The Experts

Psychologically, the strongest drive we have as human beings is self-preservation. And that is closely followed by revenge!

One application of this is how customers react when they feel they have been treated poorly. Understanding this concept can determine the success or failure of your business.

For more than 25 years I have been running customer service workshops and during those workshops I ask people to relate their poor customer service experiences and I ask them how they react after they have had such an experience.

The result I expected initially was that they won’t do business with that person or retail store or professional again. But what happens in reality is SO much more that that. Customers who have been treated badly will take revenge and some will go to great lengths to do so, often inconveniencing themselves to make a point to punish the business that has treated them badly.

Let me give you a few examples.

One lady in regional Australia said she was humiliated by a car salesman when trying to buy a new car (not an unusual occurrence as my research shows that about 90 per cent of women in Australia have been humiliated while trying to buy a car). She wanted that brand of car but refused to buy it from that dealer so she drove over 100 kilometres to the nearest town that had the same brand of car and bought it there so the original dealer wouldn’t make the sale. And, of course, she told everybody in her hometown of the poor experience she had.

A young man used to buy his lunch from the same place every day. It was close to his place of work and the food was good. One day he was treated rudely by the person serving him and complained to the boss. The boss told him he was “just another customer” and he could like it or lump it. Since then, he has walked close to a kilometre to another sandwich bar every day rather than going back to the first place. And told everybody at his work not to go there.

My personal favourite story was told to me by an Australian who used to live in America. He said one of the value added services of his bank, which was located in a shopping mall was “we validate parking with a transaction” so he cashed a cheque one day while he was in the shopping centre to save him a $25 parking fee. The teller said to him, “I am sorry sir but that is not a transaction so we can’t validate your parking”.

The customer said, “That’s ridiculous. I have stood in the queue for ten minutes and now you tell me you won’t validate my parking. What do you define as a transaction?” The teller said, “You must make a deposit or a withdrawal from one of your accounts”. The customer was furious and this was the “straw that broke the camel’s back”.

At this point I should mention that the customer is a multi-millionaire with several business accounts as well as personal accounts with the bank and he also had a little time on his hands. He said “Good. I want you to close every account I have at this bank and deposit the money in the bank across the road.” It took about half an hour and a few phone calls but the teller did what was asked and closed all accounts.

“Now”, said the customer, “can you validate my parking?” and the teller replied “Certainly, by closing your accounts you qualify for validated parking”. And the customer never did business with that bank again.

The internet has certainly made it easier for customers to take revenge through bad word of mouth on Facebook or negative reviews on tripadvisor.com <http://tripadvisor.com> but let me tell you the most powerful case of commercial revenge instigated by a single customer.

It happened to UNITED AIRLINES.

A rock band was travelling on a U.S. domestic flight and one of the band members saw one of the baggage handlers throwing his guitar case around (the guitar case was distinctively marked and coloured so he knew it was his) and he saw him drop it on the tarmac. When he arrived at his destination, his guitar came out broken (not surprisingly). He complained to UNITED customer service staff and they told him that there was no way it was their fault and virtually called him a liar to his face.

The band member’s response was to make up a song called UNITED BREAKS GUITARS and post it on YouTube. It told of his experience with humour and melody and was effectively a three-minute advertisement to all people to never do business with UNITED based on the way he was treated.

The video went viral!

The band member was invited onto the Jay Leno show and several other talk shows where he told the story again and UNITED’s share price went down on the stock exchange.

Eventually, UNITED admitted liability and compensated the band member.

Too late!

If you go to youtube.com <http://youtube.com> and search UNITED BREAKS GUITARS you will see that video has had more than 11 million views and every one of them is an advertisement against UNITED.

One complaining customer can take a lot of revenge!

What is the lesson for businesspeople from this?

Obviously, it is to look after your customers and not disappoint them but it is so much more than that. You MUST have the skills to deal with a complaining customer without crushing them in the process. Or they will take revenge.

Here’s how to do it.

People want three things when they complain.

Firstly, they want to whinge. Don’t interrupt them. Let them whinge. Secondly, they want acknowledgement of their inconvenience. When they have been waiting four hours for furniture to be delivered and the truckie hasn’t turned up and they are angry, they want someone at the end of the phone to say “I am sorry for the inconvenience you have been caused and I appreciate your frustration”. But that almost never happens.

What you usually get after waiting on the phone for 45 minutes is someone covering their arse and saying something like “It’s not our fault. We tried to contact the truck driver but his mobile is off for some reason”. The customer doesn’t care who is at fault, they are just angry and want some empathy and a solution. Please be aware. “I’m sorry” is not an admission of legal liability, it is an empathy statement.

Thirdly, they want to know what you can do, not what you can’t do.

I was working with a lighting company in Queensland and they had a policy that if the delivery didn’t arrive on time and the customer complained they would airfreight the lights to the customer straight away.

Not only was this not always what the customer needed, it was incredibly expensive. In most cases the air-freighting costs took away all the profit on the job. I taught the sales and customer service people to let them whinge; acknowledge their inconvenience; and then ask “what can we do to put it right?”

Guess what?

In more than 80 per cent of cases, the company did not have to airfreight the lights. The customers were angry and just wanted to be listened to. When they were listened to and had their inconvenience acknowledged, they didn’t need to have the lights air-freighted the next day (in most cases the deadlines weren’t that tight). A large number of customers, after they were pacified effectively just said “please make sure it doesn’t happen again”. My client asked them “Is it OK if we put it on the next road train rather than air-freighting the lights to you?”

In over 80 per cent of the cases the customer said “That’s fine” and my client saved the profit on the job. One thing my client did though was to have a bottle of wine and a note of apology with the lights that came the next day and in almost all cases, the relationship was enhanced rather than damaged by the incident.

You might think this is common sense but let me tell you from my consumer experience and the workshop participants who have told me poor customer service stories (and good ones too, but the bad outweighs the good about 25:1), this is happening all too rarely in the marketplace – and it is causing customers to take revenge.

A small amount of prevention (giving your staff the skills and empowerment to deal with these situations) is better than a large amount of cure (compensating the customer after they talk about you on a television show).

I hope you have learned lessons from this article and it wasn’t a waste of your time but if you did consider it a waste of your time and you choose to phone or email me to complain, I promise to listen and to treat you with respect. I don’t want to end up on Jay Leno!

Martin Grunstein is contactable on 0414933249 or martin@martingrunstein.com.au

In a business world where so many drop their price at the drop of a hat and then complain that margins are tight and it’s hard to make a profit, I find it strange that so few businesses give the consumer what they REALLY want when they ask for a price reduction, which is RISK reduction.

The money-back guarantee, which is offered by EVERY business in this country (because if I’m not happy I’ll take you to the Department of Fair Trading and I’ll win because the system is in all favour of the consumer) remains the ‘forgotten value add’, yet one that is remarkably lucrative and at the same time very inexpensive to implement (unless you give terrible service and disappoint your customers on a regular basis).


Why is this so? Simple. Because most businesses look at the downside of the guarantee, not the upside.

The downside of the guarantee is ‘the ratbags are going to get us’ and that is true, a very small number of people are going to exploit your money back guarantee. But guess what? The ratbags get you any way, whether you offer the guarantee or not!

What about the upside of the 99+ per cent of people who are impressed by the money-back guarantee and NEVER TAKE UP THE OFFER? Presumably because the product or service lives up to expectations. Sadly, in this country we market at the people who are out to rip us off instead of the people who are putting money in our pockets and that’s just DUMB!

You want real world examples? I have plenty.

I was working in the nursery industry and one of the franchise owners had the misfortune of a chain store opening up right next door. He couldn’t compete on price (he was 30 per cent more expensive) and he didn’t want to.

So what he did was he put up a big sign as an anti-opening sale that said, “We offer a 12 months unconditional money-back guarantee. If you buy a plant form us and it dies within 12 months, whether you kill it or the plant is faulty, bring it back and we will give you your money back or replace the plant free of charge”.

The franchise owner was really happy with how his sales went during the opening sale of his competitor that at the end of that six-week trial period for the guarantee sign, he decided not to take it down and he left it up forevermore.

Now, here’s the point. After having the sign up for 12 months he analysed his business and he didn’t have to give any more refunds in the course of the year he had the sign up than he did in the course of the previous year when he didn’t have the sign up – yet his business improved significantly.

Why? I’ve always said that business is about understanding human nature not tricky marketing – and human nature says that the value is in the offer, not the delivery.

How many people do you know that are going to turn up seven months later with a dead plant demanding their money back?

Very, very few, if any. That’s how many!

How do they sell puppies to children? You go to the pet shop or markets and your kid falls in love with a little dog. Now, if the pet shop owner has any brains he says, “Your child obviously loves that puppy. Pay for it and take it home and if you’re not happy bring it back on Monday and we’ll refund your money and put it to death in front of your children” (that’s just a joke by the way, I don’t advocate euthanasia as a marketing strategy).

Still, very, very few people bring the puppy back. They just want the reassurance that they can.

But the greatest suckers on earth when it comes to guarantees are golfers (myself included). You don’t believe me that golfers are the greatest suckers on earth, read a golf magazine. There are ads in golf magazines that say “If you don’t get a birdie on the first hole with this magic new golf club, we will refund your money” and these ridiculous ads work on us idiot golfers.

Why? Because the golf equipment companies know they are not selling golf equipment. They are selling HOPE TO THE INEPT! And people will pay a lot more for hope than they will for a golf club.

Let me share a personally humiliating true story that reinforces this point.

Many years ago my golf pro had a $500 driver in the window (that used to be a lot of money to pay for a driver). I was hitting the ball pretty badly but I said to the pro “I’m not paying $500 for a driver”. He replied that he had a trial club that I could have a hit with for 18 holes and if I didn’t like it I could return it and give someone else a go.

As luck would have it I hit it really well and at the halfway break in my round I went into the pro shop and said “I’ll buy it”.

The pro was walking out the back and I said “where are you going?” The pro said “I’m getting you a brand new one” I said “I don’t want a new one. This one works” (any golfer will tell you that’s normal behaviour). In fact, I’m not suggesting I am paranoid but I left the words TRIAL CLUB on it for two and a half years because while the thing thinks it’s a trial club, it knows as soon as it stops working it’s going back into the pro shop!

Now, the point I’m making is that the pro could have taken 20 per cent off the price and I wouldn’t have bought the club but by giving me a free trial or unconditional money back guarantee I am very happy to pay full price once the product has demonstrated value.

Surely, this can apply to your business.

Martin Grunstein’s work with over 500 Australian companies across over 100 industries have made him this country’s most in-demand speaker on outstanding customer service. He is contactable by phone on (02) 96623322 begin_of_the_skype_highlighting (02) 96623322 end_of_the_skype_highlighting or by email at martin@martingrunstein.com

Does the following sound familiar?

You spend 10 minutes on hold waiting to speak to someone who can’t help you because the system doesn’t allow him to deviate from standard procedure even though you are a ‘gold’ customer of that business. You tell him the issue is an urgent one and that if you can’t be helped, you will take your business elsewhere. He promises to get his boss to call you and you receive no phone call. So, in a fit of anger you take your business to the competitor – WHO IS JUST AS BAD, IF NOT WORSE!

It’s enough to make you tear your hair out.

When I run an interactive workshop on customer service, I get people to tell stories of poor customer service they have experienced as consumers to show them that once your ego is crushed, price doesn’t matter anymore, the motivation becomes revenge.

This helps people to understand two things that are fundamental to running a profitable business in this country – firstly, that price is not as crucial in the buying decision as most businesses think and secondly, in most industries you don’t have to be brilliant to be better than your competition, and hence, turning up is often a marketing advantage.

Let me share with you a few of the funnier/sadder/more outrageous examples of poor customer service my clients have contributed.

A Brisbane man had just purchased pay TV from Foxtel and was experiencing poor TV reception after installation. He rang Foxtel to get someone to fix it up and was told that although it was a simple problem that would take only a minute or two to fix, they could not specify an exact time for a technician to arrive, only a four-hour period (ie. morning or afternoon) and they couldn’t even ring him on the day when the technician knew his schedule to allow him to come home from work and let the technician in.

He got so frustrated at the fact that he would have to take four to six hours off from work that he decided to cancel his purchase of pay TV and they could come round and remove the box and cables. The Foxtel person replied, “OK sir, we can have the technician there at exactly 10.30am tomorrow to remove everything if that’s convenient for you”. My client laughed out loud but the Foxtel representative still didn’t see the funny side, or should I say the stupidity, of the situation. They are totally flexible when it comes to removing the cables but totally INflexible when it comes to keeping a customer happy.

I was speaking at an Apple conference once and they were outlining the marketing and promotional schedule for the launch of their new computer – the iMac. There was visual advertising scheduled on television, newspapers, outdoor advertising and a number of magazines, both computer and general interest. One of the salespeople asked, “Why is it that we are only advertising the iMac in women’s general magazines and not men’s magazines? Is it a marketing strategy to attract female buyers?”

The reply was staggering. “No. It’s much simpler than that. We rang four men’s magazines and told them we wanted to place advertising in their September issues but none of them returned our phone calls”.

WHAT! Nobody returned a phone call from Apple Australia to say, “We’d love to take your money”. Not even one out of the four.

A hairdresser advertised for a junior to join the salon and have a career opportunity. Pay was award wages but with unemployment high, the hairdresser was not surprised to receive 15 replies and arranged interviews for all of them. The girl who got the job asked her new boss why she was the successful candidate. “Simple,” replied the hairdresser, “you were the only one to turn up on time for the interview. Three were late and the other eleven didn’t even show up.”

And my personal favourite told to me by a client who lived in the US for a number of years.

My client’s bank had a sign in the window saying “With a bank transaction, we validate parking”. So, to save himself $15 one day, he cashed a cheque and asked for his parking ticket to be validated. “I’m sorry,” said the teller, “we can’t do that. You haven’t conducted a bank transaction.” “Yes I did,” said my client (who incidentally had an account worth more than $1 million dollars in this bank). “I just cashed a cheque,” my client replied. “I’m sorry,” the bank teller said again, “cashing a cheque is not a transaction.” “What’s a transaction?” asked my client who was getting a little frustrated by this stage. “To qualify for validation of your parking,” the teller said trying to be helpful, “you have to either make a deposit or a withdrawal from one of your accounts”.

My client had a brainstorm.

He asked the teller “Are you able to transfer money from your bank into the bank across the road?” “Certainly,” replied the teller. “I can do that with one phone call.” “Good,” said my client. “Then, withdraw all the money I have in this bank and place it an account with your competitor across the road – and please validate my parking.” “No problem,” said the teller.

Is there a deep philosophical point to this article? Not really.

I just thought you might like to be entertained a little, and every once in a while, if you’re feeling a little down you can reread this and remember that people like these are your competition.

As trivial as it seems, unreturned phone calls are the number one reason for existing customers taking their business elsewhere and right behind that is having systems that are so inflexible they defeat the customer.

Some companies are so involved in creating vision statements and implementing state-of-the-art technology that they forget to return phone calls and they fail to have empathy with what it’s like to be the customer themselves.

It seems that in the face of competition, the response, in almost all of the 100 industries I’ve spoken to, is to either match the price or lose the sale.

Not only is this bad for your profitability (and there is evidence of this margin erosion in so many industries, for example the retail margin in the IT industry on many products has gone from over 40 per cent to single figures in the last 15 years), it is bad for your future profitability - because all the people who have screwed you on price refer their friends and colleagues who expect, and get, the same cheap prices.

Where does it stop?

Well, in a lot of industries it hasn’t stopped and the results are a lot of people going out of business in the last ten to fifteen years.

But a story I was once told in the hairdressing industry gives the insight into how to turn things around and it applies to any person selling products or services in any industry!

There was a hairdresser in a small US country town charging $25 for haircuts and doing brilliantly because there was no competition in the town.

One day a competitor opened a salon directly across the road with a big sign in its window saying “$6 HAIRCUTS”.

The first hairdresser was rattled. He thought it through and realised that if he kept his price at $25, he’d lose a lot of his customers to his competitor and he may not get them back BUT if he dropped his price to $6, he may eventually drive this guy out of business but he’d go broke himself because he couldn’t afford to take $19 off his margin.

If you disregard the industry and the price difference, I believe most businesses in this country think they would have to either match the price or lose the sale.

RUBBISH!

What the US hairdresser did, that worked outstandingly well, that we can learn from, was this. He kept his price at $25 and put a big sign in his own window that read “WE FIX $6 HAIRCUTS”.

And I tell Australian businesses day after day “that’s what YOU do for a living”!

Isn’t the easiest sale you ever make the person who comes to you complaining about the poor service of your competitor? Just smile and take the money.

The trouble in this country is that we fix $6 haircuts for $6 when we should be charging $25!

How do you fix “$6 haircuts” in your industry?

How about returning phone calls promptly?; how about telling people about your extensive experience in the industry so you reassure them you’ll be around in the future?; how about guaranteeing your products and services so the customer is never taking a risk in doing business with you?; how about testimonial evidence of past satisfied clients so there is credibility in the promise you make of a good result?; how about offering personal accessibility so that your customer can contact you when they need to even if it’s outside business hours (they will very rarely contact you outside business hours but the value is in the offer, not the delivery)?; how about the range of products and services you offer making your business a “one stop shop” rather than making the customer waste time going to other places; how about profits stay in Australia rather than going overseas?

There are literally dozens of ways you fix $6 haircuts every day of your working life. The trouble is we don’t communicate these to the marketplace and and then we wonder why people come in and screw us on price.

Before your prospective customer threatens to get a “$6 service” instead of doing business with you, tell him all the things he gets for free with his “$25 service” and make the $6 service look like a risky proposition for the customer - which it is because despite the proliferation of discounting in almost every market, most people still believe “you get what you pay for”. Unfortunately, most businesses don’t tell them what they get in the offer that they DON’T pay for to help the more expensive offer compete.

Think about it.

In my business I offer twelve months marketing consultancy, FREE OF CHARGE, to all the clients that book me to speak (even for a single presentation). I will write articles for their newsletter; I will be accessible to anyone within the company who needs my advice on implementation of the things we have discussed at their conference; I will critique the work they do at the conference as a result of my session and keep working with them till what they present to the marketplace is excellent. And all of this is free of charge.

Now, like you, I have prospective clients trying to get me to discount my fee by saying things like “how much is the seminar without the consultancy?” and my answer is simple and the same every time. “I DON’T SELL the seminar without the consultancy because I’m selling a result, not just a presentation”. The consultancy is just as integral to my offer as the preparation of my presentation.

This works.

I have a client in the W.A. building industry who gets approximately 8 per cent more than his competitors by offering a home with a fixed price guarantee so that the client never has the price blow out due to unforseen circumstances (which are pretty common in the building industry) - he is selling RISK MANAGEMENT. I have a client in the real estate industry that has increased his earnings by 16 per cent in one year by implementing a service guarantee with default. That is, if this real estate company doesn’t return your phone calls within two business hours or breaks any of its promises that it makes to you when you give them the listing, they refund $200 from their fees every time they let you down - they are selling STRESS MANAGEMENT; I have a client in the Victorian grocery industry who is more expensive than the major supermarkets but they have a Community Benefit Card which means they advertise that they donate one per cent of their total turnover every month to charities and schools of their customers’ choice. Are they doing well? You bet, having donated over $4 million to charity. They are selling COMMUNITY SPIRIT.

Please brainstorm all the things YOUR customers get that are included in the price of your products or services and communicate these BEFORE they make their purchase decision. Why do we have to wait until a customer gets a $6 haircut before we fix it?

Not only is prevention better than cure, it’s more profitable!

I was sitting on a Qantas jet bound for Hawaii with my wife on holiday. I should have been happy but there was something making me angry. I could see at least 30 empty seats in business class!

No, I wasn’t so concerned about Qantas’s profitability that seeing revenue seats unfilled would upset me. I was angry because I tried to use the mountain of frequent flyer points I have accrued through my business travel on one of my few leisure trips only to be told that because the flights around Easter are so heavily booked that there was no way I would be able to use my frequent flyer points on that flight even though I booked well in advance and I am one of the “goldest” frequent flyers Qantas have. I even used all the influence I had by asking one of my clients in the travel industry to speak directly to the Qantas state manager and plead my case - all to no avail. I was told that the flight was too heavily booked to make an exception for anyone. And on the plane, a sea of empty seats and I still have enough frequent flyer points to get a seat on the next space shuttle.

I have heard Qantas’s CEO speak at conferences on a number of occasions and his message has been “there are no rules for our gold frequent flyers. These are the customers we can’t afford to lose”. Yet, in practice, like so many other companies, Qantas alienates the travelers who put most money in their pocket. The quick $5000 they made from me by getting me to pay for my ticket rather than allowing me to use my frequent flyer points could cost them half a million dollars in recommendations to my clients that they fly me (and their people) on another airline rather than Qantas.

Sadly this practice of alienating the most loyal of customers is not restricted to Qantas. It is a commonplace occurrence.

How often do we see retail stores offering huge discounts to attract new customers not realising how irritated the existing customer base must be who have been shopping there for years and not received the same courtesy. It seems as if it is the objective of some businesses to reward disloyalty rather than loyalty educating consumers to be loyal to the discount rather than to the provider of the goods or services.

A classic example of this is in the mobile phone industry.

These days you can get a brand new mobile phone for very few dollars (zero dollars in some cases) if you sign a contract to stay with the provider for a 15 month period. At the end of that period it is actually cheaper in some cases to get a new phone and sign a new contract with a different provider than buy a new battery for the mobile phone you are happy with. How stupid is that???!!!

It’s almost as if companies go out of their way to alienate the clients who have made them successful. And worse than that, when these customers leave them, their response is to seduce more new customers with “cheaper than ever” prices that embarrass the loyal throng who paid full price and some of them take their business elsewhere. If you’re looking for a strategy for bankruptcy, here it is!!!

I often ask businesspeople why they don’t say “thank you” and generally keep in touch with their existing client base, especially the “gold” clients and their response is almost always the same: We would love to but we’re just too busy to do that stuff. When you ask them what they are too busy doing, they say they are doing quotes, putting out fires and generally trying to get new customers.

From my outside perspective, they are so busy doing low payoff activity that they haven’t got the time to do they highest payoff activity of all and that is to keep the existing customers “more than satisfied”.

I believe the reason this is happening comes down to a fundamental flaw in the way management tracks marketplace results. We track all new business and gross sales versus last year but most businesses have no measure of client loyalty and if our sales are up over last year it appears good news even if we have gained ten new clients and lost nine existing clients through neglect. The logic step that has been forgotten and why so many companies since the recession of the nineties have increased their turnover but not increased their profitability, is the fact that there are great marketing costs associated with attracting the new clients and far less is needed to be spent to keep the existing clients happy yet, in most cases, NOTHING is done to foster the loyalty of the existing client base and companies wonder why their profitability is under threat!

I encourage my clients to take a percentage of their marketing and advertising budget and invest that in a post-sale client recognition programme (“CDs with your Lexus” for those that have heard me present) and they will need to spend less and less on marketing and advertising to maintain and increase their profitability.

There are two reasons for this.

Firstly, because you are recognising your existing clients, you won’t be losing key customers who experience the frustration of believing they are not as important as your new customers (like me after my Qantas experience). Therefore, the new business you create through your marketing will lead to incremental profits.

And secondly, the word of mouth of your “oversatisfied” clients will lead to new customers that your marketing would never have been able to reach.
Remember, turnover is not the vital variable. You can’t bank market share, you can only bank profits.

Today I was humiliated by a car salesman.

So, what’s new? It’s probably happened to anyone who’s ever bought a car.
What I learned from my incident is why customer service in Australia is so poor!
And what we can do about it - as consumers and businesspeople.

You see, I asked an outrageous question that triggered off my humiliating experience. This question was so impertinent and so unusual that the salesman was at first dumbfounded and eventually abusive. Not only didn’t the salesman have an answer, he called his manager over and he had no answer either.

What was this infamous question that caused all the trouble?

“I can get this car from a number of dealers. Why should I buy it here?”

“What do you mean?” asked the salesman.

I rephrased the question.

“What’s in it for me to do business with you that has nothing to do with price?”

“I’ve been selling cars since the seventies and nobody has ever asked me that”.

His answers (and his manager’s whom he called over) ranged from “Why wouldn’t you buy from us?” to “We need the money”. This was ridiculous but when they started joking together about what a stupid question I’d asked, it became too much and I walked out.

They were flabbergasted.

The salesman chased me and said he thought I was kidding when I walked out and I told him that if he thought he could have a joke at my expense to my face and then expect to take my money, he was sadly mistaken.

As I left, he told me he knew from the start I was a troublemaker.

I was angry!

But when my anger subsided, it was replaced by insight.

The reason customer service is so poor in this country is twofold.

From the consumer’s point of view, we don’t challenge businesses to give us more than we pay for. The reason that car salesman had never been asked what he did to add value to the sale is that it’s a risk for a customer to ask. The same as it’s a risk to send food back in a restaurant or to complain about bad service in a shop. If you take the risk, you might get humiliated like I did.

As a result, we “learn” not to challenge and complain and sadly, those bad businesses “learn” there is no need to do it any differently.

From, the seller’s point of view, the lesson is not just the obvious one of treating your customers with respect when they do complain. That is important, but what is critical is to ask yourself, or your partner or boss, “what’s in it for a customer to do business with us that has nothing to do with price?”. And tell your customers these reasons up front because they may not ask you for fear of being humiliated.

There are great examples in the Australian marketplace of reasons to do business with different companies that have nothing to do with the price of their products or services. And you don’t have to pay for any of them!

Target tells the world about their unconditional money back guarantee; Nissan offer free road service with all their new cars in case anything goes wrong; Muffin Break remind you that their muffins have low salt, low cholesterol and high fibre.

Telling your customers what they get that they don’t pay for (whether they ask you or not) not only shows you are concerned about their needs, it helps shift their focus away from price and onto value.

As a salesperson, it could be the difference between making sales at top dollar and constantly having to price match.

I don’t believe customer service is ever going to be perfect in this country, but, if as consumers, we regularly ask the people we buy goods and services from “what’s in it for me to do business with you that has nothing to do with price?”, two things will happen.

The businesses that have a customer focus and have an answer to that question will have an increasing loyal client base and the businesses that don’t care enough about their customers to be able to answer that question will go broke.

And wouldn’t that be wonderful?

I am less angry now. I hope you and your customers benefit from my experience.

There is much written and spoken about the importance of first impressions. Lines like “There is no second chance to make a good first impression” and “People judge you in the first five seconds after they meet you”.

If it is acknowledged that first impressions are so important, then why do so many “professional” businesses make such a poor first impression.

What’s the first thing they ask you for when you check in to a five star hotel? A credit card imprint. Why? Because you’re a thief! And that IS the real reason.

How many businesses can you think of that get a credit card imprint before they’ve even served you? Would you put up with it in a restaurant? I don’t think so. Would you accept it if a retailer took a credit card imprint when you entered the store in case you did a runner with some stock? I don’t think so. But in the industry reputed to have the best service in the world, they create a terrible first impression.

And what’s much, much worse is that you can stay at the same hotel ten times and pay your bill every time and they STILL ask for a credit card imprint when you check in the eleventh time.

One of the oldest truisms in life is that people act the way you treat them and that is why so many people steal things from hotels. They treat you like a thief, so you act like one. In fact, I was once told the rule at hotels is quite simple - If it’s not nailed down, it’s complimentary! Someone else even suggested that if you can pry it loose, it’s not nailed down but I think that’s taking it a bit far.

Ironically, I was running a seminar in Ulverstone, Tasmania and a lady told me she had run a bed and breakfast for 22 years and she never asked for a credit card imprint because that’s rude. And in the whole 22 years she never had one bad debt! I guess people do act like you treat them.

Why do the big hotel chains treat you like thieves? Because all their competitors do. If Hyatt stopped asking for credit card imprints from customers (or even just stopped taking credit card imprints from people who had stayed there before and paid their bill) so would Hilton, Sheraton and all the others. At the moment it’s not costing them any more because their competitors are making no better first impression.

But you might not be so lucky.

A lady told me she was browsing in a newsagency and one of the staff came up to her and said “This is not a library, either buy the magazine or put it back”. She did buy it - AT THE SUPERMARKET ACROSS THE ROAD and continued to buy three magazines every week from that supermarket for the next FIVE YEARS!

A businessman told me that having moved to a new area he rang up a local printer and asked about starting an account there. The printer growled back at him “You have to do a minimum of $70 a month to start an account”. The businessman hung up the phone and went to another printer where he did approximately $4000 a month in business for the next eleven years.

Am I saying the printer shouldn’t have minimum transaction level for account customers? No! Am I saying that the newsagent has to watch someone read but not buy magazines every day for months without saying anything? No! I am saying that we should give people the benefit of the doubt and not yell at everybody because of the sins of those that went before them.

In the printer’s case, set up the account and if the transaction level is seen to be low after a few months, have a quiet word with the customer and explain that it is not profitable to run an account for the low level of business.

In the newsagency watch your customers and let them browse but if you see the same person reading magazines day after day without buying any, have a quiet word with them.

It’s hard enough to get people to do business with us without treating them like criminals before we’ve built a relationship with them. And it’s potentially very costly as in the above cases.

Have a look at the first impression your business creates. Are your customers welcomed or treated with suspicion?

You think bad first impressions are not common? How many of the following situations have happened to you? You are waiting to be served in a department store while two staff members are having a personal conversation ; you ring a business that takes ten or more rings to answer the phone; you are put on hold by a receptionist and not returned to for what seems like an eternity; a tradesperson says they’ll quote on a job and you never hear from them again; a salesperson says they’ll return your phone call and you never hear from them.

I have had ALL of those things happen to me and I wouldn’t be surprised if ALL of them haven’t happened to you, too.

Newsagents of this world, let me browse for a little while and I’ll be happy and the odds are I’ll buy that magazine from you rather than the supermarket across the road.

And if you ever have some time on your hands and want to have some fun, check into a hotel and when they ask for a credit card imprint act surprised and ask them why.

After a lot of sidestepping with lines like “it’s the policy of the hotel” to which you reply “why would that be the policy of the hotel?” they’ll eventually tell you it’s in case you run off without paying your bill. It’s nice to watch the reception staff squirm before they have to eventually tell you the truth.

There’s an adage in customer service circles that says “the customer is always right”.

Well, I don’t believe it!

In fact, I believe the customer is WRONG most of the time!

But that’s not the issue.

What’s REALLY important is what the customer THINKS when he or she walks away.

If we want customers to do business with us again, they have to walk away THINKING they are right. Such is the importance of ego in the buying decision. And that requires a very specific approach when it comes to customer service.

I believe that the customer’s perception of our business when he/she walks away is more important than whether or not we solved the problem because the ego drive is stronger than the money drive.

Let me give you an example.

I was staying at a top Melbourne hotel with my wife. Midway through my stay I asked for a VCR to be put in my room so I could watch a video prior to attending a conference at which I was speaking.

The VCR was placed in my room but I couldn’t get it to work and after a good deal of fiddling with the machine, I called reception to tell them there was a problem and could they fix it or bring me a different VCR.

The hotel person, dressed in a dinner suit, came to my room walked straight to the VCR and in ten seconds noticed it wasn’t plugged in. He rectified my oversight, cued up my video and walked over to my wife and myself and said “Sir, it wasn’t plugged in.”

I felt like such an idiot!

For the next three days I avoided that hotel person because he reminded me that I was an idiot. In fact, whenever my wife and I saw two or more hotel people giggling together, we knew what they were laughing at - the idiot in 612.

And I don’t like going back to that hotel. I definitely don’t stay there as a matter of choice and if I am booked to speak at a conference there, I am reminded of how embarrassed I was every time I walk in the front door.

Please understand, that hotel person was doing what he thought was his job, but he lost the customer because he didn’t understand the importance of ego in the customer service situation.

He could have handled things differently and kept me as a customer of the hotel very easily. One way was to plug the VCR in and then make light of the situation by telling me that almost everyone makes the same mistake of not plugging an appliance in and wondering why it won’t work and that he’s done it himself a hundred times before. That way I don’t feel such a fool. Another way is to spend a bit of time fiddling with the VCR, plugging it in while I wasn’t looking, then telling me it was a technical problem that only he could fix with his expertise and apologising for the inconvenience. I would then turn to my wife and say “See darling, I told you it was a serious problem” and feel vindicated in my decision to ask for assistance.

Either way the problem gets solved but the difference is in my future intention to do business with the hotel as a result of my interaction with the staff member.

This “ego” issue is equally applicable to a selling situation because most objections are ego rather than price or other type of objections. The trouble is that a lot of inexperienced and aggressive salespeople crush the objection and the prospect’s ego with it. Let me assure you, once my ego is crushed in a selling situation, I’ll never do business with you no matter how good your product is.

Let me give you another example.

An insurance salesperson is trying to get me to buy superannuation. I tell him I can’t afford it. That’s really not a price objection, I just want to get rid of him.

Now, if the salesperson gives me a number of great reasons why I not only need superannuation but I actually can afford it, I still won’t do business with him.

Why?

Because I would have to admit to him that I was wrong and he was right and swallow my pride and admit that my objection was silly. And I don’t want to admit I’m wrong to anyone, especially not to a salesperson. So, what happens? I tell the salesperson I still can’t afford it and then ring his competitor and tell him I need superannuation, will you come out and sell me some?

And the sad thing is, most salespeople don’t know they are doing it. They believe the client when he says he can’t afford it, they go back and tell their sales manager that their products are not price competitive and then go out and crush another ego.

It happens all the time. How many times have you taken your business to a 
different provider because they treated you badly or didn’t return your phone calls? You had your ego crushed. Basically, that’s what poor customer service is. And we respond by taking our business elsewhere, sometimes paying more to the competitor just to be treated with a little respect, care and courtesy.

I spend my professional life helping business professionals understand how their consumers make purchase decisions and giving them the communication skills to preserve an ego while crushing an objection. It’s unbelievable how the focus goes away from price when the consumer is treated like a human being rather than a prospect.

In summary, I ask you to shift your focus from solving the problem, fixing the machine or making the sale to “how can I let this customer walk away from dealing with me with his/her ego in tact”

If all the people in your organisation have that focus, you WILL solve more problems, fix more machines and make more sales.

Those who’ve been in business a while will appreciate that in the last five to ten years more people are putting their “two cents' worth” into buying decisions than ever before. And many of them have no expertise in the area in which they are asserting their influence.

For example, CFOs are telling people in all departments to cut costs; husbands and wives are telling each other to trim their budget on “non-essential” items (and what one person calls non-essential is very different from what the other calls non-essential); employees are having to justify to management why they are making purchases that used to be automatic – these could be everything from the type of motor car they receive as part of their package to chocolate biscuits in the coffee room.

So, as a salesperson, in many cases the greatest obstacle to making sales at satisfactory margin is a person you don’t even get to see!

So what do you do?

Most businesses have dropped price as a strategy and claimed it’s just a part of the “tough times” mentality and that skinnier margins are a fact of modern business life.

I beg to differ!

I believe the correct strategy is to give the customer reasons to get the other person off their back even if they don’t tell you they have someone else to get off their back (and in most cases they won’t tell you).

Let me relate to you a story from my own consumer experience that illustrates the point.

Several years ago I was walking through a Sydney shopping centre with my wife and I came across a franchise called the Muffin Break. Now, Muffin Break sells muffins that are full of fat and sweet stuff and other rotten things………and I wanted one! But I had a problem in that my wife wasn't going to let me have one.

I was resigned to missing out on this wonderful taste sensation when I noticed a sign that said “NO CHOLESTEROL, HIGH FIBRE, LOW SALT” (none of which matter to me but those things are important to my wife, she’s a health professional) so I said to my wife in my most timid voice “Look darling, no cholesterol, high fibre, low salt. I think those muffins are good for me”. And after a short pause, my wife said “in that case, dear, you may have one”. And I felt terrific because not only did I get to enjoy the muffin but I out argued my wife (a rare occurrence which I savoured more than the muffin itself).

I reckon that sign is the difference between whether the franchise owner takes home $20,000 a year or $120,000 a year because it gives me the reasons to get the other person off my back without me having to ask for them. It’s not just my wife and myself, it could be the young person on a diet saying to themselves (another person we have to get off our backs is our own self!) “high fibre, low salt, I can justify it”. Or the elderly couple who’ve just come from the doctor after finding out they have sky high cholesterol so they see the low cholesterol sign and they buy the muffins. Now, you and I and the franchise owner knows the fat in those muffins will kill them in a fortnight but making the sale is all about giving people reasons to justify to themselves and others at point of purchase.

Now, let me turn this around and tell you how I use this concept in my business experience to sell my services.

Since the mid-nineties I have been offering twelve months marketing consultancy, FREE OF CHARGE, to all clients who book me to speak, even if it’s just one presentation at a conference. I write articles for their newsletters; I critique the “reasons why” they brainstorm after the session I run with them; I am even happy to critique their copy for their print advertising. I promise to reply to every email I receive (or faxes in the olden days) and do all I can to contribute to their bottom line even when I’m not speaking.

Why do I do this?

Simple. I get much of my business, in fact, most of it, from someone in a seminar audience who goes back to their boss and says very enthusiastically “we should get Martin to speak at our conference”. When they find out how much it’s going to cost the boss says something like “we’re not paying that much money for an hour”.

The person from the audience can then say “we don’t just get Martin for an hour, we get him for a year!” They then explain the free consultancy and in many cases the boss can justify my fee over a year but he/she can’t justify it over an hour.

Two factors come into play that work in my favour.

Firstly, I get paid up front so I don’t have to wait a year for my cheque and, secondly, most of my clients NEVER take up the offer of the consultancy – it is just a reason to justify the expenditure. Ironically, the ones who do take up the consultancy are my best clients and I get more business and referrals from them so I win either way. But giving people reasons to get their bosses off their backs has been instrumental in winning me some terrific jobs that I don’t think I would have otherwise have won.

Another very important thing from a marketing point of view is the fact that after doing this automatically for so many years I have worked out that the marketing consultancy is only critical in the purchase decision to about 25 per cent of prospective clients BUT I DON’T KNOW WHICH 25 PER CENT, SO I TELL EVERYBODY.

I can’t emphasis enough the importance of giving everybody all the “reasons why” even if they tell you they don’t have anybody they have to get off their back because sometimes their ego prevents them from telling you the truth. I say in seminars that some of the people who tell you that they make all the decisions are the same people who have to go home and ask their wives if they can come out and play with you!

These days we have to give people ten, fifteen, twenty “reasons why” because two are going to matter to me and a different two will matter to my boss and if you don’t get the two that matter to my boss into the equation, you may miss out on the sale or have to discount your price significantly to get it.

There is always talk among businesspeople about how price preoccupied and how disloyal customers are these days. Many businesspeople complain that some of their long term customers switch  brands or providers when they are offered only a slightly better deal by their competitor. “Where is the customer’s loyalty?” they cry.

Guess what?

I think most businesses are LESS loyal to their customers than their customers are to them!
How often do you see companies offering a special deal to get new customers or win back old customers when very little has been done to nurture the relationship with the existing customers.

One of my workshop participants said “I used to be a loyal customer of XYZ retailer until they started having massive sales advertised in the newspaper. They are offering 30% off to people who have never done business with them before while I have been paying full price the whole time and have never received any recognition from them. They are not very loyal to me so why should I be loyal to them?”

It is very well known that if you approach your telecommunications provider and tell them you have been made an offer by their competition, they will match that price to keep your business. So who are the people on the worst deals? The people who never complain and just continue to do business with that telco. In other words, their truly loyal customers.

Years ago my wife used to subscribe to MARIE CLARE magazine and she always used to renew her subscription when she received the first notice from the publisher asking her to do so. One year she forgot to renew her subscription and she received a letter offering her a make up kit if she renewed. She didn’t respond to that offer and a couple of weeks later came an offer of a make up kit and a voucher to be spent at a well known retail store. We decided to see how much they would offer her if she was “disloyal” and didn’t renew until the last minute and she eventually received over $100 worth of goods to renew. Needless to say, in future years she waited till the last minute to renew and got all the goodies.

This is ridiculous but it is the norm in the industry. The less loyal you are, the more we will give you.

Can I propose an alternative that can save money and create loyalty instead of disloyalty? When the loyal customers renew at the first opportunity (which is what the publisher wants), how about sending them a card saying “thank you for renewing, we appreciate your loyalty” and throwing in a make up kit or some other token of appreciation. That way there is an incentive to be loyal rather than to be disloyal and basically, people will do what gets rewarded – works in parenting, works in business.

I say to my clients that instead of yelling at the people who don’t pay, why don’t you reduce bad debts by recognizing the people who do pay? Get your accounts receivable person to identify all the people who have paid their account on time every month and, at the end of the financial year, send out a card saying “I notice you paid your account on time every month this year. Thanks so much for that. You made my job so much easier. I hope you’ll accept this bottle of wine as my way of saying Happy New Financial Year”.

Next year when I have 12 bills to pay each month and I am only going to pay six of them on time, yours will be the first bill I’ll pay on time every month. It’s easy to not pay a computer, it’s hard not to pay a person, it’s almost impossible not to pay a person who thanked you for paying last time. $15 spent on wine could save you $15,000 of bad debts. It all depends where you place the focus.

The word loyalty is bandied about in business with great inaccuracy.

For example, many companies have “loyalty” programmes like FLY BUYS or Frequent Flyer programmes or “Get your 10th coffee free cards”. Please understand, these are NOT loyalty programmes, they are incentive or, more correctly, bribery programmes. If you spend $17,000 on petrol, you can fly to Melbourne. Getting every 10th coffee free is effectively a 10 per cent discount. How can you tell it’s not a loyalty programme? Because when you take away the programme, the customer often leaves too.

Let me tell you the very important difference between recognition and bribery. It is where it happens in the sales process. Recognition happens AFTER the sale and bribery happens BEFORE the sale.

Let me give you a couple of examples of recognition that are cheaper and more effective than bribery.

My financial planner rang me before Melbourne Cup day a few years ago and said he was having a FREE Melbourne Cup sweep for his best clients to thank them for their business.

He told me what horse I drew and that there was a big hamper at the office that would be mine if my horse won. 

I didn’t win….but I told about a dozen different people about my financial adviser and I think he picked up a client or two from my recommendation stimulated by the free Melbourne Cup sweep.

He could have run ten Melbourne Cup sweeps for 240 clients and generated ten times the goodwill. And perhaps he did. I don’t know and I don’t care. All I know is that I felt recognised and I was motivated to tell others about him.

One of my clients in optometry has a friend who owns a book shop. Whenever he sells a pair of reading glasses for the first time, and the frames could be anything from $100 to $1000, he sends out a thank you card and a paperback novel he buys from his friend for $5. The card says “Thanks for buying your glasses from us. We really appreciate your business. I hope you’ll accept this book with my compliments and enjoy reading with your new glasses for the first time.”

The optometrist says he gets lots of word of mouth referrals from the $5 book and those people all pay full price for glasses when they do business with him. What is his competitor doing? BUY ONE, GET ONE FREE which has been decimating profits in the eyecare industry for over 20 years.

I am not saying that there is anything wrong with having an incentive for new customers to do business with you or for existing customers to do more business with you, just don’t call it a LOYALTY programme.

It is important to know that people are loyal to people, not companies or incentive programmes. If you want me to be loyal, remember my name, get to know me and ask me about what’s happening in my life when you see me, give me a call to see how my business is going or give me something that is not linked to me buying from you.

That’s what creates loyalty!

The day telcos or airlines or retail stores start spending more on recognition for their existing customers than they do on bribery for potential new customers, that’s the day we will see more customer loyalty in the marketplace, but not before.
 
Martin is contactable on 0296623322 or martin@martingrunstein.com.au or you can go to www.martingrunstein.com.au