The E Myth Revisited
Blue Ocean Strategy: How To Create Uncontested Market Space And Make The Competition Irrelevant
The Know-It-All: One Man’s Humble Quest to Become the Smartest Person in the World
Seth wrote an article this past week about companies that have lost their ability to deliver functional customer service. It reminded me that I needed to talk about a few companies that I have read about or been exposed to that have gone the extra mile.
A few weeks ago, I was privileged to have the opportunity to meet Bo Burlingham, an author and former editor at Inc. Magazine. He wrote a book a few years back called Small Giants: Companies That Choose to Be Great Instead of Big. As a result of his talk, I reread the book and found a few nuggets. The premise of the book is that there are some companies that have remained entrepreneurial and have decided to be great companies without reaching out for the siren song of growth forever. Bo looks at a total of 14 companies in depth and examines the decisions that the management of each company makes to be the best they can be without uncontrolled growth.
One of the companies that he profiles is CitiStorage, a records management and retention company based in Brooklyn, NY. You can’t get much more pedestrian than this business. They take boxes of records from companies, store them in a huge warehouse and deliver them back to the customer when requested. Yet, even here, a savvy business owner can make a difference. Norm Brodsky, the CEO of CitiStorage, is a crusty, exerienced and by the books manager. Yet he understands the power of customer service. The book recounts a sales interaction with a potential customer:
The prospect was to meet with Brodsky at the end of the tour. As they were sitting in his office, Brodsky asked the man if he was considering other vendors. “Yes, two,” he said, and mentioned the names of CitiStorage’s major competitors.
“Did you see any differences between them and us?” Brodsky asked.
“Yes, I did,” the prospect said. “Everyone of your employees was smiling, and they all said hello. I’ve never seen anything quite like it. They really must be happy.”
“I hope so,” Brodsky said. “Thank you for noticing.”
“Because of that, in fact, I’ve decided to give you the business.” the prospect said.
This was an important exchange. First because the prospect noticed that the people who worked at CitiStorage were happier and showed it. Second, due to this, the prospect make a business decision based on his interactions in an hour that usually took several weeks.
In the past several weeks, I have noticed a couple of other companies that have gotten the message. First, I have been to two Chicago Cubs games and every employee from the ticket takers to the ushers have had a great attitude, smiling and conversing with the patrons. It is a big change from previous years under the Tribune ownership. I think that this is an intentional customer service posture that is required by the Ricketts family, new owners of the team.
Second, I had the opportunity to participate in a company tour at S&S Activewear, a company that sells apparel to companies that will further customize them for end users. They had the requisite big, sprawling warehouse with forklifts and conveyors, but they also had a difference in how things were done. Again, it was evident in the way their employees interacted with us. Everyone from the president (who gave the tour) to the order picker was helpful and displayed a genuine excitement about the work that they were doing. Yet you think that this is an outlier due to the company tour, my contacts who deal with this company report that every interaction with the company is treated this way. Due to this fact alone, they have consolidated all of their apparel purchasing to S&S.
Going back to the Seth article, I flew four flights on American Airlines in the past week. They have gotten to the point where the only time that I really have an interaction with them in person, is when I leave the jet and the pilot is standing there waiting for us to get off the plane. Otherwise, it is use the website and the automated check-in, swipe your credit card to pay for checked baggage and yet again for an overpriced package of chips or a pillow. They have squandered any potential opportunity for delivering a positive customer service experience and thus made the choice of airlines for this consumer to be a random choice, rather than an informed choice.
Don’t let yourself fall into this trap. Sure it is cheaper to let a web site do your customer service, but in the end you do your business a disservice if it is the only (or even primary) method of interacting with your customer.
It doesn’t matter if you are big or small. Be like CitiStorage, the Cubs and S&S. Ensure that your team provides customer service with a smile. It will pay off in the long run.
Apple. It seems like they are the darling of the technology world. Just this week, they announced the iPad — the next thing that will revolutionize our world. Apple is a very divisive company. People either love them or hate them. The lovers are passionate and evangelical. The haters are passionate and focused.
Until recently, I was a hater. I have been on the PC platform since my first PC in 1984, with one 5.25 floppy drive, since I couldn’t afford the 5 MB (yes MB) hard drive. My resolve broke down when I saw the iPhone. Here finally was a phone that I could use as a single device for all my needs. The fact that it could sync with Outlook and keep all my music and run apps was (pardon the pun) beautiful music to me. So last June, when the iPhone 3GS was announced, I overcame my trepidation and bought the phone. I really love the phone. It is easy to use, rock solid, has the huge App Store and just works well. Yes, of course, there are things that I wish it could do, like multi-tasking and more detailed profile settings, but in general I am pleased with my iPhone purchase. I am still not on the Mac bandwagon. That is going to take a whole lot more magic.
The Apple store is another great story. I love the Apple store. Everyone in the store is enabled to make a your customer experience the best. Want to buy something? Any Apple employee can make a sale — no waiting on line; heck they will even email a receipt to you. The Genius bar is terrific for solving problems. You get the feeling that everything that they do is focused on you. I can’t think of another retail environment that makes me feel like that, with the possible exception of Disney (topic for another blog post).
But, while Apple can make you feel like the smartest consumer ever for choosing to work with their products and their people, it seems to me that in their own way, they also treat you like the stupidest consumer. How can that be? Well, they severely limit the types of applications that developers can offer. Somebody reasonably smart can write a solid profile manager for the App Store, but Apple won’t allow it because it violates what they think should be available. How about a way to automatically expand text typed into an input field — something like tyvm should be able to be automatically expanded to Thank you very much? Both of these features are standard on the competing Blackberry platform, but even if someone wanted to write these applications, Apple would not allow them.
It gets worse. Say you lost your iPhone charger. How much would you expect Apple to charge you to replace it? Remember that the 8 GB iPhone can be bought for $99. According to Apple website, they want $29.00 for the replacement. 30% of the purchase price for a power charger? That is crazy. Yes, I know that you can find a third party charger almost anywhere for $10 or $15, but what does Apple take us for? Here is an even worse case. The iPhone allows you to store movies for remote watching. No problem, unless you want to plug your iPhone into your home television so that you can watch on the big screen. Then you can buy the video cables from Apple for $49. Too rich for your blood? OK, find some third party cables and buy them for $10. I did. When I hooked them up, the picture showed up on my tv for about 2 seconds then went blank. I got a message that said that since I wasn’t using the approved Apple cables, they had disabled the video output. Remember that I did get a picture for a short bit, so it isn’t a technical issue. Ouch. Starting to make me feel like less of that smartest consumer ever.
They have continued these policies with the iPad. What a wonderful media player. But no HDMI output. Too bad that you will need a (you guessed it) proprietary plug to get video output. Well, I am sure that it must have a USB output. All real devices have a USB output. Um, not so much with the iPad. The answer is that it will be available with an accessory kit. I have heard that Apple believes that they want to serve the non-technical crowd and don’t want to make things too complicated for that marketplace. Well, it seems to me that the PC marketplace hasn’t done too badly by giving people options. If only someone could develop a “gorgeous” device that was open to be customized to our needs.
I guess that my experience has shown that it is possible to be in the middle on the topic of Apple. I love the customer service and I love the device. I just wish that the company had the foresight to help me make this my device, at a reasonable cost. Then I could confidently move into the ranks of the lovers.
In time for the holiday season (well, actually too late for Hanukkah) I give to each of you the following links:
- Seth Godin provides a free e-version of his latest book, What Matters Now, a compilation of short essays on single topics by a raft of 70 big thinkers. People like Chris Anderson, Jason Fried, Arianna Huffington, Kevin Kelly, Dan Ariely, Gina Trapani and Tim Sanders. Absolutely worth every penny
- Amazing story about how the IRS terrorizes audits a young mother who makes $10 per hour because they can’t believe that she can support herself on that income.
- Mark Cuban has an interesting idea on how to fund some of our most pressing problems. I think he is on to something. This type of tax has the benefit of being a very small amount on a huge number of transactions and will be almost invisible.
- Customer service and large companies. Go hand and hand like a horse and carriage? Not so much at American Airlines. See what happens when an employee reaches out to a customer who has some issues with their web site.
- If you ever have to give a big presentation and you want to add video clips of famous sayings from movies, you have to catch this site. There are over 12,000 clips and they are approved for use by the studios.
I was reminded recently that I haven’t done a links column is a while, so here goes for a few good reads:
- Seth Godin writes about funding for a business. The typical methods are debt (loan) or equity (stock). He proposes a third way that might make some funding sources happy. I am intrigued.
- Dustin Curtis writes about the science of entrepreneurship. This article was fun to read, but take a look at the rest of the articles on his blogazine. He is a talented User Experience designer and each article is beautiful and thoughtful. Also to be read are the two articles about American Airlines and their user experience. By the way, American Airlines fired the AA designer who wrote to Dustin.
- Fun logic test here: Are you a cognitive miser?
- For entrepreneurs out there who are having problems with marketing, here are over 100 marketing questions that will help you get started thinking about how to market your company (or yourself).
When I think of all of the businesses that I might want to be involved with, the airline industry is down near the bottom of my list. Massive government intervention, public ownership, reliance on a wildly fluctuating fuel cost, overcrowded marketplace, customer service nightmares, unionized unhappy employees throughout the organization. Wow! But it still amazes me that the executives in charge of the majors take their eye off the ball so often.
Doug Parker, president of US Airways, crowed that the carrier was making $400 million per year on ancillary fees. Never mind that the industry continues to lose money. Never mind that US Airways lost $100 million in a recent quarter and saw its revenue drop over 13%. United Airlines makes $14 per passenger in ancillary charges, but lost $382 million in Q1 2009.
Never mind that the average consumer is tired of being nickled and dimed – window seat, head set, cut in front of the line, extra 5 inches of legroom, snack, soda, more miles, checked bag, overweight bag, travel on a busy day, talk to a ticket agent, redeem a frequent flyer award – all of these cost extra on at least one major airline (excepting Southwest). The whole travel experience is now so convoluted that some people have decided that the hassle of air travel is just not worth it. I have had 4 opportunities this year to travel that in years past I would have chosen to fly. Not this year… my rule has become only fly if necessary.
From a customer service perspective it is a disaster. Every time you need to talk to the company, they want your credit card. Their eagle eyed bean counters (and remember that I usually love bean counters) are crowing about the new revenue, but aren’t looking at how many people have stopped flying. That seems to be to be a bigger issue.
I mentioned earlier that Southwest has not moved to a la carte pricing. They haven’t had a losing quarter this year. Maybe that should tell the bean counters something.
Even in areas outside of the airlines, we see the same “logic”. I tried to buy college football tickets online last week. The website gave me two options for delivery. Print them out at home for $6 or pick them up at Will Call for $3. In neither case, did the college incur any significant additional cost, but there was that ancillary charge. Guess what, I didn’t purchase the tickets over the internet. Oh well.
For those of you out there looking to break down your pricing to provide a more a la carte menu solution, I would recommend really investigating whether you will achieve the goals that you hoped by doing so. You may be much better off by playing the Southwest to the majors.
Recently, as part of some non-profit work I have been doing, I have been to two banks. The purpose was to redeem CD’s that have matured. These are not small accounts. One was for low 5 digits and the other low 6 digits. Small community bank and mega-bank. From the outside, not a whole lot of similarity here.
What was amazing to me was that no one at either bank asked if they could do anything to keep our account? Can I tell you about our new CD rates? I would be happy to match the rate for any local bank. Nothing. Just typed up the cashier’s check and handed it to us. I know that the banking business is in such a difficult place these days that I was floored that no one tried to keep an existing customer from leaving.
But hey, what do I know, I am not making the huge bucks running a bank. I am sure that they know way better than me.
So, if you don’t run a bank, take my advice. Ask people who are leaving “Is there anything that I can do to keep you as a customer?”. Fix the problem or make a better offer. It has to be cheaper than signing up a new customer and you have the possibility of someone like me writing a very different blog post about you.
I have just finished reading The Knack: How Street-Smart Entrepreneurs Learn to Handle Whatever Comes Up by Norm Brodsky. I have read Norm Brodsky for years in Inc. Magazine and have loved his earthy, down to business common sense. The book is more of the same and it was a good read and a valuable reference for all you budding (and even experienced) entrepreneurs out there.
A sample lesson from the book and a real life example of how sometimes companies get messed up:
We tend to make bad rules not when we’re attacking problems but when we are avoiding them. We fall into the trap of looking for shortcuts and easy answers. So, one bad customer drives off without paying his bill, and we put restrictions on all of our good customers. Or one employee uses bad judgement in issuing credit, and we tie the hands of all of those who are perfectly sound.
Real Life Example
My nephew is a high school senior and a sports fanatic. He loves basketball, football and especially baseball. He has given up on his dreams of playing in the Majors but still loves the sports world so much, that he plans to major in Sports Management in college starting next year. I helped him get an interview for an intern position with the local minor league baseball team in his town. During the interview, he was told that the job was doing anything that needed to be done for the team, might be painting the outfield wall or taking tickets or cleaning the bathrooms. My nephew was still pumped. The interviewer said “You know that this is an unpaid internship”. My nephew said that was ok, he wanted to see what life was like in the baseball industry. At the end, the interviewer said “We are so happy to get someone like you in this position. But there is this one thing. In order for us to take you on for this unpaid internship position, you need to get a letter from your school that they will give you credit for taking this internship.”. What could this be all about? Well, several years ago, a college student took this position and then sued the team because he did not get credit for his internship. So, to make sure that this didn’t happen again, the team requires that the college provides proof that they will issue school credit for the internship. You couldn’t sign away your rights, you couldn’t promise, you couldn’t double-dog swear.
Now, my nephew hasn’t even started at the University yet. But he duly went through the process of trying to figure out who to talk to and find out whether he could get credit. After the process, he determined that the answer was no. He called the team and tried to figure out a way to make it work, but they were unwilling to change the rule that they had put in place.
I don’t run a minor league ball club and surely don’t understand all of the ins and outs of running a team, but I do know that the one thing that they need is what my marketing friend Michelle calls “butts in seats”. The way to get those seats filled is to get people who are in your community and who like your product to tell their friends. What do you think will happen when my nephew is asked about his opinion of the local team?
This was a no-brainer. Here you had a kid who was willing to do scut work for no pay, was a recognized baseball aficionado in his circle, wants to continue on in this industry and you could make him a huge fan and recommender, but that kid from several years ago clouded the owner’s mind.
As an entrepreneur, you must keep on the lookout for these rules and squash them as soon as you find them.
Most of my career has been in managing services businesses. You know, the kind where people actually work on some sort of problem for a client for a fee. I have been blessed to work with really great teams of folks who care about their clients, understand the products and environments and are willing to go the extra mile (actually lots of airline miles) for their project teams.
One of the difficult management issues that arise is how to evaluate these folks and provide an incentive compensation program that works. Sure, you can measure billable hours, profitability, utilization or professional growth. Those are relatively easy to track, but are not always under the consultant’s control. As my friend and incentive guru David Kelly says, there are lots of ways to demotivate your staff.
But, you say, the real measure of what your staff is doing is Customer Satisfaction, right? Just measure Customer Satisfaction and then reward people on that. Of course, why didn’t I think of that? Oh yes, it’s because there is really no good way to measure it in a service business. In a product business, you can look at returns, customer complaints, help desk issues etc. But in a pure services business, you need to look at project progress plans, client politics, change orders, working conditions, rework, team dynamics, systems —lots of interrelated pieces that can’t be readily quantified. Wait, I know… What if we were to give the client a survey that asked how we were doing? That would solve the problem, right?
Not so fast. Sure, you could give the client a survey. Now the consultant or project manager needs to get the client to fill it out. Many times the client will not fill it out — legal won’t let them, no time, not on the critical path. How do we rate the consultant then? Other times it is either all 1′s or all 5′s (it doesn’t matter for this discussion whether 1 is best or 5 is best). And much of that is related to the client’s demeanor and general angst at the time that the consultant does the asking. And that is not even bringing up the subject of the “you scratch my back and I’ll scratch yours” type of discussion between the project leader and the client.
I have recently been involved with two transactions that furthered my discomfort over the use of client surveys. Over the December holidays, my family took a cruise with Holland America. Our cruise was good in many areas, but not overwhelming. On the last day of the cruise we were handed Cruise Surveys and the Cruise Director explained how the surveys should be filled out. Everything on the form was ranked 1 to 9, where 9 was outstanding. Our instructions included: “The highest score is 9 because, of course, 10 is perfect and we don’t pretend to be perfect. However, if you enjoyed your cruise you should mark 9′s on the survey. The crew gets paid based upon your filling out 9′s. Feel free to add comments, but if you were happy, remember to give us all 9′s.” You get the picture.
If I was the COO of Holland America, that Cruise Director would have been history at the conclusion of his speech. What is the point of a customer survey if you embarrass or cajole your customers into giving you the scores you want? How can Holland America Corporate understand how satisfied their clients are with the service they receive? As you might guess, my survey was not all 9′s and had plenty of comments. I don’t know how the surveys were evaluated, but I never received a call from Holland America (the surveys were coded to indicate the cabin), so I can only assume that they were happy with the way that their crew performed according to my survey.
Lest you think that I am only taking aim at Holland America, it happens in other places too. Last time I brought my car in for service, the service manager delivered the fixed car to me and said that I should expect a call from “Corporate” asking about my service experience. If there was any reason that I could not give them a 5 down the board, to please call the service director at the dealership. Now this was a little more benign. Sure the service manager would have an opportunity to fix my problem, but he was predicating this on getting all 5′s on the survey.
There are too many ways that a Customer Survey that is used for incentive compensation can be misused. Remember that the behavior that you get is the behavior that you incent. If you want all 9′s on a survey, you will get them. Perhaps not the underlying business behaviors that cause 9′s, however. David expounds on this topic as well in Commission Plans – Let the Games Begin.
If you have some good ideas on how to incent Service Providers or how to measure Customer Service in a services environment, please let me know in the comments.
I have had so many times when I received bad customer service, that I have to mention a totally unexpected gem.
Last night, I bought this domain, alherbach.com at GoDaddy.com. A good friend had recommended them and so I bought a domain and hosted it there. I figured that it was about time for me to own myself (cloud-wise).
So, today, I got a call from a woman at GoDaddy. I figured that they were going to try to upsell me to something more. The first words out of her mouth were “Hi, I am calling from GoDaddy and I want to thank you for your business.” I sure wasn’t ready for that. Then she asked what I was planning to do with the website. Ah ha, now it comes… I said “Just a personal blog with WordPress.” “Oh” she said, “Have you used WordPress before?” I told her no. She said “go to www.w3schools.com for all kinds of free education and know that we are here 24/7 with technical support. Have a great day”.
I guess that it says something about our current world of commerce, when a simple thank you phone call is worthy of a 200 word write up on a personal blog.