Nickel and Diming Kills the Goose

Remember the Aesop's Fable, The Goose with the Golden Eggs? A man and his wife had the good fortune to own a goose that laid a golden egg every day. Lucky though they were, they soon began to think they were not getting rich fast enough. Imagining the goose must be filled with gold inside, they decided to kill it to obtain all of the gold at once. However, upon cutting the goose open, they found its innards to be like that of any other goose.

The primary moral of this story that many companies would do well to acknowledge is that greed destroys the source of good. In the same way, by nickel and diming customers, many companies are destroying the goodwill and loyalty they have with customers.

My favorite nickel and diming story comes from Bob Farrell, co-founder of Farrell’s Ice Cream Parlors. In his timeless book Give ‘em the Pickle, he shares a letter he received from a customer:

“Dear Mr. Farrell,
I’ve been coming to your restaurants 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 into your restaurant the other day and I ordered my usual #2 hamburger and chocolate shake. I asked the young waitress for the extra pickle.
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 with the manager. The waitress looked me in the eye and said, “I’ll sell you a pickle for a nickel.”

Needless to say, the customer refused the offer, left the restaurant, and was instantly transformed from a promoter of Farrell’s Ice Cream Parlors, a loyal enthusiast who keeps dining at Farrell’s and urges others to do the same, to a detractor—an unhappy customer who doesn’t return, refuses to recommend Farrell’s, and shares his negative experience with others. In the pursuit of golden eggs, Farrell’s was killing the goose.

Here’s another truly outrageous example of nickel and diming customers:

Ryanair, the Irish discount airline has taken nickeling and diming passengers to a whole new level. Earlier this year, its CEO announced, with a straight face, that he’s considering the idea of putting pay toilets in every one of the airline’s 168 Boeing 737s.

It’s true. I can’t make this stuff up. Passengers would be required to spend one British pound (about $1.50) to use the toilet. No word yet on options for those passengers who either don’t have cash or don’t have the proper change. I suppose they can cross their legs—assuming there’s sufficient legroom.

Any time making money becomes more important than properly serving customers, the business suffers. When the bottom line drives a company's decisions relative to serving customers, it will begin cutting back on product and service quality in order to improve its near-term operating statement at the expense of long-term customer goodwill and loyalty—not to mention comfort.

If companies genuinely believe that there’s a valid relationship between customer satisfaction and financial results, why would they ever agree to nickel and dime customers to capture another one percent when they could invest in and deliver outstanding customer service and reap double digit returns on every metric that matters: employee satisfaction, customer satisfaction, market share, revenue, profit, etc.?

The American Customer Satisfaction Index (ACSI) produces scores for the causes and consequences of customer satisfaction and their relationships to, among other things, financial results.

Claes Fornell, Professor of Business Administration at the University of Michigan’s Ross School of Business, oversees the data collection and analysis of the quarterly ACSI results. According to Professor Fornell, “A five percent improvement in customer satisfaction leads to an increase of over 35 percent of future operational cash flow.” That’s a lot of golden eggs! He refers to customer satisfaction, or the goose’s health, as “the ultimate economic asset for business, because the sum of the value of all its customer relationships is also the true value of the company.”

If companies would channel the same energy and ingenuity into customer satisfaction that they use to identify and apply creative ways to nickel and dime customers, they would more than recover the revenues gained from this irritating practice.

There should be a litmus test for any such fee. If a board of directors would vote for it unanimously while a group of customers would oppose it unanimously, get rid of it. Instead, make your money the old fashioned way: Earn it by providing value to customers by delivering exceptional product and service quality that justifies the price premium you’re charging.

We are in a recession and many businesses are suffering. I get that. Even so, that doesn’t justify killing the goose to obtain more golden eggs.

Steve Curtin is a customer service, training, and public speaking enthusiast based in Denver, CO.

www.stevecurtin.com

Look for efficiencies and cost containment strategies that will have the least negative impact on your customers. Look for ways to add value, not fees. In doing so, you’ll be caring for the goose—your customers—while earning plenty of golden eggs!

Copyright © 2007 Steve Curtin, LLC
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