Service recovery is crucial for service business excellence. In his speech on quality service, Ron Kaufman presents a prominent example of a bank making a mistake in a monthly credit card statement. The charges from the last month are copied to the next month. The customer is furious. He thinks that his bank is trying to rip him off and informs everybody he knows about this event. His loyalty goes down.
Even after a credit card officer fixes the problem, the customer remains in a bad mood. His image of the bank is seriously damaged by this inconvenience. The customer has received a refund of the charges, but now he is in fear that this situation can reappear in the future. He does not feel safe anymore waiting for new bad news to come up. One mistake is more than enough for him to distrust the bank on a general basis. The call from a branch manager slightly changes the situation. He acknowledges the mistake made and underlines the importance of the customer. There are good reasons for that.
The customer has a checking account, a credit card, and a car loan with this branch of the bank. Prior to the mistake, his loyalty has been very high. Now he is suspicious about every action of the bank. The branch manager makes the customer feel important by flattering attention to his new expensive car and a promise to take care of further banking services personally. The customer is in a good mood again. After the call from the branch manager, the customer receives a package with an official letter from the bank and a leather wallet as a present for the inconvenience. The bank has used its mistake to recover and increase the customer’s loyalty.