Policy or Flexibility: A conundrum for Organisation for Customer Retention

I witnessed a huge shift in various organisation’s approach on how they acquire and retain a customer. This shift is quite contrary to what an ideal organisation publish in their vision mission statements.

From MNCs to Public Sector to Private organisations you find all of them talking about new ways of acquiring a customer to raise their top lines, with various means of attracting a customer, promising moon till product life cycle. However, the catch is, their policies and procedures restrict their employees in delivering moon and hence they land up delivering below customer expectations leading to customer loss.

Do we know that policies framed for an organisations are designed keeping in mind customer centricity and employee delivering consistent, high caliber service without dramatically increasing the burden of employee management responsibilities, while it may be argued that without policies system may fail leading to mismanagement and chaos down the line and ultimately affecting customers?

Counter argument suggests if policies are too rigid, customers may not find it comfortable and may move out of the system in the name of rigid policies.

Policies and procedures are required when there is a need for consistency in our day to day operational activities. Policies and procedures also provide clarity to the employees on the activities that are of critical importance to the company which also involves activities related to customer relationship management.

One of the important aspect which an organisation misses in understanding and measuring the effectiveness of these policies and procedures while handling customers is “whether they meet the organisation needs”?

Are these being reviewed & updated to account for

-         customer’s voice

-         business lost

-         employee feedback

-         employee inefficiency or inconsistency in handling customer issues

-         increasing customer complaints

My experience as a customer with 3 of the well know companies – one being a leader in the Insurance sector, second a leader in private education sector and third being a well know name in life style & holiday ownership company, throws a basic question “Do such a big organisation listen to their customers” or simply they are engulfed in capturing the cream from the market and build business due to huge potential and untapped market still open and receptive to their attractive schemes to lure customers which restricts them to realise the importance of losing a customer.

Let’s see how these companies lose their customer which is based on my experience of being a customer in recent past:

A.  Listen to a customer or lose a customer – An insight for Insurance Companies

-         You take a Health Insurance policy for mitigating the risk associated with higher expenses in case of hospitalization. I too had a health insurance cover with a reputed Insurance Company for almost 8 years with zero claim and spending close to Rs 25k each year. This was just like a business with 100% profit for the insurance company. The twist came at end of 8th year, when the policy was due for renewal and call centre started chasing me 2 months in advance from due date. While the due date came closer and their renewal rate sky rocketed with no justification, which I still was okay to accept, the issue came up when I demanded an extension of a health coupon which was provided to me last year and which got expired as I missed to avail.

-         The value of this coupon would have not been more than Rs 500/- as it involved a preliminary health check-up which all insurance companies provide as an incentive to buying a health cover. From the day I started demanding extension of this coupon along with renewal of my health cover, standard answer “as per policy we cannot give” started testing my patience.

-         The demand was put up to connect me to one who is senior or head of the business, they connected me to an executive and the same standard answer “as per policy we cannot give”.

-         I would have received not less than 30 calls from the Insurance company and each time a different executive interacted, starting from scratch explaining the context of the problem and putting up a fresh request again and again made me baffled and matter became so intricate that I decided to put an end to this by porting my policy to some other insurance company.

-         The calls continued till next 3 months from date of expiry, highlighting I being an old customer I should renew, threatening by the risk associated with non-renewal of a health cover and they explaining me their constraint of adhering to the policy guidelines set by the management.

The lesson I learnt was that organisations like this, will take some time to realise that their policies are hindrance to their growth and then amendments to such rigid policies will start. Will it be too late for them is the question they should ask themselves.

As a customer I realised one thing: ‘don’t be silent as a customer during the early phase of relationship, try & explore to learn about the organisation, how they treat you as a customer, and if you remain silent as I did for 8 years, you may lose of getting all the benefits when you are actually in need of them.

B.  Empathize with your customers or else you will die in long run – A lesson for Educational Institutes

-         My Second experience is based on my interaction with an “Private Education Institute” who prepares student for competitive exams for Engineering & Medical. When you induct your child for 2 years to such an institute you have a very high hope from the institute and do lot of research and then zero in to one particular institute.

-         I did the same and inducted my daughter to this institute. She completed this 2-year program and we were waiting for final results of the competitive exams to be announced. When the results were announced, a fresh petition filed by an NGO led to temporary suspension of admissions to Private Medical Colleges in Maharashtra. This resulted in huge chaos and confusion among parents and students leading lot of protests and agitation.

-         As a parent I decided to re-induct my daughter again to a repeater batch by paying hefty sum of Rs 55k/- with a commitment to pay balance amount in 2 equal PDCs.

-         The decision on admission process came in favour of students in 7 days of time after I re-inducted my daughter into the repeater’s program.

-         The cancellation request was put immediately in anticipation of getting back the fees paid but to my surprise it was stated I am not eligible for any refund, which means I am being charged Rs 55k for attending 7 days’ class that too for a student who has been with the institute for 2 years with them.

-         The answer which I received from this reputed institute was “As per policy you are not eligible for refund”. Pushing the front-end staff harder, they came up with an answer, we are recommending your case to our Head office and if they approve, we shall refund you Rs 43k/-.

-         Few days back I received a refund of Rs 5k/-, and on checking with the institute, i was told that since your case is not eligible for refund, still we are processing Rs 5k/-.

-         Further pushing hard to their Regional representatives, amount of Rs 4k/- was processed with a refund notice letter sent to me stating infact you are not eligible for refund but our calculation shows that you need to pay us Rs 9k, but we are not demanding this.

-         In all my interactions with all levels of management of this institute, each level expressed their inability to go beyond policies, while they agree that these charges are too high and will recommend to the management for doing needful.

This is a classic example of organisation neglecting what is happening at the ground level as the market is so buoyant for growth and each one of this institute is busy in opening new branches in many towns and cities of India, they forget the fact that losing a customer and creating a negative impression will have severe dent on their business not immediately but in a long run.

Important lesson learnt: Give customers exactly what they ask for or even more without hesitation. If you do anything less, you might as well offer them nothing, because you’ll have lost their goodwill. If you’ve decided to give the customer what he wants, give in completely and cheerfully. Don’t haggle over the amount, and don’t roll your eyes or be sarcastic. If you are anything less than cheerful, it will cost you all the goodwill you were trying to gain.

Customers are good and if a customer tells you he has a problem; the chances are 99 out of 100 he really does. Don’t let the other 1% make you mistreat everyone else.

C.  Under promise, over deliver: Customers expect you to keep your word. Exceed it – lesson for leisure & hospitality sector.

When you buy a vacation ownership membership, you are treated like a King and lots of offers are given to lure you to buy a membership. If you try and negotiate, you get a membership package at an attractive rate with a promise to make your holidays memorable with lots of goodies and freebies.

This is common in the entire hospitality sector and the executive who sold you the membership will never be available on phone or in person once you are fallen in trap.

The promises go for a toss when you interact with their call centre and come to know about various terms & conditions. When you try to book a holiday, you are given an excuse of non-availability and policy of giving preference to old customers.

Where do you run to catch hold of the smart salesman who fooled you?

Time passes and you don’t get bookings and lastly the company demands Management Fees by reminding you of your membership. You push hard and raise your voice through all sorts of communication for not paying the fees till you get the bookings.

Atlast once the money is blocked, the answer comes, as an exception we are confirming your bookings.

Think of the image the company carries among their customers. What about referral sales? While you don’t have any alternate choice you have to forcibly be loyal to avail services as you paid hefty sum of money for your membership, but your customers will regret for being life time associated with you, unless you change and amend your policies, build trust by ethical behavior of your employees and keep promises to deliver value to your customers, survival of such companies will be difficult.

The point which I am driving through above cases, is the fact that companies design policies for smooth running of an organisation but forget important aspect of revisiting it at regular intervals to account for any changes. These are set of guidelines for the customers and there would always be exceptions, and if you have a zero tolerance policy, you may lose your customers. Where is the mechanism to listen to your customers? Businesses will continue to grow till such time markets are untapped and growing, days are not far away when you have to go back to your old & lost customers with an updated customized policies.

Wake up or Exit.

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