Every retailer spends a good portion of his day trying to figure out how best to serve his customers. But frankly, customers and their motivations can throw even the best retailers for a loop. Retail expert Chip Averwater lays out a few customer truths that retailers don’t want to admit.
“The customer is always right” is a mantra that business owners hear over and over again. Of course, anyone who has ever worked in retail knows this way of thinking doesn’t always hold water. In fact, sometimes customers are just plain wrong. They misunderstand products, what a store can do, how business is done, what pricing is realistic, and so on. But, says retail expert and author Chip Averwater, if you don’t want your retail store to join the estimated 95 percent of failed ventures, you’d better figure out quickly that even when the customer is wrong, he’s right.
“It’s a retail truth that you simply have to come to terms with if you want a successful store,” says Averwater, author of the new book Retail Truths: The Unconventional Wisdom of Retailing. “If you show customers they’re wrong or how much they don’t know, you only embarrass them and increase their unhappiness with your organization. It’s almost always more productive to swallow your pride, apologize for the perceived injustice, and make it ‘right.’ Always remember, your win is getting the business and keeping the customer.”
A third generation retailer who has spent 38 years building his own stores and assisting others, Averwater knows what he’s talking about. In Retail Truths, he provides a compendium of over 400 lessons for retailers that often have to be learned in the school of hard knocks. The book covers everything from selling to pricing to employee management, and yes, even what to do with your sometimes pesky, often great customers.
“Remember, every shopper chooses one store for his purchase,” says Averwater. “The one he feels offers the best value-not just quality and price but convenience, selection, security, atmosphere, etc. And sure, sometimes customers come with complaints and other eccentricities, but when they choose you and your store, you should feel honored. When you learn to love your customers, warts and all, you and your business will be better for it.”
Newsflash: Retail doesn’t get rave reviews. Sometimes the truth hurts. Take this one, for example: Most shoppers agree that the typical retail experience isn’t good. Many say they hate to shop-stores are crowded, parking is distant, help is rarely available, lines are long, salespeople don’t know the products…the list goes on. So considering the army of talented businesspeople focused on it, why can’t retail rate better satisfaction?
“One theory is that consumers experience retailing almost daily and become highly discriminating in their standards,” shares Averwater. “Also, consumers often see excellent examples of particular aspects of retailing individually, but rarely does any retailer get it all right at once. And finally, retailers who do manage to get it all right are too expensive to be competitive. Whatever the reason, you should accept up front that you’ll get little sympathy from customers. Their patience is thin, their budgets are stretched, and they are ever-conscious of their power to take their business elsewhere.”
Be-backs don’t come back. “I’ll be back later to purchase this!” When a rookie hears these words, he congratulates himself on a future sale. But a more experienced retailer knows that a sale has just walked out the door, probably for good. According to Averwater, “I’ll be back” is something customers say to extricate themselves from the situation without disappointing the salesperson. Even those customers who believe they’ll come back seldom do; they get distracted, lose their motivation, find other options, or simply procrastinate.
“When a customer says she’ll be back or asks for a card, you should ask if you’ve shown her the correct product, answered her questions, and provided enough information,” Averwater recommends. “If she answers yes, she’ll typically say she just needs to think about it, which translates as, ‘I’m not convinced that this is the right product or best price.’ If the customer is receptive to further discussion, keep asking questions and providing information. And if she is finished with the conversation, offer to send her some literature, collect some additional information for her, or call her if the product goes on sale. With persistence, maybe you’ll convince your be-back to come back.”
Happy customers come and go; unhappy customers accumulate. Except for the (possible) small percentage of loyal die-hard customers you might have, your happy customers aren’t necessarily customers for life. The truth is, satisfied customers might do business with you again since you’ve proven yourself to be a trustworthy source, but you’re still only one of many. However, dissatisfied customers have longer memories and look for opportunities to warn others away. They’re expensive enemies to have.
“I’ve learned that it’s usually worthwhile to actively look for unhappy customers, open a dialog, and try to make up with them,” Averwater shares. “Often, a little attention turns them into equally vocal advocates. And wouldn’t you rather have one of those instead of a critic?”
Complaints are signs our customers want us to do better. No retailer likes to receive complaints, so it’s tempting to write them off as flukes or as feedback from people who are just determined to be unhappy. But here’s the cold, hard truth: When a customer complains, it often means many others feel the same way but don’t bother to tell us-instead they take their business elsewhere. Consequently, one complaint represents an opportunity to improve service to all of your customers.
“You should welcome those few customers who take the initiative to tell you what needs improvement,” Averwater urges. “It’s information you vitally need, and, although it might not be pleasant to receive it, these customers are going out of their way to help you.”
Low prices won’t excuse poor service. Whether consciously or subconsciously, most shoppers recognize the realities of price/service trade-offs-they can have low prices or they can have good service, but not both. After all, great service in retailing isn’t a secret formula-it’s mostly a matter of the quantity and quality of a retailer’s employees.
“I think we can all agree that every retailer would improve service by hiring more and better people…if price competition didn’t constrain expenses,” points out Averwater. “But since we don’t live in a perfect world, retailers must find a balance between service and price that appeals to customers. Sometimes a cheaper price with lower service works out, but often it leads to disappointment and dissatisfaction. So here’s the bottom line: never believe the rationalization that poor service doesn’t matter if your prices are low enough.”
“Take it back where you bought it” alienates customers. Occasionally, you’ll encounter a customer who asks for help with a product he purchased elsewhere. Especially if “elsewhere” happens to be a troublesome competitor, it’s tempting to rub the customer’s “mistake” in: “Why don’t you take it back to them?” “Don’t they know how to operate it?” “Can’t they fix it?” “Now you see why their price is lower.”
“In this situation, accept that the previous deal is done,” advises Averwater. “At issue now is who gets the next one. Realize that the customer is coming to you because he is unhappy with the competitor’s transaction. Do we really want to send him-as well as his money and possible future patronage-back?”
You don’t see your competitors’ happy customers. Inevitably, you’ll encounter a customer who comes to you because she is dissatisfied with the competition. At this point, you’ll be tempted to assume that this customer is representative of everyone who does business with your competitor. However, Averwater reminds us that the complaints we hear about our competition aren’t a balanced picture. Only their dissatisfied customers come see you; their satisfied customers have bought, are happy, and have no reason to be in your store.
“Whether the result of mistakes, misunderstandings, or unrealistic expectations, even a great store has a few unhappy customers,” acknowledges Averwater. “Although sometimes vocal, these disgruntled shoppers are usually not representative of typical business experiences with your competitor. Also, you should always remember: While you’re seeing their mistakes, they’re seeing yours. Agitating and aggravating are likely to be repaid in kind.”
“Because I truly believe 99 percent of retailers want nothing more than to make their customers happy, sometimes the truths about those customers can be the hardest to admit,” says Averwater. “We simply don’t want to think about our customers not liking our store, or not feeling like we’ve treated them well, or wanting to take their business elsewhere.
“But, of course, all of these things are the nature of retailing,” he concludes. “They happen every day. When you admit these truths are out there, you can begin to implement ways to keep your customers happy, keep them coming through your doors, and most importantly, keep them buying from you!”
About the Author:
Chip Averwater is a third generation retailer and chairman of Amro Music Stores in Memphis, TN. He has been a featured speaker on retailing in the U.S., Europe, Asia, and Australia.