Exploring “the customer is always right” lie…

* We’ve all heard the standard refrain, but never checked to see if it were an accurate statement of conditions. The chart from the 2017 report by the Better Business Bureaus should provide a clue.

Notice that in some industry classes a market segment may have a fairly large number of complaints yet still show that the overwhelming majority are settled to the buyer’s satisfaction; while in others, like “online retailer” “apartments”, “clothing”, “restaurants”, and “general contractors” almost 40% are not resolved to the buyers satisfaction.

But in a segment like airlines, cable TV, and Banks, which have a somewhat high number of complaints, over 90% are settled.  Thus an analyst might ask: “what is responsible for the differential” in settlement percentages.

One of the first observations to appear is the notion of aperiodic versus continuing buying relationship, that is the former are mostly “one of” buys, whereas in the latter there is generally a continuing relationship between the parties. Sellers are thus rewarded for settling complaints and keeping the buyer as a customer.

For example: as a buyer and seller on eBay and Amazon for over twenty years, I could probably count on one hand the number of times I have bought or sold an item to the same party; but have continued banking at the same Bank, even though the Bank I started with in 1971, Citizens & Southern, was sold or taken over several times by other Banks. Same with Comcast, a company that leads all others in the number of complaints filed against it.

As previously written elsewhere on this site regarding the con-job occurring with online retailers like eBay and Amazon, Sellers who are not in a monopoly position cannot settle complaints as readily as large multi-nationals. and must depend on the integrity and fairness in their sales channels. Thus a small-business eBay Seller harangued by a buyer of a used item, or a General Contractor harassed by a customer have almost no recourse to mandatory arbitration favored and supported by law within large corporations. In fact, Pierre Omidyar, the founder of eBay designed the venue to allow buyers and sellers to interact as equal partners to a transaction, with a “Feedback” system that encouraged each party to leave “feedback” on the transaction.

However, with changes implemented several years ago on eBay, Sellers are not able to leave negative or neutral feedback for buyers. That means sellers need other tools that will protect them against unfair treatment from buyers, plus combined with limitations on who or how a Seller can prohibit purchases by a questionable buyer, means Sellers, especially small-volume Sellers are most at risk of a “con job” being pulled on them.

The other observation that appears is that the “high resolution” entities are frequently moderated at least to some degree by Government rules, regulations, or agencies, whereas the “low resolution” entities are generally not restrained except by operating principles they created themselves. Take returns at retail outlets for example: some are ultra-restrictive, requiring returns be accompanied by receipts, within a defined time period, in the original packaging, show no signs of misuse, with payback reductions for “re-stocking charges”.

And the final observation is simply the notion “the customer is always right” has never been an operational condition in modern capitalist systems. Rather it is a motif projection embraced by both buyers and sellers, each for their own distinct purposes.

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