managing_business_risk.jpg

How to manage business risk by turning customers into partners

9 shares

What if customers could be viewed as partners in managing business risk, rather than just a source of said risk?

For many types of businesses, chief risk officers and other executives have adopted an “us versus them” mentality when it comes to viewing customers as a potential business risk, and sometimes with good reason: Non-paying clients, fraud, contract breaches, shoplifting, social media firestorms, and other realities have taken center stage.

Of course, losing customers is a business risk in and of itself; without customers, your business won’t last long. Everyone in the for-profit world seems to understand the downside to losing customers, or the painful sting of losing to a competitor. In government, the reality may be more about the risk of complaints to elected officials or the mainstream media.

But what if you could flip the business risk lens? What if customers could be viewed as potential partners in managing and mitigating business risk? It’s uncharted territory in many respects, but it is possible, and even necessary as business evolves. Voice of the customer practices, feedback collected from well-designed customer surveys, stakeholder roundtables, and client interviews can help you move in that direction.

You can’t manage business risk if you don’t listen to customers

In a past life, I had just joined a firm where the relationship with a long-time client was in jeopardy. Billings had been on a steady decline. The firm had not been invited to bid on new business opportunities in two years.

During a client feedback session, one of the first-ever conducted with any client of this firm, we learned that in addition to their own bills, the client had received multiple bills for an entirely different company/client of the firm. Of course, that’s an annoying experience on the most basic level, but that mistake was also a potential operational risk. What if those bills contained confidential information specific to the other client?

But that wasn’t the only problem: A staff member who had been assigned to work on the account behaved inappropriately while speaking on behalf of the client, and in a way that was insulting to the client’s customers. That behavior, to the client, was an even greater offense than messed up bills. Rather than say something, the client elected to stay quiet and move their business to a competitor firm.

The client’s feedback flagged an opportunity and two troubling issues:

Opportunity: Set up client feedback collection mechanisms earlier, and at a regular rhythm and cadence, to more proactively avoid the risk of losing clients. Had the firm known of these issues earlier, the relationship may have been saved. Unfortunately, in this case, because the client was never asked for feedback, the issues only grew worse in the client’s mind over time. The relationship could not be saved.

Issue: An urgent need to examine error-prone business processes responsible for the billing errors and accompanying risk.

Issue: Risk of allowing a staff member to continue working with and possibly offending and losing other clients, without some coaching and mentoring.

Can you hear them now? Setting up your voice of the customer approaches

Voice of the customer practices are one of the best first lines of defense in mitigating the risk of lost customers, and identifying other looming business and operational risks.

Here some best practices for setting it up:

1.) A skilled interviewer or survey administrator who is NOT part of the customer’s immediate service team should lead. Sales and service team members can feel they personally have too much to lose if negative comments surface during the feedback process. On the same token, customers can fear retribution for speaking up to someone in control of when and how they are served.

2.) Ask the right questions. Don’t waste the customer’s time if you’re going to ask old, outdated questions, or intend to do nothing with the feedback. Tip: ask about outcomes and the health of the business relationship.

3.) Structure the work. Use a platform with survey governance features to manage rhythm, questions, and people who have access to incoming feedback data. Beyond that, you should develop and socialize a customer feedback collection and data review policy.

4.) Document the feedback in a standard way. Formulate action plans based on the data, and store customer feedback where the right executives can review the data, like any other source of business intelligence.

5.) Don’t ignore feedback. The only thing worse than not asking customers for feedback is asking and not following up. Close the loop with customers to make sure they know what you’re working on in response to their feedback.

If you’re asking the right questions at a regular rhythm and cadence, listening carefully, sharing customer feedback across the organization, and taking the right action from the feedback, customers can actually help you to identify business risks before some of your own risk monitoring activities inform you of a problem. Don’t miss the opportunity.

Turn complaints into compliments by responding quickly to customer feedback. Learn more here

This post was first featured on the Qualtrics blog, and is syndicated here with permission. 

Stephanie Thum
Share this:
9 shares
March 5, 2019
Stephanie Thum

Subscribe to our newsletter for the most up-to-date e-commerce insights.