Academics call these events ‘service failures’ and there is a vast stream of literature into the negative effects, often long-term, of these failures. Some are obvious, like consumers feeling disappointment and frustration towards the brand. Others are more subtle, like loss of trust, and the impact service failures can have on others – not just those that are affected. However, the research also shows that if brands respond to a service failure in the right way, the whole encounter can become a positive experience.
When things go wrong – Service failures
Service failures happen when a customer’s experience with a product, service or brand, don’t live up to their expectations. In my example above, I was expecting to receive new basketball shoes within a few days based on the website information. Instead, my experience was receiving nothing after two weeks of silence. So, the gap between my expectation and my experience was quite large, leading to lots of negative emotions. The severity of service failures therefore depends on the size of this gap, and that gap dictates how much impact the failure has. For example, if I had received my shoes just a few days late my expectations still would not have been met, but I’d have my shoes. In that case, I may be mildly frustrated but probably forget about it as soon as I got my shoes on.
In addition to the severity of the failure, it also matters who is to blame for the failure, or more accurately who the consumer thinks is to blame. Service failures that consumer believe were outside of a brand’s control are generally judged less harshly than those that are judged to be the retailer’s fault or within their control. For example, consumers may not react as poorly to empty shelves when it is due to a national shortage and lockdown. This level of blame is impacted by past relationships, although this can be a double-edged sword. On one hand, consumers may be more forgiving to brands they have a good history with, and assume that an given service failure is a one-off. However, having past positive experiences with a brand can also raise a consumer’s future expectations, which can make smaller service failures feel bigger.
Service failures cause a lot of negative emotions for consumers, ranging from frustration to anger, and these are heightened when the purchase or service meant a lot to the consumer. These emotions can lead to ‘lashing out’ at a retailer, whether in person or increasingly through social media and online review sites. For instance, my own recent service failure experience led me to make a few social media posts calling out the retailer, and even to write this article.
Another big impact of service failures is that consumers may choose to shop elsewhere, both immediately and in future. In fact, my research on showrooming shows that most times, it is caused by service failures like products not being in stock. Because of these failures, consumers are forced to go elsewhere – perhaps a different channel, or likely a different retailer. In these situations, retailers are not only giving away sales and customers, they also risk the customer preferring the experience and service they get elsewhere and not coming back.
Service failures can also lead to customers losing faith and trust in a retailer. Consider my experience where the website told me there were six pairs left, only for the order to be cancelled. Will I still trust the retailer next time they tell me something is in stock or not? I’d definitely trust them less than I did before – maybe not at all. Trust is crucial in retail, particularly online and through digital channels, so losing that trust is a big blow for ongoing relationships between consumers and brands.
What happens next? Service recovery
While service failures can lead to many negative outcomes, the good news for retailers is that you have a chance to recover. In fact, what happens after a failure (the ‘service recovery’) can have an even bigger impact than the failure itself in handled correctly.
Service recoveries can range from a simple (yet genuine) apology, through to compensation, replacement or repeat of a service, or offering a complete alternative. The appropriate recovery depends on the severity of the failure, who the consumer blames for it, and their relationship with the retailer. However, an abundance of research across settings has consistently shown that service recoveries can go a long way to improving customer satisfaction, and their future relationship with a brand. When done well, service recoveries can even lead to positive outcomes where consumers feel truly valued and become brand advocates, who share their experiences with friends and family.
Service recoveries are even more impactful when brands allow consumers to “co-create” (i.e. have input into) the service recovery they are offered. For example, a brand may have a personal conversation with the customer and ask for input into the type of recovery they would prefer. Multiple academic studies have shown that when consumers co-create the service recovery in this way, they feel like they have more control over the situation, feel like the retailer truly cares about them, and end up with a recovery that better suits their needs. As a result, they feel more positively about the retailer, and are more likely to purchase from and recommend that retailer in the future.
Aim for the best, prepare for the worst
The message for retailers is this. Do everything you can to reduce the frequency of service failures. They lead to many negative outcomes for you and your customers, particularly when consumers see them as avoidable and your fault. However, we also need to accept that some service failures will happen, and plan contingencies and strategies for recovering when failures occur. For example, what option will you provide customers who come to your store and find an empty shelf due to a shipment delay? How will you convince them not to go to another retailer or brand? Or if your website says a product is in stock but you can’t fulfil the order, how will you compensate customers for their inconvenience? What can you do to regain that customer’s trust in future?
While avoiding failures is the easiest route to success, providing a successful recovery when they do occur can make the difference between keeping a loyal customer, and creating a vocal detractor.