Why Marketers Need to See Service Recovery from a Customer’s Perspective

Even the best organizations slip up; what matters is how they respond to service failures

Surprisingly, many of the biggest and most successful companies get service recovery wrong. An experience I had with a leading fast-casual restaurant illustrates why marketers must see service recovery through the eyes of their customers.

My family ordered takeout from the restaurant, only to find at home that my BBQ chicken flatbread hadn’t been packed. We paid for it, it was on the receipt, but there was no sandwich. I also had a small cup of soup, but that didn’t take long to eat. Soon I was sitting idly at the table while the rest of my family enjoyed their meals.

Three days later, I returned to the restaurant, showed the receipt to a cashier, and explained what happened. I also noted that the person who packed the order hadn’t checked off the items on the receipt, which probably led to the lapse.

The cashier was empathetic and immediately enlisted her manager. I explained the issue again and — without missing a beat — he offered to make a new sandwich on the spot. I appreciated his response, but in so many words I explained that would not be good enough.

Was I being difficult, rejecting the manager’s offer and trying to gain all I could from the mistake? No, I actually was giving the manager another opportunity to keep my business, which his initial offer was unlikely to achieve for me or most economically minded consumers.

Recognizing customer dissatisfaction is easy. It takes more reflection to realize that the displeasure stems from an imbalance in one of business’ most basic concepts, value: a consumer’s ratio of benefits to sacrifice (V = B/S). Products are valuable to people when the utility they receive outweighs the tangible and intangible costs they incur.

Three days earlier, the sandwich had value for me, if I’d been able to eat it with my family. The service mistake, however, altered my value ratio in two significant ways that the restaurant didn’t seem to grasp:

1. Lost benefits: I wasn’t able to enjoy the sandwich during our family mealtime when I was hungry. The day I returned to the restaurant, it was around 2:30 p.m. By then, I had already eaten lunch, and it was too early for dinner.
2. Added sacrifices: It was awkward for everyone to eat when I wasn’t. There was also time, expense and annoyance involved in going back to the restaurant to resolve the problem.

Receiving the sandwich I’d ordered three days before, now that I was no longer hungry, wasn’t going to restore my value ratio, but would other consumers have similar qualms?

Curious about their expectations, I described the experience to 21 students in one of my marketing classes, to the point where the manager was about to respond. I then asked the students to imagine that they were him and to write their response on a notecard without their name.

Ten of the students suggested that they would give the customer only what he had ordered: the sandwich or its cost equivalent. Eleven students, however, described a solution that included benefits above and beyond those originally expected, for instance:

• Refund the flatbread and soup order and give a free meal coupon.
• Deliver the correct order to your home with the addition of a refund.
• Give a $25 gift card or however much I’m authorized to give.
• Offer a complimentary meal (either now or a voucher for later) and potentially refund the order that was messed up.
• Give a gift card for the value of two meals.

It’s encouraging that more than half the class realized that in order to make things right and restore the customer’s value ratio, they needed to do more than just offer the same sandwich, or refund its cost. Their insight makes it even more surprising that one of the nation’s leading restaurant chains didn’t seem to grasp the same consumer calculus.

Maybe the manager I met wasn’t following corporate procedure. A policy departure could explain the exchange, but it doesn’t necessarily account for similar disappointing experiences I’ve had as a consumer in a variety of industries, ranging from computers to communication. Why are firms often oblivious to customers’ value imbalances, or at least not inclined to try to fix them?

The inaction could have any number of explanations: employees not wanting to admit the extent of their error, companies being reluctant to give back more than absolutely required or the inability to see service failures from the customers’ perspectives. They may not fully appreciate how slighted consumers forfeit many benefits and incur added costs.

Whatever the reasons, the fact that it’s harder to gain new customers than keep existing ones should cause every marketer to reexamine how they address service failures. Eventually the restaurant manager asked me, “What would you like me to do?” This more amenable offer may have stemmed from frustration or ambivalence, but when I suggested “Twice the cost of the sandwich on a gift card would be nice,” he gladly agreed and perhaps understood a little more about the true nature of customer value.

About the Author | Dr. David Hagenbuch

Dr. David Hagenbuch is an ethicist, a professor of marketing at Messiah College, the author of Honorable Influence and the founder of MindfulMarketing.org. Before entering higher education, he worked as a corporate sales analyst for a national broadcasting company and as a partner in a specialty advertising firm. His writing has been published in Forbes, Entrepreneur, Marketing News and Business Insider.