If you’re not continually monitoring and managing the customer experience in your business, you have a hole in your risk management strategy. Your customers are your biggest asset, but when they’re not satisfied they can become a liability.
For example, if you don’t manage customer expectations at a high level, you can end up with frustrated, disappointed, or even angry customers. This will ultimately lead to diminished trust and negative reviews, which may influence others.
Nothing presents more risk to your business than a large group of angry customers with social influence. If you want a solid risk management plan, you need to think about how the customer experience fits in your risk management framework.
What is a risk management strategy?
According to Workiva, a strong risk management strategy includes managing both internal and external risks like technological changes, competitive pressure, legal and regulatory change, stakeholder pressure, and more. You can manage strategic risk by having a clearly defined business strategy and objectives, establishing KPIs, identifying risks that can vary your performance, and staying on top of monitoring and reporting to mitigate risk as it occurs. An effective strategic risk management framework will prioritize understanding the risks that your business faces to take the necessary steps to protect your assets and your business.
All of the factors listed above directly impact the customer experience in the sense of how well business operations flow. For example, staying on top of regulatory changes in your industry is critical for managing strategic risk because if you neglect this, you could be shut down and unable to operate. If that happens, your customers will have no choice but to do business with your competitors. Having a nimble risk management software can assist in monitoring risk and help keep your business up-to-date with regulatory filing requirements.
Risk management is important in every industry
Every business needs a risk management strategy, but it will look different depending on the industry. For example, companies with a board need to center the objective for board reporting on improving business management rather than a task to check off a list. A board needs to know about the significant risks, but so does the executive management team. Having a risk management software solution can help facilitate board & investor reporting with the most up-to-date version of your data.
In other industries, a SOX risk analysis is essential to assess how well an organization manages internal controls to create visibility for shareholders.
No matter how your business approaches risk management, it’s going to impact your customers. Whether that’s positive or negative will depend on how you prioritize potential risks. However, managing customer expectations is one risk management strategy that applies to every business.
Tips for mitigating risk through the customer experience
Risk mitigation is something all top performing companies cultivate at every level in their organization. Don’t forget to apply this to the customer experience.
Communication will go a long way to preserve trust between you and your customers, supplies, and key stakeholders. For instance, if supplies are short and demand is high, make that known to manage your customers’ expectations with integrated risk reporting. Don’t wait to tell them until the last minute when you can’t fulfill their order. Plan ahead and communicate potential incoming risks long before something becomes an issue.
2. Be generous
Almost nobody will be dissatisfied when a business goes above and beyond in their generosity. For example, if you run a retail store and someone wants to return a defective item, once you have proof that the item is defective, let them keep the item and issue a refund or exchange. Customers will appreciate not having to go to the post office to make a return.
The same goes for people who aren’t satisfied with their purchase. Let them keep whatever they purchased and issue a refund, no questions asked. This is easier with digital goods, but if you can’t easily resell a returned product, don’t ask customers to mail it back.
3. Be concerned with your reputation
Not caring what others think isn’t a wise business strategy. Don’t ignore negative sentiment about your business. You might think there are enough positive comments about you online to override the negative, but not everyone will see both sides. Some people might do a quick Google search, see negative reviews, and run to your competitor.
Always have some kind of reputation management strategy in place, even if it’s only to boost positive comments by interacting with customers on social media. If you find negative comments or reviews, be sure to respond to all of them. However, avoid justifying or defending your business and instead, seek to resolve each person’s complaint to their satisfaction.
Build trust with your customers to reduce risk
Last, but not least, embed the values of top-notch customer service into your operations at every level. This is the most efficient way to manage risks related to customer satisfaction and trust. The most effective way to mitigate risk is to maintain trust and data transparency, which requires putting your customers and stakeholders first and communicating potential risks as they arise.