Monthly Archives: September 2015

Part 3: Money Makers and Penny Pinchers

As the title suggests, this theory divides customers into two groups: money makers and penny pinchers. I developed the theory based on my experience providing service for small to medium-sized businesses, though that’s not to say it would necessarily exclude individual consumers or large-scale businesses too.

It goes like this: we can say that there are two very basic approaches to turning a profit. One is to set up shop and supply or make something and expect customers to just come to you based on their demand for what you sell and given the geographic area you cover. These types of businesses may not even feel that they are responsible for being experts on what they sell; their purpose is just to sell it to you and make a profit. Let’s call these guys penny pinchers; the nickname will become clearer as we drill down further.

Penny pinchers want to increase their profit, but they’re not going out of their way to find new customers or find better ways to serve their current customers. When the population and economy of their geographic region stagnate, they will naturally have to put pressure on costs to increase profit. This will entail putting pressure on their suppliers. It may come in the form of telling suppliers to lower their costs, but it will definitely come in the form of arguing with their suppliers over everything: damages, shortages, “unsellable” products, delays in shipping that cost them time and money, inconvenient or misleading programs, etc. This is why we call them “penny pinchers:” they aren’t focusing time and energy on getting new customers or keeping current ones, so spending 35 minutes on the phone arguing with their supplier over a $22 credit seems like a good use of their time.

Another way to turn a profit is to set up shop, and go find your customers. Take responsibility for understanding your products and their needs. Get excited about your products and make a mission out of maximizing your customers’ happiness. “Wow” your customers with your service to shatter any little thought they might be having about taking their business somewhere else. We’ll call these folks money makers.

Spending 35 minutes on the phone to chase down a $22 credit seems like an absurd waste of time to a money maker. To them, that half hour plus could be spent making a couple simple phone calls to customers to help secure their commitment for another season. They see bottom-line growth as something that happens as a result of expanding your top-line, rather than the result of cutting costs.

Nested within these two types of companies will be two different attitudes. Penny pinchers might not be very outgoing, so they will probably have no problem taking on a condescending tone when dealing with suppliers or customers. Their life is about just sitting in that shop, paying taxes, and trying to squeeze every dollar out of it that they possibly can, so they don’t want to make friends with their suppliers’ customer service and sales departments. Such a relationship holds no value for them, other than the objective value of negotiating lower prices and arguing over credits for “unsellable” items.

Money makers appreciate people and value relationships, so they are more likely to be friendly with their suppliers or even strike up relationships with them. They understand the accountability that often comes with the territory when they engage in such relationships.

Manage penny pinchers they way they manage you. Give them their credit but draw the line and let them know, it won’t hurt their feelings. If penny pinchers become so demanding it’s not worth it, let your sales department know or dump them as customers if you can. Don’t second guess their complaint just because of their reputation for complaining, consider it as though they were your favorite customer (but only for a moment).

Allow money makers to flourish. Nurture them by providing them with the knowledge they seek, and take care of their issues expeditiously. You stand to gain from both types, but if you help your money makers grow, you will grow right along with them.

Part 2: The Quasi-Problem

It happens to all of us. We dial customer service, then, for reasons that make perfect sense to them, they transfer us to a different department who can help us. “What is the direct line to this customer service department?” you ask, and the number read back to you is often a different toll-free number than the one you called. Next time, you call the new number. They transfer you.

It’s no big deal, because you’re otherwise satisfied with the service you get from them. Another thing that happens from time to time is the line disconnects while you’re being transferred or while you’re waiting to speak with someone. Or perhaps your products came in and the packaging was a little busted, but it wasn’t that big of a deal.

These are all quasi-problems. They’re not that big of a deal: at worst you were slightly peeved in the moment, at best you forgot about them entirely. If this company in question continues to provide you with great products and great customer service, you will tell friends and family that you “never had a problem.”

Then comes the erroneous $833.13 charge on your bill. You call, a little bit more emotionally this time, but you still manage to stay polite. They assure you it was a mistake, and say they will drop the charge. Then you get a bill that says “past due.” Now you are fuming, rightly so, and have zero confidence that the issue will be taken care of if you stay calm.

As a quick interlude, I want to mention a concept that I read about in Crucial Conversations by Kerry Patterson, Joseph Grenny, Ron McMillan, and Al Switzler. They drew a line between facts and stories. Facts are things that you witnessed with one or more of your five senses and know to be true. Stories are when you commit that oh so human fallacy of drawing connections between the facts you observed with the objective of uncovering some greater truth about what’s really going on. Believe it or not, this fallacy used to be of evolutionary benefit: some jaguar footprints here and a rustle there could save the life of the person who made the connection.

Now back to the second-person customer service narrative. You start to subconsciously make up stories. “I bet they over-charge people at random hoping they never notice and just shut-up and pay it as part of a sales strategy… I bet it works too (I doubt it)… I bet they hung up on me on purpose too… Probably the last time I called, they made a little note in the note-thingy they undoubtedly have that says “this guy’s a fairy!! Keep charging him!!” Whether or not you realize it, your stories are making you madder even if you stay objective.

All your little quasi problems are back now. The package with the smashed corner, the hang up, the transfers: all come rushing back into your psyche. Now you’re oppressed, aggrieved, victimized, and mobilized. Now it’s up to you and your rage to right these wrongs. You get the customer service supervisor and imagine she personally approved every outrageous injustice that happened to you. You explain the issue, then enumerate a long list of the otherwise benign quasi-problems as if her ability to fix your problem increases as your degree of victimization increases. All it took was a real, bona fide problem to suddenly resurrect all the peaceful little quasi problems into an undead army of big problems.

People like to make lists of the things that happened to them; just remember that when dealing with customers. It’s really about the big problem, not the little quasi-problems, though one should strive to fix ALL problems. I recommend acknowledging the quasi-problems and making it clear that you would like to address those, but that right now you’re mostly concerned about the big problem. Once you resolve the big problem, you might find that the quasi-problems have already melted away.

Customer Service Theories: Intro and Part 1

For the better part of a decade, I have been providing and enabling my team to provide business-to-business customer service. I’ve noticed some things over the years; you can call them “laws,” but I find myself drawn to the word “theory” for a number of reasons. This is part one of a three-part series on customer service theories: it is a general theory of customers.

The Theory of Customers

I’ve written about this one before, most notably here. It goes like this: customers are your boss. Customers are the entities that pay you or your company in exchange for a product or service, (in recent decades the line between “product” and “service” has increasingly become more blurry, as it should). Your boss, be she manager or supervisor or whatever, has a similar relationship with you. She is in charge of your company or a certain aspect of your company, and she has hired or inherited you to help execute that function. She approves and determines your salary, and uses your work to help deliver some function or product to the rest of the company. In other words, just like a customer, she pays you for your service.

What’s important about this idea is how it goes against the pyramid structures you have in your head when you think about organizations and customers. You imagine a triangle, with executives at the top doing their strategizing, managers in the middle doing their planning, and technicians, associates, specialists, and others at the bottom, carrying out the daily activities and transactions that keep the business running.

You probably imagine that organization’s customer as being another triangle underneath or to the side of it. This seems like a harmless mental image, but companies do all too often suffer from the attitude of thinking they are “above” their customers. Perhaps it comes from being “up” the supply chain from your customer?

When we fully embrace the concept of seeing our customers as our bosses and as our employers, we will see those triangles differently. If our customers pay our organization in exchange for the good or service that we provide, then technically, their pyramid should be on top of ours! Think about it like this: in your company, money flows down from the top: the CEO pays your boss’s boss, your boss’s boss pays your boss, she pays you, etc. Services flow up from the bottom: your labor creates sales for your region, your boss’s labor creates global sales, her boss’s labor creates spot-on operations for the entire company, and the CEO’s labor produces good quality products delivered on time to customers. From there, the flow keeps going: money flows down to your CEO from customers, and your company’s products and services flow right back up to your customer. Money flows one way, goods and services flow the other… customers are your CEO’s jefe.

That is a technical take on it, but it crystalizes the theory. One could theoretically map out our entire economy with money flowing in one direction and goods and services flowing in the other. A less technical perspective on the same theory is well summarized by Dr. Price Pritchett in his book Service Excellence:

Without paying customers, nobody has a job. The organization will shrink, wither, and eventually die unless there are people willing to pay for what you do. Customers vote daily on how well you do your job, and they vote with their money. If your competitors serve the paying customers better, you lose the vote.