Podcast Episode #19: Managing Customers in a Crisis

Hi and welcome to the Key Customer Growth Podcast. My name is Jermaine Edwards and I have become obsessed with customer behavior and how people and organizations win with their best customers long term. After starting, failing, and growing my own companies, 30 customer growth projects, hundreds of strategies, and the study of 50 years of customer service research, I've seen firsthand how and why organizations win, lose, and win again with their most important customers. This podcast is my way of sharing those insights, failures, principles, and strategies so you can become what I call an Irreplaceable Advisor, someone so valuable your customers never want to leave. In an increasingly competitive world, how do you continue to deliver unrivaled value and deepen those most important customer relationships? Join me as your customer growth guide, your Your journey starts here.

It's Jermaine Edwards, your customer growth guide, and this is episode number 19, and we're talking about how we can think about managing customers in crisis. Now, for every single podcast episode, I try to go a little bit deeper and really focus on the thinking, the practical thinking behind the activity. Activity alone will only get you so far, but once you know how to think about those activities, you can create all kinds of new advantage and opportunity. So the first big thing about crisis is to understand the problem is not really the problem, it's how you think about the problem. And so when we think about crisis, we can often cast our minds to natural disasters, global emergencies, PR scandals, but in reality, crises can take many kinds of forms, and the most are hidden from public view, but they will have a wide range of consequences. An example being a customer that is dissatisfied and now has taken it to their executive board. That is a problem, but it could be now be a crisis because now there are multiple things at play that have wider consequences to that relationship. So how can we identify and know what is classed as a crisis in our business? Well, in principle, there are actually some defined characteristics and qualities in how we can think about crisis. And there are these 5 things are actually something you can apply to almost any crisis, and those in the crisis management field will probably agree with the majority of these. So number 1 is it's triggered by significant internal or external factors. So there's something significant that's taking place, and we can define significance as wide-ranging consequences. When it impacts more than one thing, it has some significance. Number 2 is the escalation of smaller incidents. So if there are multiple small things that are taking place that impact, compound on each other, that's something we may want to consider, and it could be classed as also as a crisis. Number 3, has an enterprise-wide or multifunctional impact. This is going back to the whole idea that has multiple different chains of relevance, but if it goes right across the business and not just necessarily single independent, uh, agents or independent segments, then we can probably significantly look at that as a crisis. Number 4, creates disruption in normal business operations. So not all crises will necessarily disrupt immediately normal business operations. However, you can in many cases have crises that do disrupt normal business operations, and so you now have to either remodel, redeploy something specific, or at minimum begin to look at ways or small adaptations you can make within that particular context.

What else?

Number 5, last one, has the potential for reputational damage or harms. That's a big one. So you want to make sure that you're having a think about those 5. So triggered by significant internal external factors, escalation of smaller incidents, has an enterprise-wide impact, creates disruption in normal business operations, and has the potential for reputational harm or damage. That's what we could kind of generally think about. A number of different studies around this, so you can have Deloitte's Global Crisis Management Survey back in 2018, really kind of labeled the importance and also the concern that companies should have by not thinking about crisis as a, a particular kind of advantage that they could create in their business, a way in which they could begin to adapt in their marketplace in a much more meaningful, intentional way. So this particular survey at Deloitte actually was called Stronger, Better, uh, Stronger, Fitter, and Better: Crisis Management for Resilient Enterprises. That was the exact name. Out, nearly 60% of respondents believed that their organization was facing more crisis today than they did even 10 years ago. Yet many overestimated their capability to respond, which had led for many of them significant impact to their business, to the point in which many had gone bankrupt or seen significant loss in their business, whether that's talent, finance, people, customers. So today, many organizations' confidence in crisis management does not really align with their actual level of preparedness. And so whereas organizations will take an organization-wide impact or view of crisis management, I like to think about having agile areas for crisis management, meaning having one specifically just for your customers. Why is that important? Because ultimately, without your customers, you just don't have a business. So if you don't have a crisis management plan for how you mitigate or eliminate risk to those relationships in crisis, it's very, very likely you're going to get caught unawares and leave your business very, very vulnerable. So customer crisis is about certainty, your ability to confidently approach each day knowing you can protect your customers in difficult circumstances. That's a really important distinction. Customer crisis and having a customer crisis plan is not about customer retention or renewal. It's not. It's about certainty. It's your ability to confidently approach each day knowing you can protect your customers in difficult circumstances. So I'm going to let you into a really simple process here, a very short process of thinking about how you might begin to shape a customer crisis plan. So it begins in 5 different stages. So the first of these is really important because it's, um, the whole idea of the plan is it's designed to help you reduce or completely eliminate risk of customer loss. So it's protecting those different areas, and it's also designed to help you uncover unique advantages from that customer uncertainty. That your organization may or may not be aware of that you can use to drive current or future success with your best customers. So there's real advantage actually when you are disrupted in particular ways because it forces your business to have to adapt and produce something new that you've never had before, you've never considered before. So what are these 5 different Areas or components to a customer crisis plan? Well, the first is the ability to mobilize a team for skills and resources, not titles. That's really important. Oftentimes we look at the experience of people, we look at titles and say, oh, we need to have this person, this person here. Not really. And actually, some of the most effective teams on the planet are sometimes not in management roles at all. They're based on the skill set and the ability of those individuals, and sometimes that will be experience-based, Sometimes it will be about just getting somebody who has a different perspective on board that has a different vantage point into a customer or into a particular market situation. So the challenge here is to resist just looking at titles and experience and look at capability as the most important thing. It doesn't mean you may not involve somebody senior in your business. That's not what I'm saying. But as for the exact team that you might put together to help navigate that particular situation, that team may look very, very different. So knowing this is really important, and there are typically 3 to 4 people, 5 people you may need to have as a must for every kind of customer crisis team. You're gonna need an experienced thinker facilitator, someone who has a really strategic mind. You're gonna need a negotiator, somebody who can go in to have hard but fair conversations across the board, whether that's internally or externally, to help you navigate different kinds of complexity. You're gonna need a sponsor, somebody internally that can resource things or release resources for you where you need it. You're gonna need somebody who's a data analyzer, somebody could look at the data and help you determine risk or opportunity where that is. You're gonna need a change manager, somebody to help where that's needed to support change for customers and to people inside the business. And obviously the relationship manager for that customer, as long as they're not the one who's part of the problem, you can remove them from the situation if that's the case, but they also need to be involved if that's not the case. That's number 1. Number 2 is understanding VUCA decision-making. So there are a number of different ways in which you can make decisions, and I have a fantastic I've seen podcasts that you can listen to on the way we think better about our problems and how we can make sure that we have a much more robust view of that. But VUCA decision-making is about applying this whole idea of volatility, uncertainty, complexity, and ambiguity into our thinking, understanding that it's not something that we should avoid, put our head in the sand. Is something we should embrace as just a fact of life, that we have these things in our world and we're never going to get rid of them. It's just going to be there. So ultimately, VUCA is not just a tool that we can use to look at a market and test to see where it might be and how we might view it from our business. It's actually a tool that can help us to mitigate risk And so although Vuca is not the only tool for looking at risk, in fact, there are many other risk tools that I'd say are best practice to use, but this particular tool is most helpful in a customer crisis plan because you can very quickly extrapolate unique dangers that may exist with what you've discovered. So here's a very general process for effective decision-making within a crisis context. So you may kind of Take a thinking principle and apply it somewhere else, and the structure may be slightly different. So first, you always need to identify the exact problem you need to solve, always. Then you need to understand what the cause and impact are, practically and emotionally, is for the people or entity or other involved. Then you need to evaluate what you don't see, what are the dangerous risks, consequences, and design the proactive action plan. Now, in the place where you're designing for risk or looking at those things, this is where VUCA comes in. There are a range of questions you can ask within that. So for volatility, you may ask a question like, where are the places that are unpredictable in our business right now? Where the places are unpredictable areas that impact how we might solve the problem. That may be a frame of question. For uncertainty, You may have a question like, "Where is there lack of specific insight or information about the problem?" For complexity, you may have a question like, "What are the different elements involved in solving this problem? How might that impact how we think about the problem?" You might have a question like, "What areas of the situation important to taking action are still unclear? Where are the— what the areas of the situation important to taking action that are unclear? So you have a range of questions you can ask that are really helpful. You can design all kinds of ones inside there, and if you need support on that, some range of different resources you can help to really support in navigating creating those questions. But that's number 2, the VUCA decision-making, helping you to evaluate risk in a very speedy and very pragmatic way. The third is creating the customer crisis action path. It's the path you, you're going to take. So there's actually a range of different things you may need to put into this path that's really important. So the first is scenario facts, what we now know to be true after you've done your evaluation of thinking. Then you want the customer outcome. What's the customer actually want and what is the experience that they want? It's what the customer wants and isn't experiencing. You need to write that down. Then the outcome, our outcome. What do we want to resolve directly? What is that outcome we want? Then what is the unique advantage? What we need to design to prevent this from happening again. What is that advantage we want? Then we have the goal. What items need to be accomplished to reach the outcome? And this is for the team. So we give the team a goal. So, okay, now we have this big view. What's the goal first? What's the first thing we need to go and accomplish? We need to put that down. Then we ask ourselves, what's the controlled action? Actions that we have control over. What's the influenced action? What's the action we have influence of? These are really, really important questions and questions we very rarely ask. But the whole idea of controlled and influenced action comes from the whole frame of understanding that everything outside of control and influence shouldn't really be in our purview. We shouldn't be totally confused or concerned or worried about it, particularly if you've done the VUCA exercise. You've already covered, or you would have already covered, all the different risks that might be in place, and that would simply be embedded into your thinking about the goal. Then you'll need to look at collaboration needed. So who or what is needed to complete the action? You need to measure it. How we'll know this has worked? You decide on an owner, who is best positioned to own this resource and capability, and by when, when must this be done, and have that there. So that is the framework for the customer path. I suggest you go back and listen to what I just said, and you can have that there. Then we have the number 4, which is communicating the change, and it goes without saying that communication is super, super, super critical. In fact, there was a particular example that always comes to mind when I think about crisis and communication, particularly for an organization. And that's actually with Starbucks back in 2008, the financial meltdown. Starbucks was an organization that was thriving at the time but got into deep trouble. The customer experience was inconsistent. They were growing way too fast without clear process, and they were losing customers. Reputation really wasn't getting better. So former CEO Howard Schultz came back to the company to lead the helm. Among that, uh, considered changes The action that is pointed to the most that really kickstarted Starbucks' rise back into prominence was a speech that Schultz had given that spoke to purpose, honesty, and action. This speech was shared by Schultz, and what he did was he empowered the individual to take action, and this became a catalyst to really purpose-led action and now one of the most beloved brands on the planet. So I'm not saying that you need to have a Howard Schultz-level speech, but the point is, when it comes to communication, we often think facts first and we miss that we are communicating with people who are, who are and will be impacted by these events. So we have to think about hearts and minds, as they call it, hearts and minds, and what we can do to support those things. Number 5 is re-engineer for the unexpected advantage. So now we have a total view of the problem, we've got our team, we know what the change is going to be, the actions, and we want to communicate that change. Now we want to re-engineer. This is the final step in the Customer Crisis Plan, and this is an area that goes unnoticed by most organizations, but actually, when you really consider this, there are some massive rewards that can be got from this. And let me give you another example. So in 2012, a company called Best Buy, a retail computer electronics company, had reported, like at the time, a $1.7 billion loss in a single quarter. Unprecedented for their business. And they've been caught off guard, like many retailers at that time, with the rise in prominence of e-commerce, online price comparisons, In particular, there was an Amazon price-checking app which allowed shoppers to compare in-store prices to those offered by Amazon's own store. Customers were becoming more and more deal-sensitive. So instead of bowing to the online power of Amazon, they decided that they could create an environment to consistently cultivate more loyal customers while still competing online with their customers and remaining profitable. So this is a really big deal. And what they decided to do, what the advantage they noticed that they had, was the in-store experience, the in-store experience. And what they noticed there was that first, you know, the Best Buy customer was somebody who wanted to experience the product before they purchased. And so that in-store experience, they decided to do 3 specific things to re-engineer particular aspects of their business. The first was introducing a price match on selected items to reduce the number of its customers going to Amazon. Second, they trained their staff to be more knowledgeable in very specific, high-value, complex brand products. And third, they created partnerships with brands like Samsung to set up product showrooms in store. And what that created for them was this brand new advantage that they had to re-engineer from once they've understood the problem. And once they understood the problem, they could re-engineer the experience for their customers to gain that advantage, to stop Amazon stealing their customers. And the progress was so impressive, even Jeff Bezos himself acknowledged them in a 2018 press conference and were so impressed with their growth and profitability. So for you, what is that re-engineering? What are you re-engineering in your business based on the problems that you see? What advantage are you creating? If you're seeing the same problems come over and over again into your business, it's likely you haven't fully understood the problem or you haven't created the advantage needed to eliminate it in the first place. So what do you do now with these 5 different areas? Well, I suggest you go back and listen to this, jot this down, and really have a think about the implications of not having this there. If you do not have this there, what is your alternative? What is the plan for when crisis hits? And we have these situations come about in our world every, every year, in some cases multiple times within the organization, because crisis is not just about natural disaster, it's about those 5 different areas I mentioned. And it could be small iterative things, or it could be quite significant, but mostly it's hidden and private to your organization. So you need to have a plan. So that's been helpful for you talking about crisis and thinking about how you may think about these different areas. It's really important that you take time to consider because these are all part of growth systems, part of thinking about how we design for excellent, predictable, repeatable results with our customers. I'll see you in the next podcast.

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