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Part Three
Understanding Customer Requirements
Strategy Insight
“The Customer Is Always Right”: Rethinking
an Old Tenet
The old tenet, “the customer is always right,” has
operated as the basic rule in business for so long that
it has become entrenched as an “absolute truth.” The
practical reality, however, is that sometimes the customer is wrong. When taken to the extreme, the issue
for the firm becomes what to do about it. Service
managers understand that there are situations when
employees should be fired. In some situations, this
strategy may need to be applied to customers, too.
SPRINT/NEXTEL FIRES 1,000 CUSTOMERS
On June 29, 2007, Sprint/Nextel sent a letter to
about 1,000 of its 53 million customers telling them,
in effect, they had been fired from the company. In
doing so Sprint was attempting to rid itself of customers who frequent its customer service lines by
informing them that it was canceling their service
at the end of the next month. In these letters the
company stated: “While we have worked to resolve
your issues and questions to the best of our ability,
the number of inquiries you have made to us during
this time has led us to determine that we are unable
to meet your current wireless needs.”
The customers were told their service agreements were being terminated, they would not owe
anything on their final bill, and the company would
waive its standard early termination fees. They also
were told to switch to another wireless provider by
July 30 if they wanted to keep their phone number.
These 1,000 customers had been calling Sprint’s
customer service an average of 25 times a month,
which is 40 times more frequently than a typical customer. Sprint determined these customers
were not generating enough revenue to make up
for the high cost of servicing them. The company
conducted an internal review, lasting more than six
months, to determine what types of problems these
customers had and what information they were
seeking when they contacted the customer service
department. The review found that the subscribers
often were calling about the same problems over
and over after Sprint officials felt they had resolved
the issue. Additionally, some callers were repeatedly asking for information about other customers’
accounts, which customer service representatives
are not allowed to divulge. Sprint indicated that
the amount of time being spent to resolve the same
issues again and again was affecting their ability to
service other customers.
The Results
Initially Sprint’s move made headlines in the business press, stimulated negative word-of-mouth from
some portion of these 1,000 customers, and may
have cost them some new customers in the short
run. But it also improved the customer experience
for other customers calling customer service.
ZANE’S CYCLES TELLS CUSTOMER: “GET
OUT . . . AND TELL ALL YOUR FRIENDS”
A recent Business Horizons article tells the following
story of the owner of a bicycle store well known for
its dedication to customer service—Zane’s Cycles in
Branford, Connecticut (for more insights into Zane’s
Cycles, see our Chapter 5 opener):
A disgruntled Spint/Nextel customer
A father was picking up a repaired bicycle for his
daughter, who, without telling him, had approved
the recommended replacement of both tires (a
$40 service). Although the employee patiently
and repeatedly explained that the purchase was
approved and offered to further verify it, the
customer made accusatory remarks and yelled at
her angrily, saying at one point, “Either you think
I’m stupid or you’re stupid. You’re trying to rip me
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Valarie A. Zeithaml, Mary Jo Bitner, Dwayne D. Gremler, Enrico Bonetti
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off.” At that point, Chris Zane, the store’s owner,
walked up to the customer and said, “I’m Chris
Zane, get out of my store, and tell all your friends!”
After the customer wordlessly slapped $40 on the
counter and stormed out, the besieged employee
looked at Zane and asked “‘. . . and tell all your
friends’?”
Zane explained to her and other employees who
had gravitated to the front of the store that he
wanted it to be clear that he valued his employee
infinitely more than a rude, belligerent customer.
“I also explained that this was the first time I had
ever thrown a customer out of the store and that I
would not tolerate my employees being mistreated
by anyone . . . I believe that my employees need
to know that I respect them and expect them to
respect our customers. Simply, if I am willing to
fire an employee for mistreating a customer (and I
have) then I must also be willing to fire a customer
for mistreating an employee.”
The Results
After returning home and thinking about the service
encounter, the fired customer phoned the owner to
apologize three hours later. He explained that he
had argued with his wife prior to visiting the store
and was therefore already in a poor mood. Once the
customer returned home and verified the accuracy
of the store employee’s explanation, he realized he
had been unreasonable. The customer asked if he
could be allowed to shop in the store again. He also
commented that he respected the owner for supporting his employee even if it might mean losing
a customer. Mr. Zane thanked him for the call, welcomed him back to the store, and indicated that the
apology would be conveyed to the employee.
EVENTS PLANNER TELLS MAJOR CLIENT:
“NEVER AGAIN”
Capitol Services Inc.—an event planning company
in Washington, DC—spent considerable time and
money attempting to secure a major automobile
company’s potentially very lucrative business. In
the midst of the first-ever event for the client at a
museum in Washington, DC, the person overseeing
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203
the event (who was not an employee of the company but working for a third party) became very
demanding, degrading, and disrespectful to the
CSI staff. Nearly everything the firm did was, in
her opinion, not good enough. The entire team,
who was in the midst of delivering an event
exactly as promised, was being micromanaged. CSI
employees felt they were being abused, and for no
good reason. David Hainline, company president,
approached the client representative and said that
CSI would finish the event but would never conduct business again with her—knowing full well
this decision might result in the loss of a client with
a very high potential relationship value.
The Results
The event was delivered as promised, but the belligerent staff member was not happy. After the event
was completed, she demanded that CSI reduce the
amount owed for their services—so CSI reduced the
amount by $60,000. Months later Hainline had a
meeting with the automobile company and began
the meeting with an explanation of the situation
that occurred at the Smithsonian. The company
understood, and agreed to use CSI to organize
future events for them in Washington, DC. And, CSI
employees felt valued and supported by the management team.
ENDING A CUSTOMER RELATIONSHIP MAY
BE THE RIGHT STRATEGIC DECISION
Service providers are not obligated to serve any and
all customers, no matter how much revenue they
might generate. Although services marketing strategies intended to develop relationships with customers receive much attention—and rightly so—from
managers, occasionally selecting a strategy that
results in ending a relationship with a customer may
be the most prudent approach to take.
Sources: S. Srivastava, “Sprint Drops Clients over Excessive
Inquiries,” The Wall Street Journal, July 7, 2007, p. A3;
L. L. Berry and K. Seiders, “Serving Unfair Customers,”
Business Horizons 51 (January/February 2008), pp. 29–37;
D. Hainline, President, Capitol Services Inc., Washington,
DC, personal interview, August 15, 2007.
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Valarie A. Zeithaml, Mary Jo Bitner, Dwayne D. Gremler, Enrico Bonetti
© 2012, The McGraw-Hill Companies srl
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