This is the fifth in a series of six articles that looks at different aspects of excellent customer service and how it leads to increased overall profitability. The full series will be available for download as a white paper once it is completed.

In the last article, we covered a few of the reasons why customer service should be better than expected — but what happens when we fail to deliver an exceptional experience.

A negative experience often means the customer goes elsewhere with their business — and often they tell their friends. So each lost customer means more than just their lost business, but it results in lost business from their friends as well.

However, research also tells us that if we are able to recover from a poor experience — then customer loyalty actually increases. So if you can turn a negative experience into a positive one — that can lead to loyal customers and increased profits for the company.

In this article, we will cover 5 methods for turning a negative into a positive customer service outcome and helping to keep customers in the process. Customer retention is vital. It’s far easier and cheaper to retain customers than to find new ones.

Remain Calm
If an employee is confronted with an angry or upset customer, they should let the customer vent to express their frustration. No one is rational when they have pent up anger and emotion. Remind employees that the customer is angry at the company and not them as an individual — they’re simply the person in the position of handling the complaint. If an employee took every complaint personally, they wouldn’t survive long in the job.

Once the irate customer has expressed their frustration and calmed down, the employee can ask questions and determine the actual problem. Listen to the real concerns because part of complaint handling is giving the customer the chance to express themselves. Then training can kick in and the problem solving techniques will be put to good use to ensure that whatever the concern, the customer leaves the store satisfied because proper action has been taken to rectify the problem.

Empathize
The employee can diffuse the situation by showing the customer they’re “on their side” and want to help. Sincerity is the key. The customer should feel the employee is there to help instead of arguing or disagreeing with what has been said.

Avoid typical phrases such as “it’s company policy” or “I can’t do that” because they’re negative and will only inflame the situation. Calming phrases such as “Can you tell me exactly what happened?” or “I appreciate your frustration and I am here to help” will go a long way towards winning the customer’s trust.

Lastly, don’t be afraid to say you are sorry for the way they are feeling or their experience. “I’m sorry to hear about your bad experience — what can we do to make it right” is totally different than apologizing because the employee themselves made a mistake.

Evaluate
Review the situation objectively. Ask the customer what would satisfy them and determine the best course of action. Talk through different options if there is more than one to choose from and let the customer provide input on what they want to happen.

In these situations, it’s critical that the employee can think “outside the box” as not all complaints fall within company policy. However, there are often solutions that can be solved by using guidelines that satisfy the customer’s needs and still allow the employee to follow correct procedures to avoid possible future problems.

Take action
Once the optimal solution has been determined, the employee should advise the customer what steps need to be taken to implement that solution. It may be easy to do or it could mean a few different steps need to be taken to ensure the problem is rectified completely.

It’s essential that your team look for every opportunity to exceed a customer’s expectations. It’s one thing to merely satisfy their current problem but if you can take things a step further, the customer will not only be satisfied but may convert to being a loyal customer because their problem was addressed professionally and promptly.

Check back/verify
It’s not enough to just put steps in motion to satisfy a customer. It’s vital that those steps be followed up and your team should ensure that everything has been done the way they promised. Actions may need to happen in other departments or places beyond their control and so follow up may be necessary.

Contact the customer once everything has been taken care of and verify that they’re satisfied with the final outcome. Express appreciation for bringing their complaint back to your company so you had the opportunity to fix the problem.

You should always be looking to go the extra mile for the customer to keep them happy. It may not always work but the effort will often be appreciated. It will help turn the negative experience into a positive one with a hopefully happy ending.

Finally, remember to always thank them for their business and for allowing you to help. After all, they are the customer.

In our final article we’re going to talk about 4 Ways to Turn a Satisfied Customer into a Loyal Customer because that’s where the bulk of the company’s profits are made.

Recently my wife and I made a real estate investment and in the course of that transaction we were exposed to 2 banks we had no previous relationship with that caused us to re-evaluate our existing banking relationships.

We currently have accounts at 2 different banks and for simplicity were considering consolidating it with one of those banks — Bank of Montreal.

The 2 banks — TD and RBC — which we had no previous relationship, are offering a very attractive interest rate.

However, when we asked the Bank of Montreal, which we have a long standing relationship with, if they would match the offer — their answer was that we needed to submit an application and they would consider it.

My Perspective: The Bank of Montreal made us feel like I had to qualify to be their customer and that they would only treat me as a preferred customer if they felt it was worth their while. We had been their customer for over 30 years — and yet they were treating us like they knew nothing about us.

On the other hand, the TD & RBC banks both let me know they were interested in our business. Of course I knew that a preferred rate was subject to application — but without even seeing my full financial picture they were willing to let me know their best rates.

When I posed the question to the Bank of Montreal branch representative, they were embarrassed by the “head office” position, but their hands were tied.They also acknowledged that they were aware that TD & RBC were very aggressive in seeking new customers so the information was not news.

Do you have processes in place that treat your existing and potential customers like they have to apply to be your customer. Or do you welcome them with open arms.

I fully appreciate that all customers are not alike — or as profitable — but don’t insult them by making them jump through hoops before you have enough information to make a decision.

Wouldn’t it have been far better if the Bank of Montreal had indicated they did offer to match the preferred rate subject to qualification. I am sure the local bank representative could have easily determined whether we were likely to qualify based on 30 years history with that branch.

Instead, we have decided not to consolidate our banking with Bank of Montreal and are now less loyal than we were and potentially open to a relationship with a new bank that demonstrates they are interested in our business.

If you are not building loyalty with your customers everyday — beware that your competition isn’t sneaking in the backdoor with better customer service.

This is the fourth in a series of six articles that looks at different aspects of excellent customer service and how it leads to increased overall profitability. The full series will be available for download as a white paper once it is completed.

In our last article, we discussed 4 Steps to GIVE Exceptional Customer Service. Now we want to go over some of the key reasons why it is so important that customer service should be exceptional — to exceed expectations.

If customers are receiving exceptional customer service, they would naturally have a tendency to return to the same store again to fulfill future needs. Although the customer may only spend a small amount in any given transaction, their loyalty is potentially worth thousands of dollars in profits to the company — which helps secure future employment for the team.

Therefore, exceeding customer’s expectations is in the best interest of all employees at all times. Here are 3 key reasons why investing in exceptional customer service is an investment in your long term success.

Differentiates you from your competition

Customer service should exceed expectations because it may be the only factor that separates you from your competitors. Your products and prices may be the same. Your hours of operation and location may be the same. The quality of your products may also be the same. So it’s the things you do differently that will make you stand out from other businesses in the eyes of your customers.

Be different in as many positive ways as possible. Be memorable for the right reasons. Your team should be cheerful when dealing with all customers, no matter what sort of day they have had. Handle customer complaints in a positive manner. Make the effort to go the extra mile at every opportunity so people are more than satisfied with your service. They are so delighted with your service experience that they wouldn’t dream of going elsewhere.

Creates loyal customers

Your end goal should be to gain as many loyal customers as possible because they’re priceless. Exceeding their expectations on a regular basis is the best way to satisfy them and retain their loyalty. Customers don’t want the stress of looking for new places to shop. If you provide excellent customer service at every opportunity, they’re more likely to keep coming back because you’re making life easier for them.

Loyal customers are much easier to service because they’re more forgiving if there are the occasional problems because generally they’re satisfied with your service. It’s five times harder to win a new customer than it is to service your existing customer base so it’s essential that your team builds long-lasting relationships with your customers so they do remain loyal.

It’s easy to become complacent when dealing with loyal customers if they’re simply coming in and spending their money. It’s vital that your team remain ever-vigilant to customer needs.

Word of mouth is powerful

If your customer service experience exceeds expectations, that’s a powerful reason for customers to tell family and friends about your company’s service. People trust personal recommendations and are more likely to try a new business rather than go through the stress of shopping around for better prices.

If the new customers are equally impressed with your service, they’re also more likely to refer you to their friends and so it continues like a domino effect, thereby increasing your profitability even more without excessive additional expenses.

Even if you have a situation when a problem arises, this can be turned into an exceptional experience. This gives your team the opportunity to really demonstrate your service experience by the careful handling of the situation (more on this in our next article) and a positive result for the customer. Even then, any word of mouth advertising is bound to be positive.

Word of mouth is the cheapest, yet most powerful form of advertising available. The faster it spreads, the better it is for your business.

People will talk about your service experience — so it is important that the conversation is positive.

In our next article we’re going to cover 5 Steps to Turn a Negative into a Positive Customer Experience and thus retain even more customers in the process.

Stopped by our local East Side Mario’s for dinner the other night. It was a nice night and since it was mid-week the restaurant wasn’t too busy, so we decided to sit on the patio. However, when we asked the hostess to be seated outside we were told that it would be 15 – 20 minutes before we could be seated. However, we could be seated immediately if we wanted to sit inside.

When I asked why we couldn’t be seated outside immediately — since approximately 50% of the tables were open — we were told that there wasn’t enough staff scheduled on the patio to serve more tables.

My Perspective: If there were enough staff in the restaurant to serve the total number of customers — then why couldn’t they simply reallocate some of the inside staff to serve outside on the patio?

It was such a nice night outside that people wanted to enjoy the evening. In fact people were waiting for tables — while servers inside stood around since their tables weren’t full.

My guess is that staff had been scheduled to stations in advance and that no one either had the authority or the initiative to adjust the staffing arrangement to address the customer desire as a result of the weather. Seemed kind of a no-brainer to the customer — but if the management hasn’t built in this type of flexibility then they will often be faced with disgruntled customers who can’t understand why there are silly rules preventing them from achieving their desired outcomes.

Is there any rules in  your business that seem silly to the customer — even though they make sense to you?

Have a look at your processes through the eyes of the customer and see if you see any areas for adjustment that can increase your opportunity to delight your customers. If you can’t see any holes — ask someone who doesn’t work in the business to have a look. They might see something you miss because they see things through fresh eyes.

Last week, Audi Canada lost a customer.

The customer currently has a 2009 A3 and 2007 A4 in their garage and was considering a Q5 for their next new vehicle. They also lost the brother-in-law of that customer who drives a Q7.

Plus there is all of the friends and family that will hear the story that I am about to tell you.

It seems that Audi decided that saving $1,000 — the cost to repair a leather driver seat in a 4 year old A4 — is a better financial decision that investing in the good will to stand behind their product and keep a customer loyal.

Back in 2007, when this customer was considering a new vehicle, the decision was between BMW, Lexus and Audi. The customer had been driving BMW’s since the 80′s and still had a 1990 BMW 325 convertible — which he loved to drive. But it was time for a new car for his wife. The final decision came down to the BMW, which they had a great family history with and the Audi A4.

One of the key tipping points for the Audi was the leather seats — you see BMW had started to use leatherette in the lower end models. The costs of similar vehicles were very close, but the leather seats just stuck in their minds as “going cheap”. In the end they liked the sales rep and they purchased the Audi.

They told all their family and friends about the experience with Audi and the brother-in-law also purchased a Audi Q7 when they replaced their Lincoln Navigator.

Fast forward to 2009, and the original customer needed another new vehicle. Since the sales rep was very good and the A4 was running beautifully, they decided to get an A3. There was no shopping around this time — since they now had an established relationship with Audi and the local dealership/sales rep. They were more than “satisfied”–  they were now “loyal”.

However, this past week, the wife — who was the main driver of the A4 — noticed a crack in the “leather” of the driver’s seat. The dealership was approached about this issue and they agreed that a crack of this nature was unacceptable and agreed to ask Audi Canada for some assistance although the car was no longer under warranty. After all, they were good customers who already had 2 Audi vehicles and had been bringing all their service work to the dealership (which is where the dollars are made in the car industry).

Much to their surprise, Audi Canada refused any assistance. The car was out of warranty — “too bad so sad”.

However, in an effort to salvage the deteriorating situation, the dealership offered to absorb the cost of the labour ($480) if the customer would pay the cost for the new seat cover from Audi Canada ($580). The dealership also advised the customer that if they called Audi Canada directly and complained that Audi Canada may back down and pay part or all of the claim — because the customer refused to go away.

My Perspective: Audi Canada needs to re-think their customer service policy.

They are throwing away hundreds of thousands of dollars of sales to save thousands of dollars. Their cost benefit analysis is broken.

They have turned a loyal advocate into a vocal critic who is now telling everyone who will listen to not buy Audi’s because they have cheap leather seats and refuse to stand behind poor workmanship in their vehicles.

How much smarter to look after this customer and then ask for a recommendation.

Are you looking at the short term value of a transaction against the long term value of a customer?

Do you know the long term value of a customer? What about their value as an ambassador of your organization based on the number of people they influence who might use your product or service based on their recommendation?

If you are not clear on the number, make sure you think then through. Then make sure you are making decisions for the long term vs. simply the short term.

Postscript: That customer in this story was me and will now be shared with thousands of people as a great story to illustrate my message of building long-term, profitable relationships with customers when I speak at conventions and conference across North America. Hopefully I will see you at one soon