zenbusiness

The Customer Is Always Right

by Team ZenBusiness

- May 26, 2020 9:00 am

Some mottos find their way into our minds, even if we have no idea how they found us. Take “the customer is always right,” for example. Three men popularized that phrase more than 100 years ago as they learned their stores’ cash flows depended on customers’ positive experiences. But that was more than 10 decades ago! Do businesses still live by that motto? Does a company lose out if they decide, well, no – the customer is sometimes wrong? 

To determine if “the customer is always right” has endured the test of time, we surveyed 352 employees and 698 customers. Read on as we explore who stands by this adage and what happens when businesses decide to go off the beaten path. 

Are Customers Always Right?

A report analyzing the success and failure rate of small businesses found that 44% of them failed by the fourth year. The top two reasons for failure were no market needed and a lack of cash. Experts might say it isn’t the market that’s the problem, but the business model itself – perhaps they weren’t marketing to the right shoppers, so funds eventually ran out. 

Maybe the possibility of failure has to do with why 51.1% of the businesses surveyed said, “the customer is always right.” But customers didn’t agree. Only 33% believed in that adage. Most of us know a person or two who enjoys complaining about businesses so that they can get a free item or discount. Some people will even go as far as using an item before returning it, which may be why Amazon has been cracking down on abusers of its return policy

However, Amazon is a massive online retailer with more than 20 years in the industry. Newer companies (aged 10 years or fewer) tend to want to please customers, so they might be stronger consumer advocates. Compared to 43.5% of older businesses, 61.1% of newer companies were likely to support the “customer is always right” motto. 

Customer Feedback

Today, an online review could be the difference between a business boost and a social media crisis. All the customers in our study reported leaving at least one review. On average, consumers reported writing 6.5 reviews per year, with people in their 30s writing the most reviews (7.1). 

Although people in their 20s said they most often left reviews for midsize businesses, a majority of people in their 30s and 40+ said they reviewed all companies equally. Over 1 in 5 customers reported never receiving a response to feedback left about a business, but the majority of people did hear back from someone employed by the company reviewed.

Worth Addressing?

A bad online review, especially one that is mishandled internally, can drive a business into the ground. According to expert advice, small businesses should acknowledge a bad review and take steps to address customer concerns because feedback is vital in growing a company. If a bad review is mishandled, customers may very well take their money elsewhere. 

And the majority of customers in our study did just that. We found that more than 3 in 4 people aged 40+ stopped patronizing a business because their complaint was not addressed. Sixty-one percent of 30-somethings and 56.5% of those in their 20s also stopped frequenting a company because their feedback was ignored. 

Chronic complainers exist, and they sometimes make conversations tricky to navigate because they are difficult to satisfy. More than 27% of 30-year-olds and people aged 40+ and nearly 34% of 20-somethings reported changing a negative review to a positive one after their feedback was addressed, and some even deleted the unfavorable reviews. 

If you’re wondering if negative reviews are worth addressing, our findings say yes. Although there may always be complainers with nothing positive to say, a negative review can be legitimate. Take all feedback seriously because customers could be addressing a flaw within your company, and it could mean your business’s demise.

What Companies Have to Say

According to the majority of businesses, what customers have to say impacts their success. Only 2.7% of older companies and 0.6% of newer businesses said reviews had no effect. More than 40% of newer businesses and 31.5% of older ones reported seeing a moderate impact. 

New businesses were more than twice as likely as older businesses to report that customer reviews always bring in new sales. If an enterprise builds its customer base using existing traffic, sales are very likely to increase. So, turn that first sale into a returning customer, and they’ll help you grow from a struggling startup to the talk of the town.

When Reviews Turn Sour

As previously mentioned, negative reviews happen, and according to the experts, it’s best to address them professionally and appreciatively. But is that how things actually play out? 

For the majority of older and newer businesses, yes. Nearly 95% of companies with more than 10 years of experience said their organization typically works to solve customer concerns, compared to 87.3% of newer businesses. Perhaps the percentage is lower for newer businesses because they don’t quite know if they should respond. 

But we also found that newer businesses were more likely to take negative feedback seriously. Businesses were asked what percentage of negative reviews they believed were fair. Newbies believed an average of 47% of negative reviews were fair, which is around 7 percentage points more than older businesses. 

The Customer Is Always Worth Listening to

How companies do business has evolved quite a bit in the last 100 years, but opinions about how to handle customer relationships have remained fairly consistent. Our findings show that more than half of companies still hold the belief that “the customer is always right,” but not in the way we think. It’s less about facts and more about listening to customer concerns to show them that businesses value their feedback. 

Starting a new business can leave you with a lot to juggle. There’s legal paperwork to keep track of and customers to manage, but you don’t have to do it alone. Visit ZenBusiness, and let us work with you. Our specialists are ready to help with everything from new business paperwork to state tax regulations. Visit us today and get started for free. 

Methodology 

We surveyed 1,052 people for this project in two separate surveys. One surveyed 352 employees whose job responsibilities included monitoring customer reviews of their employer. The other surveyed 698 respondents who had written a public review of a business within the last year. 

In the employee survey, respondents were 59.5% men and 40.5% women. The average age of respondents was 36.6, with a standard deviation of 10.6.

To qualify for the employee survey, respondents had to report that at least some of their job responsibilities revolved around monitoring customer reviews. 

Employees were asked to report how many years their business/employer had been operating. We then grouped responses into two groups: operating for 10 years or fewer and operating for more than 10 years. In our final visualization of the data, we labeled these groups as “newer businesses” and “older businesses.”

In the customer survey, respondents were 49% men and 51% women. The average age of respondents was 37, with a standard deviation of 11.1. Customers had to report having written a public review of a business to qualify for the survey. 

Customers reported how many total business reviews they write in a typical year. The final average presented was calculated to exclude outliers. This was done by finding the initial average and standard deviation. The standard deviation was then multiplied by three and added to the initial average. Every data point above this sum was then excluded. 

Customers were asked to report what size businesses they review the most. Business sizes were defined for respondents as follows:

  • Large business = 250 or more employees
  • Midsize business = 50–249 employees
  • Small business = less than 50 employees

Limitations 

The data we are presenting rely on self-reporting. There are many issues with self-reported data. These issues include, but are not limited to, selective memory, telescoping, attribution, and exaggeration.

Fair Use Statement

 Regardless of whether the customer is really always right, customer reviews play an important part in helping businesses grow. If someone you know would benefit from reading this project, you’re free to share for any noncommercial reuse. Please link back here so that people can view the project in its entirety, including its methodology. This also gives credit to the contributors who make projects like this possible.

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