...from the desk of       Elly Valas
Issue: 07-08  Date August, 2007

Elly Valas

Biz News You Can Use

Bad Stuff Happens at Good Retailers: 
Sharper Image Redux


Quote of the month:

"Clearly there are opportunities for continuous improvement." ---Steven Lightman, the CEO of The Sharper Image

In my last newsletter, I wrote about a poor shopping experience I’d had at The Sharper Image.  Here’s the end of that story.

My newsletter quickly made its way to Steven Lightman, the CEO of The Sharper Image.  To his credit, Mr. Lightman’s response was prompt, apologetic and professional.  Most important, he explained that even though he’d only recently joined the company, he is “intent on living up to our customers’ high expectation by improving all areas of our organization.” 

He went on to say that “our goal is for our stores to be fun, interactive places to shop and experience our products.  Clearly there are opportunities for continuous improvement.” His response also said that the policies which kept me from buying were under review.  Mr. Lightman went further including a gift card in hopes that I’ll give The Sharper Image another try.  And I will.

I’ll go back not because of the gift card, but because Mr. Lightman personally addressed the issue.  As CEO of a struggling company, I know he is busy and I appreciate his attention to the more global issues my experience represented.  I felt that he was sincere in his desire to make his company more customer-focused and a better place to shop.

Bad stuff happens at good retailers.  No one sets out to give poor customer service or to develop policies that prove to be deal breakers for potential clients.  Sometimes, though, we just don’t treat our valued patrons the way they should be.

The proof of a great business, though, is in how they recover from poor customer service.  It’s in how well and how quickly they are able to admit the mistake and make it right with the buyer.

The way in which a company recovers from a service or product failure tells us a lot about the company’s culture.  It may also be a predictor of the company’s chance for success.

Remember the famous Tylenol scare in October of 1982?  A mad killer infused potassium chloride into capsules ingested by seven people in the Chicago area.  Johnson & Johnson’s response was swift and wide sweeping.  The company halted production of the capsules, issued half a million warnings to doctors and distributors, and offered to exchange the estimated 22 million bottles of the drug in circulation. 

The result of their effort is nothing short of miraculous.  While at the time of the scare the market share of Tylenol collapsed from 35% to 8%, it rebounded in less than a year, a move credited to the company’s prompt and aggressive reaction. In November it reintroduced capsules, but in a new, triple-sealed package.  Within several years Tylenol had become the most popular over-the-counter analgesic in the US.

How about the New Coke fiasco in April of 1985? Developed with the secrecy of a military operation and launched with great fanfare, the new drink fell far short of Coca-Cola’s expectations. The drink was so detested by loyal Coke drinkers that they threatened to sue the company to get their old soft drink back.  

Donald R. Keough, Coca-Cola president responded to consumer dissatisfaction saying, “We did not understand the deep emotions of so many of our customers for Coca-Cola.”  By July, New Coke was pulled from the shelves and replaced with Classic Coke.  Today, Coca-Cola continues to be a world-wide leader in the soft drink industry.

The Cambridge, MA-based Strategic Planning Institute has found that customers with service complaints that are resolved quickly and satisfactorily are more likely to return to that business than are customers who never had any problems.

Why?  Because satisfied customers simply had their expectations met.  They expected to come into the store, find what they were looking for, buy it and leave.  That’s what they got.

Customers with problems, though, expect to do battle with the company.  In fact, 96% of dissatisfied customers don’t even bother to register a complaint.  90% of them simply will not come back again.

 Of those who do ask for relief, 70% say they’ll return if their complaints are resolved.  That figure jumps to 95% if the customer feels their objections were handled promptly and efficiently.  They thought they’d be disappointed but instead, the company far exceeded their expectations.  They’ll even tell their friends and relatives how well they were treated when they had an issue that was taken care of quickly.

Just like I’m doing now.  Most people influence 250 others—their friends, relatives and business associates.  Some, like me, can reach even bigger audiences.

Mr. Lightman responded fairly and appropriately to my complaint.  He made me feel like my business was valued by The Sharper Image.  I felt like he really understood the points I was trying to make.  He recovered quickly and he deserves my business.

How about you?  How well would you fare in a similar test?  How well would you recover?  Would you exceed your customer’s expectations or just barely meet them? 

Business Trends Poll (07-08 ):

In your company, who has the primary responsibility for resolving customer complaints?

____ Sales associate
____ Customer service representative or department
____ Department manager
____ Store Manager
____ Buyer or merchandise manager
____ Owner or executive level staff member

View this month's and previous month's Trends Poll Results

To participate, click the button to go to
Business Trends Polls
at www.EllyValas.com

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