While these examples do not from from what we describe as ’small business’, the concepts are still appropriate. Research shows that two of three customers that stop doing business with you do so because of the perception that you no longer care. The customer may be incorrect in their perception, but their perception is their reality. I think you will find this article interesting. Tom
Do your customers love you?
Surveys show that more consumers than ever are fed up with bad service. Meet entrepreneurs who are profiting by bucking the trend.
By
Justin Martin, FSB Contributor
September 24 2007: 10:46 AM EDT
(FSB
Magazine) — All Adam Reuter wanted was the video of his graduation
from Villa Julie College in suburban Baltimore. After two months the
production company finally sent a DVD, but it featured the wrong
graduation ceremony. Over the next two months Reuter called the firm,
VPC, repeatedly, but got no satisfaction.
Fed up, Reuter grabbed
his camcorder and showed up unannounced at the offices of VPC
(vpcinc.net), a small outfit in Reisterstown, Md. He proceeded to grill
the owner 60 Minutes-style. What was taking so long? Why
wouldn’t anyone return his calls? Reuter got his DVD, which had simply
been languishing on a shelf. Reuter also opted to put his footage up on
YouTube and has gotten 1,467 views. “They didn’t do anything quick
until I showed up with a camera,” he says.
 |
Doug
Chapman, owner of a high-tech gym in Ann Arbor, helps customers get in
shape more quickly by sending them e-mail reminders when they miss
workouts. |
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I can’t explain it. It just happened,” says Eli Eisenberg, VPC’s owner. “We pride ourselves on good customer service.”
Adam
Reuter has lots of company in his frustration - and his easy recourse
to online revenge. Do a web search using terms such as “customer
complaints,” and alongside Reuter’s mini-exposé you will find millions
of videos, blog entries, and other web postings from angry consumers.
Airlines such as Jet-Blue (jetblue.com) have been the target of
particular ire, amid a rash of delays and cancellations.
But
the sheer variety of complaints is astonishing: broken products, broken
promises, problems starting up a service, problems canceling one,
endless hold times, calls bounced to Bangalore, rude reps, incompetent
reps, automaton-like reps who stick to irrelevant scripts.
According
to the University of Michigan’s 2007 American Customer Satisfaction
survey, overall customer satisfaction remains flat over the past year.
In some industries such as computers, hotels, and restaurants it is
getting worse. In the 2005 Customer Rage Survey, the most recent
available, 70% of respondents who had a problem reported feeling this
fevered emotion at least once during a recent transaction, up from 68%
in the 2003 poll.
As for those unpleasant interactions, each
victim had on average four exchanges with the offending company to
resolve the problem. And 15% of the ticked-off customers entertained
fantasies of revenge: They said they’d like to repeatedly pester the
business, and cost it time and money as payback.
“Companies are
routinely out of touch with just how angry customers are,” says Scott
Broetzmann, president of Customer Care Measurement & Consulting
(http://customercaremc.com), an Alexandria, Va., firm that conducts the
rage survey in partnership with the W.P. Carey School of Business at
Arizona State University (wpcarey.asu.edu).
Now
for some good news. As new technologies empower the aggrieved to expose
bad service, fresh opportunities are rising for anyone who can delight
customers. That especially holds for small businesses. Competing with
larger rivals on the basis of price or selection is usually a losing
game. But service can become a powerful differentiator and a way to
boost margins. And it is often best executed by smaller companies,
where the owner is leading from the front. “Good service really stands
out these days,” says Chip Bell, a Dallas consultant (chipbell.com) who
specializes in customer satisfaction. “Take that extra step, deliver
what I call ’sparkly service,’ and oh, boy!”
FSB went in
search of small companies that have mastered the art of extreme
customer service. We talked to experts, business owners, and of course
customers. One point quickly became clear: Every company says it gives
great service. But actually delivering is a very different matter.
We
tuned out the talkers and focused on the walkers - companies that have
creatively delivered big upgrades in customer service. We picked seven
that represent a range of industries and challenges, from catering to
finicky B-to-B customers to providing superb service over the
none-too-friendly Internet. All attend to customer service in a
systematic way; maybe some of their methods are worth adapting for your
business.
Know your client’s culture
Visit the
Manhattan headquarters of Genesis 10 (genesis10.com), a technology and
business consulting firm, and here’s what you won’t see: cheesy posters
with sayings such as “the customer is always right.” Neither will you
hear its employees repeating customer-focused mantras the way they do
at so many firms. “Our commitment goes deeper than that,” explains
Harley Lippman, the firm’s founder and CEO. “We’re looking for ways to
truly engage with our customers.”
Genesis 10 has 120 clients,
including such blue chips as J.P. Morgan, United Healthcare, and Wells
Fargo. Lippman says it has been profitable every year since its
founding in 1999, and annual revenue has grown from $7 million in its
first year of operation to $134 million in 2006. Before undertaking a
consulting gig, Genesis 10 devotes ample time to learning about a
client company’s culture. According to Lippman, many of his rivals
(including Big Five firms) simply parachute consultants into a new
organization. They figure that any thorny cultural issues can be worked
out on the client’s time - and dime.
Genesis 10 hires
recently departed employees of the client company to brief its
consultants. This provides vital insights: A client such as the
Principal Financial Group, an investing and insurance company based in
Des Moines, wants consultants to fit into an environment that puts a
premium on teamwork. Meanwhile, a type-A outfit such as New York
City–based Goldman Sachs, which is built on individual superstars,
wants consultants to immediately step up as leaders.
“This is a
people business. That’s how projects succeed or fail,” says David
Granger, an executive at the insurance giant Northwestern Mutual in
Milwaukee and a Genesis 10 client. “They know to work differently with
us than they do with Citi-bank, say.”
Because Genesis 10 arrives
prepared, the firm is able to hit the ground running. Lippman estimates
that he beats a client’s project deadline 60% of the time - in a
business in which deadlines tend to be arbitrary and get pushed back
repeatedly, to clients’ dismay.
While some companies rely on
empty gestures (one outfit FSB encountered gives its employees “kudos”
for great service), Lippman hands out cash and prizes, tied directly to
exceeding customer expectations. He goes out of his way to make those
spot bonuses thoughtful and surprising - just as good customer service
should be.
In one instance an executive at Johnson Controls
called to thank Lippman for providing such great service. In response,
Lippman lent his credit card to the two consultants in charge of the
project and told them to enjoy a three-day weekend in Vegas. “We’re
always encouraged to go above and beyond for customers,” says Sara
Brahm, one of the bonus recipients. “The bonus reinforced that message.
It was surprising and special, but this time it was for us.” The two
consultants spent less than $2,000 total on their Vegas getaway.
Grateful employees are unlikely to go wild on the boss’s nickel.
Another
time, a Genesis 10 consultant who happened to be a hockey fan beat a
tough deadline, thrilling the client. Lippman presented him with a
hockey stick autographed by Wayne Gretzky and packed him off to Phoenix
for a game.
Lippman makes a significant portion of his
consultants’ pay variable, tied directly to customer service. Such
bonuses are usually triggered when Lippman or one of his account
managers gets a call from a satisfied client or when one of them
recommends Genesis 10 to a potential customer. But Genesis 10 routinely
debriefs clients at the end of each engagement to identify
extra-pay-worthy performances.
One more secret to Genesis 10’s
success: The firm says no. A lot. Lippman explains that while he took
on $134 million worth of work in 2006, he turned down gigs potentially
worth millions more. He routinely nixes assignments that might stretch
his staff too thin, along with jobs that are outside his consulting
specialty. That way he avoids diluting his focus.
“We’re
selective. It allows us to maintain the illusion that -every customer
is our only customer,” says Lippman, who provides his cellphone number,
e-mail address, and home number to every client.
Software that sells
Customer
service demands a deft personal touch, no question. But technology can
also help. Small-business owners face more and more software options
that promise to help them track and initiate contact with buyers.
Customer-relationship management or “CRM” software can maintain a
record of customer interactions or send an automated alert if a service
issue is unresolved. Among the most popular CRM programs for small
businesses are Microsoft Dynamics (microsoft.com/dynamics), NetSuite
(netsuite.com), RightNow (rightnow.com), and Salesforce.com.
“You
can’t become a paragon of customer service by simply buying software,”
says Paul Greenberg, president of the 56 Group
(the56group.typepad.com), a CRM consulting firm in Manassas, Va. He
offers a couple of caveats. Software is available off-the-shelf or
online, but always adapt it to your company. Also, many firms are
tempted to use the programs to fully automate their customer-service
functions. But forcing your customers to navigate intricate phone trees
and such - especially when a live rep is nowhere to be found - is
likely to produce rage rather than delight. Better to use CRM software
to enhance a company’s human touch.
Doug Chapman took this
approach. He owns HyperFit USA (hyperfitusa.com), a gym in Ann Arbor,
Mich. He’s also a devotee of cross-fit, a regimen that builds strength
and flexibility and employs some exotic devices such as Russian
kettlebells. For the ideal CRM system, Chapman had a detailed wish
list. So he hired a techie to cobble together several pieces of
software including ACT!, a popular database program (act.com), and
Constant Contact (constantcontact.com), used for sending out various
e-communiqués such as newsletters and tracking the responses.
Doug
Chapman took this approach. He owns HyperFit USA (hyperfitusa.com), a
gym in Ann Arbor, Mich. He’s also a devotee of cross-fit, a regimen
that builds strength and flexibility and employs some exotic devices
such as Russian kettlebells. For the ideal CRM system, Chapman had a
detailed wish list. So he hired a techie to cobble together several
pieces of software including ACT!, a popular database program
(act.com), and Constant Contact (constantcontact.com), used for sending
out various e-communiqués such as newsletters and tracking the
responses.
“My gym is different, and I wanted to provide a
different customer experience,” says Chapman, 39, an All-American
wrestler with an MBA from Eastern Michigan University who has done
stints in the Navy and at Smith Barney.
The key is to customize
the software to fit the needs of the customer. HyperFit USA holds
frequent seminars on topics such as self-defense. This is a great way
to trawl for new customers. Chapman gathers the e-mail addresses of
seminar attendees. Then he sends them his gym’s e-newsletter. Thanks to
a special tracking app, it’s possible to tell whether a prospect opens
the newsletter and even which articles are read. (Chapman doesn’t feel
he needs to get permission to track the reading habits of those leads.)
Say a prospect reads an article on nutrition. Now Chapman has
valuable information about her interests. He can instruct his staff
nutritionist to give her a call and perhaps land a new customer.
Chapman estimates that around 10% of these calls result in a new
membership, vs. a conversion rate of less than 1% from the mailers he
used to send out when he worked for a big-box gym.
When new
members join HyperFit, they fill out forms that highlight their fitness
goals and any health issues. The information, which is stored in a
database, comes in handy in all kinds of ways. If a member works with
several trainers, for example, all have access to the database. “A
trainer might say, ‘I know you’re bothered by a bulging disk. Let’s
modify your routine from that of the rest of your classmates,’” says
Chapman.
If a customer doesn’t show up for three weeks, an
e-mail alert is automatically triggered. Trainers then decide how to
respond case by case. Sometimes they call and gently urge the laggard
to get back to the gym. Other times more subtle tactics are called for.
Recently someone joined the gym planning to run a marathon, but stopped
coming while in the throes of a messy divorce. After three weeks an
alert went out. Rather than calling, Chapman e-mailed an article about
marathon training. The man soon returned to the gym.
Chapman
started HyperFit in 2004 and says he still has nearly all of his first
50 customers. Membership has since grown to about 300. This year it
will collect $400,000 in revenue and is profitable, according to
Chapman. Both a Bally and a Gold’s gym are within a mile of his
facility, yet he’s been able to compete effectively. Next he wants to
take HyperFit national.
Apply a human touch
While
it’s hard enough to get good service from brick-and-mortar businesses,
finding it on the Internet can be ever tougher. The upside of
e-commerce is that you can shop from the comfort of your home at 2 a.m.
The downside: Just try finding a customer-service phone number on the
average website. Most online vendors promise e-mail support, but a
recent study by JupiterResearch (jupiterresearch.com) found that more
than a third took at least three days to respond, and many never did.
Inspired
by the poor service she en-countered on the Internet, Kassie Rempel,
34, quit her job as a financial planner and started SimplySoles
(simplysoles.com), an online women’s shoe emporium. Rempel’s company,
based in Washington, D.C., specializes in high-fashion shoes. Some
notable designers, such as Bettye Muller (bettyemuller.com), have
created designs exclusively for SimplySoles. Given the haute pricetag
(average pair: $275), you can bet there’s a toll-free number, and it’s
even possible to reach Rempel directly.
For certain customers
Simply-Soles will send out a selection of shoes - no charge, no
commitment. To qualify, one doesn’t have to be a loyal customer or
place a huge order - although that certainly helps. Sometimes
SimplySoles provides this service to a first-time customer who is
unsure of her exact size in a particular brand. Other times the
decision is made on a gut feeling. “I won’t do this with everyone,”
says Rempel. “It’s based on my comfort level and that of my staff.”
These
select customers can try on shoes in their homes to see which pair
looks best with a particular outfit. Customers are billed only when
they make a purchase; the remaining shoes can be sent back to
SimplySoles in prepaid mailers at a cost of about $12 a returned pair
roundtrip.
Kaethy Kennedy, 42, is an L.A. executive who is
active online: shopping, banking, paying bills. She often orders
European styles from SimplySoles and says the sizes don’t always
correlate to American makes. She appreciates the option of trying on
several pairs at a time and keeping only the one that fits. “They’re
like a little neighborhood boutique, only they’re online,” she says.
SimplySoles
also sends out handwritten thank-you notes to every customer who orders
shoes. The notes address the customer and shoe by name: Dear Amy, We hope you will enjoy your pair of Gaby slides by Tory Burch
(toryburch.com). Some days Rempel and her seven employees churn out as
many as 200 of these notes, a huge time commitment. But Rempel says it
pays off because feedback from customers indicates this little touch
helps build loyalty. Rempel has even received notes thanking her for
the thank-yous. “It’s an important piece of who we are,” she says.
SimplySoles,
which also has a catalog business, is profitable, says Rempel, and will
post nearly $2 million in revenues this year, a big jump from $200,000
in 2004, its first year of business. Given the intense level of
service, she feels there’s a limit to how big SimplySoles can grow.
Rempel says her goal is to build a $10 million-a-year company, not a
$100 million one.
Customers who serve themselves
If
you want your customers to love you, give them want they want. Duh!
This sounds simple, but isn’t so easy to execute. Which customers? What
if they can’t explain clearly what they want? One way around this
dilemma is to involve your customers early on in the design of your
product or service. In industry jargon, this is called user innovation.
The concept has been around for a while, though it is growing in
popularity.
Many small companies have now jumped on the
user-innovation bandwagon, but their approach is often lackluster.
(Would you like us to produce the next-generation widget in taupe or
fuchsia? E-mail us your vote. It’s your choice!) A nod for best
practices goes to Threadless (threadless.com), a Chicago T-shirt
manufacturer. “They’ve really nailed it, with a solution that’s both
simple and elegant,” says Ben McConnell, a consultant who writes a blog
called Church of the Customer (customerevangelists.typepad.com).
Using
its website and various company-sponsored blogs, Threadless has built a
fervent online community dedicated to underground T-shirt design.
Threadless.com now has 500,000 registered members, up from 350,000 in
2005. Members submit T-shirt designs. Then the community votes on its
favorites à la American Idol. Each week, Threadless executives
choose a few winning T-shirt designs. Those styles are produced, then
sold back to the very people who conceived and voted on them in the
first place.
Founded in 2000, by college dropouts Jake Nickell
and Jacob DeHart, the company is profitable and its revenues grew to
$12.5 million last year.
To encourage members to submit designs,
winners are paid $1,500 plus a $300 merchandise credit. The odds are
long: Over the company’s seven-year history, 200,000 designs have been
submitted, but only 1,000 have been chosen as winners. Recently
Threadless added a critique section to its site, meant to keep repeat
losers from growing discouraged and taking their T-shirt business
elsewhere. With the critique section, it’s possible to submit a work in
progress and get feedback. Now someone can participate in the
Threadless community without having to enter the bruising competition.
Winning
shirts are produced in limited runs of about 1,500. So far, every
winner has sold out, and top sellers have gone back to the T-shirt
press repeatedly. Among the all-time favorites: Communist Party
(featuring a sketch of a drunken Lenin and Stalin) and a shirt bearing
the enigmatic slogan, We’ll be safe here in this dark creepy barn.
Threadless’s
top brass don’t automatically produce the shirts that receive the
highest scores; they reserve some measure of editorial control. They
reject designs featuring copyrighted material such as cartoon
characters. They have also created a simple computer algorithm that
identifies designs that received a preponderance of 0’s (the lowest
score) and 5’s (the highest). Such a love-it/hate-it response suggests
that a T-shirt will provoke controversy. And as everyone knows,
controversy sells. “It’s not really a gamble for us,” says Jeffrey
Kalmikoff, 28, Threadless’s chief creative officer. “There’s no real
guesswork involved. We ask people what they want. They tell us. We give
it to them.”
Sounds so simple. It almost makes you forget that
becoming a company known for great service takes planning, persistence,
and at the end of the day, the hard-earned goodwill of your customers. 