Plaxo and the Art of Successful Service Recovery

My previous post was critical of Plaxo for being unreachable via their VIP service on a normal business day during normal business hours as defined by Plaxo. I took a few steps to voice my concern and frustration:

  1. Submitted a support email to Plaxo through my VIP account
  2. Wrote this blog entry and trackbacked to Plaxo’s corporate blog
  3. Even shot a message through their Nabaztag service through the suggestion of a friend

Well, I did get their attention! And the purpose of this post is to illustrate Plaxo’s response as a textbook example of stellar service recovery. As a student of The Service Profit Chain (SPC), I know that it is OK to screw up your service delivery, but if you do, you must execute service recovery in a manner that is fast and perceived as over the top from the viewpoint of the customer affected. Let me be sure to emphasize that screwing up service delivery cannot be a common practice for a successful business no matter how good your recovery efforts may be; however, it does happen to the best of companies.

How did Plaxo respond?
First thing Tuesday morning I received an email from the Director of Services & Support – someone with authority over the customer service experience contacted me directly. Good first step.

The first words in the email were an apology for not being available when they said they would be. They also explained why this happened and that they dropped the ball on notifying customers about their planned outage.

This person then went on to ensure that my problem was addressed, by doing research into my account and the issues that I described, and offered a few solutions to ensure that my problem was addressed properly and efficiently. Furthermore, they suggested an approach for avoiding the initial problem that I experience in wiping out my contacts in the first place.

Finally, I was offered full refund for my first year of Premium service for my troubles.

How did Plaxo do and why did they do it?
The Service Profit Chain recommends that the most effective service recovery is:

  • fast
  • customized
  • personalized

My opinion is that they did an excellent job of service recovery. All of my problems were adequately & quickly addressed by someone in a position to do so and I understand why what happened did happen. They addressed my issues directly by looking at my account details, and constructed a response that met my specific needs. I was also offered remuneration beyond my expectations and have the comfort to know that (1) Plaxo intends to provide great service and (2) if they ever slip in their performance in this regard, they will fix it immediately.

Why they went so far as to refund a full year of membership fees is probably less obvious. Again, the Service Profit Chain illustrated research that shows repurchase rates for customers based on how their complaints were handled:

  • Didn’t complain at all – 9% repurchase rate
  • Complaint not resolved – 19% repurchase rate
  • Complaints resolved – 54% repurchase rate
  • Complaints resolved quickly – 82% repurchase rate

In fact, the more a company holds to the "fast, customized, personalized" service recovery dictum, two things happen: (1) the higher the repurchase rate, and (2) the less they have to "pay" to make the customer happy. Speed is critical. So is addressing the core problem – the customer is looking for their problem to be solved, and not necessarily a "buyoff".

What’s not explicitly in the SPC research but should be intuitive from this blog post is the other positive effects of the service recovery effort. Namely, Plaxo reimbursed me for a year subscription. What kind of payoff can they expect, even though they are not explicitly refunding my membership for a payoff per se? Here are some potential sources of payoff:

  • I will renew my subscription, whereas I may have asked for a refund and canceled or potentially just not renewed next year
  • I will tell this story to others to vouch for Plaxo’s service, and thus refer business to them
  • Others may pick up my story and pass it on, generating further referrals

My renewal is enough of a payoff for Plaxo, however, one new subscriber from this blog post will put them in positive ROI territory for sure.

I’ll leave this post with one more piece of data out of SPC:

British Airways research had shown that 98% to 99% of customers were sincerely convinced of the validity of their complaints, and we had nothing to gain by squabbling with them. Our aim was to win back the almost 400 million pounds sterling in potentially lost revenue these customers represented.

If only more companies truly took this viewpoint to heart. Good job on the recovery effort Plaxo, and I look forward to continuing my use of your service.

— brian

  • Well, I am glad you had your problem resolved efficientley, I have been trying to solve a problem with them for more than 3 months. I sent them another email today, to add to my file on their lack of response. I really like their service, when it works for me. Initially AFTER emailing several times, they told me the problem was that I had too many contacts in my contact folder so they had disabled my account. I worked with a rep to remove most of the contacts and it worked for about a week. Now I am still getting the error message that says they are experiencing problems and I can't sign in or look at profiles or anything. I am wondering if I am the only on getting this message or if other people are experiencing problems. They tell me I can sign on to vip services to get the number to call, however, when I try to sign into the service I get the error message!!!
    Not a Happy Camper!

  • Well, I am glad you had your problem resolved efficientley, I have been trying to solve a problem with them for more than 3 months. I sent them another email today, to add to my file on their lack of response. I really like their service, when it works for me. Initially AFTER emailing several times, they told me the problem was that I had too many contacts in my contact folder so they had disabled my account. I worked with a rep to remove most of the contacts and it worked for about a week. Now I am still getting the error message that says they are experiencing problems and I can't sign in or look at profiles or anything. I am wondering if I am the only on getting this message or if other people are experiencing problems. They tell me I can sign on to vip services to get the number to call, however, when I try to sign into the service I get the error message!!!
    Not a Happy Camper!