Service Failure Recovery: The Ultimate Guide
Published:7 Jul 2022
A service failure can mean a lot of different things. Maybe your website goes down, your phone service stops working, or you have an outage in your office. No matter what the cause, it's important to have a service failure recovery plan for how to recover from the failure as quickly as possible. We will discuss the ultimate guide to service failure recovery. We'll cover why you should offer service recovery, stats on service failures and their impact on businesses, examples of how other businesses have recovered from service failures, and when to recover a bad service. Let's get started!
The short story: Service failure recovery works
Customers who receive compensation or gifts for service failure are more likely to continue using the service, and they’re also more likely to recommend it to others.
A study by Bain & Company found that 70% of customers will stay with a company after a service failure if it’s handled well. On the other hand, 96% of customers will leave and never come back if the service failure isn’t handled properly.
What is a service failure?
For modern customers, the bar has changed for service failure. With a need for speed, even the slightest service interruption can result in frustration and a loss of business.
A service failure is any unanticipated event that interrupts the normal service process and causes service quality to decline below the customer’s expectations. A service failure can be as simple as a server going down or a missed delivery. Even though service failures are inevitable, how you recover from them can make all the difference.
Why service failure recovery is important
Service failures are inevitable, but that doesn’t mean you have to accept them. In fact, service failures provide an opportunity to build customer loyalty and create advocates for your business.
According to American Express, “Acquiring a new customer can cost five times as much as retaining an existing one.” This stat is a reminder that it’s important to focus on service recovery to keep your current customers happy and coming back, instead of always trying to acquire new ones.
Stats on service failures and their impact
Now that we know why service failure recovery is important, let’s look at some stats on service failures and their impact.
According to a study by Microsoft, 66% of customers have stopped doing business with a company because of a bad service experience. This stat shows that service failures can have a big impact on your bottom line.
Another stat from the same study found that 78% of customers have also taken their business to a competitor after a service failure. This stat is a reminder that service failures not only impact your current customers, but also your future business.
Service failures can have a big impact on your business, both in the short term and the long term. That’s why it ’s important to have a plan for service failure recovery.
Customers love service failure recovery gifts
A quick search online reveals just how much these are appreciated!
Examples and ideas for service failure recovery
There are a lot of different ways you can recover from a service failure. The key is to find the right solution for your business and your customers. Here are a few examples and ideas:
Apologize: The first step in service failure recovery is to apologize to your customers. This shows that you are taking responsibility for the service failure and that you are sorry for the inconvenience.
Offer Compensation: One way to show your customers that you are committed to service recovery is to offer compensation. This can be in the form of a discount, a free product, or a service upgrade.
Take Action: Another way to show your customers that you are committed to service recovery is to take action. This means making changes to your process or training your employees so that the service failure doesn’t happen again.
Keep Customers Informed: Keeping customers informed during a service failure is important. This means keeping them updated on the status of the service recovery and what you are doing to fix the problem.
Examples of recovery gifts
Amazon recover service failures with hampers. In this instance, Vegan Gifts have been selected.
Gift cards are an excellent service recovery choice, offering flexibility to the recipient.
Drinks and wine
Hampers and flowers
Compensation or gifts - what works best for service failure recovery?
Typically, a company offers compesnation, in the form of a discount, to service failure customers as a way to apologize and show that they are committed to service recovery. However, research shows that gifts are more effective than discounts when it comes to service failure recovery.
This stat shows that gifts are more effective than discounts when it comes to service failure recovery.
In a study by Bain & Company, they found that “52% of respondents said they would be willing to give a company another chance if it sent them a personalized gift after a service failure, while only 39% said they would be willing to give the company another chance if it offered them a discount.”
Should you admit that you made a mistake?
Personalised branded gifts create a real wow moment. Twitter has hundreds of examples of customers showing off their apology and service recovery gifts. The old way of thinking is that by having a branded delivery, you are showing that your company makes mistakes. Yet hiding behind a false premise that you are perfect is unrealistic, and unwanted.
You could ask your family for instances of poor customer service and service failures and they would tell you all about them. But see how the mood changes when they discuss what the company did to put things right? It's all about evolving the customer experience for loyalty.
Today's consumers want ethical businesses who are trustworthy and human. Mistakes happen - so turn a bad moment into a brand moment.
In fact, a study into service recovery by Accenture found that " service failures provide an opportunity for businesses to differentiate themselves and build customer loyalty."
A gift is remembered. A study into the impact of gifts on memory vs cash found that service failure gifts were remembered up to two times longer than service failure compensation in the form of cash.
When to offer service failure recovery?
The key is to act fast. Customers who receive service recovery within 24 hours are more likely to do business with the company again, compared to those who don’t receive any service recovery at all.
Service failure recovery is an important part of customer service. By offering service failure recovery, you are showing your customers that you are committed to providing them with the best possible experience. If you act quickly and offer a personalized gift, you can turn a service failure into a brand moment.
What kind of gift should you send for service failure recovery?
The best gifts are ones that are personalised, branded, and relevant to the customer.
Many of our utilities companies offer hampers and chocolates, flowers and letterbox gifts, all designed to create that emotional connection with customers.
The same goes for media companies. With Simply Thank You, we can design a custom service failure recovery gift that really does wow the recipient - and everything is branded, from the font of the apology note to the colours and ribbon of the item.
When to use service failure recovery
You should always have a plan for service failure recovery, but there are some service failures that require a more immediate response. Here are a few examples:
Server Outage: A server outage is a service failure that can have a big impact on your business. This is because it can prevent customers from being able to access your website or use your product.
Missed Delivery: A missed delivery is another service failure that can have a big impact on your business. This is because it can cause customers to miss deadlines or not receive the product they ordered.
Customer Complaint: A customer complaint is a service failure that should be addressed immediately. This is because it can be an indication of a bigger problem with your service.
Service failures are inevitable, but that doesn’t mean you have to accept them. In fact, service failures provide an opportunity to build customer loyalty and create advocates for your business. With a plan for service failure recovery, you can turn a service failure into a positive experience for your customers.
Why not read our guide on getting customer service right or speak to us today?