Debbie Mayo-Smith: Feedback - an opportunity, not a threat

If a customer gives a thumbs down for bad service, this will most likely translate to detrimental economic costs for the business that irked them. Photo / Thinkstock

If you run a local service business, you have a finite supply of customers. Full stop. Naturally, it makes sense to keep the ones you have.

Combine the constraint of location with the difficulty of acquiring business in this economic environment and the many ways bad word of mouth now spreads, and you can see it's of paramount importance to ensure your business gives the very best service and customer experience.

New Zealand research shows that when someone has a great customer experience:

* 80 per cent tell on average nine other people

* More than one-third actually give you more business.

But getting it wrong can be costly. Colmar Brunton New Zealand Research shows that if the customer experience is bad:

* 80 per cent of customers will tell 13 other people

* 32 per cent will recommend to others not to use you

* 38 per cent will start looking for another supplier

* 24 per cent will spend less money with you

* 26 per cent will take all their business elsewhere

* 25 per cent of those who defect say they will never ever do business with you again.

This research doesn't take into account the cost of negative word of mouth online. There was a small article in the Herald on Sunday last month. A luxury hotel in Queenstown discovered seven negative reviews were incorrectly attached to their profile on the Travelocity website, after they had been on the site for two years. The hotel estimates the mistake cost it 40 customers a month, or $245,000 in two years. (Note: conduct at least a weekly online check for your business name and comments.)

If you read my column regularly, you know I like to quantify things. I think money talks and fluff walks. So let me tell you of a negative experience our family had with a veterinarian.

One of our five pets, a chihuahua, had a rash on his snout. I took him to a convenient vet, rather than our usual one.

I mentioned to the veterinarian, "careful, he's a bit snappy".

The vet hardly touched him and consulted from the opposite corner of the room. I paid $65 but felt aggrieved that the consultation was so "cold", hands off and lacking in communication.

Several days later I wrote a nice email, explained my point of view and asked for a partial refund.

I got an email from the vet outlining his perspective that standing away was not to antagonise the dog (shows how important communication is). I was welcome to come in for a full refund, which I did.

A primary reason for my email was to give them customer feedback. I thought it was good for them to know. They might have other clients who felt the same way and never said a word, nor returned. I had no quarrel with them and our family were happy to return.

Fast forward a couple of months.

A real emergency. After a fight one of our cats had a bleeding eye.

My husband made an immediate appointment with the same vets. But when he got to reception and they heard the name, they turned him away. Luckily, our usual vets took him straight in.

Now, let's look at the estimated cost of the veterinary clinic's piqued reaction. It certainly wasn't $65. I would approximate $6740, at least, for a one-year period. And what about the longer term cost from lost repeat business? You can at least quadruple that figure. Gone.

Here's how I got the figure.

Statistics I found on the American Veterinary Medical Association for 2006 put average expenditure per year (US$, but the point is the same) at: dogs $200; cats $81. The average number of furries is 1.7 dogs or 2.2 cats per household with pets. If we had been treated differently they would have had our continued business. The lost revenue from our three cats and two dogs for a year: $643.

I tell 13 other pet owners (7 cat people and 6 dog people) and they move vets. (6 x 1.7 x $200) + (7 x 2.2 x $81) = $3287.

I could write bad review on their Google map site. (Ever notice the reviews button?) Then 10 dog and 10 cat owners who move into the area do a Google search for a vet. They read the reviews. Do you think they'll go there? Cost of another 20 lost pets for a year: $2810.

Think dollars and sense the next time you feel peeved at a customer for giving feedback.

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Debbie Mayo-Smith is a bestselling author and international speaker.