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Old 21st October 2007, 08:34 PM   #1
colemg01
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Default Customer Service - Is It Worth It?

I have a small tool and industrial supply business that offers great customer service, ie manufacture warranty help, delivery, going the extra mile to identify solutions for the customer. We are competitive, having good prices, but rarely much cheaper then competitors.

I got to thinking as I did a warranty exchange for a tool that was bought from a local competitor. The competitor gave the customer an 800 number and told the customer to call the manufacturer, so instead knowing I deal the same brand he came to me. The customer was appreciative, but I am not sure it will influence his next purchase. In fact I think he is going to order a $1,200 tool I quoted him from another supplier half way across the country because they are $30 less.

While the warranty exchange does not cost $ for the product because of the manufacture exchange it is a hassle taking time, and paperwork.

My question is are there enough people that value good service to justify the expense of giving it? Do customers understand that service costs money?

I used to believe in karma, but I am not sure anymore. If we cut out service we can be the lowest priced too.

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Old 21st October 2007, 09:04 PM   #2
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While customer service is more important in the service industry versus the product industry. I really believe that good customer service is still the best way to keep customers.

I'd say that the service that involves how you speak and respond to customers is more important than the service gimmicks such as warranty exchange.

If you give warranty exchange but aren't really happy to be doing it, the customer will sense the tension and the experience for them won't be as pleasant.

Customer service should always be about making the experience of dealing with you easier and more enjoyable. Rather than simply providing more service options.

Hope that makes sense.

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Old 21st October 2007, 09:27 PM   #3
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If I had the choice I'd pay up to 10% more for items from a company with great customer service, thats just me.

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Old 21st October 2007, 11:17 PM   #4
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I'll second east2west's notion. I think customer service should remain the rule not the exeption. Kudos to you, colemg1 for handling that like you did. But, as a side note, you gave that customer his opportunity to come on board with your company and buy from you. If he returned again with a service issue I would have no problem telling him to return the item to his original vendor.

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Old 22nd October 2007, 10:39 AM   #5
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Ken, I think if you did that he would be sure not to come back. That is the catch of customer service, by providing the warranty service once it will be expected the next time. If you don't provide, I would think customer expectations will not be met and he'll be disappointed as 'you did it before'.

Customer service is nice, but I am not so sure that is the issue. Sounds like you did provide good customer service, but the issue is/was the $30 price difference. You could do backflips, and he would probably make the same decision to use your competitor based on price. I realize we are only talking about 3%, but that is an expense he has for his business that reduces his profits. If he is buying equipment and supplies, the less he spends the more he has for profits. His profits.

I would approach this customer by displaying how you can help increase his profits. Maybe by lower costs but also maybe by extending the use/value of the equipment and supplies he does purchase. For example, does this equipment have exchangeable parts that wear and need replacement/servicing over time. How can you provide him a better value so he has more profits. This is not always based on just lowering his costs based on my experiences.... add value to his profits.

Oh yeah, not saying this is the case ... but .... maybe he is behind in payment or something with his previous supplier. Something to consider perhaps as to why he did use your business instead.

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Old 22nd October 2007, 04:36 PM   #6
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I think it depends. When I was working full-time, I always tried to go the extra mile to help people. But a lot of times, they were just looking to save a few pennies here and there.

Now that I am not working, I see that a lot of people seem to care more about the bottom line rather than what services are received.

On the customer service issue, you can go way over-board too. T-Mobile comes to mind with this one. I hate calling them because I usually lose a couple of minutes with them thanking me for verifying my information, how long I have been with them, etc.

Are there people that care more about the customer service and want a bit extra? Yes, there are. Some don't see it and some do and appreciate it. I think it depends more on your customer base than anything

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Old 22nd October 2007, 05:41 PM   #7
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Everyone is making really relevant points here.

I find that the customers that want price reductions aren't the ones I'm looking to keep as long term customers.

They usually want more for less each time I do a job and it becomes harder and harder to satisfy their requirements each time.

But of course I'm in the service industry rather than into product sales so there is quite a difference.

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Old 23rd October 2007, 06:07 AM   #8
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Everyone has made great points. You are right that we don't do a good job of "showing" how our service saves them money. Many customers understand it but a fair bit do not.

I guess my real question is it seems like more businesses are trying to be low priced as their business model. Is that more profitable then the old provide great service and maintain margins model?

The reality is 10 years ago name brand dealers, from cars to outdoor equipment to clothing for the most part were in this second mold because there was less competition. If the customer needed something they came in and bought it and came back again if you treated them well. The internet brings so much transparency to the market it is almost perfect price competition.

So is everyone becoming a commodity broker by default?

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Old 26th October 2007, 02:56 PM   #9
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I agree with Logan, it is primarily about adding value to the clients bottom line. If a business doesn't make a case that their product/service will improve the bottom line, then the default judgement is based on price alone.

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Old 26th October 2007, 03:41 PM   #10
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colem,

The statistics are still the same... 1 in every five people buy based solely on price. That leaves four people looking for value.

-------------------------------------

Logan, what would he lose if the guy did not come back? I am all for above and beyond customer service but there are users out there as well. In my opinion this guy used up his one customer service freebie (especially considering he wasn't a customer to begin with). He should be convinced now that price is not king. If he isn't.. he was never colem's customer and never will be. Some people, contractor's especially, will never figure out the difference between price and cost. They are very different.

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