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Questioning the Service Recovery Paradox

customer recovery diagramIt’s often said that customers who encounter problems and get good service recovery are more loyal than customers who never encounter problems at all. This is known as the service recovery paradox. It’s a seductive idea, and it’s become standard wisdom in the customer experience and service worlds.

But is it actually true? Sometimes. Maybe.

Academic research suggests it’s at best less common and narrower in influence than generally assumed.

That’s interesting and has obvious implications for how we talk about this stuff. But does the truth about the service recovery paradox really matter? Sort of. For starters, it suggests that we should focus more seriously on preventing service failures from happening in the first place, knowing that they’re probably not leading us to higher levels of loyalty in the end.

However, on a more fundamental level, the service recovery paradox can lead us to ask the wrong question in the first place. The real issue is not whether we can generate greater loyalty through service recovery than through flawless initial delivery. It’s whether we can generate greater loyalty through good recovery than through bad recovery. That’s what will tell us whether we should care about and invest in this area of the customer experience at all.

Not surprisingly, when viewed in this regard, industry research does indeed support investments in service recovery.

Chart of Good and Bad Service Recovery Statistics

Forrester found in a 2010 study that 81% of consumers who encountered problems but got great service recovery were very likely to continue doing business with the recovering company. Just 5% of those who got very bad service recovery were also very likely to stay; 57% were actually likely to leave.

Temkin Group found similar results in a 2012 study noting 37% of consumers who got very good service recovery said they’d spend more with the recovering company, while 74% of those who got very poor recovery said they’d spend less.

Flawless delivery may be the best path to loyalty. But if you’re going to make mistakes – and of course we all are – good service recovery is still well worth the investment.

 

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