In hot water – A tale of service failure and recovery 

Last week, right when I was feeling very sorry for myself because of the booster vaccine’s side effects and needed a pick me up, our Nespresso coffee machine stopped working. It started by being a little bit annoying; but, 48 hours later, it was really frustrating, and I was seriously considering quitting coffee or, at the very least, giving up on Nespresso because the coffee may be great (in taste and consistency), but the capsule system is very much not.

But, then, it all changed when a Nespresso customer service assistant talked us through some steps (push this, remove that, press here, clean there…); the machine started working, again; and the husband poured me a delicious and creamy cup of coffee. I am no longer thinking about quitting coffee. And, more importantly, rather than giving up on Nespresso, I am thinking that I must bring home the manual Nespresso machine that I keep in my drawer at work, so that, should the machine at home break down, again (or, rather, when the machine at home breaks down again), I can continue enjoying my Nespresso drink.

My little Nespresso misadventure illustrates, neatly, a phenomenon known as the “service recovery paradox”. The service recovery paradox refers to the observation that, sometimes, customers who experienced a problem which is subsequently solved not only remain loyal to the firm, but they are even “more satisfied, more likely to remain loyal, and more likely to engage in favourable word-of-mouth about the company than customers who had never experienced a failure”.

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Failure, it seems, can be good for business! But, is it?

If something seems too good to be true, it is usually wise to follow our instincts and resist the temptation of the easy win. That is a good rule in life, and a good rule in business, too. Businesses should not feel tempted to relax quality standards because they can always count on good service recovery to make up for it, and then some. Specifically, there are two types of factors that seriously limit the extent of the paradox, or even the likelihood of its occurrence: factors related to the failure itself, and failures related to the recovery.

Factors related to the failure itself

It is more difficult to recover from failures attributed to product or the organisation themselves, than those (perceived to be) caused by external factors. In my case, the problem was not with the coffee itself, but, rather, with the machine (which Nespresso has been very clever not self-brand), not the coffee itself).

Moreover, it is difficult to recover from various serious or very light failures. Very serious failures are hard to recover because of the extreme cost inflicted on the customer, be it a tangible cost (e.g., a serious injury) or an emotional one (e.g., loosing graduation or wedding photos). Conversely, small failures are hard to recover because customers are unlikely to complain about them (in my case, the non-reusable capsule system). So, even firms that are great at handling complaints, may end up losing customers because of niggles too small to complain about. 

Finally, it is difficult to recover from a repeat failure. Customers’ expectations are raised after the first successful recovery, meaning that it will take more and more for the firm to achieve the same level of satisfaction. Customers may also start doubting the firm’s efforts to solve the problem (e.g., change the supplier of coffee machines).

Factors related to the recovery

Even though offering rebates is a common form of recovery, it actually seems to be an ineffective option. First, because it increases customers’ price sensitivity. Second, because as large as the rebate may be, it may pale in comparison to the inconvenience incurred by the customer – for instance, the financial cost of a few hours or days without Internet is likely to be much lower than the inconvenience caused to customers.

The form of recovery, too, can reduce its effectiveness.  Namely, if the recovery attempt takes too long, or it is deemed to be forced, it will be ineffective. It could even backfire. An example of this United Breaks Guitars case.

Finally, if the recovery effort is made personal and relevant to the customer it is more likely to succeed than if it is seen as standard company policy.

In summary, it really is a risky strategy to rely on service recovery to make up for quality problems. It’s much better to spend time designing the service delivery, carefully. For instance, it is better to consider in advance how to deal with surges in demand, than offering upgrades or discounts when capacity problems lead to mistakes and customer complaints. 

And last but not least, it is good to remember that quality problems and regular customer complains also impact negatively on staff morale.

For now, mission has been accomplished: I am delighted to be enjoying my cup of Nespresso again; and I parked the idea of switching to another type of coffee, or drink. For the time being, at least.

Have you experienced the service recovery paradox, yourself?

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