In any service business, customers appreciate the little things. But what was missing--the small, common errors--was plaguing Fringe Benefits Management, an $11-million Tallahassee, Fla., business that administers benefits plans. Faced with the loss of a major customer in 1990 because of poor service, CEO Michael Sheridan took drastic steps to save the contract.

Sheridan and his client drew up a detailed list of performance standards, backed by cash guarantees. For instance, Sheridan promised to maintain an average hold time of less than 40 seconds for customer-service calls--or pay a $1,000 monthly penalty. The biggest improvement has come in the number of days it takes the company to pay out claims and reimbursements. Now Fringe Benefits guarantees payment in 10 days, and lately it has averaged just three. Plus, phone hold time, which used to run up to one minute, now averages 30 seconds.

To keep mistakes to a minimum, Sheridan ties a greater part of employee compensation to guarantees. His 200 employees help set the 40-plus standards outlined in the contracts, and cash penalties are taken out of their bonus pool. Their latest guarantee promises complete customer satisfaction within 30 days. If the client is still unhappy, it can terminate the contract immediately. And Sheridan's company will even refund all fees for the 60-day period prior to contract termination.

Sheridan's guarantee makes him stand out from his much larger competitors. "We rarely are the low bidder," he says. "But clients tell us our service and our guarantees more than make up for the difference in cost."

Copyright 1999 G&J USA Publishing