Two Costly Mistakes to Avoid

Creating policies that make no sense to customers and then not listening when customers complain about them are two common mistake business leaders make. The result is often lost sales and lost customers.

The other day I was shopping with a friend in Taupo when he asked if we could go to the WINZ office so he could ask about applying for his superannuation. When we got there my friend asked the receptionist if he could leave his completed application form with her. She told him he could not because he lived in Auckland. He asked if they had a nationwide computer system and was told they did but the Taupo office would not process his application form because he lived in Auckland. Then she added, "And you'll have to make an appointment with the Auckland office to go through your application."

My friend said he did not need to meet with anyone because he had already completed the application form. "Can't I just drop it off?" he asked.

He was told he could not because WINZ policy required him to meet with someone to go through the application.  " If you don't want to have a meeting," the receptionist added, "you can apply online."

My friend replied he did not want to apply online because he had already filled out the application form. "Why would I want to fill the form out again? he asked.

"Well, it's your choice," said the receptionist. "We prefer people apply online because we want to reduce the number of people we have to meet with."

"Let me see if I understand this," said my friend. "You are telling me I have to meet with someone to go through my application but I don't want to do that because I have already filled it out. You are also telling me that if I don't want to meet with anyone, I will have to go online and fill the form out again. If I do that, I will be filling out the form by myself without assistance from WINZ staff, which is what I have already done. Finally, you would prefer I apply on line because you want to reduce the number of meetings you have with applicants. In short, you are requiring me to have a meeting you would rather not have and that I don't want or need to have. Do I have that right?"

The receptionist said that was correct and my friend told her that made no sense to him whatsoever. The receptionist said she thought their policy did make sense and added that if he wanted to complain my friend should talk to the manager and nodded towards a man who had been shuffling through some papers beside her throughout the entire conversation. Not once had the manager participated in the conversation or shown any interest in it. Once he was identified as being the manager, he had to say something. "I'm with somebody right now," he said. "If you want to talk to me about this you'll have to wait until I'm free."

This is a great example of the two mistakes - a policy that does not make sense to a customer and the organisation's unwillingness to listen to its customers.

How could the WINZ staff have handled this situation better? Firstly, when the customer said the policy did not make sense to him, the receptionist could have said, "I'm sorry to hear that. Please tell me why." After listening, the receptionist could have asked what would make sense. The manager who was listening to the conversation could have jumped in at that point and said he was interested in what the customer had to say and would like to hear more but he was with another customer right then. He could have added he would be free in a few minutes and would really like to hear what my friend had to say so would he mind waiting?

You have heard me say for years that your customers will tell you everything you need to know to succeed. You just need to listen and ask questions. But that rarely happens because we become defensive and are more concerned about proving we are right and the customer is wrong. This, of course, is a battle you cannot win. In most cases, customers just take their business elsewhere. For government handouts, WINZ is the only game in town so the staff might think they can treat their customers any way they like. But what WINZ now has as a result of their mistakes is a hostage customer who will be difficult to deal with in future and who will tell a lot of other people about his experience. I certainly would not want to be the staff member who has the meeting with my friend when he gets back to Auckland!

Do not make the same mistake. First, review you policies, looking at them from a customer's perspective. Ask yourself, "If I was the customer would this policy make sense to me?"  If the answer is. no. Ask yourself, "How would the policy have to be changed so it did make sense. Policies are made to solve or prevent our business from having a problem. Unfortunately, our solution can cause a problem for the customer. Do not fall into the trap of thinking either your problem will be solved or your customer's problem will be solved. Instead, try to find a way you can solve both problems.

Secondly, teach your staff how to respond when a customer complains about a policy or process.  The key is for them to zip their lips and open their ears. Make sure they understand their role is to gather information about what aspect of the policy the customer does not like and what they would like to see happen instead. Tell them the key to listening is to accept hat the customer is saying. Your staff do not have to understand what they are hearing, agree with it or know what to do about it but they do need to accept this is the customer's point of view.

Take the two steps and you will soon discover that a business that works for its customers is a great place to work and an even better place to own.

Three Guiding Principles

You have a choice. You can get your staff to do the right things by constantly directing what they do or you can give them some clear principles that will guide them to make the right decisions and to take the right actions. Here are three guiding principles I can recommend.

1. Make it easy.

Customers want you to make it easy for them to do business with you: Easy to find you. Easy to understand what you do. Easy to contact you. Easy to get hold of someone who can help them. Easy to get information about your products and services. Easy to make the right decision about what to buy. Easy to order and pay for your products and services. Easy to learn how to use them. Easy to get help after the sale.

Making it easy for your customers to do business with you is not just nice to do. It is at the heart of business success. As you know, business is the activity of creating value. Customers do not want products and services. They want the value they can extract from them.  Customers consider they have received value when they perceive the benefits they get from products and services outweigh the costs of obtaining them. Remember, price is only one of the costs customers pay. They also pay time, effort and emotional costs. The more difficult it is to do business with you, the more time, effort and emotional costs your customers will have to pay and the less value they will think they got.

The key to making something easy is to make it simple. Complexity leads to difficulty and is time consuming. Therefore, it discourages customers from doing business with you. I took a load of re-cycling to the tip in Taupo over the holidays and the whole process was so complicated that the next time everything is going to be hidden in rubbish bags and tossed into the landfill!

2. Do not spend money on things you customers do not value.

Do you spend time and money doing things that your customers do not value? Imagine you invoiced your customers for everything you did for them. Would they pay? Every time I fly across the Tasman I am offered a newspaper and noise-cancelling headphones and every time I turn them down. I just do not value those things. They are not useful to me because they do not solve any problems I have.

As a general rule customers value, and are therefore are happy to pay for, things that benefit them. A benefit is something that will solve a problem the customer has that bothers them or will prevent such a problem from occurring. Many ‘great’ ideas companies have for sales promotions or delighting their customers do not benefit their customers and therefore are seen as destroying value not increasing value. I was buying something for my boat the other day and saw a product that came with a free dive torch. I do not need a dive torch so I was not motivated to buy the product.

As I said earlier, business is the activity of creating value and value is defined as what customers are prepared to pay for. Do you know what your customers will happily pay for? It is worth finding out because giving them something they do not value is a waste of your time and their money.

3. Aim to make your customers successful.

Make sure your staff understand that aiming to satisfy your customers is not enough. The aim in business is to have profitable customers who stay a long time and unfortunately satisfied customers are not necessarily loyal. In fact, studies show that up to 86% of customers who defect are satisfied customers. And why would a satisfied customer defect? Because they got only what they expected to get and because that is all they got, the transaction did not leave them with a burning desire to return. On the other hand, over 20 years ago Xerox found ‘very satisfied’ customers were six times more likely to re-purchase. This is because customers are rarely very satisfied. A very recent study by Forrester Research in the USA found the customer experience provided by 61% of companies was rated by customers as being only OK, poor or very poor. Therefore, when a customer gets an experience that leaves them very satisfied, they are going to remember that company and be motivated to buy again.

A better goal is to make your customers successful. Any customer who believes you are part of their success in business or life will be loyal. To make your customers successful the first thing you have to know is what they are trying to do. Make sure your people are more than just order-takers. Teach them to find out why the customer wants a particular product or service. Tell them to first understand the problem the customer is trying to solve before giving them a solution. And make sure the customer knows how to use the product or service to get maximum value from it.

Communicate, communicate, communicate

The best way to get your staff to believe in these principles, to remember them and to follow them is to communicate them constantly. Holding group and individual meetings with staff members is a good first step but it is only a step. Ministers of the church and sports coaches understand the power of repetition. Advertising agencies also know how important it is to repeat their message. That is why we all know what you get at the Warehouse and also where you “never buy better.” But managers think it is enough to tell staff something once. Hold meetings, put signs up, and talk about them one-to-one but keep at it. Find every opportunity to weave them into the conversation. When their eyes roll back in their heads as you speak, you will know you are getting somewhere!

Are Your Suppliers Letting You Down?

 

While I was driving along the motorway recently, a truck threw up a stone that cracked my windscreen. When I got home I phoned State Insurance to lodge a claim. Much to my surprise they were great to deal with. I was able to get through to a live human being before my next birthday and she was very helpful. No unnecessary questions were asked. No obstacles were placed in my path. The woman I spoke with was friendly, polite and efficient. I even got more than I expected because I thought I would have find a windshield repairer and contact them with a claim number. But no, I was told someone from Smith & Smith would be in touch with me within four hours. In short the experience was wonderful and I was delighted.

Then the fun began.

Within three hours I had a text from Smith & Smith asking me to phone an 0800 number, push 1 then 1 and quote the registration number of my car, which they kindly listed in the text. Unfortunately it was the wrong registration number. Still, that was no big deal and I rang the number as requested.  Sure enough I got the two prompts and pushed 1 each time. Then I waited. Eventually I got a recorded message apologising for the delay and saying someone would be with me soon. They were not. After getting the "sorry for the delay" message several times, I heard the phone ringing at the other end. Great, I thought, now I am finally being connected to someone who can help me. My optimism was premature. What I got was a recorded message saying I would be put through to somebody who could help me. The phone rang again and this time it was answered by an actual person. I told her why I was calling. "OK," she said. "But they are all busy right now. I'll get somebody to phone you back."

It seemed to me I was right back where I started. I hung up, and replied to the original text saying, "You asked me to call you. I did. It was a waste of time. Would you please call me?" By the end of the day nobody had called so I called again and this time I got through and an appointment was made. I was told I would have to go to my nearest branch of Smith & Smith because the type of car I owned meant they could not come to me and replace the windscreen at my place. So, I took my car to Smith & Smith and killed two and a half hours while they did the work. When I returned to collect my car, I was told the windscreen had been replaced but it was not the correct windscreen and I would need to have another windscreen installed the following week. To make my life easier, I was told, they would come to me to do the work. I asked why I had to bring it in the first time but they could come to me the second time. There was no answer to that.

State Insurance clearly understand how important it is to provide their customers with a great experience. More importantly, they seem to understand that customers want to deal with companies that are easy to do business with, and with people who are efficient, friendly, helpful and polite. State also knows customers like to be delighted, which comes from doing something above and beyond what the customer expects. What State does not appear to realise is that all their hard work is being undone by one of their key suppliers. Consequently, my overall customer experience getting my windscreen repaired was less than average.  

Are you in the same situation? I expect you are passionate about giving your customers a great experience and work very hard to do that. Is all your hard work being undone by one of your key suppliers? Would you know if it was?

Remember when ISO 9000 was all the rage? Many companies required their suppliers gained ISO certification because it would mean they would have to demonstrate their processes were effective (they gave customers what they wanted) and efficient (there was minimal waste). ISO also requires companies to identify areas of non-performance, report them and fix them. Therefore, a customer like State could easily audit a supplier such as Smith & Smith to assess how well they are performing. Most importantly, if State found performance issues with a supplier, they could see whether the supplier was taking steps to improve their performance.

You could require your suppliers to be ISO accredited but here are six actions you can take to find out whether they are giving your customers the kind of experience you want them to have:

1. Make follow up phone calls to customers you have placed in the hands of your suppliers to find out what kind of experience they had.  

 2.  Mystery shop your suppliers.

 3.  Ask your suppliers to show you data from their customer satisfaction surveys, complaints registers or customer feedback systems. If they cannot do this, alarm bells should sound.

 4.  Ask to see their plan for managing the customer experience.

 5.  Make a site visit and talk to both management and frontline staff about what they see are their customer care issues and what they are doing to fix them.

 6. Insist your suppliers set up a Corrective Action System where things that go wrong are logged and the action taken to fix them is recorded.

In a crowded and competitive market, it is difficult enough to get and keep customers without having your suppliers undermining what you are doing.