The emergence of Web 2.0 technologies (blogs, forums, social networks, has created a public forum for customers to voice their opinions about companies, products and services.

One challenge for organizations is that it is difficult to control what is happening outside their sphere of influence on blogs, forums or social networks.

Dell Hell is just one of these examples when the angry voice of customers has run out of control. The term coined by Jeff Jarvis to describe the horrible service he experienced from Dell Computers, has received a lot of attention, especially since at the time when he posted the number of customers frustrated with Dell’s customer service reach record-breaking heights.

What can a company do about these public complaints that might start an avalanche of negative publicity?

It is necessary to create a platform that gives customers a possibility to complain on the Internet. This should not just be possible in a private way (such as a complaint submission form), but instead in a public way with representatives from this organization working and documenting their efforts to fix the problem.

After the "Dell Hell" fiasco, Dell has established a few quite innovative concepts to deal with customer complaints on the Internet. Dell Community Pulse allows you to state your problem and post your tone (compliment, comment, complaint) together with a message. Take all complaints submitted to Dell globally and the result is a real time thermometer of their customer’s mood.

Complaints dominate the current mood; one reason is that such a website is always biased because of a self-selection of customers who prefer to complain rather than to compliment.

Nevertheless, such a platform creates transparency where an organization has problems, but it is also a way to show that an organization is taking unsatisfied customers serious and is not afraid to show the current state of customer satisfaction.

Even more important is that such a platform attracts people who would otherwise complain on platforms out of Dell’s control. Most customers do not want to harm an organization; they just want to be heard. That is why they write on blogs.

Providing an open, (semi-) transparent channel for your customers can help you to attract customer complaints and at least partially keep negative word-of-mouth in control.

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How is it possible that customers are more loyal after failures of products or services than they have been before? Excellent service recovery is the key and with the right activities, companies can fully utilize the service recovery paradox.

The “service recovery paradox” states that with a highly effective service recovery, a service or product failure offers a chance to achieve higher satisfaction ratings from customers than if the failure had never happened. A little bit less academically, this means that a good recovery can turn angry and frustrated customers into loyal customers. In fact it can create even more goodwill than if things had gone smoothly in the first place.

Nevertheless not all service recovery efforts will lead to increased satisfaction ratings as several studies have already shown. The key is to understand that there are certain situations when it is highly likely that a service recovery will lead to increased customer satisfaction. Services recoveries that are likely to be efficient are obviously those where the service failure is perceived to be not systematic or that the company had little control over it. But even in cases when it was a systematic failure and the company had control over the failure there is benefit for when service recovery activities are put into action to ensure that one can win-back customer’s and the source of failure is eliminated.

The key question is this: Are you aware when your customers encounter service failures? Have you thought about an “emergency plan” that can be put in action whenever your customers encounter a service failure? Or do you plan to take ad-hoc action when customers end their business relationship with you?

Read more about the service recovery paradox in these publications:

VP Magnini et. al., “The service recovery paradox: justifiable theory or smoldering myth?,” Journal of Services Marketing 21, no. 3 (2007): 213-225.

CA de Matos, JL Henrique, und C Alberto Vargas Rossi, “Service Recovery Paradox: A Meta-Analysis,” Journal of Service Research 10, no. 1 (2007): 60.

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BusinessWeek recently published their updated list of companies that offer the best customer service (mainly with focus on U.S. companies).

The names on our second annual list of Customer Service Champs know how to keep front-line folks happy, make tech investments that help rather than hinder consumers and have leaders who make service a priority. See a full explanation of how we chose the winners, and to have your own say. This year, we’re letting readers help to reorder the top 10 names on our list.

They shortly write about the details of the winners: USAA, Fairmont Hotels and ACE Hardware. Here is the list of the Top 10 companies, the full list can be found here.

1. USAA
2. L.L.Bean
3. Fairmont Hotels & Resorts
4. Lexus
5. Trader Joe’s
6. Starbucks
7. Jetblue Airways
8. Edward Jones
9. Lands’ End
10. ACE Hardware

Read the complete special report.

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