Friday, May 21, 2010

Customer service in a low margin business

I was at my local grocery store doing my usual shopping. I had a $1 coupon for an item that happened to be on sale for less than $1. Should the store:

a) take $1 off the total – because the coupon doesn’t say that the item had to be $1 or more.

b) take the sale amount of the total – because that was the item’s cost to me.

c) refuse to take the coupon at all

d) refuse to take the coupon and give me a hard time about it.

As you can tell from the last option being included, that is what happened. Most stores do a). It is the best for customer service and building loyalty. You see these grocery moms on TV doing this all the time and buying $100 worth of groceries for like 35c. But because grocery stores have such a low margin business (and because of all the coupon moms around these days), I completely understand b). But I think c) is wrong. And d) is just a lame brained business. Usually, this chain has good service, so it surprised me. The manager did accept the coupon, but having the cashier call him over was a bit embarrassing (even though there was only one person in line behind me to annoy). And the time wasted was worth more than $1 (to them and to me).

Two lessons we can learn here.

  1. Use the exception principle. If the time required to enforce a limitation will cost more than the limitation will save, make an exception. But make sure that the exception is part of the rule so you don’t get a culture of rule-breakers.
  2. Whatever your rules are, be nice about how you deal with customers. Losing a customer can be a much bigger loss than the savings from the rule.