The Importance Of Being Honest

Our water system quit working again today.

My wife and I live in a rural area and get our water from a well. For the last few weeks, an electrical problem of some sort has been tripping the breaker or keeping the pressure switch that kicks the well pump on and off from working.

I have reached the limit of my knowledge of how to fix this problem...which means I have to call someone to troubleshoot and repair the system.

That used to be an easy thing. We simply called the company we bought the system from and they came out to fix it. When we bought the system in 1997, we paid almost 33% more for a lifetime parts warranty that was supposed to cover full repair or replacement of any and all parts on the system. All we paid was the labor.

The company recently changed ownership and the new owner has decided to stop honoring the warranty we purchased. According to the company's receptionist, (I have been unable to get the owner to speak with me), the owner believes that the warranty my wife and I (and other customers) paid for is simply a “company policy” that he can change it any time it suits his needs. She explained that the company is not “contractually obligated” to live up to any of its warranties.

Unfortunately, I didn't find this out until October 2009 when I received a bill for some maintenance work that included the cost of parts. The parts were more than 66% of the total bill.

When I called the company to remind them that our system was covered by a lifetime parts warranty, I was informed of the new owner's position on warranty commitments. It was further explained to me that the company had a new, more aggressive policy for “dealing with customers in my situation” - they now send disputed bills to a collection agency and let them “...deal with customers like...” me.

I paid the bill because it was only a few hundred dollars and was simply not worth the time, money and aggravation that would have been involved in taking the company to court to enforcing the warranty.

I suspect that's what the company was counting on; that most customers in my situation would simply pay their bill and go away. Anecdotal evidence seems to indicate that this is what has happened. My wife learned from the local handyman's wife (isn't the “wife network” wonderful?) that over the last year or so her husband has picked up a number of this company's former customers who were angered over the company's new warranty policies.

This small company has lost a number of customers because of their unilateral decision to renege on their contract. Even worse, by failing to be up-front and proactive in notifying customers affected by the change, they have angered some of their customers to the point where those customers now actively work to keep people from purchasing from the company.
What does this mean for your small business? I think there a few lessons here.

1.If you must change policies that affect your customers; be honest about it. Don't hide the changes. Give your customers some advance warning and give them the courtesy of explaining the rational behind the decision. Give your customers a chance to be magnanimous about things...offer them something of value in exchange for their agreeing to let you off the hook. Most customers will understand a company's need to change an obligation that is creating an undue financial or performance burden on them.

2.When doing a cost/benefit analysis, consider non-monetary impacts of the decision. Look at the possible negative publicity and negative impacts to the company's good name and reputation. This company not only lost a number of customers who'd been with them for years (we'd been working with them for 12+ years); they actually angered at least one of these long term customers enough so that I now actively warn others not to buy from the company.

3.Check with a lawyer to make sure you understand all the legal implications of your decision. Even though my wife and I chose not to go to court to enforce our rights, the company does, in fact, have a legal responsibility to live up to their lifetime parts warranty...and having to fight a customer in court can impact both

Oh yeah....when I paid our bill, I added a note to tell the company that we would never call them again and that I would make an effort to tell others about their new policies. So, because I try to be a man of my word, let me just say that if you ever live in the Central Florida area and need a water purification system installed (or need any plumbing done, for that matter) don't bother calling Frey Water Systems, Inc...they don't live up to their commitments.

(*Apologies to Oscar Wilde for stealing the title!)