Apologies: A sorry business

Companies have a hard time saying the word 'sorry.' Photo / Thinkstock

When customers are unhappy, an apology can put things right. So why won't more companies say the magic word?

I must be getting difficult in my old age. This year I have already written two letters of complaint.

My first victim was Telecom chief Paul Reynolds, whom I emailed about a problem with my cellphone.

Within a day I got a call from my Telecom regional manager. Not only did Ms Van De Geer listen to my concerns and apologise profusely, she also offered to make things right and fix the problem. I hung up the phone feeling the world was a better place, my faith in humanity restored.

But a recent visit to Ralph's American Diner (no, not its real name) left me feeling less inspired. It's a place we visit occasionally for breakfast. The kids love the fact that they can feast on hamburgers and chips early in the day and my dad and I are suckers for fat, fluffy pancakes.

On this morning perhaps we should have stayed in bed. The pancakes were raw and the service appalling. Even more upsetting, because it was a public holiday we were each charged a $2 service fee. I grabbed the comment card on the way out, and sent an email a few days later.

A reply came back the next day. "Thanks for the feedback. The $2 holiday surcharge goes part way towards the extra labour costs borne by an employer for being open on a public holiday. You didn't say why you paid for uncooked pancakes, it's not our intention to undercook food then expect it to be paid for as our managers will replace the food item as a priority meal if it's brought to their attention. Danielle, I know there were many dining options available to you and thank you for choosing Ralph's."

What I wanted was an apology. What I got was a reply with several spelling mistakes, in which Ralph's failed to properly acknowledge my concerns and placed responsibility back on me for not choosing an alternative meal - which I can only imagine Ralph himself believes would have made the experience satisfactory, despite the unacceptable service and the fact we had to pay extra for it.

Two customer complaints; two very different outcomes. One company addressed my grievances; the other ignored them. Telecom's response made me feel as if my business mattered; Ralph's response left me feeling just the opposite.

Sadly, it seems Ralph's reaction may be more the norm than the exception, in New Zealand and overseas. And both high and low in the company hierarchy.

Read some of the best and worst corporate apologies here.

Sydney Finkelstein, author of Why Smart Executives Fail, says the heads of Fortune 500 companies almost never apologise for poor performance. Of the 100 companies he studied, only one top-dog executive acknowledged a managerial mistake. "Admitting failure is seen as a weakness in a male-dominated corporate world."

Dr Bodo Lang is a senior lecturer in marketing at the University of Auckland Business School, and is fascinated with customer satisfaction and dissatisfaction, and word of mouth communication.

He says apologies in business are hard to come by because it's part of our mindset. Or more precisely, not part of our mindset.

"Most people struggle to apologise ... This trait can be magnified within a company ... but mostly it is just not part of many people's mindset."

He believes many people are passionate about the brand they work for and just don't like to admit wrongdoing.

"No one wants to be associated with failure, even if it leads to amazing successes further down the track. Instead, we like to focus on the things we've done really well."

Part of our mindset or not, mistakes happen and when they do, customers want to be heard and feel as though they matter. And how a company deals with its blunders may have as much impact on customer satisfaction and loyalty as the blunders themselves.

"In business, sorry is the oil that greases the wheel of service, calms the disappointed heart and heals the wounds of late delivery," says Liz Cassidy, founder of Third Sigma, an executive coaching & leadership skills training business in Brisbane. "Still," she says, "it isn't often heard in any effective manner."

A 2007 study by the British Standards Institute shows that when slips-ups occur and customers complain, 35 per cent remain loyal if they get an apology. And yet in three-quarters of cases reported, complaints were ignored. As a result, 76 per cent of those customers took their business elsewhere.

And because the cost of acquiring new customers is estimated at eight to 10 times the cost of retaining existing ones, Lang says all companies should have a customer retention and service recovery plan ready for when things go wrong.

"If a company is operating in an environment where it is easy to leave and take your business elsewhere, then they would be well advised to pay attention to and nurture their customers. If there are few switching barriers, it would be an extreme oversight for a company not to engage in customer recovery."

It's not just about losing potential future revenue from one unhappy customer, but also about other customers who may be turned off as a result of negative word of mouth generated by that initial customer.

The key is to have customer recovery take place as soon as possible - for frontline staff to be able to iron out problems as they occur. One concern, however, is that in doing so, those frontline staff could go too far - handing out too many free passes, seats, upgrades and so on - and effectively give the company away.

Technology has made the act of complaining easier than ever. Instead of having to write a letter, find out where to send it, then go to the effort of doing so, now it's just a matter of going to a company's website, finding the "contact us" page, writing your gripe and pressing "send". Does that mean people are now more likely to complain?

Yes, says Lang - and good thing, too - "because dissatisfied customers talk and when they do, you want them talking to you as a company - not somebody else."

The goal is to simplify the complaint process so disgruntled customers can easily deal with the company and not seek out a third party organisation, or engage in negative word of mouth - especially online.

"If you allow an unhappy customer to complain as soon as possible and provide a quick and effective recovery in the form of a personal, heartfelt and genuine apology, then there is less need for that customer to engage in negative word of mouth with friends and electronic media."

Complaints can also be helpful and, says Lang, they are "a huge opportunity to learn from and improve your performance, make the company better and, if handled smartly, are also a source of competitive advantage."

However, one reason companies hesitate to say sorry is that doing so admits liability and opens the door to litigation and payouts. Or worse, product recalls.

American Lee Taft has 20 years' experience as a lawyer, and is now an ethics consultant who advises clients how to lessen damages. He is also an expert on the role of apology in legal settings.

"Organisations I work with are always concerned that an apology will hurt them because an apology is also an evidentiary admission. I educate by showing how apology actually reduces damages because it removes the elements of anger and revenge and allows a claim to be evaluated without the incendiary emotional elements."

Taft believes a proper apology is a multi-step process. "It's not just about apology but rather, about apology coupled with other essential reparative gestures. Before I created the practice I have now, I worked as a plaintiff's litigator. My clients wanted apology and compensation of course, but they really wanted to know things were changed so others were not similarly harmed."

Of course, there are different levels of wrong-doing, and raw pancakes hardly compare to medical mishap or sinking cruise ships. But customers always have a need to feel as if they matter and when mistakes are made an honest, genuine apology is the first step towards reparation. I am no longer upset with Telecom and see no need to switch providers. But I don't think I'll be returning to Ralph's any time soon.

Hell cops a roasting
Late last year Hell Pizza came under fire from angry customers for including the message "You will marry a transgender" in its misfortune fortune cookies.

Tamsyn Clemerson was the first of many to post her disapproval on Hell's Facebook page: "... demeaning an extremely vulnerable sector of our population? That's pretty shit, Hells, and I'm really disappointed to find that your company is promoting bigotry under an oh-so-thin-veneer of humour," she wrote on Friday, December 2.

Dozens more complaints poured in over the weekend.

On Monday afternoon, almost three days later, Hell Pizza addressed its customers. "Guys, you're right and we've seen the light on this one. We agree that we may have inadvertently hurt some of our greatest advocates and for that we unreservedly apologise. We like to be irreverent and cheeky but we realise we stepped over a line on this one. We will rewrite the slogan for our next batch of cookies."

Clemerson, 26, was pleased with the response, and remains a Hell Pizza customer.

"I think that as corporate apologies go, it was a damn good one. It said that they apologised unreservedly, they promised to get rid of the offensive statement, and there was no appearance of the common 'non-apology', which goes along the lines of 'I am sorry you were offended' but doesn't actually take responsibility for being offensive."

But the Wellingtonian says three days for a response is too long.

Julien Leys, managing director of JML Communications in Auckland, says, "It's not just how you apologise in business that matters, but when." Sooner is definitely better than later "It's very important because it's a mark of respect.

"Apologies need to be spontaneous and given up front and must not look like they are the result of an internal board meeting," says Leys.

"We live 24/7. People expect responses and waiting two days is not good enough."

Bodo Lang, senior lecturer in the marketing department at the University of Auckland Business School, says social media has changed the way companies do business. "The key to an apology is to do it fast in order to offset electronic word of mouth. Face-to-face word of mouth does not spread quickly but once you post something online, it spreads quickly. Once you've lodged your dissatisfaction, the damage is done."

An effective apology - personal or business - includes regret, acceptance of responsibility, a request for forgiveness and restitution. It does not include denial, deflection or deceit. It is widely accepted that a proper apology contains:

* A clear, simple and direct apology - "we are sorry ..."

* A detailed account of the situation.

* Acknowledgement of the hurt or damage that has been incurred.

* Acceptance of responsibility. Do not make excuses or blame others.

* An honest explanation. Again, do so without excuses or blaming others.

* A statement of regret.

* A request for forgiveness.

* A commitment to change/improve.

* If possible, restitution or compensation.