By Tony Vidler
Looking beyond the obvious, though often hard to quantify, costs of legal expenses, downtime, stress and everything else that goes with defending a claim, there is the small matter of lost business potential. Actually, there is the potentially massive cost of lost future business….which can be far greater than dispute costs.
I began pondering this in far more detail after an incredible customer experience of my own with Air New Zealand recently. It is pertinent as an example for any service business of the cost of an unhappy customer, because like most unhappy customers I am going to vote with my wallet.
After about a decade of being a very frequent traveller with them and their version of loyal customer recognition programme well entrenched with me (and after spending many thousands of dollars per year with them) I had to change a flight at very short notice for a family emergency. Despite having paid full fare for my ticket already, and despite swapping into an earlier flight that had empty seats, we was charged $600 to change flight plans AND downgraded to a “seat only” option. You get to pay extra to take your bags home with that option…and forget the idea of getting anything on the flight. Well done Air New Zealand! Imagine if I hadn’t been one of their “good” customers….wow, doesn’t bear thinking about. Upon returning home and taking up their recommended option to ask for a refund on compassionate grounds, they then politely told me to take a hike. No further dialogue shall be entered into either!
Anyway…I’ve already been booking other flights with other airlines in just the last few weeks….and have estimated that the probable lost future revenue for Air New Zealand from me will be something like $90,000 over the next 12-15 years in all likelihood. More if I can manage it. So why have a contractual fight over $600? I’d rather tell everyone about it and spend my money with anyone else.
But is that the entire cost of having an aggrieved client? I don’t think so….it escalates rapidly if you are running a service business. There is the compounding effect of “word of mouth marketing” – which can work against your business as well as it can work for you.
In this weeks quick tip video I explore the potential cost of unhappy clients for an advice business…you will probably be surprised at how expensive poor customer service could be in a worst case scenario!
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