BusinessReport

The Upside of Customer Complaints

Customer complaints can actually be one of your best ways to strengthen customer relationships—if they’re handled correctly.

Even though a customer may be dissatisfied at first, 95% will return if the problem is resolved on the spot, according to Dick Ruhe, Ph.D., of Ken Blanchard Companies, a training and consulting firm in Escondido, Calif. “This speaks to the fact that if you have information about a customer’s problem, he’ll wind up more loyal if you fix it right away. Not that you want things to go wrong, but it’s a phenomenal opportunity if you find out about it.” Ruhe’s clients include Williams-Sonoma, Microsoft, America Online, Merck, and a wide range of retailers.

If a problem isn’t fixed immediately, only 70% of customers will return, Ruhe finds. If the problem is not resolved at all, 90% won’t come back. These disgruntled customers will tell, on average, nine others about their sour experience. Some will trumpet the bad news to 20 or more. You may never even find out what went wrong: 96% never complain to the retailer.

The lesson for jewelry stores: Employees need to know how to solve problems, whether the firm can live up to an obligation made to a customer, and how to say “no” nicely if the firm cannot. Ruhe recommends that store owners coach staff on how to handle typical problem scenarios, and how to do it in a way that makes sense for the company. “It’s a return-on-investment question, and the salesperson needs to be able to make a call on just how far you can go to solve a problem,” says Ruhe. “In profitable stores, some losses can be absorbed. But if a business is on the edge financially, this is not a social-welfare situation. It’s about making a profit.”

As an early warning system for problems that may arise, Ruhe recommends that jewelers give each customer a satisfaction survey with three key questions:

  1. On a scale of 1 to 5 (1 is the worst score, and 5 is best), how was your experience with our store?

  2. What did you find most satisfying about your experience?

  3. What could we do differently in the future to make sure you come back to see us again?

Ruhe also recommends that when a problem does occur, staff should focus on the solution, not why the problem occurred. “Then, they should establish an expectation about what they will do to solve the problem and follow up, keeping the customer informed. If in any way you can add value at the end, try to come in 1% over expectations, which is about what most operations can afford to do. Of course, if it’s a long-term relationship with thousands of dollars of jewelry sold to that customer in the last few years, go way out of your way.

“Jewelry stores may not understand that it isn’t enough to have the best product. They have to provide reliability, dependability, and accuracy. They should manage the store to provide service beyond what’s expected and make sure people are aware of it. You aren’t selling a thing, you’re selling a whole relationship.”

Marketing the Mystique of Custom-Designed Jewelry

Promoting custom-designed jewelry can pose a challenge. After all, you’re selling something that hasn’t even been created yet to clients who may not be sure of what they want or whether they can afford it.

One strategy for attracting these customers is to hold seminars or promotional events featuring your jewelry design expertise. Eln Albert of StyleQuest Communications, La Jolla, Calif., envisions a “special event to [relieve] customers’ fears and concerns about custom design that could be presented in an exciting way.” The benefits: new business from customers who never realized custom jewelry was an option they could afford, plus an opportunity to showcase your designs and build your reputation as an expert jeweler.

Albert, a speaker and trainer who for eight years operated a jewelry store specializing in custom-design work, recommends holding a seminar in the store once or twice a year or serving as a guest speaker for community or civic organizations. The format: Show customers what’s involved from start to finish, beginning with sketches of design options and moving through wax carvings, the wax model, the rubber mold, the casting, and on to the finished piece. Use slides or posters. For groups of 25 or fewer people, objects that aren’t terribly expensive could be passed around the room for participants to touch and feel. Add emotion to the presentation by showing photos of your customers when they see their custom jewelry for the first time. Generate drama by passing around two or three mystery items such as fire opal and have participants guess what they are.

“Once people realize that custom design is an option, they usually get excited about it,” Albert says. Publicize the in-store seminars with fliers, display ads in local newspapers, a sign in a display case, and calls to customers who like unique or different jewelry. Talking up the event also helps. “Even several months in advance you could start saying to almost any customer, ‘We are going to have a special event for custom design. If you’ve ever thought about it, we’d love to have you come,’ ” says Albert.

“Without a doubt it’s a valid idea,” says David Gardner, who owns a high-grossing jewelry store in College Station, Texas, with a considerable custom-design business and 30% revenue growth this year. “It won’t be for everybody, but for some it will be a home run. It’s like a real estate agent holding a seminar on how to buy a house.”

Gardner typically makes three presentations a year to community and civic groups. It pays off. For example, a woman who attended a presentation for spouses of a local university’s advisory council visited his store the next day with her husband to commission a $12,000 piece.

Instead of sponsoring seminars, Gardner gives every customer who has questions or concerns about custom jewelry a tour of the shop and talks them through the process there. “People really enjoy this,” he says. Instead of inviting interested clients to attend a presentation in two weeks, he suggests, “Why not give the ‘seminar’ right then?”

Jewelry Sales Rise by 3%

Jewelry stores posted 3% sales increases for the first five months of 1999 over ’98 figures, according to the U.S. Commerce Department. That’s slightly lower than JCK’s forecast of 5% to 7% sales growth for the first half of the year (JCK, January 1999, p. 119). Even so, members of JCK’s retail panel reported strong sales gains through May, and the economy continued to be robust into the summer.

The Commerce Department tracks sales by jewelry stores only, which represent nearly half of jewelry sales in the United States. Sales results from other venues for jewelry sales such as catalogs and Web sites are not included in the Commerce data.

Jewelry Store Sales on the Rise

Year Percent growth in sales
1995 6.1%
1996 5.7%
1997 1.9%
1998 8.5%
1999 (through May) 3.0%
Source: U.S. Commerce Department

Travel and Advertising Costs to Increase

Expect to pay more for advertising and business travel in the year 2000. According to the Kiplinger Washington Letter, ad rates should increase by about 6% next year for most media, including television, radio, newspapers, and the Internet. That’s on top of a 6% hike this year. Because independent jewelers can’t negotiate discounts based on volume, they’ll need to shop carefully to get reasonable rates. The publication also predicted that banner and other Web site ads will reap stronger results as more people shop online.

Business travel costs are expected to rise by 4% next year, about double the expected inflation rate, according to Runzheimer International, a Rochester, Wis., travel management consulting firm. That’s on top of the firm’s 4.8% forecast for 1999. The forecast is based on a 3% rise in air travel costs, a 5% increase in lodging expenses, a 5% increase in meal costs, and a 5% jump in car rental fees. But what about the anticipated oversupply of airline seats, hotel rooms, and rental cars? That’s factored in, Runzheimer says.

Millennium Opportunity

Thanks in part to De Beers’ hefty advertising budget for “Millennium diamonds,” the general public associates the new millennium with jewelry. But there are few measures of consumers’ actual plans to give and receive jewelry to commemorate the event. Research conducted for JCK by Taylor Nelson Sofres Intersearch of Horsham, Pa., indicates that the millennium presents a strong selling opportunity for jewelers. The following data are from a survey of consumers who purchased jewelry in the second quarter of ’99 (a sample size of 157 out of a total of 1,000 consumers surveyed).