Why do companies with big brands and tremendous momentum go out of business? One reason often discussed here is lack of innovation, which is often opaque, quite difficult to grasp when it is happening because you are in the midst of it, even enjoying a final gasp of success. Another is much easier to understand and very definitely within control—when you stop loving your customers.
Here is a summary of a recent actual customer service call with a well-known company in which I was the very real customer.
ME: But the replacement knob you sent me does not fit the appliance.
CUSTOMER SERVICE: It’s the one you ordered.
ME: No, not exactly, I called and gave you the model number of the appliance and told you which knob was broken, and this is the one you sent me.
CUSTOMER SERVICE: Well, it should fit. Did you push hard on it?
ME: It does not fit, so pushing harder will only break it.
CUSTOMER SERVICE: Maybe you don’t know how to install it. Would you like us to send out a technician? I need to advise you we bill on site service visits at a minimum $95 per hour.
ME: I don’t need a technician. It’s a $4.75 plastic replacement knob to turn the appliance on and off. It does not fit on the metal stem.
CUSTOMER SERVICE: Sir, if you don’t want me to schedule a technician to come to your home, there is nothing more I can do.
ME: Yes, you could send me the proper replacement part. I actually looked up the appliance online and have the serial number for the part I need. It differs from the one you sent me by two digits.
CUSTOMER SERVICE: That’s not possible, they are all the same. If you are not able to install the one we sent, how do you expect to install another one?
ME: I’ll take my chances that the right part will fit. Can I send this one back and get a replacement please?
CUSTOMER SERVICE: We don’t refund parts you ordered incorrectly that become open stock. You can order another one if you want, but you’re still going to need a technician to install it.
ME: You do understand this is a $4.75 part for an appliance that cost more than $1000. How do you expect to stay in business when you treat customers like this?
CUSTOMER SERVICE: Sir, we’ve been here for a hundred years and we’ll be here for a hundred more.
Then he hung up on me. Really. Somewhere there is an actual recording of this call, for training purposes.
Just so the damage is clear, we have a house filled with appliances from this retailer. As these need to be replaced, none will come from that retailer. The next house will also have none. How much did that $4.75 part and the mishandled call cost the seller? The future lifetime value of this customer. I know from having told this story to more than a dozen friends that I am not alone.
One of my very best former senior executives used to start each morning in our customer service department with the kick-off mantra: “Remember, our business would be so much better without all those pesky customers. Never forget that, how happy our days would be without them.”
Of course he was kidding, but just saying those words aloud every morning to our trusted heroes on the front lines reminded them how important they were to our success, or how much pain they could cause if they forgot what they were there to do—help keep our customers our customers. We would consider every inbound call a gift, an opportunity to repair any aspect of our relationship that might have been violated. Without our customers, we could not exist, and without the opportunity to hear and fix their problems, we knew we would lose them.
No one in a customer service role likes to get yelled at all day, but what’s the alternative? When the phone stops ringing and the emails stop coming, it is seldom because you are doing everything right. It is usually because the customers have been trained not to contact you or they simply aren’t there anymore. Not exactly a great alternative to customer complaints, is it?
Recovery, or “the art of the save,” is the process by which a negative becomes a positive. Every downside event experienced by a customer offers the single best opportunity you have to show your love. When you empower the people on your front lines to transform any possible negative experience by a customer into an opportunity to bond with them forever, you not only keep their business, you have a shot at recruiting an uncompensated evangelist. Solve a customer’s problem and exceed their expectations, lifetime value continues and they might even go to bat for you with their friends. Ignore or insult them with as many alternatives as there are in the marketplace, the tar pits of antiquity offer your final resting place.
Beating back the challenges of creative destruction is hard enough work. Is being nice to the people who pay your bills really that hard? If it is, get ready to join the march of obscurity and obsolescence. There are so many ways to lose what you’ve built and so few ways to win in the long run. Take heed and don’t lose the game for the things you can control.
Any presumption that a company will last forever defies logic and history. Don’t give your employees reason to think that perpetuity is ordained or soon enough you’ll sink together in the ooze. Love your customers, every single one—those who complain the most are probably the ones who control the keys to your survival.
I really enjoyed this blog, Ken. I have had the opportunity to study Amazon’s “Customer Obsession” principle first-hand over the last year or so, and as a result, I was literally cringing as I read your anecdote.
It should be noted that “loving your Customers” means far more than paying lip service to the clichés of “service with a smile” and “the Customer is always right” – it’s about making real sacrifices in order to assure the health of your long-term relationships. Lack of willingness to replace a $4.75 knob on a four-figure appliance is beyond the pale.
Famously enough, margins and short-term earnings at Amazon are sacrificed on a regular basis to fund innovation and develop new services, all in the spirit of increasing Customer satisfaction and loyalty (see: Prime, Kindle, etc.). At companies who “do it right”, Customer obsession breeds innovation.
If your technical and business development road-maps consistently reflect the “voice of the Customer”, you’re doing it right. If you are not innovating to please your Customers, you’re doing it wrong.
Thanks, Jon. Amazon is a voracious competitor and in many ways setting the new standard for customer service and responsiveness. I wrote as much in a comment on the WSJ story announcing AMZN earnings. A lot of people were focused on the margins. I was focused on the future, which is what a stock price is all about. There is a whole generation growing up with Amazon’s standard that doesn’t yet have full household buying power. If Amazon maintains its focus on loyalty, this will be the Amazon shopping generation, particularly on mobile. Amazon is proving you can build a real beloved brand online, but it’s expensive, which means lifetime value has to be factored. Amazon has also become a master of the save with great recovery strategies on dropped balls, which are few — reminds me of my alma mater, Disney.
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