How Unresolved Service Failures Can Cost You Big Time

 Sally's Mom loved the bouquet ordered through ProFlowers.

Sally's Mom loved the bouquet ordered through ProFlowers.

Service failures happen.

They’re unfortunate. Many are preventable. But make no mistake, they happen to every business. After all, we’re human.

Unresolved service failures are something else. They’re annoying and unnecessary. Continuing to fail at resolving a problem shows customers you don’t care, you can’t handle your business, or both.

Service failures also get far more expensive the longer they take to resolve. A 2013 Zendesk white paper estimated that waiting 48 hours to fix a problem costs companies 66 percent more than if they had solved it in just one business day. Way back in 2008, I wrote a post detailing how recovery costs rose rapidly when there wasn’t a quick solution. The longer it takes you to fix something, the worse it gets.

FTD recently provided another example. 

The costs of their service failure will be hard to spot on their profit and lost statement. Nobody in senior management may ever even notice.

That’s too bad for them. Hopefully, this post will ensure it doesn’t happen to you.


FTD's Service Failure

My wife, Sally, ordered some flowers via FTD’s website for her Mom. Her Mom was staying in a hotel for a few days and Sally thought the flowers would bring some extra cheer to her room. She paid extra for Sunday delivery so they’d be there when her Mom arrived.

An automated confirmation email arrived on Sunday signaling the flowers had been delivered.

Except they weren’t. That was service failure number one. It got worse. 

Sally called on Monday morning to see if the flowers could be delivered that day. She was told that someone would have to do some research and call back. No one ever called. That was service failure number two.

Sally called again late Monday afternoon. She still couldn’t get an update on the status of her delivery, so she asked to speak with a supervisor. The supervisor couldn’t guarantee the flowers would even be delivered on Tuesday. He was completely un-empathetic and did not apologize. 

That was service failure number three. Three strikes and your out. 


How it Cost FTD Money

This service failure caused FTD to lose money in a number of ways:

The first was labor. Two customer service representatives and a supervisor spent time talking to Sally on Monday about FTD’s service failure.

The second was revenue. Sally cancelled the order.

The third was a customer. Sally spends an estimated $300 a year with FTD. Now, she’ll spend that $300 with one of FTD’s competitors.

The fourth is goodwill. I wouldn’t take the time to write this blog post if FTD had fixed their error. It was their inability to correct a service failure that inspired me to write.

It may seem like FTD hasn’t lost too much if Sally takes her business somewhere else. After all, she’s just one customer.

But, what if this situation is just the tip of the iceberg?

Companies like FTD don’t spend much time looking for icebergs. They should. The cost of losing one customer like Sally might be small. But like an iceberg, what lurks beneath the surface might be bigger and more dangerous. 

How many customers has FTD lost because of unresolved service failures? 


ProFlowers Nailed It

Sally didn’t want to do business with FTD, but she still wanted to send some flowers to her Mom. She decided to give ProFlowers a try.

They delivered a beautiful bouquet without a hitch. Sally’s Mom loved it. 

ProFlowers earned Sally’s future business in the process. They did what they promised they’d do. No drama, no issues, just service. 

And, next to FTD, they look like rockstars. ProFlowers delivered flowers faster than FTD could issue Sally a refund.