Is the customer always right? Is there a bigger falsehood in the retail or service industry than “the customer is always right”? It is right up there on the international list of famous cliches with “I am Not A Crook”, and “Everything is Under Control”.
Once upon a time stores demanded sales associated be properly trained and versed in both product and client relations. Sadly, this is no longer the norm,
National chain stores spend millions on sales development through advertising programs like television and newsprint, touting their great prices, wonderful selection, and great service. But when you get into the store is your experience really a satisfying one?
Recently I an issue with a 6-month store-brand computer component and tried to return it to the store and get a better quality one (this one shorted out and could have started a fire). The salesperson could/would only recite the stores 14-day return policy and when I would not accept that called for a manager. The manager was totally irritated with having to deal with this issue and suggested I should take the matter up with their corporate office.
So I took the issue off the table- and asked they show me a better quality replacement that I would purchase. The manager led me to a shelf and proceeded to recommend the same unit that malfunctioned! They had only their store-brand in stock and when I asked if he, given my circumstances, would repurchase that same item he merely shrugged and gave up.
In most retail environments the squeaky wheel almost always winds up getting the grease. The loud customers usually get discounts or free merchandise outright, not to mention calls from executives looking to smooth a tense situation in hopes of protecting the brand’s good image. There is a lot of merit in this strategy, especially in this era of social media where postings on Twitter, Facebook, and LinkedIn could reflect badly on a company or brand image.
From an article by John Lofstock I recently read: “No one likes hearing a complaint, so when a customer complains, a business quickly and resoundingly rectifies the complaint,” said Betsy Kruger, who is a marketing consultant and author of the book Top Market Strategy: Applying the 80/20 Rule.
The issue here is I am most likely one of the top 25% of customers in this particular store and mostly likely will now go elsewhere. When a chain follows this strategy they end up with mostly disgruntled customers who bring in less profit than the regular customers like me do.
“It’s wrong to reward complainers,” Ms. Kruger said. “You should reward loyal customers since they reward your business with higher profit.”
The solutions? Give your client facing team information about their customers! If they can recognize the top customers they can step up to insure a good experience, offer special incentives, and a more lenient policy where warranted.
Identify the ways that the top 25 percent of your customers differ from other customers and what characteristics they have in common. Market to those characteristics and invest in programs to engage them. Why would you invest your marketing dollars to the people who spend less and make you less profit? In the end you will develop a bigger pool of similar prospects you can convert into good customers. When you replace your less profitable customers with these new customers, you can expect your total profit from customers to exponentially grow!
The disgruntled manager, whose bonus and career path are largely depenedent on store revenue growth, might have behaved differently had he recognized I was a top customner. “The top 20 percent of your customers magnifies your profit, whereas the bottom 20 percent of your customers magnifies your complaints,” Ms. Kruger said.
And I did take the managers suggestion to contact the corporate office. I mailed the faulty device (it still reeked of smoke) directly to the CEO and informed him of my experience! I will post a follow up with the response I receive, if I receive one.