Front-line flexibility

A loyal customer base is built - and lost - one customer at a time.

If a customer's experience does not match the brand promise that built loyalty in the first place, even a loyal customer will shop around.

The company that wins will most likely be the one where policies provide front-line employees with the authority to do whatever it takes to satisfy the customer.

An East Coast college-tour trip in October demonstrates this truth.

I don't comparison shop for car rentals, being loyal to Hertz. Their buses arrive quickly and I can bypass paperwork, enabling a speedy airport exit. In light of a 10:30 p.m. Boston arrival time and expected two-hour drive into Maine, the timesaving mattered.

I was extremely disappointed, therefore, to discover a $372 additional charge for returning the car to a different city.

Incredulous, I spoke to a supervisor and then her supervisor. "These are our rates," both said.

In less than five minutes, I became a potential Avis customer. Avis' rates were competitive; Avis offered a no-paperwork service; and the drop-off charge was only $35. When benefits are the same, price is all that matters. I switched brands.

Well, almost. I then learned that Avis required that I finish no-paperwork enrollment in Boston. I wanted to complete the paperwork in Madison, my point of departure. I was repeatedly told, "No, it's Boston."

Still wanting a fast exit in Boston, I made a last-ditch call to Hertz's headquarters. A savvy woman understood that Hertz was about to lose a faithful customer over $372. She canceled the drop-off charge. Avis never discovered it lost an opportunity to win a frequent renter's business.

Consistent policies

Company policies exist to create consistency. Consistency contributes to product quality and profit management, and facilitates training and evaluation of employees in jobs requiring routine tasks. Consistency is especially important for risky processes - handling raw meat, for example. Quality management approaches such as Sigma Six have even elevated consistency to a strategic goal.

But should consistency always be a goal? In their zeal for uniformity's advantages, leaders take consistency too far.

Hertz's lack of frontline flexibility nearly cost it a loyal customer; Avis' rigid policies precluded a win.

Consistency does not make sense at the point of customer service when harmless flexibility can create a superior customer experience.

Policies are strategic choices, selected to meet three needs:

• The first is to comply with laws and company core values;
• The second is to meet customers' minimum requirements to consider your offering.
• The third need is to reinforce a company's desired differentiation.

If your company wants to win on innovative products, for example, don't adopt policies that preclude trial-and-error in the R&D lab.

If lowest cost is your desired competitive advantage, design policies that minimize waste and secure the most price-competitive suppliers.

If service is the differentiator, free your front line employees to provide it.

In today's economy, products and services become commodities almost as fast as teenagers create new excuses for breaking curfew.

It only takes one other comparable offering (Avis) to turn a once-differentiated brand (Hertz) into a me-too. And it only takes one barrier to switching - Avis' sign-up in Boston - to prevent converting a competitor's customer. All company policies should recognize and reflect this economic truth.

What degree of freedom do your front-line employees have? What policies no longer help your company to succeed?

Kay Plantes is a Madison economist, strategy consultant and executive educator.