Great post from the New York Times blogger Jay Goltz on the Doing the Math on Disappointed Customers.

Doing the Math on Disappointed Customers

In the last 30 years, I have made almost every mistake a business owner can make. But I have always understood the importance of trying to do everything I could to make customers happy and encourage them to return. This might seem trite and obvious, but it really isn’t. At least not to everybody.

Seven years ago, I bought a new house. I decided that I wanted to get one of those garage-floor coatings that make the floor easy to clean and leave it looking great. It is a big garage, and the process is not cheap. I chose a company that claimed to be the best, and I forked over $3,600. The company’s people did a beautiful job, and I got a very nice letter:

Dear Mr. Goltz,
Thank you for choosing to do business with us. We appreciate the opportunity to serve you, and your satisfaction is our top priority. Please contact us whenever we may be of further assistance. Thank you again for selecting us. It is our privilege to work with you.
Sincerely, [name withheld]

Nice, right? So far, so good. Seven years of good, in fact. And it is still mostly good, except that the coating flaked in one spot, about the size of a small banana. I know: it’s nothing to go bananas about. The rest looks great, and people have bigger problems. But I figured I might as well fix it.

I found the original bill to get the phone number, and I was happily surprised. Attached to the bill was a “Limited Lifetime Warranty: If verified peeling or blistering occurs and a claim is received within 10 years after installation, [the company] will, in its discretion, either repair the affected area at no charge or replace the entire floor at a discounted fee, …” Wow. What a great company.

I called. I described the problem. The woman on the phone asked me to take a picture of the spot and e-mail it to her. Sure, no problem. Then she called me the next day, to tell me that the spot was probably due to some moisture in the concrete, and it wasn’t covered by the warranty. Really? In that case, it is hard for me to imagine just what the warranty does cover. She told me, however, that I could buy a scratch-and-nick kit for $35 and repair it myself.

In a sense, I was no worse off than when I started this adventure because I didn’t even know that I had a warranty. Initially, I would have happily spent the $35 and called it a day. But then I did find the warranty, and that left me disappointed that I was not dealing with what I thought was a great company.

But I was not mad. I am a small-business professional! I don’t get mad. I tried to help both of us. I explained, calmly and politely — you’ll have to trust me — that this was disappointing. I told her that if the company would just send me the touch-up kit, I would be happy to fix it myself. Then I went on to explain that I, too, own a business and that if this were my business, I would give the kit free so that customers would continue to feel great about their floors and about recommending the company to others.

After I delivered this eloquent, reasonable, well-thought-out suggestion, she replied, “You can either give me a credit-card number on the phone or mail us a check.” (Anybody remember Lily Tomlin’s telephone operator?)

I stayed calm. I asked, “Is there an actual owner of the company there, or is this a branch location for a large company?” It turned out there was an owner, and the woman on the phone volunteered to put me into his voice mail. The recording revealed his name, Gus. I told him the situation. I was not complaining — just giving him an owner-to-owner suggestion on how to make customers happy for very little money. I left my phone number but told him he didn’t have to call me back. Which he didn’t.

And that was O.K. Of course, the next time someone asks me which company coated my floor, I will be giving a different answer. Here is the simple math. The touch-up kit can’t cost more than $10, including shipping. The cost of coating a garage floor is now, I’m sure, around $4,000. I almost certainly would have had occasion to recommend this company to a couple of other people in the coming years. Which means this will probably cost him $8,000 in lost business. And then there are all of the referrals from the referrals. Maybe $20,000? $50,000? Nice letters and warranties might get a sale, but standing behind your product or service will get the repeat business and referrals that make the business.

But it’s not just the math. If I were him, I would have fixed the floor because it is the right thing to do. Period. That is how I have always run my business. I own a large custom-framing shop. If someone comes in tomorrow with picture framing I did for them 30 years ago that has a problem, I would happily fix it. I would feel great that they thought enough of my company to bring it back. It’s good business. It’s good karma. And when you get bigger and you are not taking care of the customers personally, it’s about good hiring and training.

Maybe Gus will call me. It has been only a couple of weeks. Maybe he is out of town at a seminar on how to build your business.

Original article here.