My first customer service interaction didn't end well.

I was sixteen and had been on the job for 15 minutes. An irritated customer approached and I said the wrong thing. He stormed out of the store.

It was a terrible feeling to see a customer literally walk out the door. In that moment, I vowed to learn everything I could to prevent that from happening again.

I've been obsessed with service recovery ever since.

This guide summarizes what I've learned about getting customers to give you a second chance after a service failure.

What is service recovery?
Why is service recovery important?
When do you need service recovery?
How can you recover from service failures?
Do you have to give freebies or discounts?
Frequently asked questions (FAQs)

What is service recovery?

Service recovery is the action taken to regain the trust of a dissatisfied customer after they experience a service failure.

A service failure is anything the customer believes went wrong. It could be a defective product, unfulfilled service, a restrictive policy, a rude employee, or anything else that falls short of the customer's expectations.

Service recovery requires more than just soothing an upset customer's anger. (Check out my comprehensive guide for doing that.)

The key to service recovery is restoring trust.

Why is service recovery important?

Service failures create problems. Customers might stop doing business with you, tell others about their experiences, and cause your customer service costs to soar.

The 2020 National Rage Study from CCMC found that 58% of customer complaints go unresolved. The study found a dramatic difference in a customer's willingness to recommend a business after making a complaint.

**Image Source:** CCMC 2020 National Rage Study

Service recovery can help you prevent lost business, a negative reputation, and inefficiency.

Lost business

Service recovery can prevent lost business. A 2011 study by Venessa Funches revealed that 42 percent of customers stopped doing business with a company after a service failure.An additional 35 percent did less business than before the service failure.

Negative reputation

Service recovery prevents negative word-of-mouth that can harm your reputation. Funches's study found that 70 percent of customers spread negative news about a company after experiencing a service failure. This included:

Online reviews
Social media posts
Sharing stories with friends

Inefficiency

Service recovery can help you serve customers more efficiently. Upset customers contact you more, return products more often, and ask for more discounts, freebies, and upgrades. Their issues also take up more time, which creates the need for additional staffing. Understaffed departments can irritate otherwise happy customers who have to wait for service.

When do you need service recovery?

Service recovery is needed whenever a customer experiences a service failure.

Some customers contact your company to ask for help. They tell reps in person, call, chat, or send emails.

Other customers do not complain.

Unreported issues make service recovery more difficult. You can't work to regain a customers' trust unless you find out it's been broken.

Here are just a few ways to identify unreported service failures:

Ask customers directly. For example, "How is everything?"
Survey customers.
Read (and analyze) online reviews.
Proactively monitor your operations for service failures (ex: late deliveries).
Follow-up with customers who cancel or don't renew.

As the membership director for a professional organization, I helped increase membership by 67 percent by contacting former members and listening to the reasons they didn't renew.

Their eye-opening feedback helped our association learn about some big issues that never showed up in our member surveys. Many members ultimately renewed once we demonstrated that we were willing to listen and fix the problems they had experienced.

How can you recover from service failures?

There are three general steps involved in regaining a customer's trust after you identify a service failure:

Solve the problem
Make it easy
Restore faith

Let's take a closer look at each one.

Step 1: Solve the problem

Customers purchase your products and services for a reason. A service failure causes a problem because it prevents them from achieving their goal.

Solving that problem is critical to regaining a customer's trust.

Briggs & Riley makes well-designed, durable luggage for frequent travelers. It also has an outstanding recovery process to repair damaged bags.

A damaged suitcase can leave a traveler without luggage while their bag gets repaired. That's why Briggs & Riley gives customers multiple options to minimize the time a bag is out of service. One option is to use a local repair center.

My local repair center is Index Urban, in San Diego. Any repairs I've needed are handled in just a few days—plenty of time for my next trip. Loaner bags are also available in the event a repair takes longer.

Step 2: Make it easy

Service recovery should be easy for your customer.

Researched published in The Effortless Customer Experience revealed that customers are 3.41 times more likely to take their business to a competitor when service recovery is too difficult.

Examples include:

Contact a company multiple times
Repeating information already shared
Additional effort required (paperwork, follow-up steps, etc.)

Airlines often damage passengers' luggage. Getting the airline to pay for the damage can be a cumbersome process that often takes weeks.

Briggs & Riley removes that friction by repairing airline damage at no charge. Customers don't have to wrestle with the airline. They can go straight to Briggs & Riley (or, a local repair center like Index Urban) and get their bag quickly repaired.

Step 3: Restore faith

Customers are more likely to give you and your business another chance if you demonstrate accountability for the issue and prove you are working to prevent the problem from happening again.

The fix is sometimes simple.

Most baristas will gladly remake your latte if you don't think it tastes right. That instantly regains your trust so long as it doesn't take too long to remake your drink.

Other situations might require more expense and effort.

A mechanic once scratched my car door while it was in for service. While I wasn’t happy about the scratch, the service advisor immediately took responsibility. He offered to fix the scratch plus another scratch on the same door that the dealer didn’t cause. It would take a couple of days to make the repair, so he offered me a loaner car to use in the meantime.

This was a costly repair for the mechanic, but the accountability and extra effort demonstrated by the service advisor restored my faith in the company and earned my repeat business.

Do you have to give freebies or discounts?

Some people mistakenly believe that service recovery always includes giving customers a freebie or a discount. A few even worry about unscrupulous customers inventing problems just to get something for free.

Freebies and discounts should be used cautiously. They aren't always needed for service recovery, and sometimes they can make issues worse.

A better approach is to focus on regaining your customer’s trust.

Frequently Asked Questions (FAQs)

Q: What specific metrics should I use to measure the effectiveness of my service recovery efforts, and how do I track them?

The most effective metrics tie service recovery to increased revenue or decreased costs. Customer experience expert, Jeanne Bliss, suggests calculating net customer growth. Here's a link to my interview with Bliss where she explains this metric.

Q: How can I train my employees to handle service recovery situations effectively, especially when dealing with particularly challenging or irate customers?

The LAURA technique is an effective way to help upset customers feel better. It consists of five steps:

L = Listen to the customer
A = Acknowledge their feelings
U = Understand what the customer really needs
R = Relate to what the customer is experiencing
A = Act to solve their problem

You can train your employees on service recovery with this complete guide.

Q: Are there any case studies or examples of companies that have successfully implemented service recovery strategies, and what lessons can be learned from their experiences?

Use service failures as an opportunity to improve your business. One manager saved $50,000 per year after a customer complaint led to the discovery of an error in the company's billing software. Another executive recovered $75,000 in lost business by calling former clients to learn why they left.

Conclusion

Service recovery is the third part of an experience guarantee. An experience guarantee helps you win and retain customers by earning their trust. The three parts are: