Customer COST vs. Customer VALUE: What Smart Business Can Teach Us

Ginger the Wonder Dog.  If you’ve spent time with our family you’ve met or heard about her, a fifteen pound mixed breed who’s just as comfortable sitting in your lap as she is joining you for an eight mile run (never on a leash – she’ll stick by your side like a loyal solider).  One part chill, one part energy, and all parts friendly, she’s brought tremendous joy to our family for the last twelve years.  And unfortunately, last week was her last.

Ginger the Wonder Dog: 2010-2022

Anyone who’s grown close to a pet knows the heartache of losing one and as you can imagine, our family misses Ginger.  Friends, neighbors, and family have expressed condolences and it’s comforting to hear from them.  But like anyone’s passing, there’s the business of it all that needs to be addressed, including arrangements for her cremation, cancelling her meds, even stopping her dogfood delivery subscription (gotta love online ordering – it’s everywhere!).

As we went about the business of closing out Ginger, however, we experienced one flash of compassion that reminded me how powerful seemingly-wrong-but-oh-so-right business decisions can be.  Last night we got a knock on our door from the local florist who stopped by to deliver a beautiful bouquet of flowers.  Like every forgetful husband my first thought was, “Uh oh…  Did I miss an anniversary?”  After reading the card, however, I was A) relieved to know I was in the clear, and B) dumbstruck by the thoughtfulness and yes, savvy business decision, the team at made.

Flowers from… Wow!

Haven’t heard of Chewy?  Neither had I until my wife, Jessica, explained it’s the online subscription service through which we ordered Ginger’s dogfood.  When Ginger died, Jessica called them to cancel our subscription and the phone agent, upon learning of our circumstances, said, “Tell you what, Jessica, how ‘bout we credit you back for that most recent shipment that you may not have even opened yet?  Instead of returning it to us, can you donate Ginger’s food to a local shelter?” 

That alone earned Chewy big points with Jessica but this gorgeous flower delivery?  Don’t be surprised if our entire family ends up with Chewy tattoos*.  (*If my daughters are reading this, THAT’S A JOKE.  No Chewy tattoos, please 😊.)

Did Chewy make a good business decision?  At first glance, maybe not.  For starters, they refunded us thirty dollars on a shipment they’re not getting back.  In addition, they sent us a bouquet I estimate cost seventy dollars.  All in, that’s a one hundred dollar debit from a single customer who can’t possibly earn them more than fifty dollars are year in profit, and a customer whose dog (their consumer) is definitely not eating any more dogfood.  Add it all up and in a couple days Chewy spent double on “being nice” vs. what they made in annual profits from all our orders.  On paper this company is circling the drain, right?  But what the spreadsheet does not take into account is this:

Goose the High Energy Maniac

Meet Goose, the Lawrence family’s other dog, a six month old maniac we recently added to our roster.  Up to this point we’ve been buying his food from a retail store but moving forward, guess where Jessica is placing her orders? 

So the rest of the dogfood story goes like this:
Chewy took a $50 hit on Ginger but stands ready to make $600 in profit from Goose that they otherwise never would have seen.

My point: Compassionate gestures and good business are not mutually exclusive.  In fact, one supports the other and organizations who bake both into their decisions come out on top.  I don’t care how may brochures the retail pet store sends me or how many Super Bowl ads they run, Chewy is now our family’s go to source for every piece of dogfood that Goose consumes and we’ll encourage other families to follow suit with their pets.

What can your organization learn from Chewy?  What actions can you take that tell your customers, “I appreciate you.  You’re important to us.  When you’re feeling low we’ll support you, even if the spreadsheets tell us not to.” 

Can you send your new customers personalized welcome packages?  Pen handwritten Thank You notes to those who send you referrals?  Deliver Get Well packages to clients who are under the weather? 

When you’re deciding what to do for your clients, keep in mind not all gestures need to carry a price tag or consume vast amounts of time.  For example, earlier this week I was due for a medical screening which, for the first time in my life, required me to be anesthetized.  My logical brain knew this was a safe procedure but I still felt a little uneasy.  Sitting in the doctor’s waiting room, the nurse came out and instead of standing at the doorway, shouting my name, and beckoning me to follow her, which is what’s happened every other time I’ve visited a doctor’s office, a friendly nurse approached me, sat down next to me, and said with a smile, “Hi, I’m Wendy.  I’ve been working here a long time and I’ll be with you every step of the way today.  Any questions before we head back?”

That brief introduction, that pause in the action which took all of thirty seconds, made all the difference.  Wendy dialed back her authority, removed the “business” of the process, and offered a dash of compassion that left me feeling like I had a partner for this procedure who was going to take good care of me. 

The screening went fine and as I was leaving I asked Wendy, “When you came into the waiting room and sat next to me, was that something you’re required to do?”

Laughing, she replied, “No.  I just figure if I was coming to the doctor that’s how I’d want to be greeted so that’s what I do for my patients.”

As I returned home I noticed billboards all over for medical centers but Wendy’s thirty seconds made them irrelevant.  You can bet your bottom dollar I’ll be seeking out Wendy’s team any time I’m slated for procedures their clinic offers and I’ll encourage others to use their services, too.

Here’s the bottom line:  It’s easy to coldly calculate customer cost.  Enter into a spreadsheet questions like, “What’s the future value of a dead dog?” or “How much efficiency will our nurses gain if they admit every patient thirty seconds faster?” and you’ll get a certain answer.   But make the effort to compassionately calculate customer value and the answer you get may be very different.  “What happens if the dog’s family becomes a loyal customer with its next pet?” or “If our nurses greet every customer in a more personal way, what does that do for our brand?”  In today’s world of online shopping and infinite consumer choices, value is the special ingredient that separates the best from the rest.

Want to earn lifetime customers?  More referrals?  A stellar reputation that no competitor can displace?  Follow Chewy’s lead.  Follow Wendy’s lead.  Look for the (seemingly) small ways to compassionately serve your customers and reap big rewards both on your balance sheet and in your life.

6 Replies to “Customer COST vs. Customer VALUE: What Smart Business Can Teach Us”

  1. Well said Ben and very true. About 10 years ago I started something similar for my business. The key to a successful retirement is not rate of return on your investments, it is time value of money. Meaning, save early and often. So when I have a client that has a new baby or grandchild, I send the newborn a customized ceramic piggy bank from with the newborns name on it. The response I have received from that gesture is remarkable. The cost is about $70 per piggy bank MY rate of return has been unmeasurable!

    1. Jim, I love the piggy bank! Perfect representation of your “Time value of money” perspective. My first piggy bank was a little dime book from our local bank. I still remember how proud I was to have finally filled it. These days, with two kids in college and a third on the way, that dime book is emptying quickly ha ha 🙂 You’ve certainly helped our family prepare for this, and we are grateful.

  2. Ben thank you for the story and the observations. It made me think about the difficult-to-define topic of, “employee engagement”. I’ve been involved in some pretty big formal problem-solving processes. When we build the roster for the participants I always ask for, “the crusty old operator” or the mechanic that’s always mad about the way our assets are treated. Some warn me, “you don’t really want Matt (just a made up name, no one that you know) in the room…he’ll be disruptive”. I welcome those characters. I’m only interested in the truth and who to unveil the unvarnished history than those that are not afraid to share their feelings?
    What happens? Those are usually the ones that allow us to see what really happened and come up with ways to eliminate that in the future. Since they are part of the solution, they are the built-in enforcers of the new ways.
    How much is it worth to see that grumpy person become an advocate for change? I don’t know. But I’ll bet they make a difference on more than just that event. The best part is that their participation is free, and the rewards are lasting.
    Maybe not as flashy as a bouquet of flowers, but good…still good.

    1. Brian, You are courageous (and smart) to request that audience. How often do we miss out on the best ideas because we fear the uncomfortable engagements that give birth to them? Hmmm… Should we be offering those crusty old operators bouquets of flowers? Ha ha maybe not but I know you’re one of those gifted leaders who shows them the appreciation and gives them the voice they deserve. What a valuable comment you shared. Thank you!

Comments are closed.