Tag Archives: Customer service

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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October 31, 2013 · 8:34 am

Churn

We have a statistic in the television business called churn.

English: Butter churn, Dunserverick Museum One...

(Photo credit: Wikipedia)

Actually, it’s more about the cable TV business and it’s short for churn rate.  As is sometimes the case, Wikipedia defines it nicely:

Churn rate, when applied to a customer base, refers to the proportion of contractual customers or subscribers who leave a supplier during a given time period. It is a possible indicator of customer dissatisfaction, cheaper and/or better offers from the competition, more successful sales and/or marketing by the competition, or reasons having to do with the customer life cycle.

Obviously, if a company is to grow, that growth needs to exceed its churn rate – you need to gain more customers that you lose.  Simple, right?  It points out pretty clearly that keeping customers is at least as important as adding new ones.  That simple thought is what popped into my head as I read the results of some research from the Accenture Global Consumer Pulse Survey.  You can look for yourself here.

What they found was that companies are not working hard enough to stop consumers from switching. In fact, among people who changed service providers – banks, phone companies, retailers – 81% said that the company could have done something differently to prevent them from switching.  Maybe it’s not as simple a thought as it might appear?  As MediaPost reported:

The report says that while service providers… have more data and insights into consumer desires and preferences than ever before, providers have failed to meaningfully improve customer satisfaction or reverse rising switching rates among their customers.

Ouch.  So what does that mean specifically?

  • 91% of respondents are frustrated that they have to contact a company multiple times for the same reason
  • 90% by being put on hold for a long time
  • 89% by having to repeat their issue to multiple representatives
  • 85% of customers are frustrated by dealing with a company that does not make it easy to do business with them
  • 84% by companies promising one thing, but delivering another
  • 58% are frustrated with inconsistent experiences from channel to channel

Marketing is often focused on growth.  However, as any financial person will tell you, improved profitability can come from cutting expenses as it does from growing revenues (and I’m a strong advocate for the latter since those cuts often kill growth and revenues but that’s another screed!).  Churn is the cutting of losses and helps reduce costs – I think it’s cheaper to keep a customer than to acquire one.  It’s also something that businesses can fix if they focus on it.  None of the study’s findings are difficult to address IF there is an awareness and a commitment to do so.  Is your business ready to do that?

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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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