[h3]Before you fire the customer standing there screaming at you, David Geller says consider the lifetime replacement costs.[/h3]

When a typical un-happy “product” customer comes back into the store, a refund or exchange for that item usually soothes the customer. But when you repair jewelry and something bad happens, most customers come back armed, ready for a fight:

“Hi Mrs. Jones, how may we help you today?”

“Lookie here young man, you sized my ring last week and now two stones have fallen out. This was my mother’s ring, it held up fine for 25 years, you touch it and it immediately starts to fall apart. Now what are you going to do about it? You know buddy, I don’t know that I can trust you. Heck, I hear about all of those stories of jewelers swapping stones. How do I know that these are even my original diamonds?”

Before you fire this customer, step back; take a breath and count to 10.

Your thought process should go this way: If I please this lady and she comes back in again, she’s mine and happy. It costs us about $25 in advertising to get a customer in the door. Over a lifetime the average customer spends $3,500. A happy customer tells only three people of her happy shopping experience, but an unhappy customer can easily tell 10 people. If this lady tells 10 customers, at $25 each to replace, it will cost me $250 to get replacements for all of the damage she’ll do if she leaves unhappy. But at $3,500 for a lifetime value of the customer, that’s $35,000 in lost revenue over one single unhappy repair customer.

Do I want to win the argument for $35,250? I don’t think so!

Maybe it w

as your fault that the stones fell out. Maybe the jeweler didn’t check for loose stones. It was OK for 25 years before we touched it, as she said.

Maybe what you need to do is get in the insurance business. Insurance companies pay claims and make a profit from the premiums collected from those that don’t cost them money.

If you charged correctly for repairs, you’d have enough money in your arsenal to where it wouldn’t bother you to pay for a lost stone now and then. If you charged an additional $25 to check, tighten and guarantee stone loss on just 60 percent of all jobs with five or more stones in them (in addition to the repair charge), you could easily collect $18,000 to $40,000 a year in “insurance premiums.”

With the typical jeweler shelling out $3,000 to $5,000 a year for lost/replacement stones; you’d be able to please all unhappy customers with a smile and still make a profit just on lost stone insurance.

Back to your customer: Keep your cool, smile and tell her, “Mrs. Jones, I’m so sorry you’ve had this problem. It’s not like this store to do shoddy work, and I’m going to make you 100 percent happy. Let’s get you back to enjoying your ring.”

Even if you don’t charge for “insurance premiums,” look at the customer replacement costs. It will also be easier to say hi to that same customer when you run into her at a restaurant. Your mother would also be proud.

[important color=orange]David Geller is an author and consultant to jewelry-store owners on store management and profitability. E-mail him at dgeller@bellsouth.net. [important]

[span class=note]This story is from the September 2009 edition of INSTORE[/span]