I think we can agree that positive word-of-mouth is one of the best marketing tools any business can have. To get this to work, you need what I like to call “war stories” that are affirming. These are customer experiences about doing business with you that are so compelling they want to share the story with their friends and colleagues. For that to happen, you truly need to have over-the-top customer service that consistently exceeds expectations.
When I owned my printing franchise, we used an over-the-top guarantee with the tag line: It’s Right, It’s On Time or It’s Free. If the customer was not 100 percent happy with the job, we reprinted it for them and gave it to them for free. The same was true if we missed their due date; it was free. I don’t have the space in this column to explain the details and rationale for this guarantee and its execution, but here are a couple of key points:
Having the guarantee forced us to get our systems and quality right.
It forced us to set realistic customer expectations when taking the order to be sure we could meet the deadlines and the quality expectations.
It was also critical to train, train, train staff to be error-free and catch mistakes before going to the customer.
The concept that makes this work is lifetime customer value. When one does the math on how much gross margin a customer produces over time, you can invest a lot to make sure you keep them. The financial risk in this type of guarantee can be worrisome unless you understand this concept. Of course it is also important to run a solid operation that ensures giving away jobs is a rare occurrence. Moreover, if you do mishandle a job or a customer, you want to fix it in a way that improves the odds of a positive war story being shared.
My Favorite War Story
When we first introduced this guarantee, one of our employees happened to be good friends with an employee at one of our major competitors. He told the story of that firm’s owner going through his shop shouting, “If you people were as good as those that work at Allegra, we could offer a guarantee like that, too.” Of course, hearing that comment brought a lot of pride to our staff, and they were willing to work even harder to serve our customers like they deserved. We heard many great customer war stories but this one involving a competitor and our staff is more fun to share.
Why Should You Care?
We have all heard the statistics of how a satisfied customers tells two to three people and a dissatisfied customer tells eight to 10 people. Put in your own numbers because no one knows for sure. If you do an online search of that question, you will get a wide range of data, including three versus 3,000! Regardless, the point is that war stories travel faster and farther when people are dissatisfied than when they are satisfied. So recognize the lifetime value of a customer, and go above and beyond to create good war stories about your firm. It will make you a lot of money.
Carl Gerhardt is a 30 year veteran of entrepreneurship and is retired Chairman of Alliance Franchise Brands. He is currently a consultant with FranNet a company that matches individuals wanting to own their own business with franchise opportunities. Carl is also a volunteer with SCORE offering free counseling for small business entrepreneurs, www.score-reno.org. Contact him at cgerhardt@frannet.com.
