Small Business Blog from Atlantic Canada

I am "CA" Atreya (PMP, MBA), the author of this blog. I help businesses in Atlantic Canada achieve their BHAG successfully. You may subscribe to this blog using a feed reader (RSS).

“To err is human, to forgive is divine”, so goes the saying. But customers are not divine beings. They are as human as you and me, and their forgiveness tolerance - low. There will be times when your small business screws up big time. Inspite of the best intentions screw-ups happen. It happens in the best of businesses. How you deal with the problem will determine your success at retaining customers in such circumstances. In today’s blog based world, news travels like wild fire. Your prospects and customers are watching your every move. Act in customer’s best interest and resolve the issue quickly, and you may have salvaged the complaining customer while at the same time potentially acquiring new ones.

Here are some tips how your small business can retain customers when you screw-up:
1. Admit the mistake: I have never gone back to do business with any vendor who do not admit to their mistake. If you determine that your business screwed-up, you have to be responsible for it. H&R block screwed up my personal tax returns a number of years ago. It recently came to light. When I brought it to their attention, I got a call from the area manager himself who admitted to the mistake. When I am in the market for a tax specialist, I may look them up. Admitting to mistakes softens customers’ stance towards you. They may even listen to you when you offer an alternate solution.

2. Communicate: Large corporate accounts have been lost by businesses due to lack of communication. Your customers deserve to know what happened, why it happened and how you will prevent it in future. Any delay in communicating with effected customers is not advisable. Ideally, use the telephone or go in person. Use email as the last resort. Never user instant messaging. Apologize. No need for a lengthy explanation. The customer is not interested in what your problems are. They just need the services or products they paid for. If there is a problem, let them know.

3. Request for a second chance: Depending on the severity of the screw-up you may or may not get a second chance. But you are not going to get this at no cost to you. Often times the customer service representative offers incentives that holds no value to the customer. The H&R block area manager offered to fix the error and refund the charges. But by that time someone else was doing my taxes. It would be more beneficial for me if he would have offered to do my book-keeping free for a month or two. Not only would he have made amends, but he could have retained me as a customer in the long term. Ask the customer how can you make amends that will satisfy them. Sometimes, you can get away with an apology. At other times you may have to offer significant monetary incentives to retain the customer. Often times all that is required is a discount or a fee waiver. But ask the customer what will satisfy them.

4. Do not commit the mistake again: If you get a second chance, chances are you will not get another one if you screw-up again. Wise men learn from other peoples mistakes. You do not deserve to be in business if you cannot learn from your own mistakes. In one of my earlier posts (Top 5 sales mistakes small businesses make), I suggested an “Under-commit and over-deliver” strategy. This will be a good time to use that. Say your small business screwed up on delivery of a product. If you get a second chance, add a buffer and state the delivery date. Then make sure you deliver it before the stated delivery date. You would have redeemed your small business.

As a small business, you cannot afford to loose any customer, however big or small. It is always easier to retain customers than acquire new ones. You must make every effort hang on to them - especially when you screw up.

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