So how about preventive maintenance? In customer-service circles, no news is bad news. Ruppert Landscape gets a respectable 60% return on its twice-a-year customer-satisfaction surveys. Most of the 650 accounts give the company high marks. But it's the 40% who don't respond that cause management to worry. "We assume the worst," says vice-president Chris Davitt. "Those customers could be about to leave, and we need to reach them. We do a follow-up letter that yields another 20%." A manager visits or phones the remaining 20% and those who gave Ruppert a negative report. It's time-consuming, but it pays off in increasingly larger renewal contracts and fewer bad debts.
Take a deep breath, and don't panic. Whatever you do, don't lose your sense of humor. You'll never win 'em all. Miller has learned how to put a troubling situation into perspective. To the man who complained that his matching plants were no longer identical, she explained, "I'm not God!"
Ned Guilbeau of Lafayette Woodworks turns truly outrageous complaints over to the arbitration service of his local Better Business Bureau. "It can save legal fees and sometimes customers" because they appreciate the chance to "argue in front of an impartial person." He recently settled one outlandish consumer complaint -- about seven-year-old wood that rotted from homeowner neglect -- for less than $400, and he kept the customer, too.
ClichÉ: "You should always do whatever it takes to satisfy a customer."
If you do, what does that say about you? Jeff Thompson, CEO of Peripheral Outlet, a $24-million direct marketer of Macintosh computer memory in Ada, Okla., couldn't wait to fax us his reply: "No! If a customer's demands are totally out of line, and a company capitulates, perhaps losing money in the deal, how can that possibly cement a good relationship?" Thompson, by the way, is just 22, but he has 7 years of business battle scars to support his point of view.
He cites the case of a New Hampshire man who threatened to sue for a shipping-charge refund when his order wasn't delivered overnight -- during a crippling blizzard. Some customers have insisted their orders arrived half filled, even though three Peripheral employees check each outgoing box. "It's a minute percentage of customers, but it comes up every week," says Thompson. "Mail order is a rough business. We take losses all the time. We're known for being more courteous than everyone else." But he insists, "We have the right to ask customers to be honest and courteous, too."
Only when it makes long-term sense. "We can't always do whatever it takes, but we try," says Team One Plastics' Craig Carrel. Team One makes plastic parts that others build into assemblies for automotive and medical manufacturers. Earlier this year a loyal customer asked Team One to take back an already-approved part. "It had a defect, but no one knew until the car company said, 'Take it back." Carrel did, swallowing a loss of thousands of dollars. "But the fix is small compared with what this customer has spent and will spend," he says. "A good customer can be worth $1 million over 5 to 10 years."
Still, Carrel doesn't bite the bullet for just anyone. "It's not always a matter of volume, but the relationship we have." In some cases, he splits the cost of a fix with the customer. "That usually works." If it doesn't, it could be the impetus to part ways.
Know your limit. "Even when a customer comes back after a month with a dead plant, I say, 'I'm so sorry,' and I replace it," says Lorraine Miller. "I don't argue, because the person's next purchase is usually a good one." She draws the line at customers who swap more than three times. "But I do it in a nice way," gently reminding people that she is selling a perishable product.
Builder Bess Herzog goes so far as to detail her expenses for querulous customers -- a practice that goes too far for many CEOs. But, she says, "I don't have a problem explaining the bottom line. They may have no idea what my insurance costs me. I've never had someone say I'm charging way too much."
You don't have to be perfect. The more you understand your customers' needs, the more forgiving they'll be of little screw-ups. George Riggs of Embroidery Services knows his clothing-store customers depend on tourist traffic. "My clients do 80% of their business in two months of the year. Shipments have to be right, and they can't be late. . . . If I help stores get two to three more inventory turns a season, that's customer service." He adds, "They'll forgive us for a lot of bonehead things if we're on time."
Cut your losses. You can't afford to keep the unhappy and unreasonable customers: the chronic complainers, the late payers, the never-satisfied-no-matter-what-you-do club. George Riggs takes a tough stand on collection because, he notes, "we're past the point where we're in business because we love embroidery."
In its early years Rachel's Bus Co. would do anything to hold on to customers. Rachel Hubka trusted, waited to be paid, and suffered silently when schools seesawed between her charter service and another. But after she had been in business three years, aging accounts receivable had grown to $125,000, and she realized that some customers are more valuable than others. She established a commission structure for charter coordinator Carolyn Braggs that is tied to keeping receivables current. Receivables are now down to a respectable $25,000.
