Is your customer smart or stupid?

Is your customer smart or stupid? "What kind of a question is that?" you may ask. But it is a serious question that every company that attempts to connect to its customers ought to consider very carefully.

In my consulting work, I have noticed that organisations can be grouped into two different categories. In the first category are organisations that view their customers as smart and sophisticated. These organisations value the relationships with their customers, treat them respectfully and attempt to connect to them in a reciprocal and mutually beneficial fashion.

In the other category are organisations that perceive their customers as being stupid. For these organisations, customers are no different than a herd of sheep that can easily be swayed into making the 'correct decision'. These organisations always seem to have the appropriate remedy for every situation and only have to dangle the carrot (eg a timely discount or advertising campaign) for the sheep to follow the sheppard.

While companies belonging to this camp rarely air this conviction in public, they don’t need to for their actions speak louder than words. Their executives often have contempt for their customers and view them as nothing more than a means to an end. They speak about them in a derogatory fashion, and refuse to meet with customers or even visit the customer service department to get the 'pulse of the customer'. For these executives, customers represent the cheapest medium through which they can reach their financial goals and target lifestyles. These executives and by extension, their companies, are not in the business of customers. They are in the business of self fulfillment through customers.

You may be wondering how to spot these companies and differentiate them from those that are truly in the business of serving and delighting customers. One way is through their advertising. These organisations often use advertising language that underlines their belief that “they know better than you and what is good for you.” I recently identified such an organisation when I came across their advertising campaign that described tyres as "spoiling and pleasing". I have yet to discover how tyres can spoil or please someone, and to be honest, am not sure that I want to know. However, this is a classic example of arrogant advertising.

Other organisations give cheap gifts or 'giveaways' to steer customer behavior. These giveaways (which are ultimately paid for by the customer) are part of another deceptive tactic to lure prospects or retain customers that might be considering defecting to the competition. These organisations believe that “everyone loves a freebee” and offer prospects and customers cheap imports (eg mugs or calendars) that will likely be thrown into the garbage during the next spring clean.

Signing on the dotted line

The practices that mortgage companies utilise to attract business from prospects has been brought to light in recent years. While I won’t go into these practices here, I will point out that the common theme to these programs was determining that prospects were vulnerable and stupid enough to trick them into signing on the dotted line.

I would challenge you to raise the question in your organisation regarding the manner in which your firm regards its customers. Ask yourselves: “are our customers smart or stupid?” Even if you never broached this topic or raised this question within your organisation, the answer to this question is already guiding your strategy and business practices. To implement a truly customer-centric strategy, find out what your employees think about your customers.

Make sure to ask employees from all levels from the CEO on down; and from every department, such as R&D, finance, marketing, sales, collections and customer service. Even if your organisation perceives customers as being vulnerable (as are many sub prime customers) or unsophisticated, this does not mean that they are stupid. Moreover, if your customers are ignorant regarding a field such as finance, recognise that you have an opportunity to provide products and services that educate and empower them – a winning formula for success!

Viewing your customers as being stupid and treating them accordingly can often be a cost-prohibitive strategy for two reasons.

1. Your customers will eventually become more sophisticated and either defect to the competition or remain a customer but demand compensation for past behavior (eg discounts).
2. The board, shareholders and wider public will become aware of these practices and punish your organisation for it.

Customers are not always sophisticated. Most of us aren’t experts in the fields of law, healthcare, automobiles, computers or finance. However, this should not give companies a license to take advantage of us. We rarely feel empowered when we interact with accountants, lawyers, mechanics and insurance companies. Organisations that deal with generally unsophisticated customers should recognise that they have an opportunity to educate and empower them so that they will continue giving them their business and potentially bring them new business. An investment in education and empowerment is worth much more than a free frisbee, mug or calendar.

While your customers may not be savvy, they are also not stupid. Recognise that most of your competition probably treats their customers in a derogatory manner, so by treating customers as your partners, you will reap the rewards of long-term customer loyalty. If your customers are ignorant, that’s all right. Leverage this ignorance by educating them, being patient with them and building relationships that will stand the test of time.

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Lior Arussy is the president of Strativity Group and the author of several books. His latest book is Passionate & Profitable: Why Customers Strategies Fail and 10 Steps to Do Them Right! (John Wiley & Sons, 2005). To learn more about customer strategies, sign up for Lior’s newsletter at www.StrativityGroup.com