T Nation

Business Screw-Up: Your Preference (Poll)


#1

Here's a fairly generic question, serious replies appreciated.

If a service-business offered a 97% discounted, no-contract-required, service package, paid in front (say the total paid was ~$10), and then for any reason was unable to provide said service package in the form offered, would you prefer:

A. Refund

or

B. Different service of greater value to service provider

?

Keeping in mind, you would not be offered only A or B, but would have a choice between the two.


As a new business owner, I put myself into a situation where the above question is one I will need to ask.


#2

If option B would give me everything I originally wanted plus something extra, I would do that. If I had to change my expectations completely for option B, I would take the refund and probably look for a company that COULD do the original job specified.


#3

A refund...

But it really depends on the service that wasn't given and how much I paid.


#4

Give specifics


#5

I have been grooming a second personal trainer to assist with an expected upsurge in business from a deal-of-the-day promotion.

I designed the promotion as very low barrier to entry with a high value ($10 for $400 in service).

I did NOT include attached fees required of potential clients (gym fees), a total which surpasses my ability to pay on their behalf.

I did NOT have a personnel redundancy to cover for the trainer I've been training to leave town.

As it stands, I have the ability to offer one week's service where I had promised four, as well as a six month subscription to a digital training service for which I normally receive $97 per member per month.

(I will point out a few obvious, service-devaluing mistakes I made with this offer either in a later post or in the Personal Trainer Shop Talk thread)


#6

So instead of 4 weeks of hands-on training, you'll either give them 1 week hands-on and six months digital training ($582 value), or the money back for the original offer?

How many clients does this mistake extend to?

Before you offer the six months digital training to 30 different people, think about how much of a pain it'll be if they all take the digital option.

If it's just a few people or less, it sounds like a fair option to offer them.


#7

A little over a hundred.

The two things I'm looking at are:

Preservation of reputation. In my on-site training, I built a reputation on being punctual, good to my word, and delivering a more impressive experience than the price tag would imply. Since I've turned over the day-to-day running of that aspect of my business to other trainers, that reputation has stayed the same. Having over 100 people, with a little under half actually being in the niche to whom I traditionally market, getting an initially negative interaction is disgusting to me, especially considering it is delivered in a way that looks very dishonest.

The second is potential lost revenue, of course. With my sales experience, and the process which I use to convert prospects to clients, I have a solid 80% closing rate. So if I could close that ratio of, say, 40 targets out of the 100 shoppers, that would be an extra $12,000 a month.

So getting at least 1/4 in either my live or digital training services means a huge boost.


#8

I understand your want to please the customers, but can you handle up to 100 more online clients? Also, isn't that $12,000 a month extra not going to exist until a full six months later, assuming the people that become clients take option B?


#9

With the system as it stands currently, I can handle an additional 200 clients.

As far as the $12k, yes, that is potential in six months, presuming 4 of 10 coupon users convert. I must also consider the referrals they generate, as well as the big resource, and the number one reason I ran the program at all, the before & after pictures, and testimonials.


#10

Hmm. In that case, I'd say stick with those original options. However, Why did you pick 6 month of internet training? Is that equivalent value to three weeks of hands-on training? I would set the value of the digital training offered to just slightly above($50-100) the value of the hands-on training. Every month extra you give them is $12,000 less in your pocket.

Unless you are offering the extra time as an incentive for them to take option B.


#11

I should clarify my first post: by "more value to provider," I am referring to my profit IF I were charging a rate outside of the coverage of the initial offer. If they decide to not refund, they would get a service for which I can charge the same amount as the original offer, plus more, without any additional investment.


#12

In my experience, a little honesty goes a long way. Your reputation needs to be your primary concern. Do what ever you have to do to make the clients feel like they are satisfied. If that means a refund for some of them, so be it. Although, in my experience, once you have contact with a potential client and build enough rapport, you can over come just about anything.

Focus on rapport, be honest and explain the situation, ask THEM what will it take to keep them as a customer and do your best to meet that expectation. If you really "wow" them with your integrity and your willingness to admit a mistake and do everything in your power to make things "right" with them on an individual basis, then I think you could potentially get MORE referrals than you otherwise would have.

You could even INCENTIVISE the referrals as an additional solution to the mistake... Get creative. People just don't want to hear a bunch of bullshit. If you deal with them in an upfront and honest way, you will at least have your reputation, which is by far the MOST important thing to protect.

I hope this helps.


#13

Thanks for the awesome input, AC. It definitely aligns with what I have been thinking. It's good to know I wasn't too far off the mark.

As of Wednesday, I will have the situation resolved, and I will know how close I can come to meeting my ad's promise. I will have the "fall back" solutions, offering either a refund OR combination live and digital training. Thanks to AC, I will not just throw a bunch of sales jibberish at potential clients, and will first let them know the situation, and find out what THEY WANT to make it right.

I will post the results of my damage control once it's done. I think at least a few business threads would be handy for the self-employed among us.


#14

Okay, situation contained, deal will need to changes, customers get exactly what they paid for.

wipes forehead