On Monday, we shared a typical retail service encounter and how a seemingly harmless $5 service charge can actually detract from value perceptions. We suggested instead a customer-centric policy, one which (as outlined below) would cost the company only 33 cents per redemption, build loyalty, and reinforce perceptions of service quality excellence. Today, we follow up with the rest of the story. What did Performance Bicycle lose in terms of Customer Lifetime Value and what would the ROM be if they invested the 33 cents in only a few customer relationships.
I have recently witnessed several performance improvement opportunities, one of which is described in this week’s blog. A service policy failure resulted in directly observable negative financial impact for a chain of specialty retail stores. The service design and pricing gaff not only resulted in an experience that was not satisfactory for the consumer, but also a readily quantifiable loss of revenues and profits and poor brand management for the company. The issue is discussed first in terms of Value Perceptions and on 7/5 in terms of Customer Lifetime Value.