Order of Magnitude CEOs

Seek Customers that Matchup Best to your Offer or they are Going to Leave

 

“You don’t want my business, so stop telling me you do, because you really don’t.”

I was talking to Ted Jones, an ambitious owner, who was letting me know about a conversation he had earlier in the week with what used to be his local preferred bank.

“What do you mean Mr. Jones, we would love to get more of your banking business and to loan you money for your business. That’s what we are here for.  Can you step in my office and we can discuss your situation?”

Ted wanted none of it from the banker, “As my Dad said to me, fool me once shame on you, fool me twice, shame on me. “

“I don’t understand Mr. Jones, why wouldn’t we want your business, please elaborate.”

Ted replied to the confused banker, “I have applied a couple times to refinance my business loan with you and have been consistently turned down.”

“If your departments talked with each other, you would see that I have already moved a large portion of my money out of your bank in the last few months.”

“And why is that,” the banker replied as the banker finally started to get it.

“I found another bank that actually said they wanted my business and actually proved they did, they refinanced my loan.”

After Ted finished the story I asked him what the bank should have done differently.

“Jeff, when I first signed up with the bank a couple years back, they knew the kind of business I have including my revenue, profit, and growth trajectory. The bank seemed excited to have my business and wanted to help me grow. Now, I found out that the bank’s customer profile doesn’t match my profile - the loans they give are typically for much larger businesses that have been in business much longer. It’s been a big waste of time and a frustrating experience.”

If you are marketing and selling solutions for which you really don’t have a great offer, you may generate short-term profits and enable your sales team to earn commissions, but, you won’t be building a valuable company.

Instead focus on selling and marketing to customers where you can serve them long-term, otherwise, be prepared to have more and more frustrating conversations like the one Ted had with his now ex-banker.

A tale of two dry cleaners – How is your Client Experience different than your Competitors’?

Roughly a year ago, I switched dry cleaners.  I was very happy with my current dry cleaner, but, a new dry cleaner opened near the train station stop that I take from NJ to NY, with a 40% off promotion, so I decided to try them.    I got into a routine and started to use them, although I noticed that the 40% off was not as great of a bargain as it first appeared to me since they had a much higher list price (although, I never checked).  They were convenient and I got into a habit.

A little while ago, after picking up my dry cleaning, I noticed a missing button on one of my dress shirts.  The next time I brought my clothes to the dry cleaner, I pointed out this problem to the person behind the counter. I didn’t think much of it, until she objected, “we did not do this!”  I replied, the button was fine before and I haven’t worn it since I picked up my clothing last week.   She agreed to take care of it but when I got the receipt I noticed a $2 charge.

“I thought we agreed it was your issue, why would you charge me $2?”  She just shrugged her shoulders in a nonverbal way to say “It is only $2, why are you making this a big deal.”

I agreed with her shrug but in my head I was thinking, “How would you treat me if I had a really big issue like I had with my previous dry cleaner,” as I gathered my clothes and immediately drove to my old dry cleaner.

As I was driving, I thought some more about what happened three or four years ago at my old dry cleaner, when I really did have a big problem.    Somehow, the son of the owner had their dry cleaning truck stolen, which happened to contain about a half dozen of my dress shirts.

How did the owner handle the issue?  He asked me to tell him the replacement cost and paid it without questioning me or even asking for a receipt for the shirts.  I remembered that incident as I drove directly back to my old dry cleaner and chatted with the son as I gave him my clothes.

He immediately knew my name, I gave him my clothes, I did not even ask for a receipt. 

“Your clothes will be ready Monday after 5pm Mr. Silbert.  Good to have you back.”

“Thanks Steve,” I replied.

It felt good to be home again and boy did I feel foolish for straying.

What have you done to make your client experience different than your competitors’?

If you make it hard to cancel you also make it hard for me to come back (or to recommend you)

 

I quit my local gym two to three months ago.  The experience at this gym had been a good one and at some point I thought I might return until I went through their cancellation process.

If I remember correctly, to quit the gym, I was given a blank piece of paper and asked to write down that I was quitting and the reason. I was then told that I would be billed for two additional months. 

After seeing my credit card bill with the charge on it from the gym a few days back, I decided to call them to see when I would stop being billed.   At first I was told that I had not quit, since they had no formal record of me quitting which made me slightly perturbed.

“Please check again,” I asked. 

“Oh yes,” came the reply a few minutes later, “you quit on May 17^th.”  

Progress.

“Are you sure?” I asked.  I did not remember the exact day but it seemed earlier than May 17th and I knew it was not on May 17^th as I looked over my calendar for that day.  I overheard in the background another person saying, ‘Yes, that is when he quit, May 17^th.”

I hung up the phone not knowing when my credit card would no longer be charged and not believing they knew when I actually quit.  Also, I did not understand the two month billing cycle policy for quitting, that is even longer than the cable company’s policy, I thought to myself. 

About five minutes later, I received a call on my cell phone.  Although I did not ask, this person appeared to be the owner of the gym who had gone through the cancellation process with me on “May 17^th”.

“We found the piece of paper, you actually quit on April 30^th.”

The owner of the gym then proceeded to do a nice job of explaining when my credit card would no longer be charged and that I could use the gym up until July 28th.

(I had signed up on the 28^th of the month, so that is the day they bill my credit card for the following month.  Quitting on the April 30^th meant I had to pay two additional times – May 28^th and June 28^th.  Since the gym pre-bills the membership, I actually had to pay for close to three additional months.  I did not agree with the policy, although at least now I understood it.)

I asked my wife, who is a Zumba instructor (and as I am writing this blog is attending the annual Zumba conference along with 6,000 other instructors from across the World) and is much more familiar with gym policies than me about the two month billing policy after you quit.  “Oh that’s standard, all the gyms do that.”

All I can say is if you have a difficult process to cancel that includes:

1. Your Customer filling out a blank piece of paper;

2. No documentation for the customer on the day they cancel and telling them the last day they can use your service;

3. Your customer not knowing when their credit card will stop being charged;

4. And, billing your client for two additional months (and in my case just under three months) after they quit

Then, unless your offer is rare, unique or has capacity constraints, making it hard to cancel makes it less likely an ex but happy customer will join again or refer somebody else to subscribe to your service.

 

Coincidentally, this past Friday I bumped into a good friend and business owner with a subscription billing model geared towards businesses, who was smiling as he came up to me near Penn Station as I was heading home.

“You’ll get a kick out of this Jeff.”

“Why so happy,” I asked.

“For the fourth time this year, a customer that cancelled their service called to request we start providing service again.  A good thing I made cancelling so easy,” he replied as he high-fived me to begin his weekend.

It Doesn't Just Matter What Gets Said, It Also Matters What Gets Heard

“Why is there cream cheese on one of the bagels?” my wife asked me, “and where is the tub of plain cheese, I only see the vegetable cream cheese?”

We had guests in from out of town over the weekend, and I had just returned home from our local bagel store, where I thought I had ordered a mix of a dozen bagels and two tubs of cream cheese – one plain and one vegetable.

Instead, I had received 11 bagels with the 12^th bagel already spread with cream cheese and a single tub of vegetable cream cheese.

The bagel shop server must have messed up the order (or had she?)

“That’s funny, not a big deal,” my wife replied, “I went to Dunkin Donuts on Friday and asked for a coffee with half sugar and cream and as soon as I tasted it in the store, I knew it was wrong, it was way too sweet.

When I asked, I found out, the server had put double cream and double sugar.”

The Dunkin’ Donuts server must have messed up my wife’s order (or had he?)

In both cases, it’s hard to be sure what was heard, compared to what was said.

Contrast to the drive-thru experience at McDonald’s I had a couple weeks back where what was said and heard was the same yet there was still a breakdown.  I placed my usual order for my two daughters which included a small Iced Tea for my older daughter. Upon getting home and bringing the food into the kitchen, my older daughter asked for her Iced Tea.  Knowing I ordered it, having seen it on the order screen, I checked the car.  No Iced Tea.  I checked the receipt, and of course, saw the order on the receipt. With confidence I called the McDonald’s back to let them know and they proceeded to do a nice job of addressing the issue.

These are three very trivial examples for me, but I speculate aren’t trivial for the 3 owners (of the bagel shop, Dunkin’ Donuts, and McDonald’s) of what occurs every day in businesses.  Your staff is communicating with other employees, with clients, and with vendors among others, where:

1. Commitments are made (“Yes, we will finish it by Tuesday.” Do both parties agree on what “It” is and when on Tuesday),

2. Offers are made and accepted (“Happy to take that off your plate”, “Why Thank You!”   Does the person making the offer and the person accepting the offer agree on what is actually on the “plate” and have the same standard of satisfaction) and;

3. Assessments generated (“Tim’s not reliable, let’s have Rachel take care of it instead”.  Is the assessment of Tim not being “reliable” credible for the specific item required or is Tim never reliable which has broader implications?)

Commitments, Offers, and Assessments made by yourself and your staff can have a profound impact on the relationships your firm has with these very employees, clients, vendors, and other people you need in order to fulfill the ambition you have for your business.

Actively training staff to be aware of these potential breakdowns and designing systems to prevent these breakdowns can go a long way towards closing the gap between what gets said and what gets heard as well as provide additional opportunities to make your company’s offer standout in the marketplace.

Providing Slow Service to your Clients like Quick Service Restaurants Kyochon and Cosi - Do you care?

Last week, I had a few minutes in between meetings towards the end of lunchtime, so I ventured into one of the new quick service restaurants (QSRs) that are opening up across Manhattan.  This particular one, Kyochon, is a restaurant chain focused on Korean style chicken.  The restaurant was clean and fresh looking both on the outside and inside and it was not crowded.  Perfect! After placing my order, I received a buzzer and proceeded to wait while one person made the food.  After about 10 minutes, I inquired about the slow service.  When I was told each order was made fresh I replied, “I understand, but why do you only have one person making the food during lunchtime?”  I then added, to see what reaction I would get in a polite voice, “Most likely, I will not be able to visit your location again due to the slow service.”   Five minutes later, I received my food but with no response to my comment about not coming in again due to the slow service.  

I had a very similar experience the prior week at a Cosi during breakfast except this time the line to order moved so slowly that the two people ahead of me left the restaurant out of frustration.  As with Kyochon, to see what would happen, I let the cashier know that the two customers ahead of me left due to slow service to see her reaction.  The cashier was apologetic and explained that this is normal.   Interestingly enough, in both cases, if you have the patience, the Kyochon chicken and my Cosi breakfast order actually turned out to be quite tasty.  

Ok Jeff, slow customer service with a good product, I get it, we have all experienced it, why blog about it and what can this possibly have to do with helping an ambitious business owner like myself?

If I am the owner of Kyochon, I would want to know that a customer was dissatisfied with the speed of the service and also wonder why only one of the two food preparation stations was being operated during lunchtime.  If I am the owner of Cosi, I would want to know if I had a recurrent issue in taking breakfast orders that would make my customers abandon the restaurant once, if not for good.  Unless one of the cashiers did something with the information or there was a system in place for measuring speed to order and/or speed to receiving food, it is highly unlikely the owner of either Kyochon or Cosi knows about their slow service issues.  Or so I thought, until I did a search on “slow service” for both restaurants and to my surprise found that “slow service” is a recurrent theme in online customer reviews for both restaurant chains. Rightly or wrongly, the employees of the Kyochon and Cosi locations I visited appeared to prioritize the quality of food preparation over delivery speed.

(It is also quite possible that the respective owners intentionally accept slow service during lunch (Kyochon) and during breakfast (Cosi) if most of their respective profits are made during other parts of the day).

If your employees perceive you do not care about something, you better be damn sure that you really don’t.

By the way, Cosi is trading at less than 15% of its high over the prior 5 year period and Kyochon is a private firm based in South Korea.

How Brands Like Apple & HP Can Lose Their Way when Dealing with Customers? (or Is Your Staff Executing on Your Core Values or just your Policies?)

Last week, a business owner and Apple Fanboy (click on the link to see if you are one too) who until a week ago only bought Apple products for his house told me about Apple not crediting him $1.29 for an accidental purchase on iTunes (since he had made a similar request to Apple that was granted about 1 year ago).  Of course, it wasn’t the money for this business owner, it was the point - he thought he was more than just a transactional customer for Apple.  I then shared with him my own similar experience with a large retail brand that happened last month to me.

About two years ago I bought a high end laptop.  This was the 2^nd premium laptop I had purchased from the same vendor within a year.  I didn’t run much on it.  Just the basics – mostly Microsoft Office applications and Internet browser software.  I also have a few other random applications that I use including Dropbox and TweetDeck.  When Windows 7 came out I upgraded. Recently, the screen died and I was forced to pair it up with a monitor in my office and relegate it to a desktop replacement.  So, I bought a 12” screen netbook with 2GB RAM for client meetings and for working during my commutes into Manhattan.  I noticed that my new netbook was much quicker than my two year old laptop.  Appreciating the difference, I decided to devote some time to make the old laptop quicker.  I did a bunch of software related tasks like removing unneeded items from Start Up.  One consistent issue I noticed is that once I opened two applications the physical memory would hover around the 90% mark.  As I searched online how to lower it, people wrote that adding RAM typically solves the problem.  When I checked my RAM, I noticed I only had 1 GB.  Checking back on my records I noticed my laptop was supposed to have 3GB. I immediately did 2 things – first I went to Amazon and luckily found out that 2GB only costs about $35.  Second, even though the issue was 2 years old, I decided to let the vendor know.

Having unsuccessfully used their tech support for other issues when the laptop was under warranty, I decided to email the corporate office.  Within less than 12 hours I received a reply with a case number with words in the email including “apology” and a commitment to “escalate” the issue.  Wow, I thought, they must want to investigate and understand the issue just like I do.  In my mind one of two things can explain the issue – either they sold me a laptop that accidently had the card removed somewhere in the supply chain or somebody had secretly removed the card.  Instead, I was immediately transferred to a generic out of warranty support person that said that since my laptop was 2 years old it was out of warranty.   It would cost me $398 to fix.  His callous reaction made me upset and the call went downhill from there.  The person had no interest in discussing what happened, didn’t express any empathy, he didn’t even let me know the price of an additional 2GB of RAM that I could install myself. I immediately emailed the corporate office to let them know about the interaction.  This time, there was no reply.    

I now have no idea where they stand on the issue.  One thing is clear though, they had no intention of genuinely interacting with me to either rectify the issue or explain to me what could have caused the issue.  From my perspective, they viewed each of my purchases as transactional, they appear not to care about my current frustration, and thus having a genuine conversation with the customer is currently not The HP Way to do business.   (As for Apple, after rereading their core values, I can sort of see why they did not issue a refund, as their core values are all focused on producing great products and nothing to do with customer service).

In your own firm, does your staff make decisions based on policies or are they empowered to act the way you would act if you were talking to that particular customer.  Unlike these two incidents with Apple and HP, granted - both are very large, very successful companies, if customer service matters in your business (and admittedly it might not), make sure you train employees to not only follow policy but how to break policy and even better train them in the long-term value of empathizing with your customer if you expect them to continue to do business with you.

Note: This blog was inspired by great blogs I read by two ambitious Owners/CEOs this week, one from John Dijulius on why policies are bad and one by Dan Hoffman on how great firms like Amazon and Google have recently dropped the customer service ball.

You want that Espresso To Go - Not Gonna Happen - What Business Owners can Learn from Café Grumpy and other NY Restaurants that say “No” to their Customers

 

“I have no way to stand out other than providing great service or the lowest price.”

This is a complaint I recently heard from a struggling business owner who is competing against many providers with a similar offer.

On the flip side, another business owner I know recently left his current professional service provider who provided great customer service and was relatively cheap compared to the alternatives. So why did he make the switch?

It turns out his current provider said “Yes” to every request without digging deeper to understand the implications of fulfilling the request. The business owner finally concluded that his current professional service provider wouldn’t be able to help him solve the really difficult issues his business would face in the future and thus it was just too big a risk to not make a switch.

If you read The NY Times this past weekend you might have come across a fun article profiling NY restaurants  that are getting noticed for saying “NO” to their customers based on their product or domain expertise:

A French bistro that serves great fries but you must hold the ketchup

A hamburger joint that won’t make you a cheeseburger, unless that cheese happens to be Roquefort

A bagel shop that won’t toast your bagel

And,

A coffee shop that doesn’t allow you to get your espresso to go (Café Grumpy)

(The links above all point to Yelp reviews where you can see that each establishment scored on average 4 or more stars out of 5 from their customers).

Don’t forget that you can differentiate based on your product and/or trust built through domain expertise.

For example, as an executive at M5 Networks, a business hosted VoIP phone system provider, I had to turn down signing up prospects that wanted to skimp on the connection between their office and the M5 data center. Sure, it may have been cheaper for the prospect in the short run, but I knew that an increased likelihood of their phone service being down was definitely not worth the risk for them and for us. 

Plenty of customers would end up signing with M5 anyway. Others would try a different provider that agreed to provide the inferior solution with a high percentage of these businesses migrating over time to M5 as they came to understand and appreciate the value of our domain expertise.

If you truly are the expert, sometimes telling the customer why they are wrong, is not only the right thing for your customer, it is actually the best way to build your business over the long-term, even if it means sacrificing some short-term profits along the way – eventually enabling you to attract more of the customers you really want.

Crowdsourcing and How One Bad Review Can Cost You a Deal but Finding Out Why Can Help You Win in the Long Run

“Remember that deal I was furious about losing back in the middle of last year.” “Sorry Tim.” I had to confess to Tim that unfortunately I did not. “You know the one,” Tim continued, “I thought my sales team had it all wrapped up and then we lost it.” “Oh yes, vaguely,” I replied. “Well I just found out this week why we lost. It turns out that a business acquaintance of the decision maker had just come off a really bad experience with us where from her point of view we over promised on a crucial delivery schedule. She ended up not hiring us for any additional work and I never bothered to find out why, now I know.”

“That’s awesome Tim, that you found out why you lost the client, at least now you can do something about it. Your situation reminds me of a couple recent consumer purchases I made at the end of last year. In December the screen on my supposedly high end HP laptop died after less than two years of use. To purchase its replacement, I went looking for a non HP 12” disposable Netbook that could easily run Windows 7 and Microsoft Office applications. I ended up purchasing a brand that I had never used, let alone, heard of. What caused me to purchase a Hannspree were the excellent crowd sourcing reviews, so I knew what I was getting before the actual purchase. This is the way I now narrow down movie selections (Rotten Tomatoes), new restaurants (Yelp) and more recently how I select local handymen and contractors to do work in and around my house. For selecting the last two service providers for my house, a plumber and handyman, I used the crowd sourcing reviews on Angie’s List.”

“Excuse me Jeff, what does consumer crowd sourcing got to do with me losing a deal due to a bad employee commitment?” Tim finally exclaimed.

“Although crowd sourcing is relatively new Tim” I continued, “the buying process has not changed. If you lose an existing client unexpectedly or lose winning a new client when you think you should have won, you must understand why your offer was not selected. Are you targeting the wrong buyer which leads to bad client “reviews”, is your offer inferior to other choices in a particular category, or is there an expectation mismatch that could have been avoided? Only by finding out why buyers really select your offer and even more importantly, why they do not or decide to not work with you any longer, is it possible to make the necessary changes to your sales, marketing, and offer to take the next leap forward in terms of what the collective wisdom of the “crowd” thinks about your offer.”

“At least it was worth the wait Jeff, got to run, just checking though that there is no apostrophe in the web address for Angie’s List, right, because I need an electrician.”

Discover a New Blog or Two: Top 10 Blogs for Ambitious CEOs & Owners

Years back I was talking with Tom, a friend and media executive.  During our conversation I noticed a wall of businesses books lining one complete wall of his office.  When I asked what he was reading he told me proudly the latest book he had just finished, Crossing the Chasm, which I immediately read, and to this day, is my favorite business book.  Tom then went on to say that although he “loves reading business books, the challenge is which one to read next and figuring out how to apply the book to my company.” 

If I was having a conversation with Tom today, I imagine he would tell me something similar about business blogs as well.  There are so many, it can be challenging to figure out which ones to try.  The good part is that blogs are much easier to sample than a business book.  All it takes is a free blogging tool like Google Reader and a few minutes of downtime between meetings or while waiting for a train or taxi.

Since that conversation with Tom, whenever I am in an owner’s office I take notice of what business books are on the owner’s book shelf.  If I see they are an avid reader or if it comes up in conversation, I will ask for a book recommendation and add it to my list.  Through this practice I have come across a number of impactful books like, Crossing the Chasm, that perhaps I never would have read.  On LinkedIn you can see a bunch of the business books I have read.  This blog post though is not about business books it’s about business blogs and in particular business blogs that are helpful for ambitious CEOs and owners in the midst of their own journey.

Last week, through an introduction from successful NYC based serial entrepreneur Evan Bailyn, I was asked by blogs.com to provide my Top 10 Blogs for Ambitious CEOs & Owners and in a sense pay forward all the good business books people have recommended me throughout the years. 

My top ten blog list includes a couple of venture capitalist bloggers including one relatively new to the game of blogging (Mark Suster) as well as a veteran New York City VC and blogger (Fred Wilson).  I also included experts from the fields of sales (Charles Bernard), customer service (John DiJulius) and leadership (Simon Sinek) as well as a few others. 

What’s your favorite business blog?  Please either send me a message or put a comment on my blog, so I can add your personal favorite blog to my list.  Thanks for sharing and I promise to pay it forward!

 

The $12 Nuisance Fee and Other Unintended Stories Your Customers Are Telling About You

 

I took my kids for ice cream a few nights back to the Ice Cream Palace, a local ice cream store.  As usual, there was a line out the door and as usual my younger daughter got strawberry ice cream in a cone.  Just as we sat down outside the store to eat the ice cream, she dropped it on the floor.  I brought the ice cream and cone back and as soon as I said that it had accidently fell on the floor the customer facing person, who by the way did not serve me, gave me a new one immediately in a happy manner.  Meanwhile the local Carvel franchisee directly across the street from the Ice Cream Palace was empty and the Cold Stone Creamery franchisee one block away has shut down.

I recently switched insurance providers and so when I called my local dentist to make an appointment, I informed the office manager.  I asked if my dentist took the new provider.  She said I would have to call my insurance provider to find out or I could risk coming in.  I asked who would be responsible for the difference if the dentist was out of network.  “You would be,” she replied.  “Interesting,” I thought as I hung up the phone, “I wonder if my dentist knows about this policy especially since he comes in routinely at 7am and has evening hours to accommodate busy schedules like myself.”  How hard could it be to create a simple process for letting a patient know whether the dentist takes a specific insurance or not (if only he knew)?

My local bank recently charged me a $12 nuisance fee.  I politely asked to have the fee waived just because (it was my first such request in at least 10 years with the same bank).  The manager told me she didn't have the discretion to waive the $12 fee but could raise the issue with her regional manager.  I said it wasn’t necessary and not to check.  “I was just checking to see how you valued me as a client.  Think of it this way, would your marketing department authorize you to give $12 to obtain a new client or to get me back as a client if I left?” 

Last week was the end of my family’s week long vacation to South Carolina.  At the beginning of the drive back my wife asked me to be on the lookout for a Dunkin’ Donuts so she could get her Iced Coffee fill.  Along the way, she had a number of opportunities to get coffee from other stand alone places as well as other chains.  A devout fan of Dunkin’ Donut coffee, she waited.  Unfortunately for her, Dunkin’ Donuts appears to not be as plentiful in the Carolinas as it is in the Northeast and we ended up driving around 400 miles, 12 miles before the Virginia border before we spotted the first one on our trip.  We pulled over.  Michelle went in by herself and emerged about 20 minutes later.  She was not happy.  “She toasted the bagel even though I asked her not to, I had to remind her about my Iced Coffee after my order was complete.  And to top it off they were out of donuts.”   The only part of the experience that was good for her was the taste of the iced coffee.  If we had not experienced the Dunkin’ Donuts experience hundreds of times in the past, this single store could have ruined the brand experience for us.  Perhaps it has for potential customers in the Carolinas?

For a large franchisor like Dunkin’ Donuts or for any customer facing business, which is all of us in some fashion, the policies you set or don’t set and the training or lack of training of your customer facing staff can have intended and unintended consequences that can lead to a line out your door or your best customer leaving you without an explanation.  What stories are customers telling about your firm? 

What to do about it?  Of the experiences above, only Dunkin’ Donuts made it easy for the customer to tell the story directly to them.  On the receipt was a link to a website survey to discuss the experience.  My wife, as an avid fan of Dunkin Donuts, wanted to let Dunkin’ corporate know about the experience and so she immediately filled out the survey on her smart phone.  One of the last questions on the survey was what caused the bad experience.  My wife checked the box “training.”  If there was better training, all the problems with the experience, I didn’t even mention some other minor issues, would never have happened.  As I mentioned in an earlier post about the iPad, measure the customer experience to ensure your customers are getting the experience you expect, so if not, you can do something about it.