The Cost of Customer Satisfaction

Recently I had the opportunity to witness a situation that occurs often in our current fast pace society. A client receives a call from a service provider making them aware that they have completely missed their scheduled appointment.

Client apologises and organises for a new appointment. The surprising thing was the reaction from the service provider, although understandably annoyed at the situation, is it appropriate to vent that on the client?

Fault is clearly on behalf of the client, complete rudeness is missing the appointment, acknowledged. But, let’s analyse what did happen, what could have happened, and the end result.

The provider could have reminded the client of their cancellation policy, and then chose to apply or not apply it to the situation. This message could have been delivered to the client in a manner that left both parties feeling good about their respective positions.

But let’s put a deeper lens over the situation. The service provider has lost revenue of $80 for the missed appointment. The client recovers some of the costs from an insurance provider, so is really only out of pocket for $50.

What is the average length of a client at the service provider? Maybe three or four visits. Missing one of these appointments on a revenue stream of $240 – $320, what would the impact to the service provider be?

How about a further piece of information, the client has a long term health condition and has been receiving services from the provider for several years, and often visits several times per month. Potential value of that client per year is in excess of $2,000.

How often do you have new clients present at the service provider? What is the cost of marketing to attract new clients, and is it effective? How important is the word of mouth or referral network is sourcing new clients? Do you think it is a two way process when negative things happen?!

Attracting customers to your business is a difficult process, and we are all aware that it is more expensive to find a new customer than to keep an old one. There is stacks of information on the web about customer retention and marketing. A quick search and I found an article from The Chartered Institute of Marketing which says somewhere between 4 and 10 times to acquire a new customer versus keeping the existing one.

A quick chat with the client and their strategy moving forward looks like this……cancel the rescheduled appointment and find a new service provider. Turns out that the service was generic enough that an alternative provider would not be a difficult transition.

And there is another angle! If your service or product does not tie the customer/client to your business, then how important is that $2,000 client? It is often your reaction in those moments of frustration that leaves the other party with a memorable impression. Of course it may not always be a positive impression you are leaving!

Something to ponder….

 

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Email: admin@block5.com.au

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