What is a customer recovery loop and how do you use it to improve retention?
Having a recovery loop in place that prevents customer issues from escalating into complaints is a worthwhile investment. So how do you find a process that works for you - and how do you check it is working?
Customer service is a vital part of obtaining and retaining business. In fact, 73% of buyers indicate that customer experience is an important factor in their purchasing decisions. To ensure they are servicing their customers in the best way possible, many brands are looking towards customer recovery loops to prevent customer churn and improve the customer experience.
Having a recovery loop in place that prevents customer issues from escalating into complaints is a worthwhile investment. There’s no ‘one-size-fits-all’ approach when it comes to recovery processes - finding a process that truly works for your business does require some trial and error. But the model is generally similar to that depicted in the diagram below.
Three steps that businesses must take to make a success of their customer retention via a recovery loop are:
- Capture customer feedback. The first step for any business is to ensure that they have a Voice of the Customer solution in place. This ensures any customer feedback being collected can be easily accessed and analysed, so the insight can be put to good use. It’s vital to understand what your existing and prospective customers think about the service your brand offers, and how that is split between satisfied and dissatisfied customers. If you’re seeing trends in the data with the same old complaints being spoken about regularly, or have a high percentage of dissatisfied clientele, then you’re a prime candidate for a recovery loop.
- Find your recovery criteria and build a support plan. Once the data has been analysed, the next step is to identify what makes someone a recoverable customer in your industry, as well as the level of resource needed to address those problems. This isn’t an easy task, but it’s important to ascertain these elements in tandem to understand what’s realistic for your business. When a company is getting started with recovery loop implementation, they should look at whether there are certain negative words or phrases trending in their feedback. Can these complaints be easily resolved with a simple call from a member of staff, for example? If so, establish the key criteria that falls within the team’s existing knowledge, such as “missed delivery”, “no updates given”, “[competitor name]”, etc, and set up a process for alerting subject matter experts or senior staff for those trickier issues. If you have a larger team at your disposal, with greater knowledge of your processes, the recovery criteria can be broadened out to include phrases such as “all customers with a score of 3 or below”. With that in place, staff have a clearer idea of priority customers to focus on, so that they’re not overwhelmed by the process.
- Act quickly. If a customer is unhappy, speed of assistance is vital in the recovery process – the quicker you can act, the more customers you can save. Responding within 24 hours is a good benchmark to set as a minimum, but ideally it would be within a few hours.
As with any new initiative, it’s important to have a clear understanding of what success would look like before getting started. As a business, you want to have smart, realistic goals in place that give you something tangible to aim for and continually measure against, to ensure genuine progress is being made.
That said, in the world of customer experience, some indicators of success are easier to track than others. Measuring the effectiveness of your customer recovery loop may seem tricky, so here are five ways to make sure your customer recovery loop works for you.
1. Repeat customers
Far too often, brands have their data siloed, meaning that they’re not getting the full picture when analysing the success of their recovery loop. The technology now exists to enable companies to link their customer feedback with any existing data they hold, including key things like purchase history, to provide a single view of the customer. If you can establish that your unhappy customers have continued to buy from your business after going through a recovery loop, that’s proof of its success – and a big win for your company! Companies need to ensure they’re using all the information at their disposal when checking if a strategy is working.
2. Reduced customer churn and complaints
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It’s no secret that complaints can hit a business hard, particularly those that are escalated to regulatory bodies. It’s vitally important to take preventative measures as soon as possible to stop these problems from escalating further. By intervening and taking action promptly, brands can mitigate the cost of such penalties.
With that in mind, it’s best practice for companies to take note of their typical customer churn rates, complaint numbers and, if applicable, regulatory ratings. From there, it’s possible to set goals for improvements and give yourself targets to aim for. Half the battle with analysing the success of your customer recovery loop is simply understanding the key metrics that represent success and tracking improvement against them. If you can track trends in the data that show customer churn or complaints are decreasing since your recovery loop was implemented, that’s a sure-fire sign it’s working.
3. Scoring higher
There are lots of different metrics that companies will use to judge success across different aspects of the business. Often, these will differ depending on the industry or business you’re working in, the people you’re reporting in to or even the stage of the customer journey you’re monitoring. Regardless of what your preferred metric is, what matters is to take note of the numbers when you first decide to deploy a recovery loop. Ultimately, what’s important to everyone in the business is seeing those scores go up – whether they’re Customer Satisfaction or Net Promoter Score matters not; improved scores will positively impact the bottom line.
4. Reducing cost
One of the main considerations when justifying any business decision is cost – companies want to see a return on their investment. While it needn’t be expensive, a recovery loop is still an investment, and customer service teams will still want to see the financial benefits of their decision. Cost per contact and call handling times can be significantly reduced by capturing feedback in real-time, proactively keeping customers informed, and putting preventative measures in place for reoccurrence. By empowering frontline staff with the right information and the tools they need to assist customers effectively, they can reduce the average handling time and cost of each call. Over time, this could lead to fewer calls and greater savings.
5. Better-engaged employees
The key to great customer service is that happy employees lead to happy customers and vice versa. So much so, that McKinsey & Company has reported that companies that make a concerted effort to improve their customer experience also see employee engagement rates rise 20% on average. Frontline call centre staff will often be who a customer first engages with, so it’s important to get it right. First impressions are everything. If customers are coming to the brand with a problem, they need to be greeted with empathetic and knowledgeable staff to help them – but it’s up to the business to arm them with the tools they need!
At the beginning of your journey, capturing the voice of your employees as well as your customers in real-time can often add meaningful context to your customer feedback. For instance, if a customer complains that their payment was taken late, whilst your employee flags that the billing process is manual and time consuming, you have some context. This information can be used not just to improve the customer experience but to help out staff as well. Measuring employee satisfaction scores, staff retention and productivity can help to see if the changes you’re making are having the desired impact. If not, you are then in a position to tweak accordingly.
In summary, checking whether or not your customer recovery loop is working comes down to planning and metrics. You need to get a sense of the key metrics that measure the success of a recovery loop for your business. From there, you’ll have the base stats to compare and a benchmark to aim for, so that you can confidently say your customer recovery loop is effective.
Stewart, H. (2009). Happy Customers & Happy Staff. H. C. f. C. Management. Henley on Thames.