hi Adrian

    This is very useful. I often talk about he cookie jar of forgiveness. You start with a whole lot of cookies and people know mistakes will happen. Just saying sorry keeps that cookie jar full.

    It is really nice to see that quantified with this information. My only question is how accurate the three points are as i have seen some pretty severe cases recover just by showing a bit of humanity and a really being serious about solving the problem.

    The big challenge though is that everyone has to be on board right across the organisation.

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  • Hi Adrian,

    I’m familiar with the service recovery paradox and it’s a good framework, UNTIL you ask what happens when there isn’t just one service failure but a repeat of the experience. Just consider the last time you were in a restaurant, had a disappointing experience and then the manager came over and comped your meal, gave you extra drinks and a voucher to return. Service Recovery Paradox in action. Now what happens when another service failure occurs at the same restaurant 3 months later? Your standard of recovery has been set by the last set of recovery actions. Anything less will be received as a half-hearted gesture and the recovery take that much longer….or you start to tell friends that you’ve given that establishment more than a fair chance and they don’t measure up.

    I believe that we bounce higher in loyalty after the first recovery, but bounce lower with subsequent service mishaps.

    • Hi Marc,
      I think you are right that in the instances that you point out you only get one chance to recover and, subsequently, it gets harder and harder to recover. However, I would suggest that if a recovery situation happens a second time with the same customer then there is a bigger issue at hand and its not just complaints handling that matters but more about the quality of delivery.

      Thanks for your comment,

      Adrian

  • Adrian,
    This is the first time I have heard of the recovery paradox, however, I have experienced it many times in my collision repair business. Most of my customers were not excited about being there in the first place, it’s kind of like having a tooth ache fixed, you just need to get it done. Their emotions range from anger, frustration, victimized and a myriad of other emotions, which puts them on the edge if there are glitches in the repair experience.
    The interesting part is, when we had glitches and the customer blew their top, it seemed to be what they needed to relieve some stress. As long as we kept our cool and became excellent listeners, even the most frustrating customer end up become a customer for life.
    I personally know several of them and they continue to do business with the organization today. I happen to be at one of the shops I sold last week and I saw and spoke to a customer that I have been doing business with for over 10 years, and to be frank, she is kind of a pain, in a good way! I guess this would be the bounce.

    Now I know why, thanks!
    Bill

    • Hi Bill,
      That’s a great story of how the service recovery paradoxon (and bounce) can work in practice. Thanks for giving us a personal example, it adds real context to the post 🙂

      Adrian

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  • Great post, and if more businesses understood this my blog wouldn’t be near as popular. I’ve learned a thing or two from reviewing and approving thousands of customer complaints over the last 8 months since I started my blog, that most complaints all have the same pattern. A consumer is wronged, gives the company a chance to make it right, and usually gets ignored. After that they are not only upset but looking for an outlet for their frustration, which is where the internet comes in. Oh if these companies would just give these people a little bit of attention 90% of consumer complaints would never occur.

    • Hi Chrissy,
      Thank for dropping by and leaving a comment. I have seen your site and think that you are right that most, if not all, of the complaints that are made are made by folks that just want their problem to be solved. That’s what makes little sense to me when it comes to poor complaints handling (or none at all). Handling complaints well is such a huge opportunity.

      Thanks again,

      Adrian

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