When seeking a new restaurant to eat at, a hotel to spend a night, or an attraction to visit, many consumers turn to a rating system to evaluate their options.
These systems often include a “stars” rating (typically 0-5) and potentially an area to read comments.
But what if the script was flipped and businesses were able to review their clients?
It’s already happening with some companies, including Uber, Lyft, Airbnb, and more.
So what is the practice of businesses rating clients, and what does it mean for the future?
Why Rate Clients?
The old saying, “the customer is always right,” has brought about some cynical remarks from workers who have less than positive experiences with a customer.
However, the adage persists because a business needs customers to succeed. Therefore, employees are often urged to go out of their way to please the customers, no matter how difficult it may be.
Still, businesses have caught on to the fact that they benefit more from certain clients than others. So while a problematic customer may contribute to a firm’s profit, that customer may be harming the company in other ways, such as hurting employee morale or consuming too much time versus the money they spend.
Armed with this knowledge, some firms have started rating clients to prioritize their service better and invest their efforts to serve their best clients while keeping the worst customers waiting.[1]
Advantages
By creating a rating system for customers, businesses can focus their efforts on their best customers, which best serves the company's goals.
Rating systems also help businesses hold the worst customers accountable for their actions, such as cleaning charges if they spill something in an Uber or Lyft vehicle or smoking in a non-smoking room.[1]
Furthermore, customer rating systems help businesses better understand the clients they are serving. For example, a lodging or transportation service will have an advanced warning if a customer with a poor rating will be frequenting their business.
Finally, employee morale is a winner from customer rating systems because they no longer just have to “sit there and take it.” They now have the recourse of rating a client and, at the very least, can enjoy the satisfaction of potentially holding that demanding customer accountable.
Problems
Like any rating system, having businesses rate their customers is not without problems. After all, how many times have you read a review or seen a ranking and wondered just what those people were thinking?
The practice of businesses rating customers is subject to the same drawbacks that human subjectivity entails. Furthermore, companies that rank their clients run the risk of driving away customers or being perceived as discriminatory.
Customers who discover that they have been tagged with a poor rating by a business will naturally be unhappy and may avoid that company in the future while also spreading negative attention to the operation.
In fact, eBay, which notoriously relied on rating its customers for years, has halted the practice after realizing that too many people were unhappy with the system and the company.[2]
With positives and negatives, rating customers can be beneficial for certain operations. If you are seeking to establish customer service protocols in your business or are in need of streamlining your company’s daily operational processes, give Visa Business Plans a call. We can help.
Visa Business Plans is led by Marco Scanu, a certified coach from the University of Miami with a globally-based practice coaching Fortune 1000 company executives, entrepreneurs, as well as professionals in 4 different continents. Mr. Scanu advises clients on turnaround strategies and crisis management.
Mr. Scanu received a bachelor’s degree in Business Administration (Cum Laude) from the University of Florida and an MBA in Management from Bocconi University in Milan, Italy. Mr. Scanu was also a Visiting Scholar at Michigan State University under the prestigious H. Humphrey Fellowship (Fulbright program) with a focus on Entrepreneurship, Venture Capital, and high-growth enterprises.
At present, Mr. Scanu is the managing partner and CEO at Visa Business Plans, a Miami-based boutique consulting firm providing attorneys and investors with business planning services in the areas of U.S. and Canadian immigration, SBA loans, and others.
[2] https://www.cbsnews.com/news/some-companies-turn-tables-on-customers-rate-them/