5 Times When a Penalty Fee is NOT the Best Choice

Consequences are a standard part of a service agreement, so use them to their fullest advantage – as education and incentives for customer loyalty.
Do you beat up your customers? My guess is that sometimes you do!  Without meaning to of course.  

Have you ever had a customer bounce a check or lock you out of their home – and then charged them a “standard fee”?  I bet they didn’t think it was a “standard fee.”  Chances are good they felt that you were being unreasonable because of their unique situation.  Why is that?  They should expect these fees shouldn’t they?  After all, they are a normal part of doing business.  

But that’s the problem right there.  In this industry, our business is very personal to the customer.  To them it doesn’t always feel like business.  Especially if you still do in-home quotes and pride yourself on your relationship-building. Our customers come to expect some of the niceties that come from “relationship” status – like no fees, and forgiveness, and understanding.  

If you pride yourself on your relationships with your customers, check out my list of the top 5 times when you may want to consider doing something other than just tacking on a fee.

1. The worst one for sure – the lockout  

Best practices suggest that charging a fee the first time someone locks you out is probably not in your best interests, so what should you do?  The first time someone locks you out, chalk it up to a mistake, we all make them – I’m guessing you do too.  But how you handle that is the key.  Explain in writing that you understand that these things happen and you are happy to “waive your $50.00 (whatever your number is) fee” for this golden customer.  Also offer to help her by offering a different entry method or another day for cleaning so that you don’t ever have to worry about being forced to charge in the future.  Protect the business relationship by sending a strong message of exactly how much you just saved her and an equally strong message that this kindness can’t be repeated.

2. Bounced check or other billing snafus

Whether it’s a bounced check, a declined credit card, expired date, etc., believe it or not, you can handle this identically to the way you handle lock-outs.  In this case, offer to help her by setting up another payment method that will protect her and you from ever having to charge a fee in the future.

3. Add-on service

This one is tricky because we all know that some customers may try to take advantage of this – sometimes without even realizing it!  Consider providing the first add-on as a courtesy along with a note of how much precisely this service would have cost had you charged them your normal rate.  Help her by suggesting that in the future any work that needs to be added on in advance so she can get your “preferred rate” and not take the chance of the Teams not having enough time to add-on the service.  If it becomes a habit, a phone call will be most effective, but rarely have I seen the courtesy add-on not work.

4. Skip a clean

We all know that the reason we charge more is because it takes us longer to clean when the customer skips.  The same basic strategy can be used in this scenario as well.  In this case, you may/may not have the additional burden of wages to pay without the revenue to support it.  When the customer calls to skip, you can tell her “Yes, Mrs. Johnson, we are happy to skip your clean for you.  I am also willing to waive our skip fee of ________ dollars this time.  Of course if you’d prefer we would love to be able to move you to ________ day to make sure you can keep on schedule with your favorite cleaner or team and to keep them from losing wages.”  

This may seem hard to some, but I assure you that many of your customers never stop to consider that you are just a small company and that their $120 makes that much of an impact on you and definitely on your employees.  Providing them with this small shift in understanding will be much appreciated when provided in this way. 

5. Excessive mess

This is tough because it is so subjective and how do you tell someone their house is soooooo dirty that it requires an extra charge?  Actually it isn’t subjective at all; it just feels that way to the customer.  

We all know that when the house is extra messy it takes us longer, and consequently there is a cost

• to the business in the case of hourly employees
• to the employees in the case of percentage or commission, and 
• to the customer herself in quality of service due to time constraints. 

We need to make a bit of an adjustment in how we deal with this because it is the rare customer that can hear their house is in such a state.  Try a new term, like clutter control, baby-proofing, or pick-up service.  

I suggest this conversation be handled on the phone rather than email or a note, so you can gauge the customer’s receptiveness to your idea.  You will need to tread lightly as the saying goes.  “Mrs. Johnson, I wanted to talk with you about your home.  Recently we have noticed that you have been using our “Clutter Control” service.  Typically that service runs approximately ______ dollars, but of course your team hasn’t charged you for it, choosing to offer it to you as a courtesy.  I’m wondering if you would like to add this service onto your regular cleaning;  we’d be happy to offer it to you for future service at our preferred rate of only ______ dollars.”  

The conversation will go one of two ways after that clear message is given: “Oh I had no idea; yes, please add it on” or “Oh I had no idea, what exactly are they doing?”  If it’s the second conversation, you want to have a list of specific things that have been done.  Do not say “picking stuff up, or rearranging stuff,” because they will just tell you not to do it anymore.  Instead be specific and say “putting the dishes from the living room, bedrooms, and office into the kitchen, loading them into the dishwasher,” “putting dirty clothes into the hamper,” “taking toys from the living room and putting them back in the baby’s room,” etc.  Be ready with a long list, give three or so and then offer to send it to her by email.  Once everyone is on the same page, the conversation becomes more about how much to pay versus whether or not to purchase.

It may seem like a lot of missed revenue opportunities, but what you can gain in loyalty and quid pro quo behavior more than makes up for these minor charges. Consider who is more likely to refer their friends, stay with your company longer, forgive breakage or damage, accept a price increase, be understanding about any billing snafus, etc.  The customer you handled with understanding and grace who feels like you have their back or the customer who was just that to you – a customer.