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A Crash Course In Customer Recourse
By Orvel Ray Wilson   Printer Friendly Version

Keeping customers satisfied is tough enough even when you provide top-quality products and never-let-you-down service. But sometimes your best efforts just aren't enough. Where do guerrillas draw the line when the customer complains?

They don't, because it's simply too expensive and too dangerous to let an unhappy customer escape.

On average, if someone has a good experience with your company, they'll tell three people. If they have a bad experience, they'll tell twelve. When you consider the powerful effect word-of-mouth can have on your credibility, those statistics can spell disaster.

Considering the high acquisition cost of new customers, "giving away the store" to appease the unhappy customer may be the most economical tactic. With the cost of an average industrial sales call now exceeding $225, and an average of nine calls required to establish a new account, that initial cost-of-sales investment might not be recovered until the tenth re-order.

Karl Albrecht and Ron Zemke, in their book Service America! (Dow Jones-Irwin), say it costs five times as much to sell a new customer as it does to make the same sale to an existing customer. Guerrillas know that the real money is in the subsequent sale, and will spend far more than might seem prudent at first glance to buy back a customer's good graces.

The publishers of Quicken, a $49 personal accounting software package, encourage you to "Try Quicken for a month. If you like it, send us your check. If not, just keep it and owe us nothing." The offer seems ludicrous, but it was costing them more than $49 just to repackage and re-stock the returns. The "just-keep-it" guarantee is a real confidence builder, and a real sales builder as well.

Guerrillas encourage customers to complain because they get valuable feedback about how they measure up. This reconnaissance can give them the competitive edge.

Guerrillas track both satisfiers (if you do these, the customer will be more satisfied) and dissatisfiers (if you fail to do these, they will be less satisfied). Satisfiers and dissatisfiers are independent. That is, failing to provide a satisfier will not provoke a negative response, and providing more satisfiers does not necessarily compensate for a dissatisfier. For example, lower prices (satisfier) will not compensate for poor housekeeping (dissatisfier). By eliminating the dissatisfiers, guerrillas make more customers happier while maintaining reasonable margins.

A good way to determine how far you can go and still stay in the black is to calculate the "Lifetime Value" of your customer. Consider your local grocer: an average customer buys $100 a week worth of groceries, 50 weeks a year; that's $5,000 annually. At an average margin of 3%, that customer is worth $150 net each year. Over the 10 years or so that a customer will stay in the neighborhood, that's $1,500. So when a customer complains that the beef roast spoiled, there's nothing to be gained by questioning or quibbling. What's the Lifetime Value of one of your customers? You can spend up to that amount to send them away happy and still break even.

Push the decision-making authority down to the lowest level possible. Nordstrom's instructs their salespeople to: "At all times, use your own good judgment." A bank in Dallas authorizes tellers to waive up to $100 in charges, or spend up to $100 to make things right with a customer on the spot. Disputed overdrafts, errors in interest, or mysteriously missing deposits are dealt with swiftly with the stroke of a pen, without an argument, and without having to check with a vice president. In branches of Chicago-based Bank One, elaborate POS displays promise to do "Whatever It Takes."

When a customer does complain, listen carefully. Ask, "That sounds important. Do you mind if I take notes?" Express your concern, "Sounds like we have a real problem here that needs some attention." Do not volunteer a solution; rather ask what it would take to set matters straight. More often than not, they will ask for a smaller adjustment than the one you were prepared to offer. Then, whatever adjustment they suggest, do it, and a little bit extra.

Be careful not to over-adjust for the error or you risk leaving the customer feeling guilty. Once, after buying a new set of tires, I complained that they had been mounted white-side-wall out, even though I had failed to express my preference. The shop not only re-mounted all four wheels, but over my protests, waived their normal charges for mounting and balancing. I'd have been quite happy had they simply (and cheerfully) re-mounted the tires. Their adjustment was so unreasonably generous that it felt condescending, and I haven't had the courage to face them again.

Most importantly, act now. Immediate attention to a problem is a far more critical satisfier than lavish compensation delayed.

Finally, express your sincere appreciation by saying, "Thank you for bringing this problem to our attention. No doubt others have had the same experience. We appreciate the opportunity to improve." A customer who has had their complaint satisfactorily resolved is five times as likely to buy from you again!

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