Do You REALLY Care About Your Customers?

I bet 99.99% of you will answer yes. But I contend you are either full of it, delusional, or don’t realize what REALLY caring means.

So by now you’re asking yourselves why I’m coming down on you so hard. As a software venture capital investor, I see firsthand how low customer service ranks in priority for board meeting agendas. And as a consumer, I also perceive how 99% of the companies with which I interact and from which I buy provide me with horrible customer service. Furthermore, each and every one of the CEOs of these companies would swear to me their customers are their first priority.

Why do I bring this up now? Well, I was reading an article last night in the Financial Page of the New Yorker Magazine. The article was titled “Are You Being Served” by James Surowiecki. Here’s what I deduced from James’ insights:

• As consumers of products and services, we are all dissatisfied with most of the service we receive from companies whose products and services we consume
• As senior executives of companies that provide products and services, we are all guilty of providing sub-standard customer service
• A debilitating disconnect exists between the CEO preaching that the customer is paramount, and the customer service operation taking care of that same customer
• While customer happiness is positioned as paramount to growth and success, customer service continues to be managed as an after-thought cost center

I thought James summarized it nicely when he said:

“The real problem may be that companies have a roving eye: they’re always more interested in the customers they don’t have. So they pour money into sales and marketing to lure new customers while giving their existing ones short shift, in an effort to minimize costs and maximize revenue… Economically, this makes little sense; it’s more expensive to acquire a new customer than to hold on to an old one, and these days, annoyed customers are quick to take their business elsewhere.”

This is not the first time I am writing about this subject. Back in June I posted Your Customer Service is Your Weakest Link – So Eliminate It which interestingly enough was one of my least read posts. Is this a reflection of the quality of the post, or interest in the topic?

At the time I was pointing to a recent forum OpenView was hosting concerning Customer Service. We have since retained Bill Price to compile a Customer Service Assessment template to help our portfolio companies properly evaluate the true effectiveness of their service.

My advice to expansion stage CEOs on this topic:

• Provide the head of customer service a seat at your senior executive table. The head of CS needs to be QUALIFIED to occupy that seat.
• Ask your customers what they think of your service and your product (consider implementing Net Promoter Score).
• Adopt Bill Price’s framework described in The Best Service is No Service
• At all times, make sure a top priority initiative exists that impacts how you interact with your customer. The initiative should be owned by a senior executive other than the head of CS.
• Hold a weekly meeting with your senior management teams to track and discuss the specific progress against the top initiative.
• In addition to CS specific metrics, make your customer renewal and upsell rate a key Board/CEO level metric to improve on a continuous basis.

Speaking of renewal and upsell, read Sell More to Your Existing Customers Before You Sell to New Ones and What is Your Renewal and Upsell Rate?

Focusing on existing customers represents a particular issue for expansion stage software companies. As software venture capital investors, we continue to preach a greater focus on selling more to existing customers.