When you make client service decisions, do you weigh the cost of losing the client in your decision?
I’m talking about the hard cost of losing that client, not the often fuzzy, sometimes made up, and frequently inaccurate cost of a loss, that usually includes the 10-20 people (on average) that an unhappy client will tell after a poor experience – even if it’s their fault. While that does tend to happen, it’s this unhappy client I’m focused on, not their friends, family and coworkers. That’s the one you’re almost sure to lose in a badly handled situation.
What will it cost you if that person never comes back? Not their friends, not someone who reads what they say on Facebook, but them.
Let me describe a recent adventure at Best Buy to give you some context.
A couple of months before the iPhone 5S came out last year, Best Buy (BB) had an offer to upgrade from an iPhone 4 to a 5 at no cost. The only catch, which I didn’t view as a catch, was that we had to renew our cell contract with Verizon.
We’re happy to reward their early investment in Montana cell infrastructure by remaining with them, at least until they give us a reason not to. As such, renewing was a zero friction event. More like a two free phones event.
BB has a different device insurance than Verizon and we felt the coverage was better, so we put BB insurance on our phones. The one part of Verizon we aren’t a fan of is the corporate stores, so handling all warranty/damage claims in BB seemed like a much better idea. Little did we know…
Earning return business sometimes means bending the rules
My phone recently developed a loose charging socket, probably from me catching the cord on something too many times. Near the end, I had to get creative to get it to charge. So I go up to the nearest BB store and show it to them. The guy at the counter starts the replacement process and checks their records. He says our insurance was cancelled for non-payment.
Hmm. We dig further and find that our debit card number changed in February. We didn’t think about the connection when that change occurred, and they couldn’t charge the insurance to the old card, so the cancel was legit. Unwise, but legit. After a single email to get our attention – they cancelled it. The email went to an account that gets a lot of spam and isn’t one that I monitor, so it was missed.
While still in the store, I ended up on the phone with the BB insurance guys. Staying mellow paid off, as the agent was willing and able to reinstate the insurance without paying back premiums, setup future payments with the new card number, tweak the email address and allow us to continue the warranty replacement process.
Yes. You read that right. They didn’t even charge the unpaid months in the past.
Preserve and Protect Lifetime Client Value
The potential lose-a-client error, in my mind, was them allowing the insurance to cancel after a simple email. Are you that willing to let a recurring charge client go away? Pick up the phone, people. One email is not enough effort.
Here’s why: Had they denied the claim, which was clearly their right, I would probably never do phone business with BB again. If they handled it poorly enough, they could have lost all my BB business.
But that isn’t what happened.
Someone is presumably training the folks at BB insurance to think about the long term and what marketing people call LCV – lifetime client value.
The question you have to ask is “Is the incremental value worth the lost lifetime client value?”
In BB’s case: Is it worth the incremental replacement cost of a phone, minus the payment of insurance premiums, to keep a BB client? I think it is, particularly compared to the cost of losing a client, perhaps forever.
In my case, it could have added up to decades of purchases by my wife and I, and perhaps our kids. I suspect that would add up to more than an insurance company’s wholesale price of a refurbished iPhone 5.
Are you thinking about the incremental cost of the service you provide vs. the lifetime client value when training your staff? You should.