Don't throw away $18,000! Case Study: Are You Providing Great Customer Service?

Recently I had a customer service experience that could have been better. Way better.

My intent with this blog post is to:

- Give you the background on a recent customer experience that I had.
- Put the value of a customer in perspective.
- Help you improve or maintain your customer service and not throw away thousands of dollars.

Please read this thoroughly and then leave your thoughts in the comment box. I'll do follow up posts and training. The more you interact, the better the training will be and your customer service!

Background

In the beginning of 2011 I moved to Sacramento, CA. Which is about 1.5 hour drive from Napa Valley and Sonoma, "Wine Country." Perfect time and location to start learning about wine and try different varieties.

That's what exactly what I did. I joined the quarterly wine club at Viansa Winery. in May 2010. Every three months they pick out six different wines for your shipment. They either ship it to you or attend the member's only party and pick it up there. Viansa is a member's only winery, meaning they don't sell their wine through retail. You can only get it straight from them.

There's no membership fee. If you're in one of the wine clubs at Viansa, you're a member. The quarterly wine club is about $150 every three months for six bottles of wine. Very reasonable in my mind considering the benefits that you get.

Viansa has a beautiful terrace overlooking a valley. The members party is held there and Viansa prepares food and pairs it with different wines. It's all complimentary if you're a member. It's like a country club in my eyes. Perfect way to build a community, retain customers, introduce people to different wines available and for guests to bring non members too. There are lot of other benefits of being a member as well.

As a customer and from a business analysis point of view - I loved it.

Until, my most recent customer experience. Read the emails below to see the interaction and then continue on to my notes.

--------- [Start email correspondence]

Subject: Happy New Year! Your Viansa Family wishes you all the best in 2012!
From: Viansa Winery
To: [General Email Blast to List]
Date: Jan 6, 2012, at 12:02 PM
Your January Tuscan Club is ready for pick up! The perfect time to pick up your shipment is on Sunday, January 15th from 12pm to 2:30pm at our monthly Member Party. If you are unable to attend or visit our Marketplace, we can always ship your package to you. We hope that you will start the New Year with your Viansa Family. At this month’s party, we will be showcasing our Limited Production Signature Series Collection. These wines are made by our President, Lloyd Davis and he only makes up to 150 cases of each wine. When people ask Lloyd what are his favorite wines, he answers, my Signature Collection! Our Chef, Guillermo will prepare some special dishes to pair with each wine. We will begin the party with our 2009 Sparkling Wine, Scintillare! This is an event that you do not want to miss! We hope to see and celebrate the beginning of a fantastic year! ** Our Member Parties have become extremely popular. Please call us at [Phone removed] or email us at [email removed] to reserve your spot. We want to make sure that we have enough wine and food for everyone! [Emphasis is mine.]

---------

Subject: Re: January Club is ready for Pick up!
From: Chris Lopez
To: Viansa Winery
Date: January 09, 2012 9:52 AM

Hello, This looks great! I'd like to RSVP for two for next Sunday. Thanks Chris

----------

Subject: Re: January Club is ready for Pick up!
From: Viansa Winery
To: Chris Lopez
Date: January 09, 2012 1:07 PM

Hi Chris, Unfortunately we are at capacity for our members party this month and can no longer take reservations. But I will be glad to add you to the list for next month’s party on the 19th if you would like. I apologize for the inconvenience. Thank you and have a great day,

[Name and phone removed for privacy reasons.]

---------- [End email correspondence]

Tell Your Customer Why - Do NOT leave them in the dark.

That's the response I get?

I'm a reasonable person, I know things happen and things don't go according to plan. But tell me!

- Is the event indoors and they are at the Fire Marshall's limit for maximum capacity?
- Since they're tasting their "Limited Production Signature Series Collection" did they do a check on my account and determined I wasn't worth it?
- Or did they just get way more RSVP's then expected and got overwhelmed?

Tell Your Customer Why - Do NOT leave them in the dark. The majority of people are reasonable. But you need to tell them what happened and why - otherwise people's minds wander and they get irritated. For 90% of people explaining what happened is fine.

Their email says nothing about limited seating. I've always been under the impression, "The more the merrier" and just RSVP so they have a head count and can be prepared. Their email even says:

"** Our Member Parties have become extremely popular. Please call us at [Phone removed] or email us at [email removed] to reserve your spot. We want to make sure that we have enough wine and food for everyone!" [Emphasis is mine.]

Nothing about limited seating or anything.

Do that and….

Tell them how you'll fix it or make it up to them?

I have no idea where my quarterly shipment is or even how to get it. I could email them and ask, but I shouldn't have to. Part of me wants to see what they do (if anything) and how long it takes them. Where's my shipment! As of this initial writing, it's been 12 days, and I don't know.

Plus I missed out on the party. Hard to make up, yes. But not impossible.

Add a personal touch.

In today's world we do so much over email. The power of a phone call is HUGE. If someone picked up and the phone and called me to apologize and explain things. I'd be fine. I'd still be a bit disappointed, but I wouldn't be canceling my membership.

Put yourself in your customer's shoes.

This can be difficult, but stop for a second and put yourself in your customers shoes. Napa Valley and Sonoma county are rural areas. My guess is that 80% of the people have to drive at least 20 miles or more to get there.

My girlfriend and I drive 57.7 miles each way to go out there every three months. We drive over a hundred miles at close to $4 a gallon gas to spend half the day at Viansa to BUY from them.

I literally put the members only party on my calendar as I'm leaving the current one!

How many businesses have customers like that? Not many….

Remember what you're selling. It's not just the product.

You're not just selling a product. You're selling an experience. Whether it's just great customer service with one-on-one attention or a monthly party like Viansa.

I'm not a wine expert. Based on purely on price, Viansa wine is overpriced. But, the cost of the bottle of the wine for the quality (it is good wine) and the experience as a member is great deal.

If I just wanted to get wine at the cheapest price I would buy it at Costco. Or even turn to Gary Vaynerchuk's Wine Library TV. He's got great prices and a great experience (But I already spend enough time at my computer and want to go somewhere!)

Now my experience is tainted. The other night I went to open a bottle of wine, saw the Viansa bottles and thought about the recent customer experience I had. I didn't open any of their bottles. Now the wine doesn't taste different, but the experience sure does.

What's the lifetime value of your customer?

I'm 29 years old. I'm going to buy wine for the rest of my life. The question is from who. Let's say the average lifetime customer is for 30 years.

30 years x $150 x 4 (Number of quarters in a year) = $18,000!

That's a lot of money…. but that's a TON of money from one customer.

That's just from me purchasing the quarterly shipments. What's the value when you add in:

- Other bottles of wine bought.
- Gift sets I buy for for friends, family or clients.
- Non members that I bring to Viansa. What if they buy wine or become members?
- Special events or excluseive wine tastings.
- My palette (and wine budget) improves to more expensive tastes.

It's a lot more then $18,000 when you add that up.

It's easy to keep a customer then it is to get a new one.

Are you throwing away $18,000?

I ended with this point on purpose. You see how the math breaks down? That's about $50 a month. What costs about $50 a month? USANA's Essentials with shipping and taxes added on are about $50.

The Essentials is the base product that most people start off with. What's the value when then start adding more products or refer other people? LIke the Viansa example above, it's a lot more.

I've been a USANA customer for 8.5 years. Roughly estimating, I've probably average $250/mo in products that I purchased from USANA.

$250 * 12 months * 8.5 years = $22,500.

What about for the next 30 years….

$250 * 12 months * 30 years = $90,000 dollars.

That's over hundred freakin' thousand dollars! I plan on living for more then 30 years too!

Your Plan of Action

Hopefully you'll never look at a "small" $50/mo (Essentials) customer the same ever again. If the math I just went over didn't make your jaw drop, reread the post again!

I'm using this example as a training series on Customer Service. The more you interact, the better the training will be.

Think about these questions and post them in the comments below:

- What's the lifetime value of your best customer?
- How can you take the points from above and incorporate it in your business?
- What extra value are you adding over the physical product?
- How can you improve your customer service?
- What other ideas or questions do you have?

Take one or two of those questions, think about it and answer below in the comments please.

As a side note, you're hopefully understanding why Dr. Sam, Jason Parker and I are putting so much work into the Essentials For Life Program. You now understand the value of each and every customer.

Look forward to hearing from you.

Chris

P.S. If you know of any great Winery's in Napa or Sonoma with the "community feel" - please share!

Jason said:

“Lesson learned here...so, I am wondering if people are putting their customers into the Customer section of Integritas Group and following up with them. That is a value we can add. I phone call to follow-up to see how things are going moves us far and above everyone else out there.”

Betsy said:

“I loved this post. It was such a good reminder that every customer is a good customer. They deserve to be treated as if their money matters. Unfortunately, I'm often lax about how I treat my customers - I let them order and check on them occasionally. They deserve a "thanks for your business" on a regular basis. That's one thing I can easily incorporate into my business to improve my customer service.”

Deborah said:

“Great post, Chris. This past year a customer emailed me to ask a question about a condition he had, which I was unfamiliar with. Though I didn't feel competent to answer his question, I went and found some info about it that I emailed him. Several months later, I emailed him to follow-up, and he said he was doing so well he wanted to start a business. So, he has now become an associate. A very worthwhile return for the time I spent on researching and responding to his question.”

Carol Denning said:

“This is very pertinent to me right now. Before reading it I was thinking that its been some time since I contacted my customers. It's easy for me to take it for granted that they WILL be customers for life --- because I know I am. I will be getting in touch with them now ASAP! Thanks for the nudge, Chris!”

Joann said:

“WOW great article about customer service. Customer service skills are essential. Everyone likes to be treated with courtesy & respect. Training is key for value-added customer service.”

Integritas Group said:

“@Deborah, you bring up a great point. People don't care if you know everything or are an expert. A simple, "I'm not sure about that, let me do some research and get back to you..." works well. ”

Integritas Group said:

“@Carol, You're welcome! ”

Lloyd Davis, President Viansa Winery said:

“You made some valuable points. I value my members and always address their concerns and opinions. You are correct. We could have done better. This is an email that I sent out after the event. Dear Friends, I am very excited that over 200 of you, each month, come to our Member Party. I am also very disappointed, that as a result of capacity limitations, that many of you have not been able to enjoy this fantastic event. To address this and insure that all of you can attend, I will be closing the Tasting Room to the general public so that you can have exclusive access to the entire winery for this monthly event! I will start this in February and continue it during March and April. I am also going to limit the number of guests that you can bring. Each member will be allowed to bring up to 3 guests and unfortunately, children will not be allowed. I still need you to RSVP so that I can make sure that we can plan accordingly. In May through October, I will open the Tasting Room to the general public but move the party to our upper lawn where, in addition to the Tent, I can accommodate all of you. This is just another way for me to thank you for your membership and to continue to offer you benefits that you will not find anywhere else! I deeply appreciate your membership and support. Sometimes, I know, I do not meet your expectations, but please be assured, that I always attempt to exceed your expectations and when we fail, I do my best to correct the situation as soon as possible. I hope to see you at each Member Party and look forward to sharing a glass of wine with you soon! All the best, Lloyd W. Davis President”

Integritas Group said:

“@Lloyd, Thanks for taking the time to read and post to this article. The wine and experience you have created and Viansa are truly wonderful. I understand growing pains and that even sometimes there are slip ups (I've done them and will do them to customers down the road.) Last week I sent my email back requesting a cancellation of the membership and refund for the January shipment.

All I got back was:

"Thank you for your email. I have cancelled your Tuscan Club membership as of today per your request. I have also issued a credit for the January package. You will not incur any further charges."

There wasn't even at attempt in keeping my business or making up the difference. A phone call from someone or even a more personal email would have done the trick in keeping me and turning me back into a happy customer. The email blast you sent out is great for updating everyone, but there was no effort to take care of an individual like me. I'm sure there were others in my shoes as well.

Not only would it have kept me, but I would have updated this post to reflect it for the benefit of Viansa and to show my clients an example of going the extra mile.

The fact that you read the article and no one could take 10 minutes to call makes things works in my mind.

-Chris ”

Robert Hirabayashi said:

“Chris, great article! The marketplace doesn't seem to tolerate poor customer service, the way it used to. Employees and business owners alike should take note of examples like this as a "how not to conduct business".

I went to Datz restaurant in South Tampa last week to pick up some food, but they ended up keeping me on hold so long that I decided to start driving there. By the time I arrived, I was still on hold. The manager told me my meal was "on the house"!

They couldn't fix how long I was on hold, but they did make it up. I was so impressed, I bought some preserves and sauces from them I had been meaning to try, and I will definitely be going back. That's how you keep people coming!!! :)”

Integritas Group said:

“@Robert, you bring up a great point and a great example of how to make things right. Thanks for sharing. ”

Lloyd Davis said:

“I am very surprised. We have a very clear procedure to handling member request to cancel. We are supposed to do everything possible to keep them. I apologize for the way you were treated and will take immediate corrective action. I hope one day in the near future you will consider re-joining the Tuscan club.”

George Fox said:

“The market is changing at light speed! High quality high touch customer services are emerging as the primary preeminent factor for business success. Those of us with USANA Health Sciences are ideally positioned to play BIG role in this new customer centric economy. Several weeks ago I had a training call based on Gary Vaynerchuk’s new book The Thank You Economy. Consider these emerging customer statistics Gary cited in his book: - 85% of U.S consumers say they would pay 5 percent to 25 percent more to ensure a superior customer experience. - 76% of consumers say they appreciate it when companies take a personal interest in them. - 40% of consumers switch to buying from a competitor because of its reputation for great customer service. - 55% cite great service, not product or prices as their primary reason for recommending a company or product. - 66% said that a great customer service experience was their primary driver for greater spending. Learning how to give great customer service and teaching new distributors to do so is a key to creating long term residual income. Developing skills to create better and more meaningful relationships with our customers will be a focus of many of our upcoming training calls.”

JoAnn Mansfield said:

“To value the customers who were turned away from the event party, Viansa might have made a gift of the January wine package. After all, what is $150 compared to an $18,000 customer? And accompanied by an apologetic note for the reason would speak volumes to the customer of their value. Similar value can be extended to a USANA PC - maybe a gift of the Essentials periodically to show appreciation or a new product they have not tried - may even affect their future USANA order.”

Lorenzo said:

“Having run a retail business for many years I know it is very true what you stated in your in your blog post that is far easier to retain an existing customer than it is to get a new one. As it is said, people (customers) don't really care what you know, they want to know that you care. Customer relations is crucial in any business. Highlights the imortance of training!”

Joann said:

“You really shed light on the customer service issue @ Viansa. It's amazing that the Pres. responded again trying to make it right. However, Viansa's customer service or Pres. needs to pick up the phone if they think they have a chance of you ever re-joining. It's make wonder how many they have lost due to poor service.”

Integritas Group said:

“@JoAnn - very insightful!”

Integritas Group said:

“@Joann, You hit the nail on the head! I was blown away by that too.

”

Connie Tolton said:

“WOW! Love the way you shared this. Being on the customer side really hits home on what 'they' want. It really is easy to put ourselves on the other side and give them what they want - which is really all we want - to matter.”

Integritas Group said:

“@Connie, you're welcome. Thanks for sharing your thoughts.”

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Tell Your Customer Why - Do NOT leave them in the dark.

Tell them how you'll fix it or make it up to them?

Add a personal touch.

Put yourself in your customer's shoes.

Remember what you're selling. It's not just the product.

What's the lifetime value of your customer?

Are you throwing away $18,000?

Your Plan of Action

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