A Startup Guy

Have you ever heard the term “Fair Weather Fan”? Those are the sports fans who love a team when they’re up and turn on them when they’re down. Funny thing! You often see the same thing in business. My grandmother was a loyal JC Penney customer for decades. Once she was on an extended trip to visit family (4 weeks) and during that time her Penney’s credit card bill came due. She didn’t get the bill because she was away. It was all of $3.50. Just before returning home she went shopping at Penney’s and learned they had cut off her account. She had spent thousands with them over the years and they cut off her card for a mere $3.50 that was just a couple of weeks overdue. I’ve even had a utility turned off because I mistakenly underpaid my bill by $2.00. I’ve heard of banks charging customers $35 NSF fees for $0.30 overdrafts.

I’m not suggesting that businesses should let customers run roughshod over them. And I’m not suggesting that customers should shirk their agreements. But sometimes, life happens and customers have a problem. And a little flexibility and loyalty on the part of a business could go a long way to earning long-term customer loyalty. And in this day and age, customer loyalty is getting harder and harder to find. In part, because it’s not returned by companies. I’ve heard the phrase “customer loyalty” used in business discussions for years. I can probably count on one hand the number of times I’ve heard businesses discuss loyalty to their customers.

So, how do you institute loyalty to customers? Here are a few ideas:
1. Love your customers: This one sounds a bit silly, but there are actually many businesses out there who don’t really love their customers. They realize they need customers, but they could care less if you walk through the door or if it’s someone else; just so long as a warm body comes in. I’d rather go somewhere they’re genuinely happy to see ME. In my town there is a great store just off the downtown square named The Country Gourmet. They LOVE their customers. They know us by name and they even save bubble wrap for my 4-year-old son who loves the stuff. I visit them often just to say hello… and I almost always spend money, no matter if I was planning to or not. I just love them!

2. Allow team members to use their judgement: If you can’t trust your team’s judgement, why did you hire them? Allow them to determine (at least in reasonable cases) if something should be handled a different way. “Uh, boss, are you sure we want to cut this long-time customer’s credit line off over $3.50?” Most of these issues arise due to strict corporate policies. “Company policy is….” If this statement comes up in your business frequently, you have a problem. Some company policies are necessary. Many are simply a crutch to give employees an excuse to not make a decision.

3. Figure out what your break even point is and don’t haggle about money below that: I used to work customer service for a major national book distributor. We had a standing rule there, if the customer is resquesting a credit under $5, just give it to them. The hassle factor, time needed to research issues and aggravation factor for customers cost way more than five bucks. It was cheaper for the company to just resolve the issue immediately, removed a workload that would bottleneck more serious issues and simply made the customer happier to just handle it. “You got a defective paperback in your shipment? Nah. Don’t waste money returning it. I’ll just send you a credit.” Problem solved. Compare that to my utility issue. I made a small error, and over $2 they cut off my utility, made me go through the aggrivation of aruging with them over it, made me wait to have it turned back on, then charged me a $40 reconnect fee. If utilities weren’t a monopoly, I’d have fired them that day.

How does your company practice loyalty to customers? Share your tips and ideas in the comments section.

Sometimes, the cost of savings is too high.

Recessions are tough. They’re not fun to live through, and I’ve endured several. But what really stinks is business people frequently make things worse than they have to be. We panic and give in to fear and that causes smart business folks to make soem really dumb moves. We scale back on marketing, even if our business isn’t suffering, “just in case.” We make cuts that damage customer service and product quality. I saw some of these situations play out with someone I know just in the past couple of weeks.

I’ve got a friend who sells a product to local businesses. He’s great at what he does and his service is phenomenal and he treats his customers like gold. I’ve frequently seen him do incredibly fast product deliveries (much quicker than a customer should ever expect) and eat extra rush or production charges in order to over-deliver to his clients. So it was with shock that I saw a couple of his long-time customers ditch him in favor of an untried vendor in order to save rediculously small amounts of money. In one case, it was a penny. A PENNY! In another case it was to save a couple hundred dollars on an order that was tens of thousands of dollars. That means that customer went with a vendor they don’t know (whose quality they don’t know) in order to save half of a percent. What’s worse, both could have gotten a better deal from their trusted vendor had they just told him what price they needed to beat for him to keep the business.

Here are a couple of issues with this situation. First, the customers are almost certainly responding to fear and perhaps sheer panic. People making buying decisions at companies start to get worried in recessionary times that they may be seen as expendible and they start looking for ways to cut costs… at any cost. However, if you have a great relationship with a vendor you can trust, that’s business gold right there. Dependable vendors who love you are not easy to find. Ones willing to move heaven and earth to deliver to you are worth a fortune. Dumping them over pennies or fractions of a percent in savings is just plain stupid. This guy I know has already saved these companies thousands by not passing on extra fees he incurred trying to keep them happy. Now they’re going to dump him for a few cents without even a word. Sad.

I’ve seen on multiple occasions where a buyer, thinking they’re getting a better deal from an untried vendor, dumps their reliable vendor. Then they get let down by the new vendor. Suddenly, they’re in a panic for product. They’ve burned their bridges with their old reliable vendor and they can’t get the product they need, at the quality they need, quickly enough. Suddenly, this buyer is looking inept and expendable to his company. Trying to play games has landed them exactly where they didn’t want to be.

Find vendors you can trust. If  you have to pay a little more for them, they’re worth it. Be loyal to them and they can help you make it through tough economic times. Treat them as expendable and you may find yourself out in the cold.