Many customer relationships involve the potential risk of encountering problems that the customer does not fully understand. In many cases the customer does not understand what they have bought and in others, such as warranties and insurance, they are supposed to understand the risk.

There are three challenges that lead to at least thirty percent of all customer dissatisfaction.

1. Companies fail to honestly and effectively communicate risk
2. Customers fail to read and ignore many risks
3. Serious events occur relatively seldom and both customer and company chose to ignore them as an unnecessary complexity.

The challenge for CX executives and communicators is that there is no certainty in the concept being communicated. Almost every product, however humble, contains unpleasant surprises which are sometimes serious. For instance, a yogurt manufacturer found that their cherry yogurt occasionally included a cherry pit, in spite of their best quality manufacturing efforts. The inclusion of a label, "Caution, Real Cherries Have Pits!", reduced claims for broken teeth by 50%.

This session will show both why you should communicate risk and how to do it as well as convince internal skeptics like legal, marketing and compliance that transparent communication is a safe strategy. Compelling examples will be given in a half-dozen case studies. The challenges of building a risk communication strategy include changing the outcome metric from no bad press to equipping customers to manage risk, then communicating risk quantitatively illustrating outcomes with stories and finally providing customers with options they understand and accept. The payoff of such a strategy can be quantified in both pilot tests and as an ongoing strategy. Again, metrics will need to be modified. • Opportunity to cross-sell – When insurance companies outline the risk of not having coverage or, for example, enough coverage on valuable items, customer almost always ask to buy more. They are thankful the gap was explained and the company makes more money. Relevant cross-selling is a key delighter for which 30% of customers reported that they will pay more for the company's services. • Education sets proper expectations - transparency and education leads to fewer problems and if they occur, more customer acceptance of the consequences. An internet service provider explained the limitations on satellite download speeds and satisfaction rose 40% without expensive system upgrades. An auto company found that customers who understood their car warranty cost 50% less in goodwill expense when out-of-warranty repairs were encountered. • Delight fosters word of mouth, winning new customers – The attached chart from the financial services industry shows 74% of delighted customers tell a median of 6 friends of whom more than 50 % take action on the referral resulting in more than one new customer. Proactive education is the least expensive approach to customer acquisition. • Reduced legal and regulatory costs – In one medical system, an aggressive education and patient advocate process reduced the probability of claims and mal-practices settlements by more than 20% and eliminated almost all claims when complaints were rapidly surfaced. In a pharma company, Legal advocated for millions more in annual CX expenditures to reduce the probability of a second FDA warning letter that had cost $100MM. Pitfalls in communicating risk are: - Failure to place the event within the context of all events, this is one of the three most prevalent losses - Trying to communicate too much, resulting in what Ann Cleaveland in the Harvard Business Review, calls, notification fatigue. - fear of inaccuracy - not getting beyond the discomfort of estimates - how to communicate an inexactitude.

Takeaway

1. How to convince marketing, legal, PR and compliance to invest in and experiment with CX enhancements and customer risk education. 2. How to communicate risk in practical terms when you many not have a detailed quantified description. Communicating and feeling comfortable with inexactitude. Examples from technology, travel, auto and medical care will be given. 3. How to measure and manage risk communication and get CX a seat at the table when risk strategies are being developed.