Saturday, April 14, 2012

Banned for life

Have you ever hated a company so much that you swore them off for the rest of your life?

My late father was a successful engineering professor for most of his life, who eventually became a university president. What is less well-known about him was that in the early years of his career, he worked for a major oil company. He and his co-workers hated working there. In fact, they hated it so much that as he left this company, this practical and fairly even-tempered man made a vow with his co-workers never to purchase their products again as long as they lived!

Perhaps it sounded like a few disgruntled employees blowing off steam. But as we grew up, our family got used to the idea that Dad would always drive past this (major) brand's gas stations, in favor of any other one. Over time, it became part of our family history.

Of course, being a family tradition, his children honored it as well. I certainly never wanted to disrespect my father and use this gas station either. In my entire adult life, the only time I ever made an exception to the family boycott was when I was running out of gas in the middle of the Arizona desert, in the middle of blistering 100-plus degree heat, when one of their stations was the only one around for many miles. But even then, I felt kind of like a Hindu vegetarian who had just eaten a greasy pork sandwich to survive.

Perhaps a fitting epilogue to this boycott came late in my father's life, when he attended a reunion and reconnected with some of his fellow engineers from that oil company. And guess what - they confided to Dad that they, too, had honored their vow never to use their products in their vehicles. All their lives. And probably passed it along to their children too. Meanwhile, in my own family, this boycott will soon be entering a fourth generation.

So how much do your employees love your company? Would they purchase your products and services after they leave? In fact, would they leave in the first place?

Monday, April 09, 2012

The tragedy of the commons: Why service businesses are killing themselves

As a customer service guy by trade, I have noticed something interesting recently: more businesses than ever are chasing their best customers away.

Put bluntly, I can no longer make a major purchase - and sometimes even a minor one - without getting aggressively hounded to buy upgrades, add-on warranties or services I don't want, to a degree I have never seen before. I often react to this pressure by never coming back. Multiply this by lots of others, and I can see why many retail and service businesses are going the way of lemmings marching off a cliff.

Take the time I took a business trip to the West Coast, and was browbeaten by the rental car agent for the entire transaction about upgrading to a bigger car - asking why I didn't want it, pushing the benefits of the more expensive car, and sighing and acting like I was stupid not to take advantage of such a deal. (Even worse was the time an agent said, "How would you like an Impala?" implying I was getting one anyway, and then silently upcharging me without my permission.) Nowadays I rent cars from firms with automated kiosks where possible, and avoid live agents like the plague.

More recently, I went to purchase some home exercise equipment. As soon as the dreaded extended warranty question came up, I made it clear I had no interest whatsoever. Not that my wishes mattered. The salesperson insisted on going over one "benefit" after another of his plan, as I kept saying no thanks.

Then he asked why I didn't want to buy it, and silly me, I told him: I rarely use coverage like this, and when I have actually filed a claim my service experiences have usually been horrible. Of course, he didn't actually want to know why I wasn't interested. He just wanted to keep me talking so he could yeah-but everything I said. Finally, as he kept blathering on, I walked away.

Same deal when I purchased a new computer this month. This time the clerk not only didn't give up, but called her manager over for yet another round of "Why don't you want to buy this service plan?"  I practically felt like I was going to be led away for an interrogation before I made it to the checkout counter.

In perhaps the stupidest example of all - and one I blogged about previously - I went to a bookstore for the express purpose of purchasing some expensive professional books I had once browsed there. Solely to be fair to the store instead of buying them online. My reward was to be ceaselessly hectored to purchase a $25 discount card I had no interest in, because my savings would cover half the fee I had no intention of paying. After at least five rounds of  "no thanks," with her visibly clucking and sighing at me in front of everyone about it, I silently resolved to click "add to cart" forever after.

In sociological terms, this is what we call the tragedy of the commons. It happens when individuals, acting in their own self-interest, ultimately destroy a shared resource - in this case, their paying customers - in much the same way that farmers let common lands get over-grazed as long as their own cows get there first.

Here is how the math works: Upselling improves a company's short-term bottom line. So some genius at headquarters orders everyone to do it aggressively or else. Then customers like me get hassled and shift permanently to buying elsewhere or online. Which makes them even more desperate.

It is often even worse for the employees than for the customers. Once at a chain jewelry store, for example, I saw a poster on the back of the stockroom door with a truly stupefying list of daily sales goals: close X amount of revenue, upsell Y number of customers, sell Z numbers of service plans, etc. Employees who don't "close" as hard, and are therefore liked better by customers, often lose their jobs or don't get bonuses. The ultimate impact of losing these less-pesky employees - and good customers - of course never gets measured.

Not every company falls victim to this trend. Take Wal-Mart: they offer extended warranties at check-out, but the cost is very reasonable, and at least at my store, they won't hold up the line pestering you if you aren't interested. And of all places, my favorite car dealer. We recently leased a new Honda, and the literature for their add-on services was just that: literature. No pressure and no problem. We'll be back.

Businesses today seem to have fallen into a vicious cycle of bullying people to make one-time sales, while chasing away the loyal long-term customers they need to survive. The solution? Start learning a basic concept from the world of dating: no means no.