For your most valuable business learning tool, look no further than your
customers.
There is a legend making its way around the great Northwest, and it goes
something like this: One day an angry customer barges into the back loading
dock of Nordstrom, a Seattle-based department store. The customer rants and
raves about the quality of the tires he'd recently purchased and demands
replacement. The store managers, who recognize the man as one of their
better customers, jump into action offering an immediate refund. Appeased
and suddenly calmer, the customer decides he would rather just have the
tires replaced. He asks where he should take his car. He is then informed
that Nordstrom doesn't sell tires.
What Nordstrom does sell, however, is a philosophy that the customer is
always right - even when they are wrong. By listening carefully to
customers, Nordstrom learned early on that when customers have a problem,
they want it solved. Period. They don't want excuses; they want action. And
so action is what Nordstrom trains all its sales associates to take - from
racing in and out of changing rooms handing half-naked customers the proper
size clothing, to driving their personal vehicles to and from different
stores in search of merchandise for customers who don't have the time to
look themselves. Listening to customers and going to great lengths to meet
their needs is the foundation on which Nordstrom has built a national
reputation. It has worked for them, and worked well.
Take the case of Nordstrom customer Anne Petralia. On a recent visit to the
West Coast, Petralia found herself browsing through a mall in Glendale,
Calif. She came upon a hat she liked, but the price was too high, so she
continued shopping, eventually ending up in Nordstrom. In the accessory
department, Petralia found the exact same hat for $10 less than the one she
had seen at the previous store, but not in the pretty beige color she had
wanted. Petralia told the sales clerk her dilemma. The clerk told her to
wait a moment while she had a quick talk with the department manager. The
clerk then came back and informed Petralia that she would walk across the
mall to the other store and purchase the original hat, then sell it to
Petralia at Nordstrom's price. In the sales clerk's words, "We would rather
have you be a satisfied customer at Nordstrom than a satisfied customer
somewhere else." To this day, at her East Coast home 3,000 miles away,
Petralia remains a loyal customer. And although there isn't a Nordstrom
location near her home, she shops from the company's catalog.
You could, of course, make the argument that Nordstrom is a huge company,
therefore on any given day they can afford to eat the cost of tires or a
$10 loss on a hat. As a small business owner, you may think you could never
do that. Keep in mind John Nordstrom was a Swedish immigrant who came to
America with a mere five dollars in his pocket. Nordstrom started as a
small business - a shoe store in Seattle. Today, the company has 68
locations throughout the United States with annual sales totaling around
$4.5 billion. Like Nordstrom, you too can unlock the door to success if you
truly listen to what your customers have to say and then, most importantly,
learn from it.
Listening to Verbal and Nonverbal Messages
As you learn to listen, you will soon realize that your customers talk to
you in many different ways. They give feedback through surveys and focus
groups, through warranty cards and customer rebates, via phone and e-mail,
and in person. Jennifer Morgan, owner of Jennifer's Coffee, a Los
Angeles-based coffeehouse, finds that even when customers don't speak, they
are still sending out direct messages.
Morgan explains how she learned to start listening to those messages: "At
the end of each week, I would look at my individual coffee bins. Some were
completely empty, while others were still filled to the brim." Morgan
concluded that indirectly customers were telling her they didn't approve of
certain flavor choices. A smart businesswoman, Morgan listened and replaced
the full bins with new flavors, sometimes repeatedly until she found all of
them were being purchased.
Morgan has also learned to open her ears to the grumblings of customers
waiting in line. "Instead of running around in the morning rush, tuning out
the buzz, I started to listen." Morgan explains, "I'd often hear complaints
that we don't give free refills." So Morgan met with her coffee supplier,
who advised her against offering the costly fill-ups. The high price she
was paying for the expensive gourmet coffee she sold simply did not give
her that option, he advised. But Morgan knew by listening to her customers
that it was extremely important to them, so she implemented the policy
despite her supplier's advice and the added expense.
"I have to compete with Starbucks, a few blocks down the street. I figured
free refills was an incentive for people to stick with me," she explains.
Morgan was right. In listening to her customers and giving them what they
want, she has built a loyal following, allowing her to compete with nearby
cafes.
The Little Things Add Up
These days, customer loyalty can be a powerful weapon that small
businesses, especially, should not underestimate. Take the example of
Wal-Mart: While this large corporation can usually offer better prices and
a larger selection of items than their mom-and-pop competitors, they are
often met with huge resistance when they try to open stores in some of the
more rural parts of the country. The reason? Customer loyalty. But before
you can build any kind of a loyal customer base, you must be willing to
learn from your customers and whenever possible, act upon their wishes.
Carl Sewell is a top Dallas-based car dealer who does just that. In his
highly acclaimed book "Customers for Life," Sewell talks about his decision
to hang expensive wallpaper in his restrooms - the kind you would typically
find at luxurious hotels, not car dealerships. It may sound silly, but
through informal customer surveys, Sewell discovered that cleanliness in
restrooms was at the top of his clients' priorities, so he acted
accordingly. Though he admits that no one has ever said, "You know, I
bought a car from you because your restrooms are so clean," he does believe
that customers appreciate being heard. "It may be a little thing, but when
customers are forming an opinion of you, the little things add up."
Sewell also tells of another benefit of listening to customers: You can
actually learn things about your employees that you might not discover
otherwise. For example, one customer said he hated Sewell's dealership's
loan-car program because every time he dropped his car off for service, he
was told they didn't have any loaner cars available. So Sewell spoke to the
general manager, who swore this wasn't true and insisted they always had
loaner cars available. A strong gut instinct told Sewell that his customer
was telling the truth. He investigated and found that, indeed, this
customer wasn't the only person to be denied a loaner car. Instead of
ordering more vehicles to keep up with demand, the general manager was
simply turning customers away, telling them to come back later when he had
loaners available. Sewell replaced the manager. "Customers will tell you
the truth." Sewell insists, and it's important to open your ears and
listen, even when it's not the positive feedback you'd like to hear.
Larry Squire, a vice-president at Cape Cod Bank & Trust is another firm
believer in learning from customer feedback. He cites the knowledge he has
gained from customers as the prime reason that the relatively small
Massachusetts-based bank is still going strong. In a day when so many
smaller banks are being bought out by larger ones, Squire recognizes that
there are only so many services any bank can provide. Therefore, he
believes the only way to distinguish his bank from the crowd is to make a
concerted effort to really learn from customers about their likes and
dislikes. By listening to customers, Squire learned that most of them were
fed up with the impersonality of bigger banks, whose customers often get
lost in the shuffle. What his customers craved was old-fashioned personal
service and attention.
"The customer wants to know you care about them and their transaction,"
Squires states confidently. "It's not about the smile and the 'thank you.'
Customers expect that, as they have a right to."
In talking with customers, Squire also realized that most of them thrived
on the unexpected. "Offer something additional like a follow-up phone call
just to see if everything went well, or if there's anything more you can do
to be of service. Customers love that kind of personal touch. It's what
keeps them coming back." And them coming back keeps Squire in business.
Learning to Play the Role of Student
What has kept a company like Federal Express in business all these years is
reliability; the company had long established a reputation for guaranteeing
overnight package delivery. In an attempt to branch out, FedEx introduced a
new e-mail-based product that allowed immediate document delivery.
Customers responded to the product introduction by telling FedEx that they
counted on the company to deliver hard documents, not e-mail. So the
company backed away from the idea - probably a wise decision, considering
what they had learned from their customers.
Many business owners also find that really listening to customers can help
them to capitalize on competitors' weaknesses. Vicki Titcomb, owner of
Titcomb's Book Shop in East Sandwich, Mass. Many of Titcomb's customers
come into her store wanting a specific book that they've heard or read
about, but they aren't sure of the exact title or the author. At most book
retailers, if the sales staff isn't familiar with the publication, the
customers are out of luck, which Titcomb says, "can be extremely
frustrating to a customer who really wants that book." Titcomb, however,
takes the time to do a complete search for the desired tomes by searching
the Internet and calling libraries and other bookstores to see if they've
heard of the titles. Customers really appreciate Titcomb's efforts, and as
a result of her reputation for searching high and low to fill their
expectations, she usually gets the sale.
Having opened her ears once and reaped the magnificent benefits, Titcomb
has learned to talk more regularly to customers and openly ask questions
about what is important to them. She says that customer feedback often
affects the way she buys books - especially some of the rarer ones she
sells. "A lot of my customers are highly knowledgeable. They may tell me
about a book or author I am not familiar with, then suddenly I come across
that book or author, and a light goes on. I know to buy the book - because
I know I can turn around and sell it." This is knowledge Titcomb would not
have, had she insisted on being the authority. Titcomb's willingness to
play the role of the student, allowing her customers to act as teachers has
increased her sales significantly.
In spite of her strong beliefs that you can learn from customers when you
listen, Morgan (of Jennifer's Coffee) cautions that there can be a
downside. "I think it's important to recognize that you can't be all things
to all people. Every time a customer wants something doesn't mean it's
feasible to race out and do it."
Morgan learned this principle the hard way. In listening to customers
complain about the lack of space in her coffee shop, Morgan came to the
conclusion that she should expand. "[The customers] wanted more tables,
more space, more food on the menu than coffee and pastry." So she took over
another, much larger store in the same mini-mall and added a lunch menu. It
turned out, however, to be a mistake. Most of her business came from the
morning rush - the crowd looking to start their morning with coffee, lattes
and pastries. She also made money on the sale of coffee beans. In the new
store, Morgan now had a much higher overhead and money tied up in
sandwiches that weren't moving. She has since gone back to serving just
coffee and pastry.
Looking back, Morgan says these pitfalls are easily avoidable. "Learning
from customers can be a marvelous thing. It's like hearing it from the
horse's mouth. But remember, you still have to do the research. And most
importantly, you always have to trust your business instinct."
Tips for Listening to and Learning From Your Customers
1. Obtain customer feedback - It doesn't matter if you do this through
focus groups, surveys, in person or via an 800 number. The important thing
is that you ask customers how you are doing, and then address their concerns.
2. Talk to employees - Employees who deal directly with customers probably
have some very important information for you.
3. Listen to what customers say, even if they don't put it into words - If
you have shelves whose products never move or an appointment book that has
lots of openings, your customers may be telling you they are unhappy. Find
out why.
4. Remember that the majority rules - If a vast majority of your customers
all seem to say the same thing about your product or service, you must
address it - even if it's big, or something you don't personally agree with.
5. Change the little things - If you can make small changes based on
customer feedback, your customers will feel validated.
6. Think about the big things - Just because customers want a change
doesn't always mean that it is feasible. Don't discard your good business
sense in order to please customers.
7. Keep up the good stuff - Feedback isn't always negative. When customers
tell you you're doing things right, be sure you keep doing them.
8. Let customers be your ears when you aren't around - Customers can and
will tell you how business is being conducted in your absence; take it
seriously and act accordingly.
9. Go the extra mile - Whenever possible, take extra measures to handle
customer feedback and complaints. It will not only be appreciated by your
customers, but it will also give you an edge over competitors.
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