How much does it cost to take 86p by credit card?
Martin Taylor
contact centre and customer service design and deployment support from your customers perspective
Having done some quick maths, I reckon in this case, it cost conservatively ￡6,025!
Before I break down the sums, let me start with the story.
I moved house, and as a result needed to let my insurer know my new details - the home insurance quote was ludicrous so I went elsewhere, my car insurance coincidently with the same firm, went up by an exorbitant 86p.
As I felt I had already been let down on the home insurance re-quote, I suggested that it would cost far more than 86p to collect the additional money for the car insurance and the advisor wholeheartedly agreed - we both determined that it would cost far more to collect than it was worth and common sense ought to prevail. He therefore, agreed to wipe the additional charge and we carried on with our day.
However, and there always seems to be a however...my credit card statement revealed a charge of 86p to the insurer!
Let's return to the maths
- The insurer collected 86p therefore they are .86 up on the deal
- Assumed cost of collection ￡5 therefore they are -￡4.14 down on the deal
- Cost of service to field my call to ask 'What the hell are you thinking?' -￡5 therefore they are -￡9.14 down on the deal
- Cost of escalation during the call to ask 'What the hell are you thinking?' -￡5 therefore they are ￡14.14 down on the deal
- Cost of refund and apology -￡10.86 therefore they are -￡25 down on the deal
- Cost of my business over the next 20 years (without inflation - I'm not that smart!) -￡6,000 (approximately)
Customer Lifetime Value is an old measure but...
...an important one.
Immediately following my initial conversation, I was still a little sore with the hiked home insurance quote but reflected that at least the human contact and common sense displayed by the advisor gave me some comfort and happiness. Then to ruin it by effectively going back on their word has now scarred the relationship and - as a person of principle - I will not use them again is very costly to them.
Lesson - please take note, your customers do have choice and some will recognise that this type of thing, while seeming petty to some, really does affect relationships and threaten profitability. So, enjoy your short earned 86p!