4 Tips for Fixing Mistakes

Your young company just made an epic mistake -- maybe your product is faulty, or a customer is just really (and rightfully) unhappy. You're having night sweats and panic attacks. But take a deep breath and repeat four very important words: service recovery paradox theory. It's a social science phenomenon, in which your occasional failures make customers trust you more. It helps them see you as human. But that doesn't mean you're off the hook. "The chances of customer retaliation will be reduced if the service provider has an efficient complaint-handling policy," says Celso Augusto de Matos, a Brazilian marketing professor who has led research into the paradox theory.

Here's what he means: You need an action plan—a way to show customers empathy, maintain an open line of communication and find the right compensation to regain their trust. (Cash never hurts.) Don't have one yet? Consider these four crucial lessons from those who have been there and learned from their mistakes—because you, too, will screw up one day, like they did. It's unavoidable. Be ready.