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.

Live Experiment: A breakthrough with Whirlpool?

I think I finally have a resolution after contacting Whirlpool 16 times to update an expired credit card. And, I've also confirmed my suspicions that there was a broken link in the chain. As I've written before, your service is only as good as the weakest link in the chain.

Background

My wife and I had a subscription where Whirlpool automatically sends out a new water filter for our refrigerator every six months and bills the credit card they have on file. Our credit card recently expired, but so far we've been unable to give Whirlpool the updated information. 

Breakthrough

Yesterday, I exchanged direct messages on Twitter with Chris, a Whirlpool employee who monitors their customer service Twitter feed @WhirlpoolCare. This led to a phone call where I explained that between my wife and I, we had now contacted Whirlpool 16 times in an effort to update an expired credit card. Chris listened, apologized, but like everyone else we had interacted with, he told me he was unable to help me. However, unlike everyone else so far, Chris offered an alternative solution and explained why he was unable to fix my expired credit card (more on the credit card in a moment).

The alternative we agreed upon was that Chris would send us a complimentary water filter as a gesture of goodwill. It would then be up to me to re-establish a new online account with my updated credit card as a workaround to the problem. (I could also find an alternative source for the water filter.)

This is huge because, as I explained to Chris, I have a house full of Whirlpool appliances. Before this incident, I wouldn't consider another brand. Now, I wouldn't consider Whirlpool unless this was resolved. If the filter arrives as promised I'll consider Whirlpool back on my list of preferred appliance brands (their appliances are really, really good).

The Broken Link

brokenchain_sm.jpg

Chris also revealed the broken link in their chain. The water filters are fulfilled by a third party, so Whirlpool customer service employees have no access to that company's fulfillment system. The only tool they are given is the instructions on using the website that they can relay to customers. This explains why each customer service representative we've encountered has been unable to help. Apparently, the system's designers never imagined the system could break so there were no contingency plans for handling this sort of situation.

Unanswered Questions

I didn't want to press my luck by asking Chris too many question since I was his last customer of the day and he had stayed a little late to talk to me. My top priority was getting a resolution and I had that now. However, there are a few unanswered questions that could be instructive.

What is the escalation procedure? If a system is broken, someone should be able to escalate. Why couldn't (or wouldn't) Whirlpool's customer service employees escalate this issue to someone who was empowered to fix it?

Where is the process broken? The specific problem was technical, but was it on Whirlpool's end, the fulfillment company's end, or both? When two parties encounter a problem, the instinct is often to point the finger at the other party, which means nothing gets resolved.

What's the full impact? I have to imagine my wife and I aren't the only ones to experience this problem. Is this problem really an iceberg? In other words, how much business is Whirlpool losing due to situations like ours?

Jeff Toister is the author of Service Failure: The Real Reasons Employees Struggle with Customer Service and What You Can Do About It. The book is available in paperbook, e-book, and audio book formats.

You can learn more about the book at www.servicefailurebook.com or purchase a copy online at AmazonBarnes & Noble, or Powell's Books.

Service recovery from Heitz Cellars

Earlier this week, I wrote a post about three wineries that all handled a missing or delayed wine shipment in different ways. (See Good, Bad, and Ugly ways to handle the same problem.) Since then, Heitz Cellars has made a bit of recovery.

Heitz Cellars was my "ugly" example in the post because I had called three times to check the status of some missing wine and they had short shipped my order twice. Yesterday, the last two missing bottles finally arrived. The modest recovery came from the refund they issued to my credit card. This means the end result was I finally had my delicious wine ('07 Zinfandel) and I didn't have to pay for it. Heitz Cellars makes some terrific wine and this gesture was enough to keep me as a customer.

This also serves as another installment in my collection of stories that prove the longer you take to solve a customer service problem, the more expensive recovery will be.

Related posts on expensive service recovery: