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Of all the famous studies regarding child behavior, one usually rises to the top of the list when it comes to overall recognition by the public and effectiveness at determining the future success of a child: the Stanford Marshmallow Experiment. In the experiment, children were asked to decide between eating one marshmallow immediately or waiting for 15 minutes and receiving a second marshmallow to eat along with the first. It turns out, the children who were able to use the power of delayed gratification to receive two marshmallows instead of one ended up with significantly better outcomes later in life.
Now you are asking: How on earth does this relate to our customers? Bear with me…
Many customers in the event world are fickle creatures. They change their minds up until the last minute; expect perfection in product and production; are blissfully unaware of how the burdens of weather, traffic, and labor affect our businesses; ask for sales commissions on top of their fees to the client, you name it. Yet, they are the most important part of keeping food on our tables and lights on in our warehouses.
The best way to retain customers is to consistently meet or exceed their expectations. But how do we respond when it’s not a perfect, seamless event, and the customer has some “feedback”? What about those last-minute add-ons? How about when they call on Friday, the weather has changed, and they’re pleading to add a tent to the order—the one that they didn’t want to reserve in advance?
During these conversations (and to be clear, ideally during all interactions), we ask our team to consider and weigh the customer’s lifetime value. Often, especially when busy, we don’t want to be flexible with add-ons. Likewise, it’s easy to say you need to charge for every small item when the final billing is being tallied a few days later. And, instinctually, we want to defend against the negative feedback by sharing everything behind the scenes that caused a wrinkle in our performance. But (and this is where the Marshmallow Experiment ties in) often when we weigh the potential lifetime value of this hard-won client, against our first, easy, cost-effective reaction, a more balanced approach emerges.
For years in our office, if there were small additional charges to the invoice that needed to be billed post-event, we would debate about whether to charge them. Should we take one marshmallow now and bill for as many items as possible, or should we turn down the first marshmallow, and wait for the second (another event), by sending a zero-balance with a nice note: “Hi, here is your final invoice. We took care of those Friday add-ons for you. Thank you again!” Surely, a small gift that increases customer loyalty, and the potential for future business, is worth one or two percent of a final bill, right?
Even harder: the team didn’t perform to the client’s expectations and the customer wants us to know about it! It’s comforting (to us, not to our customers) to explain how the deck was stacked against our team from the beginning, how so many issues were out of our control, and how the customer’s last-minute changes put our team at a disadvantage. Very instant gratification of us. But with a little planning, we can approach the call much differently. Before getting on the phone, we ask ourselves: What happened? How are we making improvements in real time to ensure a similar outcome is unlikely in the future? What is a fair solution to the areas in which we fell short (whether that is financially with a refund or credit, or simply an “I’m sorry. This should have never happened and here’s specifically what we are addressing to improve on this”)? By checking our collective company ego at the door (not eating the first marshmallow) and listening to and addressing client concerns about performance (waiting), maybe we can earn back the trust required to work with this client again, and really show them what we can do when we are at our best (two marshmallows—an ideal outcome).
None of this is to say that customer retention is easy, simple, or about limitless flexibility for our customers at the expense of our operation. But by viewing each interaction through the lens of lifetime value and applying the principles of delayed gratification to secure better outcomes with our customers, we can expect to increase loyalty, retention, overall satisfaction, and future business. Two marshmallows, indeed!
Zachary Wilson is president of The Greenwich Tent Company and a member of the TRD Steering Committee.