Kick-Start a Unified Service Recovery Management Strategy
Build and support a culture of quality and loyalty.
- Customer expectations are at an all-time high, where speed-to-resolution and customer satisfaction can make or break a business.
- Customers are not willing to have a negative experience but will pay more for high-value experiences. Having a strong service recovery strategy is a proven solution to creating holistic service and loyalty.
- Creating a structured service recovery strategy can be difficult; using a customer service management system and total quality management principles can ease the process.
Our Advice
Critical Insight
- A unified service recovery strategy must align with corporate objectives and goals, driving value back to the business and resulting in customer satisfaction and long-term loyalty.
Impact and Result
- Define unified initiatives, objectives, and goals for enabling a holistic service recovery strategy.
- Illustrate an operating model with organizational needs, drivers, environmental factors, challenges, opportunities, processes, and stakeholders that will inform the service recovery strategy.
- Determine metrics that will reflect organizational objectives to showcase the value added to the business.
Kick-Start a Unified Service Recovery Management Strategy
Build and support a culture of quality and loyalty
Analyst Perspective
Secure long-term loyalty through service recovery
Developing a unified service recovery management strategy through technology will allow organizations to meet customer expectations while preventing customer churn, ultimately leading to engaged, loyal, and satisfied customers. While it’s difficult to please everyone, using technology to reduce friction and the chance of dissatisfaction is vital to success in today's digital economy.
Customer experience digital transformation (CX) can increase the revenue of a brand by 20-50% (McKinsey & Company, 2020). Additionally, businesses that respond and resolve their complaints in a timely manner have 83% more loyal customers (Khoros, 2021).
However, successfully executing on this strategy is not as easy as it sounds. Using strategic management principles and a systematic approach to begin the baseline for a service recovery strategy will ease this process while effectively kick-starting the strategy with the right objectives, operating model and goals. This will correctly position leaders to deliver a unified strategy that drives value back to the business resulting in customer satisfaction and long-term loyalty.
Elizabeth Silva
Research Analyst, Sports, Gaming & Hospitality (GHRC)
Info-Tech Research Group
Executive Summary
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Info-Tech Insight
A unified service recovery strategy must align with corporate objectives and goals, driving value back to the business resulting in customer satisfaction and long-term loyalty.
Understand the customer engagement process to effectively create unified service recovery
The customer engagement process is an important structure for any customer journey that leads to engagement. With engagement, the notion of customer satisfaction is transformed into an elaborate process model of loyalty. The path passes through satisfaction, commitment, delight, trust, involvement, and emotional attachment from a customer to a specific business.
Service recovery management is a series of processes that should occur when a customer goes through an experience that results in a negative response to their commitment toward the organization.
Service recovery management involves the process of restoring customer satisfaction, as fast as possible, before it impacts the organization negatively. This can be done through closed loop customer feedback, social listening, client complaints, and other initiatives.
Service recovery management is intended to resolve issues. The goal is to address concerns to the customer’s satisfaction and save the relationship. Done well, this will result in increased satisfaction, trust, and loyalty.
70% of all purchase decisions are impacted by customer service. Negative experiences can influence the success of a business. (Hospitality Insights, n.d.)
Sources: University of Minho, 2021 & NRPA, 2014.
Info-Tech Insight
Capturing the end-to-end customer experience will allow the business to identify existing friction points and digital opportunities to create holistic service recovery management initiatives to strategize.
A proper service recovery strategy can influence loyalty
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Study 1: The Influence of Service Recovery Strategies A study on the influence of service recovery strategies on customer loyalty was conducted in Nigeria in three fast food firms (N=91). This study concluded that providing an apology, explanation, refund, and replacement of service are positive factors during a customer’s experience, however, there was only a 10.7% difference in overall customer loyalty. Instead, the study recommends that service recovery should happen:
These are the main drivers of customer loyalty. Source: Asian Journal of Economics, Finance and Management, 2022. Improving loyalty and customer retention rates by 5% can increase profits by 25%-95%, while it can cost the business 5x more to attract a new customer (Path Digital Solutions, 2022). |
Study 2: Service Recovery From Human Staff Vs. Service Bots Many businesses within the greater hospitality industry (sports, gaming, hotels, etc.) can be skeptical of utilizing technology for customer-facing interactions, where some businesses prefer human staff over service bots. A study on service recovery between human staff and service bots was conducted in the US with Amazon Mechanical Turk (N=180). This study asked participants to complete a questionnaire in the context of a hotel self-check-in. This study proves that: There is no difference in customer satisfaction for participants who received service recovery from human staff vs. a service bot. Both performed equally. Additionally, those who received service recovery from human staff or a service bot had a much higher service satisfaction rate than those who received no service recovery at all. Source: International Journal of Hospitality Management, 2020. 90% of businesses report impressive improvements in time to resolution after using chat bots (MIT Technology Review, 2018). |
Info-Tech Insight
Customer satisfaction, engagement, and loyalty will be determined by whether customers feel they have been heard and treated properly throughout the service recovery process.
A customer service management system will ensure consistent and effective service
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Customer service management (CSM) uses multiple channels (e.g. telephony, email, social, field service) to receive and process customer requests, and provide effective resolution of customer concerns in the quickest and most cost-effective process. After-sale customer service is critical for creating, maintaining, and growing customer relationships. Organizations that fail to provide adequate service will not be positioned well for future customer service and sales efforts. Deploying a CSM solution will help ensure the most consistent customer service experience across all interaction channels. It is also the natural place to address customer service issues that are being aired across the social cloud – many CSM solutions include social monitoring, response, and engagement capabilities. Customers expect quick resolution regardless of which channel they use – in person, via the phone, via a chatbot on website, or through social channels. 89% of consumers are more likely to make another purchase after a positive customer service experience (Salesforce Research, n.d.). Explore the SoftwareReviews CSM vendor reviews |
CSM features that improve first contact resolution (FCR) & overall customer service
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Info-Tech Insight
Not all incidents can be resolved on the first contact, but each additional contact costs an organization extra money and increases the chance that the customer will defect to a competitor.
Total quality management principles allow businesses to continuously improve
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Total quality management (TQM) involves the continuous improvement of the business. Customer-focused organizations leverage strategies, data, and effective communications to combine quality into the culture and activities of the organization. This management style can be achieved through a quality management system (QMS) (“Total Quality Management,” ASQ, n.d.). A quality management system (QMS) documents processes, procedures, and responsibilities for attaining quality policies and objectives. A QMS helps coordinate and direct an organization’s activities to meet stakeholder and regulatory requirements to improve its effectiveness and efficiency in a continuous manner. Consider integrating a QMS and CSM system to develop a holistic strategy and view of the customer service journey. ISO 9001 is the international standard for quality management system requirements. It is the most implemented and recognized quality management system standard in the world (“Quality Management System,” ASQ, n.d.). |
8 Principles of Total Quality Management |
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Customer-focused |
The customer determines the level of quality received, despite the effort the business may have put into quality management. |
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Total employee involvement |
Employees at all levels participate in working toward the same goals, enabling empowerment and improvement. |
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Process-centered |
A focus on process thinking ensures the right steps are in place to efficiently deliver to customers. Processes are properly defined, and performance measures are constantly monitored. |
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Integrated processes |
A focus on all employees understanding the vision, mission, principles, policies, objectives, and processes to deliver an effective strategy is critical, as integrated processes will enable improved customer service. |
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Strategic and systematic approach |
The process of strategic planning is a critical part of a systematic approach to achieving the organization’s goals. |
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Continual improvement |
Meet customer expectations more effectively by using analytical and creative ways to becoming more competitive through continual process improvement. |
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Fact-based decision making |
Consistently collect and analyze data on performance measures to improve decision making, attain agreement, and allow for forecasting based on data history. |
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Communications |
Improve communication around organizational and day-to-day changes as these can have an impact on strategy, processes, and timelines. |
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Resolving incidents should be a simple, streamlined process
Workflow automation can be implemented to further streamline processes.
”Businesses often forget that the fan experience and team performance are not mutually exclusive, but bad service cannot be covered by winning a game. Fans don't rage about great service, but it does reduce the frustration fans experience when a team loses.”
– Kevin Rye, Owner, Think Fan Engagement and lecturer, University Campus of Football Business (UCFB) Wembley
Acquire a comprehensive understanding of the organization to create a unified strategy
A successful service recovery strategy requires a comprehensive understanding of an organization’s overall corporate strategy and its effects on the interrelated departments of marketing, sales, and service, including subsequent technology implications. In contrast, a strategy that emphasizes tools for service recovery management while being at odds with a corporate strategy that focuses on only one or two goals or guiding principles will fail.
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A unified service recovery strategy should have metrics that can be linked to the corporate strategy and service recovery initiatives. |
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Info-Tech Insight
An organization’s corporate strategy is critical to indicating the direction of a service recovery strategy. Corporate strategies are typically focused on customer-facing activities and will heavily influence the direction of various departments.
Service recovery management has various needs, drivers, and factors to consider
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BUSINESS NEEDS |
ORGANIZATIONAL DRIVERS |
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A business need is a requirement associated with a particular business process. For example, marketing needs customer insights from the website – the business need would then be web analytics capabilities. Examples:
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Organizational drivers can be thought of as business-level goals. These are tangible benefits the business can measure such as customer retention, operation excellence, and financial performance. Examples:
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Technology drivers are technological changes that have created the need for a service recovery strategy. Many organizations turn to technology systems to help them obtain a competitive edge. Examples:
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External considerations are factors taking place outside of the organization that are impacting the way business is conducted inside the organization. These are often outside the control of the business. Examples:
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Info-Tech Insight
Many organizations within the greater hospitality industry are becoming highly competitive and rapidly changing. To become successful in this environment, the business must have an extensive and rationalized portfolio of enterprise applications for customer interactions.
An organizational assessment will determine the viability of a service recovery strategy
Establish clear drivers, enablers, and barriers to implementing a service recovery strategy. Consider the needs, environmental factors, organizational, and technology drivers as inputs for a feasible service recovery strategy.
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Guided Implementation 1: Complete an organizational assessment for a service recovery strategy
- Call 1: Determine the viability for a service recovery strategy.
Guided Implementation 2: Align service recovery initiatives with organizational objectives
- Call 1: Align corporate objectives with service recovery initiatives to create a unified service recovery strategy.
- Call 2: Use the organizational assessment to assist in creating aligned initiatives.
- Call 3: Further analyze the initiatives by indicating which total quality management (TQM) principles apply to each initiative.
Guided Implementation 3: Determine the operating model needed to execute a service recovery strategy
- Call 1: Create the organization’s own operating model for a service recovery strategy.
- Call 2: Create a transformed organizational structure for a service recovery strategy.
Guided Implementation 4: Identify metrics to communicate organizational success
- Call 1: Recap the major functions and departments the service recovery strategy will focus on.
- Call 2: Identify business metrics that reflect the organizational objectives for each function.
- Call 3: Establish goals for each metric.
- Call 4: Communicate the chosen metrics and goals with each function and department.
Contributors
- Kevin Rye, Owner, Think Fan Engagement, and Lecturer, University Campus of Football Business (UCFB) Wembley
- Jeff Macdonald, Chief Strategy Officer, Bulbshare