Exactly, on all points - except for the part where I'm looking at a
different angle on your analogy.
All I'm saying is the paying customer are not being allowed to leave
unless they pay for what they might have eaten had they stayed. That, I
declare, is wrong and ought to be illegal; the days are long past when
cell and cable companies could claim they need the protection to enable
them to afford to extend the service.
And I think, around here at least, Sprint makes a great example.
It's selling to new people services which they later find are much less
than satisfactory, and out of which they may not get without paying an
exhorbitant "fine" equal to the next 4-5 months they won't be even
trying to use the service.
But your restaurant will allow them to continue to be dissatisfied
customers as long as they are paying customers. Not until the cost of
their complaining (regardless of whether the complaint is justified)
exceeds the profits derived from the lousy dinners will our erstwhile
restaurateur chase them away - then claim it's not the dissatisfied
customers who are leaving, but the conscientious bean counters who are
chasing them away.
In either case, I think Sprint's numbers show customers are going to
the competition, and telling their neighbors what service not to buy.
Jason wrote:
> On Fri, 6 Jul 2007, Craig Froehle wrote:
>
>
>> What I'm about to say here will probably be met with indignant gasps and
>> muttered profanities, but what Sprint's doing is *exactly* what I teach my
>> students they should consider doing.
>>
>> As a business school professor, one of the courses I teach is Service
>> Operations Management. In that course, I show a graph that looks like a J
>> that has been rotated 200 degrees clockwise. The x-axis is "customer
>> retention rate" and the y-axis is profits. As you start retaining more and
>> more of your customers, your profitability increases...to a point. At some
>> point, you're retaining customers you really shouldn't, as they cost you
>> more to service them than they generate in revenue for you.
>>
>> Say you ran a restaurant. Would you be happy to serve a customer who comes
>> in and takes up a booth for hours, uses napkins and silverware, sugar, milk,
>> stirrers, uses up your wait staff's time, but only orders a 29-cent cup of
>> coffee? No...you can't run a business with customers like that.
>>
>> I fully understand that Sprint is partly to blame -- Sprint's customer
>> service is lousy, which may be causing some of the repeat calling. But,
>> there are always going to be customers who simply cannot be satisfied and
>> will continue to leech away your resources unless they are cut free. If
>> Sprint is finally doing that, more power to them. I just hope they do what
>> I teach my students, which is to be really smart in selecting which
>> customers get pared.
>>
>
> With all due respect I think you missed a bit with the analogy. If the
> customer came in every morning, noon and night and ordered a full meal and
> always paid in full you'd be unwise to run him out the door, especially if
> your restaurant were losing money and had a reputation for lousy food and
> poor service. Even if the customer is very demanding of the staff. The
> restaurants next door, VerPieZone and AT&Tacos, have better food and
> friendlier waitstaffs - can you afford to send a profitable customer over
> there?
>
> Sprint isn't terminating these customers for not paying their bills but
> for using up more resources than they would like. Should my ISP cancel my
> contract with them just because I'm using the full 20mbit they allow me,
> even though they oversubscribe the network and don't expect anyone to use
> that much for more than a few minutes at a time? If I were violating
> their terms of service (spamming, distributing viruses, etc) that's one
> thing, but the Sprint contract doesn't give any warning about calling
> support too much. And that's the worst part: this was done without
> warning. Back to the restaurant, would you ask the customer to be a bit
> easier on the staff and not take all of the napkins or would you just turn
> him away at the door without warning? You can bet he's going to tell his
> friends if you do the latter and they'll avoid your place too, deceasing
> business that much further.
>
> -Jason
>
> -----
> --- There are no absolute statements. I'm very probably wrong. ---
> "The difference between genius and stupidity is that genius has its limits."
> - Albert Einstein
>
>
>
> Yahoo! Groups Links
>
>
>
>
>
--
/"Thirty-five million deaths leave an empty place at only one family
table." /
(News commentator Eric Severied in a radio essay on the 25th
anniversary of the start of World War Two. 8/31/64)
[Non-text portions of this message have been removed]
