How Can You Build Customer Satisfaction Costs Into Your Pricing Strategy? – Fastlane Founders Clips
In this video, author, founder and CEO of Loyalty Brands, John T. Hewitt shares a powerful story about Sam Walton’s customer-first philosophy at Walmart, illustrating how exceptional customer service can be built into business pricing models. He explains how companies can factor in the cost of creating raving fans through generous policies and guarantees, drawing parallels between retail spoilage and customer satisfaction investments to demonstrate how businesses can maintain profitability while delivering outstanding service. Watch the full episode to learn insights on building successful businesses through exceptional customer service.
What you’ll learn:
00:00 John T. Hewitt and Jason Barnard
00:01 How Did Sam Walton’s Customer-First Philosophy Create a Legacy of Exceptional Service?
01:00 How Do Successful Businesses Factor Customer Service Costs into Their Pricing Models?
01:09 How Can Tax Firms Balance Money-Back Guarantees with Profitable Pricing Strategies?
01:28 What is a Spoilage?
“This clip is taken from Fastlane Founders and Legacy with Jason Barnard.”
https://www.youtube.com/watch?v=fZnaTwCPWoQ
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Transcript from How Can You Build Customer Satisfaction Costs Into Your Pricing Strategy? – Fastlane Founders Clips
John Hewitt: And so when I first met the first Walmart employee, he told a story. He said a man came into a Walmart. And he had this old Ben Franklin stove from the twenties, little stove, and it was all melted and burned. And he said, he went to the section where they sold those little stoves and the employees said, oh, just pick, just leave it here and take one. Just take whichever one you want. And so he said, and when the guy told the story, he said the employee was Mister Sam.
He didn’t even call him Sam Walton, he called him Mister Sam. And I thought to myself, the manager of this store, this is the way he thought customers should be treated. So they’re going to be, that’s going to be creating raving fans, right? And the guy was clearly taking advantage of them. But you build that into your price. You build in. If you’re gonna have a 3% loss, like in the tax preparation business, we have a money back guarantee and someone will, some people will complain just so they can get it for free.
But it’s only 3%. If all you do is raise your fee 3%, then it covers the cost of the losses. To me, it’s sort of like in a grocery store. I assume that when you buy apples, you expect some of them not to be sold, right? If you buy 2000 apples, then 1400 of them are going to be sold, or 17, you know, approximately. They’re not all going to be sold. So you build that into your price. It’s called spoilage.
And so that’s how companies with raving fans with great service get higher, higher prices than their competitors. And you build the rate, creating raving fans into the price.
