Would You Tell Your Customers (and Your Employees) How Bad it is?

I confess it's been hard to cut through the myriad messages of alarm and preoccupation coming from every which way in the last couple of weeks, and think rationally. As a human who is highly invested in relationships, how all of the recent events are connected has impacted me to varying degrees.

If you have time, do listen to Warren Buffet's conversation with Charlie Rose, it will be time well spent (54"). (hat tip to Tony, CEO of Zappos.com)

This week we will talk about the role of mentors and leaders in our professional lives,with the benefits spilling over the personal arena. 

One of the reasons why companies are having such a hard time with social media is an innate inability to look less than perfect to the public. There is an image the organization has spent considerable time building and maintaining as part of its branding efforts in ads, PR, web copy, brochures, etc. Why would it be different with blogs? Debbie Weil wrote about corporate blogs on the economic crisis, what crisis? analyzing a few of the blogs she follows.

Companies do want to look and sound like they have their act together. Less than that and they would undermine the confidence of their customers and employees. Yet, as Weil points out, this is an opportunity lost. Many companies have much to tell us, or can educate us, on what this all means.

Having been involved in internal communications, I know that starting a dialogue with employees about where things stand and giving them the opportunity to ask questions can be good for an organization. This is a difficult task for leaders, as they may not really have all the facts, or may not know the ripple effects of the current situation downstream. However, burying your head in the sand and pretending that all is peachy, as my British friends used to say, may ultimately be worse.

Timing is not ideal - many companies are in the midst of budget season negotiations. Consider that it is in times of need and distress that leaders are born - individuals and companies. There is never greater opportunity as that earned in uncertain times. It does not stop with employees. Too many companies are still running on the mindset that "we keep it all in the family".

Have that conversation with your customers. Get closer to them. Take this opportunity to put things in perspective for them, share how you add value. Honest, candid conversations can cast a business into a good light. We are after all social creatures. This is an opportunity to showcase operations and customer service groups who have truly served customers. Today at Fast Company Expert blog, I talk about the top ten customer service success factors. Customer service is your business best bet.

Would you tell your customers and employees the truth about where things are? Why? Why not?

[image of E.M. Escher Crystal Ball, Stephanie Cates]

Comments

[Jon]

I always tell my customers the truth about the way things are with my IT support business.

This past summer is a great example as I ran into some medical problems that really impacted my ability to respond to service requests. Every existing customer was told and every new customer was informed about the medical problems.

I lost about 4% of my existing customers but gained them back in new business. That means 96% of my customer base was willing to stick it out with me, rather than move on to an unknown solution.

Total transparency works for me.

[Valeria Maltoni]

It's a delicate balance isn't it? We want to look viable and strong - as businesses and as people - yet honesty to me is the best policy to have. Yes, some people may decide to make alternative arrangements, but I think once you establish a track record of being truthful, people tend to stick with you through thick and thin.

[Stephen Jackson]

This reminds me of when I started my 1st company. The first year was rough we were hemorrhaging money. One day while walking in the SoHo area of NYC with my wife she asked me how bad was the business. I said real bad. Then she asked what's the worst that can happen. I said I may have to file for bankruptcy and return to work.

When I said that a great weight was lifted off of my shoulders. Failure of this business was not the end of the world for me and my family.

The next business day I held a meeting with my staff of 3 and I explained where we stand and asked for assistance. I called my creditors and my two clients and spoke to them also.

My staff, creditors and my only two clients all became sales people for my company because when I revealed the truth to them they felt a vested interest in seeing me survive.

3 years later we grew the business to $4.5 million in sales before we sold the company to a larger competitor.

When rough times are approaching I will always be upfront with staff, clients and creditors.

[Valeria Maltoni]

Stephen:

Your example extends the conversation in two new directions (also related to social media):

a) enroll others in your dreams/pursuits, let them help you - and by doing that,

b) spring to action - what can be done, how can you go about it, etc. I have had weight on my shoulders during my lifetime, and I know that sometimes it can be paralyzing.

Thank you for providing a perfect story.

[RIck Julian]

Excellent and timely topic, Valeria.

It's especially critical at times like this for leaders to maintain, and even increase, their levels of frank communication. Employees and customers are looking for lighthouses in the storm, and prudent discussion of the challenges businesses face along with a vision (even a tentative one) of how they plan to address these challenges can grow the equity in relationships.

I posted a video on my blog that expands a bit on this topic.
http://www.quo-vadis.tv/rickjulian/2008/10/13/always-communicate/

Thanks.

[Sonny Gill]

Most definitely I would tell my customers/employees. Within social media, we are always quick to preach transparency when it comes to how we conduct and communicate with our consumers. That same theory isn't any different internally. You're going to create a better rapport with your employees and customers if you show all your cards up front vs. them finding out later.

[Marcel LeBrun]

I'm a strong believer in transparent communication during the good times and challenging times. Without it you can't build trust & confidence. Employees are smart and generally know what's going on anyway, so you have an opportunity to build trust & confidence by articulating what they are feeling/seeing anyway and interpreting the situation. If you can describe your company's vision and priorities in the face of an accurate and transparent view of the current environment, then employees will see that you have a realistic view and yet your plan makes sense.

[Ricardo Bueno]

Re: "Honest, candid conversations can cast a business into a good light."

It can and it really does. Honesty is the best practice! But I think that it's also easier said than done and perhaps that's why people struggle with it.

Jon raised an excellent example in his comment above and it's something that I've experienced as well which is why I say that "honesty" works best. It's not until you try it that you experience that little known fact.

[Valeria Maltoni]

@Rick - thank you for the link to your video, very instructive! Being able to articulate things simply is a gift. Communicating with customers on an ongoing basis is important, as is staying real and authentic. And as you say, that does not cost a lot financially. I especially liked the comment on passion.

@Sonny - things do have a way of coming out anyway, don't they? With the information of how things stand there should be a plan on how the business is working or going to work through it. Also, in times like this, people need to know they are part of the solution.

[Valeria Maltoni]

@Marcel - beyond building trust and confidence, you are also giving employees and customers the tools to make better decisions. Where to focus their time, what they can do to help, etc. Those are the building blocks of relationships and loyalty. We all know that people join solid plans and vision. You make some excellent points.

@Ricardo - one of the fears is to be judged, another one is to lose the trust others have placed in us. But, I think also that people buy from you because of who you are and integrity is important to represent that.

[Tim (@Twalk) Walker]

Lots of good thoughts here, Valeria, in both the post & the comments. A few points I'd like to address:

--The Warren Buffett video is excellent. He's an excellent example of the transparency you're talking about. I well remember the criticisms about Berkshire's cash hoard from a couple of years back, but he was totally forthright with his shareholders about why he was holding that money. Now Berkshire is down only ~10% for the past 12 months, compared to 35+% for the Dow Jones or S&P.

--"One of the reasons why companies are having such a hard time with social media is an innate inability to look less than perfect to the public." Amen! Companies have spent so long adopting a pose of infallibility that they don't know how to communicate their fallibility when that's appropriate.

--"Timing is not ideal ... There is never greater opportunity as that earned in uncertain times." Just so. In Carol Dweck's book Mindset, she quotes Billie Jean King about the ability of the greatest sports champions to win even when things aren't perfect. Now is the time for the rest of us to cultivate that quality in ourselves.

[Valeria Maltoni]

Your comment about the Warren Buffett video reminds me of all the times a visionary has been called crazy. Leading means also being ahead of the times, having foresight and insight from that.

About communicating "fallibility when it's appropriate" you inspired me to think about not using failure as a crux, or an excuse. Not just companies, everyone. What is the plan? Where do we go from here? And also, acknowledging it without making excuses.

I read Carol Dweck's book a long time ago - what a thought-provoking read! It's easy to win when all you know is winning, or is it?