The wonderful Jason Fried points out that most company policies are a form of organizational scar tissue – an overreaction to a single, unexpected event.
I love this metaphor, and I would suggest it extends well beyond dress codes and not stealing someone’s yogurt and has a profound impact on how we treat customers.
Policies are the opposite of discretion. While they are meant to remove ambiguity and inconsistency, what they mostly do is kill off any goodwill in a given conversation, and while they’re at it, they drive customer service costs up while forcing the quality of the service down. It’s a one-two punch of dumbness, if you ask me.
Here’s an example: a few years ago I succumbed to the Christmas advertising in late October and bought my husband a new squash racquet at a sporting goods chain. I even remembered where I hid it and on Christmas morning, my husband was delighted with his new toy. A few days later, he was not so delighted when it came unstrung during his first match.
Back to the store, receipt in hand to exchange it for one that is properly strung. No dice. The policy is returns within 30 days only. “But you advertised this as a holiday special. How could I possibly return a gift in 30 days when I wasn’t giving it to anyone for 60 days, and you knew that?”
Policies are policies and the store clerk had no discretion to do any of the right things — replace the racquet, refund the money or even just restring the thing for free. We have since taken our business elsewhere, which, over the years, has lost this chain a bunch of revenue, in addition to the time the clerk spent arguing with me.
If you have ever asked for change in a store only to be told they aren’t allowed to open the till without a purchase. If you have ever been told a Styrofoam plate is 50 cents unless you buy something. If you have ever been forced to pay to rebook a flight, cancel a reservation or stay a little longer at a hotel, you have landed on the frontier between transactional scar tissue and common courtesy.
Before you start to feel smug about things, let me ask you this: do you assess late fees if your customers are bit behind on their bills? Do you insist they pay in 30 days while your “policy” is to sit on invoices for 90 days? Can your front line service people waive a fee? Can they offer a discount? Can they make something right? Or is your scar tissue forcing them to handle calls in under two minutes whether or not the issue is resolved?
What do your policies cost?
I would bet most companies have never done a cost analysis of their customer abuse polices. Here’s where I would look:
- How many calls a year do your policies cause?
- What is the cost for each of those calls?
- Do any of your policies force an escalation to a manager or supervisor?
- What is the cost per minute of their time?
- What is the cost per minute for a manager’s discretion versus a front line worker?
- What is your average revenue per customer?
- How many do you lose each year because of each policy?
- Can you track which policies are dissatisfiers for your customers?
- What is the cost to replace each of the customers you have forced out the door with your policies?
- Do you have special software that enforces policy compliance? How much does that cost?
- Do you pay auditors to prevent your customer service people from being helpful? What do they cost?
- What is the cost to you to waive a policy?
- What is the cost to hire new people to replace the demoralized ones who leave because you don’t trust them to use discretion?
- What is the impact to productivity for your sales or service people to explain policies to customers?
- How much do you pay your Dementors to write and update your policies each year?
- What percentage of your policies are punitive (late fees, cancellation clauses) versus enabling (guarantees, unconditional refunds)?
You get the picture. If you are struggling with customer retention, or you’re competing with a company that has surrounded itself with dumb policies, I think you have a great opportunity to reinvent how you govern your conversations.
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BizMarketer is written by Elizabeth Williams
I help companies have better conversations
Drop me a line at ewilliams@candlerchase.com
Or follow me @bizmkter
I see your squash racket-return-pain and I’ll raise you an airline ticket, electronic game and about a billion other bad experiences thanks to “policy”. You are so right about all of this!
On the other hand, a few smart businesses have great customer service policies that leave no room for discretion, yet still keep the customer happy and loyal. I’m thinking here about LL Bean and Costco, both of whom have a policy of issuing refunds (not exchanges, refunds) for any product that doesn’t satisfy the customer….ever. I have put these policies to the most extreme test several times, and left amazed, in love and busting to tell others. (I won’t bore your readers with stories of the returned Norwegian sweater, two years later and after about two dozen wearings, when I finally realized that XXL really wasn’t my size; or the kids bed that finally gave way after one too many trampoline sessions…). But, alas, far too few companies adopt such customer-friendly policies and instead use them as a reason to be awful.
One other area where I think your “discretion-over-policy” consideration can come into play is human resources. I work at a small business with a paucity of HR policies in favour of flexibility and discretion by managers. It’s an approach that sometimes causes a bit of uncertainty, and more than a few managers (myself included) and employees have suggested we adopt more policies, but to my boss’s credit, he has held the line and made the point that people love rules only until they want to bend them. And it’s true…there are many occasions where our grey areas have allowed us to grant great employees extra time off reasons that would never make it through the policy net; or given raises or bonuses to worthy recipients for reasons that are purely discretionary. The outcome in each of these moments of discretion has been a happy, loyal employee…just like a happy, loyal customer.
Thanks for an excellent reminder about the importance of this customer-centric approach!