Chapter 14
CUSTOMER MANAGEMENT

IN This Chapter
Customer loyalty and profits
Understanding your customers
Managing and using customer data
Resolving customer complaints

Introduction
Businesses can’t thrive without loyal customers, and they can’t grow without attracting new customers. That’s why it’s so important to deliver great customer service.
For big corporations, this often entails trying to simulate the close relationship that a small business has with its customers. Expensive software applications, cutting-edge automated processes, highly technical theories, and an entire consulting industry have been deployed in hopes of replicating the emotional connection that small businesses forge naturally with their customers.
Companies that manage to create this illusion are often very successful. But as a small-business owner, you have an easier path. You have an innate ability to adapt to customer needs more quickly, creatively and personally than your larger competitors.
Personal, responsive, friendly and flexible customer service is a small business’s greatest advantage. Entrepreneurs who don’t take advantage of it are throwing away a vital competitive tool.
Customer Loyalty AND PROFITS
All across America, small businesses have challenged conventional wisdom by weathering competition from “big box” stores like Walmart and online goliaths like Amazon. This is primarily because small businesses can get to know their customers as individuals and learn to value them as something more than consumers. This builds trust, and trust builds loyalty that can withstand a huge amount of competitive pressure.
In fact, studies show that personalized and accountable customer service is one of the top reasons that consumers prefer smaller companies to larger ones. This preference is strong enough that it frequently trumps price; many consumers will spend more to be treated better.
It’s a basic fact of business that loyal customers are more profitable than new ones. This is known as the 80/20 Rule: 80 percent of your sales come from 20 percent of your customers.
Suppose a customer goes to a deli and pays $2 for a bagel. If she doesn’t return, her business is worth exactly $2 to the deli. But if she returns three times a week for a year, her business is worth $312.
Also, studies show that loyal customers:
Show less sensitivity to price changes
Generate referrals and word of mouth
Buy add-ons more often
Make it harder for competitors to enter your market
Need less handling, education and selling time
Earning customer loyalty requires being loyal to customers, and that means listening to what they want. Customer needs evolve constantly, so you need to keep the lines of communication open. That includes formal research methods such as surveys and focus groups, as well as informal chats at the cash register or taking a client out to lunch. Some businesses even involve customers in product design and marketing decisions, as we’ll see shortly.
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When I started out, I had what may well have been the world’s lamest website. It was seriously ugly, with red text on a gray background and a few blurry pictures I took with my phone. It had zero functionality beyond a checklist order form. We offered maybe 20 fruits and vegetables in any given season, and you could go down the list and check off the stuff you wanted.
In 1992, the interface would’ve been a little on the clunky side. But in 21st-century Portland, it was a total embarrassment. I actually won a “Worst New Site” award from one of the weekly papers.
When I think back on that site, I have no idea what made people decide to use it.
But I do know why they kept coming back. It was all about the service.
Patrick Lee runs Bee’s Knees, an online grocery based in Portland, Oregon. Bee’s Knees specializes in home delivery of locally grown organic produce and environmentally responsible household goods from around the world.
Today, they offer more than 2,000 items, ranging from frozen juices to lead-free ceramic cookware to LED lightbulbs. Bee’s Knees has bought out or merged with all four of its original competitors, and it has more than 60,000 very loyal customers in the Portland area, each of whom spends an average of $84 per week.
Part of Patrick’s success comes down to good timing. He got into business just as organic products were going from a small but profitable niche to a mainstream interest. He also catered to two important growth markets: people who were under serious time pressures, and people who wanted to eat healthier food.
Strangely enough, he also benefited from having his website mocked by a high-circulation paper. A lot of people went to look at the site out of curiosity, ordered out of curiosity, and were won over by his high-quality produce and friendly service.
But ultimately, Patrick’s success was due mainly to his business model, which combined the low overhead of an online business with an absolute focus on cultivating face-to-face customer relationships. That’s the aspect of his business that competitors have so far been unable to match.
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Understanding YOUR Customers
Understanding your customers means knowing how they use your product and why they chose you over your competitors. It means knowing about your customer’s life at work, at home and in between.
Successful businesspeople have a very accurate profile of their customers, and they make it their business to know when that profile changes. This knowledge is reflected in the business plan, and in the firm’s marketing and operating plans. Once you understand what the customer needs, you can put processes in place to deliver it. That’s the essence of a customer orientation.
Creating a Value Profile
What do your customers value most? Are they looking for the best price, or the best quality? Do they see you as a friendly local alternative to a larger, more impersonal firm, or did they choose you simply because you were there?
Once you find the answers to these questions, you must use them to deliver better customer service than any of your competitors. It takes more than simply meeting expectations to build customer loyalty. The customer must consistently receive service above and beyond her expectations, resulting in a cycle of ever-increased and ever-exceeded expectations.
Six basic questions can identify your customers’ idea of value:
What do my customers want?
How does my product meet my customers’ needs?
What aspects of my customers’ dealings with me are most important to them?
How do my customers feel about my competitors?
What can I do to distinguish myself from my competitors?
How are my customers’ needs likely to change, and how will I prepare for these changes?
Researchers have studied how customers react to good and bad service. Someone who had a good shoe-repair experience probably won’t mention it unless he runs into someone else who needs to get a shoe repaired. Otherwise, the subject’s not likely to come up.
But someone who had a bad experience will talk about it to blow off steam or earn sympathy: “You’ll never believe what happened to me!”
Some people will even make the experience sound worse than it was. It’s not fair, but it’s human nature. As negative stories travel, they often get worse.
When this happens, it can be very hard for a business to clear its name. It’s much easier to avoid the problem altogether by being friendly, fair and organized. Always deliver the things your customers expect, and always try to exceed their expectations.
Creating a Customer-Centered Business
Your first task in creating value for your customers is to be sure your business has the tools it needs to deliver consistently excellent service.
Your Customer Service Plan
Every business should have a customer service plan within its marketing plan. This should include:
Customer service goals
Customer service benchmarks (how you’ll measure success or failure)
How you will gather, store, protect and use customer data
After-sales service practices
Return, exchange and complaint resolution policies
Special order or custom service policies
How different areas of your business will work together to deliver good service
Information on your “customer expert,” who will deal with customer needs and compile customer service reports. Remember that in a truly customer-centered business, almost every business function has a customer service component, so the person in charge of this effort must have a broad understanding of all business areas.
A formal system by which customers can report their feedback (e.g., questionnaires, report cards, suggestion box, online surveys)
Customer Service Basics
The specific form that great service takes can vary considerably from business to business and customer to customer, but the following approaches will be central to virtually any serious customer service plan.
Take the Lead
As the owner of your business, you are its public face. Even if you have employees, you should make yourself easily accessible to your customers so they can ask questions, make comments, express concerns and—most important—get to know you. Your ongoing involvement is central to building a strong personal relationship with your customers, and it will also model appropriate customer interactions for your employees.
Good approaches include greeting regular customers by name; remembering their preferences; adding them to a mailing list (with their permission, of course); learning their birthdays and sending them a card or discount coupon; and chatting casually to learn more about them. As we discussed earlier, learning about your customers, and writing down what you learned, is an important part of prospecting and selling.
Be Friendly and Helpful
Always project confidence, enthusiasm and friendliness when dealing with the public. Give out positive feelings and you’re likely to get them in return. Naturally, that’s also true of negative feelings. If you treat customers as opponents or burdens, they’ll live up to that role. In other words, good customer service can make your job—and your life—a lot easier.
The very first thing your business should offer is a pleasant experience. Even people who don’t buy from you will take away a positive or negative impression of your business, just like paying customers do. This impression affects your reputation in your market. Whether they’re browsing, buying or simply asking for directions, people want to feel comfortable, welcome and respected when they visit your business.
It’s especially important to be cheerful and friendly when customers arrive and leave. Greetings and goodbyes tend to make the strongest impression on customers.
This isn’t always easy for an overworked entrepreneur, so be especially careful about maintaining good customer service when you’re feeling stressed.
Engage Your Employees
Your staff is the first line of direct contact your business has with its customers, so every employee should embody your customer service policy. You must let them know what you expect of them, but you should also give them the freedom to invent new ways to deliver customer service. Wherever possible, let them contribute to and improve your customer service plan.
Remember: The way a business treats its employees mirrors the way it treats its customers. Whether you have three employees or 300, your business must be a place where quality people are eager to provide quality service. This requires openness, trust and participation at all levels. To achieve this, you should:
Hire inspired, friendly, curious and committed people, and pay them fairly. Larger businesses often prioritize cost over quality when it comes to employees. As a result, their staff tends to have a high turnover rate, as well as a low level of interest in and engagement with customers. Employees who are glad to be working for you will deliver better customer service.
Train all employees in customer service. Even workers who have no contact with customers should understand how they add value to the business, and how their work enables frontline personnel to deliver service. Some businesses specify that all staff, from management to marketing, must routinely handle customer service to stay engaged and avoid tunnel vision.
Empower your employees by giving them the freedom and tools to add value to each transaction. Help them gain product expertise, and encourage them to share it with customers.
Make it clear that customer service is a priority. Post your customer service goals prominently in your office.
Express your gratitude. Let your employees know that you value their efforts to serve customers. Thank them often and publicly for good service.
Reward and reinforce good behavior. Create a system of measurement, recognition and rewards for excellent service. Tie rewards to things like devising new customer service ideas, or minimizing customer complaints, returns and wait times.
Maintain strong customer service standards as you grow. Replacing your receptionist with an automated voicemail system might save money, but it can also lower service quality, which may harm your profits in the long run. Like any other business function, your customer service should scale up as you grow, so that your customers can rely on receiving the same great service that got them hooked on your business in the first place.
…
A lot of retailers see the Internet as a way to reach the widest possible geographic area—the whole world, in many cases. But I was doing the opposite: I was just targeting one fairly small area of Northeast Portland. I wanted to find a way to marry online convenience to the friendly feeling you get from a nice neighborhood grocery store where the people know your name.
That’s the kind of business I personally prefer, but I also felt like it was necessary. It’s not such a big deal now, but buying food online wasn’t all that common back then. I wanted the business to have a human, trustworthy face.
Bee’s Knees had several competitors when it started, but these firms were very different. There were organic vegetable firms that would deliver a box of vegetables every week to subscribers, and there were larger chain stores that made deliveries of general grocery products. But no one was doing exactly what Patrick wanted to do.
Patrick also had another shrewd tactic. Where many firms would try to drive the competition out of the marketplace, his business plan called for win-win expansion through buying competitors out or merging with them. That way, he’d get assets, relationships, customer lists and professional expertise.
Within two years, Bee’s Knees had bought out one of its main competitors, and had also merged with Harvest Moon, a firm that delivered household goods, cleaning products, and bed and bath supplies.
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Help Customers Help Themselves
Good customer service doesn’t necessarily mean serving a customer directly. In some cases, it means stepping out of the way and letting customers meet their own needs. This is especially true for online businesses, whose purpose is increasingly to provide tools that allow customers to answer their own questions, meet their own needs and design their own solutions. Consumers still want to be able to reach real live human beings when they need to. But when they don’t, the human touch can be an irritation.
Know Your Product
To meet your customers’ needs, you need to know all about the products you offer. This means knowing their limitations and weaknesses as well as their features and benefits. An important part of knowing your product is knowing what it can’t do.
Be honest about your inability to meet your customers’ needs. If you tell a customer that your product isn’t what she needs, you’ll lose a sale, but you’ll earn respect. And that customer may later come back for some other product, or recommend your business to someone who does need what you sell. Look at every interaction with the public as a promotional opportunity. Even a person who doesn’t want or need your product can send valuable business your way.
Reward Loyalty
It used to be that a business earned a certain amount of regular business by being the only game in town. Now that customers can buy online from all over the world, customer loyalty is more meaningful than ever. Show your best customers you appreciate them with frequent buyer cards, discount coupons, special deals and a willingness to bend the rules to keep them happy.
Also, don’t overlook the impact of simply saying “thank you for your business.” Customers hear this phrase often. But if you’re as grateful for good customers as you should be, they’ll know you mean it.
Smile—You’re on Camera!
It used to be that an unhappy customer might tell a few friends to avoid your business. Now, that customer can go online and complain to the whole world. Also, most people have phones that shoot video, which means that filmed arguments and business disputes can easily wind up online.
Return Policies
Creating and posting a clear, fair return policy is an important step in building trust. You don’t have to accept returns on every product, but you do need to make your policies clear and consistent. If you need to charge a restocking fee, the amount should be stated clearly. If the customer pays return shipping charges, make that clear too. Bear in mind that if you allow customers to choose and pay for the shipping method, they may skimp on packaging and insurance.
You also need to tell them how many days they have to change their mind, and when that period begins and ends. Does it start when the buyer places the order, or when he receives the goods? Do the goods need to be returned by the end of the period, or does the buyer simply need to express an intent to return them within that period?. (Note that you may need to take the policies of your payment gateway or credit card firm into account.)
If an item can only be returned for store credit, those terms must be clear as well. As a general rule, you need to balance the need to protect yourself against your need to encourage shoppers to buy. A policy that’s too strict may scare buyers away, while a policy that’s too lenient can cost you money. You probably have retailers you deal with who make you feel secure and whose policies seem fair; that’s a good place to start when devising your own policies.
Managing Communications
When it comes to communicating with a business, the main thing today’s customers want is options. Most of them have multiple ways to reach you from almost anywhere they happen to be, and they expect you to respond quickly to any method they choose.
That might mean a phone call on one day, an email on another, and a tweet on a third. Now that many of us effectively carry our offices in our pockets, customers expect businesses to merge seamlessly with the convenience of modern communications.
This omnichannel approach to buying means you must have all channels open and available, and it also means you need to be able to integrate data from all these channels so that accounts are updated properly and information is shared—but not duplicated or garbled—between your various departments.
The requires managing communications standards across a dizzying array of platforms and media. It’s no longer about writing an appropriate letter or answering the phone professionally. Today’s entrepreneur needs to master Twitter, instant messaging, Facebook, Skype and countless other technologies. Each of these communication channels has its own etiquette, its own best practices and its own limitations—and all of them are constantly evolving. Businesses that don’t train their teams to meet these standards and to evolve with them will be increasingly isolated in years to come.
Here are some tips for keeping business communications effective and prompt.
Train every member of your team who interacts with customers to communicate across every channel. Start with overarching goals—like being polite, or responding to all communications within a certain time—and then drill down to the use of phones, email, social media and so forth. Good top-level guidance will help them to make the right choice on smaller issues.
Record and follow up on all customer contacts. Always take down the customer’s name, phone number and other information. If customers place an order or receive assistance, follow up within two days to check on satisfaction.
Explain how to track and report each form of customer contact. Each employee must know what information to collect, and where and how to store it.
Aim for consistency. The tone, functionality and quality of your communications should be consistent and professional across all channels.
Set standard response times and stick to them. During business hours, phone calls and text messages should be answered immediately. Tweets and most other social media communications should be answered within an hour, if at all possible. You will also need to come up with a policy for handling social media inquiries outside business hours; studies show that most consumers expect a fast reply even at night or on weekends. Letters should be answered within 24 hours, even if it’s just to explain why a full response will take longer.
Make it very easy to leave comments or ask questions by whatever method the customer prefers. Answer immediately with a thank you, provide whatever information or followup is necessary, and encourage the customer to stay in touch. Share comments with appropriate team members and put them in charge of responding to or acting on the information.
Perform regular customer service checks. Have someone call your business and pretend to be a customer in order to gauge service quality.
Managing Customer Experience
Customer experience management (CEM) entails anticipating, tracking and optimizing every customer’s interaction with your business, whether online, on the phone or in person.
CEM aims to maximize customer satisfaction, minimize complaints, and turn customers into loyal brand ambassadors. Although CEM software is widely available, old-school methods of monitoring, measuring and reinforcing customer satisfaction are still viable. The important thing is to make the determination to gather data and use it to improve the customer’s experience.
A simple, familiar CEM method would be conducting surveys. You can do this online through services like SurveyMonkey, or you can hand out questionnaires. How you collect it matters less than whether you have a system in place for tracking, acting on and learning from it.
Sophisticated CEM systems track customers at every point of contact with your business, from in-person buying, to browsing your website, to commenting about you on social media.
This requires a holistic approach to customer service that optimizes every interaction with the customer. It creates emotionally invested customers who are not just loyal, but serve as advocates for your brand, often by means of social networking tools that the business itself provides (e.g., a Facebook page). In some cases, managing customer experience can involve having customers assist in product development and delivery.
On the other hand, managing experience during a growth phase requires integration between all business functions, all employees, and all forms of communication from phone to email to your company blog. This is likely to require an investment in technology and training that may be too ambitious for most small businesses.
Even if you can’t manage cutting-edge experience management at this stage, it provides a good framework for action and a good ideal to embrace. Here are some of the qualities that experience-oriented companies share:
They collect input from everyone in the customer service chain. Different people will have different experiences of your customers. Your goal is to get the fullest possible picture of your customers, so you should take everyone’s experiences and insights into account.
They learn everything they can about their customers. They understand who they are, where they live, how they spend, what they believe, what they expect, and what annoys them. They build every aspect of their business around this knowledge, and make adaptations as necessary, both to adjust to changing demands and to exceed customer expectations.
They understand the larger business network into which their business fits. All their employees, suppliers and partners have an impact on customer satisfaction, so all of them have to be integrated as much as possible in order to deliver the best results.
They go above and beyond what’s expected. Where another company might cut corners, they believe that spending a little extra to earn a loyal client is a good tradeoff.
They’re reliable. No matter who you deal with, or when you deal with them, the company’s values, competence and service standards are apparent.
They give customers a chance to design their own experience. Some companies ask customers to create ad campaigns, contribute content to a website or vote on product features. In all cases, the goal is to give users more direct control over products and services.
All the parts of the business communicate with each other. As we noted above, managing experience requires integrating marketing, sales, customer service and all other departments. Not only must this integration take place across business functions, but also across communication channels. In other words, whether a customer communicates with the business by phone, fax, email, mail, text or Twitter, that communication is integrated with, and understood in terms of, all previous communications. To put it more simply, if you call the sales department today, email the technical department tomorrow, and text the shipping department three days later, everyone involved knows what you’re talking about, and can answer any questions you might have. You’ve undoubtedly spoken to companies where you had to explain your situation to three or four people in a row. Avoiding that sort of frustration and wasted effort—on both sides—is one of the main goals of customer experience management.
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Once Bee’s Knees caught on, we hired a lot of people and went through a lot of changes in a very short time. All of a sudden, I had departments. And it seemed like the IT people were overhauling the site every other week.
That was a little scary, because at any stage of this process we easily could’ve lost the connection with our customers that made the whole business work. It’s not easy to have constant change without chasing away customers, but we knew that’s what we had to do.
At first, we just tried to think about everything from the customer’s point of view. After struggling with that perspective for a while, we thought, “Instead of pretending we’re our customers, why don’t we just bring our actual customers in to help us?”
Bee’s Knees had no trouble getting customers to volunteer to test proposed site changes. Volunteers were timed as they navigated the test site; if they couldn’t get where they wanted to go faster than they did on the old site, Patrick knew it needed more work.
This approach took more work and cost more money, and the IT team wasn’t always happy about it.
But Patrick’s philosophy was that if a change required a customer to learn something new or take extra steps, it was too complicated. The only allowable changes were ones that didn’t require customer readjustment.
If I ran a brick-and-mortar store, I wouldn’t always be moving doors and windows around, or moving checkout from one end of the store to another. I like exciting change, the kind that draws people in to explore on their own terms. I don’t like change that feels like a shell game, where you don’t get what you want unless you can guess where it is!
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MANAGING AND USING Customer Data
To consistently deliver great service—even as you grow—it helps to plot out every point at which customers interact with your company, from calling your receptionist, to viewing your advertisements, to accepting deliveries from your drivers. This will help you to find points that need more attention, and to eliminate redundant or unnecessary points. Mapping also helps employees to understand how their customer service roles interlock.
Many businesses suffer because different types of customer data are on different people’s desks in different formats. The result is that customer information isn’t always available when you need it.
Therefore, after you’ve mapped points of contact with your customers, you should map the different paths by which customer information comes into your business, and what happens to it after that.
For example, some of your customers will contact you by email, some will browse your site, some will call, and some will post comments on Facebook. If you have different employees monitoring these communications, and they don’t integrate their knowledge, it limits your company’s ability to serve the customer. A good system will centralize and link all these forms of communication, so you can cross-reference and analyze them. The logical solution is a central database that allows you to track:
Responses to promotional campaigns
Questions and suggestions
Requests for promotional packets, newsletters and catalogs
Order placement and fulfillment data
Demographics and psychographics
Account information
Website browsing data and analytics
After-sale praise and complaints
Even mistakes can be informative. If people keep calling to ask whether you offer a particular service, perhaps your website or ads aren’t clear enough about what your business does. Or perhaps you should consider offering the service people are requesting! Customer inquiries can be a good source of ideas, so you might want to have a call log that very briefly describes each call that comes in.
Suppose you run a graphic design firm called Lightbox, and people keep calling to ask if you sell LED lighting systems; you could then take steps to adjust your advertisements and listings to make it more clear what your business does.
On the other hand, if you sell lighting fixtures, you might consider whether adding this new product could be profitable. But either way, if your receptionist simply says “No, sorry,” and forgets all about the call, you get no information.
Monitoring Satisfaction
Because your employees deal with customers every day, they’re your best resource for information-gathering. Encourage them to report on customer attitudes, positive and negative. If possible, have them fill out a brief report after customer interactions, or enter data into the “comments” field of your customer database.
One solution might be to have employees who deal with phone-in customers ask every fifth caller a couple of simple, conversational questions like “How long were you on hold? Did you find that wait unreasonably long?” Have them ask questions like these once a week or once a month and mark the results on a tally sheet. You could also call customers who recently received goods and ask whether the packaging and shipping speed were acceptable.
One benefit of doing this—in addition to the informational benefit—is that it discourages tunnel vision among your employees. Workers have a tendency to go on automatic pilot and do familiar jobs without thinking. But when asked to write a brief summary of customer interactions, they may start noticing small but important details they’d overlooked in the past.
Many businesses ask customers to fill out survey cards or questionnaires, or to participate in online surveys. These are good ideas, but it’s even more important to train your employees to gather data on a daily basis, and devise a reliable way of storing and sharing it.
Online Business Reviews
Online reviews provide a way to monitor customer satisfaction, and they can also amplify good word of mouth and bring you a steady stream of new customers. In some cases, good reviews may even help to justify premium pricing. Studies show that consumers are far more likely to trust customer reviews than traditional ads.
More generally, online reviews foster transparency and accountability, which are things customers consistently say they want from businesses.
Although business owners often complain about online reviews, it’s important to remember that consumers were criticizing businesses long before online reviews existed. The main difference today is the visibility of these complaints in a networked world: “Out of sight, out of mind” is no longer an option for most business owners. For entrepreneurs who are committed to delivering the best service possible, this is actually a much better state of affairs, because it takes a lot of the guesswork out of designing customer service strategies. When you think about it, it’s a little strange that so many business owners will go to huge lengths to collect customer surveys and questionnaires, while resenting or ignoring online reviews.
Looking at reviews of your business will give you crucial insights into what customers want. Most likely, you’ll find that people are fair; they don’t expect perfection, but they do expect problems to be acknowledged and fixed.
That said, some sites allow users to be anonymous, which means that you never know who is rating your business. It could be a bored teenager, a disgruntled employee or even a competitor. In many cases, you’ll have no recourse; the best policy is to try to benefit from any constructive criticism you hear, and ignore the rest of it.
Above all, try to keep a sense of perspective. If you’ve made a serious commitment to quality and service, it’s very likely that positive comments will balance or even directly contradict the negative ones. Furthermore, studies suggest that people have more trust for businesses that have bad reviews; a lack of negative feedback may make your business seem too good to be true; readers may think that the reviews are phony or have been censored. The occasional bad review demonstrates your transparency and accountability, while also showing that unhappy customers are few and far between. It also gives you a chance to respond effectively to complaints, as we’ll explain later in this chapter.
In the previous chapter, we emphasized the importance of integrating marketing, sales and customer service channels so that each team works together to identify, target, serve and track customers. This is not just good for customers; it’s good for your staff, too. Better organization means less stress and more focus, as well as a shorter learning curve for new or temporary employees.
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One of Patrick’s best ideas was to hold frequent focus groups that offered customers gift certificates in return for advice. These focus groups gradually evolved into a “Board of Customers”; this was a rotating group of customers who helped with company brainstorming sessions in return for a months’ worth of discounts at 10 percent below the list price.
In addition to providing the firm with many great ideas—and steering them away from some bad ones—these customers became Bee’s Knees’ ambassadors to the community. They had a strong sense of emotional involvement in the business and wanted to tell other people about it. Patrick was getting the best kind of publicity a business can have, and it was costing him next to nothing!
After a while, the day came where we couldn’t just keep tinkering with the site. We needed to start from scratch to take advantage of new social features and customer management options. We’d reached the point where the site was holding us and our customers back. The new site would have to tempt people to browse, and it also needed to let them interact with each other more.
The way I described it was, “Up to now, everyone’s been sitting at home alone. Now, we need to throw them a party and let them mingle.”
Once again, Bee’s Knees ignored the conventional wisdom. Rather than hire outside IT contractors with expertise in these new technologies, Patrick decided that his IT staff would learn how to do everything themselves. That way, they’d have a new skill that would serve the company well as it continued to grow. Better yet, Bee’s Knees wouldn’t be tied down to another business’s processes, schedule or culture.
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Resolving Customer Complaints
At some point, you’ll face a customer who has a problem with you or your product. Whether this ends in a good or bad outcome is usually up to you.
Look at it this way: Customers who take the time to complain aren’t attacking or insulting you; they’re giving you a second chance to get it right. People express things in different ways, and some customers may be pretty nasty. But don’t take it personally; no matter how angry the customer sounds, all he’s really saying is, “This is wrong. What are you going to do to make it right?”
Once you’ve come up with a complaint resolution policy, train your employees carefully. Never assume that because an employee is very nice or patient, she won’t need guidance. It’s good for complaint resolution to be flexible, so that employees have the authority to solve problems on the spot in creative ways. But this casual approach is almost always the result of careful drilling on what policies are and aren’t acceptable.
With that in mind, here are five steps you can take to resolve complaints.
Step 1: Listen
The first step in handling a complaint is to listen. When we say “listen,” we don’t mean listen to the customer’s angry tone or bad language. Try to get past all that and listen to why the customer is unhappy. Consider how the problem has made the customer feel, and try to figure out what need your business failed to meet:
The need for value or quality?
The need to be respected?
The need to save time or meet a deadline?
The need to be understood?
Contrary to the old saying, the customer is not always right. But if a customer doesn’t understand one of your policies, it’s your job to explain it clearly and respectfully.
When someone is very upset and you’re having trouble staying calm, try to mentally separate the way the person is acting from who that person really is. We all have bad days from time to time; any number of things could be contributing to a customer’s mood, from a hard day at work to problems at home. Try not to take anger personally. It may have very little to do with you.
Focus on the problem, not the personality. Learn to recognize what’s in your control (your reactions and decisions) and what’s not (the way your customer chooses to act).
If a customer is really being unreasonable, it’s natural to feel angry. Still, it’s best not to show it. Often, people who are being unreasonable want you to get upset, because they came in looking for a conflict.
Whether a customer is right or wrong, always keep your cool. Remember: No one ever wins an argument with a customer. When you refuse to get sucked into a fight, you show strength and character. Even if you decide you’re better off losing a difficult customer, it’s best if you reach that decision without visibly losing your temper.
That said, part of the art of good service is knowing when to be flexible. You don’t want customers to feel like you’re insisting on a rule that doesn’t make sense. This is especially true for long-time customers, who tend to expect special treatment.
Step 2: Recognize the Customer’s Feelings
It’s not enough just to listen. You must also acknowledge the customer’s feelings. This doesn’t always mean you should rush to apologize, or even to agree. However, remarks like “I can see why that upset you” or “I’d be unhappy too if I were in your shoes” will help the customer understand that you’re listening and you care.
Such remarks are especially helpful when you’re dealing with an angry or irrational customer. The ability to put yourself in your customers’ shoes is very useful when you need to defuse a tense situation. Even if it doesn’t calm the customer down right away, it will usually keep things from getting worse.
Step 3: Apologize
As the owner of your business, you must take personal responsibility for problems and apologize for them. Solving these problems may also demand further action from you, like issuing a refund or offering a 20-percent discount on the next purchase. But that’s no substitute for a heartfelt apology. Always apologize first, and then offer a discount or refund.
Step 4: Thank the Customer
A customer who complains is giving you an opportunity to improve, which means he’s actually doing you a favor. Studies show that customers who complain usually represent only 4 percent of the unhappy customers you have. The others walked away silently and vowed never to return.
It might not be pleasant to hear bad news, but in some cases, it can save your business from heading over a cliff. You don’t have to enjoy hearing complaints, but you should definitely appreciate them and thank the customer for giving you the chance to make things right.
Step 5: Explain Your Solution
Some people will be satisfied with nothing more than an apology. In other cases, you must find a solution you can both live with. For example, if you give the customer a full refund, you’ll lose some money (and maybe a little bit of pride). But on the plus side, you may earn the customer’s loyalty because you stand behind your products. In the long run, that may bring in more money than you lost through the refund. Don’t fall into the trap of seeing your customers as opponents. The future of your business depends on keeping them happy.
Resolving Online Complaints
In a perfect world, no one would complain about your business without giving you a chance to make things right. In the highly imperfect online world, unhappy customers often don’t bother trying to work things out. Instead, they instantly go on the attack.
Some business owners prefer to ignore negative online reviews. Although this is understandable, it’s not much different from ignoring a complaining customer in your store. The main difference is that at your business, only a few customers may be watching. Online, you may have hundreds or thousands of spectators.
Consumer review sites like Yelp allow you to email reviewers directly to ask for more details and to offer to make amends. Handled carefully, this can turn skeptical customers into true believers.
If you decide to go this route, your response should address the reviewer’s experience clearly and directly. Introduce yourself, thank the reviewer for taking the time to comment, and ask what you can do to resolve the problem. As the conversation progresses, remain calm and respectful, and try to learn how to prevent the problem from happening again.
Unless the reviewer is extremely rude, you should always offer some sort of reward for taking the time to answer your questions. Any compensation should be offered privately to prevent readers from making false complaints in order to get discounts or other rewards.
One thing you should definitely not do is write positive or defensive reviews under a false identity. Even if your true identity doesn’t come out—and the odds are pretty good that it will—savvy users have a way of recognizing this behavior.
In cases of serious misrepresentation—such as an untrue and clearly malicious claim—you may feel a need to respond publicly. If so, wait until you’re no longer feeling angry, and then answer the criticism calmly, factually and honestly. Threats, insults or any sort of drama are likely to make the situation worse.
Depending on the host site’s policies, the nature of the comment, and the amount of evidence you have that the comment is false, you may be able to get the comment taken down. This should be a last resort, as the process tends to be time consuming and doesn’t always work. Also, it can end up bringing you more negative attention.
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Bee’s Knees’ new site is a big hit with users. Its system of “virtual aisles” allows them to stroll through the store the way a traditional shopper might, while its improved customization functions allow shoppers to set up their own mini-stores, create product reviews, join forums and make recommendations.
You can have the site display only ingredients used in a certain type of cuisine (e.g., Thai or Mexican), and you can also enter dietary restrictions that will limit what your store displays. If you’re allergic to peanuts, your store will exclude any product that has even trace amounts of peanuts in its ingredient list. Don’t want dairy? Nothing containing milk or butter will appear in your store.
A new focus on the stories behind products keeps users browsing even when they’re not in the mood to shop. Want more information on the farm that grows Bee’s Knees’ radishes? Click on their link and take a virtual tour!
Anyone who saw my old site knows we’ve come a long, long way. It’s a little like going from horseback to space travel in just a few years.
A lot of what we’ve accomplished is due to advancing technology. I can’t take credit for that. In fact, I don’t even understand it all that well, as my IT crew will be more than happy to tell you.
The one thing I will take credit for is that through all these changes, we’ve never once lost our focus on our customers. We started out as a neighborhood business, and we’re still a neighborhood business. We just have a lot more neighbors than we used to.
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Conclusion
Your customers are a valuable source of information for your business. If you listen, they will tell you what they want. If you plan your strategy carefully, you can deliver what your customers want faster and better than any of your competitors.
This will enable you to create lasting business relationships, generate enthusiastic referrals, and create new product and service opportunities. Finding new ways of looking at your customers will keep you focused, engaged and competitive.

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What Customers Want Access. Customers expect to be able to reach you through whatever communication channel is most convenient for them. And they expect a fast response. Consistency. Customers want the same level of service every time they deal with you. If they recommend your business to a friend, they expect that person to get equally good service. Confidence. Customers want to feel they can trust you to keep your promises. They don’t expect perfection, but they do expect you to make things right when they go wrong. Personal attention. Customers want to feel that you’re alert, interested and ready to help. If they have a complaint, they don’t want to hear vague boilerplate about your mission or your vision; they want a fast, direct response that recognizes and resolves their issue. Security. Customers want to feel that their personal information is secure and that it won’t be used inappropriately or unethically. Comfort. Customers want to feel comfortable, welcome and relaxed. They don’t want to feel rushed or pressured. And they generally prefer businesses to be clean, attractive and well organized, whether they’re online or visiting a store.

| NxLeveL® TECH TIP BUSINESS RESOURCES AND THE WEB
Customer Relationship Management (CRM) Inexpensive CRM packages such as Insightly (www.insightly.com) can help your business to manage records, communications and sales for past, current and future customers. Potential benefits include: Business integration. CRM offers an opportunity to integrate accounting, marketing and selling functions online and offline, resulting in better data collection, better sales forecasts and more effective marketing efforts. Sophisticated customer segmenting. CRM systems can sort customers by ZIP code, purchase amount, their field or industry, and their preferred products. This way, you can effortlessly send promotional codes and complementary services to customers with a proven interest in products of that type. You can also run reports to see which segments are delivering the most revenues, and which need to be targeted differently or dropped altogether. CRM systems can track requests for an online brochure, subscriptions to a newsletter, or acceptance of a trial offer. These prospects can be grouped by type and then targeted with a coupon or other promotional message. Such activities can be automatically scheduled, leaving your team free to focus on other activities. Social media integration. A good CRM package will allow you to stay connected with customers across a wide variety of social media