Insureon Blog

6 Customer Service Strategies to Prevent Liability Lawsuits

30. April 2013 16:25

While investing in business liability insurance is a hugely important part of managing the risks your business faces, much of the work you do to reduce your business risk has nothing to do with insurance.

That’s because one major source of risk for any business is from potential lawsuits from customers and clients. Preventing such lawsuits is often a matter of recognizing when someone is unhappy and handling the situation in such a way that you deter that person from turning to the courts to seek reparations.

Customer Services Techniques for Avoiding Lawsuits

Here are six customer service strategies that can help you minimize your risk of liability lawsuits by keeping your customers happy and non-litigious. (For other non-traditional risk management strategies, check out our post, "Is Going Green a Good Risk Management Strategy?")

  1. Follow up mid-project. When you’re busy running your business and serving dozens of clients at once (and, really, when are you not busy?), it’s easy to assume that everything’s going well unless you hear otherwise. But that’s not always a safe assumption. Your clients may be just as busy as you are, meaning that they don’t have time to contact you when something goes wrong. Checking in to verify that things are good demonstrates that you’re invested in the outcome of your clients’ projects – and lets you address any problems before they become large enough to trigger a lawsuit.
  2. Keep clients updated about what you’re doing for them. Whether you’re keeping clients posted about steps you’re taking to address a problem (see above) or just sending regular status updates, keeping them in the loop helps build trust, which can win you leeway in case something goes wrong. Imagine, for example, that a snafu with one of your suppliers or contractors prevents you from meeting a client deadline. That failure could open you to Errors & Omissions liability. If you give your client a play-by-play of the situation, though, rather than announcing at the last minute that you won’t be able to meet the agreed-upon terms, you set yourself up for understanding and will likely be able to course correct on the fly.
  3. Collect and respond to feedback. Whether you use a formal survey or simply make it a habit to ask your customers about your services, take what they say about you seriously. And when you do make changes based on customer feedback, be sure to let your customers know (see #2)!
  4. Spur feelings of reciprocity. One reason so many businesses give away freebies is that humans are hardwired to want to reciprocate kindness. So when we get something, we want to give something in return. In business, go the extra mile for your loyal customers to win their affections – this might mean throwing in a free cupcake now and then if you’re a bakery or waiving a late charge when a usually on-time client incurs one. Don’t make a huge deal about the freebie, but be sure to mention it – again, communicating about what you do for your customers is key.
  5. Know when to invest time in hyper-personal contact. You probably don’t have time to chat at length with every customer you serve, but not every customer you serve is likely to bring a lawsuit against you. Take extra time to ensure the happiness of the squeaky wheels: write thank-you notes, follow up regularly, and listen carefully to any comments or complaints. The people most likely to make a big deal about bad service are often the same ones who are happy to make a big deal about excellent service.
  6. Ask for referrals. Humans are social creatures, and we often make decisions based on what the people in our networks are doing. Tap into your customers’ existing networks by asking for referrals – and then make sure to keep everyone happy. When your one person in a network offers positive reviews of your work, the others will be more likely to do the same.

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Risk Management | Small Business Risk Management | Tips for All Small Businesses

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