Customer Orientation: The service recovery paradox

T he service recovery paradox proposes that a customer that has been mistreated by a supplier, and then is taken really good care of (by the same supplier) will get more satisfied than if the delivery was correct from the beginning. This would appear a fairly easy way to create win-win for a company and a customer in a situation which has turned out unsatisfactory.

Most companies are well aware of that a miss-treated customer can create greater costs than the actual benefit of the sale. Unfortunately, this is not always the case, creating a gap between a company’s corporate (and often communicated) objective and reality. This (true) story by Carl-Johan Petri offers some good learning points. A story which has also been published on Swedish national radio.

Here is the story: A girl saves all her money for a long time to buy her first own computer. After a thorough investigation she chooses a nice-looking silver metallic laptop from HP. Soon after opening the box she notices that one of the buttons on the keyboard is not working. This is troubling since the family lives abroad and now is about to leave the country for the new semester. 

To fix the problem, the family stops at a second store of the electronics chain that sold the computer on their way. Fortunately, the store immediately switches the bad computer for a good one (instead of making it a service order, since the family is leaving the country). Prior to leaving the store, the girl and her father ask the seller to start the computer. Just to make sure that everything is working fine.

First screen; irrecoverable hard disk failure! Puh – what a relief they found this out before leaving the country. Finally, the third computer is handed over to the girl – after the sales rep has demonstrated that it starts properly. After a couple of days of eager waiting, the girl finally arrives in her home and starts the computer. Two steps in to the Windows configuration process an error screen appears; irrecoverable hard disk failure. Again. This time on the third computer. Unfortunately in another country than where it was bought.

Now, is when the slap-stick starts. The girl’s father calls the reseller to get to know how to solve the problem. The reseller refers him to HP in the country where the computer was bought. HP in the country where the computer was bought refers him to the country where he is. HP in the country where he is refers him back to HP in the country where the computer was bought. Upon the simple question, if the HP employees could not talk directly to each other, the recurring answer is NO; “We are not allowed to talk to colleagues in other countries”.

Some academics refer to the fuzzy concept of “the service recovery paradox”. The service recovery paradox proposes that a customer that has been mistreated by a supplier, and then is taken really good care of (by the same supplier) will get more satisfied than if the delivery was correct from the beginning. I admit that doing research on such a process must be very difficult. How can the researcher construct a control group that can be compared with the group of customers that are taken well care of?

At this stage, however, scientific rigour is off the point. The proposition seams “face valid”. Turning to our own experience; when we were well treated by the second branch of the reseller it actually made us feel better about the purchase, than if the computer had been correct in the first place. I am also sure that HP could have relied on the service recovery paradox, and treated us in a customer centric way. Especially given their prime corporate objective:

“Customer loyalty – We earn customer respect and loyalty by consistently providing the highest quality and value”

Well HP, you have a long long way to go, if you are not better prepared to interact with your customers than you were in this case. Summarizing your ability to show “customer respect” and “consistently providing the highest quality and value”, you do quite the opposite – delivering three computers in a row with irrecoverable hardware faults, constantly pointing finger to someone else to solve the problems you are causing, and asking us – the customer – to mitigate between your different organizational units. The problem is still not resolved and the daughter is still sad. But I have gained some fundamental experiences about scientific rigor and relevance.

Yes, of course the service recovery paradox may be difficult to prove in a scientifically rigorous way. But the scientific relevance of the concept is apparently face valid. We experienced it when the reseller immediately offered to switch the computer, instead of making it a service order. HP, on the other hand, did not only miserably fail to take opportunity of the service recovery paradox. They also behaved in 180 degree contradiction to their prime core objective. Hence HP, thank you for enhancing my knowledge about face validity and giving me a chance to experience the essential message in the concept of the Service Recovery Paradox, in real life.

carl-johan@petri.org

For Swedish speakers: https://www.linkedin.com/pulse/i-cant-believe-hewlett-packard-still-dont-get-carl-johan-petri?trk=pulse_spock-articles

Malin
September, 2015