The Case of the Complaining Customer

Group - AMG (Section – D)

Group Members
Amjad P P (p39184)
Gokul S (p39195)
Akshay Kumar Desannavar (p39182)
Arnelit Philip Mani (p39187)
Arun Prabhakar S (p39188)
K Manoj Kumar Reddy (p39198)
Situation Analysis:

This case is about the dilemma faced by the cleaning and service provider Presto Cleaner on the
decision to retain a customer or to let them go i.e. lose the customer forever.
Presto Cleaner introduced a new computerized system to streamline its services at both the store
and the plant level. Through this, it also intended to improve its service offering to the customer.
The effective implementation of the new system was hampered when a regular customer - George
Shelton made a complaint highlighting the inefficiency of the new system. His negative experience
with the new system was when there occurred a temporary misplacement of the clothes he had
given to Presto for cleaning. He also claimed that the new service was complex and lead to longer
wait time thereby causing dissatisfaction. He raised the grievance with the management and also
used Presto's complaint resolution system but to no avail or resolution of his grievance. Frustrated
with the apathy displayed by the management with regard to his lost shirts, he ended up buying
new shirts only to hear from the Presto management that his shirts were inadvertently picked up by
a wrong customer who has now returned the same. Presto Manager Paul Hoffner has refuted George
and has claimed that George had out rightly lied on certain key facts. He believes he has acted in
good faith with regard to dealing with George's case. He considers the circumstances to be highly
mitigating factors which have influenced his decision making with regard to the case of George's
lost laundry. Mr J.W. Sewickley (JWS) was apprised by this situation when he received a detailed
letter from George Shelton. He was faced with two choices. These choices were as follows:

Alternative 1:
As the customer is demanding higher than what he actually lost during the whole episode, we won’t
provide him with the full claim. Also, if we do so, then that becomes a milestone for the future
customers and in case if the same problem happens with any other customer, he will also demand
the similar claim and thus the customers can take benefit of it rendering the company in the loss.

Alternative 2:
As all that happened was the mistake of the company only. So, they have the responsibility to give
compensation to the customer. Also, the customer had no choice left except buying new shirts. So,
the company should provide Mr.Shelton with the full claim.

Evaluation and choice of Alternatives

In choosing amongst the above two choices, JWS has to conduct a cost-benefit analysis of retaining
George as a customer. The fact that George has been a loyal customer of the firm since last one
year and had never raised any grievance or complaint with regard to the services of Presto only
complicates the decision making process for JWS. He will also have to analyse the value of the
George as a customer to the firm and contrast it with the cost that shall be incurred in compensation
for the agony faced by him and to keep his satisfied. Given the realizable NPV, JWS shall
compensate George for his bad experience and apologies him for the poor service quality he
received. Below is the computation of the cost and benefit that shall be realized upon apologizing
and thereby compensating George. If George is retained and if his grievance is satisfied, the
calculations computed states that presto shall realize a total benefit of 7216$. This even after the
company compensates him for the order (by refunding for it in totality i.e. 35$, purchasing a set of
four shirts for him and going the extra mile by offering him a one-time discount coupon of 100$.
This will make George feel that he was and will always be a valued customer for the company and
ensure a positive word of mouth and referral for the firm's services. George shall indeed market
Presto's services as a benchmark amongst him network and indulge in repetitive use of Presto's
services. This shall bring greater revenues and profits, for the firm.
JWS thus should take the feedback from the George, compensate him so as to ensure his satisfaction
with the service and then conduct an internal review of the new system in place. For the future,
employees in general and Paul, in particular, shall be sensitized for exhibiting the right
communication with the customer instead of offending or "pushing away the customer". Before out
rightly rejecting the customers' claims, JSW or any good marketer should first try to see merit in
the complaint and review the internal systems.

Final Decision: George shall be retained as he is a valuable customer. Presto Cleaners shall offer
him a sincere apology for the poor quality of service he was made to experience.