Let's face it: Every employee and every business in the world occasionally makes a mistake, what separates service leaders from the rest of the pack, however, is how they handle those mistakes, how they meet the challenge of turning a disgruntled customer into one who sings their praises and becomes a customer for life.

This is called service recovery. It is taking a customer from hell to heaven in 60 seconds or less. It is apologizing, taking responsibility, and giving customers something of value as a way of appeasing them and earning both their trust and their loyalty.

Unhappy customers can wreak havoc on your business. They reduce employee moral and increase employee turnover, generate negative word-of-mouth advertising, and destroy your bottom line. The good news is that, using some of the strategies in my new book on service recovery, which will be available later this year, you can quickly put smiles on the faces of those unhappy customers and keep them coming back to you year after year.

Service leaders realize they are in the service business—not the banking, restaurant, hotel, computer, airline, or health care business. They know the value of a loyal customer. They spend time and money training their staffs in the art of customer service and give them the tools they need to do their jobs. They establish customer-friendly policies and procedures. They hire people who genuinely enjoy working with people. They empower their employees to bend and break the rules in order to solve customers' problems.

Incredible service will give you incredible returns. If you doubt that, you need only look at Amazon.com. In 1995, during its first year in business, the company had sales of $511,000. By the end of 2003, Amazon.com had sales of $5.26 billion and was expecting sales of between $6.2 and $6.7 billion in 2004. What is driving those remarkable sales? Service.

Happy customers will drive your business. You must care for them, nurture them, and do whatever it takes to earn their undying loyalty. We all know that advertising can bring a customer through the doors to your business once. The challenge is to keep them coming back to you, to provide them with service that is so exceptional they wouldn't think of taking their business elsewhere. That includes solving their problems. Let me give you an example of service recovery. While I was skiing at Vail Resort in Colorado, the ski lift malfunctioned and left me and many other skiers stranded for an hour. The resort people offered us two free lift tickets. It would have cost us $140 to purchase those two tickets, but they represented no out-of-pocket expense for the resort.

All too often, companies handcuff their frontline employees with strict rules and procedures. Employees who don't follow those rules and procedures are reprimanded, even fired. Service leaders, on the other hand, have policies that say, "Do whatever you have to do to take care of the customer." They train their employees and trust them. They praise their employees when they break the rules and the result is a satisfied and loyal customer.

Commerce Bank on the East Coast is a $23-billion bank with a 10-year, 31-percent annual return that knows the importance of service recovery in operating a successful and growing business. In fact, the company pays $50 to any employee who identifies a stupid policy or rule that gets in the way of serving the customer.

Empowerment is the backbone of service recovery. You must allow your employees to solve a customer's problem on the spot. You also must encourage your employees to give the customer something of value, something that is so powerful they not only will keep coming back to you but will tell everyone they know about it, as well.

What can you give your customers when you make a mistake? First, give them an apology. Then follow that with something that has value for the customer. Hotels can upgrade the customer to a suite at no extra charge. Restaurants can provide a free round of drinks or appetizers. Airlines can upgrade passengers to first class. Car rental firms can give the customer one free day of rental. Car dealerships can provide a loaner car when the customer's car is not repaired when promised. Internet service providers can waive their fees for a month or two when service is disrupted. The list goes on and on. The key is that you are giving the customer something that has value in their eyes—and pocketbooks—but that doesn't cost you an arm and a leg.

Price alone is not a competitive weapon. You must provide exceptional service and service recovery if you are to survive and succeed. Practice service recovery and you will be amazed at how often you can bring customers back from the brink of defection and at the positive impact it will have on your bottom line.

John Tschohl is an international management consultant and speaker. Described by Time and Entrepreneur magazines as a "customer service guru," he has written several books on customer service, including The Customer is Boss, Cashing In, and Achieving Excellence Through Customer Service.

As president of the Minneapolis-based Service Quality Institute, he has developed more than 26 customer service training programs that have been distributed and presented throughout the world.
You can contact John at (800) 548-0538 or e-mail him at quality@servicequality.com .