What’s Your Service Recovery Procedure?

If someone on your staff makes a mistake or you promise to deliver something on a certain date, and that doesn’t happen—what’s your service recovery procedure? Even if it isn’t your fault, what can you do to recover from that?

If you don’t have a recovery process in place, you’re making a big mistake. The studies on customer service and retention tell us that customers are far more loyal and refer more people to a business that screwed up and recovered well—than they are to a company that did everything they promised in the first place (Note: Don’t use that as a justification to screw up so you can recover well :-).

Moreover, when you calculate in the cost of customer acquisition and the lifetime value of a customer, having an aggressive customer recovery procedure in place makes all the sense in the world.

For example, I placed on order for a new iPad 2 on the first day of the iPad 2’s launch (March 11th), before the 5:00 p.m. launch time, with a local reseller and service provider for Apple—and still don’t have my black 32 Gig Wifi iPad 2 (yes, that’s six and a half weeks later).

Now, it’s not the local reseller’s fault. Apple and the distributer have screwed up their distribution of iPad 2 units. Even though the order was placed five minutes after Apple allowed the resellers to place their order, Apple still hasn’t sent that original order to the reseller.

However, no matter what Apple may have done wrong, from a customer perspective (not the owner’s), it’s still been six and a half weeks. Other people have received their 32 Gig Black Wifi iPad 2’s around the country (we just haven’t). So what should this reseller have done?

My recommendation to them the other day was

1. Eliminate the 3% charge back fee to free those who placed an order with them. The charge back has caused lots of frustration and ill-will. The 3% has cost them far more than 3% (lost customers).

2. Set up an automated email response as soon as inventories are updated so that customers feel informed. Let them know, “Inventories are updated X and Y dates so we’ll send you an email each Tuesday and Friday to keep you informed until your unit is delivered.”

3. By week three, I recommended that they should have gone out on the open market and bought the models that were promised that first day and then turned that into a customer for life moment. “We’re so sorry that Apple hasn’t sent us the model you ordered on launch day. However, we value you as a customer so we went out on the open market and bought your iPad 2 at retail. So, come on in to get your iPad 2.” If they had done that, they would have solidified their relationship with each of us, we would have told that story over and over again, several of us would have blogged about it or written up a review on Yelp, and I wouldn’t be surprised if the  local media would’ve covered that story. They could have had all that if they had been willing to be extravagant in their service recovery.

4. If they didn’t choose option #3, I suggested that they could have at least pulled a Miracle on 34th Street moment and searched databases to find out which stores had which models and said, “Bruce, we’ve searched the distributors logs and it appears that XYZ store should have ten 32 Gig Black Wifi units delivered tomorrow. You may want to contact them.” That would have been nice as well.

5. Finally I recommended that they offer some kind of service recovery “bonus” to those of us who’ve been waiting for six and a half weeks. This should be something of high perceived value but a lower cost. For example, they could choose to offer a free iPad cover or a free Ipad class (or a free class of any sort).

Again, this is all about service recovery. It’s not about “nickels and dimes.” It’s about pulling out the stops to delight a customer who’s had a bad experience (even if the problem wasn’t the company’s fault).

I may not be the largest customer but I’m an Apple guy. I buy a new Apple laptop every two to three years (plus one for my wife). I buy a new iPhone every two years–and will buy the iPhone 5 when it comes out in September (plus my wife has now decided to switch over this year). And I just bought an iPad 2 (and will buy the iPad 3 when it comes out). All of that is in jeopardy for this company—which is why I say that when you look at the cost of client acquisition and the lifetime value of a customer—being extravagant with service recovery is simply a smart business decision.

So, how about you? What’s your service recovery procedure? If you haven’t done this in awhile, take a look at your different products and services as well as your different clients/customers. Look at each and ask, “If we blew this, how would we recover well?” You’ll end up with different procedures depending on price points and customers (and their annual value)–and that’s okay. But leaving it to chance or not being pro-active or thinking that it’s not your fault are all bad options.

So, what’s your service recovery procedure?

To your accelerated success!

P.S. This is a great team exercise. “What would delight our customers if we messed up _________?”

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