For more than a century, smart leaders have promoted the concept that “the customer is always right.” Marshall Field and Harry Selfridge popularized this in the retail space, but it’s spread to being a general business maxim.

Taken literally, though, it’s not true. An amusing example is in recent MetLife ads, where Lucy Van Pelt from “Peanuts” stubbornly declares that the price for everything should be five cents. Clearly the customer can’t be “right” in the sense that she can make your business decisions.

Let’s not get too cynical, though. The customer holds the keys to your revenue stream, and without that, you don’t have a business.

Here’s what we should learn from the phrase:

The customer’s decisions are to be respected. Each person is an independent entity, with individual needs and desires. These are the people who have the power to keep you in business – or to leave.

Customer satisfaction is paramount. When someone becomes dissatisfied, or even just bored, they’re probably going to just walk away. Even when you think you’ve cleverly locked in someone’s purchasing decisions, they still have considerable power. They can always give negative recommendations to others who are evaluating you.

Customers think differently than you do. Even when you’re very close to your customer profile, the fact is that each person is an individual. They have things going on in their lives that you don’t understand, so it’s important to stay connected with their changing reality. Don’t get blinded by your own priorities.

Employees need a customer focus. It’s natural for your workers to be more worried about their personal concerns, and for managers to be drawn into internal issues. It takes constant attention to create a culture which reinforces customer satisfaction in every decision.

Despite all this, the customers still aren’t your entire business. You have your own goals, employees, suppliers and investors. Your challenge is to find an appropriate balance between all the various needs and desires.

A problem with the phrase “the customer is always right” is that it ignores your role in setting expectations. Most times the customer’s sense of rightness will be based on what they expect from you. If you’re not saying very much, then it will be based on the general behavior of the market.

I’ve observed how customer-service expectations have changed for utility companies I’ve worked with. I have a regular service contract with an HVAC company, and they’ve trained me to expect them to show up within five minutes of the scheduled time. If there’s any problem, I’ve always received a phone call in advance.

Compare that with the normal expectation of, say, a cable company. It seems that they still give you a “four-hour window” and often miss that.

Customers know the difference; we talk about it with our friends all the time. But mostly we’ll talk about the bad experiences: the missed appointments, the broken agreements, the mistakes. So there’s definitely an opening for a competitor who wants to come in and consistently deliver better service.

You might argue that specifying the “four-hour window” is a great way to meet and exceed customer expectations. The problem is that I, as a customer, have every right to compare my HVAC service against my cable service, and search for different companies who will deliver more. I’ve never looked for an HVAC replacement, by the way, but kept looking to switch out my cable provider and finally found a great alternative about six months ago.

The other problem with that “four-hour window” is that it makes your organization lazy. The customer’s been sitting there for three hours in frustration, but your team isn’t worried about it. They still have an hour left, right? Even when they turn up “on time,” the customer already is annoyed. They had to take four hours off of work, lost some income and created a problem for their supervisor.

You can’t completely set customer expectations. You do your part, but within the context of the larger market.

Make sure you put customer needs first, but do it intelligently. Consistently set the right expectations and you’ll reap the benefits of loyalty and great referrals.

Carl Dierschow is a Small Fish Business Coach based in Fort Collins. His website is

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