Law and the Business of Furniture

Jerry Cohen Law and the Business of Furniture blog.

Avoid Lawsuits Through Effective Customer Service

September 29, 2008

When our clients call us to defend a customer lawsuit, or to reply to the applicable State consumer protection agency, a governmental authority, or the Better Business Bureau, it’s too late. As the Wall Street Journal (“WSJ”) recently stated: “…it’s crucial for companies to realize that the way they handle customer complaints is every bit as important as trying to provide great service in the fist place.” If you want to save time and money and give your lawyer a pink slip, read on.

1. Why is it important to have an effective customer service program: At the recent WithIt conference, Patricia Sherrill, Operations Manager at Neiman Marcus, discussed the importance of service recovery:

* Customers that complain can identify weaknesses in an organization. The WSJ points out that learning from failures is more important than fixing problems for individual customers, because process improvements have a direct impact on the bottom line. Unfortunately many companies have untrained personnel or salespeople address the complaint, offer an apology or compensation and hope for the best, thus failing to address the underlying problem and guaranteeing its reoccurrence.

* Individuals that have suffered from an unresolved complaint will turnoff a multitude of potential customers, whereas customers that have had their complaint satisfactorily resolved are positioned to become your most loyal customers.

* It costs an average of five times more to buy a new customer prospect than retaining an existing customer.

2. Effective customer service: The WSJ reports that “customers judge a company first on how it handles the problem, then on its willingness to make sure similar problems don’t happen in the future.” It continues that fairness is the biggest concern of customers and therefore service recovery must re-establish justice from the customers’ perspective. Ms. Sherrill suggests the following:

* Just LISTEN.

* Use positive body language and words. Be aware of your tone of voice.

* Call people by name (but be respectful).

* Defuse the situation with empathy, not excuses.

* Say “Thank You” and take responsibility.

* Apologize (but avoid “I’m sorry”.)

* Never make them wrong

* Follow-up

3. Preventing a customer complaint from escalating into an ugly legal dispute, by providing a fair hearing and assurances that the problem won’t happen again, is too often ignored. Give customer recovery your full attention and you’ll be sure to see profits increase and business grow. And I won’t be lonely, because you’ll send me “Thank You” cards.