Explaining Service Failures Can Save Organizations Time and Money

July 15, 2010 - PRLog -- There's real value in taking the time to ensure customers understand why problems or errors occur.

According to John Goodman of TARP Worldwide, his research has found that you can often achieve the same customer satisfaction ratings at a much lower cost by taking the time to explain service failures.

In the July issue of industry publication, "Customer Service Newsletter," Goodman explains.

"For example," he says, "one of the ways of resolving a lot of things in say, catalog sales, is by offering a refund. And that might give you a 90 percent customer satisfaction rate, and keep customer talk time down, but it is achieving that rate by giving a lot away."

What TARP's research has found, he notes, is that while you can get a 90 percent rating by giving refunds or writing off charges - another "approach is to have a longer talk time, where the rep gives a clear, believable explanation as to why a policy is in place or why a charge is reasonable, and you can still achieve a 90 percent rating without giving so much away."

Goodman offers a similar example from the health insurance industry. "A lot of companies in this industry use escalations or appeals as a key metric," he says. "And we found that to the degree that you gave people a reasonable response - rather than say, 'I'm sorry sir, that's our policy,' and say instead, 'Here is the reason we cover this kind of treatment and not this kind' - escalation rates went down."

Talk time was a little longer, but the number of escalations - which can be much more expensive because higher level managers, medical officers, and even heath insurance regulators can become involved - went down dramatically.

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