The Sunk Costs of Spilt Ice Cream

Earlier this year, I travelled to Orlando, Florida to attend a conference. It was here that I had the privilege of attending a seminar by Dennis Snow.

Dropped Ice Cream Dennis was employed at Walt Disney World for twenty years. During this time, he advanced from a “cast member” assigned to the 20,000 Leagues Under the Sea attraction, to a management position overseeing various operating areas within the theme park. Today, he is a full-time speaker, trainer and consultant, where he mentors others on the lessons in customer service, employee engagement and leadership that he honed while “working for the mouse.”

While listening to his presentation, one lesson in particular resonated with me. It is the notion that, in the realm of customer service, “little wows add up.” In his book,┬áLessons from the Mouse: A Guide for Applying Disney World’s Secrets of Success to Your Organization, Your Career, and Your Life, Snow provides the following illustration of this concept:

I saw the whole thing as it occurred. The family of four nearly danced as they walked out of the Main Street USA Ice Cream Parlor, each of their cones piled high with two large scoops. As they strolled along, the youngest child, who couldn’t have been more than three, beamed as she licked away at her strawberry ice cream. She was, after all, in a place where dreams come true, enjoying the most delicious dessert imaginable.

Suddenly, though, the ice cream slid off her cone and hit Main Street with a big, pink splat. I watched as the little girl’s lower lip quivered. She froze in her spot. Her brother pointed and laughed. Her mother and father reached down to console her. And the little girl, who moments before had been the happiest child on earth, burst into tears.

I was ready. As a Disney employee, I had been trained to see this as a rescue opportunity, a chance to turn a tragic moment into a magic moment. I quickly approached the family, dropped to one knee, and smiled as I reassured the little girl that these things happen all the time. And then I asked, “Do you still want strawberry?” The tears suddenly stopped, and the little girl nodded. Her mother smiled in surprise and appreciation. When I returned with a fresh strawberry cone, a custodial cast member was already mopping up the spilled ice cream, telling the child, “It’s okay, it happens all the time. That’s why we have mops!”

Personally, I am so fond of this story because of how effectively it conveys the economic concept of sunk costs, especially as it pertains to customer service decisions in a retail setting.

Once the child’s ice cream hits the ground and her tears begin to flow, the employee must quickly decide how to proceed. For one, he can respond the Disney way. That is to say, he can treat the situation as a rescue opportunity, and swoop in to save the day as Snow describes. The company will simply eat the cost of another ice cream cone. In the grand scheme of things, it is a small price to pay.

Alternatively, he can choose to do nothing. After all, it was clearly the clumsy toddler’s fault, not his. In fact, he performed every duty that was expected of him. Didn’t you notice the little girl smiling from ear to ear before her butterfingers got the better of her? That was thanks to him, you know. In other words, “Tough luck, buttercup. Next time, learn to lick more carefully.”

According to the economic concept of sunk costs, the past is gone. When choosing a course of action, all that matters is the present situation in relation to the future. Simply put, “Let bygones be bygones.” Applying this to our example, it is clear that the employee must weigh the cost to the business of incurring the expense of providing another ice cream cone, on the one hand, versus creating a little moment of customer service wow, on the other. Insofar as his decision is concerned, all that happened before is irrelevant.

With this in mind, surely the possibility of creating an impressed and loyal customer by going the extra mile is a more gratifying and profitable strategy to employ. Yet, in the realm of customer service, the reality of sunk costs is all too often ignored or overlooked.

As a result, there exists a wonderful opportunity for employees and businesses to differentiate themselves from many of their competitors.

Take advantage of this. Simply remember sunk costs by forgetting about them.

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  • About Gregory Cummings

    Gregory Cummings writes about Canadian monetary and economic policy. His writing has been featured at the Ludwig von Mises Institute of Canada and the Ludwig von Mises Institute's Mises Daily publication. Read more.

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