If you think bad customer management won't hurt your business too much, better think again. Bank of America and Netflix just learned extremely expensive lessons about the dangers of making their customers hate them. Here are ten things you should never do if you want to keep your customers happy.
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10. Nickel and Dime 'Em to Death
The recent Bank of America debacle is proof positive that we consumers have been "nickel and dimed" to death by usurious fees. Making your customers bear the brunt of every little increase in your cost of doing business, so you can keep your profits at record highs, just won't work. Whether it is a $5 fee for using a debit card or $40 maintenance fee on an IRA, or anything other trifling fee, enough is enough.
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9. Double Prices for the Same Product or Service
If you want to know how well this won't work, take a look at what happened when some marketing genius at Netflix decided that customers really wouldn't mind paying double for the same service they had before. How did that work, Netflix? According to a report by ZD Net, "...Netflix lost 810,000 domestic subscribers in the third quarter."1
We don't feel it necessary to belabor this point; except to say that in today's weak economy and volatile marketplace, it's probably not a good idea to run off almost one million customers.
However, on the other hand, if your goal is to make your customers hate you, but increase your bottom line, this seems like an effective way to do it. This was actually a brilliant move on their part. They potentially almost doubled their margins and only lost approximately 5 percent or less of their customer base.
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8. Bait & Switch
Here's how this one works: You get your sales force to go out and promote a new product. As it turns out, the product is actually really good and your customers love it. You are making a fair profit, so here's the part your customers don't really understand. For no good reason, you drop the product from your product line. Then, you replace it with an inferior product that has a little more profit margin in it.
Here's the fun part: You force your sales force to go out and try to convince your customers that the new product is better than the old one. Uhh...remember how they were just singing the praises of the first product? Insulting the customer's intelligence in this manner is guaranteed to make them hate you.
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7. Cop an Attitude
Customers come in all sizes, shapes, and personalities and so do businesses. We heard of a situation where a grumpy old customer always had some physical complaint that he wanted to share with the folks in a certain customer service department. In addition, he always had some minor complaints about the company's products; some of which were legitimate and some were not.
Consequently, the whole staff developed an attitude and cringed when they saw him coming through the door. They talked about him and made fun of him after he left. There's one thing they failed to understand, however. This grumpy old customer far exceeded their average customer's annual purchases. Even worse, their attitude problem did not go unnoticed by Mr. Grumpy, who took his purchasing power elsewhere.
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6. Play the Bumpety-Bump Game
This is an old one that distributors and other businesses use to increase their profit margins. They quote customers a competitive price and then once these customers start using the product or service, they bump the price up just a little bit. They hope the customers won't notice the increase.
Periodically, they bump it up another small amount. Their hope is that if they do this incrementally, the mind-numbed customers will never notice and they can increase their gross profits with little or no effort. (Mmm...sounds like the government has caught onto this technique as well.)
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5. Condemn Them to Holding Hell
"Do you mind if I put you on hold?"
"Yes! Wait, I..." Too late. You've just been condemned to holding hell. If you are lucky, you've only been sentenced to the first level, which means that a human being really will get back on the line with you (after making you wait an interminable length of time). This person may or may not try to help you with your question or problem, depending on the level of the company's commitment to customer service.
However, if you are unlucky, you'll be transferred to lower and lower levels until you reach the bottom of the holding hell pit. This has happened to my husband so often that he is developing a mobile app to connect all those poor lost souls in Holding Hell. The app would give them the opportunity to share their horror stories in real-time. The conversations would go something like this:
"Hey, this is Joe in Joppa. I'm at 10 minutes and holding...can anyone beat that?"
"Hey, Joe! Charlie in Virginia here. Got ya beat at 25 and holding. Good thing I'm hands free...I just rebuilt an airplane engine while I waited."
Putting customers on hold or shuffling them off to automatic answering services or programs just isn't popular. Instead of choosing option one or two, they may just choose another vendor.
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4. Miss Deadlines
Let's just say, for example, that you are in the building supply distributor business. Your customer is waiting for a product like floor covering or a counter top. It is critical that he has this material no later than Thursday because the house closing is Friday.
However, the typical warehouse staffer or delivery person, who does not appreciate the urgency of the situation, decides the order can just as easily go out on the next truck. What's the big deal?
Well, the big deal is...the next truck isn't until Tuesday. The customer doesn't get the supplies he needs to finish his job. The closing is delayed. The customer is mad, the salesperson is furious. In fact, the only person who is happy in this scenario is the warehouse worker, who really doesn't care if the company loses business.
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3. Don't Return Phone Calls or Give Quotes
Response time covers everything from following up on complaints to quoting prices. My husband recently called on a garage door supplier to ask for a quote on a commercial garage door. The person who could do that wasn't available, but the counter person took the information and assured him that someone would call him later in the day with a quote.
A week later, he did get a return call and a quote. Although the price was the lowest of those quoted, he couldn't help but wonder if their response time in delivering and installing the door would be as slow as their response time in giving him a quote. Ultimately, he opted to pay a few hundred dollars more and purchase from a more reliable source.
The lesson here is obvious. A customer who calls for pricing or to ask questions is ready to buy. If you are primed and positioned to help them buy, you'll earn their business. If you ignore them or procrastinate in addressing their inquiries, they may take their business elsewhere, even if they have been a loyal customer in the past.
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2. Get the Order Wrong...Continually
Hey, we're all human and everyone makes a mistake every now and then. Most customers are very forgiving and if you are quick to admit your mistake and ask forgiveness, they are just as quick to grant it. However, what happens when you continually make the same mistake...with the same customer?
This is probably a sales rep's worst nightmare, and it seems like most of us have had this happen at some time in our sales career. A customer gets a wrong part or a wrong order or a service is not properly performed. We make an apologetic sales call, smooth the customer's ruffled feathers, and if we are really good salespeople, we get another order.
Imagine our horror when we find out that the customer service department or warehouse or someone else has botched up the order again. Take it from me, this will run off customers every time.
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1. Give Some Customers Preferential Treatment... But Not Others
Who doesn't love that new customer discount or special? However, when you are no longer that preferential new customer, does it ever occur to you to wonder how the customers who paid X for something felt when you were able to purchase it for Y? Did they perhaps feel cheated that they paid the full price for something you got for half-price?
The danger of playing pricing games with customers is how fast it can backfire on you. You see, you didn't realize that Sally's mom, who got the incredibly discounted price on the new widget you are promoting, works with your friend's daughter, who just bought her mom one at full price for a surprise gift.
No one is happy when they compare prices and realize one of them paid far less than the other for the same product simply because she was a "new" customer. Good luck explaining that to your friend!
This same theory applies to store cards that offer one price for customers with a card and higher price for those without. Most customers are smart enough to realize that they can vote with their feet and go somewhere else.
For my part, I'm a loyal customer of a local grocery store that proudly proclaims "You don't need a card to get our discount prices. We offer them to everyone."
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Share Your Thoughts
We hope you have enjoyed our somewhat tongue-in-cheek look at how bad customer management can cost you in terms of loss profits or reputation. We'd like to hear from those who have had bad experiences that would highlight other ways a business could make their customers not like them. Please leave us a note in the comments section below.