When Saving Money is Bad Business

When is the worst time to try to save money?  When your customer has a problem.

Two stories illustrate the challenge with this:

– Yesterday, the transmission on my XC90 went out, just 30,000 miles after it had been replaced.  Unfortunately, after it had been replaced last time, and I was having issues, my (former) mechanic told me that it was probably just “settling in.”   I then asked if there was a warranty (in case it WAS a real problem) and they said it was 18,000 miles.   Given that I had just spent $4,000;  perhaps they would have been smarter to tell me to bring it in so they could fix it, and then they could have offered me a longer warranty.    Because, once I felt like they were not really standing behind their work; they lost me as a customer for EVERYTHING.

– My parents were paying for a monthly “pass” at a car wash service.  One day, they brought their car in for a wash and the system ruined their customized license plate (had their names on it) AND broke a side mirror.  Rather than give them $125 to pay for repairing the mirror; the Car Wash said it was not their responsibility.  So, to save $125 one time, the Car Wash lost a customer for life; which will cost them hundreds over a lifetime.  And guess how many people now know about their problems with that Car Wash?

What is tragic is that: everyone knows how valuable customers are.  We have all heard how much more expensive it is to acquire a new customer than keep a current one.  Every business owner prides themselves on providing great “Customer Service.”

So, WHY do businesses continue to have issues dealing with customers?  Because most businesses do not have a specific process to deal with issues.

The fact is: you cannot just SAY you believe in customer service.  What you must do is EXECUTE when the situation comes up. When your customer calls you with a problem; that is your chance to shine!

Here is your four step “THRILL Your Customer” Process:

1.  Apologize.  After all, you ARE sorry your customer had a problem, right?  Even if it is not your fault; your customer often will relax if you just say you are sorry.

2.  Offer to make it right.   Yes, it may cost you a little to have a longer warranty; or repair that mirror.  But, how little that is compared to the lifetime value of a customer?

3.   Give your customer something free.  Wouldn’t THAT set you apart?  What if, instead of refusing to fix that mirror, the Car Wash had paid to replace it AND given my parents a free month?  How many people would they have then told about their positive experience?

4.  Step back and examine how could avoid the issue in the future.   In steps 1-3, you addressed the symptom; in this step you address the cause.  Skip this step, and it WILL cost you more money in the long run to deal with customer issues (as you deal with the same problem again and again).

In the end, when your customer has a problem; use it as an opportunity to create a “Raving Fan” AND improve your quality.  Making your customers happy is almost always a path to profitability.

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