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Business Unplugged™
This blog features Carol Roth's tough love on business and entrepreneurship, as well as insights from Carol's community of contributors.

Class Action vs. Customer Service: Honda’s Loss can be Your Gain

Written By: Carol Roth | 5 Comments

I was recently alerted to an article in the Detroit Free Press about a woman who is suing car maker Honda in small claims court instead of via a class action suit because certain of their hybrids allegedly do not get the gas mileage claimed because of technical problems.

Now, the idea of averting class action suits is an interesting subject of discussion, but that’s not what caught my attention in this story.  My bigger takeaway is “Why would Honda let it come to this?”

As a business, large or small, your customers are your lifeblood.  Plus, with so much competition abound, customers have myriad choices for virtually every product and service.  So, if you have made a mistake- or if your customers perceive that you have made a mistake- here’s a novel idea: fix it and make them happy.

For Honda, a class action lawsuit wastes tremendous money in legal fees and is a time distraction (and probably a PR distraction) for the company.  Most importantly, it doesn’t make the customer happy and risks losing that customer, not to mention the friends, family and network of that customer.  The lifetime value of a customer for any company, particularly a car company, is very high and valuable.  Think about how much money Honda spends advertising to get new customers that could instead be spent saving their relationships with existing customers upset about this problem.

99% of customers are reasonable.  If Honda would have reached out to them and worked with them, they would have been able to find reasonable solutions, create happy customers and stay out of court.

If you have an issue that’s making customers unhappy, the best business decision is to bend over backwards to keep them raving fans.  As a business, the goodwill you generate from doing that will more than compensate for any costs involved in doing so in the long run.

 

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Carol Roth is a national media personality, ‘recovering’ investment banker, investor, speaker and author of the New York Times bestselling book, The Entrepreneur Equation. She is a judge on the Mark Burnett (Shark Tank, The Voice, Survivor, The Apprentice) produced technology competition series, America's Greatest Makers, airing on TBS and Host of Microsoft's Office Small Business Academy show. Previously, Carol was the host and co-producer of The Noon Show, a current events talk show on WGN Radio, one of the top stations in the country, and a contributor to CNBC, as well as a frequent guest on Fox News, CNN, Fox Business and other stations. Carol's multimedia commentary covers business and the economy, current events, politics and pop culture topics. Carol has helped her clients complete more than $2 billion in capital raising and M&A transactions. She is a Top 100 Small Business Influencer (2011-2015) and has her own action figure. Twitter: @CarolJSRoth