Treating customers poorly makes little sense, assuming a company considers them profitable and wants them to stay. The logic is straightforward. A diversified steady (or better yet growing) source of sales revenue enhances enterprise value and lowers business risk. Yet many organizations still struggle with all things customer service from (1) determining what buyers should receive for their money (2) calculating metrics that signal problems before they mushroom and (3) knowing how to turn grumps into happy campers. A Forrester Research analysis done a few years ago reveals that only four out of ten respondents rank “improving the customer experience” as a priority. Insurers with Owen-Dunn make clear that the costs of protecting a business go up unless the insured party can demonstrate that it interacts with customers in an ethical, transparent matter. In a social media world, complaints travel in seconds and “if the experience is bad, a whopping 95 percent will tell others about the bad experience.” This translates into the potential for lowered revenue at a fast clip.
In his Customer Think piece about developing an entity-wide culture to treat customers like royalty, Ian Golding offers actionable tips that include the following:
- Converse and hold meetings about what customers want and need;
- Communicate the importance of positive interactions with buyers;
- Hire people who can specifically develop and retain customers by carrying out the seller’s mission to treat buyers properly;
- Update internal performance reviews to gauge whether employees are “focused on customer centricity” and then reward or penalize them accordingly; and
- Establish a structure that enables employees to provide stellar customer service.
Based on recent visits to my local barista, I’d like to add another item to the list – Acknowledge the importance of your low maintenance customers. They may not be buying higher-priced caffeinated beverages but they frequently add a muffin or bagel to their order for a double espresso or cup of coffee and are less likely to complain about a missing ingredient. Unfortunately, the buyers of basic drinks seem to get short shrift, receiving their orders lukewarm and only after those who were behind them in line are handed a triple whipped cream, caramel something or other. What seems to be happening is that the barista goes off to create the fancy concoction and forgets about the simpler request until reminded. On a personal level, if that’s my only problem, life is good and my outcome is trivial. However, if there are tens of thousands of buyers like me who ultimately reject companies that favor high-maintenance customers, their shareholders will suffer. Who wants to wait in long lines and pay a premium price for bad service? There is likewise the reality that customers with complex needs could be prohibitively expensive to serve or could be introducing excessive and uncompensated risks that no seller should want. For every drink that takes two or three minutes to create, how much revenue is lost because two shot espresso drinkers are going elsewhere?
I’ve observed some of the same client disparities in the financial services industry as well. When I was in banking, there were colleagues who attached a certain cachet to complex transactions. If the buyer was a company that operated in a glamorous or sophisticated industry, so much the better in terms of prestige. Nuts and bolts companies with modest needs for a “plain” interest rate swap or hedged financing were typically not considered “exciting” by the mavens of Wall Street. At the same time, it was these standard, no frill trades that grew the risk transfer marketplace to tens of trillions of dollars. I remember dining with a corporate client – a senior executive from Florida – who bristled at being talked down to by “big city” bankers who were not shy about their supposed superior knowledge of high finance. His revenge was a large fortune he had made for himself and his investors by concentrating on the “average” deals that others scorned.
Putting the perils of commercial snobbery aside (for those who indulge), my take as a risk management expert is that a business should have policies and procedures in place that reflect the importance of delivering good customer service for all unless a business has decided strategically to focus on a particular niche as defined by demographics, industry or size. Even then, a vendor should politely apprise potential buyers why they don’t fit the seller’s requirements.
Smart company executives understand the essence of robust customer service. They know that competitors would be delighted to grow their bottom line by exploiting the indifference of businesses that are unable to make a customer feel special. For my part, I vote with my dollars and encourage individual and organizational consumers everywhere to do the same.