Is the customer always right?

“Whenever you find yourself on the side of the majority, it is time to pause and reflect.”
-Mark Twain

In the early 1900s in London, Harry Gordon Selfridge famously commanded an employee in one of his department stores to simply “Give the lady what she wants!” That model of doing business falls easily under the old adage: the customer is always right. But the past few years in popular business media have shown a strange trend; just look at some of these headlines: “Top 5 Reasons Why ‘The Customer Is Always Right’ Is Wrong” from The Huffington Post, or “No, The Customer Is Not Always Right” in Forbes, both from just last year. Is it possible that the founding fathers of customer service had it all wrong? Is this a case where Twain would have us pause and reflect? As usual, science has the answer.

Saxe and Weitz were the first to define the customer-first attitude academically using the term “customer orientation” (CO) in 1982. Specifically, they defined it as the application of the marketing concept at the level of the individual salesman and customer. The marketing concept is the idea that the main goal of a business is to respond to and develop a relationship with their market and its needs, as opposed to a “pressure based” concept of marketing. CO is when a salesman “…does not wonder, ‘what can I sell this individual?’ but instead asks, ‘How can I best solve this person’s problems?’” Early results were positive, but as the research came in the picture of CO got muddied.

In 2006 Franke and Park conducted a review of the research of over 30,000 sales professionals to see if a pattern consistently emerged between CO and sales results. None surfaced. On average they found only a small correlation between CO and job satisfaction, but no significant relationship to sales or manager-rated performance. Franke and Park even go as far as to say that “the costs of implementing customer-oriented selling may be higher than salespeople realize.” There is a real danger of CO training being a money drain that produces no value, but still lets sales reps feel like they are doing something productive when they train. Homburg, Muller, and Klarmann go on to describe the concern, “Adopting customer-oriented behaviors also requires substantial resources, in terms of both sales-person time and complexity costs arising from customizing products and processes to meet customer needs.” Their research, however, finds some hope amid the rubble.

Homburg and company suspected that there be specific circumstances where the CO approach needs to be emphasized. In their 2007 paper, “When Should the Customer Really Be King?” they identify three criteria that need to be met to make CO an effective approach: the product is highly individualized, in a competitive marketplace, and being offered at a premium price. If these criteria sound familiar, it’s no surprise. The product lines of many direct sales companies could be defined using the same terms.

Homburg’s findings on the subject allowed for the discrepancies observed in prior research: firms without these qualities could not expect to gain much from the CO approach. But there was a catch; even under the correct circumstances for their application, CO behaviors only produced results up to a point, and then fell off. There was a ‘sweet spot’ for salesmen. As a result they need to ask themselves and determine: “How right should the customer be?”

Unfortunately, Homburg and company give little advice on how to determine if your customers are too customer oriented. What they do suggest is that of your sales personnel, those that use less than half of their time on sales matters and those that see the fewest total customers are likely catering to the customer a little too much. They also warn that telling them to just cut it out might upset customers who are used to the treatment, so take the Band-Aid off slowly. The last item they suggest is to use more “outcome controls” if you are working with a product and customer type that demands CO selling. They don’t define what this means, but luckily there are more researchers on the planet. In her 2006 article “How Right Should the Customer Be?” Erin Anderson defines outcome control systems as having eight main characteristics:

• Managers pay attention to the bottom line.
• Managers use a limited number of metrics to evaluate the sales, mostly those controlled by the customer.
• Managers offer little supervision.
• Managers and sales persons have little contact.
• Managers rarely monitor sales staff.
• Managers offer little to no coaching.
• Evaluation criteria are clear.
• Pay for sales staff is variable, and based on customer-generated results.

Her article goes into much more depth, and is worth a look, no matter what your sales management strategy is.

As research continues, we’ll get a better picture of how much CO is worth the investment. In the meantime, customer is still King for most direct sales companies, no matter what you may read on the internet. When the numbers come back, you will be happy you took Mark Twain’s advice. The majority can be fickle, and wrong.

References

Anderson, E., & Onyemah, V. (2006). How right should the customer be? Harvard Business Review, 84(7/8), 58.

Franke, G. R., & Park, J. E. (2006). Salesperson adaptive selling behavior and customer orientation: a meta-analysis. Journal of Marketing Research, 43(4), 693-702.

Homburg, C., Müller, M., & Klarmann, M. (2011). When should the customer really be king? On the optimum level of salesperson customer orientation in sales encounters. Journal of Marketing, 75(2), 55-74.

Saxe, R., & Weitz, B. A. (1982). The SOCO scale: a measure of the customer orientation of salespeople. Journal of marketing research, 343-351.