Are you Saving Money or Losing Customers? - Christine Kane

Today’s post concludes this week’s Are you Saving Money? series. It’s a final exam that will enable us to score you on the wisdom you’ve gained throughout the week.

This exam is a word problem with one multiple-choice question at the end. Please sharpen your Number Two pencils. And raise your hand if you need to use the bathroom during the exam.

Here it is:

A bride-to-be bought a Lazaro wedding dress when she was at Marshall Fields in Chicago. It was a style from a past season. It cost $1000 – about a quarter of the original price of $4500.

After the wedding, the bride took her dress to Swannanoa Cleaners – a chain in Asheville, NC. They cleaned the dress. A few days after she got it back, she pulled off the plastic to find that the dress looked streaky. REALLY streaky. Like, many-cats-of-many-different-sizes-lifted- their-tails-and-sprayed-her-wedding-dress streaky. She took the dress back. Swannanoa Cleaners told our bride they’d “look into it.”

A week later, Corporate Guy A called the bride. Expert Guy B had been in town and had looked at the dress. Expert Guy B concluded that the cleaners had permanently ruined the wedding dress. Corporate Guy A asked the bride how much she had paid for the dress. She told him. She told him the brand of the dress. She emailed him the photo from the Lazaro website so he could see for himself.

Corporate Guy A called later to say he couldn’t be sure that the dress was an authentic Lazaro dress. Then he said, “Besides – one of the clerks at the drop off location said she overheard you mention that you might be selling this dress on eBay. And wedding dresses on eBay don’t sell for more than $500.”

The bride was stunned at his accusation, but simply told him that they had ruined her dress and that it was probably ethical for them to pay for it. Corporate Guy A told the bride he’d have to talk to some of the people at the corporate office, and that he’d get back to her.

She did not get another phone call. Instead, she got a check in the mail with a note. The check was for $350. The note said that wedding dresses on eBay don’t sell for more than about $350 and as far as Swannanoa Cleaners was concerned, the issue was over.

Swannanoa Cleaners never apologized for ruining her dress or for the inconvenience. They chose to take the remaining $650 they could have given the bride and keep it for themselves in the interest of saving money.

So then, here’s what has happened since that August of 2005.

1. The groom stopped taking his business to Swannanoa Cleaners, and moved instead to Asheville Cleaners. His total cleaning expenses since that date is close to $1200.

2. The groom told the story to his business partner, who also stopped using Swannanoa Cleaners. His business partner is quite the persnickety dresser – so we’ll say that his bills since then have been at least as much as the groom’s. $1200.

3. The bride told several friends about the situation. Most of them don’t do cleaning very often – but they’ve stopped using Swannanoa Cleaners. Conservative estimate: $200.

4. The bride was at an upscale clothing store downtown after she received the $350 check. She told the store-owner, who has a very exuberant vocal style. (Read: He’s from New York City.) The owner shouted, “NEVER use Swannanoa Cleaners!” There was a woman in the store who had just moved to town. She joined in on the discussion. We’ll assume that she got the message. Four hundred bucks. (Judging by her clothing that day, this is a conservative estimate.)

5. The bride starts a blog. She reads many blogs on marketing and customer service. So, one day, she decides to take this little scenario and make it into a kicky little math equation. Let’s assume that there’s a bride-to-be among her readers who just looked at her mom and said, “Mom? Let’s not take my dress to Swannanoa Cleaners when the wedding is over, okay?” That’s $200.

Not including any of the other word-of-mouth ways that stuff like this gets around, we will leave you with this final exam question. Think carefully.

Final exam question: Did Swannanoa Cleaners actually save $650?

A] Yes

B] No

13 COMMENTS ADD A COMMENT
  • Barbara

    Well I certainly won’t be using Swannanoa Cleaners. I just moved to East Asheville and was looking for a cleaners. I have been working for a major Fortune 500 company for over 20 years in their customer service department. I have been through numerous training sessions and conferences. That makes me extremely sensitive to the service I receive. How easy it can be for companies to create loyal customers. I have often thought of starting my own consulting business. Its truly the little things that make such a big difference.

  • Stacey

    I’m certainly very sympathetic to the problem of dealing with businesses that seem to be clueless about customer service. What ever happened to “the customer is always right”? I know, SO last century!

    A few months ago, I became a member of Grand Resort Travel, a “vacation travel club”, after I bought their spiel that they could save me time, effort and money with their service. After requesting their assistance for several trips, I found that in every case I easily found better deals on the internet using Orbitz or Craig’s List. When I came to this disappointing realization I requested my membership fee be refunded. Before I bought the membership a representative of the company promised a full refund if I was not completely satisfied. Of course, no such language is in my contract and now they are refusing to refund my fee. So forget “the customer is always right” and remember another old adage: “buyer beware”.

    I must say, too, that I thought the wedding dress/dry cleaning debacle was a very interesting problem that had another interesting twist (as your scenarios often do!): why not see that the bride only paid $450 for her dress? The cost = $1000 – $200 (dry cleaning fee, which I assume was refunded) – $350 reimbursement for damage. It is not certain that the bride would have received *any* sale if she had tried to auction it off, and she would have been out the cleaning fee ($200), thus rendering a $500 sale only a $300 profit. So $350 from the cleaners was really a very good profit! Finally, the bride ends up getting to wear a $4500 dress for $450 – a 90% savings! Suze Orman would love that story. And if the bride thought she would have liked to keep the dress pristine as a memento (in the event it didn’t sell), there are plenty of home organization gurus who would make the point that a photograph can serve the memory just as nicely and take up a whole lot less space.

  • Chris Owen

    Well if you fail THIS test, you’ve got to step out of being in business.
    Sigh! Unfortunately we ALL know too many similar stories so there’s an awful lot of businesses, both BIG and SMALL, who haven’t learned this lesson.
    Thanks for making the reminder about this lesson such a terrific reading moment as well!

  • Jackie Gaston

    This remindsme of a story that was recently in the news about a judge in DC sueing a dry cleaners over a pair of pants. He refused to settle with them out of court for a large sum of money and has now lost his job on the bench.

    It also reminded me of an animal shelter here that is trying hard to be a no kill shelter. In their efforts to place as many animals as possible, they have failed in several incidents to disclose all of the information they have about the animals. My daughter got a dog from them tha was so aggressive and distructive that she could not keep it. The staff might have been able to salvage some decent feelings on our part if they had not riduclued her to tears when she returned the dog as she had been told that she could do. You can bet a lot of peoplel haev heard the story and, sadly, that seems to be their normal way of doing business. I don’t think that they will save very many animals that way. There have been other incidents as well and people are afraid to adopt from them.

  • Kloudiia

    Short-term view of doing business as what I see.

    Then again, I’ve also seen many companies doing business in this way, and as the effect blows over, they are still streaming with lots of customers! This is something I simply can’t understand too!

    If only everyone is as conscientious in doing business, then it’ll be such a wonderful world. 🙂

  • annie

    I assume you had already paid them before you realized they ruined the dress? Did they refund your cleaning charge too or just $350? My answer is A because I think they saved at least $650.

  • Angie Hartford

    Imagine the cumulative effects of such “customer service” on one’s business. A smaller person might contemplate getting a pool going among dissatisfied customers, with the winner being the one who comes closest to correctly guessing when the cleaner will be out of business.

  • Christine Kane

    wow. kathy and kay – thanks for such in depth coverage of the topic! it was an interesting thing for me to think about when I pondered this topic of saving money. i certainly didn’t set out to punish the cleaners or anything… but i knew i didn’t want to return. in some ways, that seems even worse than someone who’s out to punish. it has a wider expanse! anyway, thanks for your wisdom.

    and amita – i already emailed you, but thanks!

  • Kay

    Customer service is the most important part of any business. It is not so much the loss of business for the cleaners as it is the growing image of an uncaring “place”. How much better it would have been for them to work with the young bride and solve the problem to her satisfaction and to learn from it all….both from the customer service angle and the business part of how and why the dress got ruined in the first place.
    They missed ‘the moment’ and the opportunity to “do good”….
    Too bad they don’t read your blogs, listen to your music and/or attend your retreats (or others with similar messages); THEN they might have a clue and might have acted in a kind and appropriate way.

    Because I am a teacher and loved the format of your blog introduction, I must tell you, that the correct answer is A. They did, at that moment, save $650 and because of this area’s growing population they might continue to have a lucrative business, even after losing the “money” from those who LEARNED of their bad choices/behavior and who chose to take their cleaning elsewhere. Perhaps someone will send your blog site to them…and then they might at least learn from it all and perhaps change some parts of their operation or themselves.
    Let us hope.

    Thanks for your insight and inspiration and for sharing so much.
    By the way, in yesterday’s online news there was a story about a man suing a cleaners for $54 million because they lost his pants…..here is the link in case anyone is interested in the ludicrousness of it all.. http://abcnews.go.com/TheLaw/story?id=3269485&page=1 . Someone needs to send this man your blog site as well; he could certainly use your earlier entries on time, money, and life!!
    Happy Day,
    Kay

  • Amita

    Hello Christine,

    Thanks to you, I got to experience the *Aha* moment! A couple of months back I was passing through a frustrating phase when nothing seems to work for you. In one of my most miserable moments I stumbled on your blog, You Teach People How to Treat You, and a bulb flashed in my mind! I knew then with absolute clarity that I was solely responsible for sabotaging my life. I have taken charge since and things are looking up. I am now your avid admirer and spend most of my week ends reading your archived posts and pondering over them. Your blogs led me to research on LOA and The Secret and I am much intrigued.
    Your posts are like a breath of fresh air for weary souls: keep up the good work.

    regards,

    Amita

  • Kathy

    They call this “the network effect” in management school. With the global interconnectivity of the world today, the impact of actions like this go far beyond a settlement check as your example proves. Companies who get this will survive and those who don’t will see dire consequences. Can one dissatisfied bride ultimately shut this cleaners down? Probably not… but the ramifications of treating just one customer badly in today’s world can go far beyond what traditional outcomes might have been. It’s important to understand where the edge of the network is for a company – where value is created (or lost!) – and move “power to the edge.” Swannanoa Cleaners obviously doesn’t get this. Too bad for them!

  • Christine Kane

    Mags – Why don’t you email me your address and I’ll just send you a DVD and we can work out the payment later…? christine@christinekane.com. (We can go through paypal as well.) Thanks for the note, and congrats on getting through your move. That’s a big deal! I, too, love amazon.com. I know that local bookstores complain about them, but I have to say that they go out of their way to make it easy for an artist to sell her stuff internationally – and I get monthly automatic deposits that are a great additional bonus to my income. And, as you pointed out, their customer service is wonderful.

  • Mags

    B!

    I may have been quiet for a while during our move from South Africa to Scotland, but I’ve never stopped reading your blog – thank you for keeping me both sane and inspired during the past few months!

    It amazes me that organisations haven’t yet learned the lesson that word of mouth can have a huge effect on their business, for good or bad. On the positive side, when we lived in SA, we’d often order stuff from Amazon (both .com and .co.uk), and sometimes it would arrive damaged from the long transit. Did they quibble? Not at all. Within a few days, a replacement would arrive, often sent by special courier so that we didn’t have to wait another few weeks for normal mail to SA. Sure, it cost them a few bucks to do that, but we’ve been such loyal Amazon customers as a result that I figure we’ve more than amply rewarded them with repeat business and sent a few new customers their way!

    All the best
    Mags

    PS: One of the first things that I wanted to do when arriving in the UK was to order your DVD… only to find that since my card’s billing address (still in SA) doesn’t match my delivery address in the UK, it won’t go through 🙁 Soon, soon it will all be sorted out though – I’m on the case!!