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Proactive Service Recovery: The Revenue Strategy You Can't Ignore

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January 15, 2020

The Psychology of Service Recovery

Eric Stoessel

Hotel guest approaches happy hotel manager at front desk

It’s probably difficult to remember all the times a brand has left us frustrated. However, we are far more  likely to remember the times when a company has turned a poor experience into a positive one. More often than not, there is one underlying factor that these service recoveries have in common: excellent communication.

Service recovery isn’t just about fixing issues. It’s actually much deeper than that. With good communication underpinning effective service recovery strategies, brands can fulfill much more than consumer needs for products or solutions. They can actually meet some very important psychological needs that we all share as humans. 

Graphic showing survey question about customer service solving a problem

Need proof? More than 1-in-3 millennial consumers report that they actually feel more emotionally connected to a brand if they solve a problem for them. With brand loyalty harder than ever to come by, that’s powerful. But in order to harness the psychology behind service recovery, organizations must answer three important customer — rather — human questions.

Can you hear me?

In today’s social media-driven world, where everyone has the ability to propel a personal issue into a public conversation, things like negative online reviews can be extremely harmful for a company’s reputation and bottom line.

Graphic showing 51% of consumers say online reviews greatly impact decision to do business with a brand.

In fact, more than half (51%) of consumers say online reviews “greatly” impact their decisions to do business with a brand. Further, Harvard studies have found every one-star increase in a Yelp rating equates to a 5% to 9% increase in revenue. It stands to reason that the inverse occurs when reviews are negative.

And while public criticism is a reaction to a bad experience, it’s all a cry to be heard. Many times these issues could have been prevented or avoided altogether. However, with research finding that 75% of hotel guests won’t report every issue that impacts their stay— a problem likely felt across industries — brands simply don’t always have the chance to recover before issues become visible for the world to see. 

Graphic showing 75% of consumers  say they don't

But let us not blame the customer. The problem isn’t that they are choosing to be silent, it’s that they don’t feel empowered to be heard. 

This is where establishing solid and frequent communication that allows customers to share the good and bad, in ways that meet their preferences, comes into play. By doing so, businesses aren’t just creating a basic pillar of forming strong relationships and ensuring their customer’s human need to be heard is met, but they are also giving themselves a chance to resolve issues they otherwise would not have known existed. 

And it turns out, when brands resolve problems in real-time, it’s an incredibly powerful guest experience enhancer and loyalty builder. 

Do you understand me?

But why is this? The Service Recovery Paradox suggests that if a brand’s ability to execute service recovery surpasses the customer’s original expectations, a paradox emerges and the customer actually becomes more loyal than if the brand had never made the initial mistake. This is because the secondary satisfaction they experience after they have an issue becomes greater than the satisfaction they would have experienced if a failure never happened at all. But there’s a deeper reason.

One of the most basic and profound human needs is the need to feel understood. 

It’s impossible for a brand to truly understand the issues of their customers without engaging in some form of human-to-human conversation, whether it be person-to-person, over the phone , or through text. And while technology can help scale these conversations, many brands mistakenly default to things like chatbots that simply don’t have the ability to empathize with a customer. Customers need to know the humans behind the brands they do business with can understand their situation, validate their feelings and ultimately meet their needs. 

And when a brand is able to recover, the customer comes away with stronger feelings toward the brand — even if it was responsible for the misstep in the first place. 

Can I trust you?

Promotion and link to download the how to implement a proactive service recovery strategy ebook.

The way you build trust in any relationship is through the consistency of your actions. With reports finding that 62% of companies ignore customer service queries, it’s not surprising that we are seeing all time highs in the public’s distrust of the companies they do business with. 

When trust breaks down, naturally a communication gap appears, widening whatever chasm existed in the first place. And that’s when those same customers who feel like they don’t have a voice find their own way to vent their frustrations publicly. 

As we touched on above, the first step for brands is to intercept these frustrations before they’re shared online, or better yet, before they have the chance to ruin a customer’s experience completely. To do so, teams must initiate contact with their customers and stay connected in ways that meet customer’s communication preferences. In our digital and mobile world this means text. Just take a look at Sahara Las Vegas, which has seen positive online reviews skyrocket since they implemented mid-stay guest checkups through text. The power of text is especially noticeable when you consider the least likely generations to report customer service failures are also the most influential consumer base on the planet — millennials and Gen Z. 

But again, the only way to truly build trust is through action. Even if you’ve shown your customers that you hear and understand them, if you don’t take action to solve their problems in real time they simply won’t trust you. This is where having the proper training and strategy in place to analyze the issue and fix it — in real time — comes into play.

At the end of the day, all of our customers are people. When we show them that we hear them, understand them, and can be trusted to take action, our relationships with them go from transactional to personal. And in the age of personalization, nothing is more powerful than that.

About the Author

Eric Stoessel has more than 12 years experience working in hospitality, serving in various leadership roles across B2B media and travel technology.

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