Smart Customers versus Dumb Policies (the customer will always win)

Why is it that some companies seem to go out of their way to frustrate their customers? A friend of mine related the following story about his experience with a fast-growing regional wireless company, we’ll call them Wireless North (WN for short).

My friend has four phones, unlimited texting, two data plans, and who knows how many other features in his plan. He also has two children in college. One of those children, David (not his real name, lest WN figures this out), lives in another state this semester at his co-op job. My friend got an email from WN saying David has used over half his calling minutes (400) outside the calling area. So, like any good Baby Boomer, Dad calls WN customer service to get more details. He’s told that the calling plan prohibits a customer from having more that 50% of their minutes “roaming.” He’s then told his two options are: 1) stop using the phone until David gets back into the calling area, or 2) find another provider.

Now, is it just me, or does this not make sense? WN wants a long time customer to STOP using the service or go to a competitor? Do they not realize it costs at least 5 times more to get a new customer than to keep an existing one?

Meanwhile, David, in true Millennial fashion, has a solution. “Don’t worry, Dad,” he said. “When I come home this weekend, I’ll call you before I go to bed. Leave the phone call going over night, and by morning I will have more than half my minutes in my calling area.” Problem solved.

So what can we learn?
• First, don’t underestimate the intelligence of your customers. If you come up with a policy, rule, or process that is not in their best interest, they will find a way around it.
• Second, make it easy for existing customers to find solutions when the way they use your product conflicts with a company policy. Don’t suggest they go away….they probably will.
• Third, get rid of company policies that don’t make sense (see #2).

The customer service rep was following the rules. Your customers, however, won’t. Recognize that up front and find ways to make it easy for your customers to deal with you. They are always smarter than you when it comes to spending THEIR money.

Learning from Rejection

As the parent of a high school senior, we are in our own version of March Madness. The end of March is typically the deadline for college acceptance letters… or, rejection letters. The rule of thumb is: big envelope good, small envelope bad. If you’ve even had a teenager anxiously waiting for a big envelope from The Perfect College of His / Her Dreams, you know what we’re going through.

Sue Shellenbarger of the Wall Street Journal knows. Her article about rejection is dead on. She profiles some of the biggest names in business and entertainment – Warren Buffett, Ted Turner, Tom Brokaw to name a few, who were rejected by their first choice. Their look back at the rejection and what it taught them should be required reading for every first semester high school senior (first semester because in the second semester their brains turn to mush and Senioritis is out of control).

Listen to what the Oracle of Omaha says: “The truth is, everything that has happened in my life…that I thought was a crushing event at the time, has turned out for the better.” He went on to say ”You learn that a temporary defeat is not a permanent one. In the end, it can be an opportunity.”

In business, you’ve got to face rejection. If you’re in sales, you face it daily. If you’re not facing rejection, you’re not pushing hard enough. As the leader of a small professional services firm, I hate being told “no” by a prospect. But sometimes getting a “no” is better than getting “maybe” or getting silence. “No” gives you direction. It can help you know what’s working and what’s not. And sometimes, a “no” from The Perfect Customer I Have Always Wanted to Get is a good thing.

Early in my practice, I chased after a prospect who I thought would accelerate my fledgling business. He decided not to use me for his big plans. Eight months later the firm he did choose was fighting him over unpaid invoices, unrealistic expectations, and a Titanic case of scope-creep.

In business, as in college, a rejection can be the best thing you could ask for. Good things often come disguised in small envelopes.

This Anchor Won't Weigh You Down

Ok, you’ve come up with The Next Big Thing. It’s a "game changer". “It will revolutionize the way people (fill in the blank).” Cool. Now how do you describe it?

Like most innovators, you struggle with telling people what it does. And forget about how it works. That’s way too complex.

So you stumble around as you talk about it, all the while watching your audience get more and more confused about this product that’s going to change the world.

What you need is an anchor.

People need to have a point of reference for new things. In a recent Fast Company article, Dan Heath uses the example of explaining NetFlix to someone who never heard of it. You could talk about mail order movies that or easy to return in a simple package. Or, you could say, “Think of Blockbuster, but by mail.” Having a frame of reference (Blockbuster) helps us understand in general, then the twist (but by mail) tells us why it’s different and better.

Most of my clients are technology start ups. They’re run by extremely bright, passionate engineers and scientists who understand the mechanics but sometimes struggle with explaining their products.

One company, NanoMech, was recently interviewed by the statewide ABC-TV affiliate. Keep in mind NanoMech is an advanced materials and nanomanufacturing company. Not an easy subject to explain. But they were able to use anchors and focus on the benefits of their products rather than how they worked. The result was an easy to understand description that a general audience could understand, yet one that more sophisticated viewers could appreciate as well. Click here and scroll down to see the segment.

For innovators, describing the value of your product is the key to your success. Anchors can get you there.

Oh, You're From New Orleans? Do You Know Drew Brees?

Feeling connected to others is a basic human need. And in these tough economic times, we are even more motivated to build or strengthen bonds we have to family, friends, co-workers, and acquaintances. Witness the remarkable growth of Facebook and LinkedIn.

That connectedness is important in customer relationships as well. A recent article in the Journal of Consumer Research describes research where pairs of participants were given brochures for a “personal trainer” and asked for feedback. The resume of one of the trainers in each paring was altered to include their birth date, which just happened to match that of the participant. The participant who saw the altered bio was more inclined to enroll than the participant who viewed the bio without the birth date.

The implication for marketers is that anything we can do to find commonality with a customer or prospect will increase our success. Not an earth-shattering finding; in fact we’ve probably known this intuitively for quite some time. But now we have proof that finding common ground is good for business.

So, the next time your server comes to your table, look at her name tag and don't be surprised if it lists her hometown. It's a way for the restaurant to connect with you. And get you to order the pie for dessert.

I Can Has A Profit?

If laughter is the best medicine, then Ben Huh is Dr. Feelgood. Huh is CEO of Cheezburger Network, the wildly successful family of websites that feature hilarious captions of cats, dogs, human failings, and other common topics. How successful? Well, for starters, the company was profitable from day one. How many website start ups can say that? Second, the company is averaging 8.5 million page views a week and 11 million visitors per month. That’s how successful.

Fast Company recently interviewed Huh and asked what’s driving his company’s success. I came away with three lessons we marketers can learn from Huh and Cheezburger Network.

Make it relevant. Cats, dogs, and humans are always relevant. And finding something funny about them is universal, especially with an economy in the dumps, high unemployment, higher underemployment, and an over generally blah outlook in society. Huh has found a way to connect.

Make it a community. Users contribute photos and open it up to others to submit captions. It’s a place people want to come back to and bring friends. You don’t just stumble upon these sites. Someone tells you about them and gets you hooked.

Make it simple. The sites are all arranged similarly, so when you go to a new Cheezburger Network site, it’s arranged like the other ones and is familiar and comfortable. Also, there are few moving parts, just a caption and a photo or video. You either get it and laugh or don’t and move on to the next one. Usually, you get it and move on. That’s what’s driving their skyrocketing page views.

I’m a dog person, so my favorite is I Has A Hotdog. In 5 minutes I can get a laugh without wasting a lot of time, which is easy to do online. That’s the beauty of Huh’s sites. They add just enough content every day to keep you coming back, but not so much that you have to spend hours staying current.

Congratulations to Ben Huh for taking a simple concept and building a Cheezburger Empire.

Charging for a Free Lunch

No one likes to pay for something that used to be free. And no company likes to tell its customers they have to start paying for a service they got for nothing. Nevertheless, it happens all the time and, in many cases, it causes hard feeling and ill-will between customer and company.


The folks at Pandora, the online streaming music service that allows you to create your own radio “channels,” faced the same problem. Due to royalty issues with its providers, Pandora had to begin charging for some of their content. As a devotee of the service, I was leery about what was coming. After all, Jott used to be free, and after they hooked me, they cut off the free service.


Here’s an excerpt from the email I got from Tim Westergren, the founder of Pandora.

First, I want to let you know that we’ve reached a resolution to the calamitous Internet radio royalty ruling of 2007. After more than two precarious years, we are finally on safe ground with a long-term agreement for survivable royalty rates – thanks to the extraordinary efforts of our listeners who voiced an absolute avalanche of support for us on Capitol Hill. We are deeply thankful.

While we did the best we could to lower the rates, we are going to have to make an adjustment that will affect about 10% of our users who are our heaviest listeners. Specifically, we are going to begin limiting listening to 40 hours per month on the web. Because we have to pay royalty fees per song and per listener, it makes very heavy listeners hard to support on advertising alone. Most listeners will never hit this cap, but it seems that you might.

Ok, so far so good, although I was expecting the big “but” that was going to nail me with big fees. This is what came next:

We hate the idea of capping anyone's usage, so we've
been working to devise an alternative for listeners like you. We've come up with two solutions and we hope that one of them will work for you:

Your first option is to continue listening just as you have been and, if and when you reach the 40 hour limit in a given month, to pay just $0.99 for unlimited listening for the rest of that month. This isn't a subscription. You can pay by credit card and your card will be charged for just that one month. You'll be able to keep listening as much as you'd like for the remainder of the month. We hope this is
relatively painless and affordable - the same price as a single song download.

Your second option is to upgrade to our premium version called Pandora One. Pandora One costs $36 per year. In addition to unlimited monthly listening and no advertising, Pandora One offers very high quality 192 Kbps streams, an
elegant desktop application that eliminates the need for a browser, personalized skins for the Pandora player, and a number of other features: http://www.pandora.com/pandora_one.

Tim goes on to add that a third option is to stop listening once you get to the 40 hour cap for that month. He closed the email by saying they’ve created a counter that will let you see where you are to date toward your 40 hour cap and by thanking me once again for using the Pandora service.


What’s the catch? There is none. Pandora has had to change their business model and did so in a way that almost makes you feel good about paying a small fee to continue being a customer. What did they do right and what can marketers learn from this? I see three things:

1. Lay out the issue clearly – Tim spoke of the royalty settlement and its impact on his business. No fluff, just straightforward talk.


2. Give the customer options – I now have three choices (four if you count stopping listening altogether). One of these three will surely work for me.


3. Give the customer time to react – I got Tim’s email in early July. His changes won’t be effective until August, giving me plenty of time to consider my options (not that this is a life-changing decision, but I do like my Bob Seeger and James Brown channels).

Product management’s role is to set pricing strategy. Part of that strategy includes how / when you change price. Pandora’s decision on how they increased their price says a lot about their brand and the type of company they want to be.


P.S. I responded to Tim’s email and got a prompt (less than 24 hour) response from Jasmyn, a “listener advocate” thanking me for my comments and my support of Pandora. Well done!

Making a Difference

Back from a mid-summer’s blogging break…..

One of the reasons I love what I do is that I get to work with passionate visionaries. And sometimes, these visionaries have an idea that could change the world, or at least a piece of it. I’m currently helping a start up that is trying to change the world for all the right reasons. InvoTek, a firm based in the small northwestern Arkansas town of Alma, makes assistive technology devices that help people with high spinal cord injuries use a computer. Their flagship product, AccuPoint, uses sophisticated laser technology to enable quadriplegics to operate a computer using head movements. This technology has changed the world of a small group of users who can now download pictures of their grand kids, send emails to friends, and organize a reunion of Navy buddies. For more on InvoTek, see the Fort Smith, AR City Wire article.

Here is a for-profit company with a non-profit’s vision. It shows in their products, their commitment to their customers, and even in their tag line: Compassion Driven Innovations. They understand that a solid business strategy starts with changing someone’s world.

It’s like a mentor once asked me, “Do you want to make a dollar, or do you want to make a difference?”