Customer Promises Spotlight - Do you know all the promises you make to customers?

In today's fast-paced and digitally driven world, businesses face an unprecedented challenge: the risk of a broken promise. Not only do businesses need to know all the promises they make to their customers, they also need to keep up with changes in the regulatory landscape. The consequences of a broken promise can be significant, potentially leading to financial penalties, reputational damage and reduced trust from shareholders.

Over the past few years, multiple regulators, including the ACCC and ASIC, have taken action against numerous companies across the retail, financial services and telecommunications sectors for failing to deliver on their promises. 

In June 2023, ASIC released a report outlining how pricing failures identified by general insurers and poor non-financial risk management have led to significant consumer harm.  In 2024, the ACCC addressed concerns involving key players in the retail and airline industries. These cases involved instances where customer promises were not fully met, leading to significant consequences for the organisations involved.  

Why keeping promises can be challenging?

Understanding and keeping promises can be challenging for organisations due to three key factors:

1. Firstly, the complexity of mediums and channels, ranging from websites and social media to email communication and other types of advertisements, create a vast and often fragmented landscape for promise communication. 
2. Secondly, the diversity of promises, such as those related to pricing  (e.g. large retailers frequently advertise price-matching guarantees and special discounts), loyalty (airlines offer loyalty points to reward repeat customers with benefits), and service excellence (telecommunications companies commit to reliable network coverage and customer support) adds to the difficulty of maintaining a consistent and comprehensive view. Additionally, many organisations often miss the fact that they need to identify both implicit and explicit promises which are made to customers.
3. Thirdly, these promises are sometimes made on behalf of the organisation by affiliates or automated systems, adding layers of complexity to both the design and delivery of customer promises.

As a result, many organisations face challenges in maintaining a comprehensive view of all the promises made to their customers, increasing the risk of not meeting these critical commitments. With the variety of channels and platforms used to communicate theses promises, along with the expanding range of services and products in the market, it becomes essential for organisations to have strong governance, systems, processes and controls to meet customer expectations and sustain trust. 

How to effectively manage customer promises?

To effectively manage customer promises and ensure consistent delivery, organisations should review the following practices:

• Have you clearly defined what constitutes a customer promise within the context of your business? Many businesses identifying and compiling their promises find that half of the promises made to customers may not be recognised as such by key stakeholders, though they would be from a regulatory perspective. In addition, not all promises are explicitly stated but some may be implied through marketing or customer expectations. Identifying and documenting these implicit promises alongside explicit ones can be challenging but is essential for a complete register. 
• Do you have a centralised live repository that catalogues all customer promises made across various platforms? Organisations need to achieve a single, up-to date view, that can be easily maintained by the business overtime. In developing this single view, organisations often realise that up to one-third of publicly available promises need to be updated or removed as they relate to products or services that no longer exist. Incorporating Artificial Intelligence (AI) can enhance the ability to effectively monitor and manage these promises by identifying discrepancies, updating the repository automatically, and highlighting potential risks associated with specific promises.
• Have you assigned accountability across the promise lifecycle, from origination to ongoing monitoring? It is important to ensure that all key stakeholders, such as promise owners, risk and legal business partners, enabling functions, and other governing bodies, understand their roles and responsibilities. A dynamic and interactive database enables organisations to track, and update promises in real-time, fostering transparency and accountability across the business.

Ashurst can support you to achieve compliance and safeguard against risks, by combining legal and risk capabilities with the right technology, systems and tools to develop a fit-for-purpose customer promises register. Our approach ensures that you can quickly and efficiently obtain a single view of all promises and disclosures made to customers in order to enable targeted risk management.

In a landscape where customer trust is as valuable as financial performance, we can help you navigate the complexities of conducting business, help reduce risk and promote business success.

Authors: Gwladys Ngo Tedga Yagla, Partner;  Melissa Fraser, Partner; Hong-Viet Nguyen, Partner and Aurelie Choulet, Director.