Customer Service Failure

by Business Case Studies on Tuesday 22nd May, 2007

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Customer Service – the value of saying “Sorry”

The British Standards Institute (BSI) has reported on a survey it has undertaken that examines customer loyalty and customer service.The report suggests that“76% of consumers said they had taken their business to a competitor as a result of poor customer service” (BBC, 18th May 2007).However, the survey also reports that where a business apologises for a customer service failure, consumers are much more likely to remain loyal to the firm. Retaining customers means increased profitability – but do firms really recognise the true value of an apology?

One company that has recognised the importance of maintaining strong customer loyalty is the power supplier EDF.The company apologised to customers after some of them lost supplies for up to 30 hours due to technical faults with the system.EDF engineers worked intensively to resolve the faults and the company sent out a formal written apology and compensation for the worst affected customers (BBC, 3rd April 2007).

Other recent apologies have been made by television providers such as Channel 4, after viewers were misled about calls to premium telephone lines to enter competitions.For example, it has been claimed that callers were told to phone a premium rate number even after contestants had been chosen (BBC, 19th February 2007).Assurances were made by Channel 4 and the show's presenters that a full investigation would be made.The quizzes featured on programmes can represent an important revenue flow for television and, as such, maintaining consumer confidence and loyalty is important.

Whilst understanding how to manage a customer service failure once it has occurred is important, it is clearly advantageous to have resilient systems/processes in place to minimise the risk of a service failure.

The Times 100 case study by energy company npower describes how strong team-working is required to develop problem solving skills to mitigate potential risks. 

The case study on Enterprise Rent-A-Car looks at how the company focuses on providing excellent customer service to retain customers through measuring customer satisfaction

Sources:

Firms told saying sorry can work – BBC News, 18th May 2007
 Water firm sorry for bill problem – BBC News, 10th May 2007


Richard and Judy in quiz apology – BBC News, 19 February 2007


http://www.thetimes100.co.uk/case-study–managing-risk-through-effective-team-based-decision-making–107-257-1.php
http://www.thetimes100.co.uk/case-study–the-importance-customer-service-at-enterprise-rent-a-car–96-251-1.php
 
Potential Study Questions:
What methods might an organisation use to try and identify potential risks?
What kind of risks does npower face in maintaining high customer service?
Why should an organisation invest in delivering high customer satisfaction?

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