When a customer feels wronged, it's rare for companies to take conciliatory measures. That is especially surprising in light of the high costs of inaction, as Gallup research on the subject shows:
- Experiencing a problem can reduce a customer's loyalty to a
brand by as much as two-thirds.
- Other negative effects of a customer problem, such as lost
sales or disparaging word-of-mouth comments can last at least a
year; in one case, customer satisfaction surveys showed that a
major bank was still suffering from damaged customer relationships
14 months after a spate of service problems were poorly
handled.
- To recoup the damage caused by a customer problem, a company must ensure that the customer feels its response was nothing short of excellent. Yet only one in seven customers typically emerges from such a corporate encounter feeling "extremely satisfied."
Why risk losing a customer when keeping him or her is well within your ability? To avoid the destructive consequences of inaction, try our six-step approach to problem resolution (see box). Based on research and consulting experience, this method revolves around a simple yet profound act: an apology.
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Here's how it works: When a customer expresses a problem, the person who takes the complaint acknowledges the customer's distress and pledges to help rectify it (by saying, for example, "I hear what you are saying, and I'll work to clear up the issue"). This is often referred to as "owning" the problem. Next, apologize and show you mean it by starting the process for solving the problem. This follow-up is what proves an apology is genuine. And it is genuineness that makes an apology effective.
A proper apology may even save the company money. At a well-known hotel chain, it had been standard practice to refer complaints to the manager, who often responded by offering one or more free overnight stays. At Gallup's suggestion, the hotel changed the policy, instructing all employees to apologize for complaints they received and offer restitution that was within their power to provide. If a guest complained to a maid about poor housekeeping, for example, the maid would apologize (even if she was not the person who had cleaned that room) and offer the guest a gift basket of toiletries or a complimentary bathrobe. If the guest was still fuming, the employee referred him or her to the manager, who upped the restitution. Overall, the hotel's cost of handling complaints dropped dramatically, without any drop in the satisfaction that guests expressed at how their problems were handled.
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In fact, the power of a sincere apology goes beyond repairing your customer relationships. Gallup research also shows -- and studies by psychology and sociology researchers confirm -- that a genuine apology can actually strengthen a customer's bond to your company, leaving him or her more loyal than customers who never had a problem. For example, when Gallup surveyed retail banking customers, only 26% of those who had not recently had a problem considered themselves extremely satisfied with the bank, vs. 51% who had experienced a problem, but were extremely satisfied with the way it was handled.
To understand why apologizing works, you have to realize that a customer feels isolated and vulnerable when a customer relationship goes awry. If the company owns the problem, apologizes and undertakes a remedy, the customer's perceptions are validated and his value to the company is confirmed. Marti Hope Gonzales, a social psychologist at the University of Minnesota, has done research demonstrating that genuine remorse and expressions of regret are the key to a good apology, such as saying "I'm sorry, I feel awful about your problem," and then offering restitution. If the employee who takes the complaint is not authorized to make restitution, he or she should be trained to say something like, "I'm not authorized to specify what the company can do to make this up to you, but I'm taking this to my manager and we will set this right."
On a different tack, the late sociologist Erving Goffman, who devoted much of his career to research on the importance of "face," noted that apologies keep both parties' self-images intact. Thus, when the company accepts responsibility and helps to solve a customer's problem, the company looks good and the customer's feelings are legitimized.
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Stonewalling or finger-pointing is a common way in which companies avoid apologizing. For example, if a customer brings back a piece of merchandise, claiming it's defective, some (improperly trained) employees will respond, "Are you sure?" To the customer, this translates into "I don't believe you." The opportunity to show respect and empathy is lost, replaced with a suggestion of mistrust. The customer is turned into an antagonist.
That's when lawsuits get rolling. When companies resist apologizing out of fear that doing so will expose them to a lawsuit, they are often bringing on their own worst nightmare. That's because liability is not really relevant to the myriad, everyday snafus that erode customer enthusiasm and brand loyalty. In fact, the earlier you apologize, the less likely you are to hear from a customer's lawyer. After all, if a manager apologizes and rebuilds the relationship, customers have little reason to pursue their grievances further.
Handling a problem that involves personal injury obviously does require legal advice. But according to John Darley, a psychology professor at Princeton University, apologizing may be a good idea even in those instances. In cases of medical malpractice, says Darley, research shows that patients are less likely to sue if their doctors make a heartfelt apology and work to alleviate the problem.
A final note: Gallup consultants have repeatedly found that customers who are emotionally bonded to a brand -- or "fully engaged" -- will bestow upon that company a state of grace when they have a problem. Such customers are more likely to ask themselves, "Could I have caused this problem?" They're also likely to assume that a company's mistake was honest or unavoidable.
To sustain that state of grace, companies should invite customers to speak up about any problems. Provide them a complaint forum, such as toll-free numbers, help desks and Web sites. Also train your frontline workers to listen carefully, so that you learn about problems before they become the source of a customer's grudge. Truth be told, customer problems will damage your brand whether you hear about them or not -- but only if you hear about them will you have the golden opportunity to say you're sorry.