The massive cost of not doing something right the first time
It’s interesting to look at successful businesses and understand the factors that make them such a success. There are of course many many of these, great product or service, great people, great hiring, great training, great value proposition – the list goes on and on….
The one thing that they all have in common however, is that they all get the job done right the first time. And, the exceptional ones get the job done right the first time, and wow you in the process. Some time ago we needed our washing machine fixing. A nightmare situation for a household with young children, which you might relate to. Anyway, we called Hotpoint who made the machine (under warranty) and were told that an engineer would come to us in two weeks time (2 weeks! but that’s another blog post…).
When the day finally came, the engineer arrived, diagnosed the problem and told us that he needed to order a part which would take a few days to arrive. He would call again in a week’s time, install the part and the machine would be fixed.
2 visits to fix one problem, and one fairly unhappy customer. Wasted time for everyone involved, and especially the company who now had increasing costs on top of an already expensive warranty repair. Wasted time and wasted profit.
On two more occasions the machine broke down and on each occasion the process was pretty much the same.
Hotpoint were experiencing a very common problem in services organisations called Failure Demand – a concept first articulated by Prof John Seddon in his book “I Want You to Cheat”.
Failure demand is the additional workflow into a business caused by problems in their process – “demand caused by a failure to do something, or do something right for a customer”. They are making work for themselves, increasing costs, and reducing profits. And was a warranty repair for which there is no direct profit. If the situation was a repair where I was paying, the opportunity to maximise profit would be significantly reduced.
Compare this to the situation a few weeks ago.
Having had enough of the repair cycle, when the machine broke down yet again we decided to replace the Hotpoint machine with one made by Miele. Much more expensive, but with an excellent reputation and a 10 year warranty. Let me say that again; 10 years!
After sometime the machine eventually needed a repair. Not only did Miele arrange a repair slot that week, but when the engineer came, he was able to make the repair there and then because they had diagnosed the likely issues and stocked his van with the right parts before he left to make his calls that morning.
One visit, one very happy customer. Great service.
The lessons here are obvious, and it is no wonder that Miele can offer such a massive warranty – not only are the machines better built, when they do need repairing, the process is so much more cost effective and efficient. And as a result far less costly to the company.
Imagine for a moment that this is your business. How many additional appointments, reduced costs and increased profits can you make by a little planning up front and doing the job right the first time.
The number of businesses who have to return to a customer to put things right, or follow up a first appointment is really frightening.
A lot can be said about cost reduction. Are you a Hotpoint or are you a Miele? How much more profitable could you be with some simple analysis of your processes and improvement of your systems today?
And please don’t get me started on the Customer Service and word of mouth side of all this!
For more on developing yourself, your staff and improving the profitability of your business, please do get in touch. You can email me at firstname.lastname@example.org, or call me on 07736 831151. Follow me on Twitter at @jamesnathan, connect to me on LinkedIn, or follow me on Facebook.
I look forward to speaking soon.