This is the last email this week. It's been a series of five daily emails to my staff at Crowd Favorite, where I work as the Chief Strategist & CTO.
If you've missed the series, here it is:
- We're not building chairs
- We're travel guides
- The owner is you
- We need new tendencies
- Finding the perfect client
Let's get on with it…
The Perfect Client
And as I ended on the perfect client it makes sense that we talk about that a bit. Only I think you'll find it won't be what you think.
Let's be blunt, our clients will regularly and consistently ask us for things that may be sub-optimal or strange. They may ask us for things that are incredible or make us incredulous. They may request dramatic or drastic changes, right at the time when we're about to go live.
Our clients are not in the web engineering business.
So they may have no idea what they're asking for or suggesting challenges you, or frustrates you, or makes you laugh. Because they're not software engineers.
Just like we're not experts at their businesses.
This is why you hear Karim talk about account management and expectation management so much. Because while we can't control the request, we CAN control our response.
This is why you hear James talk so much about empathy. Because while we can't change how we feel, we can change how we react and how we embrace our customers.
But today I don't want to talk to you about what Karim talks to you about, or what James talks to you about. They're each experts in those spaces and they'd do a much better job than I would.
I want to talk to you about my take on how we create the perfect client.
Yes, we create them. We build them up.
And we do it with the tools Karim and James use (relationship management and empathy). But we can also use my tool. One I'd like to try to summarize today.
I'm a huge fan of generosity.
It all starts with segmentation
When you go to Burger King and order chicken nuggets (ask for McNuggets, it's fun), they'll ask you what sauce you want. You pick something like Ranch. Then you ask for additional BBQ. Nine times out of ten, they'll tell you it costs an extra quarter.
That's because they function in a segment where they need to charge for every single thing.
But if you go to a really nice restaurant, like one of my favorites, Capital Grille, and ask for something different or extra, the response is, “Sure. Let me get that for you.”
It's because they work in a different segment. They'll make their margin on the steak, on the wine, and on the rest of the things you order.
They don't nickel and dime you.
Now, to be clear, I'm not suggesting we do this with our customers. But you can imagine how they feel if every time they make a request, any request, our response is to talk “change orders.”
Of course we care about profitability. Without it, we'd be closing down. So this is where we live with two seemingly opposing views in our head at the same time (one of the best books I've ever read covers this idea: Opposable Mind by Roger Martin).
Seemingly Contradictive Ideas
We want to be profitable. We want to be generous.
These two things feel impossible partners, and yet if you look around at companies that serve a higher segment, you'll find that they work that way.
My favorite of these is the Ritz Carlton. Their rooms cost a lot of money per night. From $400 up. That's not cheap when you think that you can get a room and a bed at another motel for 10% of the price.
But the service they bring to the table is very different. And it should be.
Because they've figured out that the lifetime value of a customer (the total they'll spend with the Ritz over their entire set of interactions with that chain) is over $200,000.
How do they focus on profitability and generosity at the same time?
They understand something that each of us should understand. In a big way.
The cost of acquiring a new customer can be 5x or more the cost of getting an existing customer to hire us again. Repeatability. That's what counts.
And that's what let's them deliver a ridiculously generous experience.
Because they know the customer will come back. And from many return trips, an overall level of profit will keep them in business.
Can I tell you a story?
A woman showed up to the Ritz prepped for a business meeting the next day. In the morning she woke up and pulled out her skirt and went to iron it. Unfortunately, the iron was bad and it marked her skirt. So she put both aside and put on a pant suit instead.
When the person came to clean the room saw it, they took immediate action. They found a local store (not a cheap place) that carried the same brand and size of skirt. They went and bought it. They brought it back and ironed it (with a good iron). And they left it there on the bed with an apology.
Do you think the business woman will come back to that hotel chain again? You bet.
More importantly, the staff are each able to spend up to $2,000 when solving an issue for a client, without supervisor approval. Think about that. How much that could total up to.
But they train their staff for weeks, and have daily huddles to inculcate the values of the brand. That helps their staff stay “on brand” daily. And gives them the freedom to act.
This level of freedom isn't just found in fancy hotels. If you've been to Disneyland you've likely noticed staff with stands of ice cream. They have a till filled with cash. No supervisor around. How does that work?
Again, core values and consistent huddles inspire and challenge their staff to live “on brand.”
We're on our way
We've started daily huddles over the last few months but they're not where they need to be. That's not your fault. It's just that we're at the beginning of a journey, and that means we'll eventually learn how to make them the most useful vehicle for communication, inspiration, culture, and value dissemination.
Additionally, you'll notice I'm not a micromanager. Neither are your team leaders. When we do that, we end up owning everything. We're the ones that care. And it can't just be us.
In the end, I want each of us, every single one of us, to have the freedom to be generous with our clients without supervisor approval. A result will be better ownership.
But a far more important result will be a different level of generosity with our customers that keeps them coming back. The lifetime value of our customers may even be larger than the Ritz. We just haven't built up the infrastructure to handle volume.
But over the last several months we've been building our structure to support it. From the international work that Karim has been doing, to the organizing we've done internally.
Let me end by reinforcing what I mean specifically by generosity with our clients. So it's practical and not abstract or academic.
Our customers come to us asking for something crazy. One did the other day. And before we've even scoped out the work, or quoted anything, I asked two of our developers to try building a little something as a proof of concept for them, so our client to see it and be able to react to it. That's R&D. And it costs us. But it's worth it.
Another client contacted us the other day asking about our take on mobile design and fat fingering. We did research, pulled together several articles and gave them the full research. Without billing them.
Lower-case “i” initiatives
Initiatives can be big. Building Ramp 2.0 – that's big. But they don't all have to be big. They can be “lower case i initiatives.” These are little ways you think you can optimize something for a client. Something you'd like to try.
Propose them to your team leads. They'll review and approve them. We'll burn some time on them. It will cost us. But if it's in service to our customer, and in the context of being generous with them, and will help them trust us to be their partner, then we're building the perfect customer.
In the end, the perfect customer is a partner.
A partner who may cost us money on one job, but come back with a second and purposely ask us to pad it to recover costs from the last one. Because they're a partner, not just a customer.
The perfect customer is a partner, who co-creates solutions with us, because we're willing to hear them, be empathetic, and manage their expectations. And in that context, be generous with them, with our skills and time, so that we can build something together that will keep them coming back.
We don't find perfect customers. As you can see, we make them.