May 19, 2014 · 12:19 pm

Fee-ed up

The family and I went to a concert last night – more about that tomorrow.

CeBIT Home 1998 student day ticket with barcode

(Photo credit: Wikipedia)

In the process of setting up the evening out with the family, I bought tickets online.  I actually bought one too many so I sold it online as well.  If you’ve done either – along with a host of other things – in the last couple of years, you’ve probably noticed that there are fees associated with those activities.  Obviously there is the price of the ticket but there are handling fees, convenience fees, delivery fees, processing fees and who knows what else.  I’m fee-ed up.  Let me explain.

I certainly don’t begrudge anyone from making a buck for providing a service.  My issue is that many businesses seem to have followed the lead of the airline industry in nickel and dime-ing their customers to death.  Let’s take last night.  The face value of my ticket was $118.  On top of that, I paid a service fee of $12.80 (almost another 11%) and a $5 facility charge (another 4%) per ticket.  There was also a $3.25 order processing fee.  The last one is, in my opinion, where the nickel and dime mentality lives.  In light of the $102 they made processing my order for the tickets, do they really need another $3.25?  At least I didn’t get charged to use my own printer to print the tickets out…this time.

Then I sold a ticket.  Since it was an in-demand show, I was able to do so for $225.  Of course, that was before I paid 15% to the site that helped me sell it – $34.  At least that fee was straightforward.  Had I been selling baseball tickets, however, there’s also a $1.50 per ticket MLB transfer fee and a $2 per ticket delivery fee. So while MLB got paid by selling a seat, they want to get paid again (as if the beer and hotdogs aren’t enough) because what might be an unused ticket moves to someone who will be there.

It’s not just tickets.  Looked at your phone bill?  What’s an “administration fee” except billions in the phone company’s pocket and a buck out of yours? Bought a car and paid a “document fee” of a couple of hundred dollars? Bank fees are among the worst and try telling the cable company you don’t want a remote control for which they charge you every month.  Then there are the airlines…

I’ll say it again.  It’s fine to  collect a fee for delivering a product or service.  Be upfront about it (you usually discover most of these fees after you’ve “bought”).  Make them clear and reasonable and in line with what the customer would expect to pay for your service.  The way to lose big bucks in my mind is to collect nickels and dimes in a sneaky way on top of those bucks.  What do you think?

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May 16, 2014 · 10:52 am

Reviewing Reviewers

I’ve got criticism on the brain this Foodie Friday, not because I’ve been the subject of any but I read a restaurant review and it got me to thinking.

Workers in the kitchen at Delmonico's Restaura...

(Photo credit: Wikipedia)

There are certain elements to a restaurant review that are certainly objective.  The silverware either was or was not clean, the water glasses were or were not refilled on a regular basis.  Much of what one would talk about, however, is very much subjective.  What is good to the reviewer might not be very good to you at all.

At least with a professional reviewer, one can hope that in addition to a palate that’s been educated a bit they would demonstrate fairness and honesty and not just try to write a clever rip job for the sake of doing so.  The good ones have an appreciation that they are not in an objective field but they know that the critic’s job is to educate and illuminate and to give you a comprehensive view of the dining experience, hopefully making multiple visits to the eatery to form an opinion.  Today, of course, everyone is a critic – just spend 5 minutes on Yelp.  The standards I just mentioned don’t apply.

This would drive me crazy if I were a chef.  Then again, I think there’s a business point in it which can be helpful to all of us.  The smart cooks just go to work and present the best possible quality food every day and enjoy themselves while doing it.  They acknowledge that they’re being evaluated each time they present their product but they don’t let the criticism overwhelm them.  It’s a tool to help them measure themselves and improve and some is more accurate and valuable than others.  They review the reviewers in the context of their own skills and standards.

We forget that in business sometimes.  Satisfying 99.9% of 1,000 customers means someone is unhappy.  If they’re a loyal, long-term buyer then that review is based on multiple visits and is an informed opinion.  Listen and learn.   More importantly, ask if you put out your best product.  Have you set your standards high enough and commiserate with your abilities or are you slacking?  When your year-end review isn’t as good as you expect, is it an objective, fact-based listing of where you’ve come up short or is it a subjective rant?  Review the reviewer but don’t dismiss a bad one out of hand if it’s accurate.

We’re all evaluated each time we produce a product.  Listen and learn and present your best product.  When you do so with high standards, the reviews will be fine.  So will your sanity.

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May 15, 2014 · 9:20 am

Love The One You’re With

One of the ongoing discussions I have with clients is the need to balance acquiring new customers with servicing exiting ones.

First customers

(Photo credit: stavos)

Many of the businesses with which I’ve been fortunate to have worked over the last few years place a far greater emphasis on acquisition than they do on showing the love to those who are already in the fold.  One of my mantras has been that it’s almost always more cost-effective and profitable to retain a customer than to find a new one and I tend to work with my clients on finding good ways to service their existing bases while helping along new customer acquisition as a lesser emphasis.

That’s why I was happy to read a recent study of small business owners from the Manta folks.  In conjunction with BIA/Kelsey, they found..well, I’ll let them tell you:

In 2012, BIA/Kelsey reported that small business owners prioritized customer acquisition over customer retention at a 7-1 ratio.  Recently, a new trend is developing as 61 percent of small business owners surveyed report over half of their annual revenue comes from repeat customers rather than new customers and that a repeat customer spends 67 percent more than a new customer  (emphasis mine!). In line with this, small business owners are spending less time and money on customer acquisition; only 14 percent are spending the majority of their annual marketing budget to acquire new customers, and only 20 percent are investing most of their time and effort to acquire new customers.  This is a significant shift in behavior as small business owners have realized that existing customers play a more influential role in business success than new customers.

In other words, existing customers bring in more dough than new customers.  The question then becomes identifying and segmenting existing customers into group that you can address in a manner appropriate to their buying habits.  You need to be having different conversations with the person who hasn’t ordered in 3 months than the one who orders once every 10 days. Maybe you handle the top 10% of your customers differently or maybe you look at spending levels, purchase cycle, or even those folks with an affinity for a specific product you’re wanting to emphasize.

No matter whether it’s loyalty programs, special customer service agents or insider news and information, customer retention needs to be a focus of every business, something I think needs to be placed ahead of new customer acquisition.  You?

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