How to Lose a Customer for Life for Ten Bucks

Steve Martin in his heyday had a funny routine called Let’s Get Small. Today I am going to ask you to do the opposite. I am going to ask you not to be small.

A while back I wrote an article called the The $20 Brand Bond, noting how Amazon locked in my loyalty by facilitating a modest refund in record time without asking me a single question. Now I am going to tell you the story from the other end, how a local brick-and-mortar company lost me forever for half that much.

wine corksThis was the very definition of a no-brainer. My wife and I recently went to dinner at a neighborhood restaurant, which since it opened offered a no-corkage policy if you bought a bottle of wine at a shop a few doors down. We had done this several times and enjoyed the restaurant as well as spent a little more on wine, since there was no mark-up after retail. All was well with the village—until we walked in one Friday with a store-bought bottle stickered with the retail shop’s brand, only to be told while the waiter was uncorking it that the no-corkage fee no longer applied weekends but was now good weeknights only. I asked why the fellow at the wine shop hadn’t told me that since we had just been there and mentioned we needed the sticker for the restaurant to waive the corkage. The waiter said he had no idea why, but it was “out of his authority” and he would send over the owner.

This restaurant is about 1500 square feet, maybe 20 tables. The owner arrived a half-hour later. I told him the situation bothered me, that we had followed the routine only to be told after our bottle was open that corkage would apply because it was Friday. He responded, “Well, they should have told you at the wine shop. I’ll have to follow up with the owner there. He should tell his people that we changed this policy. I have to charge you $10 tonight.”

“You’re the owner,” I said. “You have to charge me $10? You have no leeway to make this one-time exception since we didn’t know you changed the rules?”

“We changed the policy so I am going to charge you,” said the owner, and he walked away.

We will never go back to that restaurant. I have told this story to perhaps 50 people around town. I am not naming the restaurant here out of loyalty to our community to prevent harm to our local businesses. Yet here you observe the destruction brought on a business by making the single most important mistake a business can make: not loving customers.

What’s interesting about this particular scenario is that we almost always order extra food when we don’t pay the restaurant for a bottle of wine, and we take home increased leftovers. We also tend to tip heavily and supplement the night’s bill so the restaurant doesn’t get beat on its own promotion. We understand the cost of customer acquisition and operating in a competitive environment. We understand you can change your policies anytime you like and rules are rules, no doubt to be fair and ensure continuity in the enterprise. We also understand that we have choices, we like great value more than we like a reduced bill, and we like to be treated kindly when we are guests in your house. You don’t have to do any of those things. Feel free to advertise, run Groupons, buy ads on Google, whatever you think gets us in the door. What gets us in the door fastest is getting us back in the door after we just had a swell experience. It doesn’t get any cheaper or easier than that.

When it comes to your customers, never think small. Your customers are your lifeblood. Without them your business is nothing. It takes years to acquire a customer base, and marketing is often your biggest intangible risk investment in a new business. You can lose a customer in an instant, and the potential damage to your reputation is unquantifiable. Yelp and OpenTable are only the beginning of your problem when you do a customer wrong. While bad reviews there are almost impossible to shed, they pale in comparison to the power of WOM: Word of Mouth. Casual conversation now travels at internet speed. Word of mouth escalates and compounds exponentially, but we are more predisposed to hear the bad over the good. It might take a dozen people telling you a place is good to try it. It might take only one to get you to avoid it all costs.

Is this just about small local businesses? I think not. Listen to the people around you talk about their cable companies, their phone carriers, their insurance companies. What’s their #1 complaint? Well, cost of course, getting gouged for mediocre products. And then? Customer service. They can’t get anyone on the line to help them. When they do get someone on the line they have little discretion to help them. These customers are held in place by a lack of choice—a situation that won’t last forever. When these neglected customers do have a choice—and they will—they will be gone, gone, gone!

Last week I attended a talk called The Rise of the Chief Customer Officer. I agreed with everything the speaker had to say about making customer service strategic and giving the Chief Customer Officer a seat at the table, except for one thing: I don’t think a CEO or an owner can afford to delegate this title; I think the CEO or owner has to be the Chief Customer Officer. If you want to show your employees what matters to you most, lead by example. Customers matter most. They pay for you to have a business. Contrary to an old cliché, they aren’t always right, but they do always matter. If you don’t woo them at every turn, they will vote with their feet. Or their mouths. Or their smartphone.

Thinking big means thinking long term. You don’t want one-off transactions; they are much too expensive. You want ongoing relationships, where customers return to you because you treat them like gold. Invest in relationships and the transactions will follow. Leave a few bucks on the table today for lifetime value that is unlimited.

Our local restaurateur got his ten bucks for the bottle of wine per his policy. Good for him. The next ten times we don’t walk into his cafe at $100 per seating costs him gross sales of $1000. The ten people who don’t come in because of word of mouth cost another $1000. Multiply by ten years of lost loyalty, that’s $20,000 of topline vaporized. You won’t need an MBA to calculate the negative ROI on that cold hard ten-spot in his pocket.

Still want that extra margin on a bottle of wine on tonight’s tab?


What to Give Your Boss as a Holiday Gift

Office gift exchange can be a nightmare, especially when it’s your boss.  Believe me, I know, it’s as hard to give as it is to receive.  The ritual is uncomfortable, filled with anxiety and trepidation.  Most everyone wishes it would just go away — let work be work, gifts are for the kids, right?

Let me share with you a personal anecdote, and then an unlikely bit of advice about what I think your current boss really wants from you on the gift list.  Then I will share an idea about how to make the holidays even more satisfying with one of my personal favorite “work things” to do this time of year.

Somewhere along the way I acquired more than a passing interest in wine, and as people with a passion for something have a tendency to do, I talk about it from time to time.  I will try not to bore you with the details, but when we lived in Northern California we ventured to Napa and Sonoma on weekend drives, and that is where I began to discover the creative process behind wine is like art, poetry, and storytelling blended metaphysically with supply chain economics, agriculture, and marketing.  With my obsession around the marriage of technology and media (show + business + bits + capital), the real world metaphor of wine was a perfect diversion for me, a subject of endless study.  The more I studied every aspect of the vineyard, the more I talked about it.

Oh, those frightened employees!  How pretentious!  How intimidating!  Now we have to spend a week’s pay on a bottle just to avoid a CLM (Career Limiting Move) every holiday season.  Nightmare on Goldstein Street!

Nope, not at all.  Never asked for a bottle, never expected a bottle, and when I would get one, if it was pricey, I would donate the value of the bottle to charity and nicely advise the giver to please lighten the wallet load in the future.

Yet whenever I did get a bottle as a gift from an employee, here is what I would do — I would write his or her name on the label and the date of the gift, then store it in a closet, which eventually evolved into a more formal wine cellar.  There it would sit in the dark (luckily, my chatter reinforced my predisposition for reds, which even if they don’t age well, usually hold up if stored decently).  Then, years later, on random occasions, I retrieve the bottle because I have a taste for it, almost always forgetting who gave it to me.  That’s when I look at the label, smile, enjoy the wine, and I do my very best to find an email address or phone number for the person who gave me that bottle and I get in touch — to thank them again, to tell them the wine was good (it always is), to see how their career is going, to see how their family is doing, just to reconnect.  It’s an excuse to recapture a great slice of life, and that brings the gift full circle.

Some of you reading this have received those calls or emails from me.  Some of you haven’t because I can’t find you, but most of you haven’t because the wine is still down in the cellar and you will — sooner or later, you won’t escape.  That’s what makes the gift unique.

So if someone gives you a bottle of wine, no matter the circumstances, try the same trick, and wait as long as you can before you reach for the stored bottle, let time pass, and then open that bottle as a way to remember that person, and an excuse to reconnect with them.  You will be surprised how much fun this is, how gratifying it is, and what a great sense of continuity it brings in tying together seemingly unrelated chapters of your life as your network of colleagues expands across the globe and lives their lives with all the ups and downs we all experience.

Okay, that was the anecdote, but it was for illustrative purposes only.  This post is not about wine shopping or storage.  Let me tell you now what your boss really wants most from you for the holidays:

A better relationship.

It’s the same thing your boss wants with you all year long.  It’s the same thing you want with your boss.  You don’t need a bottle of wine to get there.  A kind note will do.

Want to know another secret?  If you write your boss a kind note at the holidays solely for the purpose of improving your relationship, your boss is likely to save that note, just like a bottle of wine.  This is not about sucking up, office politics, or any other hallway chatter you are better off avoiding — if you don’t want to do it, you should not, it is not a job requirement.  Of course your boss may not be the shiniest object in the room, perhaps you even think he or she is a nasty freak who is out to get you.  That might be true, but in case you haven’t already figured it out, bosses knows they make mistakes all the time, they worry about it, they feel terribly about it, and most of them wish you didn’t think they were out to get you.  You might prefer to fill a turquoise Tiffany box with treasures you can leave on the boss’s desk to faking a kind note, and if that is the case, you should do neither.  A wrapped gift is only a token of expression, a means to outreach, so if there is no outreach, don’t bother, you’re wasting your money.  You can give a gift, you can not give a gift, honestly I don’t think it will get you off the S-List, nor will it lead you to unwarranted promotion.  Good bosses are smarter than that, and they know the rules.

The holidays are an opportunity for reflection on all fronts.  If you do use this time of reflection to build a relationship, to settle a difficult matter of the past, to ask a candid question about how you could be doing better, to tell your boss what you like about your job, that could be a path to bonding with lasting value — and by lasting, I mean years beyond the job you currently have.  I stay in touch with some employees for decades — not all of them, but surely the ones with whom I built a relationship.  That door is open for you now, you just have to decide if you want to walk through it and have a conversation.  Hierarchies are one directional, no question about that.  Relationships cut two ways.  Hierarchies are determined by corporations with documents on record in the HR department.  Relationships are determined by people, no files at all.

This leads to my final point: What about that former boss, the one you never did give a bottle of wine or a note?  Surprise that person!  Email them as if you opened the bottle of wine and saw his or her name on it.  Tell that old boss what you are doing, how’s the spouse, the kids, the dog, the job, the retirement, the untenable new boss with whom you wish you could have a relationship.  We used to do this with Holiday Cards, and some people still do with photos of the family sitting under a palm tree on their summer vacation in Tahiti.  No one has time to write all those notes anymore — we are a busy, wired, short attention span theater crowd that communicates more efficiently on Facebook, Twitter, and in blog comments.  So just pick one each year, and see what’s there.  You will be surprised.

Whether your long-ago boss or your current one, believe me, he or she doesn’t want you to spend your hard-earned money on them.  They do want to know how you are doing.  That is a gift that is as priceless as it is ageless.

Celebrate the day, keep peace in your heart, wish for a better world and do your best to make it so!