Measuring The Value of Bad Service

Measuring The Value of Bad Service

In the late 70s, The Ford Motor Company found through a cost-benefit analysis that they were better off keeping their mouths shut about the faulty design flaws of the now-famous Ford Pinto as opposed to fixing them.

The Pinto was responsible for 27 deaths.

GM is currently dealing with its own issue – the “faulty ignition switch” fiasco. The NY Times recently reported the death toll has now risen to fifty deaths attributed to the faulty ignition switch in the Chevy Cobalt and other small cars.

They knew the switch was faulty but didn’t do anything about it for an entire decade. Not only have 50 people died, but there are 2.6 million faulty cars, and a company-wide safety review found over 30 million additional problematic GM vehicles across 86 models.

Here’s the thing, though.

Actual people died. Funerals were held. Family’s lives were changed forever. Loved ones were lost. It’s not an easy topic, but it’s one that makes me wonder…. (and I’m going to make a leap here..)

But what’s the value of bad service?

Is it actually cheaper for a company to deliver bad service?

Why would a company want to focus on creating perpetual growth and maximizing customer value when it might be cheaper to simply and continuously drive more people through the doors, dump more money into advertising, and focus more on the new customer?

Big companies tend to move towards short-term thinking. Big companies, aside from those I consider Evergreen, are rarely thinking long term. They’re often acting with complete incompetence when it comes to focusing their resources on keeping customers and creating greater long-term value.

They’re more focused on short-term profitability as opposed to long-term reputation, growth and customer lifetime value.

What this means is you have an incredible opportunity. It offers small and medium sized organizations an opportunity to compete on a level playing field.

You can’t compete with Walmart on price, but you can certainly compete in service. Instead of always trying to find the next big offering, or being the restaurant continuously adding new items on the menu, focus on the existing customer and continuously improving the customer experience.

What if you spent a little bit less time and money on customer acquisition efforts and instead added another employee so you could avoid those times where you were short-staffed, and service suffered?

What if you spent some of your advertising budget training your employees on customer service excellence?

Instead of creating new advertising material, what if you created new material designed to educate your current customer base?

Here’s the key point:

Most companies believe customer service is an expense, and marketing is a profit center. Don’t treat them like two separate things because they’re not.

Marketing is customer service, and customer service is marketing.