Service Recovery: A Best-Practice has become State-of-the-Art

Service failures happen in every organization. Even in the best-managed organizations it is impossible to guarantee a 100% service level and if one thing is certain it is that there will be events when the customer is left unsatisfied because the promised service has not been delivered.

The boulevard of broken promises

Broken promises to customers are certainly not a new phenomenon, they have happened for decades but with the shift from seller-markets to buyer-markets in the last century and the rise of online social networks in the last decade has changed the way organizations have to respond to service failures.

The latest case study comes from BlackBerry, who is compensating its customers for the service outage in early October, but they are not the first company to do so. Skype has offered its customers free credits after they experienced a downtime when the Skype servers crashed in December 2010. In April 2011, Sony was facing serious backlash due to the security problems and the corresponding shutdown of the Sony Playstation Network. Sony compensated frustrated customers with free games and access to premium content.

Where were you at the big BlackBerry outage of 2011?

BlackBerry has experienced a severe service outage in early October when the BlackBerry Internet Service (BIS) was unavailable for up to four days. For those who are not familiar with this service: BIS is the email infrastructure that is used to send emails to a BlackBerry device. This increases security compared to traditional ways of accessing emails on mobile devices and supports real-time notifications. The key difference from a consumer perspective is that every BlackBerry owner has to pay a monthly fee in order to access this service – otherwise they will be unable to receive emails own their device. As a consequence, the BlackBerry outage left millions of users without their emails on their BlackBerry and turned BlackBerry devices into plain phones again.

The outcry was understandably very loud, a large part was due to the crisis management from Research in Motion: If millions of your customers are without BlackBerry E-Mail delivery service, then you cannot update your website every 12 hours – 18 hours as it has been the case in the early stages of this outage. After three days RIM increased their updates, hosted conference calls and co-Founder and CEO Mike Lazaridis posted a video online apologizing about the problems.

RIM sets a new standard: compensating all customers for the service outage

In the aftermath it has become clear that RIM and the BlackBerry brand have taken severe damage and customers and the media started to demand a compensation. BlackBerry announced that they will offer free BlackBerry Apps worth more than 100 USD to each BlackBerry user as well as extended service contracts for existing business customers. This is the right procedure and it will certainly calm the initial criticism, if it will help to reverse the long-term damage is something one cannot predict right now.

Service recovery is not just a buzzword anymore

All these examples are an indicator of a trend that I have been observing for quite a while: If a company is not delivering on its promises, it has to compensate its customers for the service problems. The cases of Skype, Sony and RIM all set examples that consumers will remember next time their broadband connection is not available, their newspaper gets not delivered or their flights are delayed.

Whenever a company uses service recovery to rebuild customer satisfaction and loyalty, it implicitly sets a new service standard customers take for granted next time a service problem occurs.

Service recovery as an opportunity

Service Recovery is not necessarily a bad thing that needs to be prevented. If it is done correctly, which means that the customers problems are fixed in a timely manner, there is clear and honest communication and the service recovery has a personal touch, then customer loyalty can actually increase to levels higher than before the incident. This phenomenon is called service recovery paradox and can be an opportunity to build customer loyalty.

The conclusion for consumer service companies

The conclusion from these events is that organizations need to be prepared for such service problems, not just from a technical perspective with procedures how to restore the service but also from an organizational perspective to communicate directly and in real-time to consumers. Once the service is restored they can work on a service recovery package and communicate the service recovery efforts. It is probably a good idea to start to think about ideas for service recovery, estimate their costs and benefits and create guidelines to be prepared when the inevitable problem occurs.

Or you don’t, in which case you better prepare your social media team to monitor the anger and customer frustration on Facebook, Twitter and other social networks.