What’s Your Customer’s Time Worth?

Wasting My Time

Last weekend I had the pleasure of traveling to the San Francisco area to work with a few clients. I absolutely love that part of the country, but getting there and back from Chicago is a real pain. Very few carriers seem to offer direct flights, so I always seem to get stuck in LA or San Diego with a layover. This time, I flew Frontier Airlines, so I had to pass through Denver. We had 30-40 minute delays going both ways, which no one bothered to explain or justify.

Ordinarily getting by with just a 40 minute delay would be a blessing. Not so when you only have 30 minutes to make a connecting flight. The connecting flight, of course, left on time. Without me. So I found myself at the Denver airport at 9:30 Friday night not sure how I’d be getting home. I was also scheduled to leave for vacation at 8:00 the next morning. From Chicago.

After confirming that I had missed my connection, the gate rep referred me to the Frontier customer service counter, which had a line of 20 other angry looking travelers waiting in front of me. I decided to try to book another flight through their 800 number while I was waiting in line. Fifteen minutes later I spoke with a rep on the phone who informed me that rescheduling a missed flight (regardless of fault) by phone carried a $100 surcharge. I promptly hung up on her and decided to wait it out in line.

Making Up for the Inconvenience

Frontier knew they had screwed up and had seriously inconvenienced those of us trying to make tight connecting flights. They probably also knew that first-time Frontier flyers (like myself) may be inclined to fly with another company in the future.

so what does Frontier think its customers’ time is worth?

• A free hotel room for the night at the Crystal Inn (one of the nicer hotels I’ve stayed in - I kept the Bath & Body Works soaps and shampoos…)
• A $9 meal voucher for dinner that night
• A $5 meal voucher for breakfast in the morning
• A $150 flight voucher to be used toward future flights
• A sincere apology from the service rep who booked my 6:00 flight to Chicago the next morning

Was I still mad? Sure. It set my vacation back by about four hours, I was only able to get 3 hours of sleep that night, and I was cranky as hell all day. But will I fly Frontier again? Yes. Once more at least, since I’ve got a $150 voucher to use. But if they screw me over on the next trip, that’s it for me.

A Lesson in All This

Airlines are particularly good at calculating the value of customers’ time. The 25 minute delay of that flight cost them over $200 for each customer that missed a connecting flight - and there were dozens of us. They could have simply said “sorry about that” and sent us on our way, but the effects of that approach would have cost them far more than $200 per person in the long run (see my post on customer lifetime value). They’d rather pay to make it up to you and hope you come back and have a better experience next time.

This is a lesson airlines have learned better than many other businesses: if you inconvenience your customer or your product or service doesn’t meet their expectations, you’d better find a way to make it up to them. How you do that depends on how badly you screwed up and how much you value your client’s business. At the very least, you have to set things right and fix whatever went wrong. And for god’s sake, apologize, and mean it! If that’s still not enough, offer a free product or service upgrade that will convince your customer that you’re worth continuing to do business with after all.

It’s a whole lot cheaper to keep an existing customer (even a disgruntled one) than it is to find a new one. Keep yours happy.

Learning to Take My Own Advice

I was just reading a post on IttyBiz about those days where, for whatever reason, you just don’t want to deal with the customer. Maybe you didn’t get much sleep the night before, or maybe one of your customers just rubs you the wrong way. Whatever the reason, sometimes we all slip and forget who’s paying our bills.

I’ve certainly been there.

What Was I Thinking?

I was working with a client to put some of their company training online. After I had finished the project, I got a call from my client, which went something like this:

Client: “I was reviewing the training and found typos and errors on these five pages.”

Me: “Okay, well we can fix that. It’ll probably cost about $X to get it taken care of.”

Client:  “You’re charging us to fix your typos?”

Me: “No, I’m charging to fix your typos. What you see online is copied and pasted directly from what you provided us. We don’t proofread your content - that’s up to you. If you want us to proofread your work, that would cost $X.”

I never heard from him again. As far as I know, their training content remains unchanged, typos and all. When I think back on that conversation now, several years later, I think “Wow, what a colossally stupid thing to say.” I was busy. I had other projects to worry about. Bigger clients. Bigger problems. SO WHAT? This is someone who had come to me and said “I need to do this, and I’m willing to pay you to do it.” Even if they’re not a top priority, I should treat them like one.

If I Could Travel Back In Time…

What I should have done is pretty clear. It would have taken me (at most) 30 minutes to make the requested changes. I should have told my client I’d be happy to make those changes, free of charge, but informed my client that, for future reference, it is our policy to take content and put it online exactly as it is submitted to us.

In fact, even before that I should have run a basic spelling and grammar check on the entire document. Then I should have informed my client that I made these 10 changes (free of charge) and wanted to verify that they were in fact errors that needed to be fixed. That would have allowed me to subtly show my client that I’ve got his best interests in mind. A little goodwill goes a long way. Since then, this has become our standard policy.

As a business owner sometimes you have to step back and remind yourself that it’s not about you, what you think, what makes your life easier. You have to look at every part of your operation and say “Is this in my best interest, or the customer’s?” Ideally, it will be both, but when a conflict arises, your operations need to favor the customer.

Ever had a day like this, where your frustration spilled over onto a customer? How’d you make it right? Or was the damage already done?

Maximizing Customer Lifetime Value

I’ve been reading Carl Sewell’s Customers for Life, which focuses on the value of a customer over the course of a lifetime. Sewell runs a chain of car dealerships in the southwest. His philosophy is that you can either sell a customer a Lexus for $40,000, or you can go out of your way to completely satisfy that customer, ensuring that he’ll keep coming back to you in the future. Sewell has calculated that the average customer for life is worth over $500,000, more than 10 times the value of any single, one-time customer (in some industries, customer lifetime value can be closer to 1000 times a single purchase price). Full Story →

FINALLY, A Positive Customer Service Experience

I’ve been fairly outspoken in the past about my disdain for the level of customer “service” provided by large companies, particularly in the computer industry. Dell’s customer service, for instance, has been lovingly nicknamed “Dell Hell” by some of its customers. The internet is full of stories from unsatisfied Dell customers, but my experience with the company today was a glimmer of hope.

Delaying the Inevitable

For a couple of months now my laptop had been warning me that my battery was slowly dying. A few weeks back it finally died, and gave me the following message:

A normal characteristic of a rechargable battery is that its operating duration decreases over time. The battery may eventually need to be replaced. Based on this characteristic, consumed batteries may not be covered under warranty.

So today I finally decided to talk to Dell, something I had been avoiding because I didn’t want the headache that generally comes with it. Needless to say I was surprised when a rep was immediately available via their online chat support. We were walking through the troubleshooting process when my internet died, because the internet only goes out when I have important things to do. Now, imagine my surprise when that same Dell rep called me on my cell phone to finish the conversation. In a few minutes’ time, he told me I’d be receiving my brand new battery free of charge within four business days. Wow, what a pleasant surprise.

Fixing Tech Support

I know Dell and many other companies have developed some terrible reputations in the customer service arena, but my experience today gave me hope that maybe they’re actually turning things around. I had made up my mind that if Tech Support screwed me today I’d never buy a Dell product again, so that simple phone call may have saved their company from thousands of dollars in lost future sales.

Others have noted that Dell is working on improving their tech support too. Many major companies like Starbucks and Dell are creating websites to give customers a place to voice their opinions freely. For instance, Dell recently launched IdeaStorm and the Direct2Dell blog to reach out to their customers and solicit ideas and feedback.

What surprised me most was a Direct2Dell blog post about the future of customer service. What I found most interesting is that the comments were in no way censored to paint Dell in a positive light. Here are a few excerpts from this post:

“North american customers want to be supported by North American techs. “

“When calling IBM for service, the entire thing is short & sweet. I’m not left on the phone on hold while the tech does ‘paperwork’. Whatever Dell techs are required to do is apparently many times that of what is required for the IBM techs.

Why is IBM so much more efficient than Dell at handling these things???”

“If the off-shore support staff is incapable of addressing a issue with a FORMER customer (I certainly won’t ever purchase another Dell product and will encourage my sons,high school and college graduates, to puchase other-than-Dell products) they should be taught to transfer the issue to someone capable of handling the small issue - instead of abruptly HANGING UP!”

Rather than censor the communication, Dell representatives posted responses to each of these complaints in an attempt to solve, or at least address, these problems.

Evidently Dell is tapping into social media even further. They now have several customer service reps searching social sites like Twitter for complaints and swiftly contacting those people and addressing the problems.

At the very least, I appreciate the fact that Dell is making an effort to listen to their customers. How do you solicit feedback from your customers? Do you have a means of measuring customer satisfaction? Leave a note and share your thoughts, and subscribe while you’re at it.

Update:

I just received my new battery from Dell, less than 24 hours after making the initial complaint. Color me impressed.

Sun Tzu on Leveraging Strength - Part 4 of 6

“The general who thoroughly understand the advantages that accompany variation of tactics knows how to handle his troops. The general who does not understand these, may be well acquainted with the configuration of the country, yet he will not be able to turn his knowledge to practical account.” - Sun Tzu, The Art of War

An Uphill Battle

We live in an increasingly competitive world, where the top 20% of businesses own 80% of the market. Are you in that top 20%? Probably not. So how do you protect your little business in a market full of giants? How does a local retailer compete with the likes of Wal-Mart? Kmart tried to compete with Wal-Mart’s low cost strategy and it ended in bankruptcy. If Kmart couldn’t beat Wal-Mart in a price war, how can you hope to? Well… you can’t.

Enter the Internet. Suddenly small businesses could reach consumers worldwide. No longer were they limited to a local market. A small business owner’s dream come true, right? Sadly, that knife cuts both ways. In his book, Clear Blogging: How People Blogging Are Changing the World and How You Can Join Them, Bob Walsh discusses this problem, which he calls the “Internet Price.” Sure, you can reach customers everywhere, but suddenly your local clients can access businesses everywhere. Now, rather than a few local competitors, your business is fighting thousands of other businesses worldwide. Businesses that offer the same product at a fraction of the price you might charge. Even service businesses are no longer safe. Software development, IT consulting, and even so-called “knowledge processes” like legal and marketing research are now being sent overseas. Worse yet, a Stanford study says they’ll work for $500/year.

Fighting the Internet Price

“If, on the other hand, in the midst of difficulties we are always ready to seize an advantage, we may extricate ourselves from misfortune.” - Sun Tzu, The Art of War

True, small businesses may be facing an increasingly competitive marketplace. True, mega corporations like Wal-Mart have a stranglehold on the cost leadership segment. So how do you fight back? How do you keep your business from failing like Kmart did? Again, Sun Tzu has the answer: “Carefully compare the opposing army with your own, so that you may know where strength is superabundant and where it is deficient.”

You can’t beat the Goliaths of the world on price, but you can leverage strengths where they are weak. Here’s how:

Differentiate Yourself

Make your product or service stand out from the crowd. Deliver at a quality that your competitors can’t match. Use eco-friendly materials and business practices. Whatever you do, make sure that your marketing focuses on these differences. If your product is better but your customers don’t know it, what good is that? Marketing alone can be a great form of differentiation - get creative! For god’s sake, if Pet Rocks made someone rich, surely your business can do the same.

Be Responsive

In working with a few large corporate clients, I’ve learned one thing: big businesses are SLOW. Once they decide they want to do something, they have to get the approval of 43 different corporate managers, run it by legal, justify it to their shareholders, put in a request for funding, and then justify the project to the new corporate managers because 30% of the original 43 have died of old age since the initial request was made.

In my business, if a client comes to me with a request, I turn my head slightly, run it by my partner, turn my head back, mull it over for a bit, and give my client a response. I can do this because small businesses aren’t shackled by bureaucracy. We can respond quickly and respond to their needs before old age takes them.

Cultivate Personal Relationships

This is a big one. As I’ve mentioned in the past, I hate dealing with customer service reps. I put it off for days or weeks if I can because I know that they’re going to put me on hold for an hour and then someone I can barely understand will ask me to hold again while he accesses my account history. Where’s the personal touch? Big businesses can’t afford it, but we can. I keep all my client data in my phone so when a client calls, I greet them by name. Little things like this make people feel important. Take the time to get to know your clients. Treat them like people rather than numbers. In an increasingly impersonal world, people are willing to pay extra for that personal touch.

From Survival to Success

Most small business owners start out just hoping to survive. Far too many fail because they never find a way to stand out. Their business is just another nameless, faceless company vying for consumers’ hard-earned money. It’s important to develop your business in such a way that it holds meaning for your customer.

Take your doctor, for instance. You might tell people “I go to Dr. ____ because my family has known him for years, he’s extremely capable, and he genuinely seems to care about my wellbeing.” You might recommend a specific tax consultant because he found all kinds of tax deductions and saved your business from an audit. What meaning does your business hold for your customers?

Big companies may own most of the market, but there’s still plenty of room for small businesses. The key to survival is to determine what aspects of their business leave the customer wanting more, and then structure your business to make it happen. Use your small size to outmaneuver your competition. Deliver exceptional service and tell your customer how your business is different.

Remember: avoid your competitor’s strengths and instead attack their weaknesses.

What’s next?

Sun Tzu on Adapting to Your Environment - Part 5 of 6

You’ve already read this much, why not subscribe and make sure you catch the end of the series?

The Cost of Poor Service

Don’t Waste My Time

My last post about customer service got me thinking about other experiences I’ve had as a consumer recently. A few months ago I was having some issues with the company that hosts my website (IPowerWeb.com). I called them and spent an hour on hold before finally reaching someone. He assured me that the problem would be taken care of within 24 hours and I would be informed as things progressed. A week later I called again, waited an hour again, and got the same explanation. He said they’d give it “top priority.” Several weeks later the problem still wasn’t resolved. I spoke with someone via their online chat support, and they finally pushed me over the edge:

Clem: Hi Kyle. I apologize for the wait time. My name is Clement, how are you today?
Kyle: i’m doing fine thanks, how are you?
Clem: I am great.
Clem: We apologize for any inconvenience this may have caused you. Currently, our internal tools are not functioning. Hence, I am unable to check your account. Could you please contact us after few minutes, so that we can assist you in a better way? Our internal tools will work fine after few hours.
Kyle: I just spent 45 minutes on hold on both the phone and this chat. And this was after receiving no response to emails I have been sending for two weeks. Am I going to have to wait on hold again in a few hours?
Clem: We apologize for any inconvenience this may have caused you. Currently, our internal tools are not functioning. Hence, I am unable to check your account. Could you please contact us after few minutes, so that we can assist you in a better way? Our internal tools will work fine after few hours.
Kyle: I’m really not impressed with the service I’ve received in the last few weeks. I just waited in line 45 minutes to be told to call back later so I can wait in line again?
Clem: Did you receive my last message?
Kyle: I did, did you receive mine?
Clem: I apologize for any inconvenience this has caused you.
Clem: We apologize for any inconvenience this may have caused you. Currently, our internal tools are not functioning. Hence, I am unable to check your account. Could you please contact us after few minutes, so that we can assist you in a better way? Our internal tools will work fine after few hours.
Kyle: Can someone from support get in contact with me when the tools are functioning again? I’ve had very little luck contacting you, and I can guarantee I won’t put you on hold
Clem: Unfortunately, we will not contact you. Please make sure to contact after 15 minutes.
Clem: I apologize for any inconvenience this has caused you.
Kyle: Can you at least tell me why my last three emails to tech support have gone completely unanswered?
Clem: I apologize for any inconvenience this has caused you.
Clem: We apologize for any inconvenience this may have caused you. Currently, our internal tools are not functioning. Hence, I am unable to check your account. Could you please contact us after few minutes, so that we can assist you in a better way? Our internal tools will work fine after few hours.
Kyle: I understood the message the first 3 times
Chat session has been terminated by the site operator.

Needless to say, I terminated our contract with them, and took all of my clients’ accounts with me. I was livid after this conversation, which was just the cherry on top of several weeks of abysmal service. Not only did I take my business elsewhere, but I’ve instructed everyone I know to steer clear of IPowerWeb.

Lessons to be Learned

I mentioned in my last post that if you can make a customer say “Wow! What great service!” they’ll be Customers For Life. On the other hand, if you treat customers poorly it could come back to haunt you. You will almost certainly lose their business, but the cost could be even higher…

Take this blogger, for instance, who had horrible experiences with Sprint/Nextel.

Or this one, which talks about Dell’s plummeting customer service ratings.

Which reminds me… I’ve had my own run-ins with Dell. A few months back I plugged in my nearly-brand-new laptop and got an unbelievable electrical shock from it that left my arm numb the rest of the day. It fried the computer too, which I was actually far more concerned about. I called Dell, unhappy but civil, and explained what happened. His response? “We apologize that our product caused you this pain, and suggest that you put some ointment on the shocked area, then carefully unplug the computer.” Ointment? Really? Thanks Dell.

Avoiding Customer Service Disasters

A recent study by the University of Colorado indicates that Customer Service scores in service businesses are dependent upon five main factors:

1. Timeliness of initial response to the customer’s request/problem.
2. Clarity of the employee’s initial understanding of the customer’s request/problem.
3. Completeness of the resolution provided by the company.
4. Timeliness of the resolution provided by the company.
5. Courtesy of all employees involved in providing the resolution.

It’s not brain surgery. Respond to customer needs quickly, completely, and courteously and they’ll be happy! If I spend an hour on hold, it won’t matter if the service I receive is stellar. I wasted an hour listening to your crappy elevator music on hold.

7 Keys to Happy Customers

1. Respond to customers quickly. We live in an impatient world. We’ve all gotten irritated by having to wait three minutes at a drive through window. Same idea here - your customers will appreciate that you’re not wasting their time.
2. Make customers feel important. Let them know you appreciate their business, and want to make sure they’re happy.
3. If you screwed up, admit it. Then make things right. Offer them a free month of service, a free upgrade, or a small gift. Studies have shown that even the most inconsequential gift improves a person’s perceptions of the gift giver.
4. Keep your customer informed. If something is going to take longer than expected, call them and let them know. Give them periodic updates so they know what’s going on. Wagonwork Collision Center, a collision repair shop in Alexandria, VA, calls their customers twice a week with updates on the repair process.
5. Ask yourself: “What would a remarkable leader do?” Kevin Eikenberry says “Remarkable leaders set the pace in creating a mindset that is focused on customers and meeting/exceeding their needs.” Don’t just meet your customers’ needs. Predict them. Exceed their expectations so that they can’t wait to come back.
6. Hire and train the right people. Some people just aren’t cut out to be working with customers. Guy Kawasaki says it has to start from the top. As the owner or manager, you’re setting an example to be followed. Treat customers right and then make sure your employees are too. You’d be surprised how much impact your actions have on your company’s culture.
7. Measure your results. Every company, large or small, needs to follow up with customers. Ask them if they’re satisfied with the relationship, if there’s anything you could do to make it better,  etc.. My company conducts phone surveys semi-annually, tracks all the responses in a database, and looks for improvements and shortcomings over time. We do this for some of our clients as well. Without the stats to prove it, how can you be sure you’re satisfying your customer?

Your customers are too important to your business to leave these things to chance. Document your standard operating procedures (the “How-To” guide to running your business) and make sure they’re followed. Make sure everyone in your organization is focused on delivering the best possible experience to your customers. Maybe one day the rest of the world will catch on and I won’t have any customer service horror stories to tell. We can dream, right?

Customer Service: Is it Dead?

Crappy Service - An Epidemic

Last week I walked into a sandwich shop and the woman at the counter, without even making eye contact, asked “What are you havin’?” in the most uninterested way possible. It took me a second to respond because I was so taken aback. I thought “If I’m going to be treated like this, maybe I should take my money to the restaurant next door.” What’s really sad though is that most people don’t even think twice when they are treated this way as customers. Is anyone else bothered by this?

The Cost of Poor Service

Do companies realize how detrimental poor service can be to their bottom line? Consider these statistics:

• Acquiring new customers can cost five times more than satisfying and retaining current customers.
• A 2% increase in customer retention has the same effect on profits as cutting costs by 10%.
• The average company loses 10% of its customers each year
  • Source - Living on the Edge of Chaos: Leading Schools into the Global Age

• 68% of lost customers are turned away by the negative attitude or indifference of a service provider.
  • Source - Survey conducted by the American Society for Quality

Can your business afford to lose 10% of its customers every year? How can you keep even your most demanding customers satisfied?

Forget About Satisfying Your Customers

Several years ago my company decided to forget about satisfying our customers. You heard me. We decided that any business could satisfy their customers. Customer expectations are so low these days that as long as they get what they came for without being verbally abused, they’ll be satisfied. What we wanted were Raving Fans. (Do yourself a favor and pick up a copy of this book… It’s a quick read and it’ll totally change the way you approach your business).

How do you get raving fans? I remember a conversation i had with Michael Giarrizzo Sr. on my very first business trip. His family has virtually owned the collision repair market in Ohio for decades. Their company, DCR Systems, routinely receives 100% Customer Satisfaction ratings because they believe in creating raving fans. Michael told us about a customer who left his garage door opener in his car, when he was supposed to put it in his rental. Giarrizzo called him, asked for his work address, and delivered the door opener to the man at his office. The customer didn’t have to ask, didn’t have to pick it up, and wasn’t inconvenienced by not having the door opener that night when he got home. With that simple action, Giarrizzo earned a customer for life.

Creating “Wow” Moments

The Ritz-Carlton is well known for their exceptional customer service. Bellmen are trained to look for name tags on luggage as guests arrive. They then use hidden radios to inform the desk clerks of the guests’ names, and the guests are then mysteriously addressed by name. Wow!

It’s a simple concept: if your service makes a customer stop and say “Wow!”, they’re going to come back the next time they need your product or service. They’re going to tell friends and family about their experience and recommend you to everyone they know. Examples are everywhere…

Stephen from Freakonomics writes about his Wow moment with Zappos, a popular shoe retailer:

My wife had ordered a pair of sandals from Zappos. When they arrived, she found that they didn’t fit. She tried to order the right size, but Zappos was sold out of her size. So here’s what the company offered: she could return the sandals (for free), Zappos would refund the purchase price and they’d send her a $25 coupon toward her next purchase.

But wait — there’s more! Zappos also offered to try to locate a pair of the sandals in her size from another vendor. (Hah! Sure, they will!) Fifteen minutes later, the company called my wife and told her they’d found her sandals, in her size, at another online merchant — “and,” the Zappos clerk told her, “they’re even cheaper at this other site!”

Another blogger, Zaz LaMar, wrote a post called “I Heart Zappos” after a particularly heartwarming encounter with the company.

Just search Google for “blog great customer service” and you’ll find countless links to happy bloggers telling the world about the experiences they’ve had with companies that made them say “Wow!” These raving fans are providing businesses with free advertising and testimonials simply because they were so impressed. What could be better??

How do you wow your customers? How do you keep them from taking their business elsewhere? As a consumer, have you ever had a “Wow” Moment? Tell us about it!