by Paul Jarvis
Referrals work because they build trust by proxy. A referral is credible because someone you trust is telling you that they trust a certain company or product. And since you trust the person telling you, that sense of trust is instant and immediate with the company or product as well.
Joel Klettke, an in-demand freelance writer, says that 80 to 90 percent of his good leads for potential clients come from word of mouth. When he’s recommended by someone else, he’s found that those leads come with healthy expectations for a project and the costs involved, as well as the assumption that he’s an expert (not just a paid technician). Joel doesn’t have to spend time or resources on sales pitches with these referrals, since they’re already sold on working with him. He just has to determine whether the project is a good fit.
In my own service-based business, all of my leads came from word of mouth as well. Early on, I decided that instead of spending time and money on marketing and outbound sales campaigns, I’d invest those resources instead in making sure every client was absolutely happy about having decided to hire me. Happy clients then did sales pitches for me, unasked, by telling everyone they knew that I was the person to hire for design work. For over a decade (until I moved away from services into products), these word-of-mouth referrals created a waiting list a few months long.
Even product businesses like Trello — a SaaS (software as a service) that lets you collaborate on projects online — have grown their reach and customer numbers, mostly through word of mouth. Trello has had 100 percent organic growth (i.e., no paid ads) to more than ten million users simply because people talk about its product, often, and in places visible to large groups of people, like social media or blogs. Trello has even developed fun games (that loosely relate to their product, like “Taco Out”) that help create shareable moments. With the core of their product being a free version, Trello can convert people who find out about it into customers with not much extra effort. Coupled with the ease of use and helpfulness of its software, Trello’s massive (unpaid) sales force of customers tells everyone they know about this software.
LISTENING AND UNDERSTANDING: A LITTLE GOES A LONG WAY
Kate Leggett of Forrester Research found that keeping customers happy and helping them succeed reduce churn, increase the likelihood of repeat business, and even help in winning new business. In other words, when your customers win, you do too. In truth, your customers don’t care if your business is profitable — but if you help them become profitable too, they’ll never leave you.
Helping your customers as individuals requires as much empathy and care as it does to sell whatever it is you’re offering them. You have to be able to understand your customers and their needs to serve them effectively.
Lady Geek, a London-based consultancy, developed an “empathy index” (published in the Harvard Business Review) that combines publicly available information and proprietary data to rank global companies based on how empathetic they are — toward both their customers and their own employees. The five most profitable companies on the index rank at the top of the empathy scale. For example, number-three LinkedIn (with an empathy score of 98.82) is not afraid to go where its users are, even if that’s a rival platform like Twitter, which ranks twenty-fourth (with an empathy score of 86.47). This approach illustrates that LinkedIn puts the needs, interests, and choices of its customers above its own business objectives — which pays off by increasing LinkedIn’s bottom line.
The more you understand your customers — their needs, wants, motivations, and desires — the more you can feel with them and the better you can serve them. This kind of customer service is more than just the lip-service corporate speak of “you matter to us.” This is customer service that takes specific actions and puts strategies into place that begin with listening and move toward understanding.
There’s a common misconception that empathy is for weak, nonprofit, hippie-lifestyle businesses, but in fact it’s a most useful tool to drive real profit. This comes down to several simple facts: the more you understand your customers, the more you can tailor and position products that provide real value to them, the more you can help them with support requests, and the more you can learn from them, because customers understand buyers better than you do. After all, they are buyers.
The first step in treating customers empathetically is listening to their needs; with this knowledge, we can drive innovations or new product ideas. MIT’s Eric von Hippel has produced a substantial body of research showing that a resounding number of profitable innovations within companies have originated with customers — more than 60 percent. With this research in hand, 3M’s Medical-Surgical Markets Division tried to fix its poor innovation record in the 1990s by creating some new products based on information from “lead users.” Within five years, the results were quite dramatic: the division was bringing in $146 million in average revenue from user-lead innovations, compared to $18 million in average revenue from internally led innovations.
Understanding customers requires not just providing exceptional handling of their support requests but then gaining a bigger-picture idea about the types of questions and requests that are coming in. Even in a company of one, it’s important to recognize the general theme of each request and to manage it in a way that makes patterns and clues in the data discernible later on. It helps to see patterns by organizing all feedback and suggestions in a central location. For example, if you find that support requests are primarily on a certain topic, maybe you could do a better job of teaching users about that topic. And if a handful of requests on a certain topic continue to come up again and again, perhaps that topic can be the basis of your next user-led innovation initiative.
Best Buy is a stellar example of a company that doesn’t just listen to customers but actually takes time to understand customer feedback and put it to use. The company shares customer reviews on its website with vendors to encourage them to improve their products based on what customers want. Best Buy also rewards many customers who provide feedback by giving them incentives and discounts on store purchases.
Sometimes empathy in larger companies takes the form of refusing to let bureaucratic red tape get in the way of helping a customer. A few years ago, an elderly man was snowed in and stranded in his rural Pennsylvania home during the holidays. When his out-of-town daughter found out, she began calling grocery stores in his area to see if any would deliver food to him, since he didn’t have enough to weather the storm. After calling several stores — none of which offered home delivery as a service — she called Trader Joe’s. The employee said that it was not Trader Joe’s policy to deliver, nor was it a service they typically provided, but given the extreme circumstances they’d gladly get food delivered to her father. After she provided a list, the employee even suggested additional items that would fit her father’s low-sodium diet. When it came time to arrange payment for the order, the employee said not to worry about it — the order and delivery would be free of charge — and to have a happy holiday. Thirty minutes later, the order was at her father’s house, having cost nothing. Empathy in business can sometimes mean just being a caring human being.
Like the pizza delivery story, this story captivates us because it reminds us that some companies are less interested in “business as usual” and their bottom line than in keeping customers happy and taking care of them as fellow human beings. Even though most companies say that customers are their top priority, it’s uncommonly rare to see that idea put into practice. But in going far beyond the extra mile, this kind of extraordinary service turns customers into loyal and raving fans. These are the kinds of stories that get shared, and being talked about far and wide can only benefit a business.
In short, customer happiness is the new marketing. If your customers feel that you are taking care of them, then they’ll stick around and they’ll tell others. This is the precise way in which companies of one can compete with behemoths in their market — by outsupporting them. It’s much harder to compete with big
ger companies on aspects like volume, low prices, or logistics. But it’s much easier as a smaller business to compete on the personal touches — going the extra mile and treating customers like humans, not numbers. That’s a major advantage for any company of one.
SUCCESSFUL CUSTOMERS BUILD SUCCESSFUL BUSINESSES
Since financial success (i.e., profit) ensures longevity, most business owners naturally spend a great deal of time thinking about how they can make their businesses more successful. But what most business owners or even team leaders often fail to consider is their customers’ success. After all, your successful customer has the financial means to continue to support your business, which in turn increases your profit. So your customers’ success leads to your business succeeding as well.
When a company looks at customers as impersonal transactions or orders, it’s easy for that relationship to devolve into one focused on how much money can be made from them with the least amount of money spent. But a company that believes customers represent relationships that can be both mutually beneficial and long-term succeeds when its customers succeed.
Adam Waid, the director of the Customer Success Department at SalesForce Pardot, doesn’t want to take chances with helping customers find wins. In fact, Customer Success — devoted to providing training, implementation assistance, best-practice recommendations, and ongoing support — is the company’s largest department. This effort has made SalesForce Pardot the number-one most innovative company according to Forbes magazine, and its customers have seen an average 34 percent increase in sales revenue through the help offered by its Customer Success Department.
Cindy Carson, the director of Customer Success at UserIQ, believes that the most successful customers are those who start off on the right footing, with tailored onboarding processes. Her team even looks at each customer’s user case for their software to fully understand how UserIQ can benefit them the most; then they provide segmented training that highlights the specifics that will help each customer gain wins.
Growth often happens organically in a customer-first approach, based on realized profits, because even though you’re entirely focusing on customers’ success, the by-product is growth in your customer base from their slow and steady evolution into your sales force.
Jeff Sheldon, who runs Ugmonk, a boutique clothing line for designers, is obsessed with quality — in both the products he creates and sells and the support his customers receive. If a shirt doesn’t fit quite right or something is wrong with an order, he’ll ship a new shirt right away and not even require that the wrong order be sent back. Because Ugmonk takes care of them, customers take care of Ugmonk by routinely posting links to the company on social media, with photos of them wearing Ugmonk clothes. Sheldon receives a lot of free publicity from industry influencers and magazines talking about Ugmonk and his obsession with the quality of his products.
Focusing on customer success is a mentality and a way of doing business for a company of one that encompasses all aspects of a business. It begins before a product is even created, with planning to make sure everything is done correctly and is of the best quality. This way of doing business includes customer education (which we’ll talk about in Chapter 9) to improve their skill set and foster their success.
Some companies view some customers as too small to matter, especially when it comes to success. But if you take this shortsighted view, you may wrongly assume that your customer’s situation or size won’t ever change. After all, your own company of one, with its focus on being better rather than bigger, might also be thought of as “too small to matter” by the companies where you’re a customer. In adopting this kind of mind-set, you lose sight of your own customers’ long-term strategic importance and loyalty. A customer who pays $10 a month for a service and sticks around for ten years is worth a lot more than a customer who pays $100 a month but cancels your service after only a few months. Smaller businesses can also wield a lot of influence, since they can easily amass large followings on social media and massive mailing lists (both of which can scale your company with no need to grow).
Finally, to be the most helpful to your customers, you sometimes have to look beyond the problems they’re presenting to you. The underlying reason customers are asking for help is often not obvious: sometimes they’re looking for specific answers, but sometimes they’re asking for a certain feature without even being aware that’s what they’re doing. For example, when I was doing web design, clients would often want me to design a site that, in their words, would simply look great. Over time, though, I realized that wasn’t the main reason most customers wanted to hire me: what they really wanted was a site that would look great but also generate more revenue. When I changed my sales pitch and began speaking about how good design could help a potential customer achieve more profit, the number of projects I landed from sales calls more than doubled.
Listening to what your customers really need and want is key for companies of one.
WHEN THINGS GO WRONG (AND THINGS ARE GOING TO GO WRONG)
It’s not a matter of if, it’s a matter of when. Every business has so many moving parts, so many places to interact with customers, and is typically so reliant on at least a few suppliers or partners that mistakes can and will sometimes happen. Trying to avoid mistakes at all costs, or pretending that mistakes never happen, is not a viable strategy. More realistic is having a plan for when they do happen.
Just as the transparency discussed in Chapter 3 is important internally for both leaders and employees, it’s equally important to be transparent outwardly with your customers. That doesn’t mean sharing everything, but it does mean being open about your company’s relevant highs and lows, as they could have an effect on your customer relationship. If your business has been treating customers empathetically, they’ll tend to be more understanding when things go wrong — but only if you immediately work to fix or resolve issues.
You have to own your mistakes — even those caused by someone else — by taking personal responsibility for them before someone else blames you for them. The first step is apologizing like a real, empathetic human, not a corporate PR-sounding robot. Customers don’t expect perfect — they just expect problems to be dealt with fairly, empathetically, and quickly.
A few years ago, the vendor I used to collect payment from my customers had a software bug that double-charged dozens of people. They ended up paying $600 for a $300 product, which none of them were happy about (to say the least). It felt like the worst-case scenario: I was taking more money from my customers than they had agreed to pay for my product.
Although technically it was the software vendor’s fault, since it was their software that had a bug in it, I took full responsibility — because it was my company’s name on the store that sold the product. I immediately emailed every single person affected — even those who didn’t yet realize they’d been double-charged — and informed them of the steps I was taking to prevent the mistake from happening again (switching vendors, at great cost to my company in time and money) and my plan to return their money as quickly as possible. I ended the email with my phone number in case they had questions or concerns. Of the dozens of customers affected, only two asked for full refunds (the $300 double-charge refund plus the original $300 cost of the product).
Although I definitely had a couple of irate customers — and I couldn’t blame them for that — most people were understanding and acknowledged that software can involve bugs. And by taking a hit to my bottom line and absorbing the costs of switching vendors, I helped secure my customers’ confidence that I was working toward making things right. What I learned from this experience was the importance of treating my customers the way I’d want to be treated if the situation had been reversed. I couldn’t have done that by either “ostriching” (sticking my head in the sand and hoping not many customers would notice the blip of a double-charge followed by a refund) or saving money by continuing with the bug-filled vendor software. The long-term strategy o
f keeping loyal customers who were happy with my product trumped the short-term cash loss.
Some companies don’t allow employees to apologize in any way because they fear the legal consequences of admitting fault. Unfortunately, this approach can make customers angry, especially if all they want is to hear someone owning a mistake. This book is definitely not offering legal advice, but it’s worth noting here the 2015 New York Times report that doctors who are transparent about errors and offer apologies to patients are actually sued far less for malpractice than doctors who deny wrongdoing and defend mistakes. Two years after the University of Illinois adopted this practice of transparency, with full apologies, its malpractice filings dropped by half. A separate study by Nottingham University found that in most cases apologizing costs nothing — companies that simply apologize for mistakes and work to fix them fare better even than companies that offer financial compensation.
Acknowledgment of fault is powerful. It shows empathy, a willingness to own the problem, and a desire to then fix it. And as the studies cited here all found, apologizing effectively can cost dramatically less than a lawsuit or a refund. But an apology doesn’t work if you’re not genuinely sorry — most people can sense a disingenuous corporate “sorry.” Before you respond, give yourself time to understand the situation and fully listen to the complaint. This usually involves validating a customer’s wronged feelings, being transparent about what happened, and clearly detailing how you’ll fix the problem and ensure that it doesn’t happen again.
Companies of one need to turn complaints into opportunities to do better and use them to attempt to build closer relationships with the customers who stick around. A company that doesn’t both listen to and understand complaints does so at its peril. For example, in 2011 Netflix ignored its customers’ requests and split apart its DVD and streaming businesses, effectively increasing its prices by 40 percent. As a result of that strictly cost-saving move (and not listening to their customers), Netflix stock fell to half its previous value, the company lost 800,000 customers, and it was soon ranked as one of the ten most-hated companies in America, based on a survey done by 24/7WallSt.