Lifetime Value of a Client

This is a story that will cost a cleaning supplier a lot of money. First of all, I hope you all know me by now. I am not vindictive. I did not have a bad experience with the company I'm going to mention. However, I chose to do my 3-stars out of 5 review to the world because it will illustrate a vital lesson on the lifetime value of a client. I purchased my Mosquito Carbon Lite vacuum cleaner from my friend Joshua Burnstein, owner of Sawgrass Cleaning Solutions, Boynton Beach, FL. Joshua is a authorized distributor for Mosquito, which he does as a side hustle. I now use him exclusively to take care of my vacuum needs. But I almost didn't and here's what happened.

My Mosquito has a uniquely designed tapered hose to maximize power and flow for my 160 cfm motor! That's nerd talk, but it means my vacuum really sucks! All of my hoses start to wear down after 2 years. They tear between the ribs and I have to cut a piece off to keep it working. This particular hose has been cut a dozen times to the point where it's barely long enough to vacuum with. I put off ordering a new part from Josh as he told me the replacement part is $100 with shipping! When I could wait no longer, I did a Google search to see if I could get the part cheaper anywhere else. There were a few at $100 and one at $45, which ranked high on Google SEO. It seemed like a reputable supplier, Salamone Supplies out of Menomonee Falls, WI. I researched the company and found the part I needed on the website for a great price. I told Josh and he was highly suspicious as he knew the part wholesaled for $80 on the low side. He wished me good luck. I apologized for jumping ship as I had to try. I ordered the part. To the credit of the company, they contacted me via email and was kind and cordial in their replies. They received the order, but soon realized that they had the two parts mixed up on their website. The part I ordered for $45 had the part number and picture correct for the part I needed, but they had the wrong price listed. They emailed me to let me know of the mistake and asked if I'd like to receive the $45 incorrect part or the part I needed for their price of $90 + shipping. 

Where is problem with this, Ken? Why would you give this company a 3-star review to your podcast audience? Here's why. I replied in an email that I want the part I ordered on the website. It isn't the customer's fault you made the mistake and the company should do two things: 1. Honor the mistake to retain the customer long-term. 2. Fix the error on the website. They did not want to do that and made this claim in their email back. "If we did that, we'd lose money and we can't be in business if we lose money." This is a typical answer that would get by most consumers, but not me and not you! Let's break this down. They are a large company with hundreds of products they supply to cleaning companies. This mistake is remote and probably occurs once per month or once per year. How did I find this error? They have paid to get excellent Google SEO and my search for the part showed Salamone on page 1. Their error came up on SEO! I didn't know it was an error. I was shopping around and found a deal. If this error had never happened, I would have never found this supplier in the back country of Wisconsin. I would have continued to do business with the suppliers I already know, like, and trust. This supplier had the opportunity to gain my trust by acknowledging their mistake and giving me the part at half price. But Ken, they would lose money like the customer service rep said and we don't want companies to lose money and go out of business. I'm glad you said that! Let's do the math on the loss leader. Do you know what that is? It's something that gets a customer in the doors that the company knowingly sells for scraps. The company loses money on the widget in the front entrance, but they gain a new customer for life. This vacuum hose would have cost them $45 one-time to honor their mistake. I would have left them a 5-star review on Google and on this podcast. Plus, I'd share this supplier to the cleaning industry influencers that I know as a company to promote. Their $45 loss would have turned into at the very least 1 lifetime customer (me) when I buy cleaning supplies in the future and there would have been a great chance that my connections in the cleaning world would have gained them other clients. Imagine if the average cleaning company invests 5% in cleaning and vacuum supplies. If 10 million-dollar companies spent just 10% of their budget with Salamone, they would have earned $50,000 in new revenue in year 1 alone. If those 10 companies continued this meager investment for 20 years, Salamone would have earned $1 million dollars in new revenue. Thus, this company thought small to save $45 in order to lose $1 million. Again, I am not upset with this company. They are a Christian company as am I. I am just disappointed at their short-term thinking. They chose the short term savings over the long-term lifetime value of a customer. 

Keep this story in mind for your own business. You will make mistakes in your customer service or sales process and under-quote a job or two or ten! I am telling you... EAT that loss as the trust you gain from the client, the positive ripples you create, and the lesson you learn in proper quoting is WORTH the short-term loss. You will gain big long-term. Trust me. The client knows when you mess up badly on pricing. Sure, some are bad players and will take advantage of you. Don't work for them again. However, the great majority of people are good and will realize your mistake, give you a big tip with a smile, and hire you again at the right price!

I cancelled my order with Salamone and placed my order with my friend Josh.