When it comes to order fulfillment, having grown-up in the “allow 4-6 weeks for delivery” era, I appreciate how difficult the process can be, and good we have it now. Amazon has certainly set a high bar, but with so much technology now accessible to smaller companies to smooth the inevitable bumps in the supply chain, why some still make it hard is a mystery. I don’t blame the customer service reps. I do blame their bosses who should know better – the ones who should be doing the math on what it costs to acquire and keep a customer, and then deploying procedures and empowering front-line staff to make decisions based on that calculus.
Strategic Database Marketing by Hughes expertly describes the concept of customer lifetime value. In a nutshell: persistence is crucial for profitability. A clear, continually validated projection of your long-term customer relationships can change the equation and help your business make better decisions in the short-term. For the bean counters in your company, there’s plenty of detail and math in that book to excite. For the marketing team, here’s how the concepts apply in the form of two simple lessons from my recent experience as a consumer.
#1 – Steak Your Business on Trusting the Customer
As mentioned in this article, several months ago a favorite podcast host convinced me to give the Butcher Box frozen meat delivery service a try. Each shipment costs approximately $120 and consists of several different cuts individually wrapped. They secured my crucial initial order via a discount offer, so there’s a cut out of their profit to begin the relationship. They then succeeded in securing the even-more-important second order, and have since fended off other competitors I’ve tried, thus maintaining their share of my (leather) wallet. And like many direct marketers adapting to modern consumer demand, they still use a negative-option subscription plan but have given me a say in the process. I can change both when I get the next box, delaying the next shipment essentially as long as I like, and what kind of meat is in it (with plenty of opportunity for up-sells, by the way). By giving me such active control, they are ensuring my passive orders keep coming.
My last box contained a minor problem: The ground beef package had split open, wasting the poor cow’s contribution and my cash. I set forth to document the issue with a picture I expected to have to upload or email to them to prove my claim was legitimate. Thence I went to their website, found the customer service link, and clicked to report a problem with my last order. How surprised was I to find it this simple: They asked which part of my order was the issue, and after telling them with one click, offered me an instant credit or a replacement on my next order. I chose the former, and the issue was settled in seconds. No photo proof requested, no human involved, no loss of my business. All it cost Butcher Box to increase my lifetime value was the price of two pounds of grass-fed ground chuck. That’s smart math by somebody there counting the beans, or beef.
#2 – Headless Chickens Will Chase Away Customers
Now contrast that with what would have been my first order from an online computer company. Let’s stick with the protein theme and call them “Old Chicken.” I needed a new, faster laptop, found one I liked on their website, and placed my order easy enough. It delivered on time, but to the wrong state. When I contacted Old Chicken customer service, they politely directed me to their reseller who fulfilled the order, conveniently and cheaply declining further assistance in solving the problem until proper channels were pursued, by me instead of them.
The reseller promptly responded to my complaint email by telling me to check with my neighbors because the package must be there, despite the fact that I was looking at the UPS order confirmation that my laptop was delivered 500 miles west of my house. Why he didn’t know the same information immediately is a mystery.
A day later, he accepted the truth already known to both the UPS and me and said a replacement shipment would be not be possible. However, he would submit a claim to Old Chicken, and, if and when that was resolved in their favor, I would then receive my refund. Two weeks later, it remains unresolved and I continue to have act as the intermediary via email to get the seller and reseller to communicate, chasing them like headless chickens to get my money back.
These are not just stories about delightful versus disintegrated customer service experiences. They’re really about spotting potential breaking points in a new customer relationship and taking smart action to prevent attrition. Butcher Box instantly trusted my complaint as true and earned my future beef purchases, which could total several thousand dollars over time. I purchase a new computer every 3-4 years, but never will again from Old Chicken because they laid an egg on my first order and did little to make it right.
This is the easy math of lifetime value to apply to the start of your new customer relationships, and the end of all my bad barnyard puns in this article.
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