How many times have all of us chanted, “You have to secure your base before adding new customers”? You’re sick of hearing (and saying) it, right? After all, what could be more obvious? Well, we’d better keep chanting, based on the behavior of two more clueless companies. Some outfits—a whole lot, actually—still cling to the concept that customers will stay however they’re treated. “Hey, we’ve got the relationship. Too much trouble for them to switch. And we’ll even throw a few exit barriers in their way.”

Hey, how many business failures will it take to persuade these yo-yos to give it up? An infinite number, perhaps, because the predictability of mistreated customers pouring out the bottom of the bucket faster than new customers can be acquired was established years ago. So long ago that we have to classify these un-persuaded, un-repentant companies as “learning disabled.”

Recently, I’ve been posting about several visible flameouts or near flameouts resulting from customer abuse—including CompUSA (now gone), Circuit City (almost gone) and Sprint (going). But I’ve been telling these tales at a macro level, and it’s time to drill down to the specific, customer-abusive policies that so often start these downward spirals. Here are two “winners.”

Checking out of Crowne Plaza—for good!   For years, I’ve stayed in Crowne Plaza hotels for business travel because they strike a happy medium between my comfort and client expense costs, and I’ve been a Priority Club member forever. So when a client asked me to use a Marriott that was full, I took the opportunity to book a nearby Crowne Plaza online. To my regret.

As clients are wont to do, this one postponed the meeting to a date to be determined (which turned out to be the original date). So I needed to cancel my reservation. Not liking to change reservations online for all the “accidents” that occur, I called reservations at the local hotel. But guess what? Unbeknownst to me, I’d booked a guaranteed reservation—as in “you own it, sucker.” But how did that happen, we never book guaranteed hotel reservations or flights or anything else travel-related. Well, I went back on the site to see what happened, and indeed, I had missed several sections of small type text that explained the policy. But, never having experienced a hotel chain making all online reservations non-refundable, I wasn’t reading much except to understand I was authorizing a charge to my card. I was just doing the normal, “get in, get it done, get out, on to the airline or car rental company or what-have-you.

At first, I was just going to eat the reservation. But then, the cunningness of spreading out the non-refundable message instead of providing a clear, unmistakable and unmissable alert started bugging me, so I called the Crowne Plaza contact center. The first-level agent just recited to me the text I’d glossed over. So I asked for her supervisor, and this is where the worm started turning. The supervisor almost immediately commiserated with me, saying lots of customers were calling with the same problem, but her hands were tied. No exceptions.

So then I asked her for the appropriate manager at the parent, InterContinental Hotels. One manager said she couldn’t help, so I asked for her manager. After a bit of phone tag, we finally connected. I asked her how InterContinental could countenance an ongoing issue that was snaring lots of customers, rather than fixing an obvious deficiency on the site. So this “however many levels up” manager started reading a script addressing the problem. I immediately understood that not only were lots of customers complaining, but so many customers were so ticked that they too were making it up to this level, requiring her to have a prepared statement to read.

For the grand total of $140 InterContinental sacrificed a customer relationship that it will cost far more than the disputed amount to replace—not to mention undoubtedly sacrificing so many other customer ties. At Hilton or Marriott, customer service management would not turn a deaf ear and blind eye to such an issue. But then again, InterContinental ain’t Hilton or Marriott.

In today’s marketplace, it doesn’t take too many $140 “savings” of this ilk to start the blog press rolling. And let’s not forget viral de-marketing. But hey, why should we worry about it. We have other places to stay.

X’ing out Xerox:  This incident happened several years ago, but it’s top-of-mind right now because we’re getting ready to replace a Xerox color laser that does everything but stand on its head and spit nickels. When we bought this thing, we declined the annual service contract, which cost, as I recall, about 40% of the replacement cost. But a couple of years after we bought it, we tried to replace one of the high-buck, fixed duty-cycle parts. We bought the genuine part online from Xerox, but when we installed it, the unit gave us a cardiac arrest error message. So we called Xerox to arrange a pay-per-incident service call. Couldn’t be too bad, could it?

Yeah, right. In a day or two, some third-party service tech showed up to fix it. He knew before opening the machine what was wrong. He explained that the part is so poorly designed that if you don’t perfectly align it before snapping it into place, something or other bends, rendering the machine inoperable. A very common occurrence, he said. So does Xerox take any responsibility for it? No way. Just like customers pay Microsoft tech support to overcome known Windows bugs, it’s the customer’s problem. But at least the printer was up and running again.

Then we got the bill for less than a half-hour’s work. Around $500. All labor. Guess you’d call that “the Xerox mark-up.” From our own work with a client providing multi-line field service, we knew the tech support company wasn’t collecting more than $125 to $150. But it wasn’t the money. It was the principle. Here’s Xerox punishing customers that don’t contract for annual service. Only to get the boomerang right back in its face.

Guess what brand of printer we’re about to buy? Can you spell “HP?” Or, the better question is, can Xerox spell “HP?” I suspect not. Companies with policies like these aren’t that bright.

That’s right, burn your contact center budget. Print it out. Hold it over a waste basket (preferably empty). Put a match to it. And make sure to let it go soon enough. Oh, and hurry up and delete the file it came from before the sprinklers let loose.

What was that all about? Simple. Getting back to ground zero. Starting with a blank piece of paper. Stepping back and starting over again. Getting a fresh perspective. Whatever. Just not tweaking your current budget, which is most likely cost-driven.

So now what?

Well, let’s take a revolutionary budget approach called “starting at the beginning.” What’s the purpose of a contact center? Answering customer questions. Resolving customer issues. Accepting customer orders. Even proactively selling goods and services to customers. A varied lot—but there’s one constant, c-u-s-t-o-m-e-r-s. That’s the beginning. Contact centers either add value to customers or customers subtract value from the company. But can you quantify either the addition or the subtraction? Not specifically or verifiably. Which is why contact center budget creators start at what should be the end of the budgeting process with something very tangible—costs. But how the hell can they determine appropriate cost levels without knowing the value contact centers deliver, or lose. They can’t. Which is why companies like Sprint treat their contact centers as cost centers and cut costs at all costs. Then lose big time as customers defect.

Caught between a rock and a hard place? You could say that. But you have an option. You can project potential added value and value lost by invoking what we call the “rule of reasonableness.” We use it all the time, not just in the contact center but for projecting overall CRM outcomes and other numbers immune to statistical discovery.  

Here’s how it works. Start by defining what you do (or could) know: number of calls; breakdown by purpose; breakdown by calling segment; principle outcome possibilities. Then sort of define what you sort of know: customer LTV; customer turnover rate (as opposed to churn rate, which includes non-preventable loss); opportunity cost of not achieving higher share of wallet. Now incorporate all these variables into an equation for determining the financial impact of contact center operations, both good and bad.

But what about the gaps in the formula where you lack necessary data?

That’s where you invoke the rule of reasonableness. Use your intuition. What would be a reasonable percentage chance a customer will switch suppliers if X occurs at the contact center (and remember, you’ve already quantified X). For example, what’s a reasonable percentage chance you’d cancel your Sprint contract to go with another carrier after the contact center refused to credit a questionable invoice item? Or what are the odds you’d stay but not renew? Then do the same for the impact of call center issues on customer share, viral marketing (fancy way to say badmouthing), etc.

Hey, this may sound more than a little loosey, goosey, but consider the alternative. Total ignorance. At least this way, you’re using all the data you have, which allows you to roughly approximate changes in customer value triggered by specific contact center actions, which in turn allows you set a reasonable investment level for your contact center. A helluva lot better than cost-based budgeting that doesn’t take customer outcomes into account.

Try it. You just might like it.

Although mostly in hindsight, many in business recognize that the supply-demand vectors crossed over in the 1980s and ‘90s, with the aggregate demand line gradually topping supply. So ended decades of suppliers’ markets, and so began the new era of buyers’ markets.

Circuit City is sliding faster and faster down the slippery slides of a porcelain bowl. Why? Two basic choices: 1.) Circuit City self-destructed from assuming customers are stooges who will put up with whatever stores dish out; or, 2.) Best Buy has eaten Circuit City’s lunch, every crumb of it, by meeting customers half-way.

Currently, Circuit City is trying to fend off an unwanted if not technically hostile takeover tender from Blockbuster. Venture capital firm HBK, with almost 10% ownership of CC, is pushing management to be more receptive. And HBK itself has said it might enter the fray in an attempt to take the chain private. But you know what? In traditional fashion, both parties are apparently viewing CC’s troubles as financial. Too bad financial suffering’s the symptom not the cause—the cause being either : treating customers so horribly that buyers gave CC the “rats leaving a sinking ship” treatment; or, suffering so badly in customer relations relative to BB that customers went where they could get more respect.

Hey, either way, customer relationships are the root cause, so who cares?

Potential buyers had better care. “Just” reversing bad customer relationships to become “above average” can be accomplished. BB itself proved that with a near miraculous recovery from being on customer black lists. But gaining parity with BB will require becoming well above “above average” with customers—and for potential acquirers wanting a relatively quick cash out on buying CC, that should be a big red flag. That would be a miraculous recovery, one requiring heavy investment in CC’s business.

No matter. Almost any entity that does the deal will have its nose stuck in spreadsheets, with the customer aspects of the business just a minor factor.

Know what? I hope whatever buyer “wins” CC gets fried for forgetting about customers. Which will happen.

Okay, I should have kept my powder dry. Better that I tested MIGHTYsoft’s new Dynamics 4.0 package, or tried to, before weighing in on SalesFORCE’s sales overkill. ‘Cause from the sales perspective, turns out the choice is between obnoxious and stone deaf.

I’ve already documented “obnoxious” on my previous SalesFORCE post this week, so let’s skip straight to deaf. I was headed for a Microsoft Dynamics 4.0 demo this morning, except I succumbed to whatever plague seems to have infected half the Twin Cities lately, so no go. But while working in my office, a client for whom we’re developing software requirements e-mailed to ask if Dynamics was a possibility. I replied back that Dynamics 3.0 has a design flaw that ruled it out, but I was, indeed, going to look at V4.0.

I was going to, and that’s about as far as I got.

I started by going up on MIGHTYsoft’s Launch home page. Signed myself up for access to the new Dynamics CRM Live, or so I thought. Only to get the dreaded, “A Microsoft representative will contact you.” Some day.

But I also wanted to see the thick client version, so I clicked on the Free 90-day trial” link. Most CRM vendors offer a free trial or free demo on desktop of their client-server apps, so I wasn’t expecting any difficulty. The link took me to a very poorly designed download site that offered—two flavors of a server-based product but none for a desktop (which is the way most of us test software, keeping it off the network initially). I downloaded the 32-bit server version regardless, in the hopes someone at MIGHTYsoft was well enough versed with customers and consultants to have created something that would run on XP. Low and behold, no executable in the download folder. Just zipped instructional files.

So I clicked on live chat to find out where to find the file. The chat rep said she was in sales, and I was asking a sales operations question. End of session. After trying the download again, with the same results, I decided to try chat again. This second rep obviously didn’t speak English, because she kept coming back to me saying that her station didn’t provide technical support. Technical support – to find a free download file?

Next I decided to use the “Run” option on the download instead of “Save,” which I really don’t like doing. Finally, I did get the executable. Not wired for XP. So I can’t test it.

Fortunately, I have good relationships with several MIGHTYsoft partners who will review the app with me, despite not yet having any skin in the game. But here we go again. Another CRM software seller without a clue about CRM. No effort to align with customers. Pushing product instead of building customer relationships. And especially putting up a distribution wall that forces customers (and consultants) to engage partners long before they’re ready, so that customers will get the same damn sales pressure SalesFORCE exerts. All this for an application that’s a very likely non-starter for my client.

You know, there are days I’d like to stick a lit cherry-bomb in the ears of every MIGHTYsoft exec I can find. Couldn’t do any damage. They can’t hear anyway.

All this reminds me of the long-running Visio issue. Umpteen releases after MIGHTYsoft bought Visio, it still can’t print to Word, which is a terribly important function for us heavy flowcharters. Corel’s iGrafx has done it for years. SmartDraw does it. But Microsoft is so deaf to customers that customer input goes in one ear and out the other. All the cherry-bombs will do is increase the throughput.

But don’t get me started.