Tag Archive for: Sidebar: Charles H. Green

How much money do you leave on the table by trusting customers?

Case 1.
David Maister wrote about his service guarantee.  His precise words are, “If you are anything less than completely satisfied, then pay me only what you think the work was worth.”

One commenter on the posting said, “I like the post quite a bit, but I’m surprised that no one has commented on the first thing that came to my mind on the guarantee – those customers who will take the opportunity to stiff you on good work simply because of the opportunity via the guarantee."

David’s reply:

“It has never, ever happened to me. And if it did, I’d apply that old slogan "Fool me once, shame on you. Fool me twice, shame on me."
I don’t work for cheats or people I don’t trust. And if it ever happened by mistake, I wouldn’t be tempted to change the pricing policy to accomodate it! A pricing policy designed to accomodate SOBs sounds like a disaster to me.

Case 2.
I have myself on three occasions offered a complete refund of my fees because I felt the result wasn’t good enough. The client refused in each case and paid in full.

Case 3.
Joel Spolsky posts Seven Steps to Remarkable Service,

Step Seven is, “Greed Will Get You Nowhere,” wherein he talks about Fog Creek Software:

I asked what methods they found most effective for dealing with angry customers.

“Frankly,” they said, “we have pretty nice customers. We haven’t really had any angry customers.”

I thought the nature of working at a call center was dealing with angry people all day long.

“Nope. Our customers are nice.

“Here’s what I think. I think that our customers are nice because they’re not worried. They’re not worried because we have a ridiculously liberal return policy: “We don’t want your money if you’re not amazingly happy.”

“Customers know that they have nothing to fear. They have the power in the relationship. So they don’t get abusive.

“The no-questions-asked 90-day money back guarantee was one of the best decisions we ever made at Fog Creek. Try this: use Fog Creek Copilot for a full 24 hours, call up three months later and say, “hey guys, I need $5 for a cup of coffee. Give me back my money from that Copilot day pass,” and we’ll give it back to you.

Try calling on the 91st or 92nd or 203rd day. You’ll still get it back.  We really don’t want your money if you’re not satisfied. I’m pretty sure we’re running the only job listing service around that will refund your money just because your ad didn’t work. This is unheard of, but it means we get a lot more ad listings, because there’s nothing to lose.

Over the last six years or so, letting people return software has cost us 2%.

2%.

And you know what? Most customers pay with credit cards, and if we didn’t refund their money, a bunch of them would have called their bank. This is called a chargeback. They get their money back, we pay a chargeback fee, and if this happens too often, our processing fees go up.

Know what our chargeback rate is at Fog Creek?

0%.

"I’m not kidding.

"If we were tougher about offering refunds, the only thing we would possibly have done is pissed a few customers off, customers who would have ranted and whined on their blogs. We wouldn’t even have kept more of their money.

"I know of software companies who are very explicit on their web site that you are not entitled to a refund under any circumstances, but the truth is, if you call them up, they will eventually return your money because they know that if they don’t, your credit card company will. This is the worst of both worlds. You end up refunding the money anyway, and you don’t get to give potential customers the warm and fuzzy feeling of knowing Nothing Can Possibly Go Wrong, so they hesitate before buying.  Or they don’t buy at all.

How much money are you leaving on the table by not trusting your customers?

You know what it’s like.  You dread it.  You’re still not sure just how to handle it.  “It” is mentioning price, and getting this reaction:

• “Frankly, that’s just not in line with what we are thinking.”
• “Uh, that’s gonna be a little too expensive. A lot, actually.”
• Raised eyebrow…pained look…

Most sales books call this an “objection.” But “objection”—to most of us—sounds like a debate, or a trial.  It seems to call for a counterpunch, or a way to “overrule” the objection.

Instead, think of it as a cry for help.  Here’s someone who sounded pleased at the prospect of buying something, until—they felt a roadblock.  The name they give the roadblock is “price”—but they themselves often don’t know what that means.  They need your help.

You don’t know what it means either—but you know it’s one of five things.

a. That’s more than I had expected, I’m disappointed;
b. That’s more than we had budgeted for;
c. This [product/service] is not worth that much to us;
d. That’s more than your competitors have been quoting us;
e. I will not pay more than the lowest price anyone else pays.

In certain situations, every one of these meanings can be overcome.  In others, any one of them can shut down the sale.

Your job is not to get the sale.  Your job is to help the client figure out what “too much” means, and then jointly arrive at the right answer.  Which may include a sale for you—or not.

The point is to do the right thing for the customer—that starts with helping clarify what “too much” means.

How do you clarify which meaning the customer intended?  Well, you could print this blog out , carry it with you, and hand it to the customer.  Or jot down the list.  Or read it aloud.

The point is to honestly say, “look, there could be several meanings to what you just told me.  Please help me narrow it down, and let’s talk about it.”  Then talk about it—as if you were trying to help a friend decide.

The trust principles of collaboration and transparency apply here.  If you help them make the best decision, and are open in doing so, then you gain trust.  If you gain trust, you slightly improve your odds for this sale; but you go to the front of the line for when they do need what you have.

If it’s more than they expected, help them understand the market.

If it’s out of budget, explore the usual options—other funders? Next year’s budget?—and gracefully accept the answer, whatever it may be.

If it’s value, you can have a fine conversation about the source of value—and again gratefully accept the answer, whatever it may be.

If it’s about competitive perceptions, be as open as legally permissible, explain exactly how you price, how and why you discount. If you don’t have a good explanation, be prepared to gracefully accept…

Finally, if the customer just wants to get a “deal,” share as openly as you legally can just what your deals have been. Acknowledge and validate the need to “get a deal”—give them the best deal you can, and explain why it’s the best you can do.

Trust-based Selling doesn’t guarantee you the sale.  Of course, neither does hard-sell or bargaining techniques.  What it does do is greatly increase your chances of sales you should be getting—both current and future.  Not to mention helping your clients.

You become trusted by becoming trustworthy—worthy of trust. And you do that by always doing the right thing for the customer.

From Business Week’s SmallBiz magazine, February/March 2007:

The table of contents (print version only) features a small box titled Today’s Tip. This issue reads:

Today’s Tip
“Any sale should include a written statement to protect the interests of your business. In retail sales, even the wording on a sales receipt is important.”

Ah, where to begin, where to begin…

Let’s start by asking rhetorically, what does the world need more of?

a. businesses willing to take accountability for their actions, be customer-focused and deliver delight or,
b. businesses that let lawyers design sales slips so as to insure against lawsuits by disgruntled customers?

Another: do you think a customer can tell the difference between:

a. a company willing to take risks in pursuit of product and service excellence, and
b. a company focused on reducing risks from its customer base?

And another. Which company do you think employees prefer working for?

a. A company that believes in written statements surrounding every transaction, or
b. A company willing to honor the spirit more than the letter of its word?

Finally, which company do you think will be more successful?

a. One whose primary goal is to protect its own interests, or
b. One who sees its own interests as being fulfilled by serving its customers and employees’ interests?

Now, SmallBiz looks to be a good publication, with good thinking in it—as one would expect, given the BusinessWeek pedigree. And this is a tiny feature. But it’s what comes up in our unguarded moments that can be most revealing. Come on, now, BW—is this really what you want to be putting out?

Maura O’Neill—lecturer at Berkeley’s Haas School of Business—writes an article about women in business called “Luck or Hard Work?” in Forbes’ February 26 edition (members only, but it’s free).

Ms. O’Neill says she has studied the glass ceiling, and concluded that the common explanation—women opting out to have children—does not add up. It is “rarely the real reason, and never the only reason…The more nuanced explanation is that many women think getting to the top job pivots more on luck and connections than on hard work.”

In examining the World Values Survey, she thinks she finds support. She says:
 

The 1995–97 survey asked people whether they attributed success in life to luck and connections or to hard work. We found a significant gender perceptions gap that gets wider the higher you look in the professional hierarchy. Twelve percent more working men than women think it is hard work, rather than luck, that determines success. When you look at men and women who hold supervisory roles, 30% more men than women believe it’s hard work that determines success.

And Ms. O’Neill’s conclusion:
 

…the old boy network trumps 60-hour workweeks. And when women believe this, their inability to land the top job becomes a self-fulfilling prophecy…
I worry that if women don’t think that the workplace is a level playing field where effort generates promotions, they will not feel compelled to invest their best efforts. As a result, corporate America will lose out on a vast reservoir of talent.

Ms. O’Neill’s logic is tortured in two places—and manages to perpetuate a misconception about getting ahead.

First: if the premise is true—that networks do trump work weeks—then the last thing that women should do is disbelieve it. And the next-to-last last thing they should do is continue to invest in long work-weeks.

But Ms. O’Neill seems to be saying both: women should believe something she thinks to be false, and women should continue to do something that hasn’t worked. This fits the well-known definition of insanity—doing something over and over, expecting different results.

Second: Ms. O’Neill quotes the Values study as asking women “whether they attributed success in life to luck and connections or to hard work.” My emphasis on “luck and connections—” because they are surely not the same thing.

Yet—in the rest of her article—Ms. O’Neill then talks only about “luck.” "Connections" are left behind, or assumed to be a matter of luck.

Not so fast.

“Connections” are relationships that are particularly helpful for success. Relationships massively affect business success, and will do so even more as the world gets more connected.

Who you know is vital to success—Ms. O’Neill is right about that. If you have no relationships, you are dead in the water. Certain people have a walking-in advantage in relationships—those who are connected.

Is that “fair?” Certainly not. But nor is it “luck.”

Ms. O’Neill conflates luck and connections. She then suggests women substitute a belief in hard work for a belief in luck. Both points are misguided.

It’s men who are more likely to believe hard work explains success. Yet men lie.

In a world of haves and have-nots, the haves are more likely to attribute success to their own hard work, rather than having been born a) rich, b) white, c) male, d) in a good neighborhood, e) having successful parents, etc. Those who have connections are more likely to deny their importance.

Ms. O’Neill seems to want to believe in a meritocracy based on hard work alone. But that doesn’t work even as a utopian idea. It matters what you work on. 60 hour weeks on technical or desk work will—and should—get you a decent bonus and sunshades to go with your glass ceiling—but no more.

At higher levels of business, if someone—man or woman—does not develop relationships and turn them into connections, then (s)he doesn’t understand leadership, nor deserve the right to be promoted into it.

The meritocracy that does exist past middle manager level values relationships more than technical mastery—as any of a thousand books on leadership will attest.

Luck is not the issue—relationships are. If luck were the driver of success, women would be equally favored. Ironically, relationships are area where women (fairly or unfairly) may have an advantage.

If a woman (or a man) believes they are being held back by “luck,” (s)he is sadly misguided. If a woman believes she’s being held back by lack of connections, she’s probably right. To believe "luck" is the same thing as "connections" is to be confused about the role of human nature in business. Hard work does not triumph over connections, nor should it at the higher levels. To suggest otherwise is tragic for women.

The world simply is not the “level playing field where effort generates promotions” that Ms. O’Neill would have women believe. It’s not about sexism, it’s about humanity. Perpetuating the lie to women just leads them to internalize their oppression.

Luck or hard work? Do you walk to school or carry your lunch? Have you stopped beating your wife?

It’s a false choice. In the real world, it’s about relationships, connections and trust—not 60-hour work weeks or lucky stars.

It happens most overtly in a sales presentation: “So tell us, Mr. Jones, why should we choose you?”

Words vary. You may recognize:

• What makes you folks different, what sets you apart? Or,

• Why should we believe you’re different from all the others?

When a client or customer asks that question, many things are going on.

On the emotional front, “Why should we choose you?” is almost always spoken as a challenge—an aggressive act, an invitation to spar and to prove your worth. Which in turn means the presumed relationship is combative or competitive.

On a purely logical level, the question is about differentiation. Furthermore, it presumes that the answer can be given verbally, in a few sentences.

And finally, it’s a sucker’s game. Think honestly now: when was the last time you heard a seller answer that question so well that the customer sat back and said, “wow, that really is great! I guess you’ve got the job!” The truth is, people don’t buy because of differentiation—they buy because you can solve their problem.

So—what do you do with a combative partner who’s challenging you to a duel using weapons of his choice, and that he will disavow no matter how well you play?

The answer is, opt out of the game. Don’t meet fear with fear; don’t engage in a competition; don’t accept that one-liners and differentiation are the real agenda. Instead, respond with direct truth and client focus.

Here’s what it sounds like.

“Why should you choose us? At this stage, I don’t know why; it would be arrogant of me to claim I do know. In fact, it’s even possible that you shouldn’t choose us. It depends on some key questions, which I’ve brought along to discuss with you.

“But first, to answer the spirit of your question, 74% of our customers tell us they chose us for one of two reasons. 53% said it was because of our after-sales service. The other 21% cited ease of integration. Those were the main reasons our customers gave.

“Your reasons may or may not map those of our other customers—your situation is unique. One big driver seems to be the level of first-line customer interaction our customers have. Perhaps if we talk about your level of first-line customer interaction, it will become clear to all of us what is and isn’t attractive to you about our solutions.”

In responding this way, you first acknowledge an obvious truth—any blather about why a brand new customer should buy from you is nothing but BS anyway, and even if it were true, would be utterly unconvincing. So—tell the truth.

By answering the customer’s question literally—what are the reasons they should buy from you?—you show respect.

By offering actual answers to the actual question, you validate the customer’s question, and show you have real data to answer it. (BTW—I hope it goes without saying you actually do need real data).

By offering to engage in discussion, you indirectly state the only way customers make serious decisions—by engaging in dialogue. So—tell the truth and start the dialogue.

Finally, by seriously entertaining the proposition that your service may actually not fit 100% of the customers out there, you get points for speaking the truth, and save both you and the customer and lot of cost and pain trying to pretend otherwise.

When asked, “Why should we buy from you?”—tell the truth.