SDP-012. Stop Giving Coupons When You Failed

We discuss the twelfth principle: the ineffectiveness of offering coupons as a remedy for service failures. We delve into why this common practice often feels insincere and can backfire.

Daniele explains that the repetitive use of coupons as a response to service failures diminishes their value and impact. He likens it to apologizing with flowers every time one is late – it loses its meaning and becomes predictable. We discuss how this approach can lead to negative associations, similar to how excessive swearing loses its emphasis.

We also explore the unintended consequences of such practices, drawing parallels with a story from “Freakonomics” about a kindergarten that introduced fines for late pickups, which inadvertently increased late pickups as it turned a moral obligation into a transaction.

“Freakonomics” by Steven D Levitt & Stephen J. Dubner, published by Penguin Books.

The conversation then shifts to the importance of knowing when to use different tools in service recovery. Daniele highlights the Swiss railway system, where discretion is given to frontline workers to handle mistakes, emphasizing the need for a varied toolbox in handling service errors.

We also touch on the issue of customers gaming the system, particularly in the context of hotel loyalty points, where complaints can be leveraged for rewards. This leads to a discussion on the importance of not normalizing coupons and understanding the customer’s perspective – a coupon requiring further engagement with the service may not be appealing to a dissatisfied customer.

Lastly, we discuss the broader implications of automating responses like coupons, urging businesses to consider the habits and expectations they are creating with such practices.

This episode offers a critical look at the overuse of coupons in service recovery and the need for more thoughtful, context-sensitive approaches to addressing service failures.

• 00:00 Intro
• 00:03 Welcome
• 00:38 Creating Expectations
• 03:06 Unintended Consequences
• 04:03 Know when to use the right tool at the right time
• 05:43 Hotel Loyalty (?) Points
• 07:07 Coupons are just one tool
• 09:19 Outro