Originally posted on LinkedIn
Thinking about my (absolutely terrible 🫠) experience yesterday with avianca, I’m confirming once again that there’s no better business bet than leaving your customer happy.
You can ONLY afford to treat customers badly if you’re an absolute monopoly.
And even then — that just opens the door for some curious well-funded player to come in and capture the market, because everyone will try them out of pure spite.
In every other case, treating customers badly costs more than it saves. Cutting costs — sure, if you need to, but the service still needs to be good.
Basic Unit Economics:
➡️ Customer Lifetime Value must be greater than Customer Acquisition Cost.
➡️ Customer Lifetime Value = average purchase value × expected number of repeat purchases.
Treating customers badly does two things:
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Your expected repeat purchases drop. In bad cases, they drop to 1 — one purchase, never to return.
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Your Acquisition Cost goes up. People talk trash about you, and it becomes more expensive to convince anyone to try you. All your customers are new ones (the old ones won’t come back!).
Avianca might be saving a few pesos right now by cutting service (not even a glass of water), but they’re going to lose a lot more money long-term from customers who will never buy from them again — and the bad reputation they’re building will make growing incredibly expensive in the future.
And the same goes for any company — no matter how premium or low-cost, what industry, product, or service — the best bet is to leave the customer thrilled 🤩 (or at least happy, never angry).
Any other outcome ends up costing more than the short-term savings.
What do you think? Is it ever worth delivering a worse experience to save a few bucks? Where’s the line?