The Verghis Group

Happy New Year

By Phil Verghis on December 31, 2008

Wow. From a purely economic point of view, most people around the world will be glad to see 2008 in the rear view mirror. This year however, you will have to wait an extra second for 2009 to start.

For those of you with jobs, be sure to not just focus inwards, but take extra care of your customers. They will respect you for it, and it will stand out when everyone else is cutting back. Check out what to do in tough times.

For those of you who are looking for a position or think you will be looking soon, check out reach out and connect.

For all of you – may 2009 bring peace, prosperity and health for you and your loved ones.

Can messing up increase your revenues?

By Phil Verghis on December 17, 2008

(From the December 2008 newsletter. Sign up from my home page.)

It really doesn’t seem fair, does it? On one side you have senior management breathing down your neck, pressuring you to deliver more revenue and/or better margins from your existing services portfolio. On the other, your customers are looking to slash costs, and are unlikely to forget (or forgive) companies that force them to do anything that smacks of a price increase.

It’s not easy for you and your overworked team to add new services in this economic climate, so here’s another source of revenue to consider: service recovery. After all, mistakes are like death and taxes: inevitable. At some point we all will make mistakes that affect our customers. Stuff happens.

What’s important is how we recover from mistakes. The right recovery can transform them from a “Never Do Business with You Again Unless I Have To” to a “Wow” experience. Check out my blog for a personal example of this.

Continental Airlines has an interesting case study about this. A few years ago they tried an interesting experiment to discover how best to recover from “transportation events,” i.e., cancelled flights, long delays etc. For eight months, they randomly divided the affected passengers into three groups.

  • One group got a form letter apologizing for the event.
  • Another group received the form letter plus a complimentary trial membership in Continental’s Presidents Club.
  • The third group got nothing.

The third group was not happy. That’s no surprise. But the first group, the customers who received a simple form letter, ended up spending 8% more with Continental, a $6 million increase. Among customers who received both the form letter and the complimentary Presidents Club pass, 30% ended up joining the Club – which resulted in additional revenue on top of the $6 million.

The lesson: No matter how hard it is to reach out and follow up with customers after you mess up, do it anyway. When handled properly (and promptly), it is not only good for your reputation, it’s good for your bottom line.

Question: What are you doing to ensure you recover properly from service exceptions?

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