I came across a bit of very disappointing but not surprising news. "In New Orleans, a 10-year sentence for Ray Nagin...Next stop for Ray Nagin : federal prison. " (AP, Kevin McGill and Allen Breed). Ray Nagin, the former mayor of New Orleans, was made famous on a radio appearance three days after Hurricane Katrina's levee breaches by shouting "Excuse my French - everybody in America - but I am pissed".
"He started out as a rock star and he ended up as just another crass, corrupt politician" said University of New Orleans Political Science Professor Ed Chervenak". The list of charges includes bribery, money laundering, fraud and tax violations.
I liked Ray Nagin that's why, using his own words, I'm pissed too. I admired his shoot-from-the-hip and tell-it-like-it-is style. I felt that he represented the thousands affected by the Hurricane and our collective frustration with the slow response by agencies we fund and count on to be there, especially the federal government.
For me, Hurricane Katrina was Ray Nagin- the kind of mayor I would want representing me. He proved me wrong.
Beyond the obvious, that too often politics and power corrupt good people, I am straining to understand why people go out of their way to spoil a good thing? As a businessman, I always look for a teaching-moment - after all, the common denominator among all such stories is that they are about a human being and it is irrelevant whether the person is a politician or a CEO.
Can we blame a successful business for "abuse of power"? Of course, but luckily we have choices. Don't like Microsoft? Buy Apple. Don't like the local pizza joint? Go across the street.
I believe that the issue here is far deeper than merely choices. What separates us from other living creatures is our ability to "think and feel", the latter being the root of all good and bad behaviors. My issue with Ray Nagin is that I liked him and what he stood for. I was in a "committed relationship" even though we never met. Ray betrayed my trust. He hurt my feelings. I am pissed.
In business, we tend to take buying decisions too lightly sometimes. We are not as appreciative and guarded as we should be when it comes to customers. The consequence is that we drop-the-ball - we disappoint and even hurt those who choose to do business with us. Customers are way too busy and don't have the time to over-analyze who they want to do business with. For many of us, buying is an instinctual decision that is based on timing, opportunity, state-of-mind and what they heard or read about the offer and the company that is behind it. Frequently, a committed relationship starts with "sampling behavior" - let me try this out - and it is as important to value and guard as much as a long time and loyal customer.
I did some research on a wellness shake that was recommended to me by a good friend. It is a young business with a huge social media following. I liked the product and the company so I bought a bag at a reduced introductory price of $29.99 (regular price was $39.99).
A few weeks later, a box shows up at my door with a Welcome V.I.P announcement - unbeknownst to me, the first bag ,offered at a discount, automatically enrolled me in a subscription program. The bill was for $119 for three bags (three months). Clearly, I missed the small print, entirely my fault but..I was pissed. Read this to understand.
The company agreed to cancel my VIP subscription and to take the product back. I received an email with a RMA attachment that also stated they will be charging me $35 restocking fee. I went from "that was easy and pleasant" to "holly crap I am being robbed". I was pissed again.
I called to complain and explained that although I fully understand that there are costs to processing returns, a $35 charge or 30% is unacceptable. It was pointless. The young lady (horribly trained if you ask me) recited a printed script that made no sense whatsoever. The box was sealed, I never touched the product. Interestingly, I had every intention to continue to use the powdery mix rather than stare at sealed bags for months. At a standard price of $39.99/bag, my "annual customer-value" for this company was $500. If I get four of my friends to buy - you get the idea, the lifetime value potential is way beyond the immediate sale.
I was in a committed relationship. I was a customer. I admitted overlooking the fine print and gave the company every opportunity to retain me as a customer. What I experienced while attempting to return the product caused me to be pissed again. One of the tagline on their site says: love it. Live it. Share it. I loved it, I am leaving it and yes I am sharing my departure because... I am pissed.
Years ago, Circuit City, an electronics retailer on Long Island, quickly became the new game in town. They were aggressive, stocked with inventory and their stores were crowded with hungry sales reps. They did very well during their first Holiday season until customers who attempted to return unused products were hit with a 25% restocking fee on anything from a VCR to a large TV. The backlash reverberated for a long time and Circuit City was gone shortly after. Oh, by the way, a tiny cardboard sign with even smaller letters next to the cash register informed everyone of the impending robbery. That is, assuming you could see it or read the small print. Attempts to waive the restocking fee were futile. Circuit City quickly ran into financial difficulties and disappeared. I am not suggesting their demise was caused by their policy, but we know what happens when you hurt customers' feelings -- they don't forget.
Conclusion? Other than never fall in love with a politician - the cost to retain an existing customer is a fraction of the investment that is required to identify and acquire new ones. As a matter of fact, the cost to retain an existing customer is zero! - how much does it cost to have common sense?
My previous provider of wellness shakes must reveal,in big bold font, its VIP policy and restocking charges. I do not care what their rationale is. If it truly costs them 30% to process a return, they need a lesson in efficiency. The math is easy: retain a customer whose value is $500/year or chase them out for $35.
Frankly, as customers we don't and should not care about what it costs our supplier to deliver what we buy. Our job is not to plug profitability sink-holes in operations. Our role is to buy, and theirs is to serve, say thank you and never ever do anything to piss us off.
Why? A Google search for a wellness shake took 0.69 seconds and yielded over one million results. The end.