£600 is the true cost of bad customer service: use this to your startup’s advantage!

We’ve all experienced bad customer service. When this happens, I usually share my experience very briefly on social media. However, my last experience shocked me so much that I just had to write about it. There are valuable lessons to be learnt here.

The company I’m writing about lost £600 worth of business. If you are a business owner ask yourself: how much would you pay to obtain £600 worth of business from a new customer?

If you spend money on customer acquisition costs can be very high (say £150-£300 per customer. Maybe £1-£15 if you are in a small niche. Just a couple of days ago, I got a £50 reward for helping Transferwise get 3 new customers. This tells me a new customer to them is worth at the very least £17 each.

Back to the story. I was in the market for a new refurbished PC. I found a company via Amazon that sells them. Since Amazon gets a commission, I figured that buying directly could mean a small discount. Since Chessable is still a young startup, every penny counts.

Here is what I wrote:

Hi Joe,

I noticed that you offer corporate and school discounts and I was wondering if you would be kind enough to also perhaps extend a start up discount for budding new UK companies!

I will probably be in the market for {link to £500 PC and reason I need it}. However, if you can recommend something cheaper (around £300) that would achieve the same thing I’d be keen to hear what you recommend. 

Thank you and kind regards

Here is the reply I received:

Unfortunately we’re unable to provide a lower price than the one you can see online on this occasion I’m afraid.

Joe from Company A

Here Joe makes things worse by letting me know that on other occasions they do provide discounts, but not today! He also violates a well-evidenced principle of the psychology of persuasion: most of us are big fans of knowing the why of things, so tell us! Give me a reason why you can’t help me. For instance, “We are unable to provide a lower price because this machine is already at a rock bottom price. I really wish I could help you, but you won’t find a better deal anywhere.” Perhaps I would have believed him and bought it.

So I sent the same message to their competition, here is the reply:

We do work with a lot of start-ups and are always keen to help out where we can!

We can offer you £25 off this machine using code SITE25

Richard from Company B

Which company do you think I used? Easy choice.

Good customer service is the hallmark of many successful companies, and the goal of this post is to not only reinforce my commitment to good customer service but also remind other entrepreneurs and business owners about its importance. Company A is probably investing £30 to acquire that next customer of theirs, and they simply discarded me, a customer ready to spend £500 (I ended up closer to £600 with Company B!).

Good customer service can not only make you more money in the long run, but it builds trust and a loyal following of people that will help you build your brand. For example, at Chessable we offer no questions asked 30-day money back guarantee and I strive to reply to every single e-mail message we receive. When we scale we will continue with this personal and attentive approach. And if you run a business, so should you. Make the poor customer service of other companies your own competitive advantage.

You can be Company B, who gained £600 worth of business. Don’t be Company A.