On companies taking a moral position on customer service.

Increasingly business innovators are suggesting that the most successful leaders break and then recreate current moral norms to the advantage of their organisation(1).  We outline an example of where this has proven valuable and proceed to draw out the operational challenges of implementing such an approach.  We then offer 3 practices that can enable a service frontline operation to implement distinctive moral norms in a way that creates a strongly differentiated service proposition which is also hard to copy.

A company with a moral strategy

Ryanair are often seen as an organization with little care for their customers and consequently an organization with little moral insight.  They are continually castigated in the press for their approach.  Their tagline on X/twitter might reinforce this impression:

“Catch flights, not feelings with Europe’s favourite airline.” 

Looking more closely however reveals that Ryanair is a company with a clear moral strategy.  Their CEO Michael O’Leary disclosed their moral position when he said in 2012

“The European Union spends most of its time either suing me, torturing me, criticizing me or condemning me for lowering the cost of air travel all over Europe,”(2) 

On Ryanairs “X” account, they regularly push back on customers complaining about not being sat beside their travelling companions (a paid for additional service) or for not receiving a special service because of their personal circumstance NB: not because of age or disability more like “I’m in a hurry” or “I have long legs”.  Ryanair stand by their position of being cheap and on-time, and in order to achieve these objectives, they must run the service as they do.  If a particular customer does not understand this position or objects to it publicly, then Ryanair will often go toe-to-toe with them publicly in a way that other organisations seldom will.  Ryanair may tease the complaining long-legged customer on “X” with the counter “you paid £19.99 for your flight; pay £99 with a competitor if you want more space”.

It is not surprising that with this pricing and direct engagement with customers, Ryanair are Europes largest airline.

 

The practical challenge of adopting strategic moral clarity

Why do other organisations hesitate to adopt a position with more moral clarity?  It appears that taking such a position can lead to increased profits.  It allows staff to become more in tune with the position the company is taking, and importantly to make the momentarily unpopular or seemingly risky decisions that align with the company’s positions most of the time.

Here is an example of why such a morally clear position might be difficult.  The challenges arise from the need to draw fairly bright lines with small grey areas for frontline staff charged with managing regulatory and other concerns.  Imagine the scenario of a retail bank which is looking to improve its liquidity and balance sheet.  The bank has decided to sell some of its non-performing loans (NPLs) to a specialist lender.  The bank can make this choice without input from the NPL borrower, and most retail banks do this on a regular basis.  It is not unusual in this circumstance for the NPL borrower to be upset.  People have complex and often quite emotional relationships with their banks. Receiving a nicely worded letter indicating that their loan is to be sold can be challenging and will often result in a complaint. 

The handling of this complaint is a good example of where the moral position of the bank, if it is willing to be clear about it, can be practically implemented by frontline staff and make a real difference.

In our example, imagine the bank is looking to be widely admired for its thoughtful customer focus and care.  How can this moral position be conveyed to the staff taking these complaint calls from the NPL customers?  The solution might seem simple. Have the frontline service representative listen carefully, repeat back her or his understanding of the customer’s concerns, and then unless some customer conditions have radically improved, explain that the bank is not equipped (for whatever reason) to handle the non-performing loans.  Show understanding.  State the moral perspective of the bank.  The bank has to do what it is good at doing and not what it is not so good doing, you can apply for a loan with us again.

So far so good, but in heavily regulated businesses, that is seldom the end of the story.  There is usually a complicated appeals process outside the bank.  So, we want the frontline representative to say,

“Of course, your rights to appeal to the Ombudsman are unaffected.” 

And that is where things begin to fall apart.  The manager of the front-line staff knows that the rules on whether a customer can appeal to the ombudsman are complicated and does not want the front-line agents to worry about them.  So, the manager tells the agent to say, “You may be entitled to appeal to the Ombudsman.  You can research that.”  And with that statement, all the good will built up by careful listening goes away.  The client wants to stay with the bank or at least receive assurances that their new lender is regulated.  The borrower does not want a research project.  It feels like a self-serving roadblock.

What to do?

Changing the attitude of front-line staff to their role and to customers and getting that attitudinal change to stick are significant undertakings.  The rewards however are large.  For organisations that can achieve these changes, not only do they differentiate on service, but they can connect their complaint handling teams much more effectively to their root-cause teams.  It is possible to genuinely use complaints as the raw materiel to drive operational change in a new and powerful way.

We are going to suggest three domains of action and our experience is that while different organisations may choose to implement different solutions in each of these domains, some attempt is required in all three in order to design a lasting solution.

1.        Strong direction from leaders reinforced by example setting

Obviously, the simple solution would be for the front-line staff to learn the rules for appealing to the Ombudsman. But that is usually quite costly in time and training and fraught with frontline people making mistakes. The simple “may” seems much easier. 

Another way is to accept some moral risk in trying to navigate between customer care and a strong balance sheet and therefore to look for where the cracks appear between the organisations moral positioning and the decisions front-line staff have to make day to day. Don’t have the agent simply say, “You may have recourse.”

For example: Give the front-line agent some simple rules of thumb for when a customer can appeal to the Ombudsman. Try to make the rules of thumb cover 99% of the cases. Of course, sometimes the rules of thumb won’t work; the agent will give bad advice; and there might even be a small adverse judgment against the bank. Front-line staff live in fear of such moments. They fear losing their jobs, and they feel betrayed by their managers whose rules of thumb were not better and who may discipline them nonetheless.

Should such an adverse event happen use it.  Praise the employee and the manager for taking the best care of the customer she could.  Honour the decision taken by the staff member despite the short-term negative outcome.  This is not a suggestion to encourage operational slackness or inaccuracy; it is about picking very particular examples which highlight the decisions made by staff or first-line managers that were driven by the moral position of the institution rather than operational expediency.

2.        Institute learning practices where moral bravery is regularly applauded

Already machine learning technology is starting to displace front line staff and handle standard support queries.  Klarna the online department store has recently announced that its AI assistant “is doing the equivalent work of 700 full time agents”(4).  This trend will continue..

Why should organisations continue to invest in providing expensive human conversations with customers?  A typical customer conversation costs between £12 and £30 to deliver compared to less than £1 for an LLM-mediated conversation. 

But simply employing more LLM-mediated conversations has a downside. Successful companies will increasingly differentiate by taking distinct moral positions that they can follow through on in the many thousands of decisions required in countless customer conversations every day.  Staff members increasingly will be asked to make these complex decisions where they must balance moral integrity (as the company defines it) against risk during live customer conversations.  This is not a capability that LLM’s can easily emulate. 

This new role will require both staff and their immediate managers to engage in new practices that most organisations are not equipped with today.  The essence of these new skills is grounded in structured and shared listening to recorded customer conversations and then surfacing and discussing the wide variety of moral decisions that staff make(3).  Only by doing this regularly and together in a team, where the team’s immediate manager publicly endorses the moral decisions made by a staff member, will staff develop the skills and courage to fulfil their new role.

Bringing these structured “learning teams” alongside individual coaching can be done with manageable operational cost.  Some organisations are seeing good results where staff participate in a single learning team and one individual coaching session per month.

Organisations will need to invest in changing their hiring practices and look for staff with more diagnostic capabilities.  These will be higher cost and higher value roles which companies can only afford as generative AI handles more and more of the simpler and less emotional queries. 

Additionally, organisations will need to think carefully about how to support pervasive and persistent coaching across the organisation.  This focus on continued professional development in customer conversations will be new to many.

3.        Involve frontline staff in the mission to rebuild the organisation

Exhortations by senior management to align with strategy, and ongoing staff coaching are key components in creating the morally differentiated organisation, but one component remains.  For frontline staff to feel truly engaged in the mission of the company, they must see not just that their decisions with customers are supported, but that the suggestions they make to improve their organisation’s alignment with its moral goals are heeded.  Staff must be involved in steering the ship.

The morally positioned company needs to take seriously the requests made by frontline staff for more clarity and support in recurrently challenging circumstances.  These requests are today often bundled in the term root-cause requests. 

There is an implied exchange in any request where the requester expects to receive a response.  The response may be an agreement to some action or even a decline to take action – but some acknowledgment that the care the frontline staff member took to raise the issue was respected and taken seriously. .  Every request requires a response, if that response does not come this corporate carelessness rapidly depresses the requester’s motivation to raise any request in the future and rapidly disconnects staff from the moral mission of the organisation.

Remember also that for the frontline agent, the root-cause problem is an ancillary issue. The staff member could simply satisfy this particular customers problem and ignore the root-cause and save the time in sending a resolution request they think will be ignored.  The staff member must make an effortful choice as to whether it is worthwhile to identify and raise root-cause request.   

This requirement for a considered and individual response to all root cause requests is hard to implement.  As of writing I know of no organisation that does this well.  In a complex service environment with many hundreds of frontline staff, each raising 2 or 3 requests per day most organisations are totally unable close this request loop. 

To start to think of a solution to this problem, consider a few staff members in our previous banking example.  They may see the same problem but identify it in different ways, for example; “The customer is upset they cannot go the ombudsman” or “The customer doesn’t think new lender is as accountable”. 

Large language models can help here.  Already Amazon.com use LLM capabilities to read all the reviews of a product and provide a summary.  In the example shown, Amazon have read all the reviews for a pair of gloves and have summarized the 100’s of user comments on the product into 8 succinct attributes. 

Imagine this capability being redeployed to summarize requests from frontline staff root-cause requests.

For example: An LLM could review and then summarize root-cause examples above into the same customer concern for Ombudman accessibility for transferred out loans.

An organisation then might process root-cause requests in a new way:

1. At the point of raising a new root cause request, the system could compare a staff member’s request to previously submitted requests.  LLM’s are intelligent enough to match not just on text but on meaning.  They will quite often find that a project to resolve the issue is already in train or the matter has been considered and is not being progressed for a very clear reason.  The system could send such a finding to the staff member immediately.  Staff then become intimately connected with the tangible changes that are ongoing in the organisation – an exciting place to work!
   
   
2. This capability can radically change the nature of the customer conversation.  The ability for a frontline staff member to say to a customer.  “You are right, we should not do it that way, and I will make sure something is done about it”. The agent can say this with authority and authenticity, because the agent knows that the bank is working on a solution,  Such agents can then speak as though they are leaders in the company.  Customers really appreciate that especially when the words are aligned with a clear moral stance.
   
   
3. Upon deciding to proceed to raise the root-cause request, the staff member could be assisted by the LLM reviewing a transcript of their call and making suggestions on topics.  The staff member can use these or not; however, they will realise that they have the responsibility and power to ask the company to improve operations to align with its declared values.
   
   
4. The LLM system can gather together all the root-cause requests and group them into a set of candidate issues.  Just as Amazon reads all the reviews on a product and pulls out 7 or 8 key attributes, so the root-cause machine can identify the 20 or so root-cause issues that are most predominant for the month and send them to the analyst team for triage.
   
   
5. The root-cause analyst can then review the summarized issues and either progress them to a change project or decide not to progress them further with a reason why.  Importantly, because the connection between the issue and all the root causes is maintained, the system can report back on the decision made to each and every frontline staff member who made a root-cause request.

 

Conclusion

Customers increasingly value organisations that distinguish themselves thorough their moral positioning.  This can be a winning stance that can lead to rapid growth.  However doing this successfully requires that organisations;

·        Clearly articulate their moral position and take actions to highlight edge-case examples as positive action

·        Reinforce the message practically with all frontline staff regularly using real recent examples in group learning sessions

·        Provide ways for frontline staff to have genuine input into the ongoing process to continually align the company more closely to its strategic moral position.

With today’s training techniques and tomorrow’s LLM processing capabilities, organisations can position themselves morally and have frontline teams that speak for that moral positioning. Imagine frontline staff able to speak like CEOs.  Imagine CEOs able express the moral clarity of Michael O’Leary. That enables good lives for leaders and good lives for employees.

 

 

 

 

 

 

 

 

References:

(1)       Charles Spinosa, Matthew Hancocks, Haridimos Tsoukas & Billy Glennon (2022)   Beyond Rational Persuasion: How Leaders Change Moral Norms; Journal of Business Ethics

(2)       James Kanter  Ryanair Pokes E.U. Officials on Travel Policy; New York Times, March 7, 2012

(3)       Barry G Sheckley & Morris T Keeton (1997), Improving Employee Development, Perspectives from Research and Practice, P23 Putting it all together a case from a fortune 100 insurance company

(4)       Christopher Zara (2024) Klarna says its AI assistant does the work of 700 people after it laid off 700 people