A Big Mistake

Recovery Paradox

A couple weeks ago John Anderson and I hosted a webinar introducing our new white paper, Your High Net Worth Client Strategy: It’s What They Want, Not What You Know. We shared our research and at the end took questions. One participant asked: how do you recover if you or someone in your office has made a mistake that impacted a client? Mistakes happen and will continue to happen, but what most people don’t realize is the opportunity a mistake offers. A mistake provides the opportunity to gain deeper loyalty from the customer than constant good service. In the client experience world this is referred to as the service recovery paradox.

A Real Life Example

After receiving shoes my colleague ordered for her daughter she noticed that the sole of the shoe was defective. They were very obviously defective. She called Zappos customer service frustrated because the shoes were expensive and she didn’t understand how they got passed a quality control group.  The Zappos agent apologized for the mistake, reimbursed her for the shoes, and suggested a new replacement pair. Additionally, the agent offered to order a second pair of shoes in the next size up for free because she knows how quickly children grow out of shoes. My colleague is now one of Zappos biggest fans. If this service error had not happened she would have received her shoes and moved on.

Advisors Service Recovery Paradox

The service recovery paradox formal definition is, after a corrected service failure the affected customer is more loyal to the company than they would have been if the failure did not occur. In order to experience this paradox there needs to be a lot of attention given to the design of the service recovery like Zappos did in the example above. There are 3 key areas we should focus on when correcting a mistake.

  1.  Accountability: take responsibility for the mistake. Just as the Zappos rep did. By taking responsibility we are providing the client confidence that we understand what happened and that we are positioned to fix it. If we try to downplay the mistake it will create more mistrust.
  2. Communication: First, communicate the issue clearly and provide steps that will be taken to correct it. If the client is reporting the issue to you, be sure to listen carefully and replay the issue back so they are confident you understand. During the recovery process continually check in with them and provide updates. Finally, when the mistake has been corrected communicate that to the client and ask if they agree and are satisfied. Continual communication demonstrates our competency and commitment to client.
  3. Thoughtfulness: Be aware of the total impact the mistake had on the client. That impact can be monetary, emotional, and/or temporal. We must acknowledge that impact and be thoughtful in our response. Send a hand written note or flowers. This should be something you know they will appreciate and leave a lasting impression.

Mistakes are made and they will continue to be made. We try our best to avoid them, but being prepared to handle them is just as important. If done right we have a chance to strengthen and create a more loyal relationship.

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