The rules of social media: engaging customers in public forums

Today's post is a quick weigh-in a topic that has drawn a variety of opinions: should you engage customers directly in social media forums? Some people suggest this is a good way to get out in front of issues, and there are numerous success stories where a company has engaged people through Twitter, Get Satisfaction, Yelp, and other forums. Other people have decried this practice as an intrusion, as though the company being discussed should simply sit out the conversation and let the masses decide for themselves.

Here's my opinion: it all depends.

Ultimately, its your customers (not you) that decide whether you picked the right approach. This leaves you with three basic choices:

1. Do whatever you can to understand your customers so you can appropriately respond to their needs. Online, the means knowing whether or not your customers want you to engage them through public forums.
2. Educate your customers to convince them you are working in their best interests. This approach can be highly effective, but it can also backfire if your educational efforts miss the mark.
3. Segment your customer base by those that like to be served the way you like to serve and those that don't. Spend your time, money, and marketing efforts pursuing the customers who like what you have to offer. Spend as little time, money, and effort dealing with customers who want what you don't have.  This approach works great if there are a lot of customers who like you just the way you are. It doesn't work so well if it whittles down your potential customer base to your Mother and your dog, the two "people" who love you unconditionally.

A quick example...

Recently, I posted a recommendation on Yelp for one of my favorite Italian restaurants, Antica Trattoria. I was pleasantly surprised to get a message from the owner thanking me for the review. His outreach made me even more loyal and I can't wait to go back. Here's what he wrote:

"Hi Jeff T.,

I wanted to personally thank you for sharing your positive experience at Antica Trattoria on Yelp.  Our staff works hard to ensure that you enjoy your time here, so it's most rewarding to hear that our restaurant helped to make your dining experience a positive one.

Please feel free to ask for me and when you are next coming in- it would be my pleasure to meet and thank you again in person.  In the meantime, please let me know if you have any suggestions for us, as we are continuously trying to improve.

Best wishes,

Francesco Basile

Chef/Owner Antica Trattoria"

Where do you come out?

The cost of inattentiveness: a brand new "Pepsi Challenge"

Lynne Marek from the National Law Journal reported yesterday that Pepsi had lost a $1.26 billion default judgment to two Wisconsin men. The two plaintiffs alleged that Pepsi used ideas and information stolen from the men to develop their Aquafina brand of bottled water. That's a pretty big verdict, but what's even scarier is it was a default judgement.  That's right - Pepsi lost because they didn't bother showing up to court.

Pepsi's excuse for not coming to court? The secretary who received notification of the lawsuit simply put the letter aside because she was busy preparing for an upcoming Board meeting. I sure hope that Board meeting was full of important, profit-generating agenda items like a presentation on "Fool-proof ways to make $1.26 billion."

Sure, the case is likely to go back to court and the $1.26 billion judgement is unlikely to stick, at least in total. But it does raise the question of inattentiveness and poor prioritization. What important things are we not paying attention to that could cost us money? What are we doing to ensure that a single employee doesn't trivialize something extremely important, whether it is a lawsuit, a customer complaint, or an opportunity to get a-hold of Pepsi's presentation on "Fool-proof ways to make $1.26 billion" from their recent board meeting?

This story motivated me to clean out my inbox today. Hopefully, it creates some good for all of us. Except for Pepsi.  I'm a Coke fan.

Don't let the wolf in your hen house

Last week, my plumber hired a drywall guy to come to my home and patch up some holes from a plumbing repair. After completing the job, the drywall guy handed me his business card and said, "Let me know if you ever want to do any remodeling - I specialize in kitchens and baths." The problem? My plumber also has a remodeling business that specializes in kitchens and baths.

This situation is a modern-day example of sending a wolf to check on your hen house. Sure, the wolf has excellent references and works for a reasonable rate, but the wolf ultimately wants to eat your chickens! Any situation where someone you hire has very different interests than yours can result in unwanted consequences.  Economics fans refer to this as the principal - agent problem: both parties are guided by their own self-interest, so it is important for the principal (the plumber) to create the proper structure so the agent (the dry wall guy) doesn't work against the principal's interests.

Here are some more examples of wolves in the hen house:

• A customer service rep is hired to provide outstanding service. The customer service rep wants a an easy, stress-free job. The result: the customer service rep only provides outstanding service in situations that are stress-free.
• A company hires a salesperson and pays her a commission on gross sales. The sales rep wants to make as much commission as possible, so she offers discounts to make the product more attractive to customers. The company's sales look good, but their margins are so poor there is very little profit.
• A company hires a technician to make house calls and do in-home repairs. The technician loves the technical work, but can't stand dealing with people. The repairs are always done correctly, but the company's customers frequently complain about poor service provided by the technician and often take their business to a competitor.

The solution?

These situations aren't necessarily simple to resolve, but the starting point is deliberate alignment. You can use our simple competency model to work this out for anyone you plan to hire -- before you hire them! Download our competency model.

Your accounting department could be costing you money

Companies routinely allow their Accounts Payable and Accounts Receivable departments to have direct customer contact. Unfortunately, many of these people are programmed to have a "numbers and rules" mindset, and that's exactly how they approach people outside the organization.

The results often include inefficiency, damaged relationships, and a vicious cycle that starts all over again.

Accounts Receivable

Your A/R department can hurt your image and ultimately cost you money in two ways.

The first is through poor billing practices. Earlier this week, I received a bill from a vendor. The job I hired them to do wasn't complete and I was told I would be billed for the entire job once it was finished, but the bill came anyway. To top it off, the bill was dated 13 days earlier and the terms were net 10. Yup - I received an unexpected bill that was already overdue when it arrived.

The second problem comes through poor collections procedures. Every business person knows cash is the lifeblood of the business, but many A/R employees are stubborn, stern, and anti-social. There are certainly many outstanding A/R people out there, but if your company doesn't employ any of them, the net result could be angry customers AND slower payments. Double whammy!

Accounts Payable

It's a time-honored tactic for A/P departments to sit on invoices until they feel like paying them. Some A/P departments have a blanket "net 30" or "net 45" policy, and the time clock usually starts when they receive the invoice (not when the company receives the invoice or the job is done). How can this hurt the company? Let me give you a few examples:

• Upset vendors = declining service. Try asking a vendor for a big favor after you've developed a pattern of paying late, you have aging bills outstanding, or your company's A/P department is just a plain ol' hassle to work with.
• Upset vendors = tightened credit. Poor treatment from your A/P department could lead to stricter credit terms or no credit at all. That means more cash up front for purchases or you'll need to tap into a secondary source of credit to make purchases. (The opposite is often true too - treat your vendors well and they are likely to be more flexible.)
• Late fees aren't assigned to MY cost center. Good ol' cost center accounting ensures that any late fees assessed by your vendors are typically passed along to the department that originated the work, not the A/P department that sat on the bill. This means no incentive for them to change behavior, but it also means your company is paying more than it needs to.
• No pay, no work. Many companies a firm policy of cutting off all business if too many bills are outstanding. It makes sense, doesn't it? We work to get paid, so if we aren't getting paid, we don't work. (Seriously, would you keep coming to work if your company didn't pay you?) The problem here is you may have an urgent need on one hand, but a belligerent A/P department means you also have no credit. Yikes!

The bottom line is your accounting department shouldn't be exempt from treating your customers, vendors, and even your employees with respect, professionalism, and a spirit of cooperation. It's cheaper and easier to work this way, plus you can brag that you have one of the few "cool" accounting departments.

Three Customers You Shouldn't Serve, Part 3 of 3

This post is the third in a three part series on customers you shouldn't serve.

In part one I identified three customers you shouldn't serve:

1. They want what you can't deliver well
2. You can't serve them profitably
3. They are abusive

In part two I outlined a few strategies for handling these customers. Ah, but no strategy is fool proof. Sometimes, you have to part ways. My company has said "No" a few times and fortunately, these situations have generally gone well.

They wanted what I couldn't deliver well

A client of mine wanted me to facilitate our time and priority management workshop for their team. I conducted a needs assessment and discovered that the training program wouldn't yield any results, but a few simple changes to their workflow would increase their productivity by at least 10%. The client insisted we do the training but didn't want to make the changes, so I was left with a dilemma. On one hand, I could accept the paying assignment and conduct a training class that would probably disappoint the client in the long run.  On the other hand, I could walk away from the engagement. 

As a middle ground, I proposed the client make some of the changes first and then I would conduct the training. The client agreed to this change, but procrastinated on making the requested changes because they were "too busy". I continued to check in over time until eventually it became clear we wouldn't move forward. Too bad for me? Not really. Sure, I would have loved to help the client achieve some real results. However, this was the next best thing. We avoided a confrontation and they eventually just faded away. Sometimes, that's the best option.

You can't serve them profitably.

Consulting firms are notorious for charging large fees. Consultants will tell you that companies are notorious for trying to get consultants to provide free services in exchange for PR opportunities. I guess it's a vicious circle.

I've had quite a few potential clients ask me to deliver a complimentary keynote or workshop at a company meeting. The promise is always some variation of "all our division heads will be there and they'll get to see what you can do -- they may even hire you." As a novice consultant, I fell for this line of reasoning a few times until I realized it was unlikely any business would come of it.  Meanwhile, I had spent a day or more of my time preparing, traveling, and delivering the presentation. Not very profitable indeed!

My new strategy is to counteroffer. For example, I referred an alumni group to a speaker who actually went to that school. I gave another client the option of applying my fee to any subsequent business their division heads threw my way (they declined). A third client agreed to pay a smaller fee in exchange for me advising them on creating their own program. In each of these situations, the client was still relatively happy while I didn't engage my firm in an unprofitable activity. Gotta love options!

They are abusive.

I've found that politely offering to end the relationship is an outstanding cure for an abusive client. On a few occasions, I've told a client "I'll give you two options. First, we can treat each other with respect and courtesy or two, we don't have to do business together.  I'll be OK with either choice that you make."

Every time I've given my "two options" speech, the client or customer has picked option one. OK, that may be 5 or fewer times, but I'm still at 100%. My theory is customers are often abusive because they think they can get away with it. Give them two clear choices and their change in demeanor has always been instant. Nobody wants to walk away because they couldn't control themselves!