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Discover the two magic words that will help your customer retention numbers more than anything else you could do.

It’s hard to admit our faults. But during a recall, making that admission can be the difference between successful or unsuccessful customer retention. After the 2009-2010 Toyota recalls, president of the company Akio Toyoda issued a public apology. Because of the acceptance of responsibility and their long history of trustworthiness, the company was able to rebound long-term.

However, many consumers felt that the apology came too late, as the company first blamed floormats and then faulty pedals for the unintended acceleration issues that had caused fatalities. The public reinforced this opinion short-term with their spending dollars. Toyota’s sales fell 20%, and stock prices dropped 20% in less than a month following the recall.

The lesson learned is to apologize, but to apologize quickly.

The Two Magic Words in Customer Retention

After a recall, you’re going to encounter a flurry of incredulous customers. Every interaction with these customers is going to be paramount. The people on the front lines, including CSRs, and employees in individual storefronts should you have any, need to be trained on how to deal with upset customers.

The focus of these trainings should be the two magic words in customer retention:

Various surveys have shown that when an apology is issued, customer satisfaction levels go up, even if they were initially unhappy. If CSRs and other employees dealing directly with customers take it a step further and empathize with the customer’s situation, satisfaction rates go up further still.

While the training may seem simple, it’s important. Many times these are the only situation in which the company will have a chance to deal with customers directly. You want the interaction to be a positive one.

Making Legally-Required Amends After a Recall

If your product is regulated by the CPSC, all you are required to do is notify as many customers as possible, and remove as much of the product as possible from homes and stores. The FDA has the same requirements.

If your product is regulated by NHTSA, your obligation is slightly increased. You must notify owners of the recall via postal mail, following specified rules concerning contents of the letter and labelling of the envelope itself. Then, you must repair, replace, or refund the value of the vehicle less depreciation. Most of the time, repair makes the most fiscal sense.

How Dipping Into the Coffers Can Help Long-Term Profits

If you sell a baby product, and refuse to make it safe or replace it after a recall, your customer retention numbers are likely to go down. The same goes for companies that produce pet food, but make it difficult for consumers to have their veterinary bills refunded even after the customer has acquired evidencing paperwork from the veterinarian.

By providing customers with more than what’s required, you’re demonstrating that you care. You’re demonstrating that you’re sorry, and they will take note. Forget those two magic words, and you’ll have a much more difficult time retaining customers. Fail to back up those words with your actions during a recall, and they’ll judge the apology as disingenuous.