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When The Customer Is Wrong – Should The Business Be Right?

Joseph Michelli, Ph.D. | Mar 7, 2017 276 views 18 Comments

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In 1909 Harry Gordon Selfridge, the founder of Selfridge’s department store, is credited with saying, “The customer is always right”.

Through the years, a number of my colleagues and I have emphasized that the customer is not always right but they are always the customer.

I’ve come to believe that in order to be truly successful deploying a customer-experience strategy, you fundamentally have to believe:

  • In general, customers are honest and fair.
  • Lifetime customer value is more important than any single transaction.
  • Your reputation matters.
  • When people are occasionally dishonest or unfair, they should be managed with more dignity than they deserve.

With all that said, let me offer an example that tests all of these assumptions.

Imagine you are a restaurant owner and you have a customer complain about “hair in their food”. Further, let’s assume that the customer threatens to give you a scathing rating on social media unless you remove the charge for that particular meal. Let’s even assume, that you know that person wanting the free meal pulled hair from their own head and placed it in their meal after they consumed a sizable portion. What would you do?

This appears to have actually happened at a restaurant named Casa Nostra Ristorante. According to restaurant management, this is the review that was posted online:

Photo 1

The review suggests a disgusting dining experience, doesn’t it? Now to the purported video proof of the actual “hair-raising” incident (complete with narration from the restaurant owners) from their Instagram account:

Photo 2

After seeing the video, the online review crumbles and looks like blackmail. Let’s think back to your response when this was posed as a hypothetical. Did you consider posting the closed circuit video on your Instagram account? What did you say you would do when I posed this hypothetically? What do you think about what these restauranteurs actually did?

While this situation will get a lot of media attention and the video will likely be a viral hit, even if I had seen the video of the woman putting hair in her food, I would have refunded the charges for her meal and averted any conflict in the restaurant for patrons who didn’t need to have their meals affected. I likely would have “left bad enough alone”.

These owners stood their ground on food charges and tried to take pre-emptive action against, the threatened “blackmail” review, by contacting travel sites and forwarding the video in hopes that the review would never get posted. Once posted they publicly chose to let their video evidence prove that they, the owners, were right. Ultimately the review was taken down and I applaud them for their efforts in that regard – because reputation matters.

While reasonable people can take very different courses of actions when these “extreme” customer situations occur, I’ll continue to champion the view that:

In general, customers are honest and fair.

Lifetime customer value is more important than any single transaction.

Yes, your reputation matters.

When people are occasionally dishonest or unfair, they should be managed with more dignity than they deserve.

I’d love to hear what you think…

Republished with author's permission from original post.


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18 Responses to When The Customer Is Wrong – Should The Business Be Right?

  1. Andrew Rudin March 8, 2017 at 5:45 pm (139 comments) #

    For me, your list of beliefs are equivalent to assumptions, and I’m with you on #’s 1, 2, and 3. But not on #4. Regardless, even if I held the identical assumptions, I could take actions that were quite different, depending on the situation. For example, if I assume that reputation matters, I might choose to vociferously protect my company by suing anyone who makes a false assertion about my products or services, or who posts an unfounded negative review. Alternatively, in protecting my company’s reputation, I might also choose to publicly placate a negative reviewer even if I didn’t agree with him or her.

    Overall, I can’t prescribe to any person or business which beliefs or assumptions are best or even proper – much depends on one’s background and experiences. For me, the issue boils down to pragmatism. If I don’t assume that my customers are ethical and honest from the get go, then I have to ask them questions about their intent right off the bat. And that’s a poor way to begin any business relationship.

  2. Sampson Lee March 9, 2017 at 4:36 am (15 comments) #

    Good comments, Andrew!

  3. Shaun Belding March 9, 2017 at 5:33 am (47 comments) #

    I love it Joseph – and agree with your four observations/principles.

    Andrew, I think #4 is, generally speaking, sound advice. Assuming a business has created strong customer relationships and already has a reputation for ethical behaviour, these types of situations will be very rare outliers. In those very rare situations, taking the high road, while difficult, almost always creates better optics.

    Having said this, there are always situational exceptions to everything. In the example cited, the best course of action would have been, as Joseph alluded, to apologize profusely and give a refund without hesitation. The incident would have ended there, and life would go on.

    But – if the customer had not used the blackmail tactic and instead simply went straight to Trip Advisor, the dynamics change drastically. We move from managing a single interaction with a customer to managing our reputation. That is when we need to take the strongest stance we can – including video, legal action, etc.

  4. Steve DiGioia March 9, 2017 at 5:47 am (54 comments) #

    Being in the hospitality industry for 20 years, and overall customer service for much more, I have learned that you win some and loose some.

    No customer interaction will be perfect for the business. Customer taste, perception, culture, expectations, etc. all boil down to “their” opinion of your product or service. Regardless of someone intentionally trying to scam the business, you can’t please everyone so we must stop trying.

    Provide the best possible product and service, never shortchange a customer, be honest, friendly and transparent. Good customers will see and understand this. the bad ones…well, you just let them go – even if they are kicking and screaming.

    One last note, get a preponderance of true positive reviews to offset and bury the few bad ones. Yes?

  5. Michael Lowenstein March 9, 2017 at 6:24 am (1199 comments) #

    From my perspective, all your assumptions and approaches – especially #4 – are valid. Human behavior runs from a spectrum of honest to dishonest, reasonable to unreasonable, so the vendor culture must be proactive and flexible enough to accommodate for this. Having personally watched front line staff at companies like Wegmans, Southwest Airlines, Trader Joe’s and Ritz Carlton interact with upset, even nasty, customers who were clearly wrong in their complaints and assertions, I’ve seen firsthand the value of adaptive processes and employee ambassadorship training – commitment to the company, to the product or service value proposition, to the customer, and to fellow employees – to resolve potentially explosive customer situations, neutralize the heated emotions involved, and protect the company image and reputation..

    In his array of experiments, Benjamin Franklin noted how putting oil on top of lake or ocean water had the effect of calming the waves. The same principle applies here.

  6. Shaun Belding March 9, 2017 at 7:32 am (47 comments) #

    There’s a fantastic example in today’s news – showing the result of a retailer missing these principles.

    A man trying to get a refund for a store error ends up getting beaten up by mall security. All could have been avoided with a simple, “Sorry sir, here’s your money.” Here are a couple of links:

    https://www.facebook.com/malinawu?hc_ref=NEWSFEED

    http://globalnews.ca/news/3291735/man-speaks-out-alleging-mistreatment-from-west-edmonton-mall-security

  7. Andrew Rudin March 9, 2017 at 8:06 am (139 comments) #

    Dignity – “the state or quality of being worthy of honor or respect.” There are situations where customers behave so horribly that dignity doesn’t apply. I don’t need to provide examples. We all have our own inventory of memories. Customers who are dishonest and/or patently unfair should be treated with professionalism. But in my view, they have given up their expectation to be treated with dignity.

  8. Joseph Michelli March 9, 2017 at 10:15 am (29 comments) #

    Andrew, thanks for getting this spirited conversation going. I have fired clients privately and have found ways to communicate that our mutual needs would be better served in other arrangements. I think taking online grievances offline and working to rectify unfair statements that affect reputation are all part of business today – so to that degree we are perfectly aligned. I suspect all is well for the restauranteurs in question. As a rule, however, the “road less traveled” – the perpetual customer-centric one – often involves prioritizing “relationships” over “righteousness.” This case is very extreme and was used to provoke discussion about the core tenants to which leaders seek to ascribe.

  9. Joseph Michelli March 9, 2017 at 10:16 am (29 comments) #

    Sampson, thanks for engaging!

  10. Joseph Michelli March 9, 2017 at 10:19 am (29 comments) #

    Shaun, it looks like we share similar perspectives. I agree with the dynamic-changing “blackmail” component. The commentary of the restaurant owners as they opine about the thoughts of the customers in their Instagram post has a quality that goes beyond “setting the record straight.” Thanks for sharing the mall/maul example, I had missed it!

  11. Joseph Michelli March 9, 2017 at 10:20 am (29 comments) #

    Michael, only you would know that Benjamin Franklin quote and conjure it up so aptly. Thanks.

  12. Joseph Michelli March 9, 2017 at 10:21 am (29 comments) #

    Steve, great contribution as it relates to the “preponderance of positive reviews.”

  13. Michael Lowenstein March 9, 2017 at 11:22 am (1199 comments) #

    There’s also a related, but more subtle, issue of whether the customers are, over the long haul, a good or poor ‘fit’ for the organization from the dual standpoints of service requirements and profitability. About ten years ago, Sprint had a lot of notoriety (almost entirely negative) when they ‘fired’ 1,000 unprofitable customers. In a sales-dominated enterprise, this was both a cultural and process issue (http://customerthink.com/sprint_fires_its_unprofitable_customers/) Customers were demanding a level of service inconsistent to their contribution to the business; so, in that sense, they were ‘wrong.’

  14. Jack Springman March 10, 2017 at 5:45 am (1 comment) #

    If I had been sitting at the table next door and seen a customer get away with pulling a fast one and been rewarded as a result, I would be hacked off. If a business tolerates such behaviour, then I know I am likely to be paying in the form of higher prices. That violates my sense of equity and therefore my experience and my likelihood of returning.

    It is not that I disagree with the principles stated, I think they are great. But they are 1-2-1, somehow the more general impact needs to be factored in, especially in a restaurant where problems with one customer affect the others. If you assume integrity, are other customers assuming the same? If they are, apologise. If they are not, stand your ground. Of course that is hard to do. But I believe a fifth belief should be to show consideration for those whose experience is indirectly impacted.

  15. Joseph Michelli March 10, 2017 at 7:00 am (29 comments) #

    Michael, I remember when Sprint took the customer “firing” action. Their was much uproar and bad press. I like the qualification strategy of a Progressive insurance which essentially routes prospects outside their optimal parameters to other providers better suited to their risk. Thanks for always adding value with your comments…

  16. Joseph Michelli March 10, 2017 at 7:29 am (29 comments) #

    Jack, great points all. Every part o this should be as individual and respectful as possible. I would not want to broadcast any solution in a way that negatively impacts other – whether that solution engages an argument or is more in keeping with guest accomodation. I am not sure if someone at another table would know if the restauranteur was even aware of the customer’s actions with regard to the hair placement. Many people would likely be angered by the customer’s behavior and actually sympathize with restaurant manager. I think my reaction when I see an angry customer being handled respectfully by a manager. Thanks for engaging.

  17. Andrew Rudin March 10, 2017 at 7:39 am (139 comments) #

    One point I need to add: where you and I share the first idea that in general, customers are honest and fair, it can be an expensive belief for B2B companies. If a client doing business internationally told me that assumption was embedded as operating policy in their sales and legal organizations, I’d flag it as a bright red risk exposure. In many countries, bribery is commonplace, and transaction details are deliberately made opaque. Some businesses aren’t ‘occasionally’ dishonest – it’s a routine practice. This was a key reason that the Foreign Corrupt Practices Act (FCPA) was enacted in 1977 (see https://www.sec.gov/spotlight/foreign-corrupt-practices-act.shtml).

    In 2016, the FCPA assessed $2.6 billion (with a b!) in fines for violations. The best risk mitigation policy for companies selling into overseas markets is first: drop the ‘honesty’ assumption before drafting contracts and entering into transactions. Second, perform robust ongoing due diligence when working with customers and trading partners, including distributors and brokers. Third, make sure every person in the organization who should be current on FCPA regulations is current. Finally, keep detailed records of your compliance efforts – you never know when you will need to prove your case!

  18. Joseph Michelli March 12, 2017 at 9:27 am (29 comments) #

    AMEN Andrew! In the B2B (and more so in International B2B) due diligence and well-negotiated contracts avert the ambiguity that breeds imbalanced or unethical arrangements! Nice add….

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