How “company policies” will destroy customer relationships and lifetime value of a client
Customer outreach is critical in times of uncertainty, but the question becomes what to say, how to say it and how often? In our article, Six Effective Game Changing Customer Outreach Strategies, we discuss a step-by-step process on appropriate customer contact that is sure to increase your probability of success. Moreover, implementing customer outreach is not only necessary but essential to the survival of your company. The challenge is that in stressful situations, most companies are doing it ALL wrong.
We’ve compiled a list of absolute disasters from a customer experience standpoint that research revealed. These examples of poor customer outreach and service during one of the scariest times in our history – if not THE scariest by far topped the list of the study and should absolutely be avoided at ALL COST:
DEAL KILLER #1: BANKING – A bank issues NSF fees to an overdraft that was missed by the customer confused during challenging times. In our survey, the customer explained they had missed the account activity reports because it was a low activity account they mistakenly used for a subscription. Once they realized the account was tied to the payment, they immediately terminated it – but for the customer it was too late, they accrued over $400 in NSF fees. The customer, distraught and at-risk of losing their job, called to see if there were any financial concessions the bank could make to help them find a resolution to the problem.
WRONG RESPONSE: Unfortunately, the bank was not empathetic to the customer at all and refused to help find a suitable resolution. The teller stated “Well mam, you have overdraft protection and you’ve accrued $400 in fees, we’ll try to do something, but I don’t think we can help out much since this was your mistake. We have online banking, we have drive-thru, you could have handled this before it got out of hand. This reaction and response is the WORST mistake you can make. Blaming the customer even if its their mistake ‘triggers’ the customers already sensitive emotions and the relationship will most likely be terminated.
SOLUTION RESPONSE: Even though this was the client’s clerical error, during times of crisis and severe confusion, the bank should empathize with the client’s situation. It’s not that the bank should waive all fees or bend the rules beyond fairness but more on HOW they should have responded. A better response the teller could have made was “I understand there is a ton of confusion and chaos right now AND it is my understanding that congress is trying to push legislation through to help citizens mitigate NSF fees during this time, in the meantime, our bank is proactively removing all fees that were accrued beyond xx date, at the time of quarantine. I assure you we will consider more after we review your account. Our goal is to make sure we help you get through this trying time with as little as heartache as possible. Let me call my bank manager and I’ll get an answer to resolve this right away.”
LESSON LEARNED: This isn’t about handouts or waivers, this is about empathy, understanding and being prepared to preempt customer challenges during uncertain times. Can’t you see in the example how this could have been handled differently? Where the clerk could have been the hero and saved the day. Further, holding to your guns isn’t worth losing the lifetime value of a client. Sometimes, even if there are company policies in place to protect the business respectably, 9 times out of 10 there is a better way to react and phrase a response that is more suitable for customer retention and satisfaction. Most importantly, a well-scripted and well-thought out response allows the rep to remain in rapport and client centric. This is not a time to lose business because of emotional, reactive responses.
DEAL KILLER #2: BRICK AND MORTAR – A retail business in the health and wellness industry (just prior to COVID-19), announces hitting a major milestone in number of clients. Naturally, they were excited and proud to have reached that accomplishment. A client complained that the store policy to charge a fee for cancellations was a problem especially when cancellations were occurring due to ‘COVID’ concerns. No one anticipated the extent of the pandemic at that time, but the client felt cancelling was a prudent step under the circumstances. Worth noting, the customer was considered ‘VIP’ based on their account standing and activity. The customer invests a great deal monthly to this establishment and was committed but felt diminished and undervalued as the company cared more about number of NEW clients than quality of relationships of long-term customers.
WRONG RESPONSE: The representative explained ‘their policy’ was in place because they must serve a high number of clients and they WILL remain strict for that reason. When the customer explained their situation for the cancellation, the store responded, “Actually, because you cancelled twice, we could have charged you more, but we did you a favor and only charged you once.” This response left the customer furious. She cancelled her membership the very next day.
SOLUTION RESPONSE: The rep could have taken a different approach. “I understand AND you are right to be concerned and cautious with your health during this time. You are a valued customer and as one of our VIPs, we are reasonably lenient with our cancellation policy up to three times per month – we call it our no-fault guarantee because we know things come up. I promise, we’ll make sure we communicate with you if you reach that limit but for now, just take care of yourself and thank you for your business.” Can you imagine how the customer would have responded to hear “you are right”?
LESSON LEARNED: Every client should be responded to with empathy, understanding and professionalism but when a client is truly ‘VIP’ and pays a premium as did this customer, they should be considered extremely valuable and costly to replace. In some cases, it is nearly 7 x more costly to replace a client than to keep the ones you have happy. Touting that you have xx number of clients and you are churning them in and out like a revolving door doesn’t sit well with customers who are vested and committed to your business long-term. Many customers see this as the company caring more about profits than relationships. The company’s strict policies and customer service training and reaction will cost the company thousands in revenue or more depending on how many customers back out of memberships based on this response which I assume is more than one for sure. While this is a great profitable, short-term strategy that meets stakeholder and investor demands, long-term it allows the companies competition to outperform just on building stronger relationships alone. During a time like COVID-19, you can bet that people will reevaluate their monthly costs and expenditures. Your business may not make the cut if customer experience was less than par or worse prior to the coronavirus pandemic. Expect to be put on the chopping block.
DEAL KILLER #3: GROCERY STORE – A grocery store was dealing with the height of the pandemic challenges, emotions and shortages. There were policies being put in place to help ration items for other customers and fulfill needs fairly across the board. Understandably, everyone was stretched thin and angry customers ravaged stores without properly understanding the nature of the situation. After reviewing a severe breakdown between a grocery store checker and customer, we thought it was a highly relevant and notable story to highlight during massive shutdown. The customer had more items than allotted in the basket but unaware of the policy and was ready to check out. The clerk let the customer know that he had too many items and would have to vastly cut back. The man who was purchasing products for an elderly man had a legitimate story, and felt the store could bend their rules so he could make his purchase.
WRONG RESPONSE: The store checker began to argue with the customer immediately. She stated she was putting herself at risk just by being there while the customer explained the elderly man’s situation. She began raising her voice, moving her head to appear agitated and was visibly losing control of the situation. She also told the customer “the register won’t allow me to ring up more than three items total,” which was not accurate after it was all said and done. This caused the man to begin to get angry and not believe the clerk was being fully honest. The customer stated that he needed at least enough supplies to last for a week and pleaded for understanding. Although it was a somewhat complicated issue on both sides, it was a plausible story. Finally, a manager appeared and explained the policy once again, the customer explained his position once again. Ultimately, the store manager approved enough items for the week and let the man check out. Notably these items were not toilet paper, rubbing alcohol, or hand sanitizer, it was actually FOOD. Also noteworthy, these items weren’t eggs, milk or bread. They were a variety of frozen meals including breakfast, lunch and dinner to eat until fresh foods could be purchased – making the customers story likely and understandable.
SOLUTION RESPONSE: This was a very unique and complicated situation during such a difficult time while grocers were dealing with angry, confused, disgruntled customers and a shortage of supplies – both sides could have handled it differently, but once again, this is an opportunity to learn a better method to respond. The clerk could have defused the situation and deescalated but instead it turned into an arguing match in the middle of the store. She could have said “I understand that you are shopping for an elderly man. It’s really nice of you to care for him at a time like this. I’m sure you can understand the shortages we’re having and trying to serve the thousands of customers we have in fairness. Let me call my manager and see what she can do, I’m sure there is another way. I believe you and want to help you find a solution. I can’t imagine what the elderly are going through right now”. This response immediate defuses the disgruntled customer but also shows empathy and appreciation which in the end is hard for anyone to argue with.
LESSON LEARNED: The clerk lost trust and respect right out of the gate and even argued with the man. She began debating before any attempts to deescalate the situation were attempted. There was no rapport and no genuine concern or understanding. Most likely in her highly stressed state as well, she couldn’t see the possibilities or give the customer the benefit of the doubt. Again, these scenarios dealing with an unprecedented situation are ‘not typical’ but they are great examples on what NOT to do and HOW to create a great customer experience even in difficult situations where you can NOT only create a bond with your customer, but also become their hero.
These three lessons go back to the initial discussion of how to handle customer outreach and communication during an extremely rare and extraordinary situation. To get better responses and not let ‘customer policies’ destroy the relationships you’ve worked so hard to build, you have to be able to put yourself in their shoes and word your responses with care and thoughtfulness.
None the less, they are lessons to be learned and with proper training, scripting and practice you can achieve the 6 Effective Strategies of Customer Outreach:
- Be Empathetic
- Be Proactive
- Be a Good Listener
- Be Engaging
- Be Prepared
- Be a Hero