Customer Satisfaction – Page 2

Service Recovery Paradox – Fact or Myth?

Posted on April 8, 2021 at 9:55 am.

This blog is about a well-known business concept called the Service Recovery Paradox (SRP).

What’s SRP? It’s a pretty simple theory. A good recovery following a service failure can turn angry, frustrated customers into loyal ones. Service managers have known about this paradox for years.

The concept was first discussed in a popular Harvard Business Review article as far back as 1990. The authors – Christopher Hart, James Heskett and Earl Sasser – are all extremely well-respected academics and business practitioners.

But are they right? Let’s take a closer look.

Service Recovery at Slack

Why don’t we start with an example.

Ever heard of the American tech company Slack? Several years ago, Slack had a major service failure:

Tuesday, November 23, 2015 started out like any other day at work for James Crenson. Coffee, check email, prep documents for weekly meeting, solicit input from co-workers on slack. Um, Slack?

Outage

At 8:50am, popular workplace messaging service Slack suffered a massive outage, leaving over a million users around the world unable to send or receive messages and files for almost three hours in the middle of the workday. Angry users took to twitter and other social messaging sites to complain about the inconvenience. The situation had the potential to explode, but Slack was ready.

The team messaging tool had a solid plan in place for mass outages. A well-coordinated group effort handled support issues including a comprehensive social media blitz to contain the negative customer experience (CX). Over the few hours that the service was down, the official @SlackHQ account tweeted over 2,300 times with humorous, thoughtful, and most importantly, personalized – responses to customers complaining about the service outage.

Response

Not only did the all-out response wow users, but @SlackHQ gained over 3,300 followers – 7x more than average – on a day that could have gone down as the worst in company history. Slack was able to quickly contain the damage, took complete responsibility, kept its customers well informed and handled a stressful situation with humor and efficiency.

Throughout this process, Slack deepened the trust of existing customers by demonstrating that the company was prepared in times of crisis. Its expert handling of a negative situation enhanced its relationships with existing customers, boosted the brand’s reputation and even served as a springboard for an expanded customer base.

This is an exceptional demonstration of the value of the phenomena known as the “service recovery paradox.”

The graphic below explains the Service Recovery Paradox.

Loyalty generally increases over time when service is delivered consistently well. It falls rapidly if there is a service failure but loyalty increases again when service is restored and the service recovery is handled well. In fact, loyalty becomes greater than if no failure had occurred in the first place. That’s the paradox.

Fact or Myth?

The Service Recovery Paradox is generally accepted as fact. But where is the evidence for it?

Some years ago, Celso Matos decided to find out. He and a couple of colleagues from the Federal University of Rio Grande do Sul in Brazil conducted a ‘meta-analysis’ of all academic articles that discussed SRP. In total, they found 24 documented examples of recoveries following service failures. 19 of the 24 examined the impact of service recovery on satisfaction; 12 examined the impact on repurchase intentions; six looked at word of mouth (advocacy).

Their results were very interesting and not encouraging for companies with a poor service ethos.

Matos concluded that “satisfaction increases after a high service-recovery effort” but that “repurchase intentions are not increased by a high service-recovery performance.”

Service Recovery does NOT lead to greater loyalty

Matos and his colleagues explain that “customers are willing to make a positive evaluation of a firm providing a high recovery effort, but they are not likely to repatronize this firm”. They go on try to explain why this might be the case.

One explanation is that satisfied customers are not necessarily loyal. We know this from our own analysis at Deep-Insight. Another explanation is that people will give you a lot of credit for pulling out all the stops to recover a bad situation after a bad service failure. However, they will still doubt your ability to ensure no similar service failures occurs again. That’s pretty important when your 12-month or 10-year contract is coming up for renewal. They might give you good customer satisfaction (CSat) scores, but will they sign up for another contract?

In general, satisfaction levels do recover if a Service Improvement Plan (SIP) is put in place but loyalty does not. This does not mean the Slack example discussed above is not true. It just means that you need to go to extraordinary lengths to win back the trust and loyalty of clients when they experience a service failure.

The Relationship between Service and Trust

Some years ago I wrote a blog called Trusted Relationships = Consistently Good Service. It was based on our analysis of tens of thousands of customer feedback results from Deep-Insight’s database gathered over a period of 15 years. The analysis showed that of all the elements in our Customer Relationship Quality (CRQ™) methodology, Service Performance was most strongly correlated with Trust.

It stands to reason, if you think about it. What happens when you deliver a consistently good service to a client? Their levels of trust in you and commitment to your company increase. Fail to deliver the service consistently, and their trust erodes quickly. Consistently fail to deliver, and both trust and commitment levels can disappear completely. Trust and commitment also take a very long time to rebuild.

‘Quality is Free’ so make sure to get it ‘Right First Time’

There’s a really important lesson here. Service failures are the sworn enemies of long-term profitable relationships. That’s why it’s worth investing time and effort to minimise the chances of a service failure ever happening in the first place. You may never succeed completely but it will be worth the investment. In fact, it won’t cost you anything.

This is where the old Total Quality Management (TQM) principles come into play. In 1979, Philip Crosby wrote a seminar book called Quality Is Free. His basis message was that it costs absolutely nothing to build quality into products and services. If anything, you’ll make money by reducing the cost of re-work and failed business relationships.

Quality really is free, so if you’re in the service business, make sure to get it right first time.

If you operate in the B2B world, ask yourself the question: “Is CSat the right thing to be measuring in the first place?” Maybe you should be measuring something different.

UPDATE: 27 APRIL 2023

We have just written a follow-on article on the Service Recovery Paradox in B2B companies. Click here to read.

If Trust is so important, why do so few companies measure it?

Posted on October 17, 2020 at 4:41 pm.

Written by John O'Connor

Most people understand implicitly that good Business to Business (B2B) relationships are built on a strong foundation of trust. But if Trust is so important, why do so few companies measure it? It’s a question that has always intrigued me. I must admit that I’m still struggling to find the answer.

The fact is that CEOs keep tabs on all sorts of KPIs. For operational performance, there are lots of service level agreements (SLAs) and other three letter acronyms (TLAs). Logistics companies even have five letter acronyms like DIFOT – Delivery In Full On Time. For financial performance, the CFO has an eye-watering array of metrics. For customer performance, there is customer satisfaction (CSat) and Net Promoter Score (NPS).

But rarely, if ever, is there a metric for Trust that is discussed by the leadership team or reported to shareholders.

How Important is Trust?

A couple of weeks ago, I ran a short poll on LinkedIn, asking people what they thought was the most important element of a strong B2B relationship. It wasn’t a trick question as we believe at Deep-Insight (based on pretty good academic research) that the three key pillars of a great B2B relationship are Trust, Commitment and Satisfaction.

I wasn’t surprised by the winner but I was intrigued by the margin. It appears that Trust really is seen as the cornerstone of a strong B2B relationship.

Trust, Commitment and Satisfaction

How are they all related? Here’s how we explain it.

If you take a purely commercial view of any business relationship – and you shouldn’t – it’s all about the revenues you can generate from that relationship over the long term. I know that’s a bit mercenary but that’s how some people view things. The greatest predictor of a long-term relationship is Commitment and it’s important that you measure your clients’ commitment to you. We ask that question quite bluntly to our clients’ customers: “Are you committed to a long-term relationship with [Name of Client]?”

It turns out that the answer to this question has the highest correlation with the likelihood of the company buying from our client again in the future. The opposite is also true. A poor score is the best predictor that the customer will defect to the competition.

But remember: commitment to a long-term relationship is only the outcome of other factors. Two of the most important factors are Trust and Satisfaction. Trust is all about fairness, honesty and acting with integrity. It’s a reflection on what clients think of your brand but, more important, it’s their perception of how trustworthy your people are as well.

Satisfaction, on the other hand, is a measure of how well you meet (or exceed) a client’s expectations. It’s more transactional than Trust, and also more volatile. For example, you can be satisfied with your IT service provider today, but deeply unhappy tomorrow when the network crashes and your factories or stores can’t operate. When the IT service provider pulls out all the stops and fixes the problem in double-quick time, you’re both relieved and satisfied again. Satisfaction scores can fluctuate wildly. Trust scores? Not so much.

Trust at Serco

One of our clients that takes Trust seriously is Serco. It’s one of Serco’s four stated values: Trust, Care, Innovation and Pride.

Serco is quite clear about both what Trust is, and what it is not. Here are the behaviours it expects from its people:

Do what they say they will, try their best and see things through

Consistently provide the highest standards of customer service

Have a can-do, will-do attitude

Are open and honest

Communicate truthfully, clearly and concisely

Aim to always do the right thing and never compromise our values

Think through the consequences of their decisions

Speak out when they see something wrong

Understand who our customers are, listen to them and act upon their feedback

Challenge assumptions in an appropriate way

Acknowledge when they make mistakes and take responsibility for correcting them

Similarly, Serco believes Trust is not demonstrated if employees or the leadership:

Make promises that we cannot keep

Rush to provide solutions before listening to others’ needs and opinions

Fail to keep customers and colleagues informed

Are not straightforward and transparent

Allow disrespectful or discriminatory behaviour

Knowingly use Serco’s resources for personal gain

Break our Code of Conduct or the law

Falsify or misrepresent information

Ignore and don’t speak up when we see something wrong

Choose to ignore adverse criticism

Blame others for mistakes we have made or things we have missed

Shift our responsibilities to others

Why do so few companies measure Trust?

How many companies measure have identified Trust as a core company value and measure it in a systematic way? The short answer is that very few B2B companies measure Trust at all. Serco is one of the few that even identifies it publicly as a core value. Isn’t that strange? Business magazines and articles are full of ideas and tips for becoming trusted advisors. A lot of CEOs and company boards talk about “trusted relationships” with clients in their annual reports to shareholders.

Interestingly, the same CEOs and boards talk about trusted relationships but then quote the company’s Net Promoter Score (NPS). Now don’t get me wrong. There’s nothing wrong with NPS but it’s not a measure of Trust. It’s a measure of Advocacy. Yes, the two are related but it you’re going to talk to shareholders and clients about “Trusted Relationships” or “Acting as Trusted Advisors” then you really should go and measure your performance directly.

Sometimes NPS isn’t enough. It’s a good metric – simple and easy to understand. But it’s one-dimensional. If you really want to understand how trusted a relationship you have with your clients, you need to measure Trust as well as NPS of CSat (Customer Satisfaction). As a CEO or Sales Director, you need to understand if your key clients are Ambassadors who trust you implicitly, or Stalkers and Opponents who want to get out of the relationship because levels of Trust (and Commitment and Satisfaction) are so low.

If you want to know more about measuring Trust, have a read of this blog.

Alternatively, get in touch with us today.

Investing in the ‘Soft Side’

Posted on January 28, 2020 at 5:27 pm.

Written by John O'Connor

Customer at the Heart

Peter Whitelaw and I wrote a book last year called Customer at the Heart. It was a fun experience interviewing CEOs and sales directors from large B2B companies across Europe and Australia.

One of the consistent messages we heard in those interviews was the importance of investing in the ‘Soft Side’. In other words, focusing on people as much as on process.

This is a really important point: if you are responsible for running a customer experience (CX) programme in your organisation, don’t under-estimate the importance of investing in ‘Soft Side’ activities if you want to generate real long-lasting results.

This means spending significant amounts of time with both your leadership and client-facing teams planning for success.

The Importance of Investing in the ‘Soft Side’

A quick recap on the four quadrants in the Customer at the Heart model before we go any further:

1. LEADERSHIP. The most important quadrant. Good Customer Experience (CX) programmes are ALWAYS led from the top
2. STRATEGY. Good CX programmes link customer, product, operational and organisational strategy explicitly to customer needs
3. EXECUTION. Success requires properly resourced CX teams that are brilliant at executing the Strategy
4. CULTURE. Finally, Customer Excellence must become integral to the DNA of the organisation: “it’s how we do things around here”

All four quadrants are necessary for a successful CX programme. The ‘Hard Side’ quadrants of Strategy and Execution are all about metrics and processes. ‘Hard Side’ activities lend themselves to key performance indicators (KPIs) and while the activities in these two quadrants are important and easily measurable, the quadrants of Leadership and Culture are actually more critical.

In our experience, Leadership is the most important quadrant while Culture is the most challenging. And yet, here’s the strange thing: in most CX programmes the ‘Soft Side’ is often overlooked and almost always under-resourced.

Our Approach

We have a different approach at Deep-Insight. We spend a lot more time with leadership teams and sales or account teams BEFORE we think about asking our customer’s clients for their views. If you want to run a customer survey in a hurry – “I need to get the results back by the end of the month…” – we’re probably not the organisation for you.

At Deep-Insight, the first 14-16 weeks of our process are critical and must be done properly. If you don’t invest the time up-front, your CX programme will not deliver the results that Management and the Board expect from it. More than likely, it will end in failure. It’s as simple as that.

Planning & Onboarding

The first phase in our approach is ‘Onboarding’ the organisation; The very first step is to secure the buy-in from the senior leadership team to the journey that they are about to embark on. And it is a journey because cultural change takes time. The second step is to onboard the rest of the organisation, primarily the sales and account teams. They own the customer relationships and if they don’t embrace the programme with gusto, the entire programme is at risk of being seen as a box-ticking exercise.

We typically work with dispersed sales and service teams in online workshops, and always with senior leadership support and involvement. These onboarding workshops are critical to driving up response rates and completion rates, as well as delivering action and improvements.

Insights to Action

The final phase is where the rubber hits the road. The online survey is complete. We have gathered some key insights from the feedback. Now it’s time to assemble the sales and account teams again. This time the focus is on their role in ‘Closing the Loop’ with the client. This is arguably the most critical part of the entire process. The account manager – sometimes with a member of the senior leadership team – must meet the client to discuss the feedback from all individuals in that client’s organisation.

In many cases, these discussions are straightforward because everything is fine and the relationship is on an even keel. In some instances, the client may be a ‘Stalker’ or an ‘Opponent’ and a much tougher and more honest conversation is needed.

The key outcome of these ‘Close the Loop’ meetings is agreement on the appropriate actions that are needed to improve and deepen the relationship. This gets built into the Account Planning process for that client.

Investing in the ‘Soft Side’

If your CX programme isn’t working the way you hoped it would, it’s probably because you’ve under-invested in the Leadership and Culture quadrants. The symptoms will be clear: disengaged account teams; limited insights; complete absence of action.

If you notice any of these symptoms in your CX programme, do get in touch.

Invenio Announces Partnership with Deep-Insight

Posted on January 24, 2020 at 12:39 pm.

Written by Shane O'Regan

Hi, it’s Shane here.

I’m delighted to be working with Arun Bala, Nitin Lalan and the Invenio Business Solutions team on this great programme.

I’ll let you know later in the year what we are achieving together at Invenio. For now, here’s the official announcement of our partnership with Invenio!

Shane O’Regan
Project Coordinator, Deep-Insight

Invenio announces partnership with Deep-Insight

Cork, 24 January 2020
Deep-Insight is delighted to announce its partnership with Invenio Business Solutions. Invenio is a global leader in solving business challenges with IT solutions. This tailored programme will enable Invenio to better understand customer needs, address concerns, and implement measures to enhance relationships and the customer experience itself.

Invenio has doubled in size since 2017 and anticipates more growth in the coming years. Invenio’s leadership team recognises the business’s rapid growth, including the need to maintain core values while evolving the organisation’s culture as it matures.

Invenio’s new Customer Experience Programme will be insight-orientated and action-orientated. ‘Customer Focus’ will be at the forefront. The programme will facilitate interventions as soon as customer issues arise, and ultimately becoming key to the annual account planning process. This investment is integral to all future activities at Invenio and is a tangible commitment to integrate the customer voice across global business units.

Deep-Insight’s approach is multifaceted. It is based on the view that to achieve a truly customer-centric organisation requires a roadmap of careful planning and execution. The annual in-depth assessments will identify gaps and help build lasting customer relationships with personalised plans across each account.

At Invenio, listening to customers and strengthening relationships is imperative to delivering exceptional experiences. Ultimately, this will help Invenio achieve its core purpose of being the most trusted and valued partner in its customers’ success.

Partnership

Arun Bala, CEO at Invenio commented: “My focus has been and will continue to be on delivering success for Invenio’s customers while driving transparency and value delivery through all customer engagements. Partnering with Deep-Insight to enhance our customers’ experiences is a fantastic investment for us. I look forward to driving this initiative with the team there.”

John O’Connor, CEO at Deep-Insight: “We’re delighted to come on board and support Invenio on its Customer Experience journey. We’re looking forward to employing the skills, tools and Customer Relationship Quality methodology to help Invenio employees operate a world-class Customer Experience Programme.”

Interview with René Versluis

Posted on December 21, 2019 at 4:03 pm.

Written by Pim Braat

Photo: Sanne Donders

Interview with René Versluis, NPS Expert

KPN is a leading telecommunications and IT provider and market leader here in the Netherlands. As well as supporting several million consumers, KPN also supports corporate customers in the areas of infrastructure, workplace management, the cloud, security, data networks and data centres.

Our CEO John O’Connor recently caught up with René Versluis, who has been responsible for running the Net Promoter Score (NPS) programme at KPN’s corporate division for several years. René is a genuine expert in running a customer feedback programme in a large corporate business to business (B2B) environment.

I hope you enjoy this short interview with René Versluis.

Pim Braat
Deep-Insight Regional Manager, Benelux

_________________________

René Versluis and NPS

John: René can you tell me a little bit about yourself and your involvement with Net Promotor Scores (NPS)?

René: Sure, John. I have worked with KPN for more than 15 years and I have had a series of commercial and sales roles during that time. In recent years, I have been a programme director for some of KPN’s strategic projects including responsibility for setting up and running its Net Promoter Score (NPS) programme for corporate clients. The trigger for KPN creating that role and asking me to take ownership was the fact that KPN values its corporate clients and is interested in their feedback in the fast developing world.

The Importance of Good Governance and Follow-Up

John: What were the first things you did when you took on this new role?

René: Leadership is important so my very first step was to create an NPS board which included many of the senior leaders in the company. We met initially every single week. This was an important step in setting the right governance for the programme.

John: Would you say that the NPS programme was successful?

René: Yes, I would say we had a lot of success with the NPS programme. We got feedback from customers but more important, we took action. If a client score needed to be improved, we implemented a Client Improvement Plan. We also insisted on closed loop feedback with each client. That means that within four weeks of a survey taking place, the account director created this Client Improvement Plan and discussed, agreed and shared that plan with the client.

Lessons Learned

John: What lessons did you learn from running the programme? Or to put the question a different way, what advice would you give to yourself if you were to start all over again?

René: I don’t think I would have changed anything fundamentally. I have mentioned the importance of leadership. The other thing that is important is setting realistic targets. You can’t change the culture of an organisation if you set targets that are not achievable.

John: How did the NPS Board change the culture in the organisation to make it more customer-centric?

René: One of the techniques that we used when people came to us with a proposition was to ask them: “What is the effect of that on the NPS score?” If you keep asking that question, eventually people recognise that any proposal or any investment needs to be made with the customer in mind. If it’s not and people can’t articulate a clear benefit for the customer, then it’s a wasted investment. I would also say that you need to work very closely with key clients – you can’t assume that you have the right answer. You must make sure the client thinks it’s the right answer.

The Future

John: You’ve recently left KPN after more than 15 years. What do you plan to do now?

René: I’m not ready to retire just yet! I think I have learned enough from my time at KPN to help other companies thinking about embarking on their customer experience of NPS programmes. Net Promoter is a great tool but it needs to be applied correctly in B2B environments.

John: The very best of luck, René, and thanks again for sharing those insights with us.