Here's what I understand about unhappy customers:
It takes 8 CONSECUTIVE, POSITIVE actions to bring a negative perspective to neutral.
It takes 8 consecutive, positive actions to bring a neutral perspective to positive.
Who in this world gets 16 chances?
Pretty grim statistics, so it becomes absolutely vital to our businesses to be "on" all the time.
That said, I am a firm believer in continual feedback. Whether positive or negative, staff receives feedback from me all the time. I personally could never wait to offer an employee feedback only if I hear from a customer. I also request feedback continually...from staff and from customers. How am I doing? How are we doing? Are we serving your needs? How can we improve our service to you? I never, ever rest on my laurels.
So, where am I going with this? Offering 3 opportunities to maintain a C or higher may be absolutely appropriate for your situation. I don't know enough to say one way or the other. But I would think you would want to put more parameters around this...3 opportunities in a day? a week? a month?
"Disciplinary action will be taken" in my humble, is far too obtuse. What action? What exactly can the employee expect as a consequence to his/her actions?
Personally, I am quite hard-nosed about this. Customer service is the end-all for me. First and second infractions would be a written warning. The third would be final and employee would be dismissed (depending, of course, on the circumstances). I cannot afford to lose customers!
"Employee is to walk away from potential disagreement" also leaves me feeling uncomfortable. I do not want an employee engaging in a heated discussion/argument with a customer...but I also do not want them walking away...leaving the customer hanging there. Perhaps that is not at all what you intend...so my advice is to clarify this. Something like: if there is a disagreement with a customer, do not argue and do not get defensive. Listen to their complaint, and acknowledge that there is a problem. Ask if they can wait for a supervisor to be called. If the customer cannot wait, ask if a supervisor may call them to discuss the situation.
Finally, I would hope that any negative co-worker engagement would result in potential discliplinary action for BOTH involved parties...not just the employee in question.
Good luck to you! Conflict management is one of the toughest things we have to do, and it is imperative that we do it well. We can do it well by being thorough and fair and absolutely crystal-clear on what we expect.