Nikhil Kuruganti: Is Customer Always Right?

Is Customer Always Right?

The short answer is “Yes?”. Your customer is the reason you’re able to stay in business, especially in these tight times. This does not, however, definitively mean that “the customer is always right”. Harry Gordon Selfridge, founder of Selfridges department stores in the UK in 1909, is credited with coining the phrase “the customer is always right”. Mr. Selfridge likely did not intend to be taken literally. Rather, he used it to change the psychology of his customers and employees. Customers would, perhaps, feel that a company cared for them. Employees would be continually exposed to the notion that a customer could not be wrong. Presumably, this would result in a prevailing attitude among employees to treat customers positively, regardless of how the customers treated employees.

The unfortunate thing is that customers have latched onto a widespread disposition that they cannot be wrong. Even more unfortunate, as a privately held, small business, we are not able to afford the Nordstrom customer service model. We have customer complaints. But, we were unable, financially, to accommodate every customer request. It may sound terrible to think that a company would take the stance that the customer isn’t always right, but it’s true. Please do not misunderstand. We love our customers and we absolutely want everybody to be delighted with their shopping experience. However, there are situations where a customer’s expectations are not met, but we have made every effort to build clear expectations for the customer before they buy.

I’ll give you an example. A customer buys a valve with low profit margin from without contacting our customer service team, thinking that the valve will work with their existing plumbing. The specifications for the valve are clearly stated on the product detail page. The customer must read and agree to our web site’s terms of use, including our returns policy, before they are able to create an account or place an order. The customer receives the valve that they ordered in good condition and their plumber tells them that this is not the right valve. The customer immediately contacts and tells us that they received the wrong product. In researching the issue, we discover that the product that the customer ordered was the product that was sent. The customer simply did not order the correct valve. No problem. We are able to accept the product in return. However, the customer feels that should make it more clear that the valve does not support all types of plumbing and does not want to pay to ship the product back to or pay a restocking fee. The customer has already read and agreed to the returns policy which makes both clear. has made every effort to stipulate what type of plumbing this valve will accommodate. So we say “No. Your order is subject to the policies that you agreed to upon buying”.

The customer then files a dispute with their credit card company. is charged a processing fee for the dispute that is greater than the profit margin of the valve. ultimately wins the dispute and we receive our money for the sale, but we still have to pay the processing fee for the dispute. You may ask yourself, “Why don’t you just change the returns policy?” We thought of that. The cost to pay to return the item to and the cost associated with processing the return is potentially even greater than the cost of the credit dispute processing fee! Either way, we lose. On the flip side happy customers come back and we may be able to make up the costs then.

So, to recap, we set an expectation of what product the customer was buying and how the customer would have to return it, should they elect to do so. The customer agreed. The customer changed their mind when they discovered that they made a poor buying decision and asked to pay for the mistake. In this case, the customer was not “right”. At this point, has to evaluate whether or not it is valuable to lose money on this customer. For various reasons, it may be valuable to lose money on a given customer, but not “always”.

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