Making the Case for Service Recovery --

Customer Retention

The goal of service recovery is to identify customers with issues and

then to address those issues to the customers' satisfaction to promote
customer retention. However, service recovery doesn't just happen.
It is a systematic business process that must be designed properly
and implemented in an organization. Perhaps more importantly, the
organizational culture must be supportive of idea that customers are
important and their voice has value.
Research has shown that customers who have had a service failure
resolved quickly and properly are more loyal to a company than are
customers who have never had a service failure -- significantly more
loyal. Service Recovery practices are a critical element in a Customer
Loyalty Program.
Think about your own experiences with service or product problems.
Did you get a quick acknowledgement of the problem, speedy
resolution of the problem, and -- perhaps -- compensation for your
troubles? (Imagine if you got a truly sincere apology and not some phony empathy?) Weren't you
more likely to buy from that company again because of the confidence you now had in their business
practices? That's the key value to effective service recovery and complaint handling: customer
retention.
One way to think about service recovery is that it is a positive approach to complaint handling.
Complaint handling has serious negative connotations; whereas, service recovery has positive
connotations. Complaint handling is placating people, minimizing a negative. Service recovery
practices are a means to achieve the potential, latent value a customer holds for a company by
fostering an ongoing positive relationship.
Service recovery has a secondary value. It creates positive word-of-mouth about your company and
minimizes the bad spin that lack of service recovery practices can create.
Next, we'll present how to frame the argument for building Service Recovery Practices, and then we'll
examine the stages of maturity an organization may display for this vital feedback process.

Service Failure Definition

Service failure occurs when an entire service is unavailable; for example: the entire printing service, internet
access, and email.
Target Audience: Everybody
Faults that impact only a specific individual or piece of equipment (for example: a single printer or desktop
computer) are not considered service failure.
Services that are unavailable during a pre-approved and scheduled maintenance event are not considered
service failure. Maintenance events are advised several days ahead via the Notification Of Intent (NOI) process.
Impacted services are made available after completion.

The service recovery paradox states that with a highly effective service recovery, a service
or product failure offers a chance to achieve higher satisfaction ratings from customers than if
the failure had never happened. A little bit less academically, this means that a good recovery
can turn angry and frustrated customers into loyal customers. In fact it can create even more
goodwill than if things had gone smoothly in the first place.

Nevertheless not all service recovery efforts will lead to increased satisfaction ratings as
several studies have already shown. The key is to understand that there are certain situations
when it is highly likely that a service recovery will lead to increased customer satisfaction.
Service recoveries that are likely to be efficient are obviously those where the service failure
is perceived to be not systematic or that the company has little control over it. But even in
cases when there is a systematic failure and the company has control over the failure, there is
a benefit when service recovery activities are put into action to ensure that one can win back
customers and that the source of failure is eliminated.

SAP

Definition

Systems Applications and Products in Data Processing. A company that develops software which
allows businesses to track customer and business interactions. SAP is well-known for its Enterprise
Resource Management (ERM) and data management programs.
SAP Product Definition ensures that you can capitalize on your best ideas – and translate them into successful,
innovative products. And, as a composite application powered by the SAP NetWeaver technology platform, SAP
Product Definition is flexible enough to accommodate your company- and industry-specific needs.

SAP Product Definition will help you:

• Capitalize on the best ideas – SAP Product Definition systematically captures ideas from multiple
sources such as your sales organization, other employees, customers, and partners. It supports effective
evaluation of all ideas – and facilitates a thorough assessment of and follow-through on your best ideas.
• Improve product success rates – Using SAP Product Definition, you can ensure that your go-
forward concepts not only meet market needs, but also can be produced efficiently. The application captures
relevant information from multiple external sources, as well as structured and unstructured information from
your corporate systems, to support a comprehensive, cross-functional review and evaluation processes.
• Manage research and development risk – SAP Product Definition gives R&D managers complete
visibility into relevant processes and information, enabling objective concept comparison and optimal go/no-go
decisions. The application also provides the necessary flexibility to adjust the evaluation process based on the
appropriate risk level of various concepts; for example, minor improvement versus breakthrough innovation.
• Decrease time-to-market – By aligning information from multiple sources and cross-functional
perspectives, SAP Product Definition helps your product development team identify potential constraints in
the upstream process, avoiding expensive development surprises. The application maintains a centralized
source of all concept information available throughout the development cycle, substantially reducing
downstream bottlenecks, rework, and errors.