Business Decision: Turning Away a Customer
Posted in Business, Ethics, Finance
by
Penelope Pince
As I have mentioned before, Madoline and I own a small pet and horse costuming business called Franga Designs. Most of our products are custom-made from scratch, and a few are ready-made with a last customization to fit each customer’s pet or horse.
Unicorn Browband
Last month we received an order for a Unicorn Browband, a costume attachment for a horse’s bridle to give the illusion of them riding a unicorn. People often order the Unicorn Browband when they have a parade, show or a costume contest. The customer placed an order for a ready-made unicorn horn and then sent an email with special requests, one of which we agreed to do for her at no extra charge even though it cost us more.
She also told us her horse had a very large head and asked us to make the horn larger, which we couldn’t do because the horn was already made, and we advised her to order a custom horn in order to better suit her horse, but she decided to just take the smaller, less expensive one that she had ordered.
So we finished off the item (the horn was made but the length of the browband had to be customized to her specification) and added a special feature that she requested — Velcro loops instead of regular sewn loops at the ends — and shipped it off to her. A week later, she e-mailed to tell us the horn didn’t look right on her horse because it was too small and wanted to return it and order a larger custom horn as we had suggested at the time of her order.
We don’t normally allow returns due to health concerns — you never know if a customer will try a costume on an animal that isn’t clean, has parasites or communicable diseases and then return it. But because sales are slow this year and she wanted to order a replacement item, we made an exception and offered to send her a gift certificate for the purchase price after she returned it to us. She waited another 3 weeks to send it back to us, and when I emailed her a claim code for her store credit, she wrote back and said she had changed her mind and just wanted a refund.
A quick Googling of this customer shows that she participates in horse shows, and I am inclined to suspect that she used the unicorn browband for a show and then returned it for a refund, because she didn’t send it back to us until a month after making her order. This may or may not be true, but it wouldn’t surprise me if it was because I have heard of people doing the same thing with clothes.
I know businesses are supposed to love their customers, and I do like most of mine. But many people believe that a business must always treat customers as if they’re always right and give them anything they want, to which I don’t agree. As a customer, I am aware of what is honest and right. If I neglect to read a product description or terms of sale before buying something (which I never do), then it’s my fault. Perhaps this is unreasonable, but as a business I expect customers to be equally honest and take responsibility for their own errors.
So Madoline and I have decided that we will no longer accept orders from this customer. It may not be the smartest thing to do to turn away potential future earnings from her, but her actions have proven her to be more of a hassle and not worth the money we might earn, because:
- She wasted our time by not reading the product description
- She expected special features that weren’t offered or included with her purchase
- She ignored our advice to order the right size for her horse
- She expected special treatment when her decision to not take our advice turned out to be a bad idea
- She lied about wanting to order a replacement item and took advantage of us after the item had been returned to us
- She may have used the item for a show before returning it over a month after the order
All these reasons make it not worth our while to do business with her again. Maybe she’s not dishonest and merely unintelligent and inconsiderate, but I have no desire to deal with her in the future. I know we may lose a few sales that way, but most of our products are custom made from scratch to a customer’s specification and it’s not worth the risk of custom-making something for her just to have it possibly used and then returned under false pretenses again.
We agreed to give her a refund minus the shipping costs and a 15% restocking fee to cover the expense of her special requests and customization, and I will lock her account so she can’t place future orders.
Is this a wise business decision? Probably not. But as I said before, when it comes to my business, It’s Business But It’s Also Personal, and I won’t put up with dishonesty and aggravation (the dishonest ones often require the most personal attention and interaction) to earn a few dollars.
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April 18th, 2009 at 7:59 am
I don’t necessarily think it *wasn’t* a wise business decision. I really doubt that you would have seen a profit in dealing with this woman, since most of your interactions with her actually cost you money. You weren’t turning away a customer, so much as you were turning off a resource drain. There’s also no guarantee she would’ve given you good word of mouth if you had continued doing business with her. People that inconsiderate more often than not tend to complain even if their every whim is catered to.
April 18th, 2009 at 9:31 am
I think it’s a very wise decision.
April 18th, 2009 at 8:21 pm
I have to agree with the other comments: this woman would end up costing you money. You don’t need dishonest customers. She might as well be shoplifting. No one would question throwing a shoplifter out of their store, nor should you question locking her account.
April 23rd, 2009 at 4:35 pm
I think you’ve made an excellent decision. You don’t need that kind of aggrevation.
April 25th, 2009 at 11:01 am
Good for you… sometimes dropping a customer is just good business.
April 28th, 2009 at 6:15 am
Many years ago as a teenager I worked at a Radio Shack. We had a running joke called the Tandy Loan Program. It was in effect year round on Fridays but especially Super Bowl weekend.
People would come in and sign up for a Radio Shack credit card and buy a big TV or stero on Friday then they would return it for a full refund on Monday. At the time there was no restocking fee or store credits and many customers abused the policy. I’m sure the company would have been more profitable by turning those customers away.
Now as a data modeler I have build customer segmentation models for the express purpose of isolating customers who cost more than they are worth. Once identified it is a matter of changing policies so that they are not encouraged to do business with my clients anymore.
You are in business to make money, you made the right decision.
April 28th, 2009 at 10:55 am
100% right decision.
I painted houses in college.
I turned away customers that talked about past contractors they had issues with. I would ask what kinds of issues. As soon as I realized they were nitpicky and hard to deal with, I would give them an estimate for 30% more than I would have. Most didn’t book, but a few did. Even for the 30% I don’t know if it was really worth it to work on those people’s houses.
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April 28th, 2009 at 11:06 am
Thanks, everyone for your comments and confirming that we’re doing the right thing.
@ MLR: We’ve done the same thing with a few customers in our business. A lot of our business is custom designing for special events, and customers email us to discuss having something made just for them. Most people are nice to work with, but we get an occasional very nitpicky, difficult (and sometimes rude) one who won’t give us the information we need or measure their own pet or horse, which makes it impossible for us to properly do our job. So we quote them a higher price than we otherwise would, hoping they’ll just go away. (We jokingly call this an “annoyance fee” in private conversation.)
May 4th, 2009 at 1:04 pm
I think you definitely made the right decision. She would cause more stress than actual business profit. There are too many people willing to take advantage of small businesses (or even big businesses) out there and it’s not worth your time to deal with them.
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May 11th, 2009 at 1:16 pm
Nice post, Penelope. Tough decision to make, but it sounds like the right on. Looking forward to sharing this in next week’s Carnival of Money Stories.
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May 13th, 2009 at 9:39 am
Good decision. This reminds me of a situation that happened at a company I used to work for. It was a small IT consulting company, and one of the other guys on my team handled the account of a very demanding customer. No matter what we did, they always complained. So the owner decided to take the account on personally for a month, giving them a direct line, 24×7, to whatever they needed. The owner catered to the customer taking care of their every whim. At the end of the month, it was assumed that my boss would try to convince the company to stay with us and promise that level of service to them from then on out.
Instead, he called them and notified them that we were no longer able to service the account. Even though they generated several thousand dollars in revenue of month, his explanation was simple: It wasn’t worth it.
After finding someone new to support them, the customer realized that they had been getting great service all along, and attempted on several occasions to convince my boss to ‘hire’ them back as customers, to no avail. It just shows that while the majority of responsibility in the buyer-seller relationship lies with the seller, there are things that the buyer should so to make it worth it to the seller. In your case, the buyer didn’t so I fully agree with your decision not to sell to them anymore.
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