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Interpreting Business Policies Briefing

What is a business policy?

A business policy is a general rule or guideline for all employees to follow in making decisions about situations that occur often. The purpose of policies is to provide direction to management, employees, and customers. Policies tell people what is expected of them and how to handle specific problems. They may be written or unwritten, but they should be clear and reasonable.

Who establishes business policies?

The managers of a business are responsible for setting policies to guide operations. 

Factors that influence which policies are needed

• The nature and character of the business
• Business image
• Goals of the business

Reasons for business policies

Policies are meant to make sure that both employees and customers understand what can and cannot be done. There are many reasons that businesses have policies.

• To keep the business running smoothly. Policies guide the way business situations will be handled and provide a framework for operations.
• To satisfy customers. Business policies make sure that customers’ need and wants are being met and that customers choose that business over competitors.
• To reduce misunderstandings and ill will. When conflict arises, policies can help keep two parties on the same page. They save time and effort for both businesses and customers.
• To ensure fair treatment of customers. Policies help to maintain consistency from customer to customer. They reduce the chance that businesses will be accused of being unfair or discriminatory. Fair businesses are more likely to retain customers.
• To guide employees’ actions and protect their decisions. If they follow the established policies, employees will know they are making the right decisions and won’t be punished for their actions.

Types of policies

• Product policies. Product policies dictate what products the business will offer. They help the business reach its target market.
• Service policies. Businesses establish service policies to give themselves a leg up as opposed to their competition. A company may implement a service that others do not to attract customers. Services policies include returns, delivery, wrapping/bagging, installation, and repairs.
• Credit policies. Most businesses offer customers the option to use credit to purchase goods and services. Credit policies determine how these transactions will be handled.
• Promotional policies. Sales promotions are used to attract customers and increase sales. Businesses must set policies to determine how they will promote themselves using contests, coupons, and other forms of promotion.
• Price policies. Price is another tool that is used to set businesses apart from competitors. Businesses establish price policies that will attract their target customers.
• Employee policies. Businesses must establish guidelines, so their employees know how to act. Employees follow these policies to make a good impression on customers and represent the company well.

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Reasons for interpreting business policies to customers/clients

Policies are useless if customers do not understand them. It is important to interpret policies to customers/clients for several reasons. 

• To promote goodwill. Customers who understand the rules will be more comfortable doing business with the company. Clearly understood policies reduce the risk of conflict between customers and businesses and build positive relationships.
• To build a clientele. When policies are understood, customers are happy, and when customers are happy, they become loyal. Loyal customers will help build your customer base by spreading the word about the company to others.
• To obtain feedback from customers. Business should seek to learn how their customers feel about the policies. If customers aren’t pleased, the policies should be changed.
• To increase sales and profits. Explaining business policies effectively can increase sales and profits because customers who are satisfied with the policies will return.

Who is responsible for interpreting business policies?

Employees who meet with customers need to interpret business policies to customers. These employees must have extensive knowledge about the policies and must be able to explain them to customers in understandable terms.  

When do employees need to interpret policies to customers/clients?

While policies should always be written and available to customers, these policies might need further explanation certain situations, including:

• When a customer asks: Customers might need clarification or further details about policies.
• When a customer complains: Customers often complain about policies that they do not fully understand.
• When a sales presentation takes place: Policies can often be used as selling points that encourage customers to buy.

Guidelines for interpreting business policies to customers/clients

Every situation is different, but when interpreting business policies to customers, there are some strategies that can guide you in the right direction. 

• Know your business’s policies. You need a thorough knowledge of your business’s policies in order to explain them to customers and answer their questions. To learn the policies, read the written handbook and speak to your manager about any unwritten policies.
• Listen carefully. Pay careful attention to what customers say to make sure you correctly understand the questions or comments. Listening can help you find out if the customer understands your explanation.
• Stay calm. Customers might not understand your explanation or might be upset about something unrelated to the policy. Recognize these situations and stay calm – you are expected to remain courteous even if the customer does not.
• Act friendly. Treating customers in a friendly manner will make them feel more comfortable and will make them feel that you care about their needs.
• Present information clearly. Make sure policies are clear and easily understood so that customers can be fully informed when making decisions.

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• Admit when you need help. If you aren’t sure how to interpret a policy for a customer, don’t be afraid to ask your manager to step in. It is better to admit when you do not know something than to pretend that you do know it.

Following these guidelines will help employees properly interpret business policies for customers. Employees who can do so will build goodwill with customers and will give their companies a competitive advantage.