Customers are diminishing your profits. They come armed and ready to deal. Are you ready?
By Paul Beaudette, President- Leading Edge Business Strategies
The typical customer of today when purchasing goods and services comes armed with more information than even your sales clerks or sales people have. Your clerks and reps. must learn an entire inventory of products and services. Your customers learn specifically about the one product they are looking for. They research the internet for specs and prices, they read reviews and check competitors. They know what they need to pay or expect. And, they understand your product guarantees better than you’d like them to.
Addtionally, the customer knows how to handle your clerks and sales reps. quite handily. If they have the slightest inkling that you are not going to negotiate, that you will not accept a return or that you are not meeting their expectations, the assertiveness rocket kicks in. The tone of the conversation elevates and the customer is now in control. The threats start, the historical disappointments fly and the clerk is now in the passenger seat. It used to be that the person on the other end of the phone or behind the counter was respected for what they knew and how they treated the customer. Now, the customer assumes control by putting the company down, reliving a series of disappointments over the years or even demanding to talk with the President or the CEO. The ultimate outcome, depending on the level of unreasonableness of the customer will be a refund, a break on the price or they will no longer be a customer. Whose loss this ends up being is left to each party to decide. The company has lost money or a customer or both. Depending on the genuineness of the customer, yes, some customers are worth losing.
What can you do? Try this:
- Arm your salespeople, service people and delivery people (they all come in contact with customers) with knowledge. They must be trained and maintained to be knowledgeable about everything you sell and service. You’ll spend money doing it, but it will still be less expensive than dealing with irate customers and the accompanying high percentage of returns and credits.
- In the same vein, arm your employees with your competitors’ information. Depending on your products or services, this could vary as to what degree they need to know. When I worked for a heavy equipment manufacturer, they trained us in not only our equipment, but also in the competitor’s products as well. We actually got to sit in each type of equipment, run it and compare ours with the competitors. Knowledge is power.
- Train your sales people to deal with irate customers. They are not mad at them, but mad at the company. So, the need to retaliate is unnecessary, and the best thing to do is listen and if the company has done something wrong, apologize and develop a correction. If the company has not done anything wrong, don’t apologize. Just be empathic and offer a way to make the situation right. Irate customers can be verbally abusive especially if over the phone, texting or chatting. A simple statement, “I would very much like to help you resolve this, however, we need to be civil with each other. If you would prefer calling back when you are calm, we’ll be glad to help you then.”
- Guarantees can and will be abused by some customers. With lifetime, customer satisfaction and unlimited guarantees being promised today, many people are taking advantage of them to an extreme, much to the disadvantage of the retailer. For example:
- Eddie Bauer – For 50 years, “100% unconditional lifetime guarantee.”
- Zappos – “If you are not 100% satisfied with your purchase from Zappos, you can return your item(s) for a full refund within 365 days after purchase. (Returns must be unworn, in the state you received them, and in the original packaging.”
- L.L. Bean – “Our products are guaranteed to give 100% satisfaction in every way. Return anything purchased from us at any time if it proves otherwise. We do not want you to have anything from L.L. Bean that is not completely satisfactory.”
The bottom line with these warrantees is they put the cost of returns back into their products. We, the consumers, are paying for this. With some of these guarantees, 20% of the cost could be an anticipated return. If you’ve used a wearable product for 10 years, should you expect a replacement at no cost to you? Some people do. Some go longer than 10 years. Unfortunately, these companies have created these customer expectations and this level of ethical discernment. Just because you can, does it make it right?
With as many people who make no compunction about taking advantage of these guarantees knowing that satisfaction does not mean any product will last your lifetime, but maybe the expected lifetime of the product, companies are sacrificing millions of dollars of profit to appease these customers and live up to their word. The net result is customers who now expect the same from many other companies and don’t hesitate to let them know, sometimes at the top of their lungs.
The era of the customer is always right is approaching the finish line. The population is growing and retailers will soon find out that there are too many good customers out there that can reciprocate a good transaction. Verbally abusing sales people and clerks will not become the standard.
Leading Edge Business Strategies, LLC is a consulting firm for small business. Paul Beaudette is the President and has over 30 years of successful business experience managing companies to sustainable profits and leading employees to being productive and aspiring to growth.
“Trust is the glue of life. It’s the most essential ingredient in effective communication. It’s the foundational principle that holds all relationships.” ~ Stephen Covey