In services, mistakes are a fact of life. No matter how hard companies try, they can't prevent the occasional late flight or missed delivery. But they can learn to recover from them. Consider how Club Med-Cancun turned a service nightmare into a memorable experience. When a flight to Cancun left New York six hours late, made two unexpected stops, ran out of food, and had a rough landing, the vacationers on board were certain their holiday was ruined. But the Club Med manager greeted the travelers with food and music and chauffeured them back to the resort. In the end, the vacationers had a better time than if the flight had gone like clockwork. Service recovery starts with identifying the problem. The Bank of Maine in Portland pays customers $1 for writing a letter about the service they received. American Express uses an "800" number to solicit customer complaints. Once they've identified a problem, service companies must act fast. When Smith & Hawken realized that it was taking months to resolve customers' problems by mail, the company decided to use the phone instead. Most important, service companies should encourage frontline employees to deviate from the rules when necessary. Some companies use role playing to help employees develop the creative thinking needed to deal with unusual situations. Sonesta Hotels uses a game in which teams win points for coming up with good solutions to realistic problems. Also, employees must have the authority and responsibility to act on their beliefs-to make phone calls, credit accounts, or send flowers.(ABSTRACT TRUNCATED AT 250 WORDS)