I think of frugality as the conservation of both time and money. When it comes to money it helps not to think of the least expensive product, but the one with the best value. For example, in the eighties, a company began importing a car from Yugoslavia, aptly named the Yugo, for a mere $4,000. That would seem to be a frugal choice, except for the fact that the car was poorly made and unreliable. While that is an extreme example, it does illustrate that price should not be the only determining factor when making a purchase.
Another illustration would be Wal-Mart vs. Costco. Wal Mart does have very low prices. They do this by paying their employees poorly and offering them few benefits and notorious working conditions. As a result, the personnel I have encountered there are not motivated to assist you and are indifferent to customer satisfaction. Furthermore, most of the merchandise they sell are low quality products imported from China. On the other hand, Costco is well known for being one of the nation’s best employers. They pay their employees above average wages for the retail sector, and offer great benefits. In return, they retain employees a long time. This means that they are more efficient and have superior knowledge of their responsibilities. Their prices may not be quite as low as Wal-Mart’s, but their employees are courteous, helpful, and don’t seem to hate their job. Sure, many of their products are Chinese imports as well, but there are a lot more quality name brands than at Wal Mart.
I choose to patronize Costco not just because they treat their employees better, but because their employees treat me better. I have a better experience when I go to Costco, and I know that they are committed to customer satisfaction. Wal-Mart is like a Yugo, while Costco is like my trusty Subaru, they never let me down.
Look For Customer Satisfaction Guarantees
Some businesses guarantee customer satisfaction. Costco will take just about anything back, with or without a receipt. Other examples of companies with iron-clad satisfaction guarantees include REI and Performance bicycle shop. When you buy quality products from retailers who will stand behind them, you are being frugal even if it occasionally costs slightly more.
The same philosophy works with financial services. I do my banking with a small, internet based bank. I chose this bank because they rated highly on customer satisfaction surveys. They keep their costs down by not having branches all over town. Instead, they provide first rate customer service over the phone with live human beings based here in the United States. They charge few, if any fees, and even refund the ATM fees that other banks may charge me.
This Works For Credit Cards Too
You might get some great rewards from your credit card occasionally, but some companies just don’t have their customer service act together. When I had some cards stolen from my house two months ago, I was able to fix all of the problems with one phone call to one credit card company. I am still dealing with fraudulent charges from another company, two months later. Guess which card I will be keeping?
Another example is with reward partners. Like most travel and reward card bloggers, I am devoted to the American Express Starwood Preferred Guest program. On the rare occasion that I have had any problem with the card, their website, or even their hotels, I have received a prompt resolution that has been more than adequate. They do not devalue their program periodically, at least not nearly to the extent that most other programs do (I am looking at you Hilton!). They also don’t withhold points on discounted stays, like the Intercontinental Hotels Group (Holiday Inn) does.
Bottom Line
I frequently mention that your credit card is not a lifetime relationship. I also like to remind my readers that the credit card market remains extremely competitive for people with decent credit. The evidence is as clear as the offers that litter everyone’s mailbox. On the other hand, it is a good feeling when you find a product or service that delivers real value. That value is a quality product or service. When it is coupled with a competitive price, you actually have a frugal choice, even if it is not “the cheapest