Warning—Customers are perishable

A man who had lived an exemplary life died and was given a preview of heaven and hell. In heaven, people were peaceful and serene and smiling. In hell he was given a stretch limo, the best food and drink, and an endless list of parties. He chose hell.

As soon as he walked through the gates, the devil began flogging him with a whip and he was thrown into a fiery chasm. “Wait!” he said. “Yesterday I was treated like a king, and now this. Why?”

“Ah,” said the devil. “Yesterday you were a prospect. Today you’re a customer.”

Unfortunately, the same thing happens in many organizations. They wine and dine you to entice you, only to lose track of you and seem disinterested after you make the decision to buy.

There’s one thing no business has enough of: customers. Take care of the customers you’ve got, and they’ll take care of you.

That’s why I preach, “The sale begins when the customer says yes.” Good salespeople make sure the job gets done on time—and done right. They must have a fanatical attention to detail!

Companies and sales reps that understand this mentality do extremely well. They’re at the head of the class. They understand the 80/20 rule—that 80 percent of their business comes from 20 percent of their customers. And trust me, it’s trending toward 90/10.

That’s why you have to cultivate the people who have done business with you in the past. A large part of your sales strategy should be based on expanding your share of your existing customers’ business.

Those are all great thoughts, but you are really looking for the “how.” Let me share some of the lessons I have learned about customer loyalty in my 50-plus years in business.

Pricing should not be the primary issue. A business built on price alone will only be a business as long as no other business offers a lower price. Price is important, but it’s just one feature of a sale. Don’t price yourself out of the market, but don’t price yourself out of business.

Quality is important, but alone it’s not enough. Sometimes, good enough is all the customer wants, not the top-of-the-line product you are hawking. You have to listen very carefully to your customers to determine what’s most important to them.

Service alone won’t guarantee a repeat customer. Great service is, in my estimation, probably more important than either price or quality. But without a combination of the three, your customers will be shopping around before your next courtesy call. Give them the total package.

How a customer complaint is handled is what truly determines your future relationship. You’ve aced the price, quality, and service. But the day that something goes wrong is the real test. The shipping department laid your order aside for an extra day, when it was promised yesterday. Oops, the customer got 1,000 widgets instead of 2,000. You quoted last month’s lower price, but accounting didn’t look at your text message typed in bold, capital letters highlighted in yellow. Then comes the phone call. Your response must be immediate and more than fair. When someone is counting on you, it’s often because someone is counting on them. So it’s not just you who looks bad! Fix it quickly and fix it well. It may cost you big time, but it will pay off in the future.

No matter how many people there are in this world, there will always be a finite number of customers. I don’t care whether you are selling computers, cars, phones, or even envelopes. There are just so many people you can sell to. Develop relationships with as many as you can realistically service. Put yourself in the customer’s role: What if you had to go to a different grocery store every time you shopped? Would you save any time if you had to switch suppliers every time your company needed print cartridges? What if you had to take your precious little red Corvette to a new mechanic each time it needed a tune-up?

I once figured it cost my company around $5,000 to put a new customer on the books. I’m not willing to let that kind of investment go bad.

Taking care of customers is taking care of business

“Customer service in America stinks.”

That’s what my friend Tom Peters, author of the blockbuster book, In Search of Excellence, said many years ago. It must still be true because every time I write about poor customer service, I get more Amens than a Billy Graham sermon. That’s why I want to touch on customer service from a different perspective.

It’s unbelievable to me how many business owners remain ignorant of the devastating effects of lousy service. And they wonder why business is suffering and the cash register isn’t ringing?

The Research Institute of America conducted a study for the White House Office of Consumer Affairs, which found:

• Only 4 percent of unhappy customers bother to complain. For every complaint we hear, 24 others go uncommunicated to the company—but not to other potential customers.
• 90 percent who are dissatisfied with the service they receive will not come back or buy again.
• To make matters worse, each of those unhappy customers will tell his or her story to at least nine other people. These days, if those customers are posting their complaints on social media or websites that review businesses, they’re actually telling their story to thousands, if not millions, of potential customers.
• Of the customers who register a complaint, between 54 percent and 70 percent will do business again with the organization if their complaint is resolved. That figure goes up to 95 percent if the customer feels that the complaint was resolved quickly.
• Sixty-eight percent of customers who quit doing business with an organization do so because of company indifference. It takes 12 positive incidents to make up for one negative incident in the eyes of customers.

When I started out in sales, a salty old veteran told me, “Harvey, never make promises in business. They’ll ruin you every time.”

That might be good advice, but only up to a point. That point is reached when you go to contract because in a contract, you make commitments, which are the same as promises. You vouch for planned delivery dates, not random drop-off times. These are not tossed-off verbal guarantees but well-researched commitments.

Nothing is more important than customer service. No customer service, and pretty soon, no customers.

The key is to latch on to your customers and hold them fast. Don’t just meet their needs. Anticipate them. Don’t wait for them to tell you there’s a problem. Go out and ask them if there’s a problem. They are your most important focus group. Every word of personal feedback they give you is worth a million faceless questionnaires.

With business operating at digital speed, the margin for negligence is disappearing. Broken promises, missed deadlines, inadequate customer service and support—give in to any of these and you’re finished.

And as customers become more knowledgeable, customer service becomes more difficult. A while back there was a series of articles in Fortune magazine focusing on customer satisfaction and why Americans are so hard to please.

A researcher at J.D. Powers & Associates, a company that studies customer satisfaction in the auto industry, computers, airlines, and phone service, stated: “What makes customer satisfaction so difficult to achieve is that you constantly raise the bar and extend the finish line. You never stop. As your customers get better treatment, they demand better treatment.”

When I speak on customer service I usually tell a story that I read many years ago in USA TODAY. A man walked into a bank in Spokane, Washington, to cash a $100 check. The bank teller refused to validate his parking ticket, saying he had to make a deposit. The customer asked to see a manager, who also refused to stamp the parking ticket. At that point the customer proceeded to withdraw $1 million from his account and walked across the street to a competitor and opened a new account. The next day, he went back to the same bank teller and withdrew another $1 million.

That’s an expensive lesson to learn. So is losing any customer.

Create a service culture

When I went into business many years ago, I told people I owned an envelope company. I had business cards printed that identified me as an “envelope salesman.” I described myself as an entrepreneur.

All of those facts are still true, but incomplete. What I and our company really do is provide customer service.

Well sure, Harvey, you say. But isn’t that just a part of the whole operation?

Absolutely, positively, irrefutably, NO. I am in the service business, regardless of the product I make and sell. If my service is lacking, my business will be sent packing.

To validate my thinking, I visited with John Tschohl, president of the Service Quality Institute. John has spent more than 35 years focused on customer service. He has written hundreds of articles, as well as seven books on the topic. You’ve probably heard him interviewed on television or radio. He has been called the “guru of customer service” by USA TODAY, Time, and Entrepreneur magazines.

Even the most successful companies are in constant competition for business. What sets them apart often boils down to one factor: outstanding customer service. John offered up some stellar advice for creating a service culture, no matter what business you’re in.

First, you’ve got to understand you’re in the service business. “Most companies think they are in manufacturing and retail; airlines don’t know they are in the service business,” he said. “Southwest Airlines is successful because they understand they’re a customer service company—they just happen to be an airline.”

Second, you have to look at all the policies, procedures, and systems that you’ve got in place “that make life miserable for customers. You could have the nicest people in the world, but you could have stupid hours, stupid rules, stupid procedures, that just burn the customer.” When you make it that difficult for customers to deal with you, they find someone else who is more accommodating.

Third, you have to have empowerment. “Every single person has to be able to make fast and power decisions on the spot, and it better be in favor of the customer,” John said.

Fourth, you have to be more careful about whom you hire. “The service leaders hire one person out of 50 interviewed, sometimes one out of 100, but they’re very, very, very careful,” he said. “Look for the cream, the A players, instead of bringing on B and C players.”

Fifth, educate and train the entire staff on the art of customer service with something new and fresh every four to six months. “Let’s say you want to create the service culture. No matter if you have a hundred or a thousand or a hundred thousand employees, you better have something new and fresh, so it’s constantly in front of them,” John said. “So when they wake up every day, and they go to work, they say, ‘Fantastic, I’m taking care of customers!’”

Finally, measure the results financially so that you know the impact it’s making on revenue, sales, profit, and market share.

Everything you do, according to John, should be built around the concept of creating an incredible customer experience. He cites Amazon as one of his favorite role models. “At Amazon, they’ve got technology, speed, price. They’ve got everything. If I’m on their website and I want them to call me, they’re going to call me back in one second. That’s speed. When you place an order, you can do it 24 hours a day, seven days a week. And 60 seconds later, you get a confirmation.”

I realize Amazon is in a class by itself, and most businesses aren’t ever going to achieve the growth or profits of that gargantuan company. But John’s advice can be translated to companies of any size. A one-person shop can provide great service because they often have personal contact with their customers. Bigger companies have more resources available, which should enhance the service experience.

Perhaps the simplest way of creating a service culture is a variation of the golden rule: Treat your customers as you wish to be treated. Make your customers excited that you’re in business. Make them grateful that they have the opportunity to buy your services or products. Make them feel like they are your most important client. Make your service so outstanding that they wouldn’t think of doing business with anyone else.

And then find a way to make your service even better!

The art of the apology

Have you heard the colossal customer service bungle about the “bedbug letter”?

A guest in a hotel finds himself attacked by bedbugs during his stay. He writes an angry letter to the president of the hotel company. Within days, the president sends the guest a heartfelt apology which reads in part: “I can assure you that such an event has never occurred before in our hotel. I promise you it will never happen again.”

Sounds good, except for one small detail: included with the apology is the guest’s original letter. Scrawled across the top is the message: “Send this idiot the bedbug letter.”

So it begs the question, who is sorry now?

There are several lessons to be learned from this situation.

Remedial customer service may start with an apology.

Never, ever mess up an apology.

The apology is almost always the start, not the end, of finishing things.

If you think being sorry solves a problem, you will really be sorry.

Finally, the cost of the fix is nearly always greater than doing things right the first time.

Start with the premise that everyone makes mistakes. It’s human nature. What happens next is what demonstrates the true level of regret. The hotel president likely lost that customer forever. Unfortunately, it doesn’t stop there. That customer tells family, friends, and anyone who will listen about his experiences—both with the bugs and the insulting letter. Reputations are ruined in an instant.

Businesses have long understood that bad customer experiences will be reported to family and friends nine times more than good experiences. Misery loves company, I guess.

Even the most sincere apology has a limited effect. But if it helps a little, it’s worth the effort. So don’t blow what could be your only opportunity.

We see an apology from some thoughtless public figure weekly: “If I offended anyone, I apologize.” “My words were taken out of context.” “I didn’t realize that my actions would cause such a stir.” All pretty pathetic attempts at sounding sorry, in my opinion.

Train your brain to think before you speak, act, or tweet. Self-restraint is not old-fashioned. Remember that your private conversations or anonymous postings may be anything but private and anonymous.

The apology is just the beginning. It is critical to get it right. So take steps to be sure you don’t disappoint a second time. The shallow “if I offended anyone” indicates that you are only sorry because you were forced into the apology. I’m curious: Does anyone take those similarly phrased apologies seriously? Or do they sound like something your mother may have made you say when you were a child?

In business situations, apologies are generally related to poor service or defective products or missed deadlines. Those apologies must go beyond words.

First, admit your mistake. Don’t gloss over the error or the effect it had on your customer. Get to the point and own the situation. You will not win the blame game.

Next, offer a solution that will demonstrate your sincere desire to make things right. Even if the customer had some responsibility, the cost of fixing one mistake is much lower than trying to repair a reputation after you’ve been panned on Facebook, Twitter, or Angie’s List.

Third, express your intention to make sure the same mistake never happens again. Offer the customer an opportunity to make suggestions, and be prepared to deal with critical feedback. Be sure to thank him or her for the input.

Finally, learn from the experience and use the lesson to train your staff. Make sure they understand that even minor mistakes and disappointments can cause major damage to your company’s good name.

So my ideal apology might read: “We are so sorry for messing up what could be our only opportunity to serve you. Your disappointment in us is completely justified. We will fix this problem immediately and will not consider the case closed until you are completely satisfied. Here is the name, email, and phone number of the person you can contact 24 hours a day to question, complain, or check the progress of your situation.” Then insert the name of the president of the company. That should let them know that you’re serious.