Try This at Home

Time for another recurring article type here at RBfS. This time it is 'Try This at Home'. These posts will offer tips and tricks or info on products and services that I think are worth checking out. Today's Try This at Home is:

When I was in college I remember paying well over $100 per book, per class. So the way I figure it your total costs of books in college can easily top $4000. I'm an admitted bibliophile so I have kept all of my textbooks, but I know a lot of people choose to sell them back at the end of the semester to mitigate their huge cost. The problem is that most buyers aren't willing to pay nearly what you paid for the book. There are a few ways to save on textbooks, including:

• Buy Used textbooks - they are always cheaper and are often in better condition than you would expect.


• Sharing a textbook with a friend - Split the cost of a textbook with a friend who is taking the class with you. Beware sometimes this can cause real headaches.


• Purchase online textbooks - No don't purchase the book online, but rather purchase one of the new digital only copies available at a discount

There is however a new way to save on textbooks that I have discovered: Chegg.com. Chegg allows you to rent textbooks for a semester and return them! A brilliant idea that they claim can cut the cost of textbooks up to 85%. Beyond that they will plant a tree for every book you rent, employing a marketing technique where they give back to the community in order to appeal to the more issue conscious 18-25 demographic.

I have not used this service and in no way am I being paid by them I just think it has a lot of potential. Remember your opportunity cost before trying them out though. If you can rent a $100 book at an 85% discount you have paid $15. If on the other hand you buy a used textbook for $50 and sell it to a friend for $40, you are only out $10. Consider the extra work and risk of trying to sell your book for a fair price as well as the benefit of the planted tree :) before you make any decisions.

Let me know if you have used this service, and how it worked out.

Wise Words

"Customers don’t expect you to be perfect.

They do expect you to fix things when they go wrong.”

Donald Porter V.P., British Airways

A service recovery is a term used to describe actions taken to take an unhappy customer and turn them into a happy (or at least satisfied) customer. This can be done in many ways, sometimes it means taking a hit to your bottom line (comping a meal, giving away gift cards) but it doesn't always have to be (a sincere apology can go a long way). Service recovery is probably one of the hardest things to master in customer service, but it provides the greatest returns. If a company provides consistent satisfactory customer service, or even great customer service some people may recommend them to there friends. It is when things go wrong and a company fixes them, or rather recovers the service, that they can make an impression that will definitely result in positive word of mouth.

Think about it. When you have had a negative experience, alerted the company, and then been pleased with the outcome, what do you do? If you are like me you tell everyone you see, for the next few days, at least. You spread so much positive goodwill for the company for what? A 2-4-1 coupon and a sincere apology. Often times this is as little as it takes to satisfy a displeased customer. The key is to be fair, be sympathetic and admit fault. That is usually all a customer wants. If you empower lower level employees to do this you can likely avoid a lot of headaches in the long run (but that is a topic for another post).

What you should take from today's Wise Words is that for the most part any customer is eligible for a service recovery and that making things right will pay high dividends in the long run.

Do We Prefer Bad Customer Service?

In a recent article for, The Atlantic, Daniel Indiviglio postulates that: " We like bad customer service". I sincerely hope this isn't true but he does bring up some interesting points. The article is largely a response to another article written by Jay Goltz in the New York Times. Both make some compelling arguments as to the reasons behind why we encounter poor customer service.

Goltz postulates that there are three main reasons for poor customer service: Healthcare, aggressive pricing strategies and over educated workers. He writes "Smart companies are refocusing on customer service because they can see the value" and that "The customers will have the last say"

Indiviglio takes a different approach to the subject. He doesn't directly criticizes Goltz's message. Indiviglio says that: "we like what bad customer service provides: cheaper products" and that companies are not incentivized to provide great customer service because people care more about low prices. He illustrates this with a $50 difference in airline tickets.

I have to say that I agree with both authors to a certain degree. There are many factors contributing to diminished customer service. The question becomes not "how can we improve customer service?" but "should we?". For me the answer is a resounding "YES!" and I'll tell you why:

In most cases in the long run customers will punish firms with poor customer service. It is a firms goal to differentiate itself in the market. This is particularly important in today's consumer landscape. How often have you seen two firms in direct competition directly across the street from one another? Convenience has quickly become one of the less effective ways to differentiate (between physical retailers of course not online versus brick and mortar). For purposes of this discussion we can assume that goods are largely homogeneous (yes I like the lamps at Target and the coffee at Starbucks...work with me). So there are two main ways most retailers can differentiate: price and experience.

If it is true that, "cash is king" most firms will have to differentiate based on price. Slashing prices, offering rewards programs and cyclically raising and lowering prices are all strategies to get more people through the door. For a lot of firms this is going to be the best strategy, there has to be a cost leader after all. What results when firms try to compete to be the cost leader is often large scale attrition resulting in a lot of companies reducing profit margins some to the point of insolvency (I'm looking at you Circuit City, Linens & Things and CompUSA).

Another strategy s to differentiate based on the experience. Those of us lucky enough to shop at high-end retailers like Nordstroms or Apple know what it is to have excellent customer service. There is an additional value added to a good when it has been purchased in a positive experience. We can't all be the Cadillac of the industry (I don't think Cadillac is even the Cadillac of their industry anymore) but we can strive to enrich the customer experience for proposes of building loyalty and positive buzz.

Is there an easy way to measure the ROI for good customer service? Not that I know of. But you can't underestimate the impact of negative customer experience. the modern customer has networks far larger than they ever have before. Grassroots boycotts and negative press can be toxic for your business. Sure many consumers will look for the bargain. Cost differentiation in the right circumstance can be the best choice. However bear this in mind: you should provide great customer service because it could grow your business and increase your margins, but you should avoid bad customer service because it will eventually hurt your bottom line. Customers have great memories. They may not always punish a firm for poor service, but are you willing to roll the dice?