Service Recovery; The road to customer loyalty

I have heard said that it is often cheaper to try and create loyalty amongst your current customers than attract new ones. But what happens when you find yourself trying to rebuild relationships you’ve already formed?  What needs to be done, and perhaps more importantly, what needs to be spent to get those customers back? Welcome to “Service Recovery 101”

After last month’s server crash at Blackberry, when online services were down for three days, owners Research In Motion were faced with the challenge of rebuilding relationships with their disgruntled customers. Battling for market dominance alongside Apple and Microsoft, many would have expected RIM to go on the service recovery offensive. After all, it’s no coincidence that sales of the newly launched iPhone 4S surged during the Blackberry downtime.  It was rumoured that free apps would be available for download in an attempt to build bridges. However, for the time being Blackberry customers will need to be content with an apology from the CEO. Will this be enough to prevent customers from switching to one of their rivals? Or are the Blackberry owners hoping that those tied to long term contracts with the company will forget the incident when their deals come to an end? Time will tell.Step up Qantas. Last week saw CEO Alan Joyce make the decision to ground all Qantas aircraft, leaving hundreds of thousands of passengers stranded. As a goodwill gesture to all those affected in Australia and New Zealand, free national flights have been provided, costing the company $20m (£12.5m). Furthermore, those outside the southern hemisphere affected by the decision are likely to receive compensation within the coming weeks. While the expense for such compensation is expected to be great, those at the airline believe the risk of losing customers is not one they wish to take.While the Qantas approach to service recovery, compared with that of RIM, may be an expensive one (and certainly contradicts my opening statement), it shows us just how important their current customers are.  And if those hundreds of thousands affected by the CEO's decision choose to stay, then it certainly will have been money well spent.