left Xtraordinary Living At Its Best: Penny Wise & Dollar Foolish

Monday, September 25, 2006

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Penny Wise & Dollar Foolish

I hardly ever use cash when I pay for things. Whenever possible, I look to pay with my credit card so that I can accumulate the airline miles. Given the amount of travel I do, these miles allow me to upgrade my Coach tickets and fly Business Class at a fraction of a cost.

There is a deli nearby that has good food. However, I hardly think of it among my options for lunch. I'm pretty sure that one of the reasons I don't is because they don't accept credit cards. However, now that we don't have a kitchen and we're eating a lot more take-out, my wife and kids suggested we get something from this deli. When I went to pick up my order, I was pleased to see that they were now accepting credit cards.

A few days later, I decided to go to the deli for lunch. When it came time to pay, I handed my credit card and I was told that they "couldn't" accept credit cards for orders that totaled less than $10. The truth is not that they "couldn't" but that they "wouldn't." The reason for this is because they are paying a "per transaction fee" rather than a straight percentage. And they reason that accepting credit cards for small amounts eats too much into their profits. I wonder if they have any idea how much business they are losing because of this mindset.

Another restaurant nearby, did something similar. They started cutting back in the amount of salad dressing they were giving with their take-out salads. When I mentioned this to the cashier she said that they had received a lot of complaints lately but that the corporate office insisted they continue with the smaller amounts.

As a business owner, I'm very aware of looking for ways to cut costs and maximize profits. However, when these ways come at the expense of what the customers want, it can really back-fire.

As a PL&L client I urge you to let me know if you ever feel like we are making some of these mistakes.