Critical Thinking Every Customer Counts
The following ‘areas
of concern’ are provided to help stimulate your thinking for this case. They are not intended to provide a list of
questions to answer:
1.
How would you evaluate the customer service
health of the firm? What factors have
lead to the current situation?
2.
What are the strengths and weaknesses of
customer service of the firm?
3.
Do you agree or disagree that some customers
should be let go?
4.
What suggestions would you make to improve
the handling of the situation now and in the future?
5. What changes would you recommend to increase
the likelihood of success? Include
the
areas of concern and your recommended plan of action and controls to monitor the plans
success.
areas of concern and your recommended plan of action and controls to monitor the plans
success.
6. Hint: the decision to drop the customer has
already been made and does not need to be
discussed unless it relates to your analysis of the problem or alternatives for what should be
done in the future.
discussed unless it relates to your analysis of the problem or alternatives for what should be
done in the future.
Every
Customer Counts
LOSING
CUSTOMERS IS ALWAYS HARD
Maintaining
good relationships with customers can be stressful for a small business. Fred
is a lawyer I know who’s had a successful practice for more than 25 years.
When I ran into him recently, he told me he was making some changes. “I’m at a
new stage of my life,” he said. “From now on, I’m working only with people whom
I respect and who respect me.” “That’s a pretty bold statement,” I said. “I
mean it,” he said. “I just fired three clients. I sent them their files with a
note saying, ‘My firm will no longer represent you.’ I’d had it with them. They
were a constant aggravation. They didn’t treat me right. They abused my office
people. They took forever to pay their bills.”
“How did they respond?” I asked. “One of them
called me up,” Fred said. “He thought it was a joke. When I told him I was
serious, he asked me why. I said, ‘You really don’t want to know.’ He insisted
that he did. ‘OK,’ I said, ‘you’re a miserable person. You make everyone’s life
miserable, but you’re not going to ruin my life anymore.’ He hung up on me. It
felt so good. I wished I’d done it sooner.”
There was a time when I would have thought
Fred was crazy. I would have said, “So what if your customers are difficult?
They pay your salary. They cover your bills. They make it possible for you to
remain in business. It’s too darn bad if you find them aggravating. Life is
full of aggravations. Get over it. Besides, keeping an old account is a lot
easier than finding a new one. When you fire a difficult customer, you’re just
trading one set of aggravations for another.”
Not that I believed in the old saying about
customers’ always being right. That’s baloney. But I’d long felt it was
important to accommodate customers even when they were wrong—for the good of
the business. Lately, however, I’ve had a change of heart. The turning point
came a few months ago, when I received a notice announcing that a fairly
substantial customer was leaving my records-storage company.
Now, we don’t lose many accounts, so I was
curious to find out what had happened with this one. My people told me that the
customer, a big law firm, had hired a new records manager, and she was
impossible to deal with. Whenever she called, she would yell and scream and
threaten our customer-service representatives. They’d be shaking by the time they
got off the phone.
When customers abuse your employees, refuse
to pay their bills, and generally take advantage of your business, you should
let them go. I wanted to see for myself what was going on, so I told my
accounting people to send out the standard box-removal letter, detailing the
charges for permanently taking boxes out of our warehouse. I then made sure
that when the records manager responded, as she undoubtedly would, her call
would come to me. Sure enough, she telephoned a couple of days later, and she
was furious. “How dare you send us a letter like this?” she demanded. I
explained that we were simply following the terms of the contract. “I don’t
care what’s in the contract,” she said. “This is outrageous, and you can’t get
away with it. Who do you think we are?”
I told her we’d be glad to sit down and
discuss the situation. She responded by showering me with insults. There was
nothing to discuss, she said. “You’ll be hearing from one of the senior
partners,” she fumed. “Fine,” I said, “but I don’t want you to call me again. I
won’t take your abuse on the phone, and— starting today—neither will my
people.” Afterward, I told my employees that they could hang up on the records
manager if she called back and started to get nasty.
A senior partner did eventually contact me,
and we had a pleasant-enough conversation. I asked him if he knew why his firm
was dropping us. He said no but he’d investigate. When he got back to me, he
indicated that the firm was reconsidering its decision. Would I be willing to
meet with the office manager—that is, the boss of the records manager—who was
in charge of such matters? I said, “Of course.”
My sales manager, Brad, accompanied me to the
meeting. The office manager turned out to be a lovely woman who said she’d like
to work things out but there were a few issues we had to discuss. “Do they
involve price and service?” I asked. She said yes. “We can definitely work
those out,” I said, “but I also have an issue.” I pointed to the records
manager, who was sitting next to her. “That woman has been abusive to my
people,” I said. At that, the records manager exploded. “Abusive!” she said.
“Your people are incompetent. I’ve never seen such poor service.”
“I’m not speaking to you,” I said and turned
back to the office manager. “I value all my customers very highly, but I really
don’t want your business unless you can assure me that this person will be
civil on the telephone. If we’ve done something wrong, she doesn’t have to be
happy about it, but she can’t scream and curse at my people.”
The records manager started to rant again. I
turned to the office manager and threw my hands up. The office manager seemed
flustered. “Are you saying that you’re going to fire us?” she asked. “I’m
saying that the abuse has to stop immediately,” I said. “You can see for
yourself what we’re dealing with.” “Obviously, the two of you don’t get
along,” the office manager said.
“I’ve spoken to this person once before
today, and I can get along with almost anyone,” I said. “Her behavior is simply
unacceptable. If it was up to me, I’d have you pay the removal fee and call it
quits right now. But I don’t have to deal with you on a regular basis. Brad and
our operations people do. If you can persuade him that our people are going to
be treated respectfully in the future, I’ll let him keep the account.”
I
excused myself, went downstairs, and waited. Twenty minutes later Brad came
down. “I tried,” he said. “It was hopeless. I can’t believe they’re keeping
that woman in that job.” Dropping the customer cost us about $200,000 a year
in sales, but I didn’t regret the decision. On the contrary, I wondered if I
should have acted sooner. What if the customer hadn’t sent us the withdrawal
notice? How long might the abuse have continued? And how many other customers
had abused my people without my knowledge? What price had we paid in terms of
bad morale, low productivity, and turnover?
The
experience changed the way I viewed the business. Recently, for example, I was
looking into a receivables problem and discovered that part of it was due to
habitual nonpaying customers. I don’t mean customers who had fallen on hard
times; we work with those people. I mean customers who were following a
deliberate strategy of ignoring our bills and payment requests for as long as
they could get away with it.
As
it turned out, they were all marginal accounts (which is typical), and they
were driving our accounting people up the wall. We had one collections guy who
was spending hours and hours going after eight accounts that owed us $50 a
month, our minimum fee, and refused to pay until we sent a warning letter. Even
when we collected, the revenues from the eight accounts amounted to a paltry
$400 a month, or $4,800 a year. So I announced a new policy. In the future,
we’d send out no more than one warning letter to an account. The second letter
would be a box-removal notice. My accounting people cheered.
Don’t
get me wrong. I haven’t changed my principles. I still believe fervently in the
importance of providing great customer service. For the vast majority of our
customers, moreover, I feel
nothing
but warmth and gratitude, and I’d do almost anything to keep them. Nor do I
have any problem with those who complain, even when their complaints are
unjustified. Our goal is to have happy, satisfied customers. If one of them is
unhappy or dissatisfied for any reason, we want to hear about it.
But I’ve learned there’s a line that can’t be
crossed, although it took me more than 20 years to see it. When customers abuse
your employees, refuse to pay their bills, and generally take advantage of you
and your business, you should let them go. Life is too short, and good people
are too hard to find. If you can’t afford to lose the account right now, come
up with a plan for replacing the business in the future
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