Many client experience conversations focus solely on designing and building great interactions between financial advisors and their clients. We discuss quite a few tools in Practically Speaking, such as personas and journey maps, all available to help us create that positive, exceptional client experience we want to achieve.
But there is one topic that I think we should talk about more: the bad experience. No matter how much a business prepares or how many processes it puts in place to provide a great client experience, mistakes happen. What most people don’t realize is the opportunity a mistake offers. A mistake gives advisors a rare moment to gain deeper loyalty than they might have through constant good service. In the client experience world, this is referred to as the service recovery paradox.
How a bad experience led to a devoted customer
After receiving shoes my colleague had ordered for her young daughter, she noticed that one of the soles was clearly defective. She called Zappos’ customer service, frustrated because the shoes were expensive. How had they gotten by quality control? We might expect that after an incident like this, a customer may never order from Zappos again — but that is not what happened. Instead, the Zappos agent apologized for the mistake, reimbursed her for the shoes, and suggested a new replacement pair. Then she went a step further, offering to order a second pair in the next size up for free, because she knows how quickly children grow out of shoes.
My colleague is now one of Zappos’ biggest fans. If this service error had not happened, she would have simply received her shoes and moved on.
Advisors and the service recovery paradox
The service recovery paradox defined: After a service failure is corrected, the affected customer is more loyal to the company than they would have been if the failure did not occur.
In order to experience this paradox, you, the advisor, need to pay a lot of attention to the design of the service recovery, like Zappos did in the example above. Here are three key areas to focus on when correcting a mistake:
- Accountability: Take responsibility for the mistake, just as the Zappos representative did. By taking responsibility, we are providing the client confidence that we understand what happened and that we can fix it. If we try to downplay the mistake, it will create more mistrust.
- Communication: First, communicate the issue clearly, followed by the steps you will take to correct it. If the client is reporting the issue to you, be sure to listen carefully and replay the issue back so they are confident that you understand. During the recovery process continually check in with them and provide updates. Finally, when the mistake has been corrected, communicate that to the client and ask if they agree and are satisfied. Continual communication demonstrates our competency and commitment to client.
- Thoughtfulness: Be aware of the total impact the mistake had on the client. That impact can be emotional and/or temporal. We must acknowledge that impact and be thoughtful in our response. Send a hand-written note, flowers or something you know they will appreciate and which will leave a lasting impression.
Mistakes happen. We try our best to avoid them, but being prepared to handle them is just as important. If done right we have a chance to strengthen and create a more loyal relationship.
Please consult with your firm or firm’s home office compliance officer and compliance policies and procedures when notified of any customer error, mistake, and/or complaint before implementing any suggestions contained herein.
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