You Owe it to Your Customers

Imagine you were about to fire some veteran employees. But instead of calling them into your office to break the bad news personally, you announce staffing changes in a robotic, impersonal company-wide email.

Imagine you were about to breakup with your girlfriend. But instead of sitting her down and explaining the situation personally, you post a Facebook status update declaring your love for another woman.

Imagine you smashed your friend’s car in an accident. But instead of informing the friend personally, you return the car to his driveway and immediately take off.

In all of these cases, society would unequivocally declare you to be in the wrong. When bad news needs delivering to someone, engaging that person in a one-on-one, candid discussion is simply considered the right thing to do. The magnitude of that "right" increases exponentially when those affected by the bad news have an honest relationship.

So if businesses claim to seek actual relationships with their customers, why, then, do so many fail to hold up their end of the bargain? When companies make changes with an impact on customers (particularly an adverse one), why do they often refuse the burden of directly communicating the change and the reasoning behind it?

To anyone with a concern for customer-centricity, the notion of engaging loyal customers in one-on-one dialogue cannot seem anything but right.

To those executives unconvinced sappy concepts like "doing the right thing" matter in the business world, get off your high horses! According to new research, establishing personal contact with customers is not simply a morally laudable policy—it also possesses significant business value.

This past summer, Netflix introduced a significant price hike with little public justification and no personal reassurance for its concerned, suddenly-distrusting customers. The resulting outcry sent shockwaves through the customer management and technology fields, which ultimately subject the seemingly-unstoppable company to the crushing pressure of pessimism. Since that announcement, the company’s stock has lost roughly two-thirds of its value, and the brand recently appeared on the "Five Brands Most Likely to be Gone By 2015" list.

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Customers were never going to love a 60% price increase, but what if Netflix had engaged customers in the one-on-one dialogue standard to human relationships? What if reps personally contacted customers to advise them of the change, explain why it was absolutely necessary, detail the additional benefits customers will receive as a result of the increase and determine which new subscription plan will be most sensible? What if, quite frankly, it showed it really understood customer concern and was really committed to minimizing the harm of the price change?

The research, per a new whitepaper from The Forum, suggests the outcry could have been significantly minimized had Netflix engaged in that personal dialogue.

Conducted within the insurance sector, the study measured customer reaction to price changes and looked specifically at the impact when an agent personally notified customers. While customer satisfaction always declined in response to a price change, its decline was softened by as much as 21% when the personal communication happened.

That effect was particularly profound for price increases; the "satisfaction protection" of personal notification was twice as strong when the news was bad.

In assessing its findings, The Forum writes, "As businesses move toward automated computer-generated communications with customers, we call for a counter-trend because people do matter. Customers react more favorably to personal contact from companies –something companies do little of in a world where nearly all communications are outbound and impersonal."

The situation is rather intuitive. Through the promises in made in marketing and point-of-sale interactions, customers, though skeptical, are led to believe that the brand truly values the relationship and that it sees him or her as more than a number on the income statement. Most instances of personal contact help prove those promises were not empty. If the company is willing to endure the opportunity cost of one-on-one communication to make the customer feel more satisfied, it must care. These interactions, quite consistently, help dispel the undesirable notion that customers appear as nothing more than dollar signs to the corporation.

The reverse, of course, can also be true. Price increases, unequivocally, place a greater burden on the customers, and they consequently induce wondering about how seriously the company values its "relationships." In the purest, most unadulterated sense, when a company like Netflix implements such a policy--one which will adversely impact its customers--it is revealing that it will not, in fact, resist any strategy that undermines customer happiness. Generally speaking, that is not how an entity treats the people about whom it most seriously cares. And customers are right to question the validity of the "relationship."

At this point, one-on-one notification is the least the organization can do. In the aftermath of a price increase, customers are riddled with skepticism and doubt about the company’s commitment to their happiness—they have every reason to see themselves as expendable commodities being used to fuel a bottom line. It might be impossible to remove all of that doubt, but if a company takes the time to talk customers through the pricing policy, it can at least reassure customers that it does care and that they should not mistake the new prices as a sign that the brand-customer relationship matters any less.

If brands are asking customers for their support—whether through brand advocacy or actual purchasing—they must live up to the terms of the relationship. They must demonstrate that the customer matters, and when something about the brands, their products or their customer experience policies change, the ones that care about customer satisfaction have no choice but to speak directly to the customers…as humans about whom they care.