Category Archives: Huh?

December 2, 2013 · 10:53 am

Klearly Stupid

The holiday shopping season has begun in earnest and so today let’s remind ourselves about how some online businesses deserve the equivalent of a Darwin Award for killing themselves as this big opportunity arises.

Stupid IV

(Photo credit: LauraLewis23)

You might have heard about KlearGear.com, a $47million online retailer of what they call geek toys and goodies.  They deserve the aforementioned Darwin Award for resolving a dispute with a customer in a manner that will, in my opinion, destroy their business.  Let’s see what you think.

A customer ordered something from the company way back in 2008 which didn’t arrive.  The customer then posted a negative review on the web.  Nothing very unusual about this so far, I know.  What happened next is.  Some genius at KlearGear decided it would be a good idea to “fine” the customer $3,500 for disparaging the company, citing a clause in their site’s Terms Of Service that wasn’t even in those terms in 2008.  When the customer didn’t pay, they reported the $3,500 as a bad debt to credit reporting agencies, trashing the customer’s credit rating.  You can read the gory details here.

Unfortunately for the retailer, the customer fought back and looks set to win a $75,000 judgement against the company.  Frankly, that’s the least of the retailer’s worries.  The torrent of negative commentary on social media has prompted the company to hide its Twitter account and to close off other social points of contact because of the overwhelming response.  Of course, by going into hiding the company has pretty much destroyed its own reputation on the web.  My guess is that the rest of the business will follow.

This began with a $20 item.  Instead of accepting that there was a problem – perhaps even one of the customer’s own making (which it wasn’t) – and apologizing, KlearGear escalated the problem.  The lost $20 sale is now a potential $75,000 liability which pales by comparison to the millions of dollars of negative coverage they’re receiving.  As we’ve said before, when you’re doing business the right way, the need to moderate or control customer feedback doesn’t exist.  If your product or service is great, so too will be the general commentary about you on the web and social.  We’ve also talked about how it’s easier and more profitable to sell to repeat customers than to find new ones.  That’s a huge reason why the best retailers go out of their way to minimize (or get rid of!)  bad customer experiences.

This is a textbook case on how not to handle customer service or bad reviews.  It’s about as bad as it gets and reached new depths of business stupidity.  You agree?

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November 1, 2013 · 10:35 am

Ssshhhhh…

Foodie Friday, and this week I want to talk – very quietly – about secrets. You might be familiar with the fact that some restaurants have secret menus. They range from the unofficial like Starbucks (you pretty much have to describe to the barista exactly what you mean by a Red Candy Apple Frappucino) to the official but hidden menus at In-N-Out Burger which puts the hidden menu on its website.  McDonald’s, Chipotle, and pretty much every other chain has off-menu items, as do many top restaurants.

What I find strange isn’t that some customers are “in” while others are left wondering what that was the other table was eating.  No, what I think is really odd are those establishments that are themselves hidden.  These are restaurants – and many of them are very good – that go out of their way to hide.  No sign,  and often an unmarked door so you can’t be sure of the address.  In fact, The Times just reviewed one of these places (so much for keeping THAT secret)  and pointed out the restaurant is in a basement. It is closed four nights out of seven. Its sole offering is a $100 tasting menu that is not posted in advance. Substitutions are not allowed.  Not exactly a prescription for embracing the customer and yet the place got two stars (that’s damn good here in NY, folks) and you know it will be mobbed.

There are hidden places in other cities as well so it’s not just a NY phenomenon.  But it got me wondering why a business would do this.  I get the whole “the first rule of Fight Club is don’t talk about Fight club” mentality.  I know many people like to be in on the secret and know something that someone else doesn’t.  But given that Yelp, Urbanspoon, and other review sites are out there, the odds of keeping the menu and the business itself secret are pretty slim.  I mean there are even websites dedicated to outing these places. Why bother trying?

Maybe it’s the sense of belonging to something even if they’re not really “secret.”  Maybe it’s an incredibly clever form of marketing.  In a time when it seems as if every business is trying to get louder, these are standing out by making no noise at all.  Interesting, right?

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October 3, 2013 · 8:52 am

Cell Phones And Car Keys

I did a dumb thing a little while ago. I lost my car key. I had another one at home but having only one is a bad idea because apparently one can lose them (ahem). It’s one of those “smart” keys – as long as it’s in (or on, which is how I lost it) the car, the vehicle will start. Since I was due for a regular service anyway (which is where I’m writing this post) I asked the dealer to replace the lost key with another. Want to guess the price to do so?

$275.

I don’t know about you, but I didn’t pay $275 for my top of the line mobile phone. “But your phone is subsidized”, you say. “The cell companies do that to get you to pay for the service.” Exactly the business point and it applies to your business as well.

I don’t know what the key costs to manufacture – it’s a chip, a battery, and a case, basically.  Let’s be generous and say $50.  The woman at the service desk said “it takes an hour to program” as if there’s a coder in the back frantically assembling the software.  My guess is they plop the fob into a holder attached to a computer and it’s done pretty quickly.   But I understand the cost/value equation.  Why do they charge that much?  Because they can.  It’s not as if you can go on Craigslist and find a cheap key.  The issue isn’t can they, but should they?

I bought the car for $31,000 a few years ago.  I’ve spent a fair amount in regular service with them (the car has been worry-free otherwise!) although I could have gone anywhere to get an oil change and new filters.  And now, when I do have an issue, they’re choosing to maximize their profits instead of saying “let’s forego the easy $100 because this guy is a loyal customer and he’s going to have to replace that car in a year or two.”  Their short-term thinking is influencing my long-term thinking.

I know we’re all in business to make a profit.  My job is to help companies to do so.  One model – the cell model – is to tie you to the company by making it easy to become a customer and to make sure you’ll buy highly profitable services through subsidies.  I’m not sure that’s right for a car company – I don’t see them subsidizing your purchase so you’ll buy services.  However, doing the little things that build loyalty do that as well, and there is nothing that feels better when you do something totally stupid than a brand that lifts you up, dusts you off, and helps you fix it in a way that makes you feel good.  I realize the dealer didn’t lose the key.  The question is are they going to lose the customer?

Does that make sense?

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