The Customer Is Always Right…Right?

The customer is always right … sometimes confused, misinformed, rude, stubborn, changeable, and even downright stupid, but never wrong.

Today’s tip might sound a bit harsh or even a bit extreme. It makes the customer so important that he’s almost god-like. That’s correct.

But don’t take it from me. I defer to Sam Walton, the brilliant founder of Wal-Mart. He said, “There is only one boss–the customer. And he or she can fire everybody in the company, from the chairman on down, simply by spending his or her money somewhere else.”

Of course, there are some skeptics. They wonder, when all is said and done, whether customer service really affects the bottom line. The answer is “yes,” and the effect is an extra nice bottom line.

Tony and Jeremy Hope addressed that very question in their book, Transforming The Bottom Line. They found that companies with loyal, long-term customers had better financials than competitors with lower costs and larger market share–but higher rates of customer turnover.

To get specific, Marriott found that for every point they gain in customer satisfaction scores, they add $50 million in revenue. IBM in Rochester, Minnesota calculated that over a five-year period, a 1% increase in customer satisfaction ratings brought $257 million in additional revenue.

When it comes to customers, a little difference makes a big difference. Xerox asks its customers to rate their products on a satisfaction scale from 0 to 5, with 5 being the best. They found customers giving 5’s were six times more likely to repurchase Xerox products as those who gave them 4’s.

And just in case you think you have some leeway in customer service, think again. To be profitable, a company has to satisfy almost all the customers all the time. The margin between profit and loss is often quite slim.

Kevin Freiburg and Jacquelyn Freiberg discussed that in their book, Nuts. After looking at all the costs and all the services, they discovered it took just 5 customers per flight to make the difference between profit and loss at Southwest Airlines.

Technically, the customer may not always be right, but ultimately, the customer is always the customer. Remember that, and you’re on the way to customer loyalty and company profit.

Action:  You may be giving good customer service. You may even have satisfied customers. But just for today, do something that will cause your customers to be enthusiastic.