What is service recovery?
Do you know that two out of five customer engagement strategiesh in the market are set to fail? It’s because they don’t prioritize service recovery as part of their marketing. That underscores the importance of service recovery, a process by which businesses can win back unhappy customers and retain them.
Freshchat as a brand pays a lot of attention to service recovery and also facilitates the same for its customers. Service recovery has made Freshchat a better brand. I decided to document my views for you to learn and appreciate the value of service recovery—a pillar for customer engagement and marketing.
Before I get to the learnings, it’s crucial to understand why it is increasingly important to be good at service recovery.
Hop on a time machine and travel with me approximately 50 years behind.
Welcome to the 70s, with ‘Let it be’ by Beatles playing in the background. There were great inventions—inkjet printers, floppy disks, the most complex format of email, brick-size mobile phones. These were all great products, but that was pretty much it. They didn’t care much about service recovery.
The 70s formed a course of what was called a product-centric market. Good products ruled the market. As a marketer, your job in the 70s was just to create awareness and run branding campaigns like newspaper and radio ads.
Fast forward to 20 years, the market in the 90s shifted to being service-centric. Brands understood that customers wanted more than just products; they wanted to be ‘guided’. Your job as a marketer was to ensure product/market fit and market the solution as a valuable service.
Now, marketers had to start selling what was in it for customers. Gamification, incentives, personalization, and customization started to spring up as new marketing strategies.
Subsequently, we are at an age where all markets are driven by meaningful ‘relationships’. Empathy is the last hero standing to save your business.
Today, brands and customers both pay more attention to the quality of the relationship that they share. Engagement and conversations are the building blocks of business relationships.
The relationship-centric economy demands that you prioritize relationships with your customers, or you will fail. Marketing is also evolving to include excellence in service, brand advocacy, personalization, and engagement as its sub-units.
Throughout these market changes, companies that have not been able to keep up with changing patterns have failed BIG. And what’s the one thing that’s needed to survive in this age? Let’s understand that with some examples.
Remember the downfall of Blockbuster? At its peak in 2009, Blockbuster had 5,000 stores worldwide. But by 2010, Blockbuster filed for bankruptcy and its assets were sold to Dish Network. Customers were starting to get inclined to subscription-based solutions like Netflix and Redbox. They were demanding for better services from Blockbuster, but they just did not listen.
As customers started abandoning Blockbuster stores, instead of responding to that, Blockbuster tried to increase the average customer basket size with sweets and trinkets, almost converting into a convenience store. Blockbusters had sufficient information to know that their customer behavior was changing, but they neither listened nor adapted to the change, leading to their bankruptcy.
The movie rental giant failed their customers by failing on their service recovery front.
If we take a step back and look at the actual process of engagement, it starts and ends with the most important, yet the hardest, thing known to businesses: service recovery, that helps you create close proximity with the customers. How can you possibly retain customers without having a service recovery plan?
Now that we’ve established that service recovery is pivotal, let me share this noteworthy four-wheel strategy which is sort of like a game plan for service recovery. If you apply this four-wheel strategy, I assure that you will see remarkable improvements in your business just by taking one small pledge — planning your service recovery.
Four-wheel strategy to improve service recovery
The four-wheel strategy is a pretty straightforward plan to improve your service recovery and it aligns with your marketing funnel. Here it goes:
Pay attention to data
People know what they want, and they’re communicating this through a wide range of signals — from views to searches to clicks to shares.
At Freshchat, we constantly use tools like Google Analytics and Clearbit to ensure that we gain insights about our customers and what they are looking for. Understanding what users are looking for and what stage they are in the buyer journey helps in personalizing their experience and mapping the right solutions to the right intent.
Let’s look at the fascinating story of how Netflix committed to two seasons of ‘House of Cards’ without watching a single episode of the show. So, that’s 26 episodes, bidding a reported $100 million—$3.8 million per episode.
How did they know that the show would be a runaway hit even before releasing the pilot
The answer is, they listened to data. By analyzing viewer data—think 30 million “plays”, 4 million ratings, 3 million searches—the company was able to determine that fans of the original House of Cards, which aired in the UK, loved watching movies that starred Kevin Spacey and the ones that were directed by David Fincher. Netflix leveraged this pattern and bet its money on people’s preferences and they did a damn good job at giving people what they wanted.
People expect brands to know what they want and assist them in getting it. And the brands that evolve their strategies around consumer intent will win.
– Jason Spero VP, Global Performance Solutions at Google
For example, let’s say you are a media brand or a magazine that wants to write about something trending in the entertainment section, you can check out facebook.com.iq to check out the trending topics on Facebook depending on your target demographics. Here is an example of trending topics in the US region taken from Facebook.
To get your brand into the consideration stage early, understand the unexpected ways people are searching. Check out Google Trends to see how people search for your brand and start building strategies around the outcome of the search.
Intent really is everywhere. People are signaling their intent every time they turn to digital for assistance. The challenge is to know your customers—really know them—so you can predict that intent. Data is the key here. It’s impossible to segment audiences and find the right customers effectively without it.
Multifold service recovery
Once we are done with listening to the market, it’s time to really get to know about your target audience’s favorite activities, their professional and personal ambitions, what makes them anxious, their personalities, their attitudes toward life, and what items they can’t live without.
Understand how they go about solving the problem that your product or service is designed to solve. You can also get marketing insights by asking what drives them to try a new product or service. Understand that this step is crucial before launching a new campaign and doesn’t fall under the feedback scope.
One of the best ways to listen is to simply ask questions at multiple touchpoints like social media, in-product using a live chat tool, onboarding emails, surveys, and interviews. Understand that listening to your customers means enabling and empowering them to talk and provide insights directly or indirectly.
Being a live chat product ourselves, it makes it easy for us to leave our ears open for our customers at all times. We ensure that we are available 24*7 to take their queries and provide relevant solutions. Sometimes a simple “how can I help you” might lead to a series of interactions with our customers. Facilitating service recovery with the help of a live chat tool gives you a bigger picture of intent and context as well. Using our Clearbit integration we observe the user journey of the customer to address queries better.
Lastly, content plays an important role in helping you listen to and understand your customers. There have been instances where many brands realized the scope of their target audience by experimenting with their content strategies.
For example, more than 53% of CPG brand sales came from outside their target demographic. They found this out by studying the pattern of consumers of their content. When customers choose your content, you get an accurate picture of those who are most interested in your brand.
In terms of creating opportunities to listen, ensure that your content plans are not limited to just product milestones like launches, new features, extensions, and so on, but are primarily based on milestones in your customers’ lives. This is the main reason why blogs about planning your business better during holidays have more reach in December than a feature blog.
Put yourself in your customers’ shoes
At Freshchat, we constantly make it a practice to place ourselves in our customers’ shoes to empathize better and offer relevant services. This is one of the main reasons why we started paying more attention to self-service features and chatbot integrations as we understood that more and more customers wanted to find answers to their queries on their own without having human intervention.
In the 1980s and 1990s, Lego had replaced its veteran designers with a younger crew who decided to innovate without respecting what the customers wanted. The number of unique Lego parts went up from 6,000 to 12,000, the designs became more complex. However, their sales plummeted. In 2003, Lego lost $300 million—even though Lego had the highest profit margin over any toy brand—and predicted a loss of $400 million in 2004. Lego failed to respect their customers’ views at that point.
Finally, when Lego asked its customers what they wanted, they realized that their customers wanted to just build from simple blocks. At that point, Lego’s direction had shifted away from building and creativity, but that was what people had loved about it in the first place. They decided to listen and give customers what they wanted. In 2010, Lego was profitable with sales of $2.3 billion, and in 2015 sales went up to $5.2 billion.
As a marketer, you should frame this story in your mind. It’s imperative to empathize with your customers before making any big pivot. Inform your customers of all the expected changes in their interface, ask them if they are comfortable with it, provide enough assistance to late-bloomers with tools that cater to these experiences.
New York’s fashion brand, Kate Spade recently made a shift from conversational marketing to empathetic marketing. They were struggling to be understood by their customers. As a solution to that, they resorted to actively listening to what their customers truly cared about and decided to be truly empathetic.
We’ve been on a journey toward empathetic marketing to make sure we’re listening to our customers and responding to their needs rather than just talking at them.
– Mary Beech, EVP & CMO, Kate Spade New York
They asked the customers what they wanted, placed themselves in the customers’ shoes to weigh out the possibilities and formulated their content strategy around what their customers wanted. Kate Spade incorporated this in their YouTube content and saw a tremendous increase in engagement.
The most important reason why you need to be empathetic and place yourselves in your customer’s shoes is to avoid stereotypes and get closer to your customer. Most cases we might assume something purely based on the data that we analyzed. Sometimes it takes more than that. It takes care. Use data analysis to identify behaviors and segment your target audience. But true service recovery lies in being empathetic. Ask your customers, and respect their opinions.
Feed off the feedback
In 1992, Kodak Eastman’s revenue was $20 billion, but as digital cameras gained popularity, they refused to respond and tried to protect their film and film processing business. As companies such as Sony and Fuji started selling more digital cameras, Kodak started receiving feedback from its customers asking for digital solutions. However, Kodak resisted the consumer feedback and demand, and by 2010 they were only in sixth place in the digital camera market, In 2011, Kodak Eastman filed for bankruptcy, with their share price at 65c, dropping from $94 in 1997.
I cannot stress the importance of paying attention to customer feedback. This is the only straightforward way for marketers and business owners to gather insights from people who have been using their products. Ignoring feedback might cause irreversible damage to your brand image and brand performance.
Listening to feedback is an art in itself. You need to be able to map context to your feedback first, whether it is an appreciation or an opportunity for improvement. Whether the tone is negative or positive. Note that there is no bad feedback. Every feedback provides us a direction to improve and work towards.
Next step is to categorize your feedback based on the intent. It’s important to decode different parts of your feedback to understand the issue that has been conveyed. Let’s look at an example and decode the feedback together.
Customer feedback: “ I tried to set up the widget on the top corner of the screen. But couldn’t do it. Is there a workaround?” Decode this feedback into four parts.
- Part 1 – I tried to – User is trying to do something that’s not already available as an experience to simulate. Might be a user experience issue.
- Part 2 – Widget – The feature that the user is having a problem with.
- Part 3 – Couldn’t do this – Shows sentiment. The user might not be happy.
- Part 4 – Workaround – User is looking for a solution, not just reporting a problem.
Parts 2, 3, and 4 help you with immediate resolution. Part 1, which is usually the first part of the feedback is a note that you make for future references. If you have more users sending in queries with the same first part, it’s a sign that you need to work on your user experience.
Let’s look at another example.
Customer feedback: “How are you different than XYZ product. I’ve been trailing their product as well. Want to understand the difference.”
This feedback has 3 distinct parts that I would look at.
- Part 1: How are you different- Shows that the issue is with product marketing. Not enough awareness
- Part 2: XYZ – Competitor
- Part 3: Understand the difference – Asking for information
Part 2 and 3 shows that the customer is comparing you with your competitor to understand the differences in value that you are offering. This should be bucketed as a query. Part 1 shows a lack of information in terms of creating awareness. This would be a useful asset to have for a customer who is migrating from a different product.
In terms of addressing this feedback, I would immediately send out an email or chat with the customer listing down our unique value prepositions and how different we are from XYZ. As a long-term solution to address similar feedback in the future, I would put up a comparison deck on the website listing differences and why they should consider our brand as compared to our competitors brand.
With respect to feedback, it’s important to understand that you won’t be given feedback till you ask. Ensure that you probe the users at different junctures of their user journey to realize their views of your product and understand if they are having a good experience. As Stephen Covey mentions in his book 7 Habits of Highly Effective People:
It takes humility to seek feedback. it takes wisdom to understand it, analyze it, and appropriately act on it.
– Stephen Covey
Service recovery is the number one catalyst that aids you in building great relationships with your customers. You always start by listening to what your customers want, what problem they want you to solve, what your competitors’ customers are saying about that brand, and finally listen and decode what customers are saying about you in terms of feedback and testimonials.
Listening is not understanding the words of the question asked, listening is understanding why the question was asked in the first place.
– Simon Sinek
Using the four-wheel strategy, try to become a better listener and therefore become a better brand eventually. And truth to be told, prioritizing on our service recovery did make us a better brand, a more responsible one. That’s the only way you can achieve the true essence of customer engagement.
Pledge to think beyond conversations—pledge to listen!