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M. J. Xavier

The customer is no longer seen as God or king but as someone quite the contrary. Adopting a rational approach to dealing with customers will make marketing easier.

Catering to the customer — a transformation from God to Satan?

THE pendulum swings back. After lifting customers to dizzy heights - King, Boss and God - the marketers have started calling them all kinds of names - thief, the rule breaker, the belligerent, the family-feuders, and the vandal. What went wrong and how did we reach this stage?

One fundamental axiom in marketing used to be `the customer is always right'. Typically, every training session on customer service would start with an anecdote on how even mistakes by a customer can be an opportunity for the organisation. As a trainer, I had always used the story of an angry customer who wanted a refund for a costly sweater she bought from a shop, the colour of which ran right in the first wash. The catch was that the customer had not followed the washing instructions printed on the sweater. She had gone ahead and washed it in warm water while it was supposed to be dry-cleaned. Clearly, the customer was at fault.

Usually the participants get divided into two groups, one supporting the customer and the other defending the shop that sold the sweater. My final verdict always used to be that the sales clerk was at fault as she did not explain the washing instructions to the customer at the time of purchase. I used to get the participants delighted by saying that even the manufacturer of the sweater was at fault as he had not printed the washing instructions legibly and displayed it prominently.

Here is another axiom. `Big or small — treat customers equally and with respect.' It appealed to everyone as it endorsed the basic ethical principles. The egalitarian principles promoted by this axiom managed to get even the enthusiastic support of the Marxists. The most quoted anecdote to support this axiom is the story of a Japanese confectioner, attributed to Matsushita. The emotionally appealing and absorbing story goes as follows:

One afternoon in the days when Japan was still far from affluent, a beggar came into a large established confectioners to buy a manju (jam-filled bun). The assistant, startled at seeing such a lowly customer in his fist class establishment, wrapped the manju, but before he could hand it over to the beggar, the shop owner entered and called out, "Just a minute, let me wait on him." So saying, he gave the package to the beggar and when he paid, he bowed politely and said, "Thank you very much for your patronage." Later, the assistant asked the owner, "Why did you wait on him yourself? You have never done that before for any other customer." The owner replied, "We should be pleased and grateful that this particular customer came in today, and I wanted to express my thanks. Naturally we value our regular customers; but this case was special." "Why was it special?" the assistant asked. "Almost all our customers are well off, and for them it is routine to buy confectionery here. But this man wanted one of our manjus so badly that he may have spent everything he had on it. I knew it was very important to him, and so I decided that he should be served by the owner himself. That is what business is all about."

The emergence of a new concept in marketing called CRM (customer relationship management) threw cold water on all these concepts. The new concept started questioning the validity of customer service at any cost. First of all, business is not charity to give unlimited and unquestioned replacements to customers. Additionally, even if satisfying every customer is going to benefit the company in the long run, the problem is how long the long term is. After all, in the long run we are all dead.

Improved sophistication in accounting methods now makes it possible to look at the cost benefits of various marketing actions. For example, research by Professors Cooper and Kaplan at the Harvard Business School has shown that in a large number of companies, 20 per cent of customers account for 225 per cent of profits. This clearly shows that the remaining 80 per cent `lose' 125 per cent of profits. This they call the 20-225 rule.

Consequently, if a question is posed to me whether replacement should be given to a customer when clearly the customer is at fault, I ask for additional information about the customer. If the customer falls in the top 20 per cent of Cooper and Kaplan analysis, clearly the customer is (always) right. If she falls in the remaining 80 per cent, gather additional information on long-term profitability and then decide accordingly.

The new methodology divides customers into different categories, like Gold customers, Silver customers, Copper customers, Lead customers, Sand customers, and even Muck. Matsushita must be clearly at a loss to understand all these developments as he was talking about `value to the customer'. The clear motive behind classifying customers into categories based on `value to the organisation' is to differentiate customers. The caste system has now got well entrenched in marketing. Though it started with service companies, it has spread far and wide. Naturally, the Gold customers enjoy a lot of privileges from the company that are not available to low-caste customers. Nowadays there is a super-premium category called `Platinum Customers'. The so-called poor man in the Matsushita story will get classified as `Muck' and will not even get entry.

Even in its heyday, the concept of undifferentiated customer service existed only in textbooks. CEOs loved to talk about unlimited customer service to every customer when they addressed their employees or shareholders. Although no one really believes customers are always right, firms have policies that pretend this is so, and managers urge and demand that customer contact employees treat customers as if they are always right. Needless to say, such avoidance leads to stresses and strains for managers and frontline personnel alike and potentially bigger problems for firms. Especially in the field of services, unsatisfactory service encounters may be due to inappropriate customer behaviour — the notion that sometimes customers are wrong.

All these led to the development of a new term - `jaycustomers' to label customers who `misconsume' in a manner similar to jaywalkers who cross streets in unauthorised places. Of course, `Muck' customers are a category in themselves. For example, even when customers do not misbehave, they may not be good relationship customers for the organisation because they do not meet the target market profile, they are not profitable in the long term, or in some cases they may not be compatible with the service provider in terms of personality or work style.

Jaycustomer is defined as a customer who acts in a thoughtless or abusive way, causing problems for the firm, its employees, and other customers. So far the following six types of jaycustomers have been identified. More are in the pipeline.

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