Many of you have heard Bill Farrell’s true story known as “Give ’em the Pickle.” Bill’s customer had been coming to his restaurant for lunch for over three years and he always ordered the same thing. Let’s read the letter Bill received for a customer as it appears on Bill’s website at www.giveemthepickle.com .
I’ve been coming to your restaurant for over three years. I always order a #2 hamburger and a chocolate shake. I always ask for an extra pickle and I always get one. Mind you, this has been going on once or twice a week for three years.
I came to your restaurant the other day and I ordered a #2 hamburger with a chocolate shake. I asked the young waitress for an extra pickle. I believe she was new because I hadn’t seen her before. She said “Sir, I will sell you a side of pickles for $1.25.” I told her, “No, I just want one extra slice of pickle. I always ask for it and they always give it to me. Go ask your manager.”
She went away and came back after speaking to the manager. The waitress looked me in the eye and said, “I’ll sell you a pickle for a nickel.” Mr. Farrell, I told her what to do with her pickle, hamburger and milk shake. I’m not coming back to your restaurant if that’s the way you are going to run it.
The story illustrates a common problem and the point is obvious. Create a happy customer at almost any cost, and be sure the customer service message is properly conveyed to each employee. However, to make that happen, a couple of things need to be in place. First, funding needs to be in place to cover the cost. Second, an internal training program needs to be in place.
When a company determines what they need to charge per hour to cover costs while generating a reasonable profit, the first step is to determine what it costs to run the business. Those costs include rent, utilities, insurance, and many other very real costs of doing business (including your salary!). Anything and everything the company expects to spend over the coming 12 months needs to be included in what is known as overhead costs. The money to fund the cost of “pickles” (or, in your case, whatever it may cost to retain happy customers), needs to be included as a cost of doing business. For most companies, the cost of customer retention runs about 2-3% of gross sales. That means if your gross sales are around $1 million a year, the company needs to include an additional $20,000 to $30,000 in it overhead costs when setting their hourly rate. If you have eight service techs who bill out an average of 1,000 hours a year, that would amount to an additional $ 3.13/hour ($25,000 / 8,000 billable hours = $3.13/hour) in your hourly rate.
Now it’s time for training. When it comes to training, it’s a lot like raising children. How many times do we, as parents, do a great job of training our first three children … and then number four comes along. What happens? We have spent so much time training the first three that we “assume” we have taught number four as well. Ok, maybe we didn’t sit down and train number four, but surely he or she picked it up from the first three, right? Well we all know what happens. Number four never really gets the message; we just “assumed” they knew what to do … until things don’t work out as planned.
The same thing happens when it comes to our employees. We have taught the principle, or process, for so many years that we simply assume the new employee somehow picked up the training when, in reality, he or she didn’t. Then what happens? Our customer asks for a pickle, and the new employee drops the ball and mishandles the situation.
Training needs to be constant and consistent to ensure the proper message gets to every employee within the organization. Part of that training involves empowering each employee with a budgeted amount of money to create, or retain, happy customers. That includes the tech in the field through the accounts payable person. Many of the major Five Star hotels provide a budgeted amount of money for every employee, including the janitor. If an employee happens across an unhappy customer, for whatever reason, they are empowered to give them something. That something may be a gift certificate, a free dinner, a room upgrade, or even a free night’s stay. In extreme situations it might involve sending a gift basket to their room with an apology for whatever might have happened.
If your tech shows up late for a call, they might reduce the bill $20 or waive the diagnostic fee. If the customer complains about a charge, the receivables person has the authority to waive part of the fee. Maybe the tech messed up the customer’s carpet. Can you imagine the startled look on the customer;s face when the office calls and says, “Mrs. Jones, we understand Bill accidentally tracked grease onto your family room carpet. When would a good time be for XYZ Carpet Cleaning Company to come to your home to clean your carpet?” How many people do you suppose Mrs. Jones is going tell about that call?
It’s not just about keeping the customer happy, although that is very important. It’s also about future cash. In one of our classes we talk about the future cash flow generated by a happy customer over a 14-year period. Between their annual maintenance agreement, a service call once a year, a major repair every seven years, and their referral of at least one new customer, it amounts to over $20,000 in gross sales. What’s the point? Don’t cut off $20,000 in future cash flow over a $45 service call! Give them the pickle!
Be sure to set hourly rates based on your increased costs of doing business, which should now include money for customer service situations. Also make a note to hold a class on customer service for all your employees to be sure the message is received loud and clear!