What’s the Cost of a Customer?

What's the Cost of a Customer?I recently listened to an audio lesson where John Maxwell shared a story from someone describing all the things they saw companies did to attract new customers. This story described all the bright signs on the building, the flashy things just inside the door, and all the money this company had spent on advertisements to get the customer in the door; huge investments in each case. The story went on to describe this person’s own experience as an existing customer: staff standing around engaged in their own conversation instead of offering him assistance and a cashier talking on their personal phone rather than greeting him or thanking him for his business. This story closed by sharing the existing customer’s view on why none of the flash meant to get him in the door would ever matter again when this company didn’t value the business he had already given them…

I recently had a similar experience that drove this point home for me. Several years ago, I replaced our wood stove with a propane fireplace while finishing our basement. What a great decision! We switched fuel companies in late 2015 or early 2016, and were sold on an automatic refueling program that touted low prices per gallon and no rental fees on the tank. Absolutely effortless for the customer, guaranteed to never run out of fuel, the company takes care of everything! WOW!!! Overall, we had been extremely happy with this.

That changed this week when I received an invoice, separate from the one that came a day earlier for the 36 gallons of fuel that was delivered on January 12 of this year. This additional invoice was a charge for not using a minimum amount of fuel (100 gallons for the size tank we have) within a year. That seemed odd so I went back our invoices to double check. I did in fact find that they had only delivered 87.7 gallons in 2017, but I also found that 54.4 gallons had been delivered on 12/17/16. In totaling this up, I saw that over 90 gallons had been delivered in less than the two weeks just before and just after 2017. This seemed like a simple glitch in the system that should be very easy to address with a phone call. Not so much…

The first call started with someone telling me that it was the way it worked but they could transfer me to a customer service rep. I left a message. That message was answered with a returned call nearly 24 hours later which echoed the “that’s the way the system works” statement I was given the day prior. I’m not 100% certain how it happened, but the call was disconnected when I asked to speak with a supervisor. I immediately called back to be told that the person I had been speaking with was on another call; interesting… When she answered, she gave me this story about hearing some strange noise before losing the call. Funny how she immediately got on another call with someone else rather than calling back the person she lost connection with… The second call finally ended with her telling me that there was no reason to talk with a supervisor because the answer would be the same, but she did thank me for understanding. I clarified that I absolutely didn’t understand and emphasized that it seemed odd that I was being charged an additional fee for something they controlled. I also offered the opportunity for a supervisor to contact me to potentially keep my business moving forward, but I was very clear (and relatively polite) in explaining that if the additional charge stood, they would lose a customer that’s done business with them for more than 25 years. She actually answered by saying “OK. Thanks for understanding.”

Here’s the interesting part: propane for residential use fluctuates from around $2.50 to $3 per gallon. In the 13 months I referenced in the call, we were billed for (and have paid) 178 gallons. A conservative total for that is around $450. The additional charge was only $60. Neither are huge, but there is a matter of principle involved. So if I stand by what I told her, and I absolutely will, they will lose more than seven times the amount of that charge in propane revenue every 13 months moving forward. This company also owned a number of gas stations in the area, which will also not be getting my business again. That could be significantly more revenue than they would ever get from me in propane. Another interesting note: as I left a review on Yelp, I found that this company had multiple other reviews with that described the exact same situation…

One other interesting thing to note is that this company is in the process of tearing down many of their existing facilities and replacing them with flashy new buildings on the same properties. Almost exactly like the story John shared…

So here’s my question for you: Whether you’re working to attract customers, employees, or both, are you putting more effort into finding these new leads than you’re putting into taking care of the loyal customers and employees you already have? It’s often easy to neglect the quiet, loyal following we may already have in place, and even take them for granted. The moral of John’s story was that keeping a customer (or employee) is far less expensive than finding a new one. We’ve likely all seen examples of this; I’d challenge us all to do all we can to not BE an example of this – unless we’re the example of taking care of the ones that are already loyal to us!