Pissed Off Customers

"Pissed Off Customers"

My Job Here is Done™ Transcript (for general use only – machine-generated and it may not be accurate.) 

 

Kelli (00:00) I want to do a podcast on being pissed off.

Dave (00:05) We could do a whole season on you being pissed off.

Kelli (00:07) No, I'm serious. It's a huge problem.

Dave (00:09) What is the huge problem? And first, are you pissed at me?

Kelli (00:13) No, no, not this time.

Dave (00:15) Okay, great.

Kelli (00:16) You know, why can't companies get this enormous problem, right?

Dave (00:20) What happened to you?

Kelli (00:21) I'm having a problem with our accounting software, and I won't mention the brand because intuitively, this problem should have been a quick fix.

Dave (00:31) I don't know what I'm going to do with you.

Kelli (00:33) Hey, maybe it's my fault. I'm okay with that, but it sure doesn't seem like it's my fault. I called a bunch of times, been promised callbacks from all kinds of levels of tech support, and nothing.

Dave (00:46) Yeah, this is unfortunately pretty common. Sounds like you need to go to PLAN T!.

Kelli (00:52) Plan T?

Dave (00:53) Yes. In the old days when this happened, you threatened to call a manager on the phone and you usually got unstuck. Today you have to use Plan T. And to our loyal listeners, if you are a leader of a customer service department, the last thing you want is a customer of yours activating Plan T.

Dave (01:17) Hi, I'm Dave, and I've been starting and running businesses all my life. And I'm Kelli, working for the man like a dog for decades. And you are YOU! The driven career professional clawing your way up the ladder of success, maybe running your own business! The next 20 minutes or so is just for you.

Chuck Fresh (01:36) Welcome to My Job here Is Done.

Dave (01:41) Welcome to the podcast. I'm Dave, the customer support manager. How can I be of service to you today?

Kelli (01:48) Well, Dave-in-customer-support, you can start by doing a podcast on why your customer support department sucks, before I go all out, Plan T on your hinny!

Dave (01:58) Well, there's nothing worse than a pissed-off customer or a pissed-off Kelli. You need to trust me on that. But before we get started, could you please subscribe or follow us on your favorite podcast app? We'd appreciate it. On Apple podcasts, that's the little plus sign in the upper right-hand corner. Why am I telling you that it's the plus sign? Because I just discovered that and I have no idea what Apple is trying to do by hiding stuff. But that's what you click on it to follow. We also don't want you to miss any new episodes or bonus material we publish on career success and entrepreneurial business growth.

Kelli (02:33) You can also interact with Dave and I personally at our website. My job here is done.com and on social media at myjob podcast.

Dave (02:41) Okay, Plan T. What is it? How does it work and why are you as leadership, hopefully, terrified with a capital "T" of it. This is the one about customer service and how badly we're getting it wrong these days.

Kelli (02:58) To be fair, not all business has it all wrong. Nor does everyone in leadership not realize the importance of customer service. But good customer service is harder and harder to find, and we wonder why?

Dave (03:10) We'll get to the Plan T part in a moment. But first, let's talk a little about customers and the numbers behind them. This should come as no surprise. Acquiring a new customer is far more costly to the business than keeping a current customer in the majority of cases. The surprising fact, however, in my experience, is leadership usually focuses too much of their resources on new customer acquisition at the expense of current customer retention.

Kelli (03:40) And that creates a long-term problem for the business because when you lose those customers, which is commonly known as churn or churn rate, you lose revenue. But more importantly, you lose reputation. And that leads full circle to depressing new sales opportunities.

Dave (03:57) We believe that you have to think about your customer retention program before you think about acquiring new customers. And if you're suffering from high churn, we'll explain that in a minute, we think you should literally stop new customer acquisitions until you fix the retention problem.

Kelli (04:15) Stop selling?

Dave (04:16) Essentially, yes. The reason is simple. If you have high churn, your company is obviously not set up properly to handle the current customers you have. Now you're just making the problem worse! You're creating churn, and those former customers, they're now distractors against you. They don't talk nice about you. They leak info to your competitors. Some of them go full Plan T on you. You're actually paying for and creating your own army of enemies against you. Think about that.

Kelli (04:49) Pissed-off customers like me and my story today are a huge problem for you. Let me give you a bit more context on why one lonely pissed off Kelli is so bad.

Dave (04:58) I can't wait for this.

Kelli (05:00) During the preparation of my company taxes this year, I noticed the software I was using to produce the tax returns was acting differently than it did in previous years. It wasn't bringing over all my expenses, and as a result, the Schedule C form was not correct. I did everything I could on my own to try to figure it out, but nothing was working. So I intuitively called the tech support line and explained the problem. The first person couldn't solve it. Hey, no problem. I know you have to go through the steps of Escalation.

Dave (05:31) Yes, but most people also realize that and they're usually patient and it's rarely a problem when the first person that you call can't fix the problem. As long as that person has been super polite, empathetic, and offers you a definitive next step to take next.

Kelli (05:49) Yes, that's exactly what happened to me. The person couldn't help and said to me that I would get a call back from the next level of support within a few hours. Okay, no problem. I still had a few weeks to get my tax return filed, so I went about my day.

Dave (06:02) So when did they call back?

Kelli (06:04) Well, they didn't call back that afternoon. They didn't call back in a few hours as promised. In fact, they didn't call back. I got tied up for a few days, actually forgot about it, and then realized that no one was calling me back. So now I'm a little pissed and I had to call them back. The new person started asking me all of the same questions as the first one did. So I politely stopped them and asked if they saw any notes about the call that I had a few days ago in their system. Well, to my surprise, she said -  okay, let me check.

Kelli (06:34) Why aren't you checking first? Right?? Now I'm getting pissed.

Dave (06:39) Breakpoint here. Think about this for a second. You are leadership at this company and you're hearing this story that Kelli is telling right to this point. What are you thinking about right now?

Dave (06:50) Is it, that's broken! I need to get my people to follow the process better or I need to do some retraining here. If that's the case, good! If you're thinking she just forgot to check the notes, literally just stop whining. My suggestion. Fire yourself. Yeah, go ahead, let me hear you say it.

Kelli (07:10) Yeah. So the notes apparently did nothing for her and she asked nicely would I mind going through the whole thing again? Which I did. The process to show what was wrong here required me to screen share with her. So this was more than just answering a few questions. I was on the phone for about 45 minutes and that was after the 20 minutes I waited on hold.

Dave (07:31) It was nice of you to give her a chance, but I bet you're kind of boiling over at this point.

Kelli (07:35) Yeah, you bet. And what made it worse? She couldn't help me either. She said, oh, there's definitely a problem and it's not my fault and she would escalate it. So I asked for a case number this time and her name and she gave me both. She thanked me for my patience and promised I would have a call back in less than 4 hours. Nope, nothing. Again.

Dave (07:58) Good time for a Breakpoint. So you're leadership here again. What's wrong? Are you thinking why did this happen again to this customer? Why did the process break down? Is there something wrong with our escalation system? You're thinking, I need to check on this immediately? Well, good! If you're thinking, Geez, we're just busy and this Covid thing has us short-staffed or ... This will happen occasionally. Fire yourself. Please, just fire yourself.

Kelli (08:31) In the end, I made three more calls each time. New excuses and zero help.

Dave (08:36) Yikes.

Kelli (08:36) So I took the time to research other software programs that I could quickly switch to because now I have about a week left to get my taxes done and it was clear their customer service was broken. 

Dave (08:47) So what did you do?

Kelli (08:49) In a last attempt, because I really did not want to change vendors. I went to Plan T.

Dave (08:54) Wait for it ... Wait for it ...

Kelli (08:57) I Tweeted at them -- Plan T! -- Oh, you bet, I hashtagged all the right keywords, I at-signed all the right people and companies, including their competition. I became a Twitter terrorist of sorts. And people piled onto the tweet in my support.

Dave (09:15) Do Tell!

Kelli (09:16) Oh, I got their attention now. Within a few minutes, I'm being DM'ed and wine'd and dine'd and called back.

Dave (09:22) Yeah, okay, here's another great breakpoint, folks. You might be interested in how this story ends for Kelli, but that's not what we should all be thinking about, right?

Dave (09:31) Think about what just happened to your business, your costs, your reputation. All because this customer of yours went to Plan T. Kelli's public tweet was all about how this company let her down, inconvenienced her and jerked her around.

Dave (09:50) We actually have no idea how many people saw the tweet and got a bad impression of that company, but I think that we can all agree it was likely a lot of people. I can say, however, with a lot of confidence, that a number of those people who saw the tweet quietly will never buy their product.

Kelli (10:08) I wouldn't.

Dave (10:08) And the people who saw that tweet that are already their customers, many of them are now wondering, Geez, will this happen to me if I need to call support?

Dave (10:18) Now, you've created doubt, and at the very least, that one Plan T tweet dinged their reputation, and maintaining a great reputation in business today is paramount.

Kelli (10:31) Could this all have been prevented? Yes. Just by spending a little more time on quality assurance and quality control on customer service.

Kelli (10:39) Right, I get it!  We're all busy, understaffed, and stressed to the max. All this company needed to do was explain truthfully to me what would happen next.

Kelli (10:48) If I heard them say, "I know you're disappointed with us right now due to this problem, but I don't want you to ever be disappointed with me trying to help you. Here's what our next step is, and it will take a bit longer than usual for our next tier support to get back to you. But I promise they will."

Kelli (11:04) If they had heard something like that, I would have been fine. I would have been more patient. I would have had some empathy for them.

Dave (11:11) Yeah. The number one problem I see in most customer service systems and the one customers complain about the most when surveyed ...AND ... the one that's the easiest to fix forever is the lack of promised follow-up. Failure to follow up with a customer as promised or expected makes that customer immediately feel unappreciated.

Dave (11:35) And an unappreciated customer is a churn event waiting to happen.

Kelli (11:40) Let's look at some of the business metrics leadership should laser-focus on when it comes to customer retention because in the end, your customer service department's primary goal is to do what's necessary to ensure that the business retains their customers.

Dave (11:55) There are so many things that went wrong with Kelli's encounter. But if you look at each failure along the way, the core reason was lack of proper follow-through.

Dave (12:06) Do you think Kelli would have boiled over as much if before the four-hour Mark she got a call back that said, "Hi, I'm Dave here in customer service. I didn't want you to think that we kind of forgot about you, so I'm calling you back to let you know that we're working on the issue. It has our attention, and if I can't resolve this for you by 09:00 a.m. Tomorrow, I will call you back to give you an update."

Kelli (12:28) Kelli says, I would have been thrilled and felt appreciated for being their customer.

Dave (12:32) Right? The fail here, and as I have said in most customer service departments is simply poor follow-up

Kelli (12:39) Pro Tip There's absolutely no point in acquiring a customer if you're not willing to put the work into keeping them.

Dave (12:46) And with that little pearl of wisdom, let's look at three metrics that any business can and should use. It doesn't matter if you're a restaurant, a boat dealer, a software as a service company, or even SpaceX. This all applies.

Dave (13:01) The first metric is CAC. CAC or customer acquisition cost - we're not going to dig into this real deeply - but we'll go over the basics a bit.

Dave (13:12) A company's CAC is the total sales and marketing costs required to earn a new customer over a specific period of time. It is literally how much money you are paying out to gain a customer who is now paying you. Some are surprised at how high this cost can really be.

Kelli (13:30) Let's take a restaurant, for example. You need customers to come in and eat. You will advertise and market to those potential customers, and let's say that costs you 100,000 a year. You also offer discounts and free appetizers to entice the new customers, and you calculate that cost you about 30,000 a year. 

Kelli (13:48) Maybe you have a dedicated person that sells your restaurant services for business functions and meetings, and you pay 90,000 a year in salary and Commission for that.

Kelli (13:57) There are some soft costs in there, too. We won't go into those, but they're usually about 10% of the total spend. So all in all, this restaurant spends about $245,000 a year in CAC costs to attract new customers.

Dave (14:12) Okay, with that in mind, let's say that you feed a total of 100 customers a night, and of that total, approximately 20 or so are new customers each night.

Dave (14:21) During the year, you'll see about 6000 new customers for that investment. That means that your CAC - your customer acquisition cost - is about $40 per customer through the door.

Dave (14:34) Good so far? Okay, so for the first time that new customer shows up to eat, if your average bill is $50 per person and your margin is a healthy 50%, the meal alone is going to cost you $25 to prepare.

Dave (14:51) So here's the math. It cost you $40 to get that new customer through the door for the very first time. You charge them $50 for the meal, which cost you $25 to prepare, so your gross profit for the customer was $25 that you made on the food that night.  Ah, yes but less the $40 you spent in CAC to get them in the door in the first place! So you actually lost $15 on that first customer's meal!

Kelli (15:20) Ouch.

Dave (15:20) Yeah. What if they never come back? What if a lot of them never come back because the service isn't always great or the food wasn't as good as it could be? Or for any controllable reason? Right now, you should be looking at every new customer that walks into this particular restaurant as a $15 loss. And the only way you can fix that loss is to make damn sure they come back again.

Kelli (15:46) Yeah, excellent customer service and a great experience just became reality in your face.

Dave (15:52) Think about that scenario. Isn't it now essential? Mandatory, in fact, that you do whatever you need to do to make every new customer delighted, excited, satisfied, and coming back?

Dave (16:06) You bet. Because you still have $15 to make up. Just to break even from that one single customer, they need to come back through your door.

Kelli (16:14) If you, your leadership, your chef, your wait staff, and everybody think about how important it is to understand and provide great customer service in the light of CAC, I guarantee you'll improve.

Dave (16:27) Hey, the restaurant here was just one example of how to calculate CAC. There are a lot of businesses out there that have a CAC that is very, very high, which requires that the customer come back many times before they even see breakeven, let alone make a profit.

Dave (16:43) This causes great customer support to be even more important to get right on a continuous basis.

Dave (16:51) Imagine having to spend 5, 10 even $20,000 to acquire just one customer? Hey, it could be well worth it, but you need to know a little more.

Dave (17:00) This leads us to our next metric, LTV or Lifetime Value. Sometimes said CLTV, for customer lifetime value, it's usually a simple calculation like this. How long does your average customer stay with you in terms of time multiplied by the average amount they spend with you over that period? LTV is commonly represented in years of revenue received.

Kelli (17:26) Let's say you have a specialty service where a customer would pay you $1,000 a month for whatever you provide, just like Dave said, it costs you $10,000 to get that one customer - said another way - your CAC is $10,000.

Kelli (17:40) Here's where longevity or the expected lifetime of that customer becomes very important. You need that customer to stay with your service for at least ten months just to break even on CAC. If that customer has a problem and you piss them off by poor customer service, at say, five months in, you've lost five grand just like that!

Dave (18:02) All businesses that sell to new and repeat, customers should calculate LTV.

Dave (18:06) If that restaurant keeps a good history of how long a customer keeps returning ...

Kelli (18:10) ... And they should -- go listen to The R and CRM Means Revenue episode to see the importance of a customer relationship management, CRM program.

Dave (18:20)  Boy, you never forget to get the 'plug' in, do you?

Dave (18:23) Hey, if that restaurant's average customer returns five times a year over the course of two years and then stops showing up, they have a lifetime of two years.

Dave (18:35) And if your average check is like the $50 we said earlier, that's ten times 50 or $500 of value to you. The restaurant leadership can then conclude that the LTV lifetime value of an average customer is $500 over two years time.

Dave (18:53) By doing these rather simple customer value calculations, you can see just how important every customer is to your business. You'll look at things in a completely different way when you know what a customer's value means to you.

Kelli (19:08) The last metric is churn, and that's a calculation of the percentage of customers that leave you for some reason.

Kelli (19:14) Think of churn in two ways, natural churn, and defective churn.

Kelli (19:19) Natural churn is when a customer just comes to a logical end and stops paying you. You didn't do anything wrong. It wasn't because of bad customer service. It just naturally happened. Like the customer went out of business or they downsized, or in the case of the restaurant, maybe they just moved away. Natural churn happens and it's not a bad thing. We suggest that you do not count natural churn against you because there's little to nothing you can do about it.

Dave (19:46) But there is bad churn. We call it defective churn, and it happens when you, the business, for whatever reason, force a customer to leave you because of bad service, bad policies, bad communications, bad attitudes, bad anything ... And in this podcast episode, specifically because of bad customer service.

Dave (20:11) Normal churn is simply a cost of doing business. Defective churn is costing you business.

Kelli (20:21) Let's go back to the restaurant for a little churn conversation, shall we?

Dave (20:25) Sure.

Kelli (20:25) Recall, that we calculated a customer LTV of $500 over two years, and I'm the customer on my second visit.

Kelli (20:32) Let's say the wait staff was rude, or the meal I ordered took way too long to serve. Maybe it was making me late for another appointment and I'm not happy. Remember, it's my second visit, so YOU as leadership hope to get that $15 back from me so you could start breaking even, right?

Kelli (20:48) I end up upset because you didn't care for me well. I complain and you offer me a discount on my meal as a consolation prize.

Kelli (20:55) Well, let's say you cut the $50 check in half, you took all your profit away, and you're still out my $15 of cash investment, AND I'm never coming back, AND I'm going to Plan T!

Dave (21:12) See what just happened here. You thought you were helping by offering a token discount for a bad situation, and you might 'Mind-F' yourself into thinking that that was good customer service. You were wrong and it cost you dearly.

Kelli (21:27) Had you been thinking about CAC and LTV in this situation, you would not be dealing with a potential defective churn event like this. You'll do it differently and smarter.

Dave (21:37) Based on all of the numbers we ran for that restaurant together here on the podcast, this is the free advice that Kelli and I would have provided to you if you were a client of ours.

Dave (21:45) We would have advised, no matter what the reason, except for customer fraud, that the manager of the restaurant should have handled the situation more like this: "Hi, my name is Dave, I'm the manager, so I'm responsible for your disappointment here today, and I'm truly sorry for your inconvenience. I'm not going to make any excuses for what happened. I just want to make sure that you have an opportunity to give us another chance so that I can prove to you that this was just a one-time miss. For me, I have some retraining to do for my team, and I'll do that, and this won't happen again. For you, there's no charge for dinner tonight, and I'd like to offer you a VIP voucher so you can bring a friend with you next time, and you'll both get 20% off the meal on me ... and me and my team get a second chance to show you a delightful time.

Dave (22:34) Does this help a bit for tonight's trouble?

Kelli (22:37) I don't know about you, but I may be leaving that restaurant a little disappointed, but wow, did the manager just make up for it in great customer service. Yeah, I'm coming back.

Dave (22:47) Let's recap and do the new math. Now, first, remember, because you failed and provided poor service, you are not only losing a customer for good, you're out the $15 - at least - due to the CAC. But also,  that customer is going to "Plan T" in some fashion.

Kelli (23:06) They may Plan T "tweet" how horrible the experience was for everyone to see. They may Plan T "tell" about the experience they had and add a poor review on OpenTable, Google, or Resy.

Dave (23:19) Yeah, just where you don't need bad publicity, right?

Dave (23:23) But even worse, they'll Plan T "talk to their friends and urge them to avoid your business like the plague. And that's the uncalculated and expensive cost of bad customer service.

Kelli (23:34) But hey, in this case, the manager sweet Davey-baby turned it all around with peace and love, and by thinking about CAC, LTV and churn costs.

Dave (23:45) Yes, there was a small additional cost to the free dinner and the VIP coupon that you provided, but this new investment is literally coming back to you, and they're bringing a friend, and you get a second chance that you wouldn't have had in the first place.

Kelli (23:59) That friend also now knows the whole wonderful story about how you were treated, and soon you'll sell two dinners and have the opportunity to delight this new customer into coming back again.

Dave (24:11) Folks, you can apply this theory of customer service to any business, not just restaurants.

Kelli (24:15) Ponder on that for a bit and you'll see how you can pull it off too.

Dave (24:19) When you piss off a customer, you do more hidden damage than you realize, because too often leadership may not be calculating CAC customer acquisition cost, LTV lifetime value, and defective churn - that's the churn that is caused by you. So you really don't know the numbers and the true effects on the business of a poor customer experience, and that's bad.

Kelli (24:44) A few things to think about while you noodle this over and think about your own customer service programs.

Kelli (24:50) This may surprise you, but small customers are much more likely to turn to a "Plan T" terror than larger customers. We guide businesses to treat smaller customers with the utmost care, as they usually have little to lose if they go ballistic in public forums.

Kelli (25:06) Larger companies rarely use a Plan T like this because they have stricter corporate governance about public disparagement. But don't let that comfort you. Large companies can destroy your reputation and revenue hopes in other ways. We'll save that for another podcast.

Dave (25:21) Yeah, said my friend Rafe, one of the smartest guys I know, and to who I will always attribute this quote: The customer is always right ... But not everyone needs to be my customer.

Dave (25:33) If you want to provide great customer service, make sure you're servicing the right customers. Rafe was never afraid to politely fire customers that were not right for his business.

Kelli (25:43) And by digging in a bit deeper, doing a little simple math, and exposing this math to your team, everyone will realize there are good reasons to improve customer service.

Dave (25:52) It's literally about the business's ability to even exist and to compete and for people to keep their jobs. Make enabling a great customer experience and service a team event.

Kelli (26:05) And thinking in numbers will help you understand the true importance of investing in customer retention with at least the same energy as you use in attracting new customers.

Dave (26:15) Well, there's lots to think about there.

Dave (26:17) What happened with your Plan T barrage on the accounting vendor?

Kelli (26:22) They fixed it, but it was too late. I ran out of time. I had to buy another program to do the taxes

Dave (26:27) to meet the deadline?

Kelli (26:28) Yeah, they had three weeks to do what eventually took them an hour to fix.

Dave (26:31) Isn't that the case?

Kelli (26:32) Yeah, all the time.

Kelli (26:33) I'm quite sure this missed customer service opportunity costs them plenty of money and a customer they'll never see again.

Dave (26:42) Thanks for listening today. We hope you enjoyed the story and the topic. We have dozens of these short, easy to listen to episodes available anywhere you listen to podcasts. Just search for My Job Here is Done podcast and you'll find us waiting for you.

Kelli (26:56) Like what you hear? Looking for a little help? We have a number of ways you can work with us to help grow your career or improve your own business. Just head on over to our website. My job here is done.com.

Chuck Fresh (27:09) I'm the announcer guy and I sound as good as the story you just listened to. My job here is done as a podcast production of 2PointOh LLC. Thank you and your awesome ears for listening. Want to get involved? Have your own special story to share. Tell us all about it and you might get some airtime just like me. Browse over to myjobhereisdone.com yeah squish that all together into one word and look for the My Story link. Until next time my job here is done.