Thursday, July 7, 2011

Why Giving Refunds Is Important For Laundromat Owners

Luz lives next door to my parents house.  I was talking to her over the fence in the back yard the other day, and - believe it or not - she started to discuss Laundromats.  Since I work for a Laundromat distributor, I guess that people figure I am fair game to talk with them about their Laundromat problems.

Luz has a cellphone and knows how to use it
It seems that Luz was using a local Laundromat and lost money in a washing machine.  She says she wasn’t paying attention and pumped four dollars worth of quarters into a front load washer that was supposed to start after inserting twelve quarters. (That’s three dollars for those of you who don’t have a calculator on their cell phone.) J

She told the owner about her loss, and the owner berated her in front of a bunch of other customers.   He told her that she was lying:  the washers only took three dollars to start, so how could she have lost four dollars?  He told her to fill out a card and he would consider refunding her three dollars if he could figure out if the machine was really broken.

I happen to know for a fact that Luz is an honest person.  There was the night at a family party where I dropped my purse.  My wallet fell out of it after a long night of partying at my parent’s house.  It must have fallen out as I crawled into the passenger of my designated driver's car.   The next day, Luz went over to my parent's and returned the found wallet she had found in the driveway to my mother.  All $46.00 was still in my wallet.  That’s an honest person.

Anyway, honest Luz was now on a rampage.  She was making it her personal goal in life to tell as many people as possible not to use the Laundromat that had stolen her money.  She had been on the phone all morning calling her friends and telling them to never use that Laundromat again.

All Laundromat owners should know the best form of advertising is word of mouth.  What many of us forget is the opposite is also true: when you offend someone, you have just bought yourself negative advertising.  Let’s look at what this $4.00  in a failed refund bought this Laundromat owner in negative advertising and loss of business.

The average customer uses six washers and dryers per visit.  The income of $2.50 average (per load) is $15.00 per week or $60.00 per month - multiplied by the eight people Luz convinced to never return to the Laundromat. That's $480.00 per month or $5,760.00 of lost yearly income.

The success rate of postcards is about 1-2%, and the sucesss rate of hand-delivered flyers is about 2-4%.  In order for the Laundromat owner to recover his lost income, he must send  over 2,800 flyers twice in one year to make up for his one moment of discontent over the request for a refund.  His $4.00 decision just cost him $5,760 over the next year.

Now, not every customer is going to react as strongly as Luz to bad manners.  Some are going to take it worse!  Women, particularly Hispanics, love to talk - perhaps even gossip a little - and have large families.   We love to talk about anyone who offends us, and thereby offends our entire 130 member extended family. :)

The moral of the story is “give the refund.”  The consequences are too great, if you are wrong, and - more importantly - even if the customer is lying, the cost to confront them is not worth it to the owner.
 –The Latina Laundromat Advisor

P.S.  Luz later did get $4.00 sent to her in the mail by the Laundromat owner when he discovered his coin mechanism was jammed, but I doubt Luz is going to spend as much time repairing this owner’s reputation as she did in tearing it down.  Take this advice to heart.

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