Lessons learned in SaaS startups: Chapter 8. Show loyalty.
If you want to gain loyalty from your customers, first you have to show loyalty to your customers.
My wife was telling me the other day about a recent negative experience she’d had with a well-known company who made household appliances and how angry the experience had made her feel. Ok, I’ll mention the brand, it was Rowenta.
Our iron was cutting out and sometimes just not heating up at all. It turned out that the power cable was dodgy and needed replacing. Unfortunately though, the iron was a few weeks out of warranty. I said she should still contact them and let them know about the situation, and the outcome will be the measure of how good their customer service is.
The email was sent, and a few days later a reply came back with various paragraphs of copied and pasted text, along with forms and guidance on how she can send the iron back (with her having to pay shipping fees), and then how she would need to pay for a diagnostic fee (which she already had done, the cable was broken), and then pay for a replacement iron (it shouldn’t have broken in the first place).
The frustrating thing for her was the fact that she had deliberately chosen a good, reliable, and German, brand. She paid extra for this brand because they were known for being very reliable; she didn’t want the hassle of something breaking after a year, or even five years. I always say, “you get what you pay for”, and we usually pay that little bit more to get a product that’s well made and will last longer. My parents still have appliances that were bought in the seventies and eighties and are still going strong.
However in this case we were let down. And worse still, we were let down even more by their poor customer service
Ok, you might argue — ‘the terms and conditions state’, and ‘the warranty is only for a year’, and ‘the company is in their right to charge fees for diagnostics and replacements’. But this is not the point.
The point is they aren’t creating customer loyalty. What is my wife going to do now? She’s going to bad-mouth Rowenta (and her husband is clearly going to also), and she won’t buy another product from them again.
What would the cost have been for them to replace the iron, and ship it out? I don’t know, but I’m guessing, let’s say maybe $30–$50?
What is the cost to them for not having my wife as a customer, and for not recommending their brand to her friends? No more irons, steam mops, fans or air conditioners purchased from her or her friends. $100? $500? More?
The cost of loyalty would have been $30–$50. My wife would have told everyone how wonderful their customer service is, would have recommended their brand to many others, and would have purchased other products from them.
Speaking more specifically into SaaS and tech, the subject of customer loyalty has cropped up a few times. I’ve been prompted with the decision of whether I should refund the guy who didn’t realized he was being billed and wants $300 back on his card. Or the guy who just didn’t use the service and wants a refund for the last couple of months. The Terms and Conditions are clear, and we are in our right to just say “No”. But what does it do? It creates a customer who rants about how bad your customer service is, won’t come back to you, and won’t recommend you.
In cases where we have issued refunds, or we’ve just gone over and above to help a customer out, phoning them up and spending hours on their issue (even when they are on the free plan, or are paying the basic subscription price), those customers have often then gone over and above to tell their friends or Twitter followers how great our customer service is.
The other day a customer of ours surprised us by giving US a Starbucks voucher as a way of saying thank you for our customer service. It’s supposed to be the other way around. That customer is now very loyal to us, because we were loyal to them.
So customer loyalty is something hard to gain, and it can sometimes cost a lot in time and in cash, but once you have it, it certainly pays off in the long run.
Show loyalty.
