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- Is the Customer Always Right?
Is the Customer Really Always Right?
Shift in Customer Dynamics: The idea that "the customer is always right" has evolved with a focus on balancing customer satisfaction and employee well-being. This shift recognizes that catering to every customer demand, especially unreasonable ones, can lead to employee burnout and lower morale, ultimately affecting service quality.
Psychological Theory - Social Exchange Theory: This theory, proposed by George Homans, suggests that social behavior is the result of an exchange process, where individuals seek to maximize benefits and minimize costs. In a business context, constantly bending to unreasonable customer demands may reduce the "benefits" for employees, creating a negative balance. When employees feel valued and empowered to stand up against abusive behavior, they’re more likely to provide quality service in other interactions.
Example: Southwest Airlines’ approach to customer service is rooted in Social Exchange Theory. By valuing employee satisfaction and happiness, they build a more resilient and customer-friendly workforce, ready to deliver exceptional service while knowing management will support them against abusive behavior. This approach maintains a balance that prevents employees from feeling exploited and increases their loyalty and motivation.
Handling Obnoxious Customers
Stay Calm and Listen: Active listening is a fundamental psychological strategy. By remaining calm and allowing the customer to vent, businesses can often prevent escalation and gain a clearer understanding of the customer's underlying issues.
Psychological Theory - Emotional Contagion: According to Emotional Contagion Theory, emotions can spread from one individual to another, meaning that a customer’s anger can influence the employee, or vice versa. Training employees to remain calm and composed helps prevent the escalation of negative emotions, allowing for a more rational approach. Furthermore, when employees respond calmly, it can have a soothing effect on the customer, leading them to mirror this behavior.
Setting Boundaries: By establishing and enforcing clear behavioral boundaries, companies signal that while they value the customer, abusive behavior isn’t acceptable. This approach aligns with Reciprocal Determinism, a concept from social psychology by Albert Bandura, where people’s behavior, personal factors, and environmental influences interact. Clear boundaries shape an environment that encourages respectful behavior from customers.
The Postly Lifetime Deal Challenge
Lifetime Deal (LTD) users can often present unique challenges. Many are seasoned deal-hunters, persistent in finding the most affordable software options. Early in our journey, we offered Postly to around 4,800 users through a lifetime deal, giving them access to all features, including new ones, for a one-time fee of $49. While they certainly benefit from this access, there are complexities in supporting this group. Approximately 2,400 of these users remained active from January to June 2024, with 1,600 still active between April and June. Many of the others occasionally reach out, sometimes after years of inactivity, expecting account fixes or feature access. We honor their requests, but it’s an ongoing strain.
Efforts to encourage LTD users to upgrade or subscribe to additional services, such as the Unlimited AI Add-On, have had minimal success. Despite deep discounts, only a small fraction have opted for these paid options, limiting the revenue potential from this segment.
The Importance of Firmness in Customer Relations
It's essential to approach customer relations objectively, especially when dealing with a challenging audience. Lifetime Deal customers can be particularly demanding and, at times, less respectful. A notable percentage of them exhibit aggressive behavior in support channels, using harsh language and showing little patience. Unfortunately, some of these customers respond to issues by leaving negative reviews on platforms like Trustpilot and G2. Although they benefit significantly from the service, they often interact only when problems arise, and their approach can hinder effective support.
In business, emotional responses do not yield results with certain customers. Our approach must remain professional, valuing the service provided while not letting unkind remarks affect company morale or value perception.
Evaluating High-Demand Feature Access
With a clear focus on sustainable growth, we revisited the accessibility of key features. The Bulk Post feature, which allows users to upload and schedule up to 500 posts via a CSV, had previously been available to all premium users, including those on lower subscription tiers and lifetime deals. In an effort to balance operational costs and encourage upgrades, we restricted this feature to upgraded LTD plans and the Pro plan, priced at $999.
This adjustment drew mixed reactions. While some users were understanding and willing to upgrade, others were aggressive and threatened to escalate the matter. Nonetheless, this change provided insights and confirmed our strategic direction—highlighting the importance of effective feature-tiering as part of revenue optimization. We ensured that LTD users retained access to the Bulk Post feature with a paid upgrade, balancing user expectations with business needs.
Aiming for Operational Efficiency
Beyond revenue, the decision to restrict high-demand features like Bulk Post was also driven by escalating operational costs, including Heroku and Google Cloud expenses, and risks related to platform API compliance. Abuse of the Bulk Post feature had already resulted in multiple Pinterest API strikes due to spam, reinforcing the need for tighter control.
Similarly, access to Automations (such as RSS feeds, WordPress auto-posts, and e-commerce integrations) and Multiple Post Approvals was removed from the standard LTD plan to encourage upgrades. These adjustments were part of a broader strategy to keep costs manageable while aligning feature access with user contribution to revenue.
The Results and Path Forward
Ultimately, only about 28 users opted to upgrade, which prompted a migration to a more cost-effective server infrastructure to mitigate rising expenses. In light of these learnings, we’ve since restored Bulk Post and automation features, taking a customer-centric approach while reinforcing our company’s sustainability goals.
In summary, managing customer relations, particularly with Lifetime Deal users, requires balance, firmness, and strategic thinking. Not all customers may respond positively to these changes, but maintaining operational stability and respecting product value is essential to growing a sustainable business.
Rejecting a Bad Customer
Long-Term Cost-Benefit Analysis: When customers cause significant operational disruptions or negatively affect employees and other customers, companies might decide it’s best to "fire" the customer. This is seen as a proactive strategy to protect resources and morale, allowing the business to focus on more constructive relationships.
Psychological Theory - Cognitive Dissonance: This theory by Leon Festinger posits that people experience discomfort when they encounter conflicting beliefs or behaviors. Employees forced to tolerate disrespectful behavior may experience cognitive dissonance if it conflicts with their self-respect and work values. Over time, this discomfort could lead to disengagement, lower productivity, and higher turnover.
Example: Costco famously upholds a high level of customer service, but they aren’t afraid to cut ties with customers who repeatedly abuse their return policy. Their approach demonstrates a commitment to ethical standards that value fair treatment over profit from problematic customers. This reinforces employees' confidence in company values, which encourages consistent and high-quality service to their broader customer base.
Calculating the Real Cost of Managing a Customer vs. ROI
The Financial and Emotional Costs: The costs of managing customers include not only direct financial expenses, such as staff time and resources but also indirect costs, like the impact on team morale and the possible reduction in service quality for other customers. This understanding is crucial in modern customer management, where metrics like Customer Lifetime Value (CLV) and Employee Satisfaction Index (ESI) are combined to form a more holistic view.
Psychological Theory - Maslow’s Hierarchy of Needs: According to Maslow, human motivation is structured in a hierarchy, beginning with physiological needs and ascending to self-actualization. For employees, a work environment that respects their psychological safety and sense of belonging increases motivation and engagement, directly benefiting customer service quality. Companies now recognize that by protecting their employees from overly demanding customers, they can foster an environment where employees are motivated to provide exceptional service to valued customers.
Break-Even Analysis and Long-Term Value: Companies like Delta Airlines calculate the cost of customer management based on CLV and prioritize resources accordingly. If the cost of serving a specific customer exceeds their projected long-term value, they may reconsider how much effort is spent. Delta’s tiered loyalty program, for example, ensures VIP support for high-value customers while applying stricter policies for others, optimizing resource allocation to maximize value.
Best Practices in Customer Management
Clear Communication Channels: Clear, accessible communication platforms reduce frustration and improve customer satisfaction by making it easy for customers to find answers or reach out. This approach aligns with Behavioral Economics and Choice Architecture. When customers can effortlessly access information or service options, they’re more likely to feel satisfied, reducing the likelihood of negative interactions.
Flexible Policies for Loyalty: Customizing policies for loyal customers (e.g., VIP treatment) can enhance their experience and make them advocates for the brand. However, maintaining clear boundaries prevents policy abuse.
Psychological Theory - Theory of Reciprocity: This social psychology concept suggests that positive actions prompt positive responses. By offering personalized support to loyal customers, businesses encourage reciprocation in the form of repeat purchases and referrals. Spotify’s tiered membership structure is an example, where premium members receive added value and access to exclusive features, fostering loyalty.
Supportive Work Culture: Creating an environment where employees feel supported leads to better service, as employees are more likely to go above and beyond for customers. This aligns with the Self-Determination Theory by Edward Deci and Richard Ryan, which posits that people are motivated to grow and achieve if their workplace fosters autonomy, competence, and a sense of belonging. When employees feel they can make decisions and act in the company’s and their interests, they are more empowered and likely to provide quality service.
Analyzing Customer Feedback Trends: Regular feedback analysis helps businesses identify patterns and adjust services accordingly. This follows the Cycle of Learning Theory by David Kolb, which emphasizes continuous improvement through experience and reflection. By systematically reviewing feedback, businesses gain insights into what works well and what needs improvement, ensuring they’re responsive to customer needs while maintaining alignment with core values.
