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BUSINESS OWNERS, WOULD YOU RATHER BE RIGHT OR RICH?

One of the earliest lessons my dad taught me was, that in business, “the customer is always right.” “But, dad, he messed the carpet up himself,” I said. “Yes son,” my dad replied, “but we’re in the floor covering business, and the customer gets to choose to buy from us or a carpet store down the street. We want him choosing us.” “But it was his fault!” I retorted. “Why should we bear the cost to fix it?” My dad responded in a rumbling voice which sounded like God himself thundering from the mountain top, “Do you want to be right? Or, do you want to be rich?” That did it for me. I chose rich.

This simple lesson is at the heart of customer service. Make the customer feel cared for and special. It’s our job in business to get the customer to want to spend their money with us versus the competition and if that means walking an extra mile for them, I prosper by wearing well-made walking shoes. Through the years, I have come to learn on my own the lifetime value of turning my customers into raving fans, repeat buyers…and…my incredible unpaid sales people to their friends, relatives and associates.

I am writing this blog post because this simple lesson seems lost today on many of America’s leading businesses. I’m going to be sharing a recent experience with you that demonstrates this lost lesson, the cost, the seeming impossibility of a fix, and a solution that creates a win for all parties. Bear with me while I drag you through some boring details. But as Shakespeare once said, “first the stage must be set.” He didn’t actually say that, but I thought it sounded better coming from him than me.

An associate and I were on a 3 pm departure United Airlines flight returning from San Francisco to Los Angeles. While on the runway, ready for takeoff, the captain announced a computer problem that required our return to the gate to replace a module. They kept us sitting on-board the plane for near 3 hours before announcing the repair was not successful and that the flight was canceled. By the time they guided us en masse to the customer service counter, the clock was pushing 6:30 pm. There were only two more United flights to LA that night with less than 25 available seats between them. A quick count of the passengers lined up ahead of us tallied 121. It didn’t take a rocket scientist to calculate that, absent some incredible turn of events, we would be spending the night at the airport.

This brings me to another lesson my dad taught me. Following the crowd is always wrong and true success is achieved through initiative on the path less taken. My dad would say, “Take quick assessment of your tools, point them opposite to traffic and own the alternatives.” The only tool I had was my cell phone. So I called United reservations and pleaded insanity if my associate and I could not get home tonight. I prevailed upon a helpful United agent who, together with her supervisor, booked my associate and me into two of the last seats on the last Delta flight that night to LA. As I finished my phone call, we listened to the United customer service agent announce to the eighty or so people still ahead of us and the 20 or so people behind us that they would be receiving vouchers to overnight at an airport hotel.

Now when I started this blog post, the subject matter was customer service. So far, albeit through my own initiative, the customer service I received appears stellar, given the circumstances. But, the rude awakening was yet to come. I have my reserved seats and my confirmation number, all courtesy of the United reservation agent. But, I’m still not on the flight.

When I got to Delta’s check-in counter, first they could not find me in their reservation system. After a few minutes they found me but not my associate. Some minutes later they found my associate but couldn’t make our e-ticket numbers work in their system. Twenty minutes and two supervisors later with nineteen minutes before the flight is supposed to leave the second supervisor says that United didn’t properly re-issue the Delta ticket and that we had to go back to United so they could do it correctly. There would be no way to do that and still make the flight.

It occurred to me to call United’s reservation system and get them to correct the matter over the phone. The Delta agent, who could have just called over to United and told them what needed to be changed, refused to call them saying that, (Are you ready for this?) “they are not allowed to talk to another airline’s personnel.” He insisted on telling me the technical terms that were required of the United agent followed by “they know what they are supposed to do.” Meantime, the United agent is saying to me that so far as they know they did what they were supposed to do and now it is up to the Delta agent to complete the transfer to the Delta ticket. No matter what I said or how nicely I asked, the Delta supervisor refused to talk directly to the United agent. I felt like a ping pong ball being slapped back and forth between United and Delta paddles while I’m up the creek without one.

This brings me to another lesson my dad taught me. He would say, “When reasonable service is refused, stand between the service provider and the next customer. Then with voice slightly raised in a tone of righteous indignation, refuse to move until the proper service is rendered.” This maneuver executed with perfect aplomb resulted in the Delta supervisor literally grabbing my cell phone out of my hand and telling the United agent exactly what was required. Within less than two minutes, he had our boarding passes printed and we were dashing to the boarding gate.

The business world is supposed to be ordered in such a way that you don’t have to be a brazen hussy to get reasonable customer service. Yet, had I not behaved in such a manner, I would have spent the night in San Francisco with mounting non-recoupable costs in time and inconvenience.

So what? This blog post is supposed to be about customer service and its costs or benefits to a business. When entrepreneurs build a company, they generally pay a great deal of attention to the needs of their customer. It’s how they grow. But, when businesses mature, control most often moves from the customer-oriented entrepreneur to caretaker number-crunching turf-protecting management. The product or service becomes a commodity, bought this week from one supplier and next week from another. This happens in a mature industry because all the suppliers have matriculated through the maturation process together and one is as bad as the other. Every so often an entrepreneur will start a new customer-oriented competitor, shake up the industry for awhile only to be squeezed out of the market by big capital or bought out by it.

Here’s the irony. The turf-protecting number-crunching management that decided that ticket counter personnel are not to take their time to talk to their counterpart at another airline to facilitate customer service, costs their company more money in lost revenue then is achieved in the name of corporate efficiency. If I hadn’t behaved a little like Attila the Hun there would have been two empty seats on that Delta flight instead of two passengers with their fares paid for by Delta’s competition. United was actually their paying customer and they didn’t even want to talk to them. Anyone who understands business knows that passengers filling most of the seats on a flight, just pays the bills. It’s the last handful of available seats on the plane that becomes the profit or loss of an airline.

Many of my blog posts share a common theme. They are about how to fix what’s broken. There is a way to fix this at the systemic level but time, blog space and your attention need a safeguard here. So, for now, let’s just look at the quick fix and the message it may carry for you in your own business.

In business, your biggest competitor is not the company supplying a similar product or service. There is a little voice inside your customer’s head that whispers in gossamer images of memories about how you have disappointed them in the past. If your customer ever buys from the competition, more often than not, it’s because you failed them in customer service. Your biggest competitor is you.

To put it into perspective, if a person flies twice a year with an average cost of $300 per round trip, the lifetime value of that customer to an airline is potentially about $25,000. Every time they alienate that customer to a point where their inner voice whispers to try another airline’s service, even though that airline may be no better, it costs the offending airline some portion of that lifetime value. Since these decisions affect the number of empty seats on the plane, every lost passenger mile is a direct debit to profit.

Your customer should never be your quality control department. Your customer should never be put in a position to iron out technical issues between you and your suppliers. The first job of any industry is to make purchasing by the customer easy and enjoyable. The fix for Delta’s above described breach of customer service is as simple as a management instruction to their ticket counter personnel to talk directly to their counterpart at other airlines when customer service warrants it. The win is the silencing of the customer’s inner voice and the company’s enjoyment of more of the lifetime value of their customer to their bottom line.

To any savvy business person, Delta blew a golden opportunity. Here they had a United customer who was somewhat ticked-off with United; delivered to them by United on a silver platter; where all they had to do was show how good their customer service was; and win some of the future lifetime value of that customer. They should have been anxious to call United, anxious to speak directly to the United operations people, anxious to do their very best to help United transfer the tickets quickly. They should have been anxious to speed the transferred travelers on their way as efficiently as possible and, thrilled to thank United for the business and the opportunity to strut their stuff for a bigger share of the customer’s future flights. When booking my next flight in a market served by United and Delta, which airline do you think I’ll be favoring?

How’s your customer service? What are the voices going off in your customers’ heads that make them your reluctant users or your raving fans? What’s the lifetime value of your typical customer? What’s it worth to you to get the lion’s share of that lifetime value on to your bottom line? Are you choosing to be rich?

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Gordon Bizar

Gordon Bizar - Expert Business Buyer and Finance Coach Gordon simplifies business purchasing and financing. He makes understandable the use of financial leverage to start, buy or build any business with little or none of your own cash. His unique expertise and success track record has led to his appearances on NBC's Today Show, PBS's Late Night America along with segments on more than 120 other radio and TV news and talk shows. He has been featured in articles in more than 25 of the nation’s leading newspapers including the Los Angeles Times, New York Times, and Wall Street Journal. Gordon personally bought and built companies in fields as diverse as manufacturing, financial services and business education. He also served as Chairman of the California Task Force on Taxation and Regulation of Small Business during the Brown administration and is sought after as a consultant by businesses large and small and government agencies such as NASA for their technology transfer program.

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