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Customers: When they don’t return due to silly policies

Recently I dined at a popular eatery in Northwest Austin. The well dressed man in front of me had just ordered his meal and then after paying for it, held out his stamp card (frequent stamps provide for a free meal) and began: “Last time I was here, I forgot my card; would you be able to stamp it for last time as well?”

The order taker declined exclaiming that it was not the policy to accommodate customers who failed to remember their stamp previously and that there were no exceptions to the rule.

Forty-five minutes later, as I was leaving the premises, I overheard two professionals chatting about their dining experience.  One of them was the man who had been declined the stamp for his previous meal “I am never returning to this place again, he fumed – I don’t care how good the food is!”His friend tried to reason with him. He even emphasized that it had been part of their Friday tradition for over 1.5 years to visit the eatery but to no avail.

How sad, I thought to myself, that one silly shortsighted policy could cost so much money. Out of curiosity, I calculated the following:

10 meals required to receive a complementary meal = $10.00 average = $100.00 – less $10.00 (one meal) = $90.00.So, if he had been dining at least once a week (as it appeared in the conversation) then:

52 weeks = $520.00 x 1.5 years = $780.00.

Here are the facts:

The man did not look like he was not a scammer but an honest professional. He had happily patronized the Café for over a year. It was a tradition. He had a simple request, which was denied and then left and stating, “he, would not be back”.

Many places will consider request such as the one the regular customer had on a case-by-case basis. It takes a small amount of discernment to sort the free loaders from the sincere. However, establishments that fail to do so with blanket policy decisions tend to end up spending far more money on bringing in new customers rather keeping existing ones.

So here is my question, “was declining his request for a simple stamp worth it?”

Last weekend I took my boy to a new donut place up on Parmer near Cedar Park. Looking forward to a new experience, we ordered nearly 9.00 worth of donuts milk and coffee. As always, I also requested regular sized water with extra ice. The owner held up a tiny cup and stated that he could offer me “this size only “as a courtesy. “Otherwise he continued, I have to charge you for a regular drink.”

Sitting down I asked George how many people he thinks actually make the same water request that I do. “Not many he replied. Most people don’t drink as much water as you” I then challenged him to a lesson in Business 101. What was our intention of coming in here today I asked? To try a new place”, he replied. In addition, “how many times a month do you think we would return if we had a pleasant experience? Probably, well, at least twice a month. “So, if we spent $9.00 per visit X 2 X 12 months, how much is that?” $216.00. Moreover, how much would the regular size cup probably really cost him? .25 x 2 = .50 x 12 = $6.00 per year. So, how much was it costing him a year by losing me as a customer? $216.00 – $6.00 = $210.00.

“Was declining a request for regular size water worth it?”

Everyone understands the basic premise that it is less expensive to keep a customer then to lose one. Great companies learned this that hard way when they failed to pay attention to customer nurturing. Instead, billions of dollars continue to be spent annually to lure new customers – where if businesses both large and small spent less keeping their existing ones happy, then they would have more resources to build out and expand and yes, increase the chances for higher profits!

“So, are short-sighted policies that deny simple courtesies to customers always a smart idea?”

Well, you do the math.

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