Customer satisfaction is vital for any online retailer (or indeed any business at all). It’s what makes people come back to buy again and again, and to recommend your business to other potential customers.
Even for ecommerce businesses with smooth and efficient processes for taking and delivering orders, mistakes will happen now and then – customers deliveries will be delayed, incorrect items will be sent, and returns will go astray.
These issues will affect any company, and the test is how you handle them to keep customers happy.
It also represents an opportunity to show customers the quality of service you can offer. Handled well, problems like this can result in customers being even more satisfied than if they’d had no problems at all.
This is called the Service Recovery Paradox and in this article (inspired by Dan Barker) we’ll look at how online retailers can use this knowledge.
As the chart below shows, a service failure, such as a late delivery or faulty product, can negatively affect customer loyalty, and will do so without effective service recovery i.e.fixing the customer’s issue satisfactorily.
The paradox here is that, if service recovery works well, the customer has their problem fixed and is happy, they’re often more loyal in future.
Not every service failure can lead to improved loyalty and satisfaction though. There are some caveats.
IT can also be about the kinds of issues which need attention. For example, a huge problem which impacts a customer may not be so easily recoverable.
Loyalty can be increased by dealing with issues which can be resolved to the point where the customer trusts that problems are unlikely to occur again. One or two mistakes may be forgiven, but serial errors will erode trust.
The kind of problem also influences customer satisfaction. If the customer perceives that issues are out of the retailer’s control, they’re more likely to be understanding. So, an occasional late delivery or damaged package from a third party courier will be forgiven if the retailer deals with the problem.
It also helps if the customer has a history of good service with the retailer. In the context of a longer relationship, service issues will seem to be more of a hiccup than a long term problem.
So what can online retailers do with this knowledge?
The bottom line is that online retailers need to have an effective strategy for resolving customer issues to their satisfaction.
There can be done in a number of ways:
- Make it easy to contact customer service. Whether you choose email, telephone, love chat or some other contact channel, make it easy for customers to find help quickly.
- Resolve problems quickly. Where possible, most service issues should be dealt with on the first contact.
- Empower customer service staff to resolve issues. A common problem is that customer service agents often require authorisation from team leaders etc to deal with issues.
- Exceed customer expectations. Zappos is a classic example of this. Thanks to being given the responsibility, agents are able to go the extra mile when they think it’s necessary. This can not only resolve customers’s issues but also creates stories which help build a brand’s reputation.
- Surprise customers with customer service. Amazon will sometimes tell customers they don’t even need to return items. It saves the cost of return, and in a small way can increase customer satisfaction.
All retailers should aspire to providing excellent customer service, and to ensure that problems with service occur as rarely as possible.
When they do, it’s vital to have the right attitude to complaints. While it’s possible to see them as purely negative, customers with service problems are often providing valuable feedback that can help you to improve.
The service recovery paradox, when it occurs, should be treated as a bonus by retailers. It can help to improve reputation and create a more loyal customer base.