W How to recover well in business-to-business strategic reflections

strategic reflections
How to recover well in
By Lance A. Bettencourt
Partner and co-founder
Service 360 Partners
with Mark B. Houston
Eunice and James L. West chair of
American enterprise and professor
of marketing at Neeley School of
Texas Christian University
hen a product or service failure occurs it should be every company’s goal
to recover well. Research demonstrates that customer satisfaction with a
company’s recovery efforts impacts overall satisfaction, loyalty and wordof-mouth. We highly recommend “The profitable art of service recovery” (Harvard
Business Review, 1990) and “Recovering and learning from service failure” (MIT Sloan
Management Review, 1998) for practical managerial guidance. Unfortunately nearly
all studies and managerial recommendations on service recovery and complaint
handling come from the world of consumer products and services. Yet problems are
no less prevalent in business-to-business contexts, nor is the importance of effective
recovery any less significant. In fact with millions of dollars often on the line in very
complex operations, one could readily argue that a plan for effective recovery is
more important in B2B. Interviews we have conducted with commercial buyers, for
example, frequently include stories of exceptional or poor recovery as the reason a
business relationship either solidifies or deteriorates.
On the favorable side, a buyer offered, “I feel stronger about the relationship
because they made the commitment to work through it.”
Following a story of poor recovery, a buyer said, “We lost trust with this supplier
because of their inability to execute, to be forthcoming about problems.”
This column’s purpose is to describe a simple three-step model of recovery
management for B2B suppliers by drawing on the interviews we have conducted.
(See the figure on Page 13.)
and Christopher P.
Assistant professor of marketing at
Hankamer School of Business
Baylor University
One of the basics of good recovery management is identifying issues and being
prepared to resolve them when they arise. In B2B, there are no comment cards and
a 1-800-SUPPORT line is unappealing to executives who want to rely on personal
connections to fix problems, which are more likely to be communicated and resolved
to the customer’s satisfaction when connections exist between organizations at the
grassroots level and these connections have regular communication. Also, for each
customer contact, whom to approach for a particular issue should be transparent,
and supplier contacts must have latitude to make decisions to handle problems.
“I would say that for 70 to 75 percent of the problems that we experience,” a buyer
summarizes, “I don’t even hear about it until it’s already taken care of. The guy in
our plant will be calling his counterpart and saying, ‘Gee, how about such and such?’
They fix the problem, and that is the essence of a good relationship.”
A unique aspect of many supplier failures is they can be identified in advance
and shared with specific customers. Clients expect a supplier to anticipate eventual
effects of supply or production disruptions and be forthcoming with information
about them.
“Don’t let us find the shipment didn’t get delivered today,” a buyer says. “Tell us in
EPRINT ••12•• VOL. 15 ISSUE 2 2013
advance. Tell us that the trucker got
delayed and that it will be several
hours late and going directly to the
plant. There are no surprises.”
customer’s part. This requires the
supplier to build recovery capabilities
into its culture, structure, practices
and systems before problems occur.
When in doubt, it is best to share
information with customers and
allow them to have input into the
next steps.
Illustrating the importance of
such capabilities, a buyer shares, “A
lot of corporations, their divisions
are so divided up that it’s difficult to
get a one-person relationship. That’s
frustrating. I don’t care if you have
200 divisions that you have to work
with. Last thing I want to hear is
excuses of why your engineering
department didn’t meet your request
and things like that.”
Elaborating on a situation that
led to lost trust, a buyer explains,
“We ran out of supply, and it was a
surprise to us as opposed to them
communicating to us upfront. It
wasn’t a relationship where they
picked up the phone and said, ‘Hey,
we’ve got a problem. We just found
it, and here’s how we’re trying to
fix it. I needed you to know, and I
wanted you to hear it from me.’ It
was, ‘Well, let’s just move it and see
if they find it.’”
Unlike many consumer failures,
supply issues may substantially
impact customer operations and be
rightly considered crises. As such,
collaboration is needed between
supplier and customer contacts to
partners. That means that when I’ve
got a problem, you’ve got a problem,
and we need to just put everything
aside and work it out.”
In both consumer and B2B contexts
the ability to resolve one problem
should not be considered the end
of good recovery. The organization
must learn from specific recovery
situations and fix any underlying
system deficiencies.
“Anytime you have human
involvement,” a buyer shares, “there
are going to be mistakes. That is
understandable. A couple of mistakes
are one thing. A pattern of continual
screw-ups, that is not acceptable.”
A supplier needs to create and
Recovery plans
quickly resolve issues. Suppliers
must be prepared to allocate
physical and human resources
to match an issue’s severity and
urgency. Most problems affecting
customer operations demand the
on-site presence of individuals the
customer trusts—people with the
expertise to fix the issue and ability
to make decisions that matter.
regularly update recovery plans
for certain recurring issues. For
example, if a company has just
had a raw material shortage due
to political unrest somewhere, the
company should assess what did
and didn’t work well in its response
and document factors to routinely
track to ensure that it is able to more
accurately forecast disruptions.
In fact the best plans anticipate
potential problems so preparations
can be made to avoid interruptions
to supply quality or volume.
Regardless of whether an
issue is communicated by or to a
supplier, it must take responsibility
and openly share the situation’s
cause and the steps it will take for
resolution. Customers say accepting
responsibility and having a plan to
resolve a problem are critical for
showing relationship commitment.
When resolving a product or service
failure, the customer expects the
problem to be resolved completely
and quickly with little effort on the
“I really do think of suppliers as
being an extension of us,” a buyer
says, “and I expect them to be
EPRINT ••13•• VOL. 15 ISSUE 2 2013
strategic reflections
‘When I’ve got a
problem, you’ve got a
problem, and we need
to just put everything
aside and work it out.’
Contingency plans also should
incorporate customer feedback.
In addition to forecasting possible
supply difficulties, these plans
must be developed for key phases
in customer operations when an
issue might be experienced, such as
during production start-up, product
transitions and so on. What help do
customers need? What information
do they want to know? When do
they want to know it? How do they
want it communicated?
Exceptional recovery is not
the sole domain of companies
serving consumers. Recovery can
and should be a priority for B2B
companies, as well.
“I have always felt that the
defining moment with a supplier
is how they take care of you in a
problem,” a buyer says. “You don’t
want problems, but they happen all
the time. And how a supplier reacts
or doesn’t react has a lot to do with
who we choose to do business with.
People who say, ‘Service is our
middle name,’ if they don’t come
through in those times, you tend to
question their commitment to you
or if they are really worth it.”
To be a supplier companies choose
to do business with, a supplier must
make it a priority to understand
what customers expect when things
go wrong, then design systems,
processes and structures for effective
recovery management.
Lance A. Bettencourt is partner and co-founder
of the consultancy Service 360 Partners (www.
service360partners.com) and can be reached
at [email protected] or 812824-2286. He can also be found at www.
linkedin.com/in/lancebettencourt and www.
twitter.com/service360. Mark B. Houston is
Eunice and James L. West chair of American
enterprise and professor of marketing at
Neeley School of Business at Texas Christian
University (www.tcu.edu) and can be reached
at [email protected] or 817-257-7153.
Christopher P. Blocker is assistant professor of
marketing at Hankamer School of Business at
Baylor University (www.baylor.edu) and can
be reached at [email protected] or
254-710-4595. He can also be found at www.
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