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How Customer Experience Policies Empower Growth 

Lynn Hunsaker | Jun 8, 2017 1,003 views 2 Comments

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customer experience policiesIf you love someone, set them free. Do your policies set free your customers and your employees? Policies are designed to protect, but sometimes they disintegrate — rather than protect — customer relationships. And customers’ mistrust of companies propels regulations, protests and negative word-of-mouth. It’s a two-way street, so if you want your customers to trust and love your brand, show them you trust them and your employees as well.

Southwest Airlines is an outstanding example of rising above industry norms, charting its own course, and vowing to win customers’ hearts and customers’ cash through policies that set them free. Southwest mirrors these high-trust customer policies with equally trustful employee policies. Customer policies and employee policies go hand-in-hand.

Southwest’s favorable policies have propelled their growth. Unlike many of its competitors, Southwest has been profitable each of the last 10 years, with 4 consecutive years of profit growth between 50%-100%. Its stock price increased 120% in 10 years. Heather Figallo, Southwest’s Senior Director of Innovation & Labs, said the company is the world’s most loved, most flown, and most profitable airline.

That’s an example of customer experience policies that empower growth.

Customer experience policies are formal rules that govern product returns, changes, warranties, refunds and information and resource access — and they’re informal actions the company takes — and they’re the degree of ease for employees to do their jobs well.

Customers trust businesses based on how well they treat employees, the quality level of products and services, how well they listen to customers, whether they pay their fair share of taxes, and how well they conform to ethical business practices, according to the 2017 Edelman Trust Barometer.

customer experience trust

Businesses must try harder presently to earn customers’ trust, according to the Edelman study. We’re now in a trust crisis globally, with a high percentage of people losing faith in “the system” (government, non-government organizations, media and businesses).

trust customer experience

Policies — formal and informal — have never been so important as they are today. The 2017 Edelman Trust Barometer revealed all-time lows in businesses on every continent, with significant year-to-year decreases for many countries’ businesses.

Exclusions, caveats, change fees, extensive fine print, loyalty program changes, warranty limitations, extra steps (hassles), long-term (e.g. 1-year, 2-year) agreements, product discontinuations, fines, new fees for previously bundled services, abrupt product changes, and many other penalties are the norm in several industries.

These are examples of bad profits, as described by Fred Reichheld in his book, The Ultimate Question:

“Whenever a customer feels mis-led, mistreated, ignored, or coerced, then profits from that customer are bad. Bad profits come from unfair or misleading pricing. Bad profits arise when companies save money by delivering a lousy customer experience. Bad profits are about extracting value from customers, not creating value. When sales reps push overpriced or inappropriate products onto trusting customers, the reps are generating bad profits. Bad profits provide a distorted picture of business performance. The distortion misleads investors, yielding poor resource decisions that hurt our economy. That tarnished reputation undermines consumer trust and provokes calls for stricter rules and tighter regulations.”

Here are 4 prerequisites to growth-empowering policies:

1st Prerequisite: Empower Your Target Market to Empower You
Keep your eye on your primary target market. Negative policies may be aimed at the irresponsible few, yet they also affect your best customers. Turn it around. Find ways to motivate good behaviors. Whenever possible, leverage other customers to police the irresponsible.

Audit your external policies for product returns, changes, warranties, refunds, information and resource access, etc.

  • From your primary target customer’s perspective, do these policies make sense?
  • Why does the policy exist? Is there a more positive way to address that?
  • How much money are you leaving on the table (opportunity cost) because of this policy?
  • What would happen if you abandoned this policy?
  • How might the policy become a win-win for all parties?

2nd Prerequisite: Empower Your Employees to Empower Customers
Make it easy for employees to help customers. Cumbersome employee policies may be causing you to lose customers or some of their potential spending. Productivity slumps for employees often spell delays, waits, and productivity slumps for customers. Walk it back. Find ways to ease work streams, hand-offs, and productivity of employees. Remember that customer-facing staff is empowered, or not, by upstream staff.

Audit your internal policies annually:

  • What effect does this policy have on employees?
  • What impact does this policy have on customers?
  • Why does the policy exist? Is there a more positive way to address that?
  • How might the policy become a win-win for all parties?

3rd Prerequisite: Empower Yourself to Empower Customer Trust
Avoid the appearance of sin. Lax ethical standards breed sloppiness that comes back to haunt. Customers assume that the way you treat yourself and employees reflects how you value customers. Remember that actions speak louder than words. And exceptions shape your culture more than you think. In today’s transparent world, savvy customers see your intent despite your words and actions. Raise the bar. Find ways to ensure everyone takes the high road.

Audit your ethics on a regular basis:

  • What behaviors might be interpreted as selfish?
  • What comes across as disrespecting customers’ hard-earned money (unfair margins, extravagant perks, disrespect of the community or envrionment, etc.)?
  • What are managers’ and employees’ perceived entitlements? Why?
  • Do actions match words?
  • What exceptions exist, and what message does that send?

4th Prerequisite: Empower Your Company to Empower Your Industry
Borrow best practices from other industries. Crummy practices are beneath your aspirations to be a leader. Customers do not make distinctions between expectations for products and services at home or work. Rise above the norms. Find ways to inspire all employees to be creative in raising the performance bar.

Audit your company’s risk tolerance:

  • How is your firm holding itself back from positive evolution?
  • How can you turn around mis-steps to build organizational learning?
  • How can you make it safe for people to experiment with new ideas?
  • How can you encourage any and every employee to suggest better practices?
  • What is the cost of the status quo?

What? Your customer experience strategy does not include the above? Now’s the time to be more holistic and ensure all this is included for the upcoming year and beyond. Sure enough, policies of all kinds help or hinder customer experience.

Check your internal and external practices (formal and informal) regularly to determine whether they’re in-sync with customer well-being in simplifying access and use of your offerings. Customers migrate to the path of least resistance; creating hassles for customers causes unnecessary costs and churn risks.

Customer experience policies are any rules and practices in your company that have a direct- or ripple-effect on customers’ realities and perceptions. Creating ease for customers empowers organic growth.

This article is sixth in a year-long series with these topics:

Introduction: Customer-Centered Business: 10 Keys to Organic Growth

1. Goals — Sharing the Vision
2. Values — Walking the Talk
3. Structure — Nurturing the Ecosystem
4. Processes — Preventing Silos
5. Policies — Empowering Growth
6. Motives — Driving Win-Win Attitudes
7. Engagement — Collaborating for Results
8. Improvement — Preventing Issue Recurrence
9. Innovation — Creating Mutual Value
10. Momentum — Embedding Within Your DNA

Image licensed by Shutterstock.

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2 Responses to How Customer Experience Policies Empower Growth

  1. Andrew Rudin June 9, 2017 at 8:02 am (240 comments) #

    Lynn: thanks for this post. In my experience, corporate ethics don’t lend themselves to audit. Instead, what needs to be monitored and examined are the conditions that encourage or cause employee behaviors to become unethical. This particularly matters when those actions have potential to cause physical and financial harm to other employees, customers, vendors, or to the company itself.

    Modeling good ethics is paramount. It’s not important to consider how employees might be deemed “selfish.” That attribute could be applied to almost anyone. What’s a company or a division without profit? What’s a job function without opportunity for promotion (over someone else)?

    Companies should start by auditing its strategies, tactics, financial incentives, compensation and bonuses, and internal controls. From there, it’s an easier matter to spot where dissonance or goal incongruity have potential to create damage. Spotting such problems “upstream” from where possibly unethical behavior is occurring – or could occur – is a better way to avoid catastrophic problems.

    This is a board-level issue, since protecting companies from risk is one of their primary responsibilities. Wells Fargo’s consumer debacle would not have spread as far as it did had its board been cognizant of the risks imposed by its management incentive system that linked bonuses to stock price increases. And Wells management knew that stock price increases were linked to high performance in a widely-watched metric among analysts: accounts per customer. In hindsight, all of this is painfully clear. And a board that wasn’t asleep at the switch could have prevented it.

    And it’s not just internal conditions that exert pressure on ethical behavior. It’s external conditions, too, as I described in an article about corporate ethics, Big Governance Will Thwart the Next Corporate Ethics Disaster (http://customerthink.com/big-governance-will-thwart-the-next-corporate-ethics-disaster/). Pressure to produce revenue and profit certainly played a role in VW’s decision to clandestinely tweak their emissions control software.

    I wrote some other articles on this topic. Two that especially relate to your points:

    Anatomy of a Scam: Wells Fargo’s Treachery Can Happen Anywhere http://customerthink.com/anatomy-of-a-scam-wells-fargos-treachery-can-happen-anywhere/

    and

    Why Companies Should Care about How They Earn Revenue http://customerthink.com/why-companies-should-care-about-how-they-earn-revenue/

  2. Lynn Hunsaker June 9, 2017 at 9:22 am (108 comments) #

    Excellent points, Andrew. I agree 100%. And I’m glad to see your articles on this subject.

    In some parts of our country there is huge backlash against business because of policies gone awry from customers’ (public’s) viewpoint.

    Many thanks,
    Lynn

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