CHAPTER 12
The Customer Is Always Right
(Most of the Time)
Vignette: The Customer Is Not Always Righti
He was furious. He was shouting at the sheriff, the two policemen, and me as we were leaving his vessel that morning. The sheriff had just taped to the command deck a lien on his ship.
Steven was known in the marketplace as a tough customer. He was always contesting his invoices and paying late. Although his fishing vessels were hauling good catches and he operated a profitable canning plant on Vancouver Island, he was trying to squeeze every dollar out of his employees and his suppliers.
My company had just refurbished his vessel. He approved all the work daily. I did not want to take any risk of not having his cooperation during the refurbishing process. I was upfront with our hourly rates on time and material work orders, and all the work-related expenses were accounted for. The job was performed to the client’s satisfaction. Therefore, I was shocked when he gave me a check of $100,000 for the payment of an invoice of $127,000, stating, “This was enough for the work performed.”
I was warned by my colleagues and even the competition that Steven could be difficult, before I took him on as a customer. I admit that even with this warning, he took me by surprise. No discussion would change his mind. This was a “take it or leave it” position from his point of view. He counted on “the client is always right” motto.
During my starting year with IBM, I remembered an event in which my instructor told me to send difficult customers to the competition. I would have preferred to have done that. It was too late now.
I took the payment and deposited a complaint with the courts, asking for a lien on the vessel for the unpaid balance. I informed Steven of my actions. He apparently did not take me seriously. The deadline for the payment passed. The sheriff came to enforce the court order. Sensing a potential problem, the sheriff was escorted by two policemen.
This was the reason for Steven’s shouting.
To the surprise of everyone in the company, I received a certified check for the remaining amount that same afternoon. Furthermore, Steven became a better customer. He appreciated the work we had done and returned for more work, this time making upfront deposits for the work to be performed and paying “as you go.” Of course, he had no more credit privileges with my company.
I would like to think that the company earned a new level of respect following this incident. We were not going to be taken for a ride by inconsiderate customers. We deserved to be paid for the work we performed.
The company became known in the marketplace as one delivering quality work at a competitive price.
Treat your customers with respect. Expect the same from them.
Vignette: Is the Customer “King”?
Another example of unusual customer treatment happened a few years later when I was involved as a director of operations of a higher education institution. The school suffered from persistent late payments of student tuition fees. The administration was hesitating to enforce a stringent tuition payment policy that required payment of course tuition fees before the start date of each course.
Marketing did not want to alienate the students. Some students tended to forget to pay on time. Sometimes they forgot to pay for more than one course. Because they were allowed to participate in the course and receive their grades nevertheless, the motivation to pay on time was not there.
I had to address this situation because it was becoming chronic. We had hundreds of thousands of dollars in outstanding tuition fees. How were we to improve the collection process without incurring the ire of our students?
I decided to face the problem upfront, by confronting the students with the highest outstanding fees first. I counted on the fact that the message would trickle down to the other delinquent students.
Using standard collection practices, I started by sending an e-mail (all students had a school e-mail account), informing individually the delinquent accounts of their outstanding balance and giving them a deadline (1 week) to cover their outstanding balance or else they will not have access to the university’s online portal and to the classroom.
This first action resulted in some surprised feedback from students (most did nothing), and by some payments.
Once the deadline passed, the majority of the remaining delinquent accounts were sent a registered letter repeating the first message in a more forceful form—pay or else (again); the “else” involved a disconnection of their online privileges and class attendance refusal.
Another week passed.
The third action was very tangible. It consisted of first cutting all access to the school’s course(s), be it in class or online. The student’s e-mail account was also cut off, thus requiring this time a phone call or a personal visit to the accounting office. The delinquent student could not access the classroom. The instructors were informed of these restrictions.
Of course, no assignments were to be accepted; no course transcripts could be accessed or issued.
This final step resulted in a resounding response. Within 48 hours of these constraints, most of the affected students succeeded to contact the accounting office and cover their outstanding balances.
The accounting department was not very popular with the student population after this event. The message was clear: tuition fees had to be paid according to policy guidelines, or else. . . .42
“Caveat emptor”ii goes both ways.
Vignette: Deficient Product
On another occasion, as the president of a high-tech manufacturing company, I had to face an irate customer with a legitimate complaint about a deficient product—a nonperforming polyurethane hydraulic seal. The production demand was high (tens of thousands of pneumatic seals per month), and the consequences of failure were significant because if the pneumatic equipment using this kind of seal was leaking, the equipment was unusable.
I hesitated between two responses to a situation of this type: a defensive response (talk to my lawyer) or a proactive response (support the customer).
Applying the “customer is always right” rule of thumb could have been considered risky, because if the customer was indeed right (i.e., my company provided a deficient product), my company risked a losing litigation.
Even if at the time of the call I had not received the quality production report from my plant manager confirming or contradicting the customer’s claim, my instinct dictated that I should still give my client the benefit of doubt.
By avoiding a confrontation (talking to a lawyer) and opening the door to a discussion (accepting that the customer could have been right and the product defective, which proved to be the case later), I diffused a potentially dangerous situation to our mutual advantage.
The customer had the opportunity to explain the problem, and we brainstormed various solutions (costly for the company but beneficial to the customer), resulting in an acceptable solution: a recall and a correction in the quality control of the manufacturing process.
My company’s credibility was reinforced, the customer secured, and the manufacturing process improved.
I cannot think of any quantitative information that would have given similar results.
Quality is not a cost.43
Lessons Learned: Value of a Demanding Customer
Companies have to deal sometimes with demanding customers.
Demanding customers are not necessarily bad. They ensure the work is performed to higher standards because they value quality products, expect them, and react when they are not satisfied.
The company ensures that quality is at the forefront of everybody’s mind. This also keeps the workforce motivated.
Everyone is proud of a job well done. I know of no worker who likes to deliver a poor-performing product by cutting corners. People have pride in what they do.
On the other hand, some customers might interpret a company’s benevolent behavior as a weakness to be taken advantage of.
These are the customers who need to be managed or sent to the competition. Fortunately, these customers are the exception rather than the rule.
I have often seen the writing on the wall of an establishment stating:
“If you like our service/product, tell your friends. If you have a problem with our service/product, tell us.”
i“The customer is always right” is a motto or slogan that exhorts service staff to give a high priority to customer satisfaction. It was popularized by pioneering and successful retailers such as Harry Gordon Selfridge, John Wanamaker, and Marshall Field. They advocated that customer complaints should be treated seriously so that they should not feel cheated or deceived. This attitude was novel and influential when misrepresentation was rife and caveat emptor (let the buyer beware) was a common legal maxim. (Source: Wikipedia.)
iiLet the buyer beware.