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Good Points Blog

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Is your customer recovery effective?

Mistakes happen in life and in business. Regardless of top-notch products, systems and procedures, training and good intentions, poor customer experiences are inevitable. While businesses can’t always undo or fix that bad experience, they can do their best to not only apologize but mitigate the situation through a customer recovery effort.

Effective customer recovery

The good news is, most people are open to an organization trying to recover, or at the very least mitigate a negative interaction. In fact, a single blunder can even present brands with the opportunity to surprise and delight loyal customers, so long as their apology is sincere and their efforts sufficient.

Effective mitigation shows customers how much they’re valued and is essential for a business to remain relevant to that individual customer. After all, without customers, your business could find itself going the way of Blockbuster, Borders or TWA. Competition is high, and in the face of poor experiences and ineffective mitigation, brands risk losing everything to organizations that do a better job of showing customers how valuable they are.

The three red flags below indicate your customers aren’t happy with either their initial experience or your subsequent apology or recovery efforts.

Red flags your customer recovery is failing 

Declining scores within industry benchmarks J.D. Power or DOT scores and Net Promoter are excellent lag metrics to indicate their might be a process breakdown. Other indicators that should jump out at you are sudden upticks in bad press or negative online reviews, and of course, any anecdotal criticism uncovered through customer surveys. 

If you’re seeing these signs, take a look at your process and try testing different recovery tactics or offerings, to see if that has an impact on survey responses. If there’s a positive correlation between specific recovery offerings and positive survey feedback, you’re headed in the right direction.

Recovery metrics & benchmarks for success

There are also specific metrics related to customer recovery your organization should be tracking. If your brand is falling short in any of these areas, it’s time to reconsider your approach.

  1. Consumption rates – Your consumption rate (a.k.a. take rate or response rate) is the rate at which customers are using or cashing in the product or service you’ve offered as an apology, like a flight voucher, gift card or coupon. One of our largest travel clients has been able to achieve up to 90 percent consumption rates using our incentive manager in their customer recovery efforts.
  2. Breakage rates – Breakage is the rate at which a customer does not redeem or cash your mitigation offer. Breakage is the opposite of consumption. Looking at the data from that same client, we’re seeing optimal breakage rates around 10-15 percent.

While these broad indicators and specific metrics provide a big-picture gauge for the effectiveness of your customer recovery strategy, the only real way to know if it’s working is to track customer retention. Look beyond broad, overall retention numbers to individual customer purchase and complaint records and connect the dots.

Mitigate meaningfully: How to connect the dots

Sophisticated organizations have all the customer data they need to measure and assess mitigation performance: time-stamped customer purchase and complaint records. Those two pieces of data will tell you whether a customer made a purchase, then a complaint, then purchased again. If so, you know your customer mitigation system is working the way it should – by retaining loyal customers after a poor experience.

If, more often than not, customers never purchase after you’ve attempted to mitigate a poor experience, you’re likely offering something they don’t want (like a 15% off coupon to your store) or don’t need (a flight voucher to a family who flies once per year). In both of these cases, your apology/mitigation isn’t resonating and may make long-time loyal customers feel undervalued or unheard.

In conclusion

Looking at broad rankings and program metrics is a great start. But to truly gauge the effectiveness of your customer mitigation program, it’s important to track retention after mitigation on an individual basis. If things are working well, proving tangible ROI for your mitigation program will be a breeze. On the other hand, if your system is broken, the data will help you make the case for changing your strategy.

In this day and age, customers hold the cards; their experiences affect their purchase decisions, and even the purchase decisions of other consumers (think about how often consumers research and read reviews online before making a purchase). If customers aren’t accepting your apology, you risk losing them to a brand that better understands their needs and appreciates the value of their loyalty.

Tags: brand loyalty, blog, loyalty programs, customer recovery

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