Six Hidden Costs of Saying "No"

Rejection hurts. More commonly dreaded than snakes or spiders, it's an almost universal fear. It's unpleasant to give and even less pleasant to receive. No one likes to be denied, and it can bring out the worst in people. Regrettably, rejection is often a necessary function of contact centers and customer service professionals. It's one thing to tell a customer that their preferred flight is fully booked or their favorite product is sold out; most customers understand this scarcity is just part of life. Refusing customers based on seemingly arbitrary policies and procedures is another beast entirely.

In my current role, the Family Educational Rights and Privacy Act (FERPA) regulates the disclosure of student information. Regardless of age, upon enrollment in a university, it restricts the dissemination of academic records. Even if your sixteen-year-old child is taking a dual-credit course while in high school, we're prohibited by law from sharing certain information with parents. For parents, loss of control and involvement is painful even when their kids turn eighteen; it's practically unimaginable before then! It creates a unique challenge because parents are still vital to students' academic success. If for no other reason, the institution must maintain a good relationship with parents to ensure they keep signing checks.

There is no shortage of reasons to tell a customer "no." In some cases, the law requires it! It's up to us to communicate necessary rejection while preserving the customer's goodwill towards us. Our actions when denying a customer decide the outcome. Getting this right is not a "nice to have" skill; it's essential to operate efficiently. Getting it wrong can materially impact profitability.

Longer Handle Times

Too often, telling a customer "no" devolves into an argument over the policy or regulation that lead to this outcome. Rejection is painful and inconvenient; customers understandably resist denial. Increased handle times are the most direct way that rejection affects the bottom line. Time is money, and it adds up quickly.

For even low-skilled agents with average salaries, after accounting for benefits and shrinkage, the total cost of talk time easily exceeds $23 per hour. This cost skyrockets for agents with specialized technical knowledge, experience, competitive pay and benefits, and other costs of employment. If a five-minute call turns into a fifteen-minute call because a customer won't take "no" for an answer, that's nearly $4 wasted on a single rejection! The adage, "if I had a nickel for every time..." doesn't even come close to describing the potential loss.

I don't usually make service decisions based on handle time. Generally, spending a little more time with a customer is an investment in the relationship and prevention of future expensive contacts and frustrations. However, arguing with a customer about a policy (or law) that cannot be changed, isn't a productive use of time, and it doesn't improve the long-term relationship.

Unnecessary Escalation

As if longer handle times for front-line employees aren't enough, customers who feel dejected often demand escalations. Involving a higher level of support isn't always a bad thing. However, if the cause of the rejection is set in stone, such as with government regulations, it won't be any more productive. These conversations are even more expensive than those with the first-level agent, they can put a strain on limited resources, and they take specialized personnel away from more strategic duties.

Furthermore, being declined a second time by an even more authoritative source doesn't make rejection any more palatable. Repeating the same information may further the customer's perception that we don't care about them enough. I'm not implying that it's wise to withhold escalations, but it's better for everyone if the customer can be satisfied at the first level.

The Nuclear Option

Beyond routine escalations, there is yet another method of recourse against rejection. At this point, things have gotten really out of hand. If being told "no" inconveniences the customer or makes them feel defamed, they may take matters even further. The result may be anything from contacting executives directly to threatening legal action.

When customers contact executives directly in an attempt to resolve disputes, it doesn't reflect well on the contact center. The potential consequences for this depend heavily on your organization's culture, but no one wants to be made to look incompetent for merely doing their job. Even if a systematic failure prevents us from resolving an issue through regular channels, it can still affect our sense of pride.

If the customer initiates legal action as the result of rejection, no matter how frivolous the claim may be, it can be incredibly expensive. The cost of legal counsel to investigate the allegation and evaluate the company's potential liability is incurred regardless of its merit. Furthermore, this could turn into an invasive appraisal of the contact center's procedures and compliance, which takes even more time and energy away from productive, strategic tasks. While government agencies may be immune from civil liability, they may be subject to undesirable political scrutiny or publicity.

Negative Referrals

The first three costs we uncovered are direct and incident-specific, but we all know there are usually further impacts that are less quantifiable or immediately linked to specific incidents. Negative word of mouth is a real concern for any organization striving to differentiate themselves based on customer experience. Unmitigated anger that might result from rejection is a powerful motivator, and one of the first coping mechanisms of an angry customer is to tell others about it.

At this point, we've lost our ability to explain the reasoning behind the denial. The customer's story has already been decided. The company can't always be there when the story is told. To the customer, and potentially to their audience, the law, regulation, or policy that resulted in the denial no longer matters. Lost business isn't the only potential consequence. If fellow customers become more apprehensive or sensitive to the issue, it may increase the cost to serve them.

Customer Attrition

If customers are complaining to their friends and colleagues, we're at risk of losing them entirely. Being rejected conjures terrible feelings, and it may induce a significant amount of additional customer effort. They may feel as if we've given them the runaround, or that it's hard to do business with the company. They could assume the company doesn't want their business. If the switching cost is low, they could be gone before you know it. Losing a customer because of a trivial misunderstanding is a tragedy.

Agent Burnout

I saved the most severe cost of saying "no" for last. Throughout this article, we examined the emotional toll that rejection takes on customers and the organization's associated cost to serve them. Customers aren't the only ones worn down by being rejected; it's not any easier for agents delivering the denial. It can be emotionally taxing, especially if it's a regular occurrence. Rejection is a conflict. Conflict is stressful.

A bit of conflict and a little creative problem solving makes contact center work exciting. If battles, particularly very emotional ones, become the norm, it will wear down the attitude of even the best agent. While the high-stress periods may be short-lived, too many of them can start to affect how the agent serves other customers. Left unchecked, high stress, reduced performance, and emotional exhaustion are a recipe for attrition. Being equipped to say "no" the right way is better for the customer, and that makes it much easier on the agent.

In Session 405: Sticking to Policy and Procedures Without Killing the Customer Experience at ICMI Contact Center Connections, I'll share my strategies for protecting both customers' assets and emotions. We'll explore ways to avoid these hidden costs of saying "no" by preparing agents to say it without starting a fight.