A friend of mine just yesterday told me a little story about his experience last week getting a product repaired. It was an interesting conversation, and it made me think a bit about why businesses make the decisions they do and what the impact really is.

Before I tell you his story, let me first share my analogy. Say you run a software company, and that you ship software to your customers on a CD or DVD. One of your customers calls up and says that their CD worked great until last week, and that all of a sudden it stopped working. Okay, you tell your customer – Please take your CD to an IT pro and have them look at it and call me. Maybe we can see if it’s defective.

Your customer dutifully does so, and lo and behold, you find out the disc has scratches in it that make it unusable. Now, the software on the CD cost your customer a pretty penny, say $40,000 or something, so it’s a big deal to them.

You think about it for a while and then you send instructions back to the IT professional: Please ship us the CD so we can perform a repair on the disc here at our location using a CD/DVD repair system with some fancy goop and special polish. Please courier it to arrive overnight, before 10:30 am, so we can get it in our process tomorrow and ensure we can courier it back out sometime the following day. We will not charge you for the time required to fill the scratches and replace the label (since it will also be damaged by the repair process). We will then ship the rebuilt CD to you overnight, and we will insure it for $60,000, which we figure is the approximate value of the software plus the value of completing the repair.

Ridiculous (and that was probably a loose-fitting analogy, I know). My friend’s ordeal wasn’t software – it was a transmission. His wife’s car had a transmission go out on it, just out of warranty. Saturn, to their well-deserved credit, fixed the problem anyhow without charging since they determined something was wrong that simply should not happen. But rather than replace the tranny, they rebuilt the entire thing, with a stipulation that they use all brand new parts.

Now, I know as well as anyone that buying a transmission one part at a time, plus the hourly labor to break down and assemble it, is freakin’ expensive. My friend and I both sat there and wondered why they didn’t just put a whole new transmission on the car.

So, the customer is happy. But the automaker – it seems to me – is assuming a greater expense than necessary. In a world where automakers can’t seem to stay afloat (well, or at least they can’t seem to turn a profit), wouldn’t it make sense to do right by the customer, but in a way that maximizes the cost of doing so?

Anyhow – maybe I am missing something. If I am, let me know.

[tags]business, business plan, business failure, customer service[/tags]