The $1.6 Trillion Business Opportunity: How Businesses can End the Costly Customer Service Crisis

"The customer's perception is your reality."

~ Kate Zabriskie

In the fast-paced world of business, where every penny counts, the concept of systematization and process control often takes center stage. The belief is that by creating strict policies and procedures, businesses can squeeze out a few extra pennies from each transaction, ultimately contributing to substantial savings. However, in this relentless pursuit of cost-cutting, companies sometimes lose sight of the true value of customer experience, and the consequences can be dire.

According to a report by Commbox, businesses hemorrhage a staggering $1.6 trillion each year due to poor customer service. Incidents like the recent Air Canada flight debacle, where customers were escorted off the plane for refusing to sit in a vomit-covered seat, serve as yet another stark reminder of how North American airlines frequently miss the mark when it comes to customer satisfaction.

Ownership is a significant factor in this equation. Robert Glazer, in a thought-provoking article, highlights the pivotal role ownership plays in the service industry. As Glazer notes in his article, “we too often neglect to take ownership of solving problems, even though we have more tools at our disposal than ever before.” Empowering employees can be a game-changer, one that many businesses fail to recognize.

Contrast the repeated failures of airlines strictly adhering to policies and cost-cutting measures, often at the expense of customer satisfaction. It raises the question: Where does the cycle of cost and service cutting end? Are safety corners cut, and staffing standards lowered to compensate for dwindling profit margins due to frustrated consumers?

Getting it Right

Now, consider establishments like the Ritz-Carlton, which takes a radically different approach. They triple down on the customer experience, empowering their staff with $2,000 budgets, authority, and flexibility to create memorable experiences for guests. In return, the average cost of a stay at a Ritz-Carlton hotel can be more than double or even triple that of other hotels.

It’s Time for Something Different

It's time to make ownership, empowerment, and exceptional customer service a central component of leadership strategy. Imagine how Air Canada could have handled the vomit-stained seat incident differently. First, equipping airports with the means for emergency deep cleaning would be a prudent step. But in the absence of that, a simple solution would be to upgrade affected customers to business class or premium economy. If the flight was full, ensuring their next experience on the airline was vastly superior could have turned the situation around. Airlines often have their staff flying standby and seated in premium seats – what if one of their own staff had taken the unpleasant seat? It would have showcased a customer-first mindset.

Business leaders must weigh hidden costs against temporary savings when making decisions. The most effective way to create value is by empowering employees closest to consumers to delight customers without fear of repercussions. When teams feel psychologically safe and trusted to do what's best for customers, it's a win-win situation, and customers keep coming back.

Here are three practical takeaways for leaders to consider in empowering their teams to deliver exceptional customer service:

Go the Extra Mile, it’s Never Crowded!

"The more you engage with customers, the clearer things become and the easier it is to determine what you should be doing."

~ John Russell

Leaders can take a page from the Ritz-Carlton's playbook by empowering their teams with budgets, authority, and flexibility. Encourage employees to go the extra mile to create exceptional customer experiences. This approach not only boosts employee morale but also fosters a culture of ownership and customer-first thinking. Remember, an empowered team is more likely to find innovative solutions to challenges and keep customers returning.

Prioritize Customer Value over Short-Term Savings: It Pays Off in the Long Run!

"To earn the respect (and eventually love) of your customers, you first have to respect those customers."

~ Greg Gianforte

While it's crucial to manage costs, leaders should assess the hidden costs versus temporary savings when making decisions. A myopic focus on cost-cutting can lead to poor customer experiences and long-term financial losses. Strive for a balanced approach that prioritizes delivering exceptional value to customers. By investing in your customers' satisfaction, you can build a loyal customer base that will help sustain your business over time.

Trust Fuels Empowerment: Let Your Team Shine, Watch Your Service Soar!

"Empowerment is the key to a great customer experience. Employees need to feel they are trusted and their ideas matter."

~ Anne M. Mulcahy

Leaders can build a culture of psychological safety within their organizations by trusting their teams to make customer-centric decisions. Encourage open communication and make it clear that employees won't face negative consequences for acting in the best interest of customers. When employees feel safe to take ownership of customer issues and empowered to find solutions, it enhances their engagement and satisfaction, which ultimately benefits the customer experience.

Closing Thoughts:

"Customers don't expect you to be perfect. They do expect you to fix things when they go wrong."

~ Donald Porter

The road to cost savings need not be paved with poor customer experiences. By embracing empowerment and a customer-centric mindset, businesses can transform their operations, enhance customer loyalty, and ultimately save money through the creation of genuine value.

Take Action This Week:

It's one thing to read about these experiences, but what can each of us do to make a difference? Here are three suggestions for actions you can start taking this week to make a meaningful impact for your customers:

Initiate small acts of empowerment: 

Identify one or more aspects of your job or team where you can empower yourself and your colleagues to make decisions that enhance customer experiences.  Start small, such as granting team members the authority to handle specific customer issues without managerial approval.  In your next team meeting, encourage open discussions with your team to brainstorm and implement these initial acts of empowerment.

Advocate for Customer-centric decisions:

When presented with a workplace decision or policy that could impact customer satisfaction, speak up and advocate for customer-centric alternatives.  It is important that you prepare well so that you can present a well-reasoned case that highlights the long-term benefits of prioritizing customers.  Collaborate with colleagues who share similar values to strengthen your collective voice in favour of customer-centric choices.

Lead by example in building psychological safety: 

Create an environment of psychological safety within your team and demonstrate active listening to team members’ concerns and suggestions.  Consider facilitating an open team discussion where you have team members share some of the biggest customer service misses by your company.  Give the team members the freedom to propose and implement some customer-focused solutions.   The objective is to foster a culture of shared learning and customer-centric learning. 

By taking these actionable steps, you can make an immediate impact within your workplace, regardless of your level of authority. These actions not only contribute to improving customer experiences but also help in building a workplace culture where everyone is aligned toward the goal of exceptional customer service.