Turn Goof-ups into Gold

Every company makes mistakes.

Every single one. Including yours and mine. This is one thing all businesses have in common. We all goof up from time to time.

I'm a big believer in using systems to prevent mistakes before they happen. I also think that each mistake is an opportunity to improve your company by identifying and fixing the root cause of the errors.

I’ll take that second concept a bit further and boldly proclaim that each mistake is not just an opportunity, but a golden opportunity … especially if the mistake affected a customer.

The difference between companies is not whether they make mistakes. The difference lies in what a company does about it when it makes a mistake.

Some companies blame anyone or anything other than themselves. If the error affected a customer, they might correct the outcome but frequently fail to apologize. They act like you’re imposing when you ask to have the mistake corrected and think they’re doing you a favor when they correct their own goof-up.

A culture of blame exists in these firms. Their mantra is “It’s not my fault.” When bad things happen, the Blame Game starts.

Other companies immediately spring into action to correct mistakes – especially for customers. They apologize. Depending on circumstances, they might offer the customer something extra to show the customer they’re serious.

A culture of accountability exists in these firms. Their mantra is “Fix the problem to the complete satisfaction of the customer.” When bad things happen, words like “fault” and “blame” aren’t even on the radar screen.

Clearly, the second type of company is where you want to be. Many companies, maybe most, are in this category. Most businesses do a pretty good job of making things right with the customer.

But, I’m going to ask you to kick it up a notch to turn costly mistakes into profitable occurrences.

Let’s say Bob’s Computer Repair gets a call from their main contact at Big Company, Inc. telling them that Bob’s driver delivered a freshly repaired monitor but didn’t return the power cord.

Bob’s Computer Repair has a culture of accountability, so the rep apologizes, arranges to have a driver deliver it right away and offers to credit the account to make up for the aggravation. So far, so good. Every company should handle this situation the same way. Even though the rep did everything exactly right, most of Bob’s competitors would do the same, so it was good, but not extraordinary.

What if Bob’s takes the time to find and fix the root cause of the error? Now they begin to separate themselves from their busy competitors who, as soon as the customer’s problem is resolved, get back to their hectic routine. (Hey, if you’re busy putting out fires all day, every day, it’s tough to find time to install a sprinkler system.) This is the first way to profit – by driving repeat mistakes out of your business and enjoying the resultant productivity improvements.

But, here’s one more step: bring the customer back into the loop. What if someone from Bob’s contacted Big Company, Inc. and it went something like this:

“Thank you for bringing your missing power cord to our attention. As a result of this situation, we reworked our procedures. Each product that arrives for service now gets a tag on which all accessories received are documented. During shipping, the tag is matched against the accessories. Nobody – including you – should ever fail to get all your accessories back with your repaired equipment.”

Almost nobody does this sort of thing. This level of dedication to quality, customer service and follow-through puts Bob’s in rare company and helps create strong, life-long customer relationships. And, we all know the value of customers who are also raving fans.

Let’s recap:

1.      Acknowledge the error and thank the customer for bringing it to your attention.

2.      Immediately correct the problem and make sure the customer is happy. When appropriate, offer a concession.

3.      Find and fix the root cause of the mistake to prevent it in the future.

4.      Let the customer know about the improvements you’ve made. Regain their confidence and strengthen the relationship.

We all make mistakes. You may as well profit from yours.

Bill Collier is the author of “How to Succeed as a Small Business Owner … and Still Have a Life” and is the St. Louis area coach for The Great Game of Business. He helps businesses teach their employees to think and act like owners. He can be reached at 314-221-8558 or bill@collierbiz.com.