“How should I compensate a customer for a service or product failure?”
…This is one of the most common, popular, and emotionally fraught questions I encounter. (I can find myself answering it most any day in the course of customer service consulting and in nearly every Q&A session that follows a keynote speech on customer service at a business conference or event.)
The answer is: It depends. And that variability, in fact, is what’s most important. Customers have diverse values and preferences—so your people
who placate disgruntled customers need to be given enormous discretion. Still: There are principles that almost always apply:
• Most customers understand that things can and will go wrong. What they don’t understand, accept, or find interesting are excuses. For example, they don’t care about your org chart: Your mentioning that a problem originated in a different department is of no interest to them.
• Don’t panic. With most customers and in most situations, customers’ sense of trust and camaraderie increases after a problem is successfully resolved, compared to if you had never had the problem in the first place. This make sense, since you now have a shared experience: You have solved something by working closely together.
• Avoid assuming you know what solution a customer wants or ”should” want. Ask. And if a customer makes a request that sounds extreme or absurd, don’t rush to dismiss it. Even if it seems on its face impossible, there may be a creative way to make the requested solution, or something a lot like it, happen.
• Don’t strive for ”fairness” or ”justice.” The archetype for successful problem resolution — the doting Italian Mama — doesn’t investigate whether her bambino obeyed the sidewalk speed limit before comforting him, and a customer’s warm feelings for a company aren’t about fairness. They’re about being treated especially well.
• Learn from customer issues, but don’t use them as an opportunity to discipline or train your staff in front of your customer. This may sound obvious, but it happens quite often. Watch out for this flaw, especially when you’re under stress.
• Don’t imagine you’re doing something special for a customer by making things how they should have been in the first place. Time cannot be given back—it’s gone. The chance to get it right the first time? It’s gone. So re-creating how things should have been is just a first step. You need to then give the customer something extra. If you aren’t sure which ”extra” to offer a particular customer, just make it clear you want to offer something. If the customer doesn’t like red lollipops or doesn’t eat sugar, she’ll let you know. Then you can decide together on a different treat.
… And always, always, keep an eye on the lifetime value of a loyal customer. A loyal customer is likely worth a small fortune to your company when considered over a decade or two of regular purchases. Lifetime customer value studies in my experience frequently determine the lifetime value of a loyal customer to be up to $100,000—and occasionally even more.
Perhaps in your business this number is a few thousand dollars, or possibly it is half a million. It is well worth figuring out that number and keeping it in mind if you ever feel that temptation to quarrel with a customer over, say, an overnight shipping bill.
