Can you turn a negative professional service encounter into a positive one?

So, can you?

Maybe. Sort of. It depends.

This question is at the crux of the "service recovery paradox," an idea I first encountered in Chip and Dan Heath's book The Power of Moments. The Heaths highlight a study of service encounters, where the takeaway is not what you would expect:

Almost 25% of the positive encounters cited by customers [in a study of service encounters] were actually employees’ responses to service failures: slow service, mistaken orders, lost reservations, delayed flights, and so on. When employees handled these situations well they transformed a negative moment to a positive one. Every great service company is a master of service recovery.

The Heaths aren't the first to note this oddity. Business and consumer psychologists have been researching service recovery paradox—or SRP as it's also known—since the early 1990s.

Most of this research focuses on service recovery in the B2C space, but some of it has explored how SRP likewise applies to B2B relationships.

Proceeding from the more sizable body of research on SRP in B2C relationships, Denis Hübner, Stephan M. Wagner and Stefan Kurpjuweit have explored how four attributes that support service recovery—compensation, response speed, apology, and initiation—occur in the B2B space.

Hübner et al conduct their research on firms within the global logistics industry, reasoning that not only are service failures fairly common within the industry, given its scale and complexity, but that they can have significant downstream effects if not adequately addressed by the service provider.

They summarize their findings through a series of propositions, which frame out the circumstances in which a B2B service provider is likely to experience SRP.

Despite the focus on the logistics industry, these propositions clearly apply to professional service providers in the A/E/C industry, too.

1. "The service failure's potential impact must exceed the 'zone of indifference' for the affected client."

First off, the failure must be a big enough deal for the client to care. Clients understand that no one is perfect—in the course of a complex project, mistakes are a certainty.

In fact, clients and service providers don't just accept this reality—they plan for it. Construction projects are an example of this: design schedules incorporate review time for quality assurance to catch and minimize the expected errors.

2. "Externally attributed failures have a higher propensity to elicit the inter-firm SRP than internally attributed failures."

It helps when it's not your fault! Everyone knows that the world is chaotic and unpredictable, so when external forces disrupt your business, it's understandable—and clients are less likely to place direct blame on service providers.

But that's not the case when blame can squarely be placed internally to the service provider. If your project team made a pure, internal error—no outside force to point the finger at—you'll have a harder time experiencing service recovery.

3. "The provision of auxiliary resources containing the magnitude of a service failure is more likely to elicit the inter-firm SRP than limited monetary compensations."

If you can, fix the problem. If you cannot fix the problem, do whatever you can to soften the blow. Hübner et al suggest providing whatever available resources you have at your disposal to preserve your clients' operations and help them avoid any consequential significant costs that may result from the error.

4. "Compensations to individuals do not positively affect the individual perception of the service recovery episode."

You can't pay your way back into a client's good graces. Notably, this is NOT the case in B2C service failures: when a restaurant comps a meal, they may stand a good chance of improving the outlook of a disappointed diner.

When it comes to B2B service errors, individual client stakeholders aren't losing any money. What they may experience is a loss of face or credibility, and money can't buy that back. Plus, Hübner et al point out that, depending on your industry, this type of compensatory payment may actually be illegal, or at least strongly frowned upon.

5. "Immediate responses prevent failures from cascading downstream and hence increase the propensity of an inter-firm SRP."

The sooner your client knows, the better. Hübner et al observe that immediate response amount to more than just telling a client, Hey, we have a problem—it amounts to telling a client, Hey, we have this specific problem, and here is our plan to fix it, which we have already activated.

To make this happen, you must have strong external communication to client stakeholders AND strong internal communication. Ideally, you also have contingency and continuity plans in place that teams can refer to when service errors occur.

6. "Providing current information to clients' boundary spanners enables the boundary spanners to save face in front of internal and external customers and positively influences the individual perception of the service recovery episode."

Service providers should provide the client with continuous updates about the error and its impacts, especially if the provider has enacted a plan to fix it. Because boundary spanners—those within an organization who connect internal and external networks—within a client's organization may be under pressure from their own leadership, it's critical to keep these people in the loop, which may contribute towards SRP.

7. "The propensity of a service failure to result in inter-firm SRP increases when service providers communicate their engagement to eliminate the root cause of service failures."

You can't just say "Sorry." "Sorry" doesn't cut it when business relationships are at stake. The client needs to be assured that an error will not find its way to repetition—Hübner et al invoke the old business adage: "Never fail the customer twice"—and that you have a plan to address the root cause of that failure. Absent any plan, your client may determine that the error is likely to recur, and seek your service elsewhere.

8. "Sincere personal apologies from representatives of top management are most effective to convey remorse to affected boundary spanners and positively influence the individual perception of the service recovery episode."

Bring in the big guns! This is straightforward and sensible advice, demonstrating to client stakeholders that the business relationship is important to the service provider. The presence of top management also lends credibility to action plans implemented as part of proposition #7.

9. "Proactively enacting in recoveries before customer complaints are voiced increases the propensity of an inter-firm SRP."

Following on proposition #5, don't wait for the client's customers to figure out something is wrong. This proposition is especially true when service providers solve a problem that isn't their fault, placing themselves in the position of defending their client's business.

As Hübner et al put it: "[S]ervice providers that recognize or anticipate service failures before the client does will delight their clients."

10. "Recognizing failures and proactively engaging in recovery solutions creates supporters who spread their positive perception of a service-recovery episode within their organization.

When a service provider is proactive about a problem, this can go a long way towards instilling goodwill at multiple levels of the client organization. Those client stakeholders become cheerleaders for the service provider.

11. "Positive inter-subjective perceptions of the service recovery episode among boundary spanners mediate the firm-level SRP.

Back to those boundary spanners! Expanding on #10, this proposition notes that individual cheerleaders on the client side can have an institutional effect, solidifying firm-to-firm relationships and securing the client's willingness to hold onto a service provider.

Even though these 11 propositions are drawn from a study of the logistics industry, there is plenty for A/E/C professional service providers to draw on here. The more you dig into these ideas, the less the SRP seems like a "paradox." Instead, it seems that an instinctive responsiveness, strong communication structures and protocols, and a problem-solving attitude go a long way toward improving the odds that you can turn a service failure into a service success.