RTM: What should you do when customers complain?

SHL: Most intermediaries only complain when they believe there to be a serious problem. Therefore, if they do complain, then they expect or hope for some action that they perceive to be fair.

RTM: What do you mean by "fair"?
 
SHL: Good question. Customers generally form perceptions of fairness by assessing three aspects of service recovery: outcome fairness, procedural fairness and interactional fairness.

RTM: Perhaps we had better go through these one at a time!

SHL: Sure. Outcome fairness concerns the results that customers receive from a complaint. Interestingly, most intermediaries judge the outcomes they receive to be unfair. Offering an apology contributes to customer compensation, without liability!

"Customer loyalty drives profitability."

Companies often fail to compensate adequately for the harm done or to recognise the costs involved by the customer in getting the complaint resolved. Companies need to better understand customers’ expectations for a fair recovery from a service failure – even though they might not always respond to them.
Customers also prefer to have recovery strategy options to choose from.

RTM: What about procedural fairness?

SHL: First of all the company needs to assume responsibility for the failure, if appropriate. It is helpful if the complaint can be handled quickly. Also, the individual customer’s circumstances do need to be taken into account. Finally, the customer should again be consulted on what the final output should include.

RTM: And finally, interactive fairness?

SHL: It is really helpful if the company demonstrates politeness, concern, honesty and a genuine effort to resolve the problem and, where possible, provides an explanation to the customer as to why the failure occurred.

It is important to note that performing poorly on even one dimension of fairness severely limits the potential for customer satisfaction.

RTM: What does a company need to do to improve its service-recovery effectiveness?

"Good service recovery is directly linked to increased retention and profitability."

SHL: First of all, don’t forget that the better the service, the less dissatisfaction will be felt by customers. Also, the company is now being proactive in trying to identify where failure is taking place, which is positive.

So, what strategies need to be considered to improve service recovery? Basically, four practices have been identified that together dramatically improve service recovery effectiveness.

These are: hiring, training and empowerment of staff; establishing guidelines and standards for staff; providing easy access for customers and effective responses from staff and, very importantly, maintaining customer and product service databases.