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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.

How to Gain and Lose a Customer in 24 Hours

Written By: Carol Roth | No Comments

I received a wonderful gift from a friend of these crazy and delicious marshmallow crispy treats from a small business. They were unique and tasty, and I decided that they were going to be gift that I wanted to give on an ongoing basis.

I immediately had a need for a gift, so I had an order placed through the company’s website, which was an 8-piece box of treats for $44.99 plus shipping, which seemed high, but I sent them anyways.  I wondered if the treats could be sent individually, and so I looked them up and noticed that one treat was $3.50.  I knew the math seemed off immediately.  At $3.50 each, an 8-piece gift box should have been $28 plus shipping, which meant that packaging was valued at $16.99.  I looked at the 16 piece gift box for $85.99, which would cost $56 for items bought individually, which means that packaging was being charged at $28.99.

Now, my mom owned a gift basket company, so I understand the cost of labor or elaborate packaging, but this gift came in a white, cardboard, cake-box style box with a piece of tissue and a simple ribbon.

Giving the benefit of the doubt, I thought that perhaps in the gift box, the items were larger or that I had made some mistake, because $17 and $29 for simple packaging seemed outrageous.

I sent off a note explaining that I loved their amazing product, but was confused by the pricing differential of items ordered individually versus together.

I received a response quickly from the owner’s iPhone (it said so in the signature):

Hi Carol. These have been our prices for many years as we have not change [sic] our pricing. The big difference in price is the hand labor cost involved in our very detailed upscale packaging. I hope that answered your question. Thank you for your interest in [company name redacted].  All my best. [Owner’s name redacted]

This company lost me immediately as a customer. While some companies give a discount the more that you order, some don’t.  And I can understand charging a few dollars for gift packaging, but not that much. Not only did I feel ripped off by their “very detailed upscale packaging” of the box, piece of tissue and ribbon for $17 (or $29 for a larger order), but the lame iPhone response from the owner was incredibly unprofessional.  I appreciate a quick response, but I would rather wait for a non- “quickly jotted on my iPhone” response.

I could order individually in the future, but for me, I want to do business with those companies who I feel value me as a customer.

And truly, I am an ideal customer for this business. I loved their product, I order gifts extensively throughout the year, and oh, I have a radio show, TV presence, tremendous social following and more where I often share about my favorite products.  I personally was worth multiple thousands of dollars per year to this small business, but because they were trying to be penny-wise with their packaging fast-one, they were pound foolish in the net results to their business.

Bottom line- give your customers value and know that they are not stupid. Incentivize them to buy more, not less from you, or risk making a few extra dollars at the expense of losing thousands.

Article written by
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