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"The true test of business's customer service fitness is not when things are going right--but rather what it does when things go wrong."
--Steve Ferrante
One of the more overlooked aspects of growing a business is retaining customers, especially in competitive markets like retail, dining, and travel. A good way to achieve that is to pay attention to what Dr. Albert O. Hirschman calls "repairable lapses."
Every company, nonprofit organization, professional services firm, and house of worship sometimes needs to catch up.
Yet, the goal is not perfection but consistency, honesty, and integrity in our dealings on both sides of the counter. That behavioral trio is essential for trustworthy relationships and loyalty. Best efforts are like an insurance policy for when bad days happen--and they do.
Let's say upfront that viability and profitability require new and retained customers. It's not one or the other, but both. However, the September Post is about the work needed to build customer satisfaction by keeping products or services in good order and fixing them when they fall below acceptable performance levels.
That means when something goes wrong and is brought to management's attention, even by associates, action should be taken to get things back on course as soon as possible. Sometimes, it's as simple as apologizing and making matters right--on the spot. Ritz Carlton Hotels gives frontline workers the authority to do just that. Well-managed restaurants do the same with servers.
Expressing sincere regret with concrete steps is an effective way to disarm unhappy buyers. Immediate responses help restore reputations as positive word spreads among business, social, and family networks.
This principle of repairability is important because it allows corrections within a reasonable period and cost. As with health, the point is not to let small problems become life-threatening through neglect.
Departure closes the door
Dr. Hirschman, author of Exit, Voice, and Loyalty (Harvard University Press), suggests a reliable way to identify operational decline is through "exit." Customers leaving, especially in measurable numbers, are sending a message.
Walking out quietly, though, makes it difficult to always know exactly what that message is. Exiting customers also give up an opportunity to make better what they don't like.
How can those losses be reversed?
"Management must find ways to correct whatever faults have led to these exits," Dr. Hirschman says. That's why feedback is necessary for organizational health. How are we doing, and where can we improve?
Even with inflation now at 2.9%, down from 9.1% in 2022, changed shopping habits are in place for many households.
If doable, exit interviews shed light on disengagement, providing insights into what it might take to get someone back in the fold (i.e., faith communities). Resolving problems should be a priority, as finding new clientele is time-consuming and hard.
Research by Frederick Reichheld, inventor of the net promoter score, shows that increasing customer retention rates by 5% increases profits by 25% to 95%.
Keeping the right customers is of great worth to enterprises, big and small.
Speaking but not too loud
The complement to exit is "voice," although consumers can speak and still leave. Voice gives rise to advocacy by remaining in a system. The book suggests that what causes us to choose voice over exit is loyalty, which, unfortunately, is a diminishing value.
Customers or members may express their objections to anyone they believe cares. "Voice is effective up to a point and can be overdone," says Dr. Hirschman. Voices alert management to failings but must give management time to respond to the pressures brought to bear," he adds. How much time it takes for remedial action to take effect depends on the situation's complexity.
Take the recent Crowdstrike-Microsoft crisis, which caused the largest IT outage in history.
A Crowdstrike software update failed, causing flight delays, broadcast disruptions, and blue screens on corporate PCs worldwide. Crowdstrike's founder and CEO, George Kurtz, has publicly apologized. "I want to sincerely apologize directly to all of you for today's outage. All of CrowdStrike understands the gravity and impact of the situation."
He reiterated the company's earlier message that the incident on Friday, July 19, was not the result of a cyberattack.
Not all airlines use Crowdstrike. Of those that do, Delta claims it was more affected than others. From July 19 to 25, it canceled 7,000 flights, affecting a half-million passengers due to the IT outages.
"I want to apologize to every one of you who have been impacted by these events," Delta's CEO Ed Bastian told customers. "Delta is in the business of connecting the world, and we understand how difficult it can be when your travels are disrupted."
Loyalty is a two-way street
Delta's passengers voiced their anger through social media and the press, as flyers were stranded in airports and sleeping on floors. Most affected travelers, including Sky Miles members, will stick around as they have little choice. Delta's slower recovery from the outage follows an earlier J.D. Power survey showing the airline as the best in first-class and premium coach satisfaction. *
The U.S. Transportation Department, which has received more than 5,000 complaints, has opened an investigation into Delta's response. Delta has retained famed litigator David Boies and is suing Crowdstrike and Microsoft to recover a projected half-billion cost; both companies denied fault.
Some passengers use their collective "voice" through a class action lawsuit to exert legal and political pressure on Delta's top management to reach financial settlements.
How does a business repair that kind of damage? As quickly and transparently as possible.
A Delta spokesman told The Wall Street Journal that the company has processed thousands of refunds and reimbursement requests. "The airline is working tirelessly to make this right for customers."
After suffering severe turbulence, how will Delta land safely?
One way is remembering what Scottish novelist J. M. Barrie said: "Life is a long lesson in humility."
* The author is a Delta SkyMiles member.
Strategist.com
© Bredholt & Co.
