The Write Stuff – Blog

Apr 10 2012 The False Economy of Stingy Service
False economy of stingy service

Following the GFC, times have been tough and some businesses have been forced to tighten their belts and pass the cost of increasing overheads onto their customers.

I get this. I really do.

What I don’t get is the stingy nature of some business practices that defy economic rationale. They may save a penny (sometimes, sometimes not), but at what cost?

Let me give you some examples:

Gift Card Expiry Dates

The False Economy:

This one has always annoyed me. The stores get their cash up front, so what does it matter WHEN the card redeemed? Surely the longer it is before the recipient makes a purchase, the less value the card actually has? I’d be encouraging unlimited expirations!

To me this seems like a simple cash-grab in the hope that expiration will have kicked in before the cards are redeemed, netting some easy profit for the stores.

The Real Value:

Chances are when a customer comes in to spend their gift card they’ll end up purchasing something else while they’re at it. After all, they can splurge $30 for wine glasses when they’re getting a $100 dinnerware setting for free. If their card is expired, you can kiss the additional purchase goodbye.

The No Photo Policy

The False Economy:

Display homes, wedding stores, furniture shops and plenty more forbid you from taking photos of their wares.

Why?

Because you might be the competition trying to rip them off by making copies or you might be trying to save a buck by trying to find a similar item somewhere else.

In reality, most of us are just looking for a way to remember where we saw the item because we liked it and may consider purchasing it.

When I was shopping for my wedding dress, it was quite difficult to remember which dress came from which store and what each dress looked like on. I had wanted to take a quick snap with my mobile for future reference. I also wanted a picture to send my closest friends and family, who all live interstate or overseas, to get their thoughts and opinions.

Based on the reactions of the staff, you’d think I had tried to slaughter a goat on the countertop!

The Real Value:

Make it as easy as possible for your customers to remember you goods. If they want to take a photo, chances are they’re narrowing down their choices and your product is one of them. Don’t make them feel like a criminal for wanting to collect data – instead, give them a business card with the details of the item to make a purchase decision even easier.

Tasting Glass Fees

The False Economy:

On many a weekend I’ve been known to visit a winery (or two) to sample different regions and varietals. Once upon a time a tasting fee was unheard of, but more and more vineyards seem to be charging $2-$4 for a dribble of their latest creation in the bottom of a glass.

OK – wine doesn’t grow on trees (not quite!)… but if it’s good, I’m more than happy to buy a bottle and I can guarantee my husband will by a dozen. Make me pay for the dribble and we’re both more inclined to see what’s down the road.

The Real Value:

While there may be those pesky folks who simply taste and move on, there’s plenty who are happy to buy a good drop. When you put purchase barriers in the way, you risk losing potential sales – even if you DO reimburse the tasting fee (it’s the principle!)

Charging for Carry Bags

The False Economy:

Since plastic bags were phased out of SA in 2009, we’ve had to purchase our own bags to carry home our goods at a cost of 20c to $1.

Now I’m all for helping the environment, but when plenty of stores offer reusable paper or plastic bags for free, I do get a little resentful at having to pay for bags at other retail and grocery outlets (and let’s not get started on the fact that many of these “green” bags are still 100% plastic!)

The Real Value:

These reusable bags are branded with the store logo and in effect are free advertising for that store. Surely this could be contained in the advertising budget (and most of the stores with these bags are multinationals with multimillion dollar budgets) so consumers could obtain certain bags for free, such as the paper bags offered by Kmart and the thinner “reusable” bags from Woolworths or Coles.

These companies could tout their “green” credentials and how they’re donating the cost of bags to helping the environment, in turn, customers could feel good about using these bags and who knows… they might even pay more for the sturdier branded bags.

When companies treat their customers like they think they’re trying to rip them off, or charge their customers for the cost of directly promoting their business to them, is it any wonder those same customers feel a little disenchanted?

By adopting stingy customer service practices, it seems these businesses fail to recognise that customers will actually buy MORE when they’ve been given a little for free. Rather than saving themselves money, these businesses are actually doing themselves a disservice and potentially costing themselves increased sales.

As the old adage goes… give and you will receive.

Posted in Customer Service, Marketing by 2 comments

2 Responses to “The False Economy of Stingy Service”

  • Reply Bridie Jenner April 23, 2012at 11:19 am

    Paying for plastic bags, my number one shopping pet peeve! I hate that I can go to Target and spend a couple of hundred bucks and then be expected to pay for a bag to carry it in, yet I can go to Coles (about two doors down) and spend $1 on a bottle of milk and automatically it’s put in a bag. Luckily my sister sent me some funky reusable bags that I always carry in my handbag, but as you say, it’s the principle. 

    • Reply Anna Butler April 23, 2012at 11:29 am

      I hear ya Bridie. And most people also reused the plastic shopping bags for many things, such as bin liners, water-proof bags for trips to the beach or pool, packing shoes in suitcases, transferring plants, etc. Now they just buy plastic bags, so I don’t see how it made much difference (except to make someone a lot of money – which should be going into developing RECYCLABLE bags, not just REUSABLE ones).

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