Entrepreneur Life Lessons: Never Cheat Your Customers -- Ever
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Recently, the girlfriend and I went to a local cafe to grab a light snack before lunch. It was a sunny Saturday in Toronto, Canada, and we were enjoying some together time on the weekend.
We saw a quaint looking coffee shop -- The Grind Cafe -- in the underground at Toronto’s busiest intersection – Yonge and Bloor streets.
The gourmet tea selection won us over, and we each picked one to try, along with a puff pastry filled with cheese and other yummy stuff.
The cost for our light snack came to $11.42.
The barista behind the counter asked for $11.45.
With the elimination of one-cent from Canadian currency, the federal government has implemented guidelines for business owners in rounding to the next whole cent.
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According to their guidelines, $11.42 should be rounded down to $11.40 – NOT up to $11.45. Actually, it’s also basic elementary school math – round up for numbers ending in five or higher, and down for everything else.
“It’s only three cents,” protested the man behind the counter when we politely reminded him of his error.
Yes, it is only three lonely cents, however that’s not the point. You don’t reject your customer’s objection, you should politely answer it – even if you’re wrong – because picking a fight with a customer just isn’t good business.
We paid the extra three cents, though as we sat in the lovely cafe, sipping on our teas, the experience just wasn’t as cozy as we had hoped.
Great customer service makes people swoon, and want more – horrible customer service makes you want to head for the exit and never look back.
As we exited the cafe, we strolled past a Shopper’s Drug Mart – one of the largest chain of pharmacies in Canada, owned by the Weston Family (they own Loblaws grocery stores and the President’s Choice, and No Name labels of products).
We needed a few items we know we’d find there, so we went in.
“Do you need a bag for that?” the person behind the counter asked, as we were at the check out.
We did, which she proceeded to charge us five cents for.
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In 2009, the City of Toronto implemented a poorly executed by-law, requiring retailers to charge five cents for every plastic bag given to a customer. It was poorly implemented, because it wasn’t enforced, nor was it ever really clear where that nickel per bag was going.
The city claims it was being put into an environmental fund, to promote environmental practices and keep the city clean. However, as it was up to each retailer to manage the collection and distribution of the funds, most of those fees just went back into the pockets of greedy retailers looking to make a buck.
The original intent of the five cent fee was to reduce plastic bag use, in favor of reusable cloth bags.
In 2013, under Toronto Mayor Rob Ford, he killed the five cent per plastic fee, however, because it never was managed well, the city didn’t end the program well either, leaving it in the hands of greedy retailers.
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If the city really wanted to reduce or eliminate plastic bags from the city’s landfill, they should have banned them outright – which they eventually did – however the plastics industry sued and the city quietly cancelled their ban in 2013.
So, now wherever you go in Toronto – and even in the areas surrounding it – you never know if you the customer will get dinged an extra five cents for giving someone your business.
“Where does the five cents go?” I ask the kid behind the counter at the Shoppers Drug Mart.
“I dunno, probably somewhere good,” she says.
Yes, it probably lines the pockets of the executives running Canada’s largest pharmacy-retail chain.
Although charging for plastic bags does reduce their use – a City of Toronto report claims a 53 percent drop in 2012 over the three years since the five-cent fee was initiated – that’s a drop of 215 million plastic bags – the money collected for an environmental initiative shouldn’t be used as a revenue stream off the backs of customers.
Never lie to a customer, because if and when you get caught, you’ll never see that customer again. And worse, using a social cause (such as environmentalism) as a way to make money is the ultimate way to cheat your customer.
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This got us thinking about our earlier experience with the Grind Cafe. We figured, if that store wrongly rounds up it’s prices for everyone, then that three-cents quickly adds up, giving them an additional revenue stream. For every 20 customers wrongly rounded up, that’s about a dollar in profits. That adds up day-in, day-out.
However, again, you never want to cheat your customers, because that’s not a great way to keep them coming back.
Numerous studies prove it’s a lot easier to please and retain customers, than to pay for marketing and advertising to acquire new ones, some going so far to say it costs between four to ten percent more to acquire new costumers.
So you never want to do anything – anything – which could cost you a customer, especially cheat them out of their hard earned money, such as the examples used above.
There are great retailers that don’t round up – when they should round down – and that don’t nickel and dime their customers over a plastic bag. Or those that do charge for plastic bags honestly, inform and educate their staff as to where those funds are actually going, rather than “somewhere good,” which in business, just doesn’t cut it.
What’s the entrepreneurial lesson here?
Be honest with your customers unless you want them to feel cheated, lied too, and that something just isn’t right.
Because once your customer feels that something just isn’t right, they stop being your customer. And you never want anyone once willing to pay for whatever you sell, to stop paying for what you sell – ever.
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