Contracting out your reputation – 5 questions you must ask

We’ve seen a sobering example this month that should send a shudder down the spines of any company executive that contracts out customer sales or service to a contracting supplier.

Energy company AGL was ordered to pay $1.55 million in fines thanks to just one dodgy salesman working for a contractor in South Australia.

We are not talking here about a series of events – the case that’s spun out into major reputational damage and negative publicity involved just one encounter with a householder about switching his retail energy contract. 

Beyond the financial pain, just consider the damage to the company’s brand and reputation. 

Don’t even get me started on the whole idea of pushy salesmen doing the old door-to-door routine. (Yes, I know some sales pointy heads will tell me they do it because it works – but at what cost?)

Incidents like this one highlight the need to ensure any contracted out service includes significant control measures that guarantee the people acting on your company’s behalf live up to your brand promise. 

I strongly advise my clients to look closely at any arrangement they have in place that involves the contracting out of services to third party suppliers and ask these questions:

  1. Does the legally enforceable contract include a requirement that people employed by the contractor understand and will comply with your customer service standards, values and expected brand behaviours?
  2. Does it require that any new employee working for the contractor undergo an overt training program to ensure they understand what is expected of them?
  3. Are you regularly auditing the performance of contractors in relation to employee compliance with your customer service standards in both the letter and spirit of the law?
  4. Are there financial penalties in place where employees contracted by your service supplier fail to meet the standard?
  5. Are you prepared to terminate the contract for repeated contraventions of your service standards?

If you can’t answer “yes” to every one of these five questions, I’d say you are carrying a significant risk that needs to be addressed post haste.

For all full details on the ACCC case click here.