Penny wise, dollar foolish works both ways.
The phrase is meant to convey that it makes no sense to watch your pennies with one hand while you’re squandering dollars with the other. Look at it this way: Are you scrounging pennies off the ground and then forking over ten bucks for lottery tickets?
But this philosophy can work in reverse too. Too often, businesses, so concerned about collecting every possible penny from the customer, overlook the damage they are causing to their bottom-line dollars.
Some years ago, I found a great Chinese restaurant. I went there once a month—every month for three years—for take-out. It was my monthly treat. The food was top-quality, and the prices were in line with all the other Chinese restaurants for miles around. My wife didn’t eat Chinese, and so it was all for me. (I felt just like Macaulay Culkin.) I would spend roughly $30 during each visit. And although it was enough food to typically feed a family of four, I liked to have an enormous variety of delectable taste treats—and it also ensured that I would have plenty of leftovers. And thirty bucks wasn’t chump change in the early ’90s.
Despite the fact that, even after three years, the same greeter would seem to not recognize me—and address me in the same robotic way as she did the new customers—I continued to patronize the place because the food was good. A little recognition and appreciation for my loyal patronage would have been nice, but … what are ya gonna do? So I overlooked that and continued to procure my wonton soup and moo shu fixes.
During one visit, as I left the restaurant with my cardboard box—my copious cache of aromatic delights teetering—I decided I would like to have a little more mustard. And this restaurant didn’t give you those awful plastic tubes of yellow-tinted pasty mush; this place mixed Colman’s mustard powder and water and gave it to you in those little cups with lids. (It’s the little things that matter sometimes.) So I went back in and asked for one. The greeter reached under the counter and handed it to me, and as I placed it atop the already precarious stack of other plastic cups, she asked me for five cents. A nickel. I had just spent $28.73—as I had done on many previous occasions—and she asked me for a nickel. I gave it to her and told her I would never be back again. The perplexed, befuddled surprise in her expression was … I don’t know … what’s the word? But it was still on her face as I butted open the door and went not gentle into that good night. In fact, I was pretty dang … I don’t know … what’s the word?
Let’s extrapolate, shall we?
Thirty dollars per month, times twelve months, times three years. Ka-ching! I had spent, over the course of three years, approximately $1,000—in that one restaurant. And I am just one person. After that much loyalty, not only had I never been acknowledged as a regular customer, but neither had anyone ever expressed gratitude for my repeat business. Well how could they, after all? If, after three years, they were still treating me as though I’d never been there before, why should I have expected anyone to toss an “appreciation egg roll” or “nice-to-see-you-again crab puff” into the box? Instead, I was asked for a nickel.
Let’s extrapolate further …
In the twenty years since I’ve stopped going there (assuming they’ve stayed in business), and all other things being equal, and not adjusting for inflation, they’ve lost $20,000 in revenue—from just one person.
What I understood—and they didn’t—was that they didn’t see people walking into the restaurant. They saw ten- and twenty-dollar bills fluttering in through the door. And their vision, obscured by all that green paper, made them unable to see that it was people they were supposed to be serving.
So be careful. Don’t worry about the nickel, and the next $20,000 will take care of itself.