Page 36 - Flathead Beacon // 7.23.14

36 | JULY 23, 2014
BUSINESS FLATHEADBEACON.COM BUSINESS IS PERSONAL Mark Riffey
Earning Return Business
How did
D.A. Davidson & Co. grow to be the largest full-service investment firm headquartered in the Northwest?
One relationship at a time.
406-752-6212 or 1-800-955-2208
200 First Ave. E., K-M Bldg. Kalispell, MT 59901
406-862-2101 or 1-888-564-3008
14 West Second Street
Whitefish, MT 59937
D.A. Davidson & Co. is not a tax advisor. Before investing, you should always consult your tax/legal advisor about the specific tax consequences and advantages of your situation.
WHEN YOU MAKE CLIENT service decisions, do you weigh the cost of losing the cli- ent in your decision?
I'm talking about the hard cost of los- ing that client, not the often fuzzy, some- times made up, and frequently inaccu- rate 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?
Let me describe a recent ad- venture at Best Buy to give you some context.
BEST BUY?
A couple of months before the iPhone 5S came out last year, Best Buy 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 its early in- vestment in Montana cell infrastructure by remaining with them, at least until it gives us a reason not to. As such, renew- ing was a zero friction event. More like a two free phones event.
Best Buy has a different device insur- ance than Verizon and we felt the cover- age was better, so we put Best Buy insur- ance on our phones. The one part of Ve- rizon we aren't a fan of is the corporate stores, so handling all warranty/damage claims in Best Buy 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 went to the nearest Best Buy store and showed it to them. The guy at the counter started the replacement process and checked their records. He says our insurance was cancelled for non-payment.
Hmm. We dug further and find that our debit card number changed in Feb- ruary. We didn't think about the con- nection 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 Best Buy insurance guys. Staying mellow paid off, as the agent was willing and able to reinstate the insurance without paying back pre-
“THINK ABOUT THE INCRE- MENTAL COST OF DELIVERING SERVICE VS. LIFETIME CLIENT VALUE WHEN TRAINING YOUR SERVICE STAFF.”
miums, setup future payments with the new card number, tweak the email ad- dress and allow us to continue the war- ranty 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 insur- ance to cancel after a simple email. Are you that willing to let a recurring charge client go away? Pick up the phone, peo- ple. 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 Best Buy again. If they had handled it poorly enough, they could have lost all my Best Buy business.
But that isn't what happened.
Someone is presumably training the folks at Best Buy insurance to think about the long term and what marketing people call LCV – lifetime client value.
The question you have to ask: "Is the incremental value worth the lost life- time client value?"
In Best Buy's case: Is it worth the in- cremental replacement cost of a phone, minus the payment of insurance premi- ums, to keep a Best Buy 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 myself, and perhaps our kids. I suspect that would add up to more than an in- surance company's wholesale price of a refurbished iPhone 5.
Think about the incremental cost of delivering service vs. lifetime client val- ue when training your service staff.
Want to learn more about Mark or ask him to write about a business, operations or marketing problem? See Mark’s site, rescuemarketing.com, or contact him via email at [email protected].