Sep 14 2007
How the late return of a video cassette cost my corner store $260,000.00
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Isn’t it strange how life constantly dishes up interesting coincidences. Just yesterday I posted an article about the need for business owners to develop complaint handling strategies.
Shortly after deftly hitting the post button, my home phone rang and was answered by my young son. From my office I could hear he was struggling with the conversation. I surmised it was probably yet another Indian call centre ringing to tell us how extremely lucky we were, to be one of the “chosen few”…
In an effort to extricate him from their clutches I took over the phone only to discover the caller was not from a foreign country but instead was, the very irate owner of our corner store, demanding to know when his hired video cassette would be returned.
O.K. I Admit it…
Now before I go too far into this little story, let me freely admit, that on this particular day, I was a little fatigued. I had spent a long day locked in-doors, catching up on a mountain of emails, plus, I had suffered a rather nasty hard disk catastrophe, I’m sure you know the type of day. Well I was having one, and I admit, when I have days like that, I don’t always react with my normal degree of politeness and decorum.
MY Problem…!
It turned out, that two days previously, my son had hired a video cassette from the corner store and when he had inserted it into the video machine, it jammed and could not be extricated… so he and my wife had taken the video recorder to the repair shop.
I explained this to the nice man from the corner store who responded with a snort and the, I felt rather insensitive, response… “well that’s not my problem!”, I thanked him for his statement of the rather obvious and attempted to reassure him it would be returned within the next couple of days… he rudely interrupted, telling me I would have to pay for every day the tape was out and, in a statement I felt lacked the appropriate compassion for my predicament, told me I would have to pay for a new tape and that would be some astronomical figure I felt he had plucked from some unimaginable orifice.
Now I can’t remember exactly what I said next, because, and I do admit it, now I lost my temper. I do know my response did include some very well chosen old fashioned Anglo Saxon adjectives, and a number of very specific but anatomically impossible suggestions as to what he could do with the video cassette. It’s not a conversation that I am particularly proud of, However it was said, and I again admit to feeling just a little better about my day after releasing this tirade.
A Case for anger management?
Now this may merely be a quaint little story about a couple of aging, angry males stamping their petulant feet, and flexing their egos… But it does have a serious marketing message, and it’s this…
THE COST…
This badly handled piece of customer communication has cost him somewhere in the vicinity of an astonishing $260,000.00.
The maths are as follows:
Each week we used to spend at least $50.00 in his store.
The accepted Life Time Value of a customer at a corner store is 10-20 years.
So let’s be boringly conservative,
10 years X 52 weeks x $50.00 per week = $26,000.00.
Now, Recent retail studies state that a dissatisfied customer will directly influence the purchases of 10 -20 of their friends.
.
So again let’s be conservative and say 10, in fact, we had a street party this evening and I told far more, plus It will become a cornerstone story at every seminar I give, plus, It will be included in the two books I am currently writing, 4 national magazines articles and now this blog. Great publicity for a little corner store.
,
But lets remain conservative with the maths,
The figure now becomes 10 x $26,000.00 = $260,000.00.
All this, because he lost his cool and failed to put any value on the LIFE TIME VALUE of our relationship, Well I have just done it for him, he allowed his attitude, and one lousy little $20.00 video cassette cost him, an unnecessary $260,000.00.
