How powerful is a customer?

If you’ve worked in a line of business which requires interacting with customers and providing adequate service in order to maintain customers and gain them, I’m sure you might have heard the “The customer is always right,” line. In efforts to keep a business alive and prosperous, managers and employees want to see and keep customers happy whether it be with excusing a fine, allowing specific purchase/return, or simply agreeing with them when expressing an opinion, despite how right or wrong it may be. As frustrating as it can be knowing a customer is wrong, what’s best for the company always comes first, even if it means swallowing one’s pride. These sort of situations determine the true “power” of a customer within a company. Managers of all sorts of lines of business are forced to place their focus on what will attract customers of all demographics. After all, that’s the purpose of a business: seek profits.

Netflix is an example of a company whose main focus is the satisfaction of a customer. With the services it provides, Netflix has been known to be extremely successful for many years now. Not only does it service costumers through the internet, but right at their door, too, with the DVD rentals. For a long time, Netflix had a set monthly fee of $9.99 for streaming rentals and unlimited DVD, until they decided to raise the price to $15.98 in 2011. News of this didn’t sit well with costumers who had been long time users. At that point users threatened with canceling their subscription and turn to options like Redbox or Hulu Plus.

As it states in the article “How Netflix’s New Prices Causes a Customer-Service Uproar,” written by Andrew Hampp and published in July 2011, costumer service representatives didn’t how to response to such threats, as they “did not appear to have a strategy for addressing customer complaints.” In a situation like this one, it is not the responsibility of the customer service representative to come up with a “strategy” to adress this sort of issue. Companies may expect changes in their customer turnout, but not all companies foresee threats to cancel services due to a price change. At this point of complaints, higher level management is responsible for providing scripts or options for customers to decrease the intensity of their complaint. When customers influence such price changes, we start to see the power they truly have on such decisions. If the customer is unhappy, management finds a way to change their minds in order to maintain their loyalty to a company.

In October 2011, Netflix reached a point at which it could no longer afford to lose any more customers and investors, so in efforts to avoid this, Netflix sent out an email to all customers admitting to being right about an issue that had been ongoing. Many times companies have no other option than to admit to their customers that they are right, no matter how wrong they may be.

 

So what are you thoughts? Must a company always put their customer first, no matter how wrong they may be? Is that the only way to keep a customer?

 

http://adage.com/article/media/netflix-s-prices-caused-a-customer-service-uproar/228704/ 

http://seekingalpha.com/article/299927-netflix-admits-once-again-that-the-customer-is-always-right

 

6 thoughts on “How powerful is a customer?

  1. A customer is always right is so cliche.

    The customer is not always right. Companies have to make critical decisions on a daily basis. Sometimes they are to the advantage of the customer and sometimes they are to an advantage to the firm in the long run.

    Have there been any reports on how the price hikes impacted NetFlix?

    From my understanding NetFlix is still around and seems that it still maintains a good customer base.

  2. Essentially, to keep a customer, you must keep them happy. When Netflix divided their services in 2011, there was an immediate and intense backlash that threatened all the good work that Netflix had accomplished in differentiating themselves from competitors. What people loved about Netflix, myself included, is the ease and convenience their service provided. When they tried to divide their services, they lost their edge, i.e. what had made them the best (ease and convenience). It goes to show that in terms of a successful business venture, if it isn’t broken don’t fix it. To keep a customer, either keep them happy or provide something they need or value that competitors don’t. When Netflix attempted to divide its services, they lost much of their consumer base and threatened the loyalty of their remaining customers retained. In terms of strategy, they were doing fine until the stunt they tried to pull in 2011 with Qwikster. “If it isn’t broken, don’t fix it” applies to management strategy as well as product differentiation.

  3. As you stated “Many times companies have no other option than to admit to their customers that they are right, no matter how wrong they may be.” I used to work in a line of business, and I could see what you mean. I do agree that the customer is very powerful for every business. If you think about it how you would call it a business, if there is no customer? It would be problematic for a company to survive without customer.

  4. Metting customer necessities is a major aspect for businesses. Netflix is very lenient when in it comes customer requests and I think it does help them in the short run, but in the long run, they might pay the price. Customers can potentially start to realize they can take advantage of the company, and thats why the customer is NOT always right, in my opinion.

  5. In general, customers keep a business running. Netflix got into a lot of trouble when they announced their price changes, and loyal customers were not happy about it. In my opinion, as a Netflix customer, I thought it was a very stupid concept to have two websites consisting of online streaming and movies sent via USPS. While they certainly took a big hit because they lost customers, and then eventually lost revenues because they changed their minds, Netflix did the right thing in the end. “The customer is alway right” may be cliche, but it is usually accurate, as the customers fuel Netflix, which is a dying company to begin with. Companies who do not put their customers first will suffer because people look at dollar signs before anything else. There are always competitors out there that offer similar products at lower prices. It costs a lot more to get a new customer than to keep a current customer.

  6. I believe that the, “customer is always right,” motto is very applicable to all business. This is the driving force behind any business. You are there to please the customers. Whether the business is product or service oriented, you are selling satisfaction. If you do not meet and satisfy peoples’ needs, then you run the risk of losing potential loyalties over time.

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