The Tyranny of The Bad Customer

“The customer is always right,” or at least that’s what most business owners profess to their employees. We post it for all to see. “Customer satisfaction is job one.” “Our boss is the customer.” The most important person in our business is…you!”

But we all know it isn’t true. Sometimes a customer is unreasonable, dishonest, or simply just wrong. A small manufacturer we work with recently had one of his top five customers call with a request. “I’ve collected a bunch of your stuff over the last two years that we broke, or our customer broke and returned, or that we ordered but just didn’t sell. I’m going to pack it all up badly and send it back. You can make a claim to UPS for shipping damages, and give me replacement product for free.”

That customer was just plain dishonest. (The manufacturer declined the opportunity, although it took some agonizing before he made the decision.)

In another recent case, the customer was simply unreasonable. He called to express his dissatisfaction. The business owner first offered to remake his product, then to replace it with another, then to refund all the customer’s money. The customer refused any solution, but promised to take to the online rating sites to tell everyone how unhappy he was.

Common wisdom says that a satisfied customer will tell five people about his experience, while an unhappy customer will tell twenty. The numbers vary, but the point is people with a gripe are much more motivated to let others know about it. In the Internet, the number of people who may see that complaint is infinite.

What if the gripe isn’t valid? A recent court decision said that Yelp! should reveal the identities of anonymous detractors, since the owner of one business being slammed by 7 people (all using pseudonyms) couldn’t even tell if they were really his customers. Yelp! is appealing the decision, based upon a First Amendment protection of free and anonymous speech.

cyberbullyOne survey showed that businesses could expect a 4-star Yelp! rating to result in 9% less new business compared to 5-star competitors. This and other studies showing the importance of online presence cause may retailers I know to live in fear. They check Yelp!, UrbanSpoon, AngiesList, TripAdvisor, or other rating sites constantly, terrified that one unhappy buyer (whom they might not know about and can’t identify), will torpedo their cherished score.

My book on selling small companies, 11 Things You Absolutely Need to Know About Selling Your Business, has generally good ratings on Amazon. Seventy-five percent of the reviewers give it five stars, the rest giving four with one exception. He gave it two stars almost three years ago, and said he was being charitable (yeah…thanks). What makes me nuts is that his review always seems to come up first, and some people check it as helpful. I have no defense or ability to respond.

Anecdotally, competitors are using consumer feedback sites to damage reputations, customers are threatening to go to the web if their demands aren’t met, and some businesses are posting raves about their own company to inflate ratings. Yet, “I know it’s true because I read it on the Internet” still seems to be the standard for many consumers’ verification.

Have you been subjected to a rating site bully? Please share your story.

My new book, Hunting in a Farmer’s World: Celebrating the Mind of an  Entrepreneur, is now available on Amazon in paperback, hardcover and Kindle. It is an ownership book, not a management book. Illustrated with the stories of real entrepreneurs who faced challenges that apply to us all, it recognizes why small business owners are different from those who work for them.

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One Response to The Tyranny of The Bad Customer

  1. This is a great article and absolutely accurate! I represent a number of small to medium business owners and have owned businesses for many years and I find the credibility associated with online ratings to be quite shocking. As the owner of a law firm I continually stress about having a client get angry about a result in court one day and write a nasty online review the next, especially on a site that doesn’t allow users to delete reviews.

    I have one client in particular that has had to reinvent and re-brand his business a few times because of online reviews and another client that was the victim of a consumer complaint site and is spending thousands of dollars trying to resolve the claims, most of which are wholly unfounded. Yet another client had the ex-husband of a girl he went on a few dates with post that he was a pedophile and claim that his business utilized fraudulent practices and was being investigated. Sadly, those posts will probably never come down because no one wants to spend thousands of dollars suing someone who will fight a silly fight and declare bankruptcy at the end of it all. Unfortunately for one of my client’s ex-employees, he is willing to spend any amount of money to get her to remove comments she made online after he fired her.

    I would be surprised if employees or employers have analyzed the potential liability associated with posts and responses, or really any content they put online about another person. It is my opinion that most businesses should have new-employee trainings about this topic so as to avoid future problems.

    Business owners certainly do not often consider the impact online reviews can have on the sale of their businesses. Buyers can decrease the purchase price substantially if they have to fight bad reviews because getting enough good reviews to offset one bad review is time consuming and costly. Whether or not the review actually impacts the business is irrelevant in negotiations because a seller can’t really prove otherwise.

    Something new that is happening in the law is the use of reps and warranties associated with goodwill and how future reviews impact present covenants. We will be seeing a lot of litigation in the future over poorly written or understood reps and warranties in purchase agreements.

    Great article John!

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