Selfridge vs Kelleher: Are Customers Right or Wrong?

The phrase:    “The customer is always right”

is attributed to Gordon Selfridge in 1908. However, Selfridge didn’t make up that phrase out of whole cloth.  Hotelier ‘César Ritz’ advertised in 1908 and used the phrase;  “Le client n’a jamais tort” (“The customer is never wrong”)

Selfridge translated ‘Cesar Ritz’s’ phrase/slogan and gave it a positive twist. John Wanamaker took note, and was soon using that phrase in promoting his Philadephia -based department store chain.

Harry Gordon Selfridge, Sr. (January 11, 1864 – May 8, 1947) was an American-born retail magnate, who founded the British department store ‘Selfridges’. In 1879, Selfridge began his carreer by joining the retail firm of Field, Leiter and Company (which became Marshall Field and Company and finally Macy’s.) in Chicago.

Over the following 25 years, Selfridge worked his way up the commercial ladder. He was appointed a junior partner, married Rosalie Buckingham (of the prominent Chicago Buckinghams) and amassed a considerable personal fortune. While at Marshall Field, he was the first to promote Christmas sales with the phrase:  “Only   ‘X’  Shopping Days Until Christmas”,

a catchphrase that quickly was picked up by retailers in other markets… However, not everyone agrees with Selfridge on this point.  Herb Kelleher (co-founder and former CEO of Southwest Airlines) in the excellent book “Nuts!” about Southwest Airlines, says: “The customer is always right” is wrong. “How about when the customer isn’t right for your business?”           

Herb Kelleher makes it clear that his employees come first — even if it means dismissing customers. But aren’t customers always right? “No, they are not,” Kelleher snaps. “And I think that’s one of the biggest betrayals of employees a boss can possibly commit. The customer is sometimes wrong. We don’t carry those sorts of customers.  “We write to them and say, ‘Fly somebody else. Don’t abuse our people.’”

“The fact is that some customers are just plain wrong, that business is better off without them, and that managers siding with unreasonable customers over employees is a very bad idea, that results in worse customer service. So put your people first. And watch them put the customers first.”

Likewise, Gordon Bethune is a brash Texan who is best known for turning Continental Airlines around “From Worst to First,” a story told in his book of the same title from 1998. He wanted to make sure that both customers and employees liked the way Continental treated them, so he made it very clear that the maxim “the customer is always rightdidn’t hold sway at Continental.

In conflicts between employees and unruly customers he would consistently side with his people. Here’s how he puts it: “When we run into customers that we can’t reel back in, our loyalty is with our employees. They have to put up with this stuff every day. Just because you buy a ticket does not give you the right to abuse our employees . . .”

“We run more than 3 million people through our books every month. One or two of those people are going to be unreasonable, demanding jerks. When it’s a choice between supporting your employees, who work with you every day and make your product what it is, or some irate jerk who demands a free ticket to Paris because you ran out of peanuts, whose side are you going to be on?  “Of course there are plenty of examples of bad employees giving lousy customer service. But trying to solve this by declaring the customer “always right” is counter-productive.”

Most businesses think that “the more customers the better”. But some customers are quite simply bad for business. Rosenbluth International, a corporate travel agency, took it even further. CEO Hal Rosenbluth wrote an excellent book about their approach called “Put the Customer Second – Put your People First and Watch’em Kick Butt.”

Rosenbluth argues “that when you put the employees first, they put the customers first. Put employees first; and they will be happy at work. Employees who are happy at work give better customer service.” “On the other hand, when the company and management consistently side with customers instead of with employees, it sends a clear message that: Employees are not valued.”

Whether Right or Wrong: Customers are the lifeblood of any business. You can offer promotions and slash prices to bring in as many new customers as you want, but unless you identify the ‘right(best) customers’ your business won’t be profitable or even survive for long.

Developing the ‘Ideal Customer’ Profile:  The “perfect” customer just doesn’t exist. The Ideal Customer is a standard that you identify to help you measure your prospects (potential customers) to see if they fit… Why? So you can focus on the good ones, get rid of the truly bad ones, and anticipate problems with those who fall in the middle. So, you’ll take a hard look at your most profitable customer in order to produce the hypothetical perfect customer you’d like to have. This will become the definition of your Ideal Customer.

Step 1: List best and worst. It’s up to you. Start with those companies with whom you’ve done business: Just customers, not prospects. Limit yourself to those accounts where you’ve already done some business. List the best and list the worst. The best will include those that have given you the maximum number of wins and the least trouble. Then list those accounts that are the worst – possibly because even though you’ve closed the deal, either you or the customer feels that you’ve lost. Remember, you set the criteria.

Step 2: Next, list the characteristics of both the best and the worst. Best characteristics may be:

• Willing to pay for “value added”

• Committed to high quality

• Good proximity to my support center

• Size of end user group

• And worst characteristics could be:

• Inflexible on price

• Slow to make buying decisions

• Secretive and unwilling to cooperate

• Outside my industry expertise

Step 3: Now combine the two lists. List the positive characteristics, and then add the opposite of your negative characteristics. For example, “slow to make buying decisions” becomes “has a process for making buying decisions quickly”. You’ve now created a profile of your Ideal Customer. You’re ready to evaluate the account to which you’re trying to sell, against your definition of the best. Measure that account against each of your Ideal Profile characteristics.

The Ideal Customer Profile you’ve just created enables you to sort through the virtually limitless field of potential sale opportunities, to create a personal territory that is actually manageable. Time is money, and creating the Ideal Customer Profile enables you to concentrate on business you can win, and which will create a Win-Win relationship that continues to build your business for the future.