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Very few areas of life have been untouched by Covid-19, especially in the world of business. Early on in the crisis, for instance, we saw customers abandon brand loyalties as items flew off the shelves and shoppers migrated to online channels. This is a pretty common cycle: When circumstances change, people explore other options because that process helps them determine whether their current option is actually a good fit.
Unfortunately, this experimentation has real-world consequences for businesses. One survey of small business owners found that 82% lost their most profitable client after Covid-19 swept the nation. And despite Paycheck Protection Program loans injecting hundreds of thousands of small businesses with cash to maintain their payrolls, many still couldn’t manage to keep their doors open. By July 2020, just five months after initial lockdowns, one analysis estimated that more than $1 billion in PPP loans had gone to now-defunct businesses.
These kinds of stats aren’t exactly comforting to small business owners and entrepreneurs, and as a result, many have resolved to bend over backward for their customers in the hopes of keeping them around long term. But while I understand the sentiment, becoming a yes-man won’t have the effect you desire.
The art of saying ‘no’
When increasing customer retention by just 5% can increase profits anywhere from 25% to a whopping 95%, it’s natural to want to meet every request with a confident “coming right up!” But customer demands can’t always be fulfilled precisely as expected, and it’s dangerous to try to fit a square peg in a round hole.
As the leader of a software company, I’ve seen time and again that customers generally know what kind of outcomes they desire, but sometimes, their requests and desired outcomes aren’t the same. In those cases, we need to be good partners and push back. Business leaders trying to improve their retention should adopt a similar mindset — focusing their effects on being a good partner, not a sycophant.
Still, saying “no” can be tricky, so here are a few strategies you can adopt to push back without driving customers out the door.
1. Set the stage
In my own business, I’ve found that the best way to ensure client projects don’t go off the rails is to set clear expectations upfront. At the beginning of each project, we dedicate time to ask probing questions that get to the heart of what the client is trying to accomplish. Typically, that will prevent us from going down the path of doing something just because the client asked us to, even if it doesn’t necessarily make sense for the project’s goals. That openness around why we can or can’t do something sets the tone for the entire relationship.
Discuss any what-ifs, too: What if the project fails? What if you go over budget? And what will happen if things go sideways? As you progress through the project’s stages, make sure to check in with your client or customer regularly. Sometimes, the scope and expectations of a project will change, and that’s okay, but you need to make sure you’re updating the contract alongside those changes to protect your business.
2. Get radical
You’re an expert in your industry, but it’s a mistake to act like you know everything. So when a client makes a pipe-dream request, resist the urge to be brutally honest about how bad their idea really is. That kind of obnoxious aggression will just make you look arrogant and rude. Instead, work to establish mutual trust by developing a relationship grounded in radical candor, a communication style popularized by author Kim Scott back in 2017.
In short, practitioners of radical candor are able to simultaneously challenge people while still showing that they care. Traditionally, this communication style has been applied to supervisor-employee relationships, but it’s just as relevant for clients and customers. A client request might be next to impossible to deliver on, and you need to communicate that in a way that demonstrates to them that you have their best interests at heart. It’s about pointing out how a particular route could potentially sabotage their long-term success, and because you’re framing that “no” in a way that shows you care about their future, the point is more likely to land.
3. Offer alternatives
Apple is probably one of the best examples of a company that understands how to develop a seamless customer experience, even in the tricky world of tech. Its Genius Bar employees, who service customers experiencing tech issues, use the three F’s — feel, felt and found — to empathize with frustrated customers. Then, they employ the mnemonic APPLE (which stands for approach, probe, present, listen and end) to guide customers to a conclusion that they believe is their own.
When you have to turn a client idea or request down in your own business, you should always have an alternate solution waiting in the wings. Being a true partner, after all, means acting as a resource. And when it comes to offering choices, research from the University of Minnesota shows that three is the magic number.
Companies are scrambling to drive better customer retention because happy customers are their biggest sellers and their biggest advocates. But saying “yes” to every request and idea won’t get you there. Instead, learn how to gently push back on your customers or clients using the tips above and watch transactional relationships transform into lifelong partnerships.