When
20 Bucks & Ego Is More Important than a Decade of Customer Loyalty
By Ed Rigsbee, CSP
(1864 words)
When are 20 bucks and a
store manager’s ego more important than a decade of loyalty from a
customer? Never! Little things can be much more costly than one might
imagine.
I recently had an
experience that clearly demonstrated the crucial need for better
training at all levels, from entry-level employees to management. This
situation occurred at a local tire store, one that is part of a national
chain—of which will go unnamed—but claims in their name to be pros
with tires. The store manager made the decision that $20 in his cost
on labor, and his need to be right was more important to him than a
loyal 10-year customer.
Let’s Review the
Benefit of from 10 Years of Customer Loyalty:
- New
tires (sets of four) on 3 cars—approximately 8 sets at an average
of $300 per set equals a minimum of $2,400 in retail sales.
- Satisfied
customer recommendations to friends and business acquaintances—in
this particular case the bare minimum is referral benefit is a fleet
of 18 cars and trucks that moved their account to this particular
store five years ago based on my recommendation. This referral has
resulted in approximately 9 sets of car and truck tires purchased
yearly by the company. At an average of $400 (truck & SUV tires
are more expensive), the yearly sale to this company is
$3,600.
- The
bare bones minimum value this store received from one customer’s
loyalty and referrals for 10-years is $20,400.
Let’s Review
What the Store Will Most Assuredly Lose in the Coming Decade from the
Manager’s Seemingly Inconsequential $20 Decision:
- Within
the next 2 months, the store will lose the sales on sets of tires
for both a minivan and an SUV equaling a minimum of $700.
- Over
the coming decade the store will also lose, not accounting for
inflation, at the very least the same $2,400 from my 3 cars, and
most likely more.
- After
telling the above-mentioned fleet manager that I had recommended to
this store five years prior, the one that claims to be pros with
tires, this store will most likely also lose my friend’s fleet
account. The fleet account loss over the next 10 years will be at
least $36,000.
- Lost
sales in the community of Thousand Oaks, CA where I live. While for
a decade I had recommended these pros with tires to a number
of friends, now I will, as would most people in this situation, make
it a point to tell anyone that will listen how poorly I was treated
by the store manager. How many dollars do you think will be lost?
National Brand
Damage:
- I’m
sure you would agree that it is not a good idea to treat any
customer poorly, but to treat a heavily published author and busy
professional speaker poorly is purely lunatic, as I will now use
this story about the brand that claims to be pros with tires
at many of my seminars across the country.
- Will
people discontinue using this company that claims to be pros with
tires just because I tell the story? I don’t think so. But,
what will happen is that the next time they do business with this
chain and a problem occurs, as is bound to happen, they will
remember my story. Now that chain, and the particular store, has an
additional strike against it—perhaps their last?
All of the above lost,
and potentially lost business, because a chain store manager let’s his
ego and 20 bucks get in the way of making good customer satisfaction
decisions. This is a common mistake that many managers and owners make,
and not exclusive to retail.
Learning From the
Situation:
1.
My teenage son took his car in to get the tires rotated and
balanced—a free service from the pros with tires, for the life
of one’s tires.
2.
Driving away from the store, my son noticed the car now pulled to
one side.
3.
He returned to the store where they are pros with tires
and asked them to fix the problem.
4.
They said they aligned the front end and charged him for the
service without his approval (something that is illegal in the state of
California). He did not argue the issue as it was the end of the evening
and other customers were also trying to get out of the store too.
5.
Driving away again, he noticed the car still pulled.
6.
The next day I went to the store and spoke with the manager,
we’ll call him Dan because that’s his name. In private, I explained
to Dan my displeasure in the situation and asked him to remedy the
problem. He said he would.
7.
Upon returning to pick up my son’s car, Dan personally
guaranteed that the car now drove straight. And scribbled on a scrap of
paper how he claimed one of the front tires wore unevenly because of the
car being out of alignment.
8.
When I asked for Dan to refund the charge to my son since my son
did not knowingly authorize work to be done that would incur a charge,
he got in a huff and started to process a credit.
9.
While processing the credit, Dan asked what I did for a living. I
told him that I help businesses to be profitable. He snidely asked if I
would do work for free. I told him that up to that point, his customer
service had been acceptable and cautioned him not to go further. He then
told me that he did not want me to ever return to his store.
10.
Leaving the store, I noticed that the tires were rotated back to
the position they were in when my son originally brought the car in for
the rotation. The manager lied to me about remedying the problem. All
this resulting in the car back to how it was when my son first came in
and the store firing a 10-year customer.
To answer Dan’s
question—I would absolutely do something for free for a 10-year loyal
customer if I even had a hint that my organization or I might have even
partly been responsible for a situation that made a customer unhappy.
Waiting to speak to Dan that evening, I overheard a customer
congratulate Dan on his promotion, I assumed to a district manager
position. Just think what’s going to happen to the stores that he
oversees if he takes this antagonistic attitude with customers that are
rightfully, or even unrightfully, dissatisfied with the service
delivered by the pros with tires. Receiving a promotion is not a
justifiable reason to let your ego control your customer satisfaction
decisions.
What Can Be Learned
From Dan’s Foibles?
- Do
what your marketing material, advertising material and sales
invoices clearly state that you will do.
- If
your business card has the picture of a doctor checking out a tire
and your advertising brags that you inspect all tires when rotated,
be consistent in your actions with both your branding position. This
will most assuredly mean that you have to better train your
employees, even the entry-level ones. Too frequently entry-level
employees execute complementary services that are offered in
marketing materials but are executed poorly or incompetently. If the
employees of this store did their job consistent with their
company’s national branding position, and there was in fact uneven
tire wear, they would have told my son about the problem rather than
letting him drive away believing they damaged his car.
- If
a customer believes you caused a problem, either fix it or if you
believe it was not your fault, take the time to educate and show
them on the actual product what you believe to be true.
- Don’t
take advantage of teenagers lacking the life experience of mature
adults, even if it is legal to do so. Besides losing me as a
customer, the pros with tires, also lost my teenage son. How
many tires might he have bought from this national chain in his
lifetime? I can assure you that he will never buy a tire from
the pros with tires.
- Do
the job right the first time. In this situation they charged my son
for a service they did not competently perform. Had they have
correctly aligned the front the first time; my son most likely would
have accepted the unauthorized charge. If they in fact executed the
service properly, with the rear tire in front and a competent
mechanic doing the alignment, the car would have driven straight.
- When
a customer comes into your store and asks to speak privately they do
this for two reasons. First, as not to embarrass you in front other
customers. And second, because they are very seriously dissatisfied
yet want to continue the relationship—hoping that you care enough
about them as a customer to take care of the problem.
- If
you truly believe you are not at fault in a situation, take the time
to demonstrate on the product why you believe the problem was
customer caused and still offer to cover the cost. If you explain
your position convincingly, more times than not, your customer will
accept accountability and not ask you to completely cover the cost.
- Why
in the world would you want to get in a huff with a customer? One
thing that Sears and Nordstrom have in common is that they have
extremely liberal return policies. They know the value of keeping a
customer for life. They know that the buck or two they lose here and
there is nothing compared to the lifetime dollar value of a single
customer.
- Before
you fire a customer, determine how much business that customer has
done with you and could potentially do with you. If it economically
unintelligent to do business with a customer, by all means fire
them. But why would you give up income because your ego might have
been bruised a little? In my situation, Dan’s company has a
computer system sophisticated enough to look up customers by last
name, but unfortunately, Dan was simply too lazy to check the facts
and fired a 10-year loyal customer based on his ego needs.
- Don’t
lie to your customers as Dan lied to me. He told me he had fixed the
car when he had not. His store must have been unable to properly
align the car as he stated it needed to be, or why would he have put
the tires back to how they were positioned when my son brought the
car into the pros with tires in the first place?
It’s the little
things, the seemingly inconsequential decisions, that when extrapolated
out into the marketplace that can cost a local store, a national chain,
or any business both huge lost sales dollars and agonizing damage to the
brand.
While I’m sure you
are not guilty of the above situation, it bears repeating: When are 20
bucks and a store manager’s ego more important than a decade of
loyalty from a customer? Never!
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Adapted from Rigsbee's
forthcoming book titled, Customer Service Screw
Ups--Learn from the Mistakes of Others. In this book, Rigsbee rants
about the crummy customer service he has received and offers suggestions
on how you can truly partnering with your customers.
Ed Rigsbee, CSP is the
author of PartnerShift, Developing
Strategic Alliances and The
Art of Partnering. Additionally, he has over 1,500 published articles to his
credit. Ed travels internationally to deliver strategic alliance keynotes
and workshops. He can be reached at +1 (805) 498-5720, ed@rigsbee.com or visit www.rigsbee.com.
To
access helpful additional information from Ed Rigsbee at no charge,
please visit www.rigsbee.com/downloadaccess.htm.
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