Today, we're going to talk about how to turn complaints into profits using a latte.
Now, I'm not referring to the drink, but to the company that came up with that acronym
for dealing with angry customers, and that would be Starbucks.
And latte is an acronym which is a powerful strategy to help you on the spot know exactly
what to do.
We've all had to deal with that.
An angry customer or vendor, somebody's frustrated with our process or our products or our services.
Once we've discussed latte, the second thing we're going to talk about is how can we empower
our team to execute on the spot in resolving complaints.
And thirdly, we're going to talk about then how to use those complaints as feedback to
innovate and upsell.
Let's get into it.
So latte stands for listen, acknowledge, thank them, take care of them, and finally, explain.
When you're listening, most of the emotional energy is dissipated when people feel heard.
Okay, what makes people feel heard?
Well, active listening means hitting the pause button and being present in the moment.
Customer complaints, when a customer's complaining and you show genuine empathy, that can de-escalate
frustration and immediately start building trust so we can open the door to a positive
resolution.
Peter Drucker famously said, the most important thing in communication is hearing what isn't
said.
So what do we mean by that?
We're listening to what they're not saying.
Here's a power hack.
Is that when the person stops speaking, wait two or three seconds, one, two, look thoughtful
and then give a response.
Because you're looking like you're fully engaged, because you are, and you're thinking thoughtfully
about your response, which you are.
That is a powerful way for people to feel heard.
Then we acknowledge.
Don't play it down.
Don't say it's not so bad.
Well, it mostly works, or it works, you know, software engineers, well, it works on my computer.
We're not selling your computer.
I once got so frustrated with an engineer that said that to one of our insurance clients.
I said, the next time you sell that, you and your computer can both leave.
I was clearly then frustrated.
Because what the point is, it doesn't matter what we think.
We don't argue with their perspective.
Here's the power hack.
Restate it back to them in the way they said it.
Try to use a phrase that they used, so they can hear it coming back to them.
When people feel heard and they see you're acknowledging them and their complaint, you've
already got 80% of the way there.
You can say things like, I could see how that would be frustrating, or I'm sorry that happened.
We want to do it better.
Then thank them.
Now, why are we thanking them for a negative complaint?
Because this is a gift.
We actually, we as people and as organizations, we grow through negative feedback.
And when somebody's taking the time to give you feedback, think of this.
They had an alternative.
They could have said nothing, been frustrated, and spread their frustration out in their
community.
But they didn't.
They spoke to you.
That's the gift.
You know, I love what Richard Branson said.
The key is to set realistic customer expectations, and then not just to meet them, but preferably
exceed them in unexpected and helpful ways.
I love that.
And you know, Branson has used this very effectively, him and his company worldwide.
You know, when we go beyond the basics, we turn that negative into a profit-driving positive
in the long term.
So we're thanking them because it's a gift.
Thank you for helping us with this.
Thank you for bringing this to our attention.
We really appreciate that.
We're trying to grow.
We're committed to delighting our customers.
That's one of the things I like to say.
We're committed to delighting.
Clearly, we didn't delight you.
So help us do this better.
Now we're on the same side.
So you've moved from being on opposite sides of the issue to being on the same side addressing
the issue.
So now we've come around to their side of the table, and we say, OK, let's look at the
issue together.
Now we need to take care of them.
So now to take care of them, we need to tell them what our plan is.
Now here is the power hack.
Swift resolution paired with an unexpected positive gesture is a potent combination.
Swift drivers, quick resolution, something positive, some gesture, a discount, a freebie,
an upgrade can transform a complaint into a memorable experience.
So they're going to remember the negative until we flip it.
Then they're going to remember the positive.
And that's when we start fostering real loyalty, long-term loyalty from customers.
And that's where the profitability element comes.
So when I talked about turning complaints into profits, I didn't necessarily mean there
and then.
On rare occasion, that might happen.
But I'm talking about the longer term profits.
Think about a company that does really well at this, Amazon.
You know, Amazon really excels with this.
When a customer complains about a defective product, Amazon will not only replace it,
usually ship it overnight and also include a gift certificate as an apology.
And you as the customer, you're impressed.
You're like, whoa, that was quick, it was speedy, it was generous.
What happens?
I start to become a long-term frequent shopper.
That's where the profitability part.
The little bit it cost us for the extra overnight shipping, yes, we lost what the whole item
was worth.
But the long-term profits is what we're doing.
So we're exchanging a short-term gift or generosity for a long-term loyalty.
And finally, explain.
Now, this is really important because this is when you are enrolling your customer into
helping you make it better.
So we say things like, this is why this won't happen again.
We'll be careful to make changes to our training, our packaging, our shipping, our customer
service, or I'll discuss this with the president or the team leader and ensure we make these
changes.
Thank you so much for helping us.
You made a real contribution to our company to be better and we appreciate that.
Now that is a wonderful way.
What did we just do there?
We made them the hero of the story, not ourselves the hero of the story.
By the way, just as a side, a fun thing to do when you're the customer complaining, don't
just keep complaining.
Give the person opportunity to turn it positive and when you see them trying, go with them.
When they succeed, stop for a minute and say, make them the hero of the story.
Thank you so much.
I feel so much better.
I hope the company pays you well.
I've sent fun things to people like that because I want them at that moment.
So yes, we push hard when we want stuff done or something's wrong and needs to be addressed.
But when you see the person turn, when you see them trying to come to your side, then
acknowledge them as the hero of the story.
When we're doing the customer service, we're making them the hero of the story.
Now a great example of this is Zappos, who famously turned a late delivery to a loyal
customer.
But not only refunding the shipping, but upgrading the customer to free overnight shipping for
life.
That was very generous.
So this single action generated countless positive reviews and referrals.
Now that significantly outweighed the actual cost of the upgrade.
So we're looking at the short term costs for much longer term customers' loyalty and profits.
So the customer not only returned, but you can imagine the word of mouth.
What have we done here?
We have reframed their negative experience with us to a very memorable experience.
So we completely reframed it and they leave feeling, I helped that company be better.
And what does that feel like?
Well, that's my company.
That's my shipping company.
That's my, you know, they're my company.
And that sense of ownership comes because they made a contribution.
This is very powerful and actually really easy to do.
Really a little bit of practice and you can be really good at this.
You can definitely do this.
Just remember Latte.
Number two.
Let's talk about how do we empower the team then to execute on the spot in resolving complaints.
I mentioned earlier about Zappos giving free overnight shipping for life.
Well, who made that decision?
How was that actually done?
That means somewhere before that all happened, somebody was empowered to do it.
A great example of this is Ritz-Carlton, who empowers every employee, regardless of position,
up to $2,000 of discretionary spending to resolve guest complaints on the spot.
You know, there was a story of somebody's TV that didn't work and the person who was
cleaning the room, you remember they called it ladies and gentlemen serving ladies and
gentlemen.
They're not cleaners.
They're not servants.
They're ladies and gentlemen.
Well, the gentleman who was attending to their room went out, bought a TV and had installed
before the customer came back.
They were really impressed.
We created this memorable experience.
We are reframing that negative into a positive by doing two things, the speed of our response
and the generosity involved.
Those are the two power.
That combination, those are like power twins.
That's what remaps the entire thing for people.
The question in your organization then, and it would be a fun conversation to have as
a team, who can make this decision?
Who's empowered and to what level?
In our organization, I'm not expecting our customer service person to be calling me asking
if they can do this, that and the next thing.
I have to empower the team leader to be able to make decisions and for me to trust her
and in her decision making power.
Part of what helps with this is we do not see customer service as the back office.
Where, you know, the real sales and the real business is done here.
And then there's that customer service stuff in the back.
We see customer service as the pointy end of the spear,
because that's what we're hearing from customers.
They're telling us how we can do better,
how our products and services are landing with them, where the difficulties are,
how sometimes it's hard to deal with us or we make things unnecessarily difficult.
We add too many steps in and we create confusion.
All that's coming from customer service people.
Now, to to do it quickly and generously, it means they must be empowered.
So this is the rule we use.
If a short term cost will produce a long term customer, then do it.
And so we've discussed the broad boundaries of that.
And so on occasion, you know,
we see sort of an odd value coming in and go, we don't sell a product for that price.
Well, I gave them a 60 percent discount or I did.
We were generous because of the situation.
I don't know that I've ever questioned our
customer service manager on any of that because I entirely trust her judgment.
So if you do not trust the judgment of the people you're talking about,
then that's a good conversation to have to why and maybe put some boundaries
around it so that everybody can feel like it's really happening.
Number three, how do we then use complaints
as a feedback mechanism to innovate and upsell?
You know, Bill Gates famously said your
most unhappy customers are your greatest source of learning.
I love that because complaints often are a very powerful way we can fuel
innovation and even profitability if we do it correctly.
So when we treat complaints as like free market research, right,
they're coming to us, they're telling us what a gift it allows us to improve our
products and services and to really tailor them.
Often we find upsell opportunities when we start tailoring it,
listening to the customer, understanding what they're doing.
You know, we can really directly convert
dissatisfaction into additional products, revenue and so on.
So here's what we want to do.
We want to change and reframe customer service as the pointy end of the spear.
And when we see a complaint,
we are reframing that as a positive gift to the organization.
They could have been quiet and suffered
quietly and just told everybody else about the negative experience.
And then thirdly, we are going to reframe
their experience from a negative to a really memorable one.
Why? Because we acted quickly and generously.
I hope that was helpful.
So remember Latte, remember to decide
on how to empower the team to execute on the spot and use complaints to drive
innovation and new products. Enjoy.