Dr. Rick Franza, Dean of the Hull College of Business, discusses a different, timely business topic each Monday in this column. This week, he talks about how to recover from a customer issue. The interview has been edited for clarity and impact.
ABD: One of the things that is inevitable in running a business is that at some point, there will be a mistake or problem that affects a customer. Why is it so important to be able to recover well from this?
Rick: I’ve seen research that shows when a company recovers well from a problem, it eventually comes out better than if they’d had no problem at all. Not that you want to intentionally have problems. I probably think more of a company that went out of their way to correct a problem than if they hadn’t screwed up at all.
For example, one night, I was out of town and got to my hotel late. When I opened the door of the room they gave me, someone was in there sleeping. I apologized and told him I’d take care of it. The hotel upgraded my room without me asking for it.
Problems are inevitable and service recovery is important.
ABD: Of course, in business, we try to not make mistakes. What are some ways to avoid problems from occurring in the first place?
Rick: The first thing is to evaluate your process and make sure it’s a good process to be able to deliver your service. In the service industry, that includes the customer experience as well, so customer awareness is important. Ask, “What is my customer experiencing?” and make sure your process is effective and efficient.
The second part is training. Make sure your people understand how to best do the process and understand they’re part of the customer experience. Cross training is important. A lot of services take a team effort, so you must have a spirit of helping each other out.
ABD: Still, problems happen. How should you respond?
Rick: They inevitably happen – sometimes it’s people making mistakes or sometimes it’s things out of your control. Either way, as a provider, you own up to it. When a problem happens, offer something to the customer. It could be a discount or free items but do something for them.
If you don’t, if you just write off that customer, you’re writing off multiple customers because with social media people have bullhorns to tell people how bad you are. Yes, giving them something may cost you, but what’s the cost of a lost customer? A lot more. Because you’ll lose more than one customer.
ABD: You mentioned problems that might be out of your control, like a package lost in shipping or your supplier not coming through for you. Is that still your responsibility?
Rick: You should take ownership whether it’s your fault or not, but you’ve got to use your judgement. Sometimes, even if it’s your customer’s fault. We ordered some banners, and we screwed up and sent them the wrong proof. Even though it was our fault, the printer worked with us on it. If you do that, not only are you more likely to retain that customer, but you’ll gain new customers because they’ll tell others that you took care of them. What people want in business today more than anything is authenticity.
ABD: Sometimes, of course, the problem arises from a mistake an employee made. How should you deal with that employee?
Rick: Don’t embarrass them in front of the customer. Don’t bite them on the first offense because nobody’s perfect. Treat the initial mistake as a teaching moment. If it’s a recurring problem, of course, you’ll have to take some action, but if you’ve got an employee batting 995 you want to keep them.
If you start punishing people, they’re going to be gun shy. But if they know their supervisor and on up the chain have their back, they’ll work hard and won’t make the same mistake. Happy employees have better interactions with customers.
Also, empowering employees to make those decisions up to a certain point means a manager doesn’t have to get involved in every little issue. They need to be able to empathize with the customer. The nice thing about being a small business is that you can better control all of that.