ALEXANDER CHERNEV

DryClean Express: Managing Dissatisfied Customers

John Turner, the president of a privately held dry cleaning company with more than 400 retail locations, had just finished reading an email from one of the store managers describing a prob-lem that had occurred at one of the locations. A customer brought in a suit for dry cleaning and was promised that it would be ready the following day, so he could wear it to work. When he came back the next day, however, the store could not locate the suit. A week later the suit was located and returned to the customer. Meanwhile, the store manager refrained from reimbursing the customer in the hope that the missing suit ultimately would be found.

The customer argued that the dry cleaner was responsible for the cost of a replacement suit at approximately $300. He indicated that at the time he purchased the substitute suit, the original suit appeared to have been lost and he needed the suit for work. He also argued that the store should have complied with the same-day service and satisfaction guaranteed promise prominently dis-played in the store. The customer was particularly upset with the interpretation of the satisfaction guarantee promise by the store manager, who argued that it is the dry cleaner's rather than the cus-tomer's satisfaction with any resolution of the problem that is guaranteed. The customer was so out-raged by this argument that he also demanded an apology from the store manager.

In his email, the store manager argued that the company should not honor the request for re-imbursement because the suit was located, cleaned, and returned to the customer. He also sug-gested that it might not be worthwhile to try keeping this customer because he was likely to con-tinue to be unhappy with the service. The store manager further pointed out that the reverse side of the store receipt given to all customers lists all pre-conditions, exclusions, and limitations to the satisfaction guaranteed and the same-day service policies. He suggested, however, that in order to avoid further incidences of this type, it would be worthwhile to include a statement on the front side of the receipt pointing to the limitations printed on the reverse side. He also sug-gested printing these limitations in black ink and in larger font size rather than using the current gray ink and smaller font.

As Mr. Turner read the email, he could see both sides of the story. On one hand, he felt that the customer was right to request some type of reasonable compensation for the inconvenience caused by the dry cleaning store. On the other hand, he felt that reimbursing the customer $300 for a suit that ultimately had been found was somewhat excessive. Mr. Turner thought that the store should consider reimbursing the customer by offering him $300 in dry cleaning credit. Ac-cording to the manager's email, the customer spent an average of $25 per week on dry cleaning, and thus was likely to see the value of the free dry-cleaning vouchers and come back. Given that the profit margin for DryClean Express stores was on average 20 percent, it seemed to be a win-win situation for both the customer and company. In fact, Mr. Turner thought that using free dry cleaning vouchers to address customer complaints was a savvy business policy that could be im-plemented in all DryClean Express stores.

Mr. Turner also considered the store manager's proposal to make the company's same-day ser-vice and satisfaction guaranteed policies more transparent to customers by featuring the dis-claimer more prominently on the store receipt. The proposal seemed to have merits as it was like-ly to prevent future miscommunications of the type described in the email.

2007 by Alexander Chemev. Professor Alexander Chemev (Kellogg School of Management, Northwestern University) prepared this case solely as the basis for class discussion. This case is not intended to serve as an endorsement, source of primary data, or an illustration of effective or ineffective management. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any meanselectronic, mechanical, photocopying, recording, or otherwisewithout a written permission of the author. Rev. 5/1/2012 Case 0836