Brad's principle of fixing business mistakes with customers

Companies take many attitudes towards customer service. Some companies allocate a large portion of their margin for service, which the customers pay for, and try to give superb service. Others compete on price, with thinner margins and try to give more modest service. Some even try to avoid service at any cost.

No matter which philosophy a company is following, except the last, I have a principle I think is the right one when the company has made a mistake that negatively affects a customer.

That principle is not simply to offer the customer their money back or otherwise fix the mistake and bring things back to zero. It's to do more than fix it, often at a loss to the company.

That means if you cost the customer $10, give her $12, not $10.

How can you afford to do this? There's only one way, which is to not make mistakes very often. If you're only making mistakes with a small number of customers, you can afford to make it more than right. But most importantly, when you do this, you send a message (in the strongest way possible) to the customer that you obviously don't make mistakes like this very often.

So not only does the customer get their problem fixed, they walk away knowing it really was just a rare problem, and they remain a loyal customer, and tell their friends too.

When you don't fix problems like this, the message is that you can't afford to.

Sometimes it's not even that expensive. For example, I ran ClariNet communications, an electronic news service. If we had a problem that cut a customer off for a day, we would not just credit them for a day, we would in most cases given them a free week. They left the problem feeling they came out ahead. This wasn't that expensive for us because that free week inherently came at the end of their subscription period -- most customers paid quarterly or even annually. So it just meant our invoice went out a week later a few months down the road (and thereafter.) Not everybody can swing this, but often there are ways to make the customer more than satisfied and keep the bottom line in shape.

This principle isn't a suicide pact. If you really have a systemic problem, you can't lose money on every customer in order to make them happy, unless you have recurring revenue customers whose retention is lucrative for you. You still have to work at making problems the exception, rather than the rule, to follow this principle.

I didn't invent this principle, but it surprises me that many companies don't follow it who could easily afford to. These companies eventually lose my business. Which means they can't afford not to follow it.