Service Recovery: Four Steps to Increasing Customer Loyalty

21 Feb

By John Tschohl

Over the years, I have addressed service recovery in thousands of speeches throughout the world. It is, I believe, one of the most important elements of customer service, and it can make the difference between success and failure for any organization.

I am amazed, however, at how many people—from frontline employees to senior executives—do not understand service recovery. If you don’t understand it, you can’t provide it.

Let me give you a real-life example of wonderful service recovery. At his wife’s request, Bob stopped at the Olive Garden Italian Restaurant in Bloomington, Minnesota, to pick up a salad to have with dinner that night. When he returned home and his wife opened the container, she discovered it did not include the dressing for which the Olive Garden is famous.

When Bob returned to the restaurant, the manager already had been made aware of the mistake and was waiting. He apologized profusely and gave Bob two bottles of dressing, a large dessert, and a $10 gift card. What was the result? Bob and his wife happily enjoyed their salad and dessert and are looking forward to using their gift certificate.

They also told many of their friends about the incident—not focusing on the mistake the Olive Garden had made as much as what the manager had done to make up for it. The actual cost of what the manager gave to Bob and his wife was negligible; the word-of-mouth advertising the Olive Garden received for it was priceless.

This is what service recovery is all about. It is turning a negative situation into a positive one and sending the customer home thinking he has just done business with the greatest company in the world.

Word-of-mouth advertising is the most powerful advertising you can get—and it costs you nothing. It’s common knowledge that most of us, before making a purchasing decision, ask friends and coworkers for referrals. What they say is very influential, because they are people we know and whose opinions we trust. So, when someone asks Bob to suggest a restaurant for lunch or dinner, you can bet he will recommend the Olive Garden.

On the flip side, people who have problems with a company and do not have those problems solved to their satisfaction tell anyone who will listen about their negative experience. And they often do so via social network. Before an unsatisfied customer even walks out of your business, she can be sharing her dissatisfaction via her smart phone to hundreds of friends on Facebook, for example.

Every company, no matter how good its products and employees are, occasionally makes a mistake. It’s how you handle that mistake that makes the difference between earning a customer’s loyalty and driving that customer away. When a customer comes to you with a complaint, take these four steps to ensure that you provide the type of customer service that will keep him coming back to you:

1.    Act quickly. Do whatever you can to solve the customer’s problem on the spot. When you send that problem to someone else—your supervisor or manager—the customer becomes frustrated. That frustration escalates with every delay in reaching a solution. If you can’t solve the problem within a matter of minutes, you’re in trouble.

2.    Take responsibility. Don’t get defensive and take the complaint personally. And don’t challenge the customer. Instead, be empathetic. Offer a sincere apology. You might say, for example, “I am so sorry. I understand why you are upset. Let me see what I can do for you.”

3.    Make an empowered decision. Know the boundaries of your authority so you can solve customer problems and complaints. Make it clear to the customer that solving her problem is your priority.

4.    Compensate the customer. When you offer the customer something in the form of compensation, it does several things. It makes her feel valued. It makes her think he just did business with the greatest company in the world. It increases his loyalty to you and your organization. And it creates positive word-of-mouth advertising.

In the case of Bob and his experience with the Olive Garden, he and his wife told all of their friends about their experience. And they are looking forward to using that $10 gift card. That is what service recovery is about: satisfying your customers and making sure they return to you.

 

About John Tschohl

John Tschohl, the internationally recognized service strategist, is founder and president of the Service Quality Institute in Minneapolis, Minnesota. Described by USA Today, Time, and Entrepreneur as a “customer service guru,” he has written more than 26 customer-service training programs that have been distributed throughout the world. John’s monthly strategic newsletter is available online.

 

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IRATE CUSTOMERS: Learn How to Handle Them—And Look Like a Hero

10 Jan

Irate customers. No matter how good you are at what you do, what business you are in, or where it is located, you will at some point find yourself facing an irate customer. Maybe a product was flawed, a delivery was late, or a charge was inaccurate. How you deal with that customer not only will determine how he or she feels about your organization, but how you feel about yourself.

When you are able to turn an irate customer into a satisfied customer, you will gain confidence in your ability to diffuse a volatile situation and to evoke a positive outcome. You also will gain the respect of your coworkers, and you will get the attention of your supervisors. And, who knows, you might even get promoted.

When most people come in contact with an irate customer, their first instinct is to turn and run. Dealing with a customer who has a problem and is upset about it, can be more than a little daunting. With the proper perspective, however, you will see that the customer’s complain is actually an opportunity for you and your organization to put your best foot forward.

Customers who have complaints are a blessing in disguise. They are letting you know where you and your organization have flaws—and providing you with the opportunity to correct them. When you do, you will realize increased customer loyalty, revenues, and profits. It’s a win/win situation.

You should be more concerned with the customers who don’t complain than with those who do. In a recent study of retail banks in the United Kingdom, conduct by J.D. Power and Associates, results showed that 25 percent of customers who have experienced a problem in the past 12 months say they definitely or probably will switch institutions in the next year. And 55 percent of customers who have had a problem or complaint were disappointed with the resolution process.

That study also found that, while incentives are important in attracting new customers, customer service is key to retaining those customers. Almost 40 percent of customers left their banks because of a poor service experience, and an additional 43 percent cited poor service as a top reasonsfor intending to leave their banks.

Customer service is key to success of any business. And dealing with irate customers and solving their problems is a critical element of that service. When dealing with an irate customer, take these steps:

  1. Listen carefully and with interest to what the customer is telling you.
  2. Apologize without laying blame, regardless of who is at fault.
  3. Put yourself in the customer’s place, and respond in a way that shows you care about his or her concerns. Use phrases such as, “I understand that must be upsetting,” or “I don’t blame you for being upset; I would feel the same way.”
  4. Ask pertinent questions in a caring, concerned manner, and actively listen to the answers.
  5. Suggest one or more alternatives that would address the customer’s concerns.
  6. Solve the problem quickly and efficiently, or find someone who can.

Using these steps will quickly calm most unhappy or angry customers and allow you to address and solve their problems. Patience and tact are key.

It’s important that, even if a customer is making outrageous statements and, in essence, throwing a fit, that you remain calm. Do not take those statements personally. Apologize, take the blame, and empathize with the customer, then solve the problem.

Just as important as what you should do, there are four things you should not do:

  1. Don’t directly challenge someone who has a complaint and is angry. Even if that customer is wrong, don’t attempt to prove it. Your goal is to solve the problem, not to enter into a debate on the merits of the complaint.
  2. Don’t let the conversation wander or get off the topic. Solve the crisis at hand without looking for, and finding, additional problems.
  3. Don’t participate in fault finding. Shifting blame doesn’t help anyone.
  4. Don’t let your personal feelings get in the way. Stay cool and use courtesy and tact to diffuse the situation.

When you successfully handle irate customers and their complaints, you will be rewarded with a satisfied customer—and a customer who will be loyal to you and your organization. That loyalty will have a positive impact on your organization’s bottom line—and make you look like a hero.

HIGH TECH, HIGH TOUCH

4 Dec

It’s a Winning Combination

By John Tschohl

No one I know would dispute the benefits technology—specifically the computer—has had on every aspect of our lives. It has put information at our fingertips and allowed us to communicate with others whenever and wherever we happen to be. Technology also has allowed businesses—no matter their size, location, products, or services—to compete on a global basis.

For many businesses, however, that technology has a downside. They have used technology to provide their customers with the speed and convenience of online shopping but, in the process, they have downgraded the importance of human interaction to the stage of near extinction. Many of those businesses don’t even include an e-mail address or a telephone number on their web sites so that customers can contact them. The message that sends to customers is this: “Please place your order and select your payment option, but do not, under any circumstances, attempt to contact us. We are not interested in—nor do we allow—human interaction.”

What these businesses fail to realize is that most consumers turn to the Internet to compare products and prices before they make their purchase decisions. If, during that process, they have a question or two, but they are unable to contact that company, they will move on to the next.  What is almost worse are companies that do provide e-mail options and telephone numbers, but don’t respond in a timely manner to customer inquiries.

During 2010, e-commerce in the United States reached $165.4 billion, up from $144.1 billion in 2009.  How much of that revenue did your organization take in? How much more could you have had if you had provided potential customers with the opportunity to communicate with your employees?

If you are to be successful and grow your business, it is critical that you combine high tech with high touch. Amazon, Redbox, and Go Daddy are three companies that have mastered this concept. Each relies heavily on technology to attract customers, but their employees are available 24 hours a day, seven days a week to serve those customers. Amazon was one of the first—and most successful—companies to market entirely online. In 1985, it had sales of about $600,000; last year it had sales of $30 billion.

Today’s consumers want speed and convenience, but they also want a great customer experience. If you don’t provide those three elements—along with quality products and services at competitive prices—you will be doomed. You must include a phone number on your web site and man your phones seven days a week, 24 hours a day. Train your employees to respond quickly to customer inquiries—to answer phones within three rings and to respond to e-mails within an hour. The more available you are to your customers, the more money they will spend with you, and the more successful your business will become.

Remember: When it comes to online sales, you are just one click away from extinction.

Reduce Costs and Improve Morale

3 May

How? Ask your employees. In an uncertain economy, CEOs scramble, looking for ways to cut costs and keep their businesses afloat. The most common step they take is to reduce the workforce by terminating employees, which reduces payroll but also has a devastating impact on morale and on customer service. It’s a short-term solution to a long-term problem.

What these CEOs should be doing is looking for ways to reduce day-to-day costs without sacrificing quality or service. Often, when they decide to do so, they hire high-priced consultants come in, look over their operations, interview employees, and then develop a glossy report of their findings. It’s an expensive and lengthy process. And most often it focuses on looking for ideas that will save $100,000 to $1 million in one shot.

Those CEOs are correct in turning to experts to identify areas in which they can cut costs—but they’re turning to the wrong experts. They should be asking their employees. Those employees already are on site. They already are knowledgeable about your people, processes, products, and services. They know what changes could be made to improve productivity and cut costs. They’re just waiting to be asked for their ideas—so ask them.

Technology and the Human Touch

26 Apr

I recently wrote an article entitled, “Technology and the Human Touch,” which was published in the Call Center Times. This topic is especially important to call centers, because telephone support representatives have only a short window of time to make an impression on their customer–without the important elements of eye contact, gestures, and posture.

My article discusses the pitfalls of IVRs, Email, and the Internet, and how these technologies (when implemented improperly) can have a huge impact on customer satisfaction.

To read the full article, visit http://www.callcentertimes.com/Home/tabid/37/ctl/NewsArticle/mid/395/CategoryID/1/NewsID/244/Default.aspx.

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Customer Service Myths: If You Believe Them, You’re In Trouble

13 Apr

Most CEOs and other executives don’t fully understand customer service and its huge impact on sales and profits for their organizations. They don’t understand what they should (and shouldn’t) do in order to provide the best possible service to their customers. In fact, many of them have false beliefs when it comes to customer service.

Here are three myths that hamper organizations throughout the world in their efforts to provide exceptional customer service and, in the process, to attract and retain customers:

1. Adding employees improves customer service.

You can add all the people you want, but it won’t improve your organization’s customer service. More doesn’t necessarily equal better. Too many organizations have too many under-performing employees; you need to weed them out. In developing countries, the typical company has at least 25 percent more employees than it needs.

If you have 50 employees and add 50 more, all you’ve done is double your workforce. But, if you have 50 employees who are focused on customer service, who are knowledgeable, enthusiastic, and have positive attitudes, you will have a winning team. If you train those employees in the art of customer service and support that training by giving them the tools they need to take good care of your customers, you will see your sales and profits skyrocket.

2. The more you pay employees, the more committed they will be to customer service.

Increasing employees’ pay will do nothing more than eat into your organization’s profits. I’ve addressed this myth for more than three decades to clients throughout the world, stressing to them that money is not a motivator. It will not change an employee’s behavior. If you doubled every employee’s salary tomorrow, it would not improve customer service, and in 30 days you’d be out of business. If you have employees who do not provide good service, who are not committed to taking care of your customers, what you pay them will not change the way they operate.

So, you’re probably asking, what will motivate my employees to provide better customer service? The answer is this: Recognition. There is no stronger motivator than positive reinforcement and public praise. Think of it this way: If you are a parent trying to teach your young child to put away his toys at the end of the day, what do you think will be the stronger motivator—a dime each time he does so, or constant praise, especially in front of family and friends?

If you recognize the efforts of your employees who go above and beyond to take care of your customers, they will seek continued recognition by improving the service they provide. A $200 bonus would be gone in a day or two, but a word of praise will live on indefinitely. Recognition is the most powerful motivational tool you have—use it.

3. Your employees are empowered.

This is more than a myth; it’s a delusion for most managers and executives. Empowerment means that your employees have the authority to do whatever it takes to immediately solve a customer’s problem—to the satisfaction of the customer, not the organization.

In order to empower your employees, you must train them and give them the skills they need to take such good care of your customers that they wouldn’t think of doing business with anyone but you. Don’t handcuff your employees with cumbersome policies and procedures. Give them the authority to bend and break the rules in order to serve your customers.

It takes a miracle to get employees to make empowered decisions because they think they will get fired if they make a mistake. Let them know that it’s OK to make a mistake in the process of providing exceptional customer service. Without empowered employees, you will never be a service leader.

Don’t underestimate the power of customer service. Exceptional service builds loyalty, which in turn builds profits.

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John Tschohl Featured in 4Hoteliers.com and Brainity.ru

18 Mar

Two new published articles written by John Tschohl came out today. The first, Customer Service Myths: If You Believe Them, You’re in Trouble, appeared in 4Hoteliers.com, a Hospitality, Travel, and Hotel News website today. In the article, John describes 3 common myths surrounding Customer Service and explains how to debunk them.

Click here to read the full story.

Across the world, John’s article entitled Делегирование полномочий как образ жизни was recently published in Russia’s Brainity.ru publication. Customer service is an important topic across the globe and John’s great exposure in Russia proves that countries around the world are making a conscious effort to improve their customer service. Your company can too! Contact SQI today to learn how superior Customer Service can transform your business.

Click here to read John’s article in Brainity.ru.

Wimm-Bill-Dann Foods

15 Mar

On February 25, John was the keynote speaker for Wimm-Bill-Dann Foods/PepsiCo in Moscow, Russia. The speech was very well-received by everyone, from the lowest-level employee to the Vice President (pictured below). Wimm-Bill-Dann Foods emphasizes a passion for customer service and showed it through their enthusiasm during the speech.

Below: John Tschohl in Moscow with Ruslan Vesterovisky, Human Resources (left) and Silviu Popovici, Vice President (right).

John Tschohl in Moscow

To view a testimonial video from Silviu Popovici, Vice President of Wimm-Bill-Dann Foods, visit John Tschohl’s Speaking Site.

Moscow

22 Feb

Depart for Moscow today and have a great seminar with Wimm-Bill-Dann Foods which is going to be outstanding! Check back next week for photos and video of my seminar.

Great new article in HR Brand head on over to read “Effective training and development tools for sales reps” http://hrbrand.ru/practice15.php

 

Back in Minnesota

17 Feb

Just back from the great NYC! Had a great time. My wife dog won at Westminster’s Dog show you can find out more by take a look at her website http://www.havaneseshowdog.com/ While I was gone I had a few new articles publishes head on over take a look. http://bit.ly/cL5mF0

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