What businesses can learn from Argos’ £30m error
News that thousands of Argos store card customers have been charged excess late payment fees is both embarrassing and expensive for the retail giant, with £30m being set aside to rectify and compensate their customers.
Yet it also offers a stark reminder to other businesses about how important it is to get even the smallest details right.
Here we look at three lessons businesses should take from Argos’ mishap.
1. Always check calculations (and then check again)
The costly mistake occurred when a technical glitch with the company’s Buy Now, Pay Later plans resulted in a miscalculation that meant store card holders were charged excess fees for late payments.
Unfortunately, with the rise in automated processes and reliance on technology, this is something that could happen to many businesses, which is why it’s important to have processes in place to spot these kinds of errors at the earliest opportunity. The sooner you spot the mistake, the quicker you can fix it and the less damage it will do to your business.
2. Communicate with customers
Mistakes like this, that have the ability to impact customers in a large way, can be damaging to customer relationships and deter them from using your services again. For this reason, it’s important to reach out to the affected customer base as soon as possible and attempt to make amends for the error before you lose their custom for good.
Home Retail Group, the owner of the Argos chain, has said it will write to all affected customers in the next few weeks. It is expected that anyone who was overcharged by Argos after missing a repayment will get compensation of up to £100 each.
Chief Executive John Walden said: “It’s not a material number of customers and not a material amount of money per customer.
“But for each customer it matters. We will address it and treat customers fairly.”
Addressing the mistake and compensating customers for the error is likely to retain some customer loyalty at a time where it could be damaged beyond repair.
3. Have a contingency plan
Mistakes happen. We’re only human after all. But it’s our ability to rectify our mistakes that makes the biggest difference between success and failure in business. This is why having a contingency plan in place is vital to protect your business in the event something like this happens to you.
Argos’s mistake has been valued at £30m which is no small sum – even for the large chain. With no forward planning mistakes like this can have an unexpected and highly damaging impact on cash flow, which can put your business in a dangerous situation.
Setting money aside for situations such as this can limit the damage, giving you the best possible chance of overcoming the issue without crippling your cash flow.