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Mistakes happen and that’s unavoidable. However, the widespread use of social media also means that unhappy customers are not afraid to share their frustration with the world. Customers are taking to public social media platforms such as Twitter and review websites to vent about complaints that may have gone under the radar in the past. Research shows that customer frustration leads to 13% of customers telling 15 or more people about their unhappy experience. Conversely, 72% of consumers will share a positive experience with six or more people1. Organisations face a real challenge in responding to this type of communication as quickly and effectively as possible.

The Customer Service Recovery Paradox

All is not lost. The way in which a business deals with a complaint or error can often turn a bad experience into a positive one. If customers feel valued and that their complaints are dealt with effectively, a customer who may previously have felt quite neutral (or even negative) about the business may be transformed into a brand advocate. A phenomenon that has been dubbed the Customer Service Recovery Paradox occurs when people are more satisfied with an outcome following failure and subsequent recovery, than if there had been no failure at all. If this sentiment is then expressed online, the positive impact on the organisation’s reputation is multiplied. In fact, research has shown that highly positive online shares generate a 9.5% increase in purchase intent, while negative reviews can decrease intent by 11%2.

In an ideal world, there would be no need for customers to complain. In the real world, mistakes and miscommunication will continue to occur. What must change is organisations’ approach to handling complaints. Rather than being treated as a negative aspect of doing business, complaints may be positively framed as an opportunity for communication and relationship building. Here are seven top tips to achieve that:

  1. Prioritise enabling an instant response to customer complaints. This may mean training and empowering frontline customer service and support staff to respond to customer complaints on social media instantaneously and in a human manner, and to offer appropriate token rewards without the need for a time-consuming process of management approval. Digital rewards that may be sent instantly work well in this scenario by meeting modern consumer expectations for immediate gratification.
  2. Don’t wait for complaints. Empower staff to act when they discover a problem or are aware that things haven’t gone to plan.
  3. Treat complaints as an opportunity for positive communications. Thank customers for getting in touch with feedback. Keep them informed if the complaint takes time to deal with and do not be afraid to issue an apology. Try to avoid a situation where multiple company representatives are contacting the customer. If just one colleague handles the complaint, it is easier to build up a personal relationship that can underpin a satisfactory resolution.
  4. Give customers a Frugal Wow. Fred Reichheld3 recommends ‘frugal wows’, thoughtful gestures with a low monetary value, as a way to build “a huge reservoir of goodwill and positive word of mouth at very little expense”. Move away from offering compensation from your own organisation’s portfolio – customers who are complaining about your products or services may not value them as rewards.
  5. Integrate customer service recovery into your loyalty scheme or member benefits programme. As with customer marketing and employee engagement schemes, customer service recovery schemes may be segmented and tiered, so that longstanding high-value customers receive a higher value reward or more personalised customer apology than a lower value customer. The value of the reward may be connected to the lifetime value of the customer rather than the scale of the issue that occurred. However, in adopting this approach it is essential to bear in mind that a first time customer may go on to become a high value loyal customer. It is vital to spend time on defining criteria for customer service recovery rewards, taking into account feedback from customer service advisors and support staff on the front line.
  6. Use data to create effective personalisation. Many organisations have invested heavily in customer relationship management systems providing a single view of the customer. Using this information to personalise a small reward is a highly effective and low-cost way of maximising the CRM investment. If customers feel acknowledged as an individual and valued by the advisor they deal with, this will go a long way to resolving a complaint.
  7. Treat employee participation in customer service recovery schemes as an engagement initiative. Allowing front line staff to issue gifts for their customer is not only rewarding for the customer, but also provides personal meaning for the employee in the workplace. In his book “Drive: The Surprising Truth About What Motivates Us”, Daniel Pink explains that the perception that we are doing something meaningful at work is a key driver of engagement. In fact, 72% of engaged employees believe that they positively affect customer service4.

The return on investment in customer service recovery rewards is highly measurable – satisfied customers spend around 2.6 times more than somewhat satisfied ones5 and Net Promoter Scores go up. Providing a meaningful, timely apology and reward that turns a complaint into a compliment has a major impact – a 5% reduction in customer defection can increase profits by up to 95%6. A successful customer service recovery programme, with open and honest communications, leaves customers feeling that the company treated them fairly and much more likely to provide repeat business.

About Author

Adam Whatling is Head of Engagement and Development at Love2shop Business Services, the corporate division of Park Group plc. Adam has extensive experience in delivering customer and employee engagement boosting programmes that utilise enticing rewards in recognition of consumer actions and workforce achievements.

References

1 Kolsky research  http://www.huffingtonpost.com/vala-afshar/50-important-customer-exp_b_8295772.html

2 http://www.slideshare.net/sharethis/sharethis-ros

3 https://hbr.org/2012/03/the-value-in-wowing-your-customers

4 https://www.nbrii.com/employee-survey-white-papers/engaged-or-disengaged-that-is-the-question/

5 http://infoquestcrm.co.uk/about/case-studies-2/

6https://smallbiztrends.com/2014/09/increase-in-customer- retention-increases-profits.html

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