So many companies spend so much time and money fixing problems.
Often it is self-inflicted. Sometimes things just happen.
They spend a fortune on marketing and sales to convince customers they are better than their competition.
Yet the simple truth is, the profit is in doing things right the first time.
Rework Costs
Having to redo a job costs money. Looking at the profitability of 90% of businesses, they don’t have a lot of room to be wasting money.
In my recent post on the shipping company, they made numerous visits to not pick up some furniture that needed to be returned to a vendor. Then after finally picking it up, another driver re-delivered it the next day. You add in the cost of the call center people and supervisors I would guess they lost money on the deal before it even headed back to the depot.
Similarly our Internet connection was being upgraded this past week and the company had to make numerous visits onsite with a technician plus the remote technical staff. A few errors were made that made the outages a lot more painful for us and the provider.
Customer Relationship Costs
Customers want doing business with you to go smoothly. If you are dealing with small or mid-sized business owners time is often more important than the costs especially for smaller transactions.
In case of the shipping company, our staff spent a few hours on the phone plus time preparing the packages and dealing with the shipper.
In the case of the Internet upgrade, our technical staff spent several hours helping the provider troubleshoot plus re-configuring our equipment.
When I look at the costs to our company for both exercises, the cost of doing business with these vendors far exceeds the benefits received.
The Internet upgrade was somewhat of a necessity. It doesn’t mean we are happy with how it worked out. We are certainly not out there being Walking Personal Ambassadors (The Go-Giver) for them. It could have been different.
Marketing Versus Client Retention
A lot of companies spend a ton of money on marketing and sales to acquire new customers.
Yet almost every business owner will agree that it is cheaper to keep and sell to an existing customer than acquire a new one.
In our rush to optimize profitability, many companies go too far and reduce service and thus quality to the bare minimum.
With the Internet and social media the horror stories are out there for everyone to see.
And companies spend another fortune on minimizing the damage caused by the backlash and another fortune convincing people there is no problem.
Maybe some of that money should be pumped back into doing it right the first time.
But you say to me “That didn’t work so well for Zappos!”.
It actually worked extremely well! They understood.
That is where the profits are, doing it right the first time and ensuring raving customer loyalty that people talk about.
What do you think? Leave a comment.
