The Cost of Doing (Good) Business

I took one accounting class in college. And, honestly, I really enjoyed it. Something about the evenness of liabilities, assets and equities appealed to me. So, with that expertise in mind, let’s talk about the cost of doing business.

The cost of doing business, by definition, is overhead. It’s the cost of anything you have or do that doesn’t have to do with actually producing a good or service. These include: insurance, utilities, accounting services, attending networking events.

Every business incurs some sort of overhead, and tries to limit it as much as possible. After all, these costs impact the company’s revenue, and overall financial well-being. However, I think there’s a fundamental difference between the cost of doing business and the cost of doing good business. And great companies see the distinction between the two.

For example, here are two articles posted today on The Consumerist. The first was about a customer’s interaction with OXO. A customer had received an OXO Salad Spinner as a wedding gift, and was disappointed when it broke after a few months of use. Like many customers, he reached out to OXO via their online contact form, but wasn’t hopeful about getting a response. Surprisingly, OXO responded a few days later, saying they would send out a replacement part. No hassle, no cost to the customer.

For an accountant, this is the cost of doing business. For a marketer, I’d file this under the cost of doing good business. The company incurs costs here – the cost to manufacture the part, the cost to ship and the cost of having an effective customer service department. But they also gain value – goodwill from one customer, who by sharing his story with the Consumerist, spread the awareness to a massive audience. And take a look at the comments:

On the flip side, there’s also a cost of doing bad business. Again on the Consumerist, a user tells a story of their interaction with customer service. This time, though, it’s not so positive. From the user’s email: “DirecTV will never have my family's business again and via Facebook, Twitter and obviously email, I plan to tell everyone I know about this horrid experience with a company that evidently wants my business so bad.”

Instead of generating goodwill on a heavily trafficked website, DirecTV brings out feelings from the other side of the spectrum:

In this new, more social, world, is it more important to calculate the cost of doing traditional business, or the cost of whether it’s good or bad?