When Customers Leave and They Don't Say Why

Getting Images

"The true test of business's customer service fitness is not when things are going right--but rather what it does when things go wrong."

--Steve Ferrante

One of the more overlooked aspects of growing a business is retaining customers, especially in competitive markets like retail, dining, and travel. A good way to achieve that is to pay attention to what Dr. Albert O. Hirschman calls "repairable lapses."

Every company, nonprofit organization, professional services firm, and house of worship sometimes needs to catch up.

Yet, the goal is not perfection but consistency, honesty, and integrity in our dealings on both sides of the counter. That behavioral trio is essential for trustworthy relationships and loyalty. Best efforts are like an insurance policy for when bad days happen--and they do.

Let's say upfront that viability and profitability require new and retained customers. It's not one or the other, but both. However, the September Post is about the work needed to build customer satisfaction by keeping products or services in good order and fixing them when they fall below acceptable performance levels.

That means when something goes wrong and is brought to management's attention, even by associates, action should be taken to get things back on course as soon as possible. Sometimes, it's as simple as apologizing and making matters right--on the spot. Ritz Carlton Hotels gives frontline workers the authority to do just that. Well-managed restaurants do the same with servers. 

Expressing sincere regret with concrete steps is an effective way to disarm unhappy buyers. Immediate responses help restore reputations as positive word spreads among business, social, and family networks.

This principle of repairability is important because it allows corrections within a reasonable period and cost. As with health, the point is not to let small problems become life-threatening through neglect. 

Departure closes the door

Dr. Hirschman, author of Exit, Voice, and Loyalty (Harvard University Press), suggests a reliable way to identify operational decline is through "exit." Customers leaving, especially in measurable numbers, are sending a message. 

Walking out quietly, though, makes it difficult to always know exactly what that message is. Exiting customers also give up an opportunity to make better what they don't like.  

How can those losses be reversed? 

"Management must find ways to correct whatever faults have led to these exits," Dr. Hirschman says. That's why feedback is necessary for organizational health. How are we doing, and where can we improve? 

Even with inflation now at 2.9%, down from 9.1% in 2022, changed shopping habits are in place for many households.

If doable, exit interviews shed light on disengagement, providing insights into what it might take to get someone back in the fold (i.e., faith communities). Resolving problems should be a priority, as finding new clientele is time-consuming and hard. 

Research by Frederick Reichheld, inventor of the net promoter score, shows that increasing customer retention rates by 5% increases profits by 25% to 95%. 

Keeping the right customers is of great worth to enterprises, big and small.

Speaking but not too loud

The complement to exit is "voice," although consumers can speak and still leave. Voice gives rise to advocacy by remaining in a system. The book suggests that what causes us to choose voice over exit is loyalty, which, unfortunately, is a diminishing value. 

Customers or members may express their objections to anyone they believe cares. "Voice is effective up to a point and can be overdone," says Dr. Hirschman. Voices alert management to failings but must give management time to respond to the pressures brought to bear," he adds. How much time it takes for remedial action to take effect depends on the situation's complexity. 

Take the recent Crowdstrike-Microsoft crisis, which caused the largest IT outage in history.  

A Crowdstrike software update failed, causing flight delays, broadcast disruptions, and blue screens on corporate PCs worldwide. Crowdstrike's founder and CEO, George Kurtz, has publicly apologized. "I want to sincerely apologize directly to all of you for today's outage. All of CrowdStrike understands the gravity and impact of the situation." 

He reiterated the company's earlier message that the incident on Friday, July 19, was not the result of a cyberattack.

Not all airlines use Crowdstrike. Of those that do, Delta claims it was more affected than others. From July 19 to 25, it canceled 7,000 flights, affecting a half-million passengers due to the IT outages. 

"I want to apologize to every one of you who have been impacted by these events," Delta's CEO Ed Bastian told customers. "Delta is in the business of connecting the world, and we understand how difficult it can be when your travels are disrupted."

Loyalty is a two-way street

Delta's passengers voiced their anger through social media and the press, as flyers were stranded in airports and sleeping on floors. Most affected travelers, including Sky Miles members, will stick around as they have little choice. Delta's slower recovery from the outage follows an earlier J.D. Power survey showing the airline as the best in first-class and premium coach satisfaction. *   

The U.S. Transportation Department, which has received more than 5,000 complaints, has opened an investigation into Delta's response. Delta has retained famed litigator David Boies and is suing Crowdstrike and Microsoft to recover a projected half-billion cost; both companies denied fault. 

Some passengers use their collective "voice" through a class action lawsuit to exert legal and political pressure on Delta's top management to reach financial settlements. 

How does a business repair that kind of damage? As quickly and transparently as possible. 

A Delta spokesman told The Wall Street Journal that the company has processed thousands of refunds and reimbursement requests. "The airline is working tirelessly to make this right for customers." 

After suffering severe turbulence, how will Delta land safely? 

One way is remembering what Scottish novelist J. M. Barrie said: "Life is a long lesson in humility."

* The author is a Delta SkyMiles member.  

Strategist.com

© Bredholt & Co.

See You in September

 "The summer night is like a perfection of thought."

--Wallace Stevens

Vicksburgmi.org

See You in September

"The summer night is like a perfection of thought."

--Wallace Stevens

Vicksburgmi.org

See You in September

"The summer night is like a perfection of thought."

--Wallace Stevens

Vicksburgmi.org

There's No Such Thing as a Cheap Piano

"Buying cheap to save money is like stopping the clock to save time. Neither works."

--Napoleon Hill

(C) Cable-Nelson

Sometime in the late 1950s, my Mother purchased a Cable-Nelson spinet piano and enrolled me at the Edward Cullinan Studios in Benton Harbor, Michigan. 

While less well-known than Yamaha, Bösendorfer, and Steinway & Sons, Cable-Nelson was a successful manufacturer who built well-made instruments. They survived the Great Depression and manufactured various brand names until the 1980s.  

Although I was unaware then, Lydia Bredholt, a pianist, taught me the importance of quality products (Cable-Nelson) and people (Edward Cullinan). Over time, I also learned that high values and culture are obtainable, no matter one's status in life. 

In 2004, that same Cable-Nelson piano was loaded on a rented trailer in Florida and carried away to our daughter Jordan's home in Virginia. Later, our grandchildren will play, too--nearly 60 years after its original purchase.    

More than weekly piano lessons and practicing (who likes to practice?), our Mother knew that attempting to play Swans on the Lake or The Man in the Moon from John Thompson's Modern Course for the Piano (First Grade) opened the door to a world of creative expression that would provide a lifetime of enjoyment. 

That includes composing and orchestrating songs for our grandsons and granddaughters with the help of arranger Jerry Nelson.

"Without music, life would be a mistake," said Friedrich Nietzsche.

Cheap can be expensive

Recently, it was decided to replace the Cable-Nelson piano. A decade-old digital baby grand was found online, and it happened to be owned by someone nearby. Looking for a good buy, the price was agreed upon, and the piano was delivered to our home. 

However, it only took a short time for a $400 instrument to become an $800 transaction. The keyboard needed work, and the electronics were updated. The piano's computer system will require additional upgrades, the cost of which remains to be determined. 

Nevertheless, our 10-year-old grandson, Andrew, visited and admirably performed the theme from Star Wars. Additionally, the ebony piano is an attractive piece of furniture in our living room. 

So all is not lost. 

Piano lessons

Buying a piano is like buying a used car--it's a challenge for anyone.

LivingPiano.com says, "You can buy a piano cheap or get one free, but the amount of work you have to put in them varies greatly."

"Choosing the cheapest option may mean sacrificing quality, which can lead to additional costs in the long run," writes Matt Heller, who advises on these purchases.

The conclusion is that we will pay now or later (as I am doing), but we will pay.

Everyone likes a bargain--especially the well-to-do. But sometimes, within reason, paying the price to get what we want is necessary. Buying fewer but nicer things makes that possible.

May is a month of commencement and a time to reflect on the generosity of those who cared for us most. While they pass, their legacy lives.

As the Swedish group ABBA sang, "I say thank you for the music, for giving it to me."

Strategist.com

©  Bredholt & Co.

The Rule of Holes

"Everyone makes mistakes. Everyone fails at something."

--David Gemmell

(C) Deposit Photos

The "Law of Holes" adage first appeared in the Washington Post in 1911. 

The first rule's original iteration--"Nor would a wise man, seeing that he was in a hole, go to work and blindly dig it deeper ..."

The contemporary version reads like this: When you find yourself in a hole, stop digging.

It's a philosophy of learning to let go. 

Here are seven more rules to keep in mind:

2. Holes happen. They can appear out of nowhere, full-blown. One minute, they're not there; the next thing you know, you're in one. A wise person always carries a ladder.

3. Climb out of the hole as soon as possible. 

4. After you have climbed out of the hole, don't fall back in or dig yourself a new hole.

5. Holes come in a wide variety of types and sizes, all of which have the potential to cause you trouble. Sinkholes, the Black Hole of Calcutta, and the hole in the ozone come to mind. A hole in the water into which you pour money is called a boat. There can be holes in your story, your pocket, your glass, your résumé, your memory, your shoes, and your soul. 

6. Sometimes, holes can be your friend, for instance, in a storm. But it's important to know what kind of storm is coming. Holes are suitable in a tornado; they are not so good in a flood.

7. Bottomless holes are called pits, as in throwing good money into one. But "bottomless-ness" is a physical impossibility. The money just takes longer to get there before it finally disappears.

8. Regardless of all the Horatio Alger motivation, no matter how hard you try, you can never build a hole starting at the bottom and working up.

Source: H. Martin Moore, Jordan Rothstein, and the Internet. 

Strategist.com

© Bredholt & Co.

The Hacking of Organizational Systems

"There are only two types of organizations. Those that have been hacked and those that don't know it yet."

--John Chambers

(C) Contract Works

Comcast said nearly 36 million U.S. Xfinity accounts were compromised after hackers accessed its systems through a vulnerability in third-party cloud-computing software. The breach occurred between October 16 and October 19, 2023.

On Sunday, February 18, 2024, at the Munich Security Conference, FBI Director Christopher Wray said China's cyberattacks on U.S. infrastructure are "unprecedented." 

AT&T announced that the cause of its 12-hour nationwide outage on February 22, 2024, was the "execution of an incorrect process," not a cyberattack. In simpler terms, the company admitted to human error.

What's the difference between cyberattacks and hacking?

Cybercriminals hack and infiltrate computer systems with malicious intent, while hackers supposedly seek new and innovative ways to use a system, good or bad. (Micro Trend)

According to Security Magazine, there are over 2,200 attacks daily, which breaks down to nearly 1 cyberattack every 39 seconds.

On average, 1.4 billion social media accounts are hacked every month.

All systems are vulnerable

In A Hacker's Mind--How the Powerful Bend Society's Rules, and How to Bend Them Back (Norton), a book worth your time, Bruce Schneier defines hacking as "an activity allowed by the system that subverts the goal or interest of the system." 

Anything from medical records to the U.S. tax code can be hacked.

"Hacking is how the rich and powerful subvert the rules to increase their wealth and power. It's not that the wealthy and powerful are better at their hacks; they're less likely to be punished for doing so," adds Schneier, a fellow at the Berkman Center for Internet and Society at Harvard. 

As F. Scott Fitzgerald observed, "The rich are different from you and me." 

Schneier says that hacking is not the same as cheating. "Hacking targets a system and turns it against itself without breaking it. It's gaming the system and occupies a middle ground between cheating and innovation. A hack follows the letter of the system's rules but violates their spirit and intent," he concludes.

Systems evolve through hacking, especially when less critical and on a smaller scale. They might actually benefit from hacking as a way to improve their functionality and security. A breach shows where to patch, as it's impossible to think of every susceptibility when designing a system. 

Here are three stories illustrating different types of hacking--

-Johann Tetzel, a 16th-century Dominican friar, hacked the Catholic system of indulgences, intended to promote charitable giving by offering sinners the chance to buy forgiveness from the church. 

-In 1729, Voltaire got together with close friends to hack a French lottery. Since the payout exceeded the value of all the available tickets, he and his cohorts bought up the whole supply.

-A decade ago, Goldman Sachs was accused of manipulating the price of aluminum, calculated in part by its availability. The firm shifted its aluminum supply to different warehouses, trucking it around to other locations every day for years. Because it was moving, it was harder to get--a ruse that cost consumers an estimated $5 billion. After years of legal battles and appeals, the case against Goldman--and J.P. Morgan Chase--was settled in 2022. 

Who has access?

The focus in A Hacker's Mind moves from IT to organizational systems. For hacking to occur, a system of rules, such as corporate policies, must be hacked. And policies are plentiful.

The author explains that it's "one short step from hacking computers to hacking economics, politics, and social systems," as they are just as vulnerable to hacking as technology. 

Protecting the integrity of any system is rooted in the character and values of those in charge. Hiring decisions, which are extremely important but imperfect, are often a door ajar. To quote one observer, "People are honest most of the time but become dishonest in some situations when they perceive there is an advantage to be gained from it."

The book's critical point is that not all systems are equally hackable. Complex systems with many rules are the most vulnerable because there are more possibilities for unanticipated and unintended consequences.

Schneier makes clear: "Complexity is the worst enemy of security."

Questions to ask--

• What are the non-technological vulnerabilities in your system? 
• Who has access to the system? 
• What is at risk if the system is hacked? 
• How to patch a system?

If you are responsible for an enterprise, know it can and will be hacked (rules bent or ignored, boundaries stretched, goals subverted). Therefore, keep policies and procedures simple to reduce security risks. 

Cognitive hacking is powerful

Schneier wants everyone to know that any time something can alter information, choice, and agency, it represents a danger to the human mind.

"If you can hack a mind, you can hack any system governed by human action," he writes.

Can AI machines think?

AI, or artificial intelligence, is defined in A Hacker's Mind as (a) computers that can generally sense, think, or act and (b) as an umbrella term encompassing a broad array of decision-making technologies that stimulate human thinking.

An example of that last point is how specialized AI is designed for a specific task, like controlling a self-driving car. 

Tech writer Andy Kessler says, "Computers win in realms with defined rules, but humans have free will and make choices."

The AI insight:

• Data goes in one end, and an answer comes out the other. It is challenging to understand how the system reached its conclusion. 
• Human decisions could be more explainable. While offered, they're more after-the-fact justifications than actual explanations. 
• AIs don't solve problems like humans do. Their limitations are different than ours. They'll consider more possible solutions than we might.
• Remember that humans control AIs. All AI systems are designed and bankrolled by humans who want to manipulate other humans in a particular way for a specific purpose.

A corporate plan 

Steve Durbin, Chief Executive of the Information Security Forum, recommends that AI be viewed from the lens of corporate strategy and risk. 

"Before you can chart an AI strategy, develop a thorough understanding of its potential, its current usage across the organization, and the security challenges and threats that lie ahead," he emphasizes. 

At the corporate level, there is a need to integrate ethical considerations into policy and procedures. "Fairness, transparency, accountability, and privacy are the most ethical considerations surrounding AI," Durbin concludes. 

In the AI gold rush (Nvidia and OpenAI), programming and security are the next frontiers. Bringing untold financial gain, higher-than-average risk, and opportunities for hacking systems previously unconceived.  

Strategist.com

(C) Bredholt & Co.