In Steve Krug's seminal book on Web Usability, Don't Make Me Think, he proposes the concept that website visitors have a reservoir of goodwill toward a site, and that the site can either refill or drain the reservoir.
I've always found it useful to imagine that every time we enter a Web site, we start out with a reservoir of goodwill. Each problem we encounter on the site lowers the level of that reservoir. The reservoir is limited, and if you treat users badly enough and exhaust it there's a good chance that they'll leave. But leaving isn't the only possible negative outcome; they may just not be as eager to use your site in the future, or they may think less of your organization.
I certainly believe this still holds true with websites, and more than that, it applies to businesses in an even broader sense. Maybe this reservoir exists because we, as humans, are prone to keeping mental lists of mistakes and problems other people, and in this case businesses, make.
A good metaphor is tipping at a restaurant. I believe in giving good tips for great service, but also not tipping if the service is awful. Without realizing it, I will keep mental notes of all the things a waiter does right and wrong. Slow to take our drink order? Smaller tip. Friendly and helpful when we order our food? Larger tip. Check in to see how are food tastes and that everything is as expected? Larger tip. Don't refill our drinks promptly? Smaller tip.
Compare that to a common website interaction. Homepage slow to load? Deplete the reservoir. Navigation is intuitive? Raise the reservoir. Information is succinctly and elegantly displayed? Raise the reservoir. No link back to the homepage? Deplete the reservoir. If the website does enough wrong, the visitor will eventually leave. Worse, they may look for an alternative to your website the next time they are in that situation.
In my opinion this is part of the reason for Google's success as a search engine, and Yahoo's decline. In the past, a person would visit Google for 1 single purpose: to perform a search and click to the relevant result. Google did an incredible job of enabling visitors to fulfill this request. A largely blank page with the focus on a solitary search box, and usually great results. It was simple, and it worked. So people returned again and again. Yahoo, on the other hand, featured a cluttered home page with no clear call to action, and many, many distractions. This is a problem when all you want to do is perform a search.
Now this theory can be applied to business relationships as well. I work in a Business to Business market. At previous jobs I have noticed that clients rarely remain clients for more than a few years. In fact, at one particular job, several clients were obtained at around the same time during a big outreach push. A couple of years later, nearly every one of those clients left our business within two months of each other. This was probably due to a poor spout of customer service on our part, but in the larger picture it can be attributed to all the various little hitches along the way.
Forget to reply to an email? Deplete the reservoir. Not deliver the expected results? Deplete the reservoir.
The folks at Intercom just wrote about this same effect happening with Business to Consumer emails. They call it "Social Currency."
Every communication sent costs social currency. Every irrelevant or inappropriate email adds data to a user’s internal inbox filter. This is why open rates are so painfully low. You can A/B test subject lines all day long, but if your users have already decided your emails are nonsense then neither A or B is gonna change their mind. If you’re not being filtered by a rule, you’re being filtered by a mindset.
I have noticed this happening in my inbox. I used a LivingSocial Escape last year, and subscribed to their email list to be updated on new Escape offers. At first they were sending a single email every week or two with updates on the dozen or so current offers. I would open and peruse for anything that might come in handy on birthdays, anniversaries, and special occasions. After awhile they began splitting them up and sending a single email for each Escape. They are now bombarding my inbox with several emails a week on offers I only want to skim occasionally. Needless to say, I mentally filter all of them out now.
It's Easier to Deplete Than to Refill
What does this mean for your business? It's difficult to make up for mistakes in the business world. The problem is that mistakes count for much more than does a proper action. So the time that you delivered a project a week early does not make the client forget about the time you delivered a project a week late. Why is this? Clients and customers expect us to do a good job, but mistakes are always unexpected.
Making up for a reservoir depleting scenario is very time sensitive. Consider the restaurant scenario again. If the waiter brings me the wrong drink, offering extra bread sticks at the end of the meal doesn't make up for it. By that point, the error is already ingrained in my mind, and the gesture is "too little, too late." On the contrary, if the waiter corrects the mistake immediately and brings us extra bread sticks I am less likely to hold onto the original mistake.
(This probably makes me sound like a petty person - most of this rationalizing is done subconsciously. I do expect a certain level of service dependent upon the quality of the restaurant. A place charging $40 a plate better give service better than the typical McDonald's.)
If you forget to respond to a client email, make up for it right away, don't wait. If you deliver a week late, send them a bottle of nice wine to celebrate the conclusion of the project. Do something above and beyond the call of duty in order to refill the reservoir of goodwill.