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No organization, no matter how conscientious, can completely prevent problems and mistakes all the time. Weather delays, dependence on other companies for manufacturing or fulfillment, delivery issues, clerical errors, etc., can lead to slip-ups that are out of your control.
The phrase "service recovery paradox" was first used by Michael McCollough and Sundar Bharadwaj in 1992. The paradox occurs when a customer is more satisfied with a company after it has fixed a problem than if the problem had never happened – if the company resolves the situation in a way that exceeds the customer's expectation.
According to a paper published by Bolton and Smith, the quality of a customer's experience often depends on the response of the first person the customer contacts regarding the situation. Forty-three percent of dissatisfactory service encounters are due to an employee's inadequate response to the customer, not due to the initial incident itself.
Furthermore, the paper reported that companies need to provide as many as 12 subsequent positive experiences to overcome the effects of one negative experience. Unfortunately, many customers won't give you that many chances.
The top two reasons that companies lose customers are that the customers feel poorly treated and that the employee failed to solve the problem in a timely manner. Service Failure Recovery teaches that your goal should be to use these events as an opportunity to shine, not as problems to be swept under the rug.
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