Thats good news, however there has been a cost, that to the "etailer", posted this on OH last night.
http://www.asashop.org/autoinc/june2006/manage.htmInteresting article with a link to the author
Putting a Price Tag on Complaints
Posted 6/15/2006
Bob Cooper
http://www.asashop.o...
Think each complaint doesnt have much effect on your bank account? Youre kidding, right?
When it comes to customer complaints, most shop owners seem to know that theres some economic price theyll pay, but when asked how much each complaint may cost, they typically have no idea. Consider this: When a customer complains, the first direct cost youre going to incur is a loss of your "time." This is the time you spend listening to the customer, discussing the resolution and following up with the customer to ensure their complaint has been resolved. Lets call this direct expense "customer communication" time. Now, I realize the amount of time will vary with each complaint, so lets assign 25 minutes as a realistic number for your average complaint (five minutes when the customer first calls you with a complaint, 15 minutes when they return for correction or resolution, and then an additional five minutes for follow-up.)
Now lets look at the time you spend on the "internal" communication that comes along with each complaint. This is the time you spend with your technicians and service advisers discussing the cause, the resolution and the prevention of future complaints. Here at Elite we feel 15 minutes is a realistic number when it comes to this "internal" communication, and then well also need to consider the same amount of time, at a minimum, of your employees time. So your "internal" communication will cost you at least 30 minutes with each complaint.
Lets shift gears and talk about the cost of customer attrition and the cost of marketing that will come along with each customer complaint. In regard to "customer attrition," regardless of how well you handle the customer complaint, you run a higher probability of losing that customer than losing an otherwise satisfied customer. So going under the presumption that you run a good business, and with the assumption that youll be able to retain 80 percent of the customers who complain, youll still be losing 20 percent of those who do complain. Subsequently, youre now faced with the marketing cost of replacing those lost customers. Lastly, you have what we here at Elite call "loss of productivity." Simply put, while your employees are discussing the complaint with you, they are unable to be generating additional income for the company. Now, based on everything we discussed, heres the math you and your employees may very well find surprising:
Note: The hypothetical labor rates reflected in the example below are provided merely to show how costs may be calculated. The actual prices charged by an individual shop must be calculated and determined by the business owner alone. These prices should take into account the cost of doing business and include allowances for reasonable profit.
This example is predicated on a shop labor rate of $90 per hour, the shop producing $180 per hour per technician, and the cost of generating a new customer being set at $30. In this example, 25 minutes of customer communication costs $38; 30 minutes of internal communication costs $45; direct marketing cost to replace one of five customers costs $6; 30 minutes in loss of productivity costs $90 for a total of $179.
If you would like to calculate what it costs your shop for a customer complaint, use the worksheet formulas below:
1. First calculate your per minute cost. Formula: Your shop labor rate per hour/60 minutes =
per minute cost
2. 25 minutes of customer communication x per minute cost = cost of customer communication
3. 30 minutes of internal communication x per minute costs = cost of customer communication
4. Direct marketing costs to replace 1 of 5 customers (may vary by shop).
5. 30 minutes in loss of productivity costs = half of the amount produced per hour per tech.
Add these amounts for a total cost of a customer complaint. If you think $179 is a big number, please bear in mind were talking about customer "complaints" not warranty "repairs." In addition, we havent taken into consideration the economic damage to your reputation, the damage to employee morale, the loss of income thats associated with the loss of a customer or the direct cost of any repair. Thats also why the industry superstars invest in training, go the extra mile to deliver extraordinary service, and follow up with each and every customer. They know they are far better off investing a little more money in their people rather than losing a fortune ... through customer complaints.
