Words: Ian Rheeder. This article appeared in the October/November 2014 issue of Your Business.
If Harry Selfridge’s 1909 maxim ‘the customer is always right’ still holds true in your business, you may very well be setting yourself up to fail…
This is particularly relevant if you service business-to-business (B2B) customers. As you can see below business-to-consumer (B2C) marketers have a different relationship with their customers:
Business to business
• You choose who you want to do business with.
• You use a small sales team to find customers.
• You deal with fewer accounts/customers, so you have to choose the best ones for this intimate win-win relationship.
• Your frontline salespeople are highly skilled and handle each complaint differently. In B2B your service is normally customised to match the B2B customer’s demands.
• Just one wrong customer decision can destroy your profitability (i.e. a bad distributor or key account choice).
Business to consumer
• The consumer chooses to walk into your retail outlet.
• You use advertising to ‘pull’ customers into your store.
• You deal with hundreds of mostly unidentified customers a day, and it’s very difficult to identify the attractive/right ones.
• Your frontline employees probably have a stock standard approach to customer complaints. Woolworths,
for example, has a 60-day conditional return policy. For them: The customer is always right. But this is perhaps
less risky than it would seem from the outside because
their target segment is unusually mature. A similar
policy wouldn’t work for all retailers.
• One wrong customer decision (one of many consumers) has a negligible effect on profitability.
The right customer is king
Don’t get me wrong, the right customer is king, particularly if their future business will give your business a future. For many small businesses, that these profitable customers keep choosing them is essential for their very survival. And with positive word-of-mouth (WOM), this one customer could provide unbelievable Customer Lifetime Value (CLTV).
It’s no secret that up to 80% of your customers could be bleeding you dry. Is an abusive customer who also wants a 30% discount right for your business? Of course not. To avoid negative word-of-mouth, get rid of these customers cautiously by raising their price or pleasantly re-establishing new terms of engagement.
How to write your strategy
Your customers should ‘write’ your service plans and strategies. They should be at the heart of your strategy not an afterthought. But only if they are the right customers. Choose the wrong ones and your positioning will be off and you will give your advantage away to any competitors in the marketplace.
Why you should forget Selfridge’s maxim:
• Sometimes customers are wrong. Corrective action should be allowed by both parties to set up a win-win relationship.
• Choosing to do business with everyone, referred to as a shotgun ‘spray & pray’ approach, results in you becoming nothing to everyone.
• In his book Put the Customer Second – Put your People first and Watch’em Kick Butt, Hal Rosenbluth points out that the only way to encourage your staff to give world-class service is to put them before the customer. Why? Motivated employees who are treated with respect breed motivated and respected customers. Siding with the customer, on the other hand, sends the message that you favour your customers above your staff. This stance will clearly have a negative impact on staff morale, and likely see service levels drop with a plastered on fake smile the order of the day.
• Why should abusive customers receive the same or better treatment than loyal profitable customers? Use your staff’s energy and resources on fostering healthy relationships.
Unfortunately, many business owners think that the more customers they have, the better their business will do. But the reality is that the right customer is mostly (not always) right.
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