Defining Crisis
When we think about crisis we can often immediately cast our minds to natural disasters, global emergencies and PR scandals.
In reality, crises can take many forms and most are hidden from public view but they will have wide-ranging consequences.
How can we identify and know what is classified as a crisis in our business?
Crisis can be defined in five characteristics or qualities:
- Is triggered by significant internal and/or external factors.
- The escalation of smaller incidents.
- Has an enterprise-wide and multi-functional impact.
- Creates disruption in normal business operations.
- Has the potential for reputational harm/damage.
According to Deloitte Global’s 2018 crisis management survey, “Stronger, Fitter, Better: Crisis Management for the Resilient Enterprise,” nearly 60% of respondents believe that organisations face more crises today than they did ten years ago, yet many may overestimate their capabilities to respond.
Today many organisations’ confidence in their crisis management capabilities does not align with their actual level of preparedness.
The average organisation, if asked about their customers, does not have what we call a Customer Crisis Plan.
A customer crisis plan is not a customer retention or renewal plan.
Customer crisis is about certainty: your ability to confidently approach each day knowing you can protect your customers in difficult circumstances.
Customer retention is about loyalty: your ability to cultivate deep and meaningful connections predictably over time.
I’m going to let you into a process my company, The IA Group, uses to help customers and organisations that call us in during very difficult times.
The customer transformation work we do through my company has delivered “customer rescue missions” to more than a dozen organisations.
One example is where our process saved one customer a $50 million dollar customer of theirs.
Why go through the effort of creating a Customer Crisis Plan
According to a 2019 study of some 4,515 crises by PWC, preparedness gives an organisation the advantage.
Every customer looks safe until it’s put under pressure.
Many organisations saw this in 2008, 2011 and now 2020.
Thousands of good companies like yours lose great customers every day.
90% of the time they say…
We never saw it coming.
In reality that isn’t true.
90% of the time we can see things coming. We just don’t have a mechanism for evaluating those risks and creatively solving them or we just don’t evaluate the risks often enough.
Simply put, having a Customer Crisis Plan means you’ll sleep better each night you have it in place.
Regardless of the size, maturity or sophistication of your organisation, you can apply these ideas to protect your profits, reputation, relationships and revenues.
Five-step Customer Crisis Plan
The Customer Crisis Plan was developed from conducting numerous customer rescue missions. And also evaluating specific cases of companies like Apple, IBM, Marvel, and Starbucks, who faced tremendous odds that disrupted their business future, customers and reputation.
A Customer Crisis Plan is designed for two things:
- To help you reduce and/or completely eliminate the risk of customer loss; and
- To uncover unique advantages from customer uncertainty that your organisation can use to drive current and future success with your best customers.
We’ve identified five core components that enable organisations to do this.
This doesn’t mean it will be easy nor will you not have to make tough decisions. It just means the effort and tough decisions will be worthwhile.
One – Mobilise a team for skills and resources
Best practice in crisis management will always state you need a clear chain of command and a crisis team consisting of people with a select number of skills, attributes and characteristics.
That is best practice for almost every mature and established organisation.
The challenge is crisis teams are designed to take a broad approach to all events. They can struggle to mobilise quickly and address very specific nuanced events with precision.
In reality, it only ever works in the military where soldiers and leaders are trained to respond to crisis and it has been drilled into them literally thousands of times.
The everyday employee is not trained for a crisis. There is no manual given, and the once a year simulation is just not going to do it.
We’re trained to be told what to do in a crisis. This can work for many practical and legal reasons.
This falls apart when you have a customer crisis because it is more nuanced, there are many more people involved and it often comes with greater complexity.
We must know how to mobilise a team to meet those demands.
To do this we must think about skills and resources, not job titles and positions.
It’s about the result, not status.
Asking who’s got great skills at influencing, negotiating, analysing and creativity is the best way to start.
Knowing where the resources are in your business, and who has the best or easiest access to them are all part of the selection process. Those resources could be as far-reaching as people with external influence, technology, and those with particular relationships access.
Selecting the right team and identifying those resources makes a big difference.
Focusing on the team, here are a few suggestions of who should be on it. NB – those with an asterisk are the must-haves.
- Experienced thinker/strategist*
- Negotiator*
- Sponsor* (typically an executive)
- Legal
- Data analyser or risk manager*
- Technical
- Enforcer
- Change Manager*
- Relationship Manager(s) (ideally the one serving the customer unless they’re part of the problem)*
- Partners/suppliers
You don’t need to have all these roles on your team. You first need to be aware of where all the skills and resources are. Then select based on what you believe you need right now. You can always adjust again once you go to step 2.
Two – VUCA Decision Making
In a crisis, access to accurate information at the right time is a rarity.
Contrary to belief, there is such a thing as having too much information.
Seeking more information than is needed to act is not helpful in a crisis management situation. It often disables decision making and it becomes much more challenging to filter fact from fiction. There is a lot of psychological evidence that proves this.
We need a system to deal with getting to the real route cause with the information we have available, then assess the risks to take action.
VUCA (Volatile, Uncertain, Complex, Ambiguous) is not the only tool, nor the best tool but it is the most helpful for a customer crisis plan. It allows you to very quickly extrapolate unique dangers that may exist based on what you’ve discovered.
There are ultimately four general elements that exist in any effective decision-making process
- Identify the exact problem you need to solve.
- Understand what the cause and the impact will have both practically and emotionally for the people, organisation or any others involved.
- Evaluate what you don’t see e.g. dangers or risks.
- Design the proactive action plan.
You can get more specific details on effective decision making in this blog article.
I want to share how you can use VUCA as a risk tool to powerfully shape the actions you take.
Begin answering the question in each category:
| VOLATILE – Rate of Change | UNCERTAIN – Unclear about the present |
| Where are the unpredictable areas that impact how we solve the problem? | Where is there a lack of specific information/insight about the problem? |
| COMPLEX – Multiple key decision factors | AMBIGUOUS – Lack of clarity about the meaning of an event |
| What are the different elements involved in solving this problem? | What areas of the situation, important to taking action, still unclear? |
There are many other questions important to design but what you’ll begin to develop is an overall risk framework you can quickly implement.
Three – Create a Customer Crisis Action Path
The crisis action plan is designed to be a thoughtful, robust and rapid process for making decisions after you’ve addressed what’s happening and know the root cause.
In our experience, this section can happen very quickly with a clear experienced thinker and facilitator.
The elements of creating a customer crisis action path are below and here as a downloadable PDF.
OBJECTIVE
| Scenario Facts: What we now know to be true? Customer Outcome: What the customer wants and isn’t experiencing? Our Outcome: What we want to resolve? Unique Advantage: What we need to design to prevent this from happening again? |
TEAM
| Goal: What items need to be accomplished to reach the outcome?Controlled Action: What actions we can do that we have control over?Influenced Action: What actions do we have an influence on? Collaboration Needed: Who or what is needed to complete the action? Measure: How we’ll know this has worked? Owner: Who is best positioned to own this? By When: When must this be done? |
The benefits of taking this approach will allow each person involved to clearly see all the elements that must be considered in order to achieve the outcome you’re aiming for.
Even more so it is an empowering framework that shows everyone they have control and influence to achieve the result.
Four – Communicate the change
It goes without saying…
Communication is critical.
It is the one element that exists consistently in every recorded failure with organisations that do not recover from a crisis or even simply manage it ineffectively.
Identifying the:
- Who: needs to be informed and also incorporate how they might be feeling.
- What: needs to be communicated and also what result you want.
- How: the method you want to communicate this.
- When: the timing around when you need to communicate this.
Fundamentally any crisis has an immense impact on people. We must seek to address people and individuals, which requires a hearts and minds approach.
During the 2008 financial meltdown, Starbucks was an organisation in deep trouble. Customer experience was inconsistent, they were growing too quickly without clear processes in place and they were losing customers. The former CEO Howard Schultz came back to the company to lead the helm.
Among other changes, the action that was considered as fundamental to the re-rise of Starbucks was a speech that spoke of purpose, honesty and action. This speech shared by Schultz reminded everyone that in a very dark time they were in the “people business”. This became a catalyst to purpose-led action and now Starbucks is one of the most beloved brands on the planet.
I’m not saying you need a Howard Schultz level speech.
The point is when it comes to communication we often think facts first. We can so easily miss that we are communicating with people, who are and will be impacted by these events.
You don’t have to take my advice as all the evidence states that regardless of the medium, when communication is honest, purpose-led and action-focused there will be effective engagement.
Five – Reengineer for the unexpected advantage
The final step in the Customer Crisis Plan is an area that goes unnoticed so organisations will often miss out on the full rewards of all their hard work.
This is reengineering for the unexpected advantage.
In step three we explored creating the path which was the team action plan.
It asked you to think not just about the result of resolution but the advantage you want to create.
This is a very different way to think but is important for learning how you can mitigate the risk or impact of a similar crisis in the future.
We saw an example of this in 2012 with the company called Best Buy that had reported a 1.7bn loss in a quarter. This figure was unprecedented for their business. They had been caught off guard like many retailers with a faster-growing wave of e-commerce and online price comparison, in particular Amazon’s price check app that allows shoppers to compare in-store prices to those offered by its own inventory. Best Buy customers were becoming more and more deal sensitive.
Instead of bowing to the online power of Amazon, they decided on how they could create an environment to consistently cultivate more loyal customers, and compete with online consumer pricing while remaining profitable. That is the advantage they wanted and if they didn’t achieve it they would quickly see continuing downward sales and customers.
They didn’t ask, what do customers want? Instead, they asked, what do customers spend the most time asking our staff? The answer was trialing devices. Now they had an unexpected advantage… the in-store experience.
Best Buy did these three steps:
- They introduced a price match on selected items to reduce the number of its customers going to Amazon.
- Then they trained their staff to be more knowledgeable on specific high value, complex brand products.
- Lastly, they created partnerships with brands like Samsung to set up product showrooms in Best Buy stores.
The progress they made was so impressive even Jeff Bezos acknowledged them in a 2018 press conference. Since then, Best Buy has grown profitably every year.
In this reengineering stage it is important to huddle and evaluate:
- What are we learning from our interactions internally and with our customers?
- Ask yourself not just what do our customers want?
- What assets can we re-engineer to create something new or enhance something we already have based on what our customers are asking, not just what they say they want?
You may find my article on value pillars helpful in thinking about how you can drive greater value to your customers.
What now?
What customer crisis have you faced and lost in the past?
Would you like to ensure you, your team and organisation are prepared for whatever will come your way so you can protect your profits, reputation and relationships?
Take action today…
Remember, a customer crisis plan is not about retention although the outcome of retention can come from it.
A customer crisis plan is about certainty.
“Protect your most important key customers in any crisis – Learn how to implement the five customer phases to deepen relationship ties, protect opportunities, as well as your profits”.
I look forward to providing you with the guidance needed for you and your business to succeed this year.
Reference Content
- https://www.cbinsights.com/research/corporate-comeback-stories/
- https://www2.deloitte.com/us/en/pages/about-deloitte/articles/press-releases/deloitte-study-finds-organizations-confidence-exceeds-crisis-preparedness.html
- https://www.credit.com/blog/10-great-companies-that-came-back-from-the-brink-of-death-164482/
- https://www.fastcompany.com/3042431/the-biggest-business-comebacks-of-the-past-20-years
