“Do you want me to mount the spare for you?” the voice over the phone asked. He had just told me that my tire was unrepairable and the others were nearly worn out. He seemed hurt I didn’t take him up on the implied offer to buy a new set of tires. The flat tire actually just had a slow leak so it didn’t matter if we swapped out the spare or not so I said, “Sure, why not.”
I recently wrote about a used tire shop with a unique business model. Four days after buying a set of tires, I picked up a slow leak in one. Rather than driving all the way across town to the used tire place, I took it to a national chain tire store less than a block from my office. The contrast between the two businesses really highlights what some have termed “good profits” and “bad profits.”
Bad profits are profits made at the expense of the customer in a way that hurts good will, the overall customer experience, and prevents generating long-term profits from the customer. From my experience, the mobile phone industry follows a bad profits model. All the effort is made to acquire new customers with little effort being made to retain customers. Any business that focuses on fees or charging the customer more with little in return is a business focused on bad profits.
Good profits, in contrast, are profits made in a way that add value for the customer, creates good will, improves the customer experience, and increases the likelihood of long-term profits from the customer. Rather than seeking ways to charge the customer more fees, etc., a business focused on good profits is trying to find ways to serve the customer that makes them want to spend more. Apple and Zappos are regularly used as examples of businesses seeking good profits.
This national chain tire store told me my tire was unrepairable and the rest were getting thin and needed replacing. Then charged me $20 for installing the spare in place of the leaky tire – after they offered to; I did not ask. Lies, fees, and scare tactics to upsell the customer from a cheap repair to $800 worth of tires. They relented on the fee after I protested, but not ripping off the customer when they call you on it is not the same as treating the customer well.
I immediately drove over to the used tire shop where: they told me “no problem” on repairing the tire, hustled my tire through even though they were crazy busy, offered to install it on my truck for me, oh, and didn’t charge me anything for the repair because I bought the tires from them. No written agreements, no need to hassle them, no arguments, just a focus on doing right by their customers.
It’s cheaper and easier to retain customers than to find new ones. Why is this so hard to understand? Which business will I return to in the future? Which business do I refer to others? Which business do I want to support and see thrive? Which am I happy to give money to?