What You Can Learn From Your Customers

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 Nonverbial 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.

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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