Unfortunately, some customers may not always be happy with your company’s product or service. As long as the majority of your customers are happy with it, most of the time – you are probably doing fine. However, every once in a while you may encounter a customer that is more than just “unhappy”. In fact, they may even be furious. Any situation where a customer is grossly unhappy with your solution, and possibly experiencing negative financial impact or a major loss of productivity, should be defined a “customer crisis”.

A customer crisis can be caused by a multitude of reasons, for example: a product defect that causes a failure in a major function; interoperability problems with other solutions used by the customer; lack of training or knowledge that lead to operational failures; a gap between what the customer expected to gain from using your solution, and what they actually did. Whatever the reason may be, the customer clearly experiences severe pain. They may also threaten to take legal and/or financial action against your company.

Failure to quickly address a customer crisis may have negative consequences. On the financial front, a customer may to return yourCrisis management product or cancel the service, and ask for a refund. They may also demand compensation for damages they incurred, and cancel plans for subsequent orders. On the marketing front, the customer may refuse to serve as a future reference, or worse – become a negative reference. And once the information about a customer gone sour gets to your competitors, they will be happy to exploit it with other customers, the media and industry analysts.

It is therefore important to acknowledge and address a customer crisis quickly, and drive towards a successful resolution. However, dealing with a customer crisis requires both personnel and financial resources. And resources as we all know are always scarce. It is therefore important to quickly triage each potential customer crisis and prioritize their handling.

Not all customer crises were created equal: A major brand that serves as a public reference, whose sentiment suddenly turned negative, is more critical than a small unknown company. So is a customer who is about to place a large order, only to find out that your solution fails to meet their needs. So when encountering a new potential crisis, the overall business picture should be considered and the resource priorities be set accordingly.

You may be asking: “Why should a PM become involved in a customer crisis?” After all, most companies have other resources that handle customer problems: the customer support team, professional services, field engineers, account teams, just to name a few.  Unfortunately, a “customer crisis” is formed when regular procedures fail to resolve the customer problem. The solution may involve cross-functional actions, like allocating engineering resources to fix a problem or develop a missing capability, making a commitment on a product roadmap, authorizing special pricing, or simply re-adjusting customer expectations. A product manager skill for balancing business, technical and marketing considerations is exactly what’s needed in a customer crisis.

So how would you know that you have a “customer crisis” on your hands? Often it is through escalation: an account manager, frustrated with lack of progress in resolving his customer issues, raises visibility up the command chain. The “noise” gets to upper management, and you, the PM, are called to the rescue. Needless to say, not all escalations are indeed a “crisis”. Some triage is required in order to determine which ones are indeed crises that require your attention. If you wish to proactively identify a brewing crisis even before an escalation, then analyze the customer support records. Customers who open support cases frequently, or whose support cases have high priority yet remain open for extended periods of time are your candidates for early intervention.

What should you do once you face a customer crisis? First, don’t try to ignore them. Customer crises rarely go away by themselves. As a matter of fact, the longer you delay, the bigger the damage gets, and the more annoyed and non-cooperative the customer becomes. When you recognize a customer crisis on your hands – act fast!

Second, make sure you engage directly with the customer and listen to them. Don’t rely on layers of translation – get right to the source and assess the situation yourself. Third, show empathy. Lot’s of it. It is well known by customer service experts that customers respond well vendors who show empathy to their suffrage. Empathy will take some heat out of the interaction, and increase the customer willingness to cooperate on solving the problem. But be prepared to take a beating first; the customer is likely to be very frustrated, is in a lot of pain, and simply needs to take out steam on someone – which happens to be you… Showing empathy and willingness to help will go along way in a situation like that.

While empathy helps at first, remember that the customer needs the problem to be resolved. It is therefore important to quickly create a remedy plan and communicate it to the customer. Having a mutually agreed upon recovery plan will instill confidence in the customer, and assure their cooperation. However, make sure the remedy plan is realistic. The last thing you and the customer need is another set of broken promises.

Appoint a crisis manager. He or she should be the focal point for all activities involved in resolving the customer problem. Often the resolution involves multiple teams in your company, and requires plenty of coordination and project management. A crisis manager will ensure that things don’t get out of hand, and that confusion will not delay a successful resolution. If your company is large enough, you might have a ‘crisis manager’ role. Otherwise, appoint someone ad-hoc, as long as they are skilled with task management and team collaboration.

It is also advised to nominate an ‘executive sponsor’, who is a senior manager (e.g. VP) within your company. The executive sponsor can help resolve inter-departmental conflicts, and when needed, be pulled into a conversation with the customer. He or she will be a point of escalation for the customer, handling the “I want to speak to your manager” scenario.

Keep an eye on the amount and type of resources you spend on crisis resolution. A balance should be maintained between “doing right by the customer” and derailing the company from its main objectives. As a PM you may be asked to prioritized for example engineering resource allocation to problem resolution, vs. developing new features. In some extreme cases, this may call for a decision whether to continue to invest in solving the problem, or back away from a dissatisfied customer.

Your cross-functional team worked hard and you all believe the problem has been solved. Don’t forget to make sure the customer thinks so too. Seek their acknowledgement that they are reasonably satisfied with the solution provided to them. Don’t forget to monitor the situation and follow up a few weeks later. Problems have a nasty habit to re-raise their ugly head after a while…

Once the crisis has been solved, pause and do a post-mortem. Call a meeting with everyone who was involved and make sure you learn from the experience. Record the feedback provided and document the proposed action items. For example: improvement to processes, or additional documentation. There is also a lot that can be learned about your product or service. Are there additional features needed? More testing procedures? New use cases that should be addressed, or avoided? Through learning as much as you can from a crisis, you will avoid some of the future ones, and improve your products and services.

Don’t just wait for the next crisis. Conduct regular surveys among your customers. Measure their level of satisfaction and attempt to spot recurring problems. If you combine that with analyzing customer support record as stated earlier, you will be better prepared for the next crisis, and even manage to avoid it all together.

Last but not least: a crisis also presents an opportunity to build strong relationships with a customer. As the saying goes: “a friend in need is a friend indeed”. If you work closely with a customer to address their needs and resolve their problems, you stand a good chance to gain their trust and support. I have seen more than one customer who turned from a ‘complainer’ into an avid reference. No, I don’t recommend you “engineer” crises in order to build customer references. I am just proposing that you attempt to leverage the “forced collaboration” in order to form long term relationships. You may be surprised by the results…