Competing on Kindness: The SME Advantage

Bill Taylor, co-founder of Fast Company magazine, recently posed the question “Why Is It So Hard To Be Kind?” on his Harvard Business Review blog. In the post, he tells of the experience his father had purchasing a new Buick, and how one dealer went over and above to secure his father’s business. He closes the article by asking “What is it about business that makes it so hard to be kind?”

Kindness isn’t hard. The difficulty is that in large business, it is impossible to capture kindness in a process. Customer service training involves scripts, operational procedures, and policies to follow. Consequences for disobeying these ‘rules’ are clearly defined, and more often than not, performance metrics heavily favor efficiency over quality of customer service. This trend is best observed in the legions of outsourced call centers that offer nothing more than programmed responses to customer complaints, where even the most extenuating circumstances are met with “I’m sorry, that is not allowed under our company policy”.
While uniform policies and low-cost call centers may boost the bottom line of big business, they also present unique opportunities for small and medium sized enterprise (SME) to steal customers. I call it Competing on Kindness.
Kindness isn’t being a pushover, or developing deep emotional rapport with every customer. What it means is simply treating your customers with understanding, respect, and fairness. In other words, observing the Golden Rule; treat your customers like you would want to be treated. In practice, that means adopting the philosophy of flexibility when it comes to addressing customer issues, and training employees to adopt a similarly flexible attitude when it comes to dealing with customers.
When I talk about Competing on Kindness to clients, the response I often receive is ‘I’ve tried being understanding in the past, but I’ve been burned too many times.’ Usually, being ‘burned’ has involved a customer fraudulently claiming a product or service was defective, and ultimately receiving a refund. Business owners have often felt so betrayed, and so angry at themselves for ‘being gullible’, that they immediately implemented a policy to eliminate any similar event from occurring in the future.
Customer service policies are often like fishing dragnets, capturing everything and dragging them along the proverbial sea floor, dolphins be damned.

While this has the effect of eliminating that specific type of fraud from occurring again, it has the unintended consequence of punishing customers that have valid reasons for returning a product, or complaining about the service they receive. Customer service policies are thus like fishing dragnets, capturing everything and dragging them along the proverbial sea floor, dolphins be damned.
Here’s the catch- the customer who felt they were mistreated by your policy is about to become your biggest detractor, while the fraudster in the crowd has simply moved on to a new target. As I wrote about in an earlier post, customers dissatisfied with customer service they receive are going to tell, on average, 6 other people about their experience. That is 6 other potential customers you aren’t going to see, and possibly much more if those 6 people discourage their own networks to use your business.
The reverse is also true: a customer that has received a truly extraordinary service experience will become your greatest evangelist. In writing his blog post about his father’s experience with a Buick dealer, Bill Taylor just gave General Motors a powerful and compelling endorsement in front of a highly-targeted, relevant national audience. Cadillac not only lost Taylor’s father as a customer, you can bet they lost the majority of his circle of influence as potential customers, most of which fit perfectly in their target demographic.
Calculating the Kindness Return on Investment
Unsure where to add a dose of kindness into your customer service policies? One place to start is to take a hard look at how much you risk by implementing customer-friendly policies.
What is the cost of providing a money-back guarantee to your product or service? How many customers would take you up on that offer? How many new customers would you gain because of it?
Imagine you are a furniture retailer, and your average margin is 40%. A customer claims a table they purchased was defective, and you refund the full value of $1000. You find out the customer actually broke the table, and you can’t recoup any of your money from the manufacturer. You are now out of pocket $600.
However, your policy has attracted several customers who only shop with you because of your generous return policy. They have encouraged their network of influence to start shopping at your store. In total, you conservatively estimate that your 2 most loyal customers have brought an additional 8 customers into your store throughout the year. To recover the money lost because of 1 dishonest customer, you only need to sell $1500 worth of additional furniture to those new customers. In fact, you are able to sell ten times that much, netting you $6000 in additional profit.
While you have lost $600 due to an unscrupulous customer, you have also gained $6000 in additional sales due to a generous and understanding return policy. You’ve treated your customers fairly, trusting that returns are based truly on defects. Since the policy is ironclad, it is much easier for your staff to know how to react when a customer wants to return a product. Where there was once suspicion, you now have kindness and compassion.
While such customer-friendly policies should always be applied within a specific business context, the principles of kindness should be universal. It is one of the few ways that SMEs can still differentiate themselves, and in some cases, truly distinguish themselves from their competitors. By stepping back and assessing the true cost of policy changes, you can see just how far you can go to accommodate your customers. You might be surprised by how generous you really can be!


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