31 Jan Cable, Cokes and Recovery — Two Stories of how 20 cents turned into thousands of dollars
My morning routine involves getting my toddler out of his crib (usually before 6 am) making coffee, and then checking out the latest scores and news on my laptop. It’s the only time during the day for me to catch up on all the things that are happening in the world. A couple of weeks ago my cable company robbed me of my cherished morning routine through a disruption of their internet service.
If that had been the first time it was down it wouldn’t have bothered me, but our cable and internet service had been anything but reliable leading up to that point. As I drove to work still a little perturbed about my morning, all I could think about was the cable companies total disregard for a high-level of service and I decided to look into changing cable/internet providers. There’s more competition than ever which has led to great incentives for switching companies.
Before I could seriously research an alternative, a letter arrived in the mail from my cable company. The letter started with a description of the problem that occurred and the steps they were taking to keep it from happening again, but how the letter ended is what kept me from switching. The company actually apologized for the interruption, and then offered me a free movie as a “gesture of concern for your inconvenience.” It seems I was wrong, the company does care about their level of service, at least enough to write a letter and offer me a free movie. I’ve been dying to watch “Hangover” again so I was pretty happy, and I never looked into switching companies.
There has been a Coke machine here at Metro for about 15 years. We drink way too many soft drinks, so it gets a lot of use. Like most vending machines, our Coke machine would eat some change every now and then. Like most people instead of immediately calling for service we beat on the machine then dump more money in, and when that doesn’t work then we call for service.
Recently the machine ate 70 cents. Not a big deal, but we definitely wanted to be able to use it (remember, we drink a lot of soft drinks), so we called the person that owns and services the machine. He comes out, opens the machine, and hands us 50 cents. We ask about the other 20 cents, and he sarcastically said that’s what he was charging us for coming out to fix the machine. Again, a break-down in service got us thinking . . . and calculating. One person here has bought at least one drink a day for the last five and a half years. That adds up to over $1,000. That’s just for one employee, at one drink a day (some of us have been known to buy much more.) When we started calculating just how much we were spending, it started to make sense to pool some money and make a run to the wholesale store once a month and keep drinks in our fridge. It’s less expensive, and we don’t have to worry about losing any more money.
The Moral of the Stories…A little change can go a long way.
Every company, no matter how large or small, will have a product or service that does not meet a customer’s expectations at some point in time. How a company handles the unhappy customer will keep the customer and actually strengthen the relationship, or will lose the customer…probably forever. Recovery is the strategy of keeping a customer after not meeting his or her expectations.
In the first story, the cable company was able to “recover” because they accepted responsibility, apologized, and then provided something I valued to compensate for the loss of service. Their cost for recovery was really low. They had to print and mail the letter, but letting me watch a movie cost them nothing. So for 20 cents (the price of the letter) the cable company kept a client that will spend thousands of dollars over the next few years. That’s a strong ROI.
In the second story, there was no accepting responsibility, there was no apology, and there was obviously nothing given to us that we valued. All the Coke machine owner had to do was give us the entire 70 cents back. We would not have started contemplating just how much we had put in that machine over the last few years, which led to our decision to change how we buy soft drinks. By keeping the 20 cents the Coke machine operator lost thousands of dollars in future revenue. That’s a negative ROI.
The Coke story is a strong case for Recovery, but let’s take it a step farther. Imagine if the Coke machine operator had given us the entire 70 cents back, apologized, then given us a free Coke. That would not only have compensated us for our loss, but more importantly it would have strengthened our relationship. We would have told that story all day, “Dude, I got a free coke!” He would have showed us he valued us as a customer and our relationship would have been stronger than it was before. His only cost would have been the wholesale cost of a Coke.
It’s definitely easier to keep an existing customer than it is to find a new one, so if you don’t have a Recovery strategy, it may be time to develop one. Look for ways to show your client you value their business when something goes wrong. It could have only cost the Coke Machine operator a 20 cents, but now it’s going to cost him thousands of dollars.