Comments

Just read the interview. Excellent, Excellent, Excellent! Lior confirmed and operationalized so many fluffy thoughts that I have had for years about the need for sincere long-term customer relationships rather than bland, theoretical customer-service programs. The stuff about firing customers and wallet share was interesting too! I must buy this book, and think that it should be gifted to all CEOs that have come through the CFO/COO ranks! Thanks for sharing Lior's vision through a great interview!

Posted by Tom O'Leary at August 19, 2005 9:05 AM

Tom O'L,
We were just wondering why no one had commented on this interview when Erik noticed your post. And you've posted the ultimate comment, so thanks!

Erik does the interviews, so it's his skill with identifying the key points in a book that contributes to the excellence (immodest statement coming from someone who works on getting the Cool Friends posted, I know) of these interviews.

I especially liked the part about having a new idea in a tired market. Build-a-Bear, JetBlue, Godiva. Build-a-Bear is especially brilliant, I'd say. I went there with some friends, and something that is not often mentioned is this: The cost of the clothes for the bears is mostly between $5 and $20. How perfect for birthday gifts for your kids' friends if you know they already own a bear! Or an under-$10 treat for your own child. Talk about long-term. I wish I'd thought of it.

Posted by cathy at August 19, 2005 11:04 AM

Funny, I was a bit confused when I saw Lior's reference to "Erik" in one of his responses. Kudos to Erik for getting the best cut from a nice bit of beef!

I liked that bit about tired markets, too. Believe it or not, we are relocating to Bellingham, Washington, in October, and have already planned on bringing our 5 year old girl to "Build-a-Bear" shortly after we arrive. We saw it promoted on Oprah last year and, like you, said, "Now why didn't we think of that!"

Posted by Tom O'Leary at August 19, 2005 12:29 PM

HERE'S AN IDEA: all these cool friend interviews tend to be about re-inforcing the sort of messages that Tom, Steve et al are pushing. How about interviewing a few people with totally different, contrary, controversial messages? The current format risks becoming just a mutual appreciation society. Why not interview a few people who'll really challenge us and make us re-think if this sort of stuff really is right?

Posted by Mark JF at August 19, 2005 12:58 PM

well the idea of the cool friends originated with the fact that tom was quoting these other authors in his seminars, so we thought interviewing them would help us to share more of their ideas. and yes, they are like tom's ideas because they inform tom and serve as component pieces to tom's ideas. as for interviewing people who disagree...well, yeah, though i can tell you that i'm not going to interview someone who advocates adding layers of bureaucracy to an organization. so mark, do you have any people in mind?

Posted by Erik Hansen at August 19, 2005 2:14 PM

HBR wrote a piece last month that was critical of Tom. If I remember correctly, he's often cited disagreements with Jim Collins on some matters. He's disagreed with Porter (emphasis on strategy over execution).

I'm not suggesting you go out and interview someone who simply advocates adding layers of bureaucracy to an organization; my point is that I think it would be healthy to interview some people who don't necesarily agree with the TP viewpoint. It's interesting to see the links between like-minded people but it would also be good to see some healthy debate with people who disagree about some or even all of it.

Posted by Mark JF at August 19, 2005 2:59 PM

Some of what Mr. Arussy said made sense, but I wouldn't hire him. Here are a couple of things he said:

"(A)nd we teach them, by the way, how to fire customers. We argue that not every customer is a good customer, so even before you plan for the customer that stays, you start with firing the wrong customers. I actually started the firing customers program at HP."

and

"So we designed a plan for them. But first, we identified customers who were really not a good fit for the company, those who will always complain because they're not happy with the price they paid and don't really appreciate the value."

I object to firing customers. Very rarely does a business have to refuse someone service, and in my view it should only be done under extreme circumstances, such as the proposal of illegal activity, but it should never become a formalized policy or plan. The vast majority of people do not complain without just cause, and if you place the focus on satisfying (rather than firing) even the most difficult customer, then easily will you satisfy the average customer.

Formalizing a policy or a plan to get rid of customers you don't like sends the wrong signal to your employees which essentially says customers they don't 'like' or believe are making too many complaints or are not billling enough can be given the boot.

If your customers are "not happy with the price they paid and don't really appreciate the value" there is something wrong with your 'value propostion' or you haven't done a good enough job explaining it. It's easy to blame the customer, but it's also commercially stupid.

If you're thinking about upgrading or improving your customer service, or hiring a consultant to tell you how to go about doing it, obviously you recognize that you are not giving good service and want to improve it. Taking a f*** you too attitude to your customers should not be something you look at. You want to maintain your reputation and improve it rather than piss off more customers by firing them which is a stupid thing to say anyway because you're not paying them. It is the customer who is giving you their money. It is the customer who can fire you. And they will if you aren't bending over backwards to satisfy them.

The fact is that customers, even the disagreeable and demanding ones, make a business. Without customers handing you their cash or credit cards to buy your goods or services you do not have a business.

Posted by Noel Guinane at August 20, 2005 8:23 AM

Noel,
I do not agree with you at all! In fact Arussy's interview is one of the best pieces to date on TP's site. I have often seen grumpy nitpicking customers (even some big corporates) who harass and harangue, simply because we tolerate them. If we are really that bad (from their view point) then why don't they simply go elsewhere? In fact they keep coming back, but keep complaining all the time. The complaints and haranguing have more to do with getting better discounts and browbeating their suppliers for lower prices, raher than genuine complaints. These "bad" customers end up hogging a disproportionately high amount of resources compared to the business they bring and end up sapping everybody's strength. We have all seen them and know them but all along we were brainwashed by the "customer is king" hogwash, at least Mr. Arussy has succeeded in demolishing this myth.
Cheers!

Posted by Mandar at August 20, 2005 12:13 PM

Appreciate you don't like the idea of the customer being king. Doesn't change that they are. As Harold Geneen said, "the customer isn't always right, but it never pays to tell them that."

Any business that has to look at 'firing' customers is doing something wrong in their business. The fault lies within the business, not with its customers. Proposing a "plan" to identify customers who don't conform to the corporation's notion of what constitutes a 'good' customer and then proceeding to 'fire' them is the easy, and lazy, answer.

Posted by Noel Guinane at August 20, 2005 1:11 PM

Can't say I'm in the "fire the customer" camp. Let's exclude the abusive. Proper segmentation and a service/offering strategy for each segment can allow you to keep those customers that are in line with your profit strategy while allowing those below that line to wander over to the competition.

Be careful though. Many new competitors have lept out of the darkness to fill an offering gap only to grow into monsters (see the Capital One segment in the link).

This link provides a number of industry examples and can certainly be read by those firing or keeping.

http://knowledge.wharton.upenn.edu/s+b/120402.html

Posted by Jeff at August 21, 2005 12:19 PM

Jeff, didn't mean to offend sensibilities though I think that is exactly what it amounts to when a company looks at 'firing' customers it doesn't, for whatever reason, like. In my view they are abusing their customers who have spent money on their products and services and now want to give them the bum's rush.

Enjoyed the article. Might have enjoyed it even more had it included input from businesspeople rather than stories only from academics and consultants.

The truth is that no paying customer, regardless of size, likes to receive less than perfect service from any business. As Sam Walton said: “There is only one boss, the customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else.”

Companies who can afford to waste executive time sitting around fantasizing about which customers they should 'fire' and which they should keep are in my view hovering somewhere close to Pluto while their customers are very much tethered to Earth. Far better to devote that energy to identifying and fixing the problems in the business that are causing the complaints and the unprofitable relationships. May not be possible to entirely eliminate customer complaints - there's always going to be a few - but you place the focus on learning from them, rather than complaining about them and shooting yourself in the foot by exterminating the customers making them.

Sure, you want to continuously reexamine your operations and processes to see how you could do things better. If you find your company is doing something that is costing a hell of a lot more than you thought, like, for example, offering free overnight delivery to every account, you don't 'fire' those pesky small customers for taking advantage of it. You revise the policy, explain why you are doing it and are then tolerant of their complaints when they object.

In my opinion, Arussy is pitching another useless fad that will prove damaging and costly to a company's reputation.

Posted by Noel Guinane at August 21, 2005 4:22 PM

Noel, I think we are in violent agreement. I'm not for firing customers. I liked your comment about academics and consultants; no do-ers.

Posted by Jeff at August 21, 2005 5:38 PM

Although I understand where you're coming from Noel and Jeff, I think that I read into the "fire the customer" bit slightly differently. If a supplier/customer relationship is unhealthy, then the financial benefits of that customer are secondary to the overall health of the organization. While you might take an initial financial loss by sacrificing a customer who demands certain efficiencies at any cost to you and your other customers, you will make up for it in the long run by attracting customers who show their appreciation for the sincere relationship experience by coming back again and again.

When a relationship with a customer becomes unhealthy, the effects on the organization's ability to function effectively in terms of quality customer care can be drastic. Think of it in terms of a family in crisis. The youngest child of 7 is addicted to crack cocaine and steals money from others in the family when he is home in order to support his habit. When you and your wife approach him about the situation, he says that you're his parents and you have to do what he wants. He demands that he stay living at home, but you know that it is causing disruptions and stress to the other children and yourselves. You could "accommodate" him and neglect the concerns of others in the family; or you could sincerely assist him by referring him to somebody that can help him without compromising your relationship with the rest of your family. You are in fact, helping him by not continuing the charade by letting him do what he wants, and the others in the complex web of relationships will appreciate your stance in not constantly giving in to him at their and your expense.

Sure, you can constantly improve the efficiency of systems to suit difficult customers; but the true WOW Customer experience involves the relationship itself, not the process. And if a relationship is unhealthy, something has to be done before the corrosion gets ugly.

Now, I would be in favour of attempting to improve my relationship with a problem customer before letting them go, but not by simply continuing to accommodate them at any expense, and especially not at the expense of my employees or the majority of my other customers.

Posted by Tom O'Leary at August 21, 2005 5:43 PM

Tom O', have you been down the pub? Be honest now because that was a very entertaining comparison and quite unlike your usual reasonable self. Working on the premise that you're serious, I'd suggest customers, even disgruntled customers, are not 7 year old crack cocaine addicts and you don't 'fire' your son, no matter how many extra children you may happen to have in the family.

It's very simple. A company decides what it needs to sell a product for and also decides on its terms of business, maybe leaving a little wiggle room in there to allow for some negotiation if it's that kind of a sale. If a customer calls up and orders from them, they either agree to do business according to the company's terms or they do not. If they do and they're subsequently unhappy with some aspect of the offering, the onus is on the company to resolve the matter to the customer's satisfaction in order to maintain their reputation.

At no time can a company 'fire' the customer because they dislike having to go to the effort of satisfying them, just like you can't wash your hands of children who fall into bad habits and need their parent's guidance and help to get out of a bad situation. No outside professional is ever going to care for your children as much as you do and no outside consultant is ever going to care as much for your customers as you do (at least Arussy certainly isn't).

A company cannot have a "sincere relationship" with any customer if shafting customers is part of their policy. In what book, with the possible exception of Arussy's, does it say customers should just line up and hand over their money and be happy with whatever quality of service they get so as not to make work for those poor darlings in their customer service department who are more interested in having a 'relationship' with customers who understand their needs and follow their rules than they are in putting in the work to guarantee a customer's satisfaction? What do have here? Corporate communism? We're speaking about capitalism and consumerism and in that sort of a system, whether you like it or not, the customer is king. Any other attitude will degrade a company's reputation.

Posted by Noel Guinane at August 22, 2005 4:25 AM

Firstly, Noel, the child in my example was the youngest of 7 children, not 7 years old (although it wouldn't surprise me if there were 7 year old crack addicts out there!) Secondly, there are times when the best place for a child IS outside of the enabling family environment (i.e. a rehab centre or wilderness program). It doesn't mean that the family doesn't love the child.

I think that you're hanging on too tightly to the semantics of Mr. Arussy's assertion about "firing" a customer. Continually accommodating an unhealthy relationship is not good business, unless you are only focused on the short term financial gain.

Speaking of pubs, often, customers are barred from coming back into them because their behaviour disturbed other patrons. They didn't necessarily get into fights. They might have been insulting to the staff or too loud, etc. The fact is that many have been "fired" as customers. From my personal experience in the hospitality trade, I have personally "fired" customers in my restaurant when their behaviour upset other patrons. One wedding couple who were causing unbearable burden and stress to my staff during the planning of their wedding through their endless demands was eventually referred to one of our competitors who might be able to meet their requirements better. Sure we could have kept accommodating them, but the relationship simply was not healthy and in fairness to them and us, it was better that they went somewhere else, if only to prevent my head waiter (who they treated rudely and as their personal servant in previous arrangement meetings) from pouring hot gravy down the back of the brides wedding dress on the day..."ooops, sorry ma'am." IT'S NOT ABOUT THE QUICK BUCK!

The idea that customer is king is old school rubbish Noel. In a relationship, there are no kings, only partners engaged in a healthy and productive enchange. Making the customer king is making yourself and your organization a whore to capitalism rather than a champion of quality.

Posted by Tom O'Leary at August 22, 2005 5:54 AM

Thanks, Tom O'. Should have mentioned that the child in your crack cocaine example was of undefined age (though I would think that if he was in his fifties and the youngest child of seven, you would have an entirely different sort of problem on your hands). ; )

Really enjoyed that story about your head waiter wanting to pour hot gravy down the back of the dress of one of your potential bridal customers. Of course, if he had ever really done such a thing, even to a difficult customer, you would have fired him on the spot.

I agree wholeheartedly that it is not about a "quick buck". It is about ensuring that satisfied customers spread your reputation for friendly efficiency far and wide in order to build long-term confidence in your brand, whether you own a restaurant, a stationery store, or manufacture kitchen appliances.

Extending excellent service does not make you a "whore". It makes you smart. Rarely will you find at Hewlett Packard obnoxious packs of drunken brawlers with fetid breath lining up to assault other customers with either their fists or their words. Should I get a customer complaint and the customer is ill-mannered, I make sure that my manners never waver and figure it's my job to calm them down and solve the problem. This has always worked for me and my staff with no loss of dignity to either us or to our customers. To be a "champion of quality" you must lead by your own example and if you are intolerant of disgruntled customers, then it is intolerance you are championing.

Sometimes, the customer is wrong. I have had customers order things incorrectly, discover their mistake upon receiving their goods and then complain that we had shipped the wrong goods in the first place. Without fail, we apologized, took the items back and credited their account. Never did we get into a slinging match over who's fault it was or ever in our wildest dreams fantasize about pouring boiling liquids down their backs with the result that these difficult customers did business with us for years to our mutual benefit.

It's all about attitude and keeping your eye on the bottom line. Business is about making money and it is about handling relationships with customers and suppliers tactfully and intelligently. There is no 'whoring' involved in maintaining objective professional relationships unless it is in your nature to degrade yourself in which case it won't matter what you do for a living.

The customer is king. Anyone who has ever built a business from nothing into a going concern understands this very well, and this understanding does not demean them. I honestly love all of my customers, without pretense or deception, because I know on a deep and meaningful level that without my customers, all of my customers, I'd be out of business. So if you do business with me, whether you bill $20 a month or $2,000 a month or even $2 a month, you are the king (Mr., Mrs., Miss, Dr., Jnr., Snr., etc.) and I will bend over backwards to guarantee your satisfaction. Except as an absolute last resort and never as a formalized policy or plan will I be so stupid as to refer you to a competitor simply because I can't be bothered to spend the time to solve a problem, but then I'm not lazy.

Posted by Noel Guinane at August 22, 2005 9:09 AM

P.S. I can't wait for your next example. I am sincerely enjoying the colorfulness of this debate more than any others I have had with you. : )

Posted by Noel Guinane at August 22, 2005 9:12 AM

Noel - I think this highlights the differences between small and large companies. One of the key points I took from Arussy's interview was the disconnect between wanting to offer a customer-centric experience but putting in place systems and procedures that completely stymie this. You thus get conscientious employees trying hard to do an excellent job but who can't offer top notch customer service because the system won't let them...

Firing customers? Let's face it, in a large business, you're almost inevitably going to get customers who are unreasonable, rude or generally a pain in the backside. I quite agree that you work with them to try to deliver a great service - sometimes it's the price of doing business and sometimes what they're saying is maybe opening up an opportunity for you. But I agree with Tom on this one: sometimes you get to the point where you have to say, "Look, my business just isn't about doing quite what you want. I mass customise my offering but I just can't quite make it work for you. Either we agree to compromise and move forward on a more business-like basis or you should look elsewhere." It seems to me the ultimate act of customer service is to say you can't quite provide what the customer wants and refer him elsewhere.

And if you've got your wits about you, you'll refer him to a competitor who really can't do the job. This way, maybe the guy will come back in 3 months time and say, "Hey, you're not so bad after all, can we start over again?"

Posted by Mark JF at August 22, 2005 11:32 AM

Mark, the principles of every business are the same, large or small.

If on the one hand you say you want to build a "customer-centric" experience and on the other go around analyzing your existing customer base to weed out those who 'don't get it', at least not the way you would prefer them to, then that in my opinion is a serious disconnect. You are not being sincere about offering a "customer centric experience". What you're doing in effect is signalling to the rest of your staff that it's okay to 'fire' customers considered difficult instead of teaching them that the company they work for considers the satisfaction of its customers to be its highest priority.

Occasionally, you're going to come across unreasonable customers and in that situation, you give your staff access to the necessary information and decision-making ability to solve the problem to the customer's satisfaction without having encouraged them to think that the complaining customers can be 'fired' if they don't agree.

As mentioned previously, in my experience the vast majority of people do not complain without just cause, and if you place the focus on satisfying (rather than 'firing') even the most difficult customer, then easily will you satisfy the average customer. It comes down to the attitude you and your staff bring to the business, no matter what size the business is.

On those extremely rare occasions when a customer is being incredibly unreasonable (and in my experience they are extremely rare), then I can understand a business after having exhausted all possible avenues to solve the customer's problem recommending the competition, but not before granting a refund (in all cases, not just some). You don't however, actively search your business for customers to get rid of, as Arussy is suggesting. You look first to correct the problems in the business that are causing the complaints and the unprofitable relationships, amending your processes and terms of business accordingly, and you do it with the aim of retaining and pleasing all of your customers, not just some of them. If you don't, you are pushing people, more than likely vocal people, into blasting the world with an unreasonable declaration on the state of your company to anyone who will listen. Maybe before they'd tell ten people and two would sympathize. Today they'll write it up on their blog or comment on lots of other blogs and maybe ten thousand people or more will read it. And others who've been treated in the same way by your company will come forward and the state of your company's customer service will become a viral online issue that will be tagged and saved in an online database for other customers interested in what you're selling to check before they buy. Congratulations. Your name is now mud. And it's going to cost you a lot of time and money to rebuild it, if it even is something you can manage to do. Customers in my experience rarely give a business a second chance or are willing to take a risk on a company with a lot of negative feedback.

Do you think Tom would have been cool with the supplier of his wife's stove top if they had 'fired' him for complaining when it didn't show up? Think he'd go back to them in 3 months and say "Hey, you're not so bad after all, can we start again?" I don't think so.

Posted by Noel Guinane at August 22, 2005 12:34 PM

Noel - I'm not advocating a periodic exercise to weed out customers. What I'm saying is that from time to time you will get customers who prove to be totally unreasonable and if you take positive action at the time, and I emphasise at the time, then it's perfectly reasonable in extremis to fire a customer. We all seem to be in broad-ish agreement on this!

Maybe the point of Arussy's excercise was that his client had let things slip to the extent that this was a catch-up. If so, then I guess the real question is: Do you go around firing customers or do you launch an initiative to go back to them to find out why things have gone wrong and identify what can and can't be done to retrieve the situation? In this case, I have to say that firing customers does smack of admitting, "We've fouled things up by not managing customers properly on a day-to-day basis so rather than do the difficult thing and try to retrieve the relationship we'll just fire them." That - I agree - is crazy.

Posted by Mark JF at August 23, 2005 1:43 AM

Noel, I always enjoy our banter because you generally don't sit on the fence as much as I and that inspires me to get my butt off it every now and then! Furthermore, you express your views eloquently, and that is always refreshing in a time when "2 many ppl bleev dat its btr to b effcnt w/words, dat dis is gr8!"

In a strictly economic discussion, the 'king' is largely determined by demand. If there is more supply than demand than the customer might be considered 'king'. When demand outpaces supply, however, it might be argued that the supplier is 'king', as can be evidenced by the construction market over the past several years, when finding a supplier with the time to put your project on his calendar is rare and good value even rarer. In high-demand times, TP and others, even if they believe that they, as customers, are ALWAYS king, will go back to whoever is left to get the job that they need done regardless of how they feel about the suppliers, unless they have strong personal convictions that might prohibit them from supporting a particular supplier (as a PETA or Greenpeace member for example) which doesn't really come into play in strictly economic discussion.

In a socio-economic light, and certainly in a free democratic society, kings don't exist. Such a hierarchal power structure throws socio-economic relationships off balance, giving one person or group in a relationship more value than the other. CEOs are 'fired', employees (internal customers) are 'fired', suppliers are 'fired' and external customers are 'fired' occassionally. To grant infallibility to any one group in this dynamic web of relationships would seriously disrupt the natural course of global business, as some may argue it has to the Catholic Chruch by granting the Pope infallibility.

On a strictly social scale, no individual in a healthy relationship is 'king'. Normally, when somebody thinks that they are 'king', the relationship is doomed, and often, they get 'fired'. When the relationship isn't healthy, it is at times better to end it.

Now, to that end, I agree with you whole-heartedly that every reasonable effort should be made to improve personal or business relationships that are, for whatever reason, unhealthy; and I would like to hear more clarification from Lior in regards to his suggested methodology for identifying and weeding out the dead weight from a company's client/customer list. But then, I suppose that I'll have to buy the book to find that out.

Posted by Tom O'Leary at August 23, 2005 1:48 AM

Reading the article above, I think that I understand more clearly what Lior was getting at in regards to the firing customers bit. It's about optimizing the time and effort spent on customer service efforts by focusing on the demographics that have been identified as the majority wallet share and exploiting it. Not as romantic as I had hoped, but commercially??

singing I can see clearly now, the rain is gone...

Posted by Tom O'Leary at August 23, 2005 2:40 AM

There are two trends I see in the businessworld. The first is that management wants to absolve itself of its responsibility to its workers. The second is that management wants to absolve itself of its responsibility to customers.

In my view, management, as a practice, is becoming lazy. Arussy is pandering to it. If he is advocating something different to what his words in TP's interview clearly suggest, then he is free to come in here and enlighten us all as to the benefit of searching an existing customer base to 'fire' customers the corporation doesn't appreciate or can't be bothered serving.

As to the idea that the customer is king, you can extrapolate the idea as far out into society as you want and conclude that allowing the concept of 'kings' is detrimental to any healthy relationship. I can see the attraction of doing this, but it's misguided. A businesses definition of what constitutes a healthy relationship is not necessarily the customer's definition. We can try to impose our definition on them, but if they don't deign to agree to it, we're another mediocre business wishing people would stop complaining and play along with the way we want to play it.

In business, for better or worse, the customer is king and in my view, always will be. They are giving you their money and you had better satisfy them, according to the way they want to be satisfied. If you don't, they'll go elsewhere and tell everyone just how lousy they consider your company to be. Unreasonable at times maybe, but no one said that old hag we call consumerism was bliss at both ends of the relationship. It's weighted in favor of the customer and it really is a waste of time and energy trying to balance the scales or tip them in favor of the business by trying to persuade people to conform to 'relationship rules' and 'firing' those who don't conform. Good luck with that strategy. Far better in my opinion to put in the hard work necessary to make it as easy as possible for people to do business with you and treat your customers, all of your customers, like royalty.

Posted by Noel Guinane at August 23, 2005 4:13 AM

I think people do not understand what Arussy is saying. In case you require examples where customers can be "fired" I provide the following cases.
Case1 : Customer walks into restaurant and causes drunken brawl. Should restaurant owner bend over backwards because after all "the Customer is King?!"

Case 2: A commodity chemicals manufacturer has to raise prices because input costs have shot up and "efficiency" increases have not compensated the cost increases. He raises prices. Most customers accept and continue business. Some shrewd ones complain about dubious quality and other issues again and again, finally ask for discounts.They get the discounts first time, second time. Third time do you think the manufacturer should fire them (the discounts are causing a lot of heartburn amongst other customers who do not complain) or treat them as Kings?

Case 3: Customer orders regularly large quantum of parts from a spare parts vendor, but does not pay up on time. In case of 30 days payment terms he takes upto 6 months. The value addition from this customer is almost zero because interest costs shave off the margins. He has other good customers who pay up on time. Should they continue or treat the Customer as King?

Case 4: Customer wants garments exchanged for other ones from supermarket, then wants that exchanged yet again and then yet again. Should the supermarket go on pandering to these whims and treat her as a customer or "fire" her.

I can go and on........till you see Arussy's point.

Posted by Mandar at August 23, 2005 5:06 AM

I found Arussey's tone a bit arrogant, right from the first response. How is he going to bring in "customers" when he immediately disparages every other business book by every other author? I certainly won't read his book, (and I'll probably manage to make money from customers, too).

As to the argument about firing customers, this is basic Total Quality Management theory. TQM states, among other principles, that there comes a time when the value a customer brings to your organization is less than the trouble that customer brings and you have to do the right thing and "fire" them. I've done it, and it worked out all right for everyone concerned. Handle it diplomatically and give the customer the truth--you may find they didn't realize they were being such a problem and they may be willing to change.

A friend of mine once worked for a retail manager who was so concerned about pleasing the "customers" that he made sure they took every return with no questions asked. He was fired when corporate management discovered he had accepted a lot of returns of mercandise the company didn't even sell.

Posted by Mike at August 23, 2005 6:29 AM

Mandar,

Case 1: Extreme example. Most people who go into restaurants do not look to get into a drunken brawl. Don’t expect them to, and don’t do anything that would encourage them to, like telling them they’re ‘fired’. Escort them off the premises politely but firmly. Call the cops if you have to, but remember that the other patrons are watching how you handle it.

Case 2: Stick to your terms of business. If necessary, make an allowance for a large customer and don’t do it without getting something back in return, like, for example, a larger order than they were planning to place. In other words, negotiate. If they want more than you’re willing to offer, refuse, but show a little commercial sense and don’t tell them they’re ‘fired’ for asking. If you go along with a stupid deal, you’ve got yourself to blame, not the customer. Let them go to the competition of their own volition. Your prices should be in line with the market’s. If they’re not, justify your reasons for charging more. The customer either agrees with the value or they don’t, in which case they fire you.

Case 3: Standard practice to charge an additional percentage on overdue invoices and chase the customer for payment. Hard work, I know, but preferable to ‘firing’ them since you’ll get to keep their account, bothersome as it may be.

Case 4: Introduce a limit on returns, say a reasonable three times per purchase, make it part of your terms of business and print it on receipts. Problem solved. No need to ‘fire’ the customer.

And at all times, yes, treat the customer like a king. Look to solve whatever is causing the complaints and the unprofitable relationships, that is, examine what your business is doing that’s causing them and fix them with the aim of keeping rather than losing customers. For those of you out there who long ago came to understand these basic principles of doing business, I apologize for the 101.

Posted by Noel Guinane at August 23, 2005 8:35 AM

Mike, in my opinion we never want to start thinking that it’s okay to ‘fire’ customers even if a management theory that’s basically sound in many other respects suggests it. We can decide not to accept their order at that time because it wouldn’t be profitable for us to agree to it, but that’s not ‘firing’ them. In business, we always want to leave the door open, especially with customers. If someone finds themselves in a situation with an existing customer they consider intolerable, my advice is to keep looking for a solution that all parties can work with instead of alienating the customer by telling them to piss off, however tempting that may be and however politely they may put it. In my experience, the vast majority of people can be reasoned with and the reason behind the vast majority of customer complaints is because the business they’re dealing with has got its head stuck in the sand and are deaf, dumb and blind to what the customer wants. Blame the business you work for and work to remove the roadblocks and problems. Don’t blame the customer.

Posted by Noel Guinane at August 23, 2005 8:39 AM

Noel, shouldn't we be trying evolve from Business 101? Subscribing staunchly to Business 101 is never going to result in a WOW experience, for the customer or for the business. Let's think outside the box!

Posted by Tom O'Leary at August 23, 2005 9:18 AM

Noel--make a distinction between retail customers and business-to-business customers. The example I lived through was in a manufacturing business where the customers are also manufacturers. The orders are usually regular and continuous in that sense. The customer became a burden due to their own inability to run a proper business and not due to our inability to please them. But, it became obvious to us that we could better utilize our limited resources with different products for other customers and we "cut them loose." In retail, some people want to be termed "customers" even though they really aren't. The scammers who write bad checks for merchandise and then want to return it for cash; the habitual returners who "buy" something and use it once then return it; people who get you running round in circles trying to satisfy them when all they really want is to see you running around in circles, and etc. If a business works too hard pleasing customers like these, they can soon find themselves on the verge of bankruptcy.

Posted by Mike at August 23, 2005 9:20 AM

Mike, Arussy wasn't referring to these extreme examples of bad customers who in my experience represent a very small percentage of customers.

Just to remind everyone, it was the following quote (one of two) from Mr. Arussy that I objected to:

"So we designed a plan for them. But first, we identified customers who were really not a good fit for the company, those who will always complain because they're not happy with the price they paid and don't really appreciate the value."

What is he saying? Customers should just take what they are given and be grateful or push off? I think Mr. Arussy is reading this and should come in and clear this matter up for us.

In the meantime, Arussy's approach reminds me of those long-ago charlatan doctors who regularly bled patients to drain them of evil spirits and poisons, a practice that had been started by a sensible physician who came across a patient with an infection, and following an old wives tale, put leeches on it, not to drain their blood, but to drain the infection. It became a fad and doctors were bleeding patients just to see if it work. More often than not, their patients died since the little blood they had left was all that was keeping them alive. Fads are very dangerous things since they rarely have anything to do with common sense and judgment.

In our business, we never look at our customer base to see who we should 'fire'. Who we could make more money from by pitching additional services to, absolutely. Looking to improve aspects of our business based on what complaining customers have told us, again, absolutely. And we do this not because we want a medal, but because it makes business sense to listen to your customers.

Customers who wasted our time in the past are kept in our database because you never know, circumstances change and that customer may very well come back to us with another enquiry and this time maybe we'll be able to convert it into an order. We won't had we all sat around and said "okay, guys, who should we dump?" and then proceeded to tell those customers either in a letter or next time they called up to make an enquiry: "Sorry, we're not interested in doing business with you anymore" before we've even heard the propostion.

It's the attitude here I object to. No one is denying that there are difficult customers and timewasters in the world. However, this tiny minority cannot be allowed to affect the attitude we take to serving our customers. I don't and it works for me.

Posted by Noel Guinane at August 23, 2005 10:41 AM

Tom, to evolve from Business 101, you have to first learn it by experiencing it in a real business, not a classroom. Then these very basic things, like how to treat customers, become second nature and not something you have to run to a book for.

Posted by Noel Guinane at August 23, 2005 10:41 AM

Stop sugar coating it Noel, and tell us what you really think! Seriously, I'm with you most of the way on this one. I have some problems with the Arussy opinion as well. I'd like him to weigh in on this issue because we either seriously mis-interpret what he ways or we seriously disagree with him, and in either case, his position could become difficult to sell.

Posted by Mike at August 23, 2005 12:22 PM

By the way, I DO agree with Arussy about CFOs not becoming CEOs. All CEOs should come directly from manufacturing, or at least from somewhere in the operations group, and in an extreme case maybe from Purchasing. But no more CEOs out of sales, accounting, or marketing!

Posted by Mike at August 23, 2005 12:25 PM

Mike, I agree that having manufacturing experience is useful and I also agree with accounting and marketing being less useful, but I think they should have some exposure to sales in their background because sales gives you direct exposure to customers, a realistic view on what it takes to bring in the numbers and of course, because sales is what pays for everyone's salary in the company.

I think it's good to know what it takes to make the products and also know what it takes to sell them in the field so if you can combine manufacturing with sales experience, I think you've got a well rounded CEO with a CFO to back him up with the numbers.

Posted by Noel Guinane at August 23, 2005 12:43 PM

CFO's not becoming CEO's? C'mon folks: isn't the point of this whole TP / WOW thing that we're all encouraged and empowered and emboldened to go forth, defy the rules and do our best? I think it's wrong to be prescriptive about who can and can't become a CEO and that they should all be recruited and judged against their suitability and ability to do the job. What next: no Hispanics, no gays, no women etc etc???

Posted by Mark JF at August 25, 2005 2:02 PM

Mark, are you by any chance an accountant?!

Posted by Noel Guinane at August 25, 2005 4:10 PM

No, I'm a human being! Sorry in advance to all finance people - it's a joke - but there's just no accounting for taste!

Posted by Mark JF at August 26, 2005 11:12 AM

Sorry, you can't be human and a blogger at the same time, or at least that's what my wife tells me.

Posted by Noel Guinane at August 26, 2005 1:15 PM

"Lipstick on the pig"... that phrase is worth the price of the book. Sums up every ass-backwards "policy revolution" Ive witnessed... especially in the education field!

Posted by AJ Hoge at August 31, 2005 6:27 AM

Did you see your mention at Light Within?

Posted by Shirazi at August 31, 2005 7:46 AM