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Entrepreneurs

Should startups adopt a "customer is always right" attitude more than established businesses?

Ronen Menipaz

Ronen Menipaz

01.03.2021

During my weekly efforts of sharing my thoughts and musings on Quora on all things entrepreneurship, this question caught my eye. The general sentiment of the “customer is always right” idiom is a noble one. On paper, the customer-first mentality ensures you cater 100% to the people that buy your product or service and ultimately, create what is a sustainable business for you. 

However, it doesn’t necessarily translate well to the startup scene. Not all customers are good customers as some are and can be very bad for the business. This is especially true and vital to consider when a business in question is a startup in its earliest stage and competing for a piece of the action with less capital than its more established counterparts.

While customers deserve every ounce of your respect and willingness to provide them satisfaction, they don’t always deserve unconditional compliance.

So my answer to this post’s titular question is no

They shouldn’t for a number of internal and external reasons. A customer can be fallible, and by “rewarding” their fallibility, you potentially open Pandora’s box that can halt or completely destroy your startup’s growth. 

Before I get into the deeper reasoning behind my answer, I’ll first point out a few scenarios where you should nod your head in approval in front of your customers and hold them dear like a bottle of Evian in Sahara. 

Why it makes sense to treat a customer like they are always right

Let’s start with the obvious one: 

it’s easier and cheaper to retain an existing customer than to attract a new one.

Companies tend to focus on customer acquisition more than customer retention, despite indications that it can cost far more in the long run. Neil Patel calls it the fastest way to lose customers in the sense that retaining them is low-hanging fruit and understanding them is how you create loyal customers.

When startups opt for short-term decisions over long-term relationships, they inadvertently compromise their values. As such, they mislead their customers who are quick on the keyboard to use their social influence and share information quickly. Knowing how much your customer is worth, connecting with them, and treating them accordingly helps make smarter choices and investments in those relationships. More often than not, it’s about striking a balance and nurturing them rather than focusing on something else like spending money in the quest for new customers.

In a way, delighting customers is the holy grail of customer adoption and loyalty for startups. What else is there left to do after figuring out how to build the first product and then actually building it? It’s one of the first steps a new business takes, especially since it can’t rely on brand loyalty yet. Not that brand loyalty is what it once was, mind you. Today’s customer mix of Millennials and Gen Z-ers doesn’t think twice about it even if you meet their expectations, let alone fail. They believe or, worse, know there are other brands that can meet their expectations. It’s why these highly coveted customer groups so easily switch from and to products and services.

So, you have to understand your customers inside and out, and more importantly – how to delight and sell to them in order to find your market and establish a foothold in it. And that’s a lot harder to do, practically impossible if you don’t hold every single customer on a pedestal. 

Brian Halligan, CEO of Hubspot, gave a great keynote a couple of years ago on the concept of disruption from a customer experience perspective. His claim is that the companies that are experience disruptors are the ones who win. These are businesses that put their current customers above all, and make it their mission to reduce friction and meet the highest of customer expectations. The end result is a better business altogether, more meaningful relationships, and a better path to growth.

At the end of the day, customers are that all-important variable that can make a startup succeed or fail. They can take the business down an entirely different path than what the founder(s) originally imagined, and that’s perfectly ok. After all, that’s what customers want – you can’t dictate terms on this. Startup founders must have that visionary sense and foresee what’s right for their customers, which often means casting their ego aside and not getting caught up in their own vision. 

Such flexibility, paired with the ability to adjust as you receive feedback (good or bad) is vital to ensuring that the customer who is seemingly always right actually chooses your solution time and time again, not just when it’s ready.

I’ll touch back real quick on the social influence mentioned earlier as another ‘pro’ reason. It doesn’t help that people expect immediate solutions because that’s essentially what they are buying – solutions, not products or services. Largely driven by social media’s overarching reach, this immediacy can swiftly damage a company’s reputation if the customers perceive they aren’t taken seriously enough. In other words, if meaningful action isn’t taken when a problem is encountered.

As you can imagine, this can sink a fresh business before it even gets off the ground. That’s the nature of the business: customers expect or, better yet, demand a tailored approach to their problem(s), not caring if you can or can’t provide the exact same special treatment others like them are demanding. When they feel they are cared for, they advocate for businesses. When they aren’t, they use the power vested in them by social media. It’s simple math.

Why it makes more sense not to 

Math doesn’t always make sense, and neither do the customers. 

“The customer is always right” is not really an Internet thing to say. I say the Internet because the business world of startups is digital by nature, which means a few things have to change regarding the ‘customer-first’ approach.

First of all, it has to be the plural we are talking about.

A customer is not always right. Customers are. 

The saying is a remnant of a not-so-distant past when a business had to fight hard for every person. Today, you can change the customer and pivot. It’s not that they’re always right, it’s that they’re always right in big numbers. As an entrepreneur, you are in a position to “attack” the average, get stuck to the stats, scale, and be the best in your own niche. If you’d go for one on one and treat every customer as a king, you have no scale. 

Consequently, that is why products and services today are a little worse but a lot more profitable. That is also why the lean startup methodology is so popular: you can ‘fail fast’ in the online business climate by launching a product or service without getting to the endgame. People are forgiving if what you sell is not good enough as bad products/services can be improved as long as there is a market for it. There is no cure for a market that shows no interest.

Now we come to my second point: you have to understand who and what a customer is.

This can be very confusing because your customer can be a number of things. The online world is a big marketplace where collaboration and competition stand out. You either collaborate to best position yourself to compete or not. Everyone with whom a business interacts (both internally and externally) is a customer. This is the era of collaborative business where all business connections create strategic value by being some type of customer relationships.

GIF by Truly.

So in that regard, everybody can be your promoter. A customer is anybody who is your supplier or provider or partner, apart from the “regular” clients. You need these “win-win” collaborative relationships to survive, you need everybody to be the API, be that connector and conduit to communicate and share information for the “greater good”. As you value, measure, and manage those relationships, you realize they all have to be right because you have to work with them all. If you don’t, you’re going to have a problem scaling the startup and improving performance. 

A customer is an output of who pays you, directly and indirectly. You have to nurture those relationships and effectively allocate resources because you need everybody in the grand scheme of things to help you succeed.

The third thing of note is that not every customer is a good match. As weird as that sounds at first, some customers are just bad for business – period. I always say ‘less is more’ in this particular instance because the gift of the Internet is that you can scale in more ways than one. There is enough money around to be perfectly content with targeting 18-year-olds in Italy and specialize in that, at least in the beginning. Put your business first, not the customer in the traditional sense, because not every customer is a fit and will be right in this context.

Remember this: you can and should always say “this is not for you” in a respectful way. Treat everyone with the utmost respect and care but at the same time, acknowledge that a startup, of all companies, can’t be everything to everyone. It needs to find its audience so that it can rake up some money – you know, the lack of which shuts down 29% of its peers for good.

There is something even more dire than running out of cash, the first and by far the biggest reason why startups fail: no market need. It kind of goes hand in hand with no money, right? Startups aren’t in a position to sacrifice long-term growth for some short-term revenue and sales volume. They can’t survive, or at the very least, be successful, by casting as wide a net as possible and then picking up everything from it. They need to grow with the relevant target audience in mind and nurture it.

Adhering too closely to this mantra can be a devastating mistake due to the negative way it impacts your employees

Think about it for a second. Entitled customers always were and always will be a thing because they generally think they are in the right, in no small part thanks to the saying we’re talking about now. They can be unreasonable, snobbish, and too demanding, not to mention plain stupid sometimes. With some you can reason, with others you can try and fail miserably, regardless how hard you try. 

Now add your employees to this equation. If you side with an arrogant, irrational customer because you follow a certain tenet, what message does that send?

Always support your employees. If there is a dispute between unmanageable customers and your people, side with the latter. It’s them who work with you and for you to make your business what it is and what it wants to be.

Now, the tricky part is finding the balance between your employees and customers, without overly favouring either side. Yes, unsatisfied customers can be of significant cost to your business, but if the alternative is having unhappy employees, you will likely get nowhere, fast. Value the people by your side in this ordeal, trust their ability to handle awkward situations, and provide moral support whenever a customer goes out of line (which is very likely to happen at some point). I can’t think of any better way to avoid employee discontent and/or major issues that may grow from it.

finished the office GIF

The mantra is also no good because the customer is not an expert – you and your employees are. It’s super important to put faith in your employees’ abilities to solve problems and trust their judgment. This not only makes them far more likely to put actual customers’ needs first in their daily interactions but it also keeps your business on the right path. Be  employee-first: invested in your customer’s experience but not obsessed by it to an unhealthy degree. If one person is upset, there is no reason to think that you need to bend over backwards and refine your entire approach just to address a single customer.

When it comes to exceptional customer service, I find Nordstrom’s highly lauded approach the way to go. There is attention to detail in all the layers of customer experience but there is also empowerment of their employees. It’s up to them to use their best judgement, without asking permission, and come up with the right solutions to issues that often arise unexpectedly and aren’t really covered by some set of policies anyway.

While Nordstrom’s approach specifically aims at resolving the traditional shopper pain points, its concept of autonomy and standards can be applied across the business spectrum. It’s a powerful tool to get the most out of your employees, and at the same time, for your customers to get the most out of your startup.

In the end, you get to a conclusion: some customers just aren’t worth it, both figuratively and literally. When you decide that the customer is always right, two things routinely happen:

  • You prioritize customer service to those who arguably don’t deserve preferential treatment, especially compared to your normal, best customers
  • You devote and waste resources to customers who can’t be satisfied and probably won’t stick around.

Both the effort and resources can be steered towards retaining customers who pay your bills in order to continue paying them down the road. And as we discussed before, your employees become discouraged if customers are trained to get what they want. This creates a blueprint for a terrible employee and customer service environment. While it may not tank your startup all the way, it will make a dent big enough so that staying afloat is a constant struggle and the notion of thriving is a long lost dream. 

With limited resources, no one customer should take priority over the business.

Final thoughts

There is no doubt in my mind that the “customer is always right” has good intentions front and center of its core premise. As with most things in life, there are grey areas where you can find your “truth”. 

Steve Jobs was dangerously close to a truth when he said that customers don’t know what they want until you show it to them. The first Macs off the production line were built with the idea that he and his colleagues get to be the judges of whether they are any good or not, not some market research.

Jobs’ notion shows just how fine the line between being right and not being right is. He operated in space that made it possible to completely redefine or he outright created product categories. That is not the domain in which most startups exist, as evidenced by dreadful failure rates. So there is a time and place to listen to your customers, it’s just that you have to be selective about it.

Launching a startup is an interesting thing because at the same time, you do want to hedge your bets like any sane entrepreneur would. You want to receive some customer insight so you can see the customer truth, one that all of us in the entrepreneurial world pursue so relentlessly in an effort to uncover how to delight our customers. 

You do so by gaining a thorough understanding of who exactly your customers are in the marketplace and what makes them tick, and you have to be better at it than the competition. Also, you will need to embrace the idea that customer feedback (what I call the customer truth) is vital to the success of your company in the sense that they are not always right but they are likely never wrong. This will provide you an inside peek into their environment and what they aspire to be. 

Consider it as a conversation starter: customers will tell you what they want, not what they need. They will also tell you what they don’t want. Collect as much information as possible, and listen to their heartbeat. Hopefully, that will be enough to delight them. If not, they will tell you their truth.

Image credits:

https://giphy.com/gifs/trulysocial-theoffice-loyalty-customer-xWMYPQodt6XHfyPBeS
https://giphy.com/gifs/the-office-steve-carell-michael-scott-dsKnRuALlWsZG

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