Have you ever had a service problem with a customer and worried about the damage it could do to your relationship and long-term revenue prospects? Maybe they won’t renew. Maybe they won’t buy more. And, worse, maybe they will spread the word throughout their network and negatively influence other prospect or customer decisions.
On the flipside, have you ever put a recovery plan in place and ended up improving customer loyalty after the failure? Perhaps at even higher levels of satisfaction than before you had the issue?
If the latter scenario has ever happened to you or your company, you have entered the Service Recovery Paradox (SRP): the situation in which a customer thinks more highly of you after you have corrected a problem than if they never had
a faulty experience with you.
Most companies spend a lot of time and effort to avoid problems and provide flawless service to ensure customer satisfaction and loyalty. Turns out, the inevitable customer crisis can become one of your best opportunities to deepen customer commitment — if you handle the failure properly.
The importance of a good apology
The Service Recovery Paradox has been well documented in consumer settings, but only recently validated for the B2B environment. A study appearing in the February 2018 edition of the Journal of Business & Industrial Marketing was the first to prove its relevance in a B2B setting and provide a preliminary model for achieving the SRP with business customers (“The Service Recovery Paradox in B2B Relationships,” Hübner, et al)
The article identified four components required to achieve SRP:
- Initiation of a response
- Response speed
- Compensation
- Apology
New research we conducted with Professor Nick Lee of Warwick Business School focuses on the apology because unless those three recovery activities are communicated effectively in the right apology framework, you reduce the possibility that everyone inside your affected client company will appreciate and give you credit for your efforts.
Prior to our latest research, apologies had been a reasonably well-studied area. An article entitled, “An Exploration of the Structure of Effective Apologies” (International Association of Conflict Management Research, Lewicki et al, 2016) identified five individual elements that contribute to an effective apology:
- Acknowledgement of responsibility – A statement which demonstrates you understand your part in the service failure
- Offer of repair – A statement describing how you plan to fix the problem and work toward rebuilding trust with your customer
- Explanation of the problem – A statement explaining the reasons for the failure to the customer
- Expression of regret – A statement in which you express how sorry you are for the problem
- Declaration of repentance – A statement in which you express a promise to not repeat the problem
What’s the best structure of an apology?
While each of these five elements were proven to contribute individually to an effective apology, something important was missing. There has been no research to determine the best order for these elements. In other words, there’s no proven way to say “I’m sorry” in order to evoke the Service Recovery Paradox.
So, along with Lee, we created a test scenario and recruited 500 people across North America and Europe to imagine themselves in a service failure situation. After describing the service failure and the pain it caused in the organization, we asked everyone to rank the intensity of their negative feelings toward the supplier in the story.
We then took only the most extremely negative respondents to see how they reacted to the various apology messages and measured their responses to important SRP-related questions.
Four different combinations of the five apology elements were created to test for the best approach. A fifth test condition only used two of the five elements to create a control. In that case, we used just the two most factual apology components and eliminated the more emotional elements.
Often, people in B2B environments argue that emotional content only works in B2C and that just the facts matter in conversations with B2B customers. So, we attempted to see how a factual response to the problem and remedy would compare to the more emotion-laden test messages.
At first glance, you might not think that such subtle configuration changes, using elements already proven to be individually effective in previous apology science studies, would produce a single, consistent winning framework.
On the contrary, we discovered one of these approaches did outperform all the others across every question asked. The one clear and consistent winner was test Condition No.3.
Make your apologies count
The inevitable customer service failure needn’t incite panic or dismay. The Service Recovery Paradox demonstrates it may be an opportunity to increase customer satisfaction and loyalty to levels greater than if your customer never experienced a problem with you.
However, there are better and worse ways to engage your customer to achieve this result. In this study, you’ve seen there is a clear and consistent apology framework you can use to build and deliver your apology message — and positively influence even your most angry and bitterly disappointed customers.
Tim Riesterer is chief strategy officer at Corporate Visions, a sales training and marketing consultant.
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