18 Jun 2020 By: Shelby Shaffer
We can all agree that Henry Ford was a smart businessman. His legacy and business models still live on today. But there is more we can learn from Henry Ford than just assembly-line efficiency.
Henry Ford taught business owners how to say “no”.
Ford famously insisted, “Any customer can have a car painted any color that he wants so long as it is black.”
At first, Ford’s little anecdote evokes a slight chuckle, at the very least, a smile. But digging deeper, we discover that Ford was on to something.
Why Henry Said “No”
Now let’s get one thing straight. Henry Ford didn’t despise color. He was a man of business efficiency. He saw the high demand for the Model T as it was the world’s first affordable car.
In 1925, there were more than 15 million Model Ts in the world. This meant that over half the cars in the world were Model Ts and they were being manufactured at a rate of 9000 to 10000 cars a day.
Ford had perfected the moving assembly line so much that one Model T could be built in about 93 minutes. The demand for these cars was so large, that they had to be moved out of the factory as soon as possible. (Quora)
Despite pissing off customers, Ford knew what he was doing. To stay on his tight time schedule and to stay within budget, he only offered the Model T in one color, black.
Even though he had the ability to manufacture the car in other colors, changing the manufacturing time and production colors would increase production costs and raise the MSRP for the customer.
The science behind Ford saying “no” wasn’t because he liked unhappy customers, actually quite the opposite. By only offering one color and keeping efficiency high, he was able to meet the customer demand for the Model T while keeping the price fair for his buyers.
In the end, Ford was happy, and his customers were too.
Why it’s OK for You to Say “No”
Like Henry Ford, you are also a business owner. That means you have to always be making the best decisions for your business. The reality is, as a business owner, you’re never going to please all your customers. Ford knew this, and deep down, you know it too. Unless you’re willing to sacrifice your own sanity, the efficiency of your business, and eating overhead costs, there will always be unhappy, pissed off customers. But don’t let a few bad apples get you down.
It’s ok to say “no” to customers as long as it’s in the interest of your business. It takes years for business owners to find the process that works for them. Making everything run efficiently and at cost so business owners can deliver a final product to their customers at a fair price while making a fair profit is hard!
As a business owner, you have a lot to take into consideration including:
- Overhead cost
- Manufacturing cost
- Manufacturing time
- Abiding by Company Policy
If a customer is requesting specifics that would change any of those, you have every right to say “no”. It’s ok to say “no” as long as all parties are satisfied.
When is it OK for You to Say “No”
There are plenty of instances when it’s ok to say “no” to a customer. Frankly, you don’t need a list of finite reasons. If you feel like it’s in everyone’s best interest to say “no”, say it!
But if you’re looking for a more structured outline for when to say “no”, consider the following reasons.
Asking for a Refund
“I have read and agree with the return policy.” There’ a reason this needs to be manually checked when making purchases online. Yet, 97% of customers don’t read these terms before agreeing to them. The same goes for in-store purchases. How many cashiers probably go totally ignored when they say “we have a 30-day return policy”?
It’s important to have a reasonable and airtight refund and return policy with any business, even if customers don’t agree with it. Customers should only have the option to return items or receive a refund as long as it’s within your policy guidelines.
Personally, I do a lot of online shopping. I rely on quick and easy return and refund policies because sometimes the things I buy don’t fit right or they’re not what I expected. I’m always honest about my refunds, and I don’t try to swindle the business. Oftentimes, it’s an honest mistake.
However, there are customers who will try to abuse the system. They’re dishonest in their reasoning or they try to return items they’ve worn or they’ve damaged after purchase.
In the event of trying to return damaged goods, or get a refund for services rendered, it’s important to have a solid policy to back your decision to say “no.” Having a well outlined and clearly stated refund and return policy will ensure you have the best armor against pissed off customers.
Asking for a Discount
Everybody loves a discount. In fact, 95% of customers will clip coupons and 60% will actively look for coupons upon making a purchase. Additionally, 77% of consumers participate in retail loyalty programs so they can receive exclusive offers and discounts.
As a business owner or employee, it’s always a nice feeling to see the excitement on a customer’s face when you’re able to apply a discount to their purchase. The fact of the matter is however, businesses have no obligation to offer customers discounts, ever.
Saying “no” to a discount is perfectly acceptable as long as you can back it up. While it’s not right to say “no” to a valid coupon, even if the customer is exceptionally irritating, it is ok to say “no” to expired coupons or coupons from competitors. It’s also okay to say “no” if asked to apply multiple discounts or price-match a competitor.
The prices you set are yours. They are what you deem as fair for the customer, while also being able to break even, or better, make a profit. Your prices reflect the value of your products or services. If a customer isn’t willing to pay that price, they clearly see a different value.
While business owners feel they are providing everything they can to satisfy their customers, there’s always going to be someone who asks for something more specific: they’ll make a special request.
This is where business owners will have to set some boundaries. Some requests are easily accommodated while others will simply be out of their abilities.
For example, a baker is commissioned to bake a vegan cake for a wedding of 25 people. While she normally doesn’t offer vegan cake options, the bride and groom are friends of a friend and they have allocated a sizable budget of $300. The baker weighs out her ability to make a delicious vegan cake while still keeping it as a price that’s fair for her and the happy couple. She decides that since it only needs to feed 25 people, it can be on the smaller side, so it’s worth her effort. She accepts.
A few months later, the same baker gets a new client from a recommendation from the previous couple. The new client raves about how the baker was able to meet the dietary requirements and how delicious and affordable the cake was. The new client is looking to commission similar dessert options for a benefit. 300 people and a wide variety of dietary restrictions, the new client is asking for 5 different dessert options, all vegan, all gluten-free. The new client also had a budget of only $250.
This would be an okay situation for the baker to say “no”. Suddenly, she’s being asked to do something that she has neither the experience nor the manpower to complete. Likewise, the budget offered simply wouldn’t cover the cost of materials and labor. While the new client might be disappointed or even pissed off, it’s in the best interest of the baker to say “no”. She risks losing too much time and money to complete this special request.
Going Against Company Policy
Rules are rules for a reason. The same goes for company policies. Policies are important because they address pertinent issues, such as what constitutes acceptable behavior by employees, how to handle certain situations, and what procedures to follow. (Convercent)
A good employee handbook will outline all the company policies (including the three listed above) and how employees are expected to approach and handle the various situations.
In a situation where a customer is asking something of an employee that clearly goes against company policy, the employee can firmly say “no”. The risks of going against the policy are a greater loss for that employee than the loss of a customer. Employees can lean on the company policies for the reasoning behind saying “no” and know their employer will support them for following protocol.
Believe it or not, there is a limit to the amount of customer service you are morally obligated to provide customers. Customers aren’t always right. As a customer service representative, employee, or business owner, if you can honestly say that you’ve gone to the lengths of your ability to try and please the customer, your job is done.
Sometimes customers are just simply unreasonable. They will argue and fight every reason you give them as to why you’re saying “no”. For those customers, “no” is not an option. They just won’t accept it.
It’s at this point that you can say “no” without having to give any more reasoning that the ones listed above. You need to protect your own sanity sometimes. Self-preservation isn’t about proving the customer wrong. It’s about making sure you are able to give the next customer the same attention and service. It’s making sure you are treating each customer fairly, and if a problem customer is dragging you to your breaking point, then it’s time to say “no.”
Henry Ford was setting the standard for saying “no” when he only offered the Model T in black. He knew it was in the best interest of the Ford Motor Company and for his customers. Business owners can learn a lot from Mr. Ford. The most important lesson might be when to say “no” to pissed off customers.