An Empty Glass: How to Lose a Customer in 5 Minutes

Earlier today, I posted a blog detailing how a Yadkin Valley winery, faced with a negative customer experience, proactively addressed the issue and won a lifelong advocate. 

Not all companies know how to do this. In fact, some of the best lessons in customer service come from observing what not to do. I struggled writing his blog, trying to make it less of a rant and more of an instructive guide.

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A comedy of errors caused me to miss this year’s North Carolina Wine Festival. Suboptimal customer service from representatives for the event’s organizer assured that I will never attempt to attend the festival again.

We don’t live terribly far from Tanglewood Park in Clemmons, so I decided about a week before the festival  to pay $40 for two tickets. After completing the purchase, I got a notice that I would receive an email confirmation which I assumed would serve as my ticket. That confirmation never arrived and, to make matters worse, I mistakenly thought it was a Sunday event. So we showed up 24 hours too late.

No worries, I thought. I will just call Curtis Media, the event’s organizer, explain what happened and get a refund since they never sent the promised follow up communication. I was wrong. The woman who answered the phone made several big missteps from the perspective of customer service.

·         Zero empathy. She repeatedly found ways to put 100% of the blame on me. Granted, I was ultimately responsible for confusing the date, but there were some clear errors in the online ordering. An upset customer, on a very basic level, just wants to feel heard.

·         They never offeredto look into the problem. Just making that offer would have at least made me feel as though Curtis Media was proactive and interested in making improvements to benefit others. (Sanders Ridge, as you may recall, did look into the problem we had, thanking me for helping them identify it.)

·         An argumentative approach is frustrating. At one point, she defaulted to saying no refund. Such rigidity poisons the customer experience. There was no attempt at compromise or to find a middle ground. It was a zero sum game for her – over $40.

·         I had to ask to speak to the general manager. One way to make someone feel heard is to give them an opportunity to speak to “the boss.” I had to ask for that. She told me that the GM would be unwilling to work with me, and she was right. Three days have passed and he has yet to return my voice mail message.

It is interesting to look at the math. The event boasts that it draws 250,000 people, bringing in roughly $5 million on presale tickets alone. So refunding my $40 would have cut into that revenue line by a percentage so low it isn’t worth trying to calculate. Then again, when you have that many people attending, maybe you can afford to upset dozens with poor customer service.

The unfortunate thing about this experience is that the wine festival brought in at least 30 wineries, and I am willing to bet that most, if not all, of them would have given me better customer service under the same circumstances. (In fact, Sanders Ridge was among the wineries at the event.) Since many are not close to Winston-Salem, it is unlikely that I will visit them any time soon. I definitely will not see them at the next NC Wine Festival.

In Vino Veritas: Wine and the Customer Experience

As translated, the Latin saying goes: in wine there is truth. Wine also serves as the inspiration for today’s blogs, looking at how important it is to provide potential customers with a unique experience built around exceptional service. 

These blogs will focus on both positive and negative customer experiences. In one instance, an employee’s quick thinking led to a salvaged relationship and a nice boost in a company's bottom line. The other, unfortunately, will cost a company more money than it gained.

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You hear in business school about the importance of reacting quickly to remedy customer concerns; how word of a bad experience travels faster than a positive one. While that adage usually rings true, I have also seen instances where an exceptional experience has delivered substantial benefits to an attentive and proactive business owner. 

This morning, I’ll start with the positive experience. A few months ago, my significant other and I were ambling around the Yadkin Valley, stopping at wineries trying to find a new red wine. Nearing the end of the day we saw a sign for Sanders Ridge Vineyard and Winery and, on impulse, decided to drive a bit out of our way to check it out. We pulled into the drive, walked by some friendly folks in front of the cabin and went to the bar to request a tasting.

Entrance to Sanders Ridge

Just as someone was getting ready to pour, a manager told us that the winery was hosting a wedding. There were no more tastings. There were no signs and no warnings to alert us beforehand, leaving us to walk back through the phalanx of smiling “greeters,” get in our car and drive home disappointed.

Unfortunate, eh? Not so fast. This is where the winery turned a negative experience into a positive one. I emailed them the next day to express my frustration. Within a half hour, I had a response, apologizing for the confusion and offering me a gift card for two free tastings if we gave Sanders Ridge a second try.

Jennifer thanked me for alerting her to the issue – the winery had not placed a private party sign at the entrance – and she directed me to the Sanders Ridge website to look at their upcoming events and restaurant menu. We accepted her offer and returned a few weeks later.

This allowed the winery to fully win us over. During our second trip, the owner was there, telling us stories about building the cabin, wine making, and more. He was unaware of our first experience – it wasn't something we wanted to advertise – validating the sincerity of his conversational state.

We also discovered that Sanders Ridge offers bird watching(a favorite hobby for my significant other), zip lines, and a nice restaurant. They are working quite hard to offer customers a wide range of memorable experiences, and we wouldn’t have known about any of them if my email went ignored. My significant other turned to me as we left last weekend and said, “I think I’ve found my new favorite winery!”

Empowering employees to make those types of customer service decisions can be critical to maximizing revenue and income. We found a new favorite wine – Sweet Kate – and we have since bought several bottles, exposed our friends to their wines and made a return trip. And it was all because of the responsiveness of one employee.

I feel so good telling this story, which makes it difficult to discuss the negative customer experience. Let’s take some time to absorb the positive vibes; I will return to the blog later today to assess the suboptimal experience. And yes, it also involves wine!

Advice for Future MBA Students

By PAUL DAVIS (Wake Forest University, MBA ’11)
I was at my weekly trivia night at a local bar when I was stopped by another young professional who is set to enter an evening MBA program that I just completed. Conversation initially focused on classes, professors and academic expectations, but he then asked a very simple question: On a scale of 1 to 10 … was it worth all the stress and upheaval to earn the MBA?
Admittedly, I was taken aback and gave a short answer, rating my experience a seven or eight. I gave some lip service to the fact that I was better positioned now from a career perspective, which made up for the turmoil and sacrifice of the past two years. But I really slightly him with my response.
In totality, one should split the scoring up. Five of the 10 points, I believe, are in the hands of the school. The professors they hire, the way the curriculum is set up, the activities that are available … all of those things really make up half of the experience and deliver half of the ultimate reward and accomplishment. The remaining five points are really up to the MBA candidate. You alone are responsible for choosing electives, joining clubs/organizations, reading the books and cases, etc. You can choose to fully immerse yourself in the experience, or take the easy way and do just enough to pass the classes and get the degree.
So, what I should have told him was that I rated the school at a four. There were some shortcomings, but in the end I felt as thought I had gleaned immeasurable knowledge from the program. I rate myself a four … knowing that there were opportunities missed, networking that was overlooked and books that were never fully read and absorbed. Knowing this now will help each of you as you prepare to get all you can from your program.

The SEC's Unfriendly View of Social Media

This is the first half of a two-part series looking at how the Securities and Exchange Commission is (over)reacting to the popularity of social media. The first piece looks at how the SEC wants to treat sites such as Facebook. Part two will assess what SEC-regulated advisory firms can do to appease the agency … and how those firms are also overreacting.

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If you value your privacy, you probably shouldn’t work for a registered investment adviser (RIA) or any advisory firm regulated by the Securities and Exchange Commission.
Earlier this year, the SEC completed a review of how registered investment advisers use social media, and based on an alert issued by the agency, two things seem clear. First, the SEC still has a long way to go before it can claim to be an expert on social media. Secondly, the agency plans to compensate for its incomplete understanding of the medium by pushing RIAs to clamp down on how their advisors utilize forums such as Facebook.
The SEC doesn’t mince words – it distrusts social media. So what does the agency plan to do about it? They overreact, as they often do, by requiring RIAs to “adopt, and periodically review the effectiveness of policies and procedures regarding social media in the face of rapidly changing technology.” The SEC is passing the buck to the RIAs, making them responsible for policing social media use without giving then any guidance on how to do it.
Well, sort of. The agency does provide a laundry list of things it thinks RIAs should zero in on: usage guidelines, content standards, monitoring, etc. The SEC provides much verbiage, but little guidance, on the problems it sees in social media. The SEC in many aspects is guilty of a “lack of specificity” that “may cause confusion” to RIAs.
I highlight this verbiage, since it is also how the SEC chose to describe existing social media policies at RIAs. The SEC is greatly concerned about so-called testimonials, or a “statement of a client’s experience” or endorsements. The SEC really pays attention when an endorsement is disbursed to 40 or more people. It seems that the agency is critical of RIAs that choose to use social media for things such as touting a pleasant customer experience. It could violate securities rules.
To make matters worse, the SEC has decided to strike fear in the hearts of RIAs, including talk of violating the Advisors Act Rule, without providing meaningful guidance. What is an RIA to do? We’ll take a look at that in our next column.

Employer or Voyeur? Social Media in the Workplace

This is the second half of a two-part series looking at how registered investment advisers and other firms are responding to vague SEC criticism of social media. Read the first half of the series by clicking here.

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The SEC clearly does not like social media, particularly Facebook. So what is an RIA to do? The only thing it can do – panic.
I know of many instances where a firm says, “Let’s just ban social media altogether.” Some are demanding passwords from prospects and employees. Then there are some firms that think the clever approach is to let the employees have Facebook but require them to “friend” the chief compliance officer so he/she can monitor activity. That’s not going to go over well with the rank and file.
There is no way to comprehensively police social media. In many ways it is like policing insider trading. If someone is hell bent on doing something unethical, they will find a way around an irrational policy firewall. In reality, the policy is merely an attempt by a firm to limit its own liability. They must produce a piece of paper – though more than likely it is a five-inch thick binder – to show the SEC that they take the situation seriously. The goal is to essentially limit or eliminate any claims that the firm was complacent or negligent in its oversight.
I can understand that approach to a degree. But firms are overreacting by infringing on people’s privacy. It makes me think of a drowsy driver who suddenly finds his car veering off the highway. We are taught in driver’s education that the smart thing to do is to tap the brakes and slowly maneuver the car back onto the road. But human nature often leads the driver to yank the wheel and forcefully over steer the car, often with fatal consequences. This is how RIAs are responding to the SEC’s criticism.
An unethical employee could care less about such policies, which only infringe on employees with integrity. From what I can tell, RIAs are over correcting, creating unenforceable policies that are arbitrary, invasive and ineffective. Brace yourselves for the PR nightmare to come.
RIAs should expect strong pushback from at least two groups. Employees will undoubtedly object to a clear invasion of their privacy, particularly since the mantra up until now has been to silo personal and profession dealings on social media. What would the consequences be if someone received a friend request from a compliance officer, and they ignored it? Can you imagine the headlines in the daily paper?

“Employee Fired For Refusing to ‘Friend’ Exec”

I’m not advocating that employees reject “friending” outright. Rather, I would suggest that employees comply by accepting such requests and turning the compliance officer into a Facebook Friend in Name Only (FFINO) by making full use of Facebook’s privacy settings. In fact, Facebook should consider a one-button option that relegates individuals to “employer” status with restricted access presets. That’s innovation reacting to a changing environment, eh?
Speaking of Facebook, the social media site is irate over this trend since it singles out the site out while ignoring other established and upstart social media platforms. Think about this: the SEC, without naming Facebook, still found a way to single out the company’s proprietary “like” button. An article from the Associated Press recently noted that would-be employers are also focusing on Facebook, by asking job applicants for their Facebook passwords.
In fact, Facebook is reminding employers that asking for passwords violates user privacy – and the website’s terms of use. In fact, it is unlawful for a company to ask a prospect about age, race, national origin, gender, religion, marital status and sexual orientation, all of which could be researched by tapping into someone’s Facebook account (either with a password or friending).
Employers are choosing to focus exclusively on Facebook. This is discriminatory and not in a way that would flatter the (for now) largest social media destination. There is the potential that employees, peeved by an employer’s invasive friend request, simply migrate over the Google+ or another site for personal interactions. There are quite a few employers out there – enough to drive a lot of people away from Facebook. At what point does Facebook say “enough is enough,” determining that such acts represent a threat to its long-term growth.
There are several social media sites that are more menacing to the SEC’s prohibition on testimonials. On Facebook, the audience is limited to a user’s friends and access can be restricted more with privacy settings.
In contrast:

• Twitter allows a user to tweet and retweet to the masses.
• Google+ is new, but growing, and the SEC ignores its potential reach.
• Even Foursquare could be problematic because of the ability to “check in” to locations. If an adviser checks into a Starbucks for a latte … is that a testimonial? What about a night club? A diner? A Meineke Car Care Center?

I’m no legal scholar, but Facebook has a legal team that could mount an aggressive challenge to such arbitrary policies. Would-be employees could turn to the Equal Opportunity Employment Commission (EEOC) or the American Civil Liberties Union (ACLU) for help. The EEOC is already tackling the issue, determining that employers are violating certain laws when they get info from social media, even in instances where the employee relinquished a password. (It is interesting to note that the EEOC has been paying attention to social media for years, while the SEC seems resigned to playing catch up.) While a Constitutional right to privacy has historically applied to the federal government, discrimination via social media represents a juicy case to try and bring before the Supreme Court, particularly if accessing someone’s account reveals information on racial background, sexual orientation, etc.
I’m looking forward to the litigation. At least that how I see it playing out. Just remember that if I post a link to this blog on my Facebook page, please don’t “like” it. I wouldn’t want you to lose your job.

What I Learned From Watching 'Weeds'

The TV show Weeds will kick off its eighth season on Showtime in July. The show, about a widowed mother of two who turns to selling marijuana to make ends meet, has lost a bit of its edge since debuting in 2005. Still, the show has its moments, and there have been some great business school lessons embedded in several episodes.
Doubtful? In the season one finale, Nancy Botwin (played by Mary-Louise Parker) is getting ready to take her pot dealing business to the next level. She assembles a team of specialists, who are then assigned very specific operations. How about that for a lesson in Organizational Behavior, not to mention the concept of creating separate departments for key tasks ranging from R&D (Conrad), legal (Dean), accounting (Doug) and sales (Sanjay). There are profit centers, such as the grow house, and cost centers, such as Andy.
The grow house represents an evolution from selling pot to manufacturing it. Talk about vertical integration! Nancy and Conrad cut out suppliers by developing and producing their own strain of marijuana – the interestingly branded milfweed. They even “secure” a celebrity endorsement from Snoop Dogg (click here to view the scene).
Financial management also becomes a critical part of the storyline. Nancy constantly finds herself doing undesirable jobs because emergencies come up and she is short on cash. Having a reserve is critical to surviving difficult periods in a business venture.
Finally, it is important to know your customer and your competition. Often, Nancy is shafted by rival dealers, rogue agents, and even buyers. Nancy’s naivety dissipates more and more every time she is ripped off and cheated by those around her. It hardens her and makes her a more determined entrepreneur.
Establishing a strong brand is also important. The show’s initial theme song, though initially grating, is almost  as addictive as the show.

Business Lessons From Chuck E. Cheese

It’s hard to imagine learning about business at a place where the mascot is a goofy rat that wears a purple baseball cap and gives a thumbs up sign. But there I was, at Chuck E. Cheese’s, offering my daughter an occasional treat of skee-ball, hoops games and pizza.

Yes, this venue is the one with the mantra, “Where A Kid Can Be A Kid,” but I inadvertently found myself learning about the business end of this active playground.

I had just finished a game of street hoops (you can’t go to a place like this and not play the games) when I noticed that the machine was dispensing half as many tickets as it had in the past. I used to play this particular game repetitiously to help pad my daughter’s end-of-day ticket haul.

Thinking something was wrong with the machine, I mentioned the issue to the restaurant manager, a tall, lanky guy who looked like he had been overexposed to all the loud noises and flashing lights. His name might of been Kip, but that is irrelevant.

Anyway, “Kip” told me that there was nothing wrong with the machine. Sensing my interest in why the outpouring of tickets had been muted, he explained that Chuck E. Cheese insists on making on average 16.1 cents for every quarter played in one of its games. So you take the overall inflow of quarters and tokens and subtract the ticket payouts since those are redeemed for “valuable prizes” such as gummy lips and Whoopie cushions, what the company calls the “cost of entertainment and merchandise.”

Every few months, management reviews a print out of each machines input of tokens and output of tickets. Kip explained that there are certain machines, specifically games of chance like the machine that lets you try and push tokens down a chute, bring in tons of tokens (I believe he said $6,000 worth of tokens monthly).
In contrast, the street hoops game had gotten too generous, particularly when adults rack up big game after big game after big game. Management decided to tweak the output, reducing the ticket outflow in half and subsequently tempering my excitement for playing it.

Maybe they had this guy in mind when they made the adjustment. Well done!

 

Chuck E. Cheese’s was launched by Nolan Bushnell, who also founded Atari and Pong, in May 1977. The first Chuck E. Cheese’s was located on Winchester Boulevard, in San Jose, Calif. Today, the chain is owned by CEC Entertainment Inc. in Irving, Texas, trading on the New York Stock Exchange under the stock symbol CEC.

Last year, the company made $55 million off of $821 million in revenue. BTW: cost of entertainment and merchandise made up just 8% of revenue in 2011; most of the revenue comes from selling greasy pizzas and fountain drinks.

Golf Pros and Brand Management

Earlier this week, I had the opportunity to attend the pro-am at this year’s Wells Fargo Championship in Charlotte. The sun was out, the heat was high and most of golf’s biggest names were in attendance. It was an enjoyable day and time well spent.

I elected to hover around the 18th hole. Not only is it among the most difficult holes in the PGA Tour, but it also allowed me to watch how the pros handled the crowds that gather at the end of the course. Apparently, camping out near the 18th hole provides fans with the best opportunity to obtain autographs.

The experience allowed me to witness firsthand how individual golfers manage their brand, as determined by how they value their relationship with fans.

Phil Mickelson, for instance, demonstrated why he had broad appeal among golf fans. Lefty quietly told some of the course workers that he was willing to stick around after his round to sign items, as long as fans were respectful to each other. True to his work, he signed and signed and signed. It was a positive experience for virtually all in attendance.

Mickelson at the Wells Fargo Championship

There were other golfers who stood out. Jim Furyk and Robert Garrigus signed gloves and handed them to kids. Miguel Angel Carballo, an Argentine golfer who agreed to fill in when Anthony Kim withdrew from the pro-am, played around with children, flipping a coin to see who would get his gloves and extra balls.

Even phenom Rory McIlroy took the time to sign items and interact with the crowd.

All of these guys had a clear understanding that their actions and interactions impact their brand value, an intangible that goes above and beyond the purse they are all anxious to win this weekend.

In contrast, there were a number of golfers who just don’t get it. Or specifically, they don’t seem to care. It shouldn’t surprise that Tiger Woods would top the list. Granted, he still gets massive crowds of people wanted his signature, so many that it would have taken him hours to pledge his time in the same fashion as Mickelson. If anyone could benefit from such an investment, it would be Woods.

Instead, he put on his glasses, avoided eye contact and blazed through the phalanx of fans. He signed intermittently, then ducked into the clubhouse as quickly as he could. Trevor Immelman, the 2008 Masters champion, did the exact same thing. (Neither Woods or Immelman made the cut this year, saving either of them from having to wade through fans on Saturday and Sunday.)

The point? My takeaway was that there are tangible ways to value what you do, such as golf rankings, winnings, etc. But there are also intangibles such as fan appeal and reputation, which can over time be converted into more tangible benefits. Remember how many advertisers ditched Woods after his scandal? One has to wonder if those companies would have given him the benefit of the doubt if he had worked harder on relationship building as he built his storied career.

Mickelson is set to be enshrined into the World Golf Hall of Fame on Monday. Given his efforts to be a genuine human being, there are countless people who should be overjoyed to see him get to that place in his career. Lefty said at a press conference Wednesday that believes he has at least five more years of high-quality golf left in him. That’s good news for those who will continue to linger around the 18th hole waiting for him to finish numerous rounds in the future.