The kitchen, bath, and design trades are unique in that what is really being sold is a design or idea. Unlike a retail store, most often our customers complain about the services, promises, and design concepts, not the merchandise. Of course, there are those who complain about the difference in color from the cabinets in your showroom as opposed to the cabinets she was provided, but for the most part the complaints are about your designs, layouts, measurements and promises. Your designs, ideas and other non-tangible work is valuable and you should not be forced to give refunds or discounts to your clients simply because they complain. On the other hand, when you are wrong must be willing to provide reasonable reparations to your client. The tricky part is knowing when to fold and when to fight.
Dealing with tangible items was once easy. For example, if someone ordered light brown cabinets but you provided dark brown, the problem was clear cut as was the solution. You simply would replace the cabinets at no charge. However, is this day and age, things are not so simple. Most customers complain about the impact of the delay in replacing the wrong color cabinets. They claim that they are entitled to loss of use or make other esoteric legal arguments. More importantly, many customers are looking for you to make even the slightest mistake in the hopes that they can complain and receive a partial refund.
The four main complaints/allegations made by customers against kitchen and bath companies and designers are: (1) Verbal promises made before or after the contract is signed; (2) Incorrect measurements (even when they were present when measured); (3) Improper/inadequate designs; and (5) Loss of Use/Emotional Distress.
When your customer comes to you and requests a credit because your measurements were off by an inch or because you verbally suggested that the customer's order could arrive before the scheduled date when in reality it does not arrive until three days after the scheduled date how do you decide whether to give the credit or fight the customer?
The following guidelines should be used in determining whether to give in to a complaining customer.
First, you must fully understand the customer's issues. Many customers rant and rave and say nothing about their actual problem. You need to get a handle on the customer's real complaint. Ask the customer to put his/her complaints in an e-mail or other form of writing. If the claims involve some visible problem (i.e. improper installation; poor design; damage to the home; etc.) you should ask to physically inspect the conditions and photograph them.
Next you need to determine if the claims have merit. For example, if you contract does not have a time is of the essence clause and the customer complains because her cabinets arrived 7 days after the expected delivery date, she may not have a valid cause of action and thus, her threats are devoid of merit and you should offer nothing. You may need to speak with an a attorney to analyze the merit of the claim.
You then need to review your file, notes and other documents as well as speaking to any employees or subcontractors who worked on the job to see if you in fact created the customer's problem (i.e. did you actually incorrectly measure the room). If you did, the customer should be entitled to some reasonable form of compensation. Reasonable means that which remedies the problem you created. It does not mean that you should give the customer the whole project for free. For example, if you incorrectly measure the height of a kitchen island, reorder the island at no charge and offer a percentage off the original cost of the island, not the who kitchen.
If you have verbal confirmation or written documentation proving that you made no mistakes, you now need to weigh the customer's demands with the cost of litigation. For example, if a customer claims she is owed $500 due to a mistake that you did not make you may decide that it is a better business decision to pay the $500 since the cost of litigation would exceed the demand even if you win. Conversely, if the demand is $25,000 and you did nothing wrong and can prove it, you need to fight the customer to the end.
Please note, however, that giving in does not mean giving up. If you do give a credit to your customer you have to be prepared for the customer to ask for more. Remember the old adage, "If you give an inch they will take a mile." You need to be ready to refuse any further refunds and defend your position in court, if necessary.
It is important to keep emotion out of your decision to provide a credit or refund. You need to view it as a business decision only. In order to do this, you must understand the customer's complaint, your potential liability, and the true cost of settling vs. fighting it in court. Remember, that the best defense to these claims is having a proper contact that addresses your liability when certain problems occur.
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