May 62009

Customer Loyalty: A Case Study

I've written recently on the all important topic of customer loyalty and lifetime value, and have thrown out some kooky ideas for trying to get more out of those happy customers.

This past weekend a couple of different incidents made me think about the source of customer loyalty.

On Saturday afternoon there was no hot water at my house. In my vast experience with home improvement projects I've learned that three things generally happen when I try to fix something: 1) I curse a lot; 2) there is bloodshed; and 3) I end up calling someone who knows how to fix things.

I checked to make sure the circuit breakers weren't thrown, that there was voltage at the unit, I pushed a "reset" button. Nothing worked. Sunday afternoon I gave up and called Curtis Heating & Cooling. I've used Curtis' for years for HVAC stuff and was delighted to see that they worked on water heaters, too.

They suggested over the phone a couple of things to try but I'd tried those. I suggested that they'd probably need to replace the unit and he said: "well, if we do, I wouldn't be able to fix it today anyway, and I'd have to charge you more for the visit since it's Sunday. Can it wait 'til tomorrow?"

Curtis Morris, himself, came out first thing Monday morning and spent an hour or so diagnosing the problem. The problem was electrical after all, the circuit breaker switch was bad and wasn't providing enough current for the water heater. He suggested we call an electrician he knew as he wasn't certified to do that kind of work. Curtis wouldn't accept payment for the hour he spent at our house.

This is the third or fourth opportunity Curtis Heating & Cooling has had to charge me thousands of dollars to fix a problem I thought I had, and instead provided a simple solution that was more than adequate. It's why I will always call them, and why I tell everyone I know to call them. {A colleague of mine was talked into replacing his heat pump to the tune of $3K by another company. I suggested he call Curtis just to be sure. Curtis fixed his system for $73.}

By looking out for his customer's interests first, his company suffers in the short term but benefits ultimately by creating customers for life.

Also this past weekend I ran across a blog post by one of RKG's former IT Developers. He left to help build a company that provides open source software development. His article touts the merits of charging fair hourly rates instead of billing clients for on-site visits and work they don't need, suggesting that at the end of the day the strongest business model is to provide valuable service for a fair price.

This is a model we've tried to follow at RKG. Where some firms seem to see themselves as commissioned brokers for the engines, we take the view that focusing strictly on what serves our clients' best interests -- regardless of near term impacts on our bottom line -- will lead to long-term growth and prosperity.

As the economy recovers, and corporate survival is no longer the only issue, I think we all do well to reflect on the lessons taught by Curtis Morris and consider what we can do to engender that kind of loyalty.


One Response to "Customer Loyalty: A Case Study"
Marc Adelman says:
Great anecdotal story for customer loyalty!!!!!! Any company can make money. A relationship between a customer and a company though is an commodity that is of far more value than money. This relationship goes beyond marketing gimmick, sales pitch, and marketing dollars. This relationship is forged with consistent positive experience between a company and a customer. The non-advertised - hard to find in today's world, quality of honesty that Curtis Morris provided for you was the intangible positive experience that contributed to you become a life long customer. Additionally, it actually strengthened their branding via word of mouth. If the turns in the economy have forced some of us to get back to the basics and reassess what value we are really trying to provide to our customers - then maybe this economic crisis might be a blessing in disguise. I look forward to five years from now, when we can look back in retrospect and see the business lessons we were forced to learn during this economic down tick, that have since turned into the crucial building blocks of our then established success.

Leave A Comment