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I own a relatively expensive piece of electronic equipment that keeps breaking. I corresponded with someone who works for the manufacturer. His response to me

I own a relatively expensive piece of electronic equipment that keeps breaking. I corresponded with someone who works for the manufacturer. His response to me was (paraphrased), “we’ve sold thousands of these units and nobody else has complained. Therefore, our product must be good.” I've never quite understood the logic behind this thinking on the part of product manufacturers. The product has already disappointed the customer on multiple occasions, but the customer is still willing to give the product another chance in the form of a repair or replacement; and the manufacturers first impulse is that rotten customer is stealing from us, treat him like some kind of thief. They're about to lose that customer (and everyone he knows who asks him for a recommendation) forever. Send him a replacement. Send two. For bonus points, pay for him to ship the defective one back for detailed analysis of what was going wrong.

PeterisP 13y ago
It depends on the margin. Excluding other concerns, if you're about to lose 10 customers (1+recommendations) and your margin is 5%, then it's better to keep the replacement; if your margin is 20% then it's better to keep the customers. For many companies, the rate of defects and replacements determines the difference between profit and bankruptcy.
- noonespecial 13y ago
  This calculation does not take into account the lifetime value of a customer. And his reviews. My grandfather told stories about a Ford lemon he got in '68 and how rotten the experience was until he died in his late 70's.
  - PeterisP 13y ago
    Still, is the expected profit from lost sales really larger than the cost of a new replacement car or two as suggested in the post above?
bithive123 13y ago
I was eating at a bar the other day and this guy next to me was telling his girlfriend that he wanted a new iPhone. He planned on giving his mother his current iPhone, but he wanted to make sure that she wouldn't have any problems with it so he intended to break it somehow and give her the replacement. He demonstrated a possible technique for doing so; repeatedly slamming it flat against the bar (firmly, but not violently). I did not catch his girlfriend's reaction, but I was disgusted. I'm sure Apple plans for and can afford this type of loyal customer, but everyone ends up paying for it.

PeterisP 13y ago

It depends on the margin. Excluding other concerns, if you're about to lose 10 customers (1+recommendations) and your margin is 5%, then it's better to keep the replacement; if your margin is 20% then it's better to keep the customers. For many companies, the rate of defects and replacements determines the difference between profit and bankruptcy.

noonespecial 13y ago
This calculation does not take into account the lifetime value of a customer. And his reviews. My grandfather told stories about a Ford lemon he got in '68 and how rotten the experience was until he died in his late 70's.
- PeterisP 13y ago
  Still, is the expected profit from lost sales really larger than the cost of a new replacement car or two as suggested in the post above?

bithive123 13y ago

I was eating at a bar the other day and this guy next to me was telling his girlfriend that he wanted a new iPhone. He planned on giving his mother his current iPhone, but he wanted to make sure that she wouldn't have any problems with it so he intended to break it somehow and give her the replacement. He demonstrated a possible technique for doing so; repeatedly slamming it flat against the bar (firmly, but not violently). I did not catch his girlfriend's reaction, but I was disgusted. I'm sure Apple plans for and can afford this type of loyal customer, but everyone ends up paying for it.