The phrase “The customer is always right” is an iconic one in the hospitality industry and accepted as fact by most industry professionals. While the concept and message it conveys are rooted in fact and provide useful guidance upon which organizations can base their customer service, the statement is obviously not absolutely correct. Adhering to it as if it were is a mistake, leading to costs that include more than just dollars. Here’s why service philosophies should be based on the customer almost always being right, knowing when they are wrong, and what to do about it.
 
The Nature of the Relationship
There is a contract between a service consumer and a service provider. Within that contract, the provider delivers a package of goods and services in exchange for some compensation from the consumer. Traditionally, the consumer possesses most of the power in this relationship, the assumption being that the desired package of goods and services can be had from a number of providers. The consumer’s ability to choose is powerful.
 
The Nature of the Problem Customer
There is another contract between the service consumer and service provider, one that most appropriately can be described as an implied social contract. This contract holds that the parties engaged in the service transaction will deal with each other respectfully and in good faith. In many customer/server interactions, this contract is breached by a customer who takes advantage of their transactional power. This can manifest itself in a number of different bad behaviors that can cost your business if not handled properly. Researchers Leonard Berry and Kathleen Seiders describe a categorization in their 2008 article Serving Unfair Customers. Here are the various categories with examples, even though you can conjure plenty of your own.
 
1.     The Abuser – Emboldened by their sense of power within the relationship and with no regard for the social contract implied, this individual feels justified in verbally belittling or abusing their server. Example: “This isn’t the drink I ordered, you idiot.”
2.     The Blamer – This individual removes himself from all responsibility in the relationship, shifting it all to the establishment. No matter what the circumstance, it should have been handled by the server. Example: “I didn’t know these drinks I ordered were $10.50 each. I’m not paying.”
3.     Rule Breakers/Rule Maker – This person ignore policies and procedures and makes their own rules, often putting the establishment and servers at risk and offending other customers. Example: “I know you said I was shut off, but I just had a sip of her drink.”
4.     Opportunist – This customer sees a chance to get something for nothing and takes advantage. Example: Pays a check that is less and obviously incorrect.
5.     Contrarians– This customer expects you to provide something that you clearly do not provide and gets angry and vindictive when you don’t. Example: See several examples in “Should Restaurateurs Fight Social Media Bullies?”
 
The Cost of the Problem Customer
There are significant costs to a business when they don’t effectively deal with customer complaints. That is the case when the complaints are valid. It is also the case when the complaints are not … when they come from problem customers. Some of these costs are tangible and easy to measure. Others are intangible and so difficult to quantify. Regardless, they can often have a greater cost than you think.

1. Comps and Refunds: The comps and refunds necessary to placate problem customers can add up to significant dollars.
2. Employee Morale: This is the most significant and nefarious cost of not handling problem customers. Employees who feel that you don’t have their back in situations where they have been treated unfairly will lose trust in you and your leadership. Other employees observe this treatment and avoid difficult situations to your detriment.
3. Customer Attitudes: Other customers observing the behaviors of difficult customers can become angry when you do nothing on behalf of an employee being abused. They feel they are being treated unfairly when others receive benefits by acting badly that they themselves are not privy to.
4. Your Time: You may be spending an inordinate amount of time dealing with problem customers, time you know would be better spent elsewhere. When the cost of your time is added to the costs above, you may realize that these problems, even if regulars or big spenders, may be among your least profitable customers.
 
What to Do
The key to dealing with this problem effectively is to rely on the implied social contract mentioned above to define the actions and behaviors of customers that are deemed appropriate and therefore tolerable and those that are deemed inappropriate and therefore intolerable. The service provider’s job is to provide exceptional service. The customer defines the success of a service encounter and, by definition, what is exceptional. In this respect, the customer is always right. They do have some responsibility, however, and sometimes fail to fulfill it. When this happens they are wrong and should be treated as such.
 
Ritz Carlton’s much-admired motto is, “We are Ladies and Gentlemen Serving Ladies and Gentlemen.” This simple yet elegant statement communicates what the Ritz thinks of its employees and guests, as well as what they expect of each.
 
1. Deal with severe cases swiftly and decisively. Abusive customers should not be tolerated in your establishment. They kill morale and kill the atmosphere for other guests. They violate the respect part of the contract.
2. Keep track of chronic offenders. Customers who are frequent and who are frequent complainers are an oxymoron. Why would a customer keep coming if they are frequently dissatisfied? Maybe for the comps you keep handing out.
3. Don’t reward bad behavior. Handing out comps to chronic complainers is like giving candy to a toddler having a tantrum. It rewards their bad behavior thereby encouraging it in the future. It is also not a fair result for customers who act right.
4. Have a plan. Be sure that your staff knows how much they are expected to take and how far they should go before involving a manager in the situation.
5. Fire your customers. Based mostly on severity and frequency, determine what you are willing to take from a customer. Some are wrong and not worth doing business with.
 
A warning: You have to be very careful about taking these kinds of actions when dealing with problem customers. Providing customer service is difficult, if it weren’t everyone would be good at it and everyone is not. One reason that it’s difficult is because customers can be difficult. Be very sure not to confuse difficult customers with problem customers, disagreeable customers with belligerent customers, demanding customers with chronic complainers. It requires discipline on your part so that you’re not constantly blaming the customer for your legitimate failure to deliver.

This article originally appeared on Nightclub.com. For more articles by Professor Brian Warrener that appeared on Nightclub.com please click here.

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