Is Your Customer Service Sabotaging Sales?

(MoneyWatch)  It doesn’t take a genius to figure out that when the cost to acquire customers (CAC) exceeds thelifetime value of the customer (LTV) the business model is doomed to fail. However, the simple arithmetic (LTV-CAC) can get pretty complicated if you throw in the wildcard of customer retention.
Have you ever received one of those offers from a bank enticing you with extra cash if you open up an account with them? Well, we did and decided to open two accounts with Wells Fargo. What the heck, it was free money.

Sure enough, within three months, there was a $50 deposit in each account. The bank invested $100 to acquire the two of us as their customers.

Later we discovered a charge for a line of credit to which we never agreed. Mystified, we asked our assistant to call customer service. The representative refused to talk to her and said that he must speak only to the account holder. Hey, he’s protecting us, right?

We happily introduced ourselves, offered blood and DNA samples, provided social security numbers, mothers’ maiden names, high school mascots, the names of our first dates, dogs, cats, and goldfish; not to mention the account numbers, transaction history, best mile running times, and nail polish color. Fortunately, he stopped short of asking height and weight (that would have been a deal killer). We then tried to hand it back to our assistant explaining that she had all the information to resolve the problem. “No!” he shouted. “I can only talk to you.”

OK. That’s a good use of our time. We told him about the fee and said that must be an error because we did not sign up for a line of credit when we opened the two accounts.

In an arrogant and condescending tone he interrupted to say, “Well, you must have because it is in our records.” Turns out it was not from their bank, but a bank they acquired and on an account that had been closed for close to 10 years.

We asked him to waive it. He wouldn’t. “It was your responsibility to pay it.”

We then asked if he could walk us through the process of transferring the money to pay it. Again, he wouldn’t. Would he email us the information so that we could pay the fee we didn’t owe? Of course, he could not do that either.

What he could do and did is close the accounts. You have to wonder how Henry Wells and William G. Fargo would have felt if they heard that call. How would they have felt about all the marketing dollars and efforts being lost in one 15-minute bad experience? 
Loyalty Is Earned by Many Acts and Lost by One 
If social marketing has taught us nothing else, it’s that all sales are relational. You can have the best sales and marketing strategies in the world, but if you can’t keep customers you won’t have a viable business.

Everyone in your business should be aware of both the cost of acquiring and the value of retaining a customer. The customer is not always right, but the customer ultimately pays the bills and should be treated with dignity and respect. The best marketing is not done in handing out money or expensive mail-order campaigns; it is done one customer at a time at every moment of every business day.