1. Would you recommend this to a friend?
2. Why or Why not?

This is a slightly modified version of John Mariotti’s approach. I added the phrase “to a friend” because it adds an emotional element to the customer’s thinking. They think about recommendation they feel about friends.

My reason for only having these two questions are slightly different from John’s (though I like his as well). My reason is because the point of a survey is to be conversational. When you converse with someone, you don’t know exactly what they’re going to say. That’s what makes it interesting.

The reason to ask an open ended question “WHY?” is that you can’t predict what’s important to your customers. Knowing what’s important to them is the most critical insight you can get.  Of course you can’t slice and dice it like you can with most surveys and that’s the point. The slicing and dicing misleads you.

Next time you’re asked to fill out a survey that has you rate things from 1-5 take as step back and see if the choices they offer are really the things that are important to you. I’ve often answered them truthfully giving all 4s and 5s – when I would never use their services again (much less recommend them to a friend). Why? Because they didn’t ask about what I care about. Sometimes I don’t even know exactly how to list what I care about so how could they?

But asking why elicits a story. And people love to tell their story.

If you want (and only if you’ll follow up) you can ask a third question.

“Would you you like us to follow up about this? If so, please give your name, email and phone. But only if you want to hear from us.”

Takeaways:

• Ask for people’s stories
• Start a conversation
• This is a modification of the Net Promoter system and The Ultimate Question. Both are useful if you want to go into more depth. But most small companies don’t need to.

Wow. That title ought to get me some hits on the Google –  doncha think? But really this post is about …

How to Treat Your Customers Right

And about how I got get free drugs from people who are doing it wrong. I have rosacea, a disease that makes my face  break out like a teenager with acne. One of the treatments is a low dose of antibiotic. So they make one that’s time released so I only have to take it once a day. (It doesn’t help much but my doctor says we have to give it a year.)

The drug is basically tetracycline. You can buy 300 capsules (250 mg) of tetracycline for $30. Mine is time released (a common process that I can’t believe adds that much cost) but which cost $311 for 30 capsules of 40 mg each. You do the math. Never mind. I did the math. Mine cost 25.9 cents a mg. The other cost 0.04 cents per mg. Mine cost 648 times as much. Six hundred and forty eight times! Just for making it time released.

But that’s not the story of treating your customer’s wrong. That’s the story about the health care in the US and I already wrote about it. I don’t actually pay $311.00 each month for my drugs. Yes I have health insurance, but the deductible is so high ($10,000 per year) because it’s an individual plan that unless something catastrophic happens I’m paying for my health care myself.

No, the reason I don’t pay $311.00 is that the doctor gives me a card which allows me to get 30 pills for $25. So maybe if every one pays that much the real cost is 2.08 cents per mg – only 52 times  as much as non-time released. Go figure.

It turns out the pharmacies in my area all want new customers. So it’s easy to find a coupon that gives you $25 in savings, gift cards or whatever if you bring a new prescription  to them. And many places in my area do this. So guess what I do? Each time I get a refill, I bring it to a new place and get $25 off of a $25 prescription  so I get my drugs for free.

So what are these pharmacies doing wrong?

Mistake #1 – They are treating prospects better than customers.

That’s a very stupid thing to do. Your existing customers are the cheapest ones to market to. Not the ones you should be forgetting about. It’s not as easy to measure your results with existing customers. You don’t know if they would have bought anyway. And this leads me to suspect the reason these pharmacies are doing is wrong.

Mistake #2 – Measure the right things.

Somebody at corporate probably figured every new prescription  customer was worth $XXX because they would keep their business for a while, they would buy other things while they are in the store etc. So they figured it was worth $25 to get them in.

And you know what? They might be right. I’m not like most shoppers.  So maybe the $25 they didn’t make on me is just the cost of doing business. Maybe the whole promotion does pay off. Maybe. I doubt it. But even if it does make money for them it’s probably not the right thing for you. Why?

A Small Company is not a mini-Big one.

You can’t take what works at a $500 million dollar company, scale it back 100 fold and expect it to work at a $5 million dollar company. The scale doesn’t work like that. These big pharmacy chains are faceless companies to me and probably most of their customers (and employees). You aren’t – or you shouldn’t be.

Takeaways:

• Measure the right things
• Treat your existing customers better
• Be a face people can have a relationship with

I’ve been saying for years, that there are only three things any company must do to succeed. And as simple as that sounds, I was wrong. The revised three things are:

1. Create Value that people want to pay for.
2. Find those people and sell to them.
3. Build an organization that does the first two, over and over again at a cost below what your customers want to pay.

I used to say the first thing was “Make something people want to buy.” That’s subtly but significantly different from the way I say it now. What made the change? Three reasons.

Reason #1:  COSTCO. Costco doesn’t make anything but they are one of the most successful companies around. They do create value that people are willing to pay for by finding stuff, bringing it to an accessible location and pricing / packaging it in a way that is appealing to their market. So from that perspective it makes sense to think of creating value rather than making something.

Reason #2:  Passion-blinded entrepreneurs. These are folks that get so fixated on the thing they’ve invented that they don’t listen to the market. Either they believe that because they love it everyone else should too; or they refuse to listen to how the market wants to buy it or use it. So I thought changing the emphasis from “making something” to “creating value” would get those people to consider engaging the customer more. Maybe.

Reason #3 – For a business to succeed, you don’t do these thing independently from one another. It’s not like you create value. THEN go out and sell it. THEN build an organization. The best companies create value that is easy to sell and take their organizational strengths and weaknesses into account when doing so. It’s all of a piece. I thought saying “create value” makes it seem slightly less distinct that “make something”.

As I said – a subtle difference, but a significant one.

Takeaways:

1. Create Value that people want to pay for.
2. Find those people and sell to them.
3. Build an organization that does the first two, over and over again at a cost below what your customers want to pay.

What a dumb question.

Because it’s the wrong question.
I was reminded of this watching the Republican political convention. For some reason we had on the PBS channel (we usually watch on C-span so we don’t have to listen to pundits) and one of the “reporters” was asking someone in McCain’s campaign about the choice for VP. In case you’ve been under a rock for a week, you know that the pick and how it was handled is pretty big news.

The question was “Did you vet her well enough?”

Why waste prime time asking a question when I know what they’re going to say? I don’t mean I know the answer – that’s a judgement call. But when you’re a reporter talking to someone in the campaign, it’s the wrong question. She should have asked “When did the campaign first learn about xxxx?” or “How many people were interviewed in the vetting process?” or any number of factual questions which would give more of a hint at the vetting process, especially when you can see if the person avoids the facts.

So what does this have to do with running your business?  Simple. Asking the wrong question will make you think you have an answer when you don’t. If your kid says “School was fine” does that mean it was? Maybe, maybe not. It probably means they don’t want to talk about it anymore.

There are lots of questions you want to ask of prospects, of customers, of employees, of suppliers. But if you don’t ask the right ones, you’ll think that school really was fine. And the risk is you’ll be wrong and not know it.

Takeaway:

• If you have younger kids, ask them who they sat next to at lunch or what games they played at recess. If you have older kids, ask for a similar level of detailed facts. And remember the names of classmates and teachers so you can ask about them in detail next time. That will tell you more about how school really was and you’ll get a much better conversation going – which is probably what you wanted anyway.

[tags]business, entrepreneur, parenting, school, CEO skills [/tags]

Why?
It made me realize customer service is like middle management. It might have served a purpose at one time, but with free and simple communications, and ubiquitous information it’s probably time to re-think if the old structure is the best way to accomplish the goal. The real benefit of technology is to flatten organizations. But that requires using technology not just to do things in the same way (only faster). Rather you must use technology to do things that were not possible before. That’s what cutting edge organizations do.

Takeaway:

• Who is your customer service system designed to serve – your people or the customers?

[tags]entrepreneur, management, customer service, technology, small business[/tags]

Takeaways:

• Fix every problem two ways – solve it then prevent it from ever happening again.
• Have a person answer the phone – one with enough ability and experience to do the above
• Plan ahead how to say things in the right way
• Take the blame
• Solve the Problem
• Make it easy for your bosses to get their money back (hint – it will make it much easier for them to give it to you in the first place)
• If I gave you all 7 steps (8 actually) you wouldn’t read the article. Go do it.

[tags]customer service, entrepreneur, customer, small business [/tags]

Joy
Well duh! Now you can finally do what you know needs to be done without someone with their own agenda getting in the way. I think we can all relate to this one.

Deception
Of course you have a boss. In fact you have lots of them. The customers are your bosses. When Scott Adams (creator of Dilbert) quit working for the phone company and went out on his own (Dilbert was quite a success by then) he called it “boss diversification”. But this isn’t just a word trick. That’s why it’s a deception. These bosses don’t even tell you when they’ve fired you. And they rarely give you a warning. So they don’t make it as easy for you to know how to please them. Yet pleasing them an absolute requirement for success. Usually the only signal you have is that they’ve decided to buy (or not) and by the time you get that signal it’s often too late.

So your customer base should be considered a diverse, silent boss.

How could it be different?
If you treated them like you want employees to treat you what would you do? You’d make more effort to decipher their behavior. You’d probably test things more and pay attention to how they react to what you do. This is hard with a boss as diversified and silent as your customer base.  Testing is tedious. Changing just one thing at a time so you can test feels limiting (just like having a boss). Recording the results can be inconclusive or ambiguous.

But it must be done. The difference between success and failure is due to how good you are at pleasing your boss.

Destruction
Thinking you have no boss can be your downfall. Why? Think about this, when you have a boss, they usually control what you do, how you do it, and how much money you have to spend on accomplishing your goals. That’s why we all went to work for ourselves isn’t it? (See JOY above).

Yes, but to get permission or budget approval your boss made you jump through hoops. In the best of times, that means you had to clarify your thinking, do a cost benefit analysis and show how your ideas would serve the good of the company. Don’t you appreciate it when your employees do that for you?

Without the boss requiring that – you can just take off on a whim, use nothing more than your gut to justify changes in direction or huge spending outlays. I don’t mean to disrespect your gut. I’m sure it’s wonderful. But clear thinking and careful analysis has it’s place too. Without a boss, it’s too easy to ignore these activities and not hold yourself to account.

This has caused the death of many, many companies.

How Could it be Different?
Put in place a structure for the kind of analysis your company needs before every major (and many minor) decisions. Use a board of director if you can – an advisory board at least and [warning shameless plug alert] a coach.

The good news is that you can still decide to go with your gut; approval won’t be based on corporate politics (unless you allow it); and you still have the final say. But finding a way to require some rigor will ultimately help the company grow to please the real bosses – your customers.

Takeaways:

• Your Customers are your Boss. In fact it’s the market that gives your company permission to survive.
• Pleasing your new bosses may require testing and other tedious work that isn’t fun. Do it anyway.
• Dump the politics and the pettiness of your former bosses, but find a way to keep the rigor and analysis that success requires.

[tags] entrepreneur, customer, boss, management, small business, CEO [/tags]

I know customer don’t have the commitment to your success that a boss does – but pleasing them is still the only way to keep your paycheck from bouncing. And I don’t believe the customer is always right. Saying they are is demoralizing to your staff. But even when they’re wrong, you don’t need to treat them like they’re jerks.

But shouldn’t everyone in your company go out of their way to make the customer happy? Is it too much to ask that they look you in the eye, speak in clear understandable language, act like if you’re interrupting them, it’s for something more important than what they were doing?

The truth is a lot of this starts at the top in a company – do you hire, train and reward based on these kinds of things? Or do you just expect them to happen?

Fast Company September 2006 has a great issue on this topic. with a great article about Lewis Black – a very funny guy – that you can read on line. I think you’ll have to wait a month to read the whole thing on line.

Takeaways.

• Pleasing customers is the only way to keep your paycheck from bouncing.
• It’s your job to create a culture that understands this.

Far be it from me to doubt the veracity of that statement. The problem was I was thinking of the commercial as a way to get new customers when actually it was a way to communicate with their existing ones – Preaching to The Choir. It all came together this morning as I put on a tee shirt to run (OK walk) on the treadmill. The shirt said, in big letters “I LOVE YOU MAN” and had a Budweiser logo. Remember that ad campaign? I doubt that it, or the talking frogs (or was it lizards?) got anyone to order a Bud for the first time. But it probably gave those already in the Bud flock something to feel good about and a reason not to stray.

Leaving aside the question of why women feel good about clothes and men about grunting amphibians, let’s look at the concept of Preaching to The Choir. Seth Goodin would probably argue that if your product is so bland that you have to resort to an animated swamp to differentiate it then commercials are a horribly wasteful way to do this. I don’t disagree. However, the need remains to connect with your customers after the sale. Another way to say it is, give your customers some reason to have a relationship with you that goes beyond the product.

Relationship beyond the Sale
This is why companies give out hats with their logo on them, why companies invite their best customers to an annual golf outing or such. If you think the relationship ends with the sale, you’re being very short sighted. For two reasons. First, it’s usually cheaper and easier to make your next sale to an existing customer than to a new one. Second, some percentage of those customers will become promoters for you if you give them a reason to.

Harley’s got it’s HOGS – Apple computer has evangelists – Jimmy Buffet has his Parrot Heads. Who do you have? I know, you’re going to tell me that you make ball bearings, which don’t exactly lend themselves to a lifestyle choice; or that you install wood floors and your customers only buy from you once; or that all this hoopla is too expensive. Well OK if you say so – let your competition get all the goodwill and referral business.

Personalize it
With a little imagination, and personalization, preaching to the choir can reap huge rewards. None of these ideas will appeal to all your customers. You can’t do a mass media thing. But that’s the beauty of a small company – you can get to know your customers and develop ideas that may only apply to some of them.

• Some people do like hats – or golf for that matter, but a lot of people like to be asked their opinion.
• Can you invite some folks to a forum or a dinner where they help you design your next product, or improve your customer interaction?
• Can you host a blog where people write in with stories of how they’ve used your stuff?
• Stew Leonard’s grocery store has a bulletin board where they post pictures people send in holding up a Stew Leonard’s grocery bag in places that range from in front of their RV or campsite to in front of the Eiffel Tower or the Pyramids. I always wanted to send one of my holding their bag in front of Kroger’s or Stop & Shop, but I doubt they’d put it up.
• Lexus dealers in various cities have been known to chip in together and buy premium parking slots at local sports events. For free (or cheap) Lexus owners get to park there. It’s a visible advertising thing as well to others who walk by. They also have free barbecue and other giveaways.
• When I was in sixth grade, my friend Johnny Salkin was some kind of tester for the Life Saver Candy company. He got new experimental flavors to evaluate and tell them what he thought. Man, did I want to be on that mailing list. I still remember it when I buy their candy.

Takeaways:

• Do something extra for your customers.
• A gift is nice, but better is to set up something they can contribute to or be a part of.
• The key word is not preaching or choir – it’s relationship.

• do they pay on time
• do they haggle
• do they refer in other business
• are they fun to work with. Yes fun (or other values) are important.

There is no set list of what makes a customer valuable – a lot depends on your goals and your business style. A client who might be great for one law firm, may be terrible for another.

Obviously a lot of this involves judgement  – it’s not all quantifiable – but that doesn’t mean you shouldn’t track it. Before you tell me that’s too much work, let me toss this into the mix. When I wrote the 5 numbers a business owner needs to know, I left one out. Here’s the 6th. How many customers do you need to meet your goals? The fewer you need the less daunting the task of tracking and ranking your customers.

Some service companies need less than 50 clients. They could start from zero and hit that number in a year by making one sale a week. How many does a hair salon need? A lot fewer than a supermarket. Figuring out what that number is, helps you get that many. Ranking them helps you have the right number of the best customers. That will make your business more profitable and more fun. Isn’t that what it’s all about?