Good Customer Service or Servitude?
Ever heard the Nordstrom tires story? The "legend" says that one day a customer wandered into a Nordstrom store to return a set of snow tires. Even though Nordstrom does not sell tires, they gladly refunded the money. This story has been repeated ad nauseam in books and presentations as a role model of customer service.
Certainly, Nordstrom is a retailer that has gained a superstar status for putting customers first. But is this a story that can provide a blueprint of good customer service and brand loyalty programs for others to follow? Probably not. Why?
To start, according to debunking site, Snopes.com, this story is an urban legend. Next, while this behavior might (emphasis on "might") "wow" any customer who realizes that the company has gone out of their way, it can easily morph from customer service to servitude. Service is providing what is equitably paid for; servitude is being enslaved by customers and their unrealistic demands.
What are customer service traps to avoid?
Dealing with Customer Return Thieves
The Nordstrom tire story can take on a painful twist for retailers. With no quibble, no time limit return policies, some customers have taken this as an open invitation to steal or "borrow" goods from the store. Example: A customer will purchase a dress or outfit, wear it to a party or event, and then return it for a full refund.
With the potential for this to happen, why would any business offer overly generous return policies? Because they understand human nature. People who make a purchase, and know it has a long or unlimited return possibility, will think that they will return it at some point in the future. Then they go on with their overwhelmed and distracted lives, forget about it and may never return it. That's good news for retailers.
There's no doubt that customer-friendly return policies can help build customer satisfaction and confidence. But these cautions need to be kept in mind:
- Watch Return Rates. If return rates become excessive and erode profit margins significantly, changes in policies should be considered.
- Ask for Return Feedback. Actually, returns can be a huge source of market research for a business. Even if a no-hassle return policy is in place, asking customers for feedback on the reason for return can provide valuable insight for changing products and services offered. A lot of "changed my mind" or "no reason" responses could indicate a higher incidence of unscrupulous returns.
Service is providing what is equitably paid for; servitude is being enslaved by customers and their unrealistic demands.— Heidi Thorne
Dealing with Consulting Freebies and Scope Creep
Returning a product is relatively easy. Returning a service? Not so much. While many companies have customer satisfaction guarantees, for services, it needs to be clearly defined what is refundable and what is not.
Nowhere is this more difficult than in the area of consulting. A consultant can provide services and clients can say that they didn't like what was done, refusing to pay. Like the party dress example discussed earlier, these clients are "trying on" a consultant. Because services can't be resold like returned products might be, "returns" on consulting can quickly put a consultant out of business.
Consultants can easily slip into servitude mode as a reflex action when a customer expresses displeasure with this or that aspect of the consulting experience. Fearing that they will lose either the sale or the customer, they flip into "whatever it takes" mode to keep the business, eroding any profit margin to be earned. This also can detract attention from any other business on the agenda, increasing the potential for those engagements to go wrong, too.
What's a consultant to do?
- Get Everything Upfront. There are three things that a consultant needs upfront before engaging any customer: 1) Non-refundable deposit; 2) Contract or quote clearly defining responsibilities of both parties and work to be done; and, 3) Liquidated damages clause which defines how much is owed by a customer if a contract is cancelled by either party.
- Go Into "Do Not Disturb" Mode. Until a project is officially contracted, consultants should adopt a "no phone calls/email/meetings" policy with customers. These communications can quickly and easily end up being consulting freebies, sometimes even being just enough advice for the client to swipe the information and do it on their own (or with a cheaper, competing consultant). Result? The consultant never gets hired or paid.
- Remember Analysis is Consulting. One of the difficult things that consultants run into when creating proposals is the analysis question: How much analysis of the customer problem should be included in the proposal? Answer: Not much. Define the issue to be solved, but don't analyze it. Analysis is a highly valued skill at the core of the consulting process. Build the analysis time and the talent into the proposal!
- Watch for Scope Creep. In the contract, parameters for phone consultations and other communications during the project should be defined so that the possibility of scope creep (Wikipedia) is reduced or eliminated. Scope creep occurs when massive changes or additional services are requested and expected by a customer without accompanying changes and additions to the contract. Again, adopting a "Do Not Disturb" policy, except for as outlined in the contract, can help keep this in check.
Have you ever been a victim of scope creep?
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
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© 2013 Heidi Thorne