November 28, 2012
Empowering Employees (Without Losing Your Shirt)
When you find yourself thinking, "I need to contact someone from customer service," how do you usually feel?
Unfortunately for most customers, the question evokes a sense of frustration, and at worst, a feeling of dread before they have to make the initial contact. Why is that?
Geoff Colving, editor for CNNMoney, practically stole the words out of my mouth when when he said this :
The agent is superficially friendly, but nothing can derail that person's mission of getting you out of their hair ... fast.
That's how many of us feel when it comes time to get in touch with a customer representative. We sense this nagging feeling, as if they don't want to be talking to us.
It feels good to laugh at those big businesses that represent all that is wrong with this apathetic form of service, especially since we know that customers value competent service more than fast service and that better brand engagement is created by spending more time with customers.
The joke is on them, right?
Then we start to think ... can they really be so dumb? These are often multinational conglomerates (banks, airlines, etc.) that hire the best and the brightest from business schools around the world. How can they be messing up their service so badly?
It turns out, there is another side to the story, and it's one that even small business owners need to be aware of: giving employees too much wiggle room to “WOW” customers, and losing your shirt because of it!
The Scary Truth About WOWing Customers
As small business owners, we'd like to think that creating an amazing experience for our customers has NO downsides. Unfortunately, that's not always the case.
Brands that are providing amazing service like Virgin Airlines are losing money like it's going out of style. How can a business that customers love be failing so miserably?
According to Bain consultant Rob Markey, tragedy can strike when companies try to empower their employees the wrong way:
We know of one retail bank that gave their call center representatives the edict to delight customers and permission to waive up to $150 in fees for any customer without seeking any additional authorization.
The result? Customer satisfaction rose a little, but fee revenue declined.
How is that possible?
It seems absurd, especially since Markey himself acknowledges the importance of an empowered employee who engages with customers frequently and with plenty of freedom:
...companies with highly engaged workers grew revenues two and a half times as much as those with low engagement levels.
And stocks of companies with a high-trust work environment outperformed market indexes by a factor of three from 1997 through 2011.
This paradox really isn't all that complicated; it's just a matter of balance. Although better customer engagement and creating "customer WOWs" are big pluses for businesses growth and long-term retention, without careful systems in place companies can lose their shirts by spending too much time (and money) on outcomes that don't warrant the effort.
What's to be done?
According to Markey and other experts on the subject, the answer lies in giving your employees clear business goals and a flexible framework within which to operate.
When you include ample feedback (the useful kind) on how they are performing within that framework, you're on your way to a winning formula that allows employees to create happy customers without always resorting to throwing money at the problem.
Ditching Limits and Embracing Guidelines
You might think that guidelines would lead to strict limits and impersonal scripts that employees are forced to use in order to stay within company policy—but far from it.
In fact, Jim Bush, known for his work as American Express's VP of World Service and for turning the company's service policies on its head, recommends a system far easier to love: creating a framework through which every employee understands the business objectives of earning customer loyalty, and where every interaction is focused on spontaneous attempts to wow customers.
According to Mr. Bush:
The American Express team's framework substitutes guidelines for hard limits, judgment for scripts, and coaching for monitoring.
This sounds like employee empowerment, but with a notable difference that many small companies skip: a clear definition on the goals each employee has in generating customer loyalty. Bush also relies on the system taught by Rob Markey known as the Net Promoter Score.
The Net Promoter Score is based off of a single question that reps should be asking themselves while dealing with customers: Would this customer recommend our business to a friend?
(Remember, you don't always tell your friends when a company waives a fee, but you DO usually tell somebody when they surprise you with amazing service. It doesn't take big expenditures to get people talking.)
Instead of being left with instructions such as, "You can waive up to $200 in fees," employees have a better target to hit: use creative (and where possible, inexpensive) methods to delight customers.
According to Bush, this works better because:
...employees are deeply involved in figuring out how to meet fundamental business objectives. [We] don't dictate how employees achieve those outcomes, but do make sure they receive plenty of feedback on how well they are doing.
Service expenses actually went down under the new system as employees devised and shared solutions to common customer issues. Better yet, among customers who are promoters, [we saw] a 10-15% increase in spending and far better retention rates.
This sort of outlook actually reveals the flaw in empowering employees the wrong way: When you give unlimited (or generous) decision-making powers in arenas such as waiving fees and giving things away, your employees will resort to these measures as their de facto way to WOW customers.
They'll embrace these methods thinking they are doing what matters to create loyal customers, but in reality they're just confined to a single element of service rather than being intrinsically involved in the company's overall loyalty goals.
Putting the Net Promoter Score into Practice
The high-level overview of this important service aspect is great, but what first steps can businesses take to put this sort of strategy into practice?
When getting started, it all comes down to employee knowledge and involvement with the companies overall goals. One way to make sure this is understood with each employee is to engage in Whole Company Support, where every employee (from marketer to engineer) gets to spend a segment of time with customers.
More importantly, however, is crafting clear company goals for customers at a variety of stages without falling back to superficial empowerment like the ability to waive fees.
Segmenting different actions by priority can help employees have a cheat sheet on how to handle different situations without placing a strict monetary value on their actions.
For instance, for new customers that appear interested in your product but apprehensive to take the first step, guidelines could include...
- Personal email asking what questions you might be able to help them with
- Allowing "automated setup" for confused customers (where employees set up the account and email customers when complete)
- Set up ~30 minute calls with customers who need more info
- Extending your free trial time period to give them more time to use your product
- Creating a unique pricing plan for smaller customers
These lists could be greatly expanded upon, but the idea behind them is to help employees understand what your goals are when it comes to getting customers to a place where they would gladly recommend your business.
Consider it the employee playbook for dealing with customers: they still get to make the calls "on the field," but they have a much better game plan to help them in their decision-making process, and they know what the company's goals are.
Much better than calling an audible for every play!
With these sorts of systems (and ample amounts of feedback) in place, you can rest assured that your employees have enough latitude to WOW your customer base while still keeping important company metrics and spending goals in mind.
Over To You...
Now I'd like to hear your thoughts...
- What do you think about the importance of balancing employee empowerment with business goals?
- Does it make sense to set guidelines for employees, even when their goal is to WOW customers?
Thanks for reading, and I'll see you in the comments!