Through the Eyes of the Customer

The Right Way to Raise Prices, without Alienating your Customers

I've been a frequent reader of the New York Times on-line eddition for as long as I've been a frequent user of the Internet.  And I still am, even though it's no longer free.  But for those laggards among us - people like me who don't want to ante up, but know they  eventually will - the Times is taking a smart and considerate approach.

When the Times began the transition to paid access to online content, they imposed a limit of 20 free articles per month, per "subscriber."  Earlier this week, the Times entered another phase of the transition  - they reduced the number   of "free articles" from 20 per month to 10 per month.  The fact that they've added this phase reveals how they're sincere about making it easy on the customer, by smoothing the transition, to help customers to adapt to the new subscription fee.

Over the past several years, we've seen a lot of companies in a lot of industries alienate a lot of customers by charnging for some things that were once free.   Airline baggage fees, Netflix doubling its fees in last July, Bank of America's proposed $5  debit card fee,and others have been publicly demonized for suddently announcing fees in a way that infuriated customers.

But new fees don't have to alienate customers - sometimes, it's all in the delivery.

As a frequent reader of the New York Times on-line, I was initially frustrated and disappointed when I learned that they would soon charge customers for continued unlimited access to their on-line edition.
 
Frustrated, and mostly disappointed, but definitely not angry.  Here's why:

The Times explained in simple, logical terms why they made the decision to charge (a logical, believable economic reason).  And they gave notice early and often (several months in advance, and every time I logged on.)
 
When their new on-line fees began (or, the number of "free" views became limited), it wasn't a surprise, and the reason was clear. I wasn't happy with the situation, but I accepted it.  
 
If you do have to begin charging your customers for something that they didn't pay for in the past, take a tip from the Times:

Explain in simple, human terms why you have to make the change. 
Be honest and be sincere.  Don't say it through a stuffed-shirt executive, but say it through a casually-dressed, mid-level employee; an every-day person to whom your customers will relate.

Offer a Transition Period.
And don't shock your customers by imposing the entire fee suddenly  like an ice-cold bath tub, but give them a way to transition gradually, to minimize the pain.  

Give them early notice in straight, honest language, and transition gradually, so when it does happen, it's old news. 

A loyal customer is like a timeless work of art.

On a wall in the Louvre in Paris, France hangs one of history’s most famous paintings – the Mona Lisa.  It took Leonardo da Vinci four years to paint the Mona Lisa; it didn’t happen overnight.

Why did one painting take so long, especially when da Vinci didn’t have the disturbances of text messages, email and cell phone calls that impede our focus in the 21^st century? 

The reason it took so long is because da Vinci was very deliberate with each stroke of the brush.  Each time the paintbrush came in contact with the canvas, the artist was intent on producing a very specific – albeit subtle - outcome.   The cumulative result of thousands of deliberate brush strokes was that renowned masterpiece that’s viewed by over a million admirers every year.

A masterpiece isn’t created overnight, and neither is a loyal customer.

Every interaction between an employee and a customer is like a single stroke of a paintbrush on canvas.  And the evolving relationship between the customer and the business is like the evolving image on the canvas.  Each brush stroke adds color and texture, and contributes to the outcome.  Similarly, each engagement between an employee and the customer adds color to the relationship, changing the customer’s view of your business in some very subtle – or not-so-subtle way.  Just as every brushstroke affects the image which is to become the paining, no interaction is without impact on the customer relationship.

Masters like da Vinci knew this, which is why each brushstroke was delivered with forethought, care, and in the context of his vision for a certain final outcome.  He took no brushstroke for granted.

Smart companies today understand this, and like brushstrokes on canvas, they make sure that every customer interaction is delivered with forethought, care an in the context of a clearly-envisioned outcome.  

They make sure by following certain best practices – they hire people that have a caring, nurturing attitude, they train employees with a focus on the customer, and conduct regular, daily briefings with employees to keep customer-focus top-of-mind.  In a word, they help their employees to understand that every brushstroke matters; every brushstroke must be delivered with care, and with an eye on creating the kind of relationship that results in a loyal customer.

Loyal customers aren’t created overnight.  But with careful attention to each individual interaction, and with a clear vision toward an ultimate outcome, a customer relationship can become a masterpiece, and one of many in a portfolio as large as the Louvre.

A tale of two counters: How human interactions spark customer loyalty.

The most powerful customer experiences are sparked by human-to-human interaction.

This week, I had a flight from Phoenix to Boston.  When I approached the US Airways Ticket counter at Phoenix Sky Harbor International Airport at 1:15 in the afternoon, there were no other customers in line – I was it – and there were three available agents!

I said to one of the agents, “Hi – I’d like to get a boarding pass.”  She motioned to a row of self-service kiosks in front of the counter, and said, “Help yourself to any one of those!”

Three idle flesh-and-blood highly-trained humans and they directed me to a cold, heartless machine.

I printed my boarding pass, took the escalator upstairs, and passed through security.  Next stop: Hudson News, for a bottle of water.  I walked over to the cooler along the back wall to the left of the magazines, opened the cooler door, and grabbed a large bottle.  Then I walked over to the cashier counter to wait in a short line.

One woman ahead of me – as soon as I approached the register with my bottle of water, the cashier looked at me, made eye contact, smiled, and nodded. That half-second gesture communicated a friendly, “I’ll be happy to help you in just a moment, sir, as soon as a finish with this customer.”  A brief and subtle connection, but just enough to spark a positive emotional response.  He made me a happier customer, even before the transaction.  Just that quick non-verbal exchange gave me something to remember.

The dismissive agent at the US Air Ticket Counter – she gave me nothing to remember.

Here’s the point:

The most intense customer loyalty is born of emotion.  And there’s no better way to spark positive emotions, than through the interactions that occur between human employees and human customers.  Employees should be trained to pursue opportunities to engage, and to make emotional connections with customers, whenever possible. 

Loyalty is based on relationships, and relationships happen between people; through human-to-human touchpoints.

The value of long-term thinking in sports and business

What do NFL dynasties and customer loyalty have in common?

I read an article recently on ESPN.com called “Impatience spins the coaching carousel”  by Adam Schefter.  In it, he describes how NFL owners hired a total of 11 new head coaches in 2009, and only three of them remain today.    Apparently, the owners were looking for faster gratification than what history had demonstrated is needed, to produce a dynasty.

He gives some excellent examples to make the point:

Tom Landry didn’t take the Dallas Cowboys to the postseason until his seventh season, and most of today’s owners don’t seem  willing to wait half that time.  Chuck Noll of the Steelers, and Don Shula are other examples of coaches who went on to build hall-of-fame dynasties  after enduring consecutive losing seasons  at the start of the building process.

As I read the article, I couldn’t help but think of how some business owners and Boards of publicly-traded companies share the same mindset as the impatient success-seeking NFL owners.  They both want to create an enduring dynasty, and they want to see it happen overnight.

You can’t make either one happen overnight.  Winning traditions take time to transform from losing, or mediocre organizations into winning traditions that dominate their respective league or market, year after year.  To become a winning tradition, you need to have a long-term mindset.

Businesses that are successful and profitable over the long haul tend to have a base of very loyal, if not fanatic customers.  The leaders in these businesses realize that customers don’t become fanatics overnight.  It can take years to establish trust, and build that kind of relationship.  If you expect to make every transaction profitable from day one, you’ll wind up replacing your customers as often as those impatient NFL owners replace their head coaches.

If you want to establish a dynasty and dominate your market, exhibit patience.  Think long term.  Don’t sell off tomorrow’s loyal customer to gain today’s quick profit. 

Plan for the long term, and act for the long term.  Because in the long run, it’s worth it.

It takes years for an acorn to become an oak tree.

The Power of Authenticity in Growing a Business

Authenticity matters.

Companies that believe in something, and stay true to those beliefs over time, tend to attract like-minded customers.  And as the company stays loyal to those beliefs, the customers stay loyal to the company.  The result is growth – growth in trust, growth of the brand, and growth of the company – a growth fueled by authenticity. 

In Portland, Maine, a city of 64,000 people, there’s a coffee roaster called “Coffee By Design.”  Founded in 1994, it grew during a time when Starbucks was building its current 10 stores and Dunkin Donuts its 22 stores in the same small city.  Many small businesses find it a challenge to survive when a large national player moves in next door.  But Coffee By Design has been able to grow despite the challenge from these two industry goliaths.  And authenticity has clearly been a factor in that growth.

Coffee By Design was founded by two people that decided they were going to build a business around their passions – coffee and community.   As they grew, they retained that culture by being selective in hiring employees and choosing business partners.

“We believe that being selective is better, and therefore only choose to work with businesses who share our same standards and beliefs in environmental and economic sustainability.”

When companies grow and need to hire additional employees and vendors, their selection criteria are often limited to those elements which are easy to measure and compare:  differences like costs, logistics and other operational elements.  But those objective elements can easily obfuscate what’s beneath the surface:  the values, beliefs and passions of the people and partners that will become the face of the company within their new markets and neighborhoods.

Employees bring their values to the workplace.  And like it or not, their values become your brand by way of the customer experience.  Therefore, selecting employees and partners whose personal passions and values align with those of the company’s founders, the experience will remain consistent with the founders’ vision, and the result is authenticity.

Coffee by Design was designed around values.  But with each subsequent employee hired, and each business partner and supplier, they’ve included those same values in the selection process.  This has enabled the culture to stay consistent, and not become diluted by growth.

As a result, the brand has managed to stay rich and authentic over time, just like the coffee it serves. 

Nearly two decades later, the owners continue to be active in socially-focused causes through the local community, and those of their suppliers. The business has been an extension of core beliefs.  And this authenticity has produced a thriving brand that has enabled a coffee shop to distinguish itself from larger competitors, and grow a loyal customer base of like-minded coffee consumers.

People appreciate a great cup of coffee.  Especially when it’s served with authenticity.

The Adaptability of Customer Service, and Why I'd Fly Air Zappo's

Tony Hsieh , the founder and Chief Executive of Zappo’s recently said that he wouldn’t rule out starting an airline someday.

Unless you think Tony is completely out to lunch, that speaks volumes for the importance of customer service in business.

Zappo’s,  by many accounts, has defined how to build and manage an organization whose primary purpose is to serve the customer, and secondarily, sell a product.    Building an organization to sell products is relatively easy.  It takes inventory, logistics and some capital.  Lots of companies do it.  Fewer companies do it well, and still fewer do it so well that they experience the consistent year-over-year growth that Zappo’s has.

But building an organization that can curry such favor with customers, that the customers  come back again and again, and bring their friends, neighbors and associates through word-of-mouth, requires a different set of skills.  Zappo’s growth, and the source of that growth – repeat customers  and word-of-mouth – demonstrates the financial impact that an exceptional customer experience can have on the overall success of a business, and its bottom line.

If you can do customer service well, your chances of succeeding in any business improve immensely.

I believe Tony Hsieh sees business through a different set of lenses.  He sees customer service as the primary growth engine of business.  And he looks for opportunities where there is a huge customer service gap; industries with a high degree of customer interaction and emotion, but where the quality of service has been historically low.  In other words, Tony looks for industries that offer the greatest opportunity for improvement in customer service.

Airlines fall into this category.  Aside from the JetBlues, Southwests and Virgin Atlantics, few airlines have repeatedly stood out as beacons of customer service.  Airlines may employ good people,  but the leadership of the airlines have not been able to transform good people into a great company-wide service organization.   They may know how to deliver air travel, but they have not shown the same level of expertise in delivering a customer experience. 

If you can do customer service well, your chances of succeeding in any business improve immensely.

There’s room in the airline industry for another company that can deliver the level of service and experience that Zappo’s customers receive.  And I think that Tony Hsieh is just the guy to run it.  I only hope that he doesn’t wait 20 years to start.

 

Who should you listen to? Your customers or your consultants?

The New York Times recently published an article about a popular Salt Lake City, Utah restaurant called The Red Iguana.

The Red Iguana faced a dilemma that most restaurant owners might eat a real iguana to have; there were too many customers.   After being featured on the Food Network’s  Diners, Drive-ins and Dives, popularity soared to the point where customers would wait 90 minutes for a table for dinner.  Long-time customers told the owners that they didn’t like the long waits.

So, what do you do when you need to accommodate more customers?   You expand production.  In this case, the Red Iguana decided to open a new location.   Their big decision was where to locate the new restaurant?

The conventional wisdom preached by the industry experts said that the second location should be located a good distance from the first location to avoid cannibalizing the existing business.  A location farther away would also expand the geographic coverage of the brand by introducing it to new customers. 

But the owners felt that opening the second location farther away wouldn’t solve the problems that his existing customer base had expressed.  His customers spoke, and he listened to what they said.

They opened Red Iguana 2 a mere two blocks from the existing location, despite the advice from the experts.   According to the Times article, the owners  explained to their consultants and financiers that their daily anecdotal evidence was that they had a large customer base that was no longer coming in “because we had gotten too busy, too crowded, too successful and that they would indeed fill the new restaurant,” Mr. Coker, one of the owners said.

The owners' counterintuitive decision proved to be correct.  Annual revenue has grown to more than $6 million today from $4 million in 2009, and both restaurants are regularly full.

Here’s the point:  The owners listened to, and acted on the expressed needs of their customers, despite the contrary recommendations of the industry experts.  And by doing so, they succeeded.

So, back to the question: 

Who should you listen to?  Your customers, or the consultants?

A) Listen to your customers, and ignore your consultants.

B) Listen to your consultants.

C) Ignore everyone, and go with your gut.

D) Listen to the consultant who advises you to listen to your customers.

What do you think?

 

The Bird in Hand, and the Value of Existing Customers

 Has this ever happened to you?

You’ve been a loyal customer of a service provider for many years.  The service provider announces a great promotion for new customers – 3 months of free service, if you sign up now!

The promotion can vary, but you get the idea.  It seems that many companies will often give big incentives to attract new customers, while those of us who’ve been sending payments to that same company for years, are made to feel like we’re being taken for granted. 

Don’t these companies know that a bird in hand is worth two in the bush?

There’s often more attainable growth within an existing customer base, that there is through new customers.  But why do so many business owners spend a disproportionate amount of their sales resources chasing the birds in the bush?

In an August 18 article in the New York Times, Jay Goltz, the owner of five businesses in the Chicago area, explains how a business can grow its revenues twice as fast if it focuses more of its sales and marketing efforts on customer retention – keeping and growing the customers that it already has.

Every business needs to bring on new customers, to grow beyond its existing market.  But while trying to acquire new customers, too many businesses miss out on the additional revenue opportunities that can be found within an existing customer base.

So, what are 3 things a company can do, to attain more growth through the customers that it already has?

Look beyond the need you’re already serving.
What other needs does your client have, that you’re equipped to solve?  Just because the need exists, and the client knows you, doesn’t mean that they’ll automatically make the connection.  Take more time to understand your client’s entire business, so that you’ll be able to uncover these additional needs and revenue opportunities.

Provide some human touch and caring.
The reason that many service providers offer “3 months free” to new customers, is because it works – customers are willing to leave their current provider simply because they don’t feel a strong relationship with them.  There’s no strength of connection; no sense of obligation to maintain a relationship.  Nurture the relationships with your current customers by reaching out to them outside of the sales cycle, in order to build a genuine relationship.  In a word, show them that you care.

Ask for feedback, and act on it.
Survey your customer base.  Not all at once, but perhaps a handful at a time, to keep it manageable.  Ask them for specifics; things that you can do differently, that will improve the relationship.  Then if those things are feasible, do them!  Improve you level of service to the customer, in ways that the customer will perceive value.  The mere act of asking a customer what they think can go a long way toward building loyalty, and stemming the tide of defection.  But don't forget to act on what they tell you, or at least respond to it.

There’s a lot of excitement in landing new customers – that’s where the fun is, in growing a business, right?  But there’s also a lot of growth within the “old” customers.  It may not be as fun and exciting, but at the end of the day, a dollar is a dollar, regardless of the source.

 

What’s the difference between customer satisfaction, and customer delight?

What’s the difference between customer satisfaction, and customer delight?

And does the difference matter?  

Well, let’s see… 

If you order a book from Amazon, and they tell you that you’ll receive the book between August 5 and August 10, you expect to find that book in your mailbox no sooner than the 5th and no later than the 10^th.  If the book arrives between those dates, you’ll probably be satisfied, because your baseline expectations were met.  But mere satsifaction can eventually lull your customers into a state of indifference.

However, if the book arrives on August 3, you’ll be pleasantly surprised, because you weren’t expecting the book for a few more days.  And a positive surprise triggers delight.

So here’s why it matters:

Delighted customers become loyal customers, while customers who are merely satisfied are easily distracted by a seemingly better offer from your competitor.

Surprise your customers in small ways, at every opportunity.  Each small surprise strengthens the bonds of loyalty.  Simply satisfying your customers are like driving in neutral.  Your competitors will gradually pass you by, and you’ll eventually come to a stop.

Go for the surprise.  Delight your customes, and they'll delight you.

 
 
 

4 Good Reasons to Respond to Customer Feedback

When I was a child, my mother always had us write thank you notes when we received a gift.  And she was very particular about what we’d say in the note.  “Just saying ‘Thank you’ isn’t enough, she’d tell us.  “Make sure you tell them what you did with the gift.”

When a customer give your company feedback, they’re giving your company a gift – the gift of free consulting; advice on what you can do to make them a happier customer; what you need to do to make them more loyal; to buy more, and buy more often.   They're giving you a chance to keep the conversation going; to engage more with them, to learn how to grow your business.

But too many companies allow the feedback to die on the vine... at least in my experience.

Three decades after my mother gave me that advice; I was sitting in the waiting area at an auto dealership.  I was a bothered by the fact that I had to pay them 50 cents to get a cup of coffee,  especially since I would be soon paying them over three hundred dollars for brake repairs.  

So I expressed my frustration through a “customer feedback” card.  I wrote on the card, “Please don’t charge customers for coffee.  We give you our business; the least you can do is give us coffee while we’re waiting.”

About ten days later, I received a phone call from the general manager of the dealership.  He told me that he read my suggestion, and that he appreciated me taking the time to write it.  He also told me that they would no longer be charging customers for coffee. 

I immediately had a more favorable view of the dealership, for a couple of reasons:

First, they reached out to me, and said “Thanks.” “Thanks for giving us your feedback.”  I complete a lot of customer surveys, but it’s rare that the company actually reaches out to me after the fact, to acknowledge it.  (And by the way, an automated email doesn’t count!)

Second, they told me how they used my ideas; that they made a change in the way they do business, because of my suggestion.  “Wow,” I thought.  They actually listened to me.”

We’re all human, and we crave acknowledgement and validation.  Your customers are no different.  Don’t pass up an opportunity to validate your customers!

There're two more reasons why you should tell your customers about the changes you made based on their feedback.  The third reason is that it’s a great opportunity to engage with your customers in a highly personalized and relevant way.  When you have an opportunity to engage with a customer, don’t let the opportunity pass you by!

The fourth reason is good buzz and publicity.  When you tell the customer who gave you the feedback you needn’t limit the communication to that single customer.  Tweet about it to all of your followers.  Share it with your Facebook fans. Let everyone know how responsive you are to your customers’ needs, and the customers will likely continue the conversation for you.

When your customers give you good advice through feedback, thank them for it.  And tell how you put their advice to good use.  They’ll feel good about that, and they’ll tell others.  And before you know it, there will be a lot of people saying great things about you.  And your mother will be awfully proud!

 

When customers give feedback, be a good business citizen, and make your mother proud!