Turning mistakes to your advantage

By Don Porter CBE

GREAT customer service means getting it right first time, every time. However, in the real world, mistakes happen and how your business reacts to service failure is critical. React well and you gain customer loyalty; react poorly and your customers walk to your competitors (whilst telling all their friends and colleagues of the misdemeanour). React well – and secure extra profit; react poorly – and lose present and potential customers.

The fact is that recovery from the brink of disaster is not only possible but, if handled correctly, can be commercially advantageous. A recent survey of companies in the service industry showed that, when customers were dissatisfied with the levels of service they received from a company, a surprising 30 per cent would remain loyal, usually because there is no alternative supplier or because they were tied in some way to that organisation; when a customer is satisfied with the service, 65 per cent return.

However, an astonishing 85 per cent of customers who encountered problems, but felt that their companies were handled well, returned to do business again. As it is five times more expensive to attract new customers than to retain existing ones, responding appropriately when things go wrong is a commercially viable marketing tool.

Once a problem has arisen, the response must be immediate, personal and sincere. Customers recognise that, even with the best of intentions, in the real world mistakes happen. As long as complaints are handled promptly, and with a human touch, most will remain loyal. However, only 7 per cent of dissatisfied customers complain – the rest simply take their business elsewhere.

All complaints should, therefore, be registered and, once several complaints have been logged on a single issue, action should be taken to eliminate the cause of the problem and to identify those customers that have experienced difficulties but have not complained.

Staff must respond quickly – these teams should not be seen as complaint-processing factories but as showrooms for the organisations excellence. They should contact all customers experiencing problems, face-to-face if possible, or by telephone, and then with a follow-up by post. This underlines the company’s concern, expresses disappointment that the situation arose, and ensures a personal response.

Staff must set aside time to listen to each customer, even though, in the case of a major service failure, they may have been handling similar calls all day. The customer will want to explain the problem in full and will be relieved, and pleasantly surprised, to find an organisation taking their concerns seriously. It also gives the member of staff dealing with the complaint time to think about a solution.

Staff often feel aggrieved when expected to apologise for a problem that is not of their making, particularly if the customer is angry and abusive. Through service recovery training, employees are taught not to assign blame to other people or departments, but to accept the customer’s complaint as their responsibility. A sincere and unconditional apology will usually calm the most disgruntled customer, but employees should also be trained in other techniques for defusing a confrontational situation.

Many problems are insoluble – e.g. you simply do not have that particular product in stock – but an appropriate solution should be found to alleviate the shock and distress caused by the mistake. The best way to find a satisfactory solution is to ask the customer: “How can I help to solve this problem? What would you like me to do? What would make you feel better?”

Most customers do not want to be bought off. People complain in order to rectify a specific problem and issuing, for example, a case rebate may be considered insulting and, perversely, convey a lack of concern for the customer’s grievances.

At MSB, we advise companies to throw the rulebook away and empower their employees to issue, within broad limits, the amount of compensation they see fit by judging each case on its merits. Research has shown that this approach can cut compensation costs but, in order to work, employees must be given the training to take responsibility for a customer’s needs, the information to make sensible commercial decisions and the freedom to initiate appropriate action.

Always thank your customer for bringing the problem to your attention and follow up the call with a letter restating your sincere apologies and the action you will be taking to remedy the situation. Ensure this action is carried out.

Small businesses can react more quickly, and far more personally than large organisations and this gives the small businessman a competitive advantage over the large organisations. There is no blueprint for success when handling complaints – ultimately, it depends on the ability of your employees to empathise with customers and suggest solutions that satisfy their grievances.

Things go wrong in all companies, but it will be those small businesses that know how to profit from their mistakes that will enjoy the benefits that cutting-edge customer service brings.

This article was written by Don Porter CBE, Joint Managing Director of MSB.