Monday, 17 October 2011

Know What A Customer is Really Worth

Every customer is worth something to your business. Knowing that number will really help when it comes to handling customer service issues.

Recently, I worked with a house cleaning service. In looking how they did things I noticed 2 policies that needed to be changed. One is that they would charge for an in home quote for new clients. The second was that if a cleaner had to work and extra half hour in a home because of a special circumstance (like an extra messy kitchen due to a party) , they would bill for it. Their belief was that any time a cleaner was in a home, the client should be charged.

Of course, clients wanted an accurate quote before they committed to having the company clean their home. And no one likes being nickled and dimed by their service provider. So I told the manager that they should provide the free quotes and let those over time instances slide, provided it is just a one time thing. She didn't like that idea...until...I got her to calculate what a client is worth.

She took her average clients hourly rate, multiplied it by the number of hours spent in that client's home in a single cleaning, then multiplied that by the number of cleanings in a year. It worked out to about $3000 per year for the average client.

That is when she realized that every time they refused to provide a free in home quote, they probably threw away $3000. Also, every time they billed that extra half hour, they lost some of the loyalty they had with the client and risked throwing away the $3000. These actions also limited the possibility of referral business, which could bring them other clients worth $3000 every year.

They were thinking small scale, "Let's bill every minute we can to make more money." When they should have been thinking on the larger scale, "Let's make our customers love us to create more business."

By tailoring their services to make the clients happier in those areas, they ensured the loyalty of their current clients and created more possibilities for referrals.

Know what a client is worth to your business in the grand scheme of things, then make decisions about your customer service policies accordingly. The happier they are, the more they come back and the more friends they send.

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