The $20 Brand Bond

Amazon LogoLet’s talk about lifetime value of a customer for a few seconds. I use the term “a few seconds” purposefully.

Recently I bought one of those discount vouchers for a neighborhood deli, where you pay something like half of face value and then cash in full value when you’re at the restaurant. This one wasn’t from Groupon or Living Social, but from Amazon Local. When I went to cash it in, the deli was out of business. Tough times always for restaurant retail. It happens. Went to another place for lunch. Oh well.

I got home that night, went to the customer service web page for Amazon Local, found the template under Contact Us, and submitted a one-sentence email notifying them of the event. How long did the response take? Less than a minute. Full credit.

Yep, Amazon Local “bought” this voluntary endorsement for a whole twenty bucks. Plus my ongoing loyalty. My lifetime value to Amazon the Brand just increased a good deal more than twenty bucks, perhaps a hundred times that, maybe more. Why? Well, first because they respected me and my time, but more so because they laid the pipe to assure me that if something bigger ever needed to be addressed, I could count on them.

What did they do right internally to cause this function to be enacted externally? For one, they fully empowered their staff, someone in a call center likely on the other side of the world. There is no way in that brief turnaround their staff person had to ask anyone for permission to do anything. They saw an issue, they jumped on it, case closed.

We look for WOW THE CUSTOMER moments in business all the time. We spend hundreds of millions of dollars on advertising to get someone to sample a new product or service, so that somehow a WOW THE CUSTOMER moment can occur. This one cost an entire twenty-dollar bill.

Compare this experience to another I wrote about earlier this year, where try as I might, I could not get one of the largest retailers in the world to help me locate a $5 replacement part for a thousand-dollar appliance I had purchased from them. That retailer competes with Amazon, probably does not know it, and will never get another dollar from me. If you have a moment, go read the transcript I shared from that interaction. Coincidentally, I happen to have shared that post with a rising star at Amazon back when it happened who was aghast when he read it. He had no idea of the contrast to come.

This is not meant to be a lionizing of Amazon. Full disclosure, they were a minority investor in my previous company and proved to be a formidable competitor, daunting in many respects, not the least of which was their near-rabid obsession with precision, time to market, and transaction perfection. They had vast resources to call on that were not available to me, but they used them wisely and never skimped when it came to the customer experience. That is a big part of how they got to be best in class, and consistently one of the top performers in the Internet Retailer Top 500.

Germane to Amazon’s perfection is a mandate of setting a customer service standard that is so extraordinary and so rare it can seem financially irresponsible to emulate—so much of net margin goes right back into the expense line to serve the customer. Market analysts often shiver when they report on Amazon, wondering how their eye-popping trading multiples can last, with so much volume but so little relative profit. Amazon seems to pay little mind to these analysts, instead worrying instead about customers. That leaves them no choice but to focus on lifetime value, calculating it in complex equations with net present value back to the reinvested capital that most others would probably harvest.

How tempting it is to consume the fruit of that harvest, but harvest has to come each year, and that is why we focus on brands. Here I lionize the customer service commitment as an essential and grounding component of the brand promise. It is the shortest business case study in the world, yet almost every company you encounter gets it wrong.

A service culture in the information economy puts the CEO at the bottom of the hierarchy and the customer at the top. The customer is the boss. The people closest to the customer, individual contributors like those in customer service, are the ones who interact with customers. They make or break your brand. How much discretion and authority are they usually granted? None. How much should they have? As much as you can pile on. They own the customer relationship, so they own your future.

Go on, hire the highest paid consulting firms and retain power player ad agencies. Hold multi-day off-sites for brainstorming retention strategies. Give motivational speeches about reframing your mission and vision.

Or just be really, really, really appreciative of your customers. Love your customers, every single one them, embrace them as strategic imperatives, bonds that build moats.

What’s the ROI on world-class handling of those who frequent your brand? You tell me.

Customer Disservice

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.”

No Service Is Not ServiceOf 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.