This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in July 2015 and is posted here by their kind permission
Sensible outcomes from disputes
“The customer is always right” was originally coined in 1909 as a way of differentiating Selfridges Department Store from competitors. It was revolutionary at the time, when misrepresentation by retailers was common and “caveat emptor’ (let the buyer beware) was the usual response to customer complaints.
Customer disputes happen in any business. Unresolved disputes may result in loss of customers or groups of customers, refusal to pay, widespread and often biased bad publicity, loss of repute, legal action, and even damage to property and public protest. Minor disputes can quickly escalate into anger, recriminations, threats and violence. Staff complaints about abusive and unreasonable customers is another source of dispute.
Where does it start?
Customer perceptions of broken promises or products not living up to expectations are at the heart of many disputes. Rude, uncaring or incompetent service from employees is another frequent cause. You may initiate a dispute relating to slow or non-payment, unreasonable or bullying customers or continual changes to requirements but unwillingness to pay for changes.
Arguments will escalate quickly if either party feels they are not being listened to by the other. A simple request can grow to a blazing row when either party ignores the other or scorns their view. Many serious disputes could have been resolved easily if they were attended to sensibly, courteously and early.
As an entrepreneur you may be at the centre of a fight with a customer, and this is a time to exercise judgement and maturity. Assess you own conduct dispassionately and keep emotions out of it. You too can make mistakes, and if you have then apologise and make amends. Personality differences and prejudices are at the root of many arguments, and you should be able to recognise and resolve these, even if you are personally involved.
If customer perceptions of broken promises is a frequent cause of dispute it makes sense to reduce or eliminate this problem before it happens. Check the quality of everything – invoices, accuracy of delivery promises, responses to queries and product quality. Get someone to call to make enquiries or register a complaint, and listen in. Be prepared to cringe. Some people have bad hair days every day, and take it out on customers. You may be disturbed by the lack of product knowledge or inability to make recommendations displayed by staff members. Fix the problems to reduce disputes.
Whenever there is a serious dispute you need to investigate and if necessary take remedial action. Employees and customers may be defensive and slow to admit their faults so you need to be thorough, you do not want to lose the confidence of either valuable customers or valuable employees. If your company has been at fault a simple acknowledgment and apology will take the heat out of many serious disputes, but you may need to make amends by a gift or discount. About the worst thing you can do to enrage a customer is to ignore the complaint, or promise to investigate and then do nothing. About the worst you can do to your staff is to shout at or threaten them in front of the customer. You are likely to end up with a resentful staff member and a customer who thinks you are a bully. In both instances you can lose the customer and your reputation.
It is perfectly acceptable to fire customers so long as you are sure they have been unreasonable or dishonest. I suggest that any customer who is abusive, racist or sexist should be told to leave and not return. Be prepared for a social and even conventional media storm which may be totally one sided or untrue, respond factually do not get emotional. If you have established the facts you should have nothing to fear, even if the (ex) customer is in a position of power.
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