Smith Brain Trust / March 26, 2018

Recover From a Service Failure

Recover From a Service Failure

SMITH BRAIN TRUST – It happens. Sometimes companies let their customers down. And when they do, they need to fix it fast, says Janet Wagner of the University of Maryland’s Robert H. Smith School of Business.

Wagner, an associate professor of marketing and director of the Center for Excellence in Service at the Smith School, has studied service recovery and led workshops for top companies on how to regain the trust of customers after they have failed them. 

Service failure is a breakdown in the customer’s perception of the quality of a service process, says Wagner, emphasizing that sometimes there really is no breakdown, it’s just what the customer may think. “But it doesn’t matter because in marketing, it is all about the customer,” she says.

Companies want to retain customers and want them to be loyal and spend more money over time. So any time a customer feels wronged, companies need to try to fix that, Wagner says. “A company’s No. 1 goal is restoring the customer’s satisfaction,” Wagner says. “If a customer perceives that the service quality is low, they are going to be dissatisfied. And if they are dissatisfied, that puts the company at risk of losing them.”

Social media has changed the game and amplified service failure problems since Wagner was publishing research on this issue in the late 1990s. “Everything has the potential to become a high-profile case now -- people are video recording everything,” she points out. 

Nowadays, a company’s social media team is its frontline on customer service. Wagner says social media teams have to be constantly combing posts and ready to respond to people who complain about service failures. Here are Wagner’s steps for companies to make customers happy again after they complain: 

1.  Act quickly. Don’t give the customer time to fume about the problem. 

2. Apologize … and mean it. Say a genuine “I’m sorry,” because you don’t want to lose the customer. In the process of apologizing, empathize. Say something to the effect of, “I understand why you are offended by this.” Then explain what went wrong and explain what you will do to solve the problem.

3. Solve the problem as fast you can. When a service failure happens, it’s important to try to match the service recovery process to the service failure. For example, if someone in your company is rude to a customer, all you really need to do is apologize. If a customer loses time or money because of the service failure, that’s when you have to start thinking about how much you are going to compensate them financially or the equivalent (like refunding their money or offering something for free in the future). You need to restore the customer’s sense that he or she has been treated fairly. 

4. Follow up with the customer. Afterward, check back to make sure that they are satisfied with the solution you offered as well as the quality of your service. 

Wagner points to Samsung’s exploding smartphone debacle. “Samsung was a little slow to respond to that, but once they did, they apologized, explained what happened and compensated customers by giving them new phones.”

She points out that though Samsung took a huge profit hit when they recalled the phones, they bounced back because they have a strong brand. “A strong brand and the reputation that goes with it is sort of a cushion against a service failure becoming a crisis and permanently damaging your performance brand,” she says.

But even smaller brands can come out of on top if they do they right thing when customers are upset, says Wagner. 

“Every single service failure should be accompanied by an apology,” she says. “If it’s just a social failure, you can stop there. If time or money was lost, you have to compensate the customer according to the level of what they lost.” 

Janet Wagner is an associate professor of marketing and director of the Center for Excellence in Service at the University of Maryland’s Robert H. Smith School of Business. 

Research interests: Service marketing management, retailing, customer relationship and loyalty building, and survey research methods. Her research has been published in the Journal of Marketing Research, the Journal of Consumer Research, the Journal of Retailing, the Journal of Service Research, the Journal of Industrial Marketing Management, and the Journal of Consumer Affairs. 

Selected accomplishments: The Krowe Award for Teaching Excellence; Excellence Awards from the Smith M.B.A. Consulting Program; Reviewer of the Year for the Journal of Consumer Research; Finalist for the Best Services Article, 2003 American Marketing Association Services Special Interest Group; Outstanding Teaching Award, University of Maryland; Teaching Excellence Award, Center for Teaching Excellence, University of Maryland; and Honorable Mention in the Journal of Consumer Research’s Ferber Award competition. She is on the editorial board of the Journal of Service Research, and has served on the editorial boards of the Journal of Retailing and the Journal of Consumer Research.

About this series: The Smith School faculty is celebrating Women’s History Month 2018 in partnership with ADVANCE, an initiative to transform the University of Maryland by investing in a culture of inclusive excellence. Daily faculty spotlights support activities from the school’s Office of Diversity Initiatives, starting with the seventh annual Women Leading Women forum on March 1, 2018.

Other fearless ideas from:  Rajshree Agarwal  |  Ritu Agarwal  |  T. Leigh Anenson  |  Kathryn M. Bartol  |  Christine Beckman  |  Margrét Bjarnadóttir  |  M. Cecilia Bustamante  |  Jessica M. Clark  |  Rellie Derfler-Rozin  |  Waverly Ding  |  Wedad J. Elmaghraby  |  Rosellina Ferraro  |  Rebecca Hann  | Amna Kirmani  |  Hanna Lee  |  Hui Liao  |  Jennifer Carson Marr  |  Wendy W. Moe  |  Courtney Paulson  |  Louiqa Raschid  |  Rebecca Ratner  |  Debra L. Shapiro  |  M. Susan Taylor  |  Niratcha (Grace) Tungtisanont  |  Vijaya Venkataramani  |  Janet Wagner  |  Yajin Wang  |  Yajun Wang  |  Liu Yang  |  Jie Zhang  |  Lingling Zhang



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