Paul B. Brown discusses his book Customers for Life with Carl Sewell, a car dealer. Brown shares stories from Ritz-Carlton, a cable company, and a hardware store to show why keeping customers costs less than finding new ones, and how saying yes to requests, empowering employees, and removing friction actually work.
Chapters
Foreign. There's the music once again tells us we're ready for another great conversation about something to do with the world of scaling up. Today we're talking about how to keep customers and not lose them. How to hang on to customers and spend less money and less focus on customer acquisition cost. Hi, everyone, my name is Bill Gallagher, Scaling Up Coach, host of the show. We bring shows like this in the world of scaling up to you every week, three times a week, actually. And we dive into something to do with people, strategy, execution, cash, and the leadership it takes to grow and build your company successfully over time. We're over 300 episodes now, so there's loads of things on all these topics and more. Show notes, tools, special offers. All that and more@scalingcoach.com you can find all that there. Scalingcoach.com if you want more on that. All right, so listen in. We're talking today with Paul Brown. He's New York Times, hbr, Forbes. Oh, what am I forgetting?
It sounds like it can't hold the job.
Like every place you could imagine. He's written for Talk to Everything on the world of business. I'm very excited to have him join us here. He's got written over 60 books now. We're talking about one of them in particular, Customers for Life. And he's working on another one. We'll have another show on that another day. Paul, welcome to the show.
William. Thank you. How are you?
I'm good, I'm good. It's gorgeous day here today, sunny California. We're in that like magical time of the year before the fire season starts.
And the earthquakes and the monsoons and the mudslides.
Right, all that.
My oldest is about 20 miles from you, so I know the area well.
Oh, nice. And where does your oldest live?
Danville.
Oh, nice. Yeah. That's very close. And you said you have four kids to support.
I happy to give you one or more if you wish. Yeah.
I'm guessing in Danville they're likely taking care of themselves at this point.
He works for Google and he's very smart. And this poor young lady who should have known better said yes. And she works for Autodesk and is even smarter. So we're not going to do a GoFundMe page for them.
So we're going to get into the story of how you come to write this particular book. We're talking about how to hang on to customers versus lose them and your customers for life idea book, etc. Before we get into that, in the Origin of That specifically give folks maybe a little bit more colorful than the facts and figures of, of, of your career and all the people you write for. Talk about kind of how you got your start in interest in business and writing. And business writing.
Default I was for. I was forced into. I'm accidentally here. Yeah, it was totally accidentally. I was a theater arts history major back in college. And when you open the 1s back in the days when they had one ants you, you would see pages upon pages for no, you didn't. There was no job. So I had been working for the college newspaper. Hadn't thought anything about it. It's May of my senior year and I've been accepted to Yale Drama School. And the thing about Yale at the time was you had to audition to get in. And you can sit on other people's auditions and they could see me. So I went up and I sat on auditions. And this is now the mid to late 70s. And every guy auditioning looked like Robert Redford. Right? They were just gorgeous. And the thing you do as an actor, especially if you look like me, is you say, well, he's that pretty, he can't possibly act. So I'm watching their auditions and these guys are 10, 12, 14 times better than I'm ever going to be. So I'm saying, okay. He can go, yeah, they're prettier and they can act. It was so depressing. I take the train back to campus and I have no idea what I'm going to do. And the next day back up. So what would happen if you work for the college paper? I went to Rutgers. They would have college kids help cover the campus. It's called springing. You would help them out. You cover sporting events, you do whatever. And I was doing a lot of stories for the Ledger. It was a good year. The basketball team was undefeated. A lot of stuff going on. And I come home from my, my audition, which went well, and knowing, not knowing what I'm going to do. And the next day the phone rings. It's my editor at the Star Ledger saying, what are you doing after graduation? And I said, I hope to work for the Star Ledger, sir. And he said, well, when's graduation? And I said, commencements on Wednesday with such and such. He said, that's really good because our pay week starts on Thursday. Show up. And this, this is how I, I got to do this. And then I, I do this forever. All I want to do is write features because it's easy and for no fault of my own. One of the power Plants in New Jersey owned one third of Three Mile Island. So when Three Mile island hit in the late 70s, they sent me out there to cover it again. I don't know what I'm doing. I go out there, but now all of a sudden, I'm an energy writer, Right. Because I've covered the aftermath of Three Mile Island. Well, if you're an energy writer, you obviously can go to business publications. And so next thing I know, I'm interviewing at Forbes, and they say, you're hired, and this started, and it's gone on ever since. Someday they'll find out and catch me, but so far it hasn't happened.
Imposter syndrome affects us all. I'll be found out, and they will not let me in the club anymore. They'll take away the jacket.
It'd be very sad.
Yeah, interesting. I think. I think everybody has something like that. And yet, if you weren't meant for it, then we'd be talking about another story, because that would have just ended, and then you'd have been like, oh, yeah, I did that thing once. It didn't really turn out, but. But this other thing happened to me, and I did. So there's an accident, and then we discover that there's something that we're actually good at in that world, and that builds, and then we end up sticking with it.
Right. It's really true. And when I got hired at Forbes, I said to Jim Michaels, the editor, look, I'm really flattered, but I don't know anything about business. I could write, but I didn't know anything about business. And he said, you have to trust me, though. This is a great. Michaels impressed him. Look, I know that. But this business stuff isn't that hard. And if it doesn't work out, a bright young man like you can always find another job. And that's how I started. So Merrill lynch at the time had a booklet called how to Read An Annual Report. All I knew was an annual report came out once a year and had pictures. I read the booklet. And you work for Forbes, so you get to ask people questions. I'm sorry, what. What does a net loss carry forward? I'm sorry, I don't. Net operating expense. How is that different? And you just ask a lot of questions, and eventually you learn something.
That's life.
And then you die, pretty much.
All right, so talk about, then, this book, and you've got a great story about how you came to write this book and the inside and that kind of thing. Talk us through that, and let's talk about the topic.
So from Forbes, I go to Businessweek, and I'm marketing editor of BusinessWeek. And this is the mid-80s, mid to late 80s. And I'm thinking, there's gotta be something, a story, a cover story. We can do Businessweek on customer service. To give you an idea of how long ago this was, there are only two publicly traded companies that even profess to have good service. One was Nordstrom's, which at the time was only in Washington state and Oregon, and the other is Neiman Marcus. That was it. And everybody else didn't do it. So I'm thinking, there's gotta be something here. And I'm thinking, could customer service be a business strategy? And I have this. You know, I write myself a note. I write. Write lots of notes. And I'll spare you the story of how I meet Sewell, but Carl Sewell is one of the nation's largest car dealers. I'm interviewing for something. The interview goes really well. It went so well. I stayed late. I missed my plane. He said, come back to the house. We'll have dinner. And he said, you know, what are you thinking about these days? And I said, I keep toying with this idea of customer service and doing something. And he said, come with me. And we walk into his office and. And he's got four legal pads that he's doodled ideas about. And he's thinking, he's got one store, one Cadillac store in Dallas. There are three Cadillac dealers in Dallas. He's the smallest one. And he's looking for a point of differentiation. And he's thinking about customer service. It might be the way to go. And I have this idea. There's something to be done here. And we compare notes, and it's the old Mickey Rooney, Judy Garland thing. Hey, gang, let's put on a show. Let's go write a book. And so we did.
So you wrote the book with Carl?
Yeah, I did. And was really, really, really good. Because I don't know if you could tell. I'm from New York and I'm a bit of a wise ass. And Carl is a gentleman from old Southern money. So that couldn't be more different. And what was really good is we both have the attention span of Nats. So the book Customers for life has 41 chapters. No chapters longer than 5 pages because Sewell and I couldn't sit still longer than that. So that part was good. And then we just throw out ideas. And he would say, you know, you can sell on service. I said, you're A car dealer. You can't sell on service. People hate car dealers. How are you going to do this? And so we kept bouncing the ideas back and forth and we just filled down the premise and the book has done really well. Thank you.
Cool. So I, you know, in our world, many people spend a lot of time thinking about how to sell more things to the same customer. There's a lot of focus on what to do more with their enthusiastic customers, but not always as much attention on how to make make those customers into rabid fans. And so I love spending a little time because if you're going to sell more to the same people or keep selling to the same people, they have to be happy with you. There's got to be some aspect of the experience that's good and a key one potential. There is service. Why don't you share some of the stories from the book with us about interesting or legendary customer service examples. I think that that would help bring.
It to life with people. Yeah. And so you said a couple things in passing which I think is really important. What people tend to gloss over is that customer service is a business strategy. If you can turn a one time buyer into a lifetime customer, lots of good things happen. Your sales go up, right? But if you. So you're helped, but your competition's hurt, right? It's a zero sum game. They're only going to buy the one thing. So if they're buying from you, they're not buying from your competitor, as you mentioned. And it's a really important point that if you go through this, that your marketing costs are less because you have the customer, right. You don't have to go out and spend all the money to get them. You can sell them more stuff, which you said is a good thing. You might even be able to raise your prices a little bit. You've done a good job for them in the past. You can't gouge them, but they're happy with you, so they'll pay a fair price. So it really is a strategy. And so the strategy really boils down to if the customer says, can you. The answer is yes, if it's any way conceivably possible, but it's yes. And you get to charge them for. So let me tell you my favorite Sewell story. He's got a customer who's bought cars from him for 30 years and she spends half the year in Paris, half the year in New York. I'm sorry, half the year in Paris, half the year in Dallas. And she calls up Carl one day and says, hi, I'm coming back from Paris and I'm gonna spend a few days in New York and I want to rent a car. And Carl said, sure, I'm happy to make a phone call to Hertz or whoever. And she said, no, no, no, no, no, you don't understand. I don't want a New York rental car. All New York rental cars smell like smoke. This is back in the days when people smoke and I want one of your cars. And Carl says, well, ma', am, I'm in Dallas and you're gonna be. And she said, I want one of your cars in New York. And he said, sure. And so he said, I'm gonna have to, you know, I'll have to charge you. I'll give you the car for free. I won't even charge you the rental thing, but I'm gonna have to charge you to have somebody drive it up to you. All the costs associated with that. Is that okay? And if you can spend half your time in Dallas and half your time in Paris, it's probably okay. And she said, yes. So the customer said, can you? The answer was yes. And she kept. She kept buying cars.
Isn't that interesting? So somebody asks for something unusual and you find a way to do it right. We think instead so often about just locking someone in or getting a contract and make it hard to leave instead of making them love you, Right, exactly.
And you can make money on the deal. This is one of the things I talk to Sewell about all the time. He doesn't really advertise where you are. The car dealers are on the radio and TV all the time. Buy a new Toyota, buy a new whatever. Sewell really doesn't advertise, but what he does do is he's got a 24 hour service number that you can call. And if it calls, it goes to a mechanic on duty who comes out to you in a fully equipped Suburban, which can fix just about anything. And if it can't, it can tow your car in. So you lock yourself out of your car or you break the key in the thing, whatever. So the mechanic comes out, cuts you a new key right there, says, thank you for thinking of us, and drives away. And I said, sol, you're out of your mind. What does that cost you? And it cost him at the time, 50 bucks. So let's say it's 100 bucks now. And I said, why would you ever do that? And he said, how much does a radio spot cost in Drivetop? 1500 dollars. How many ads do I have to drive. Do I have to buy to get one person to come in and buy the thing? He said, this $100 expenditure with this one guy, where's he gonna buy his next car? I said, oh, you're very smart. And this is what he does. So it really is a business strategy and you can turn a one time buyer into a lifetime customer.
So let's stick with the car industry for a minute because that's your co author and our leading story. And there are a couple of things that immediately come to mind because it's an industry that's notorious for having people feel manipulated and taken advantage of and like that. But I've known some great. The last car we bought, we actually bought twice. Um, so I, I wanted to get my wife a car. We used to have five cars, now we just have one. You know, we had kids in the house and that kind of thing. We had to like the weekend car and the going to the mountains car and like all that. We had a, well, actually we had, we had a bunch of cars and a couple of motorcycles. Anyway, so we get rid of all these cars and I get my wife a new car and she'd been, we've been talking about it, whatever. So I arrange with the guy to buy it and I want him to, to sell it all remotely without me going down there so she's not tipped off and deliver it with a bow in the driveway right. The day before Christmas. And of course he does the whole thing and I'm all taken care of. But when I was trying to set that up, I must have talked to at least six or seven other dealers in the area who didn't answer or were slow to answer their email, their phone, that kind of thing. They're all spending money to advertise to do whatever. This was the one guy not only that said, answered the email, gave me a price was competitive, followed up on things, answered follow up questions, set the whole thing up, took care of the transaction, didn't make me come down, didn't try to trick me into coming down and delivered the car. The first time I ever saw him, he was in my driveway with a car with a bow on it, right? And I walked my wife out, I signed a few papers and the thing's done. In fact, the next time I had to do it, I was in the middle of leading a client strategy like an annual planning session, and there'd been an accident, they totaled the existing car. So I sent the guy a text, I need another one of those cars. And could you deliver it here so I could surprise her and drive it home with the thing? So two surprises. Two remote sales, two transactions initiated by text message while I'm busy doing other things undercover. Low hassle, great price, like, you know, I was fine to pay whatever, but, like, remarkable. And I'd have probably kept buying cars from that guy for years, except he left the business, went into some other industry.
Okay, so it's a wonderful story. And the thing you're leaving out is how many people have you told that story to? Right?
Lots. Right.
And so their next reaction is, who is this guy? Right. And you got his number. And I had a terrible experience with the dealer and let me call him up. And this is why it's so effective. And the irony just to stand cars for a second is car dealers don't make any money selling cars. They really don't. I mean, the margins are so tiny. All the money is on the service on the back end. So why, you know, you much rather have Bill as customer to be happy, because you're going to go in for the oil change, you can get the tires and the timing belt and all that stuff, and that's why you really want to do it. So you're a living proof this works, right?
Yeah. I hope to find someone like him again when we need to replace, because I did hear. I forgot. I can't remember why I know that now, but I know that he doesn't work there anymore. Maybe because I asked a question, somebody else answered it, but it still wasn't the same connection. That kind of raises the. The, the next thing, which is if it's entirely based on a person and not on a set of policies and processes and things like that, then there's some risk. Did you find the same thing?
Yeah, there. There's a lot of risk. So again, it's a really good question because there's a whole bunch of stuff going on. So on one level, if you're running the company, you want to empower the people, and I hate that word, but empower the people to make the decision they shouldn't have to go. If I work for you, I shouldn't have to go to Bill to get you to approve a relatively small expenditure. Hey, Bill, this guy wants me to drive out to his house with a car with a bow on it. I know it's going to take me off the sales. Right. I shouldn't have to do that. It should be part of that. And the other thing to the bigger point is there's got to be A system in place. So you have the relationship with the sales guy. But what the dealership should have done is the sales guy should have introduced you to the sales manager. He should have introduced you to the boss. So if the sales manager, the sales guy moved on, you would say, oh, Tom's gone. But Susie was the sales manager. And. Hey, Susie. Hi, Bill Gallagher. I bought a car and I saw Tom moved on. Can you help me out? And now you still have a relationship. She's met you, so you can't if it. Sales guys or sales guys only want to control the customer. I understand that completely. But you need to have a situation in place where there's a way the customer can follow up if the sales guy moves on.
Yeah. If you haven't structurally made the relationship, the owned by and more dominantly controlled by the company than just the salesperson, then you've made a mistake. If you. You're a brilliant salesperson, if you're the one who did that. But if you have allowed that to happen in the business, you definitely jeopardized your business.
Yeah. And so the only tweak I would give to that is the company. Sounds cold and impersonal. It's. You don't want the relationship with Toyota. You want it with Oakland Hills, the general manager of Oakland Hills Toyota or the sales manager of Oakland Hills Toyota. You don't want it to be Toyota. That's cold. And we get to customer relationship management stuff, and that's off putting. But Susie, Susie, I know that's where I want the additional relationship.
Yeah. You know, one of our past scaling up speakers is Horst Schultz of Ritz Carlton. And they're legendary about empowering employees to really take care of people. Ladies and gentlemen. Serving ladies and gentlemen. And then all of the things that make that real and not a wishful statement where if the busboy hears that you had a rough night, they could just comp your whole breakfast for you. Just as a gracious move to let you feel heard, appreciated, taken care of, that kind of thing, without going for lots of approvals and. And like that. And I've not been like a mainstay at Ritz Carlton hotels, although I've enjoyed every last one. But I do remember distinctly the first and second time I stayed in one. And that very much contrasts to another hotel experience I had in Vegas. So the first time I came in, they remembered me and remembered my name on return. So the second time, pulling up to the hotel in the car, they're like, welcome back, Mr. Gallagher. And that kind of Thing. And by then, they figured out, like, what kind of wine I like, and a variety of things like that. And then the next time I stayed in another Ritz Carlton property, they seem to remember all those things. So not only have they empowered people, but they built systems around it and practices in place so that they would remember.
Right, right. And so there's a chapter in the book that says, systems, not smiles. So the smile. Hi, welcome to the Ritz Carlton. That's good. Oh, it's Bill Gallagher. He's never been here before. Okay, so now they know you've never been here before. That's written down in the system. Oh, I see. He wanted a room on a high floor. Mr. Gallagher, do you always do that? Yeah, because I'm afraid. Okay, he likes high floors. And so all this stuff is captured so that when you come back, you get red wine or whatever. Whatever it is. I will tell you a great Horse Schultz story to prove this is true. So one of the many places I worked at Ink, and it's in Boston, and at one point, they were going to transfer me up from New York to Lizard, and they put us up at the Four Seasons, which is very nice, because they're trying to convince my wife that we should move. And we pull into the garage, and it's fine. And the next day, I'm going to the office, and she's going to go house hunting. And I walk her down to the garage, and the car has a flat tire. And I go, sorry, honey, I have to go. So I go into the office, and she's smart. She'll figure it out. And I said, what happened? She said, it was amazing. The kid in the garage changed the tire, put the spare on. I went out and looked at houses. And then when I came back, he replaced the tire. He got it fixed. And so I tracked down the kid before we went out. I said, what did you do? And he said, well, you know, I saw your wife, and you had two little kids. And so on my lunch hour, I just took the tire down to the local service station here, and I had him patch it, and I waited, and I had my sandwich while they were doing it. And so that's a $10 charge you see in your hotel bill. I hope that's okay. And then I just came back, and when I had time, I put the tire back in the car. Okay, where am I going to stay at the next. You know, my wife's got two little kids, and she's under a whole lot of stress. And this kid in the Garage made the problem go away. I mean, there are nice hotels everywhere, but that's where I'm going in.
In a. In a increasingly uncaring, callous, fearful world, right. Where people are nasty with each other, fear finding somebody who takes care of you, who actually cares, who's been hired for their propensity to care, who's been trained and encouraged to care, rewarded for caring, who's been given the tools, the systems, rewarding the authority to care. All that is profound. Right. And I think so contrast the.
And it is. And it's people you want to do business with. Right? Right. I mean, think about where you and your wife go out to dinner. I'm sure it's lovely, and I'm sure you have a favorite place. And I'll bet anything that the favorite place is not the most expensive restaurant in the Bay Area. And you're going there because the food is good. Sure. But the experience is lovely. They take care of us. We like the people. We can get a table. It's all that stuff. And people are going, well, the margin's on the steak. Yeah, you know what? You can charge an extra dollar for the steak if it's good. And you take care of the customer. So you really can create customers for life.
So my mom's family is from Las Vegas. I grew up going to Las Vegas. I lived in Las Vegas for some years. I did a couple of years in school there. So I have some connection to Vegas. In addition, as a business adult on the west coast versus Vegas is a place of meetings, conferences, conventions, that kind of thing. So I've been to Vegas a lot, and I remember there was a mater d there who remembered everyone's name, and he was legendary. And of course, you know, eventually they blew up the hotel and they put up a new one, and he's died right as. As people do. But none of that was baked in the way that it was. So, you know, I go to Vegas today. Do they go, oh, you lived here for years, Mr. Gallagher, we remember you, and we remember you were here a year ago before the pandemic. And welcome back to the hotel. We're so glad to have you back. And are you gonna see any of your old friends at the radio station you used to work at here? And, you know, none of that. You stand in line if you're unlucky and don't have any access. But even if you have some VIP access, like, a ton of that is lost on them. Oh, welcome back. You're a titanium member with Marriott or that Kind of thing. Yeah, but none of that like personal aspect, you know.
Right. And again, and what happens, I was saying with the car dealer, you want the relationship with the manager and not with Toyota, you want the relationship with the maitre d or the hotel manager and not Mario. It's lovely. You're a titanium, work whatever. But Marriott, somebody at a 1-800-Marriott line doesn't care. I mean, your name goes up. Oh, be nice to Bill because he spends lots of money with us. Okay. That's not the same as welcome back, you know, the house cars available if you need it. That. Right. That's what you want.
So I coached a number of companies through their growth periods in Hawaii. And so there was a regular hotel I would fly into. And I started spent years living in Hawaii as a kid. And I went back and I'm so happy to be back and that kind of thing. I went back to the same hotel seven times because of where it was located. And like that. And eventually I'm like, you know what? They never upgrade my room. They never act like they recognize me. They never. So I went across to another hotel who upgraded me every single time, who welcomed me back, who, you know, like that kind of thing and treated me like I was somebody treat made me feel special.
Right. And what, what did the upgrade cost them? Right? I mean, the room was empty anyway. It was available, it was free, so it didn't cost them anything. And now you feel better. And yeah, so again, it's this stuff.
And the location wasn't quite as good as the other one.
Right.
Like I'd rather have been from a location standpoint. The other one is a little quieter, you know, a little bit nicer beach, like that kind of thing.
But they made you feel special and comfortable. And so you go back there. This customer service stuff is not that hard.
Not that hard. And yet how come our experiences keep being like they are? Right?
Well, because people don't think it through. So I figured I should have an experience because I knew I was going to talk to you. So we picked on car dealers. Let's pick on a cable company. I won't, I won't name a cable this week. Okay, so we have. I live in the middle of nowhere. We have one television set because it's now just my wife and me. The remote control dies and I go, oh, change the batteries. I reboot the system. No, does it doesn't work. Okay. So the first thing that happens is on the customer service stuff is if you make a good product, you don't really need this customer service stuff. If they had a better remote control that didn't die, I would now be in this loop. I need customer service. Okay, so problem number one, the product wasn't very good. So I called the cable company and they put me on hold for 9 minutes and 45 seconds because I have a timer on my phone. And I'm thinking, wait, this is ridiculous. We have technology now that we're sorry. Our whole times are beyond usual. Please leave your number. We'll call you back at, you know, 37 minutes. No, the cable company doesn't do this. I get through the cable company and they say, oh, well, would you like us to switch you to your local office, you know, local retail outlet to see if they have a remote? No. I mean, why don't, you know, if you have a remote you can't plug into the system? No, sir, we really can't. Okay, so what do I do? You could drive between 9 and 5. That's when the store's open. You can drive 17 miles to the store to see if they have a new remote. I'm saying, that doesn't seem like a good idea, does it? Well, if you want, we can send it to you. You'll have it within seven to ten days. Wait, wait, wait. If the customer says, can you? The answer is yes, I need a new remote. Paul, are you willing to wait seven to 10 days with your one television set? Not to watch TV? No. The Yankees are on this weekend. Well, that's the way I said, fine. So seven to ten days, they're gonna send me a remote. Day 11, I call no remote. What happened? Oh, well, we'll FedEx it out to you so you'll have it tomorrow. I'm going. All right, so this is day 12. And then I said, look, I never do this, but it's been 12 days. And do you guys know what you're charging me a month for service? Well, as a matter of fact, we do, Mr. Brown. It's a lot of money. I said, can I have a credit because at least I'll feel better. Mr. Brown, we can give you a credit on the rental of the remote. So that will come to 18 cents a day times the 11 days. So why don't we round that up to a dollar?
Yeah.
And so in answer to your question, why do we still have these problems? Because nobody thinks through from the customer's point of view. If you had. If the cable company had, they would say, oh, you know, if we have really good remotes, then they won't break and we won't have this problem. If they do break, then let the customer service rep know if we have it in the system. Right. And just kind of walk through every step with what could go wrong. Okay, we now know what can go wrong. Let's build systems to take care of that. But in the same way your hotel experience didn't think about, you know, you had been there a lot. My cable company had never really thought this through from the customer's point of view. And so that's why we get frustrated, because what you and I can figure out as customers, most people can, and it makes it even more annoying. Why don't they care?
So I've been in and coached a number of companies, and I think the thing comes up again and again is how we can't afford that. Oh, it's going to be really expensive. Right. And. And I don't think we are factoring in the cost of pissing people off and reselling customers. Right.
Well, and that gets to what we talked about before. Right. It's. It would be so much easier where I live on Cape Cod. It would be so much easier for my cable company who remain nameless because I don't want to. But if I switch, we're out. You know, we now have two TVs and the remote and the streaming and this and that. They're out 3,000 bucks a year. Okay, multiply me times whatever. That's a big number. Maybe you could spend $10 or whatever it would have taken and save 29, 90.
Yes. I think very often if they're calculating the cost of one cable box over another that they have to install from what, you know, the latest provider, the latest version of whatever that they're installing in. I, I think very often the calculus is not including how many interactions where they book someone to come out to your house between 10 and 7pm.
Right. And.
All that like, okay, so pay a couple bucks more for the box that you're going to put in the.
Customer'S house and your service calls will be so much less. And the customers. And the other thing you could do that people don't think about is just be transparent about it. Look, we could sell you. You can either give the customer choice, we tell you good, better, best when it comes to the cable box and the rental is 10, 12, or $15 a month and say, okay, here's the deal, here's why it's 12, here's why it's 15. Or the other thing is, and this is where companies freak Out. And they really shouldn't. They can say, look, we know that we're $5 more than brand X. We'll make it worth your while. Try us. If you're unhappy, we'll kick you back. We'll give you about the $5 back. Hold us to a higher standard. You know, everybody says we're terrific. We really are. We'll put our money where our mouth is. And you can do that too. How much? You know, I would pay a couple dollars more not to ever have to call my cable company. Oh, okay. This sounds like a business opportunity to me. So let's say it's a third of the market. Can you create pricing for that third of the market at that level? You probably could.
Yes, there's something. Great. So the, the cost of keeping a customer may in fact be quite a bit less than the cost of finding a new customer. And clearly there's market value in having raving fans of customers. So keeping them is cheaper than getting a new one. Having raving fans is much more valuable. Right. And you said something in there as well. When somebody asked for something, say yes. Just don't assume that you have to do that for free. I see this again and again with some of the, especially some of the SaaS companies that we work with. They're like, customer asked for this, customer asked for that. They're going to want us out of business. Like, great, say yes to everything, but just charge them for it. Oh, that's great. That's, that's part of our professional services. You can have that. It's whatever dollars. And then they might say, oh, yeah, I didn't really want it that badly. Or they might say, great, thousand bucks is fine for that feature ad.
Right. And again, give them the choice. And wouldn't it be lovely when they say they want X, Y and Z features if you could say yes to everything you just said and say, well, tell me why you want that feature. Well, because we're going to do. Well. How many people use that feature? Well, it's maybe one out of 100. Oh, you really want to spend that money to satisfy that one out of a hundred customers? Maybe they do, maybe they don't. Or maybe you can say, oh, well, we've got something that's almost as good for a lot less money. And Instead of losing one out of 100, you lose one out of 200. Is that a worthwhile trade off? So if you give people options that, that can work out as well. And as you said, okay, they want it. You want custom or semi custom. Fine, here's what's going to cost.
I think the thing that that implies though is that we have to interact with people as people capable of thinking.
Well. And. But again, it's not, it's not that hard. So where I live in Cape Cod, it's, it really is all the cliches. It's little towns. Guys at the hardware store have been there for 47 years. And so this is a true customer service story, which is why I will never leave my little hardware store, even though there's Home Depot, unless closed. So we have a sliding door that goes onto the deck and we're right on the water. And so it rusts and whatever. And so when you try to open the slider to get to the deck and it's screeching and whatever. And I don't know anything. Yeah, and anything. And I know you're not supposed to use WD40, I don't know why. And so one of my neighbors is an engineer and he says, you need human grade silicone. I have no idea what that is, but he told me I need human grade silicone or food friendly silicone. I don't know what it is. I go to the hardware store and I say, do you have this? And the guy says, no. I said, oh. He said, tell me what the problem is. I said, that thing. Here's the door. And he said, okay, so you're where? Okay, you're on the water. So he sells me this product, which he says, look, this is gonna work. This is what I use. Here's how you fix it, you know, clean it and whatever. So here's the product. It's eight bucks. And if it doesn't work, give it back to me. Even if you've used it?
Yeah.
And I said, oh, well, first of all, I'm not, you know, I use it, I'll eat the $8, but I'm going, oh, I had a problem. I thought I wanted this. He said, you really don't. You want this? And I'm so sure it's going to work, I'll guarantee it. Okay, I have a hardware store. Could I go to Lowe's? Yeah, there's nothing wrong with Lowe's and Home Depot, but find a person, find the silicone section, find somebody in the silicone spray section to talk to. And no. So again, this guy has been selling hardware this way for 50 years. So I wrote this book a while ago, but it wasn't 50 years years ago. And he has a very nice hardware store.
Yeah, you Know, it's funny as you're telling that I'm reminded I had a fantastic experience just this week and I immediately decided and said to my wife, oh, I'm gonna like, shop from them forever. So I bought like last September, I bought a surfing wetsuit from a local chain, like a regional chain of stores. And you know, they, it's a discount place, but they have a lot of inventory and I didn't have to order it online. I could go try it on and that kind of thing. And my old wetsuit had, had, had broken out. Now, wetsuit's still in good condition, but last week I was pulling it up and in and it just an amazing day and I'm just desperate to get out there and I'm like trying to get the zipper up and it like ripped, ripped apart, right? And it shouldn't have failed in that way. So I called him up and I'm like, I. I'm not exactly sure when I bought this, and I don't have a receipt anywhere, but I bought it from you. And do you have any more of these? Can you do anything? And I really expected him to say, sorry, no, we can't. But they said, well, why don't you come in and see what we've got and show it to us. And so I drove down a couple hours later and they said, well, why don't you go see if we have one in the background? And I came back and they just said, yeah, that looks like about the same here. Let me see if there's any price difference between the two. They're like, yes, there is definitely a price difference between these two. It says that was exactly the same model just a year later, right. They said, it's one penny. How would you like to settle that? One penny to get something replaced. It was Nordstrom, like service from like a discount warehouse place. Like, oh my God, I'm going to keep coming back here. And they of course, had my. They could easily find the transaction in their system tied to my name and phone number.
Right? And again, you're going to tell this story to countless people. This is the thing, right? So when I back.
Sports Basement is the company that's good.
We'll give them, we'll give them a plug. So back when I work for magazines, when Home Depot and Lowe's were coming into the fore, I did a piece for somebody probably Business Week that said the death of local hardware stores because Home. Home Depot and Lowe's are going to come in and drive them out of business. And God you probably can Google it. It's probably a cover. I did. And what I didn't understand was the guy down the road from me who's been selling hardware for 50 years that he's going to do that. And the thing he sold me for, eight bucks. I'm sure Lowe's and Home Depot has their seven. Okay, but it's worth the extra dollar to me A, not to go that far and D, just have this guy say, no, I understand your problem. This will work. And so again, it's. The more you can do this with.
You on that, right? So there's a time and a place maybe to go to the big box retailer for something, a very large purchase or whatever, but 9 out of 10 times I will first call that local hardware store. There's a local lumber yard, Piedmont Lumber, and there's a local hardware store they aced down the street. And I will call both of them and. Or you know, whichever applies, and I'll say, hey, do you have, you know, whatever it is, I need some form stakes or I need some wood or I need a fastener like this and, and they'll say yes or no, but I will do anything to go there before I go to Home Depot for the distance, the parking, the, the empty store, the long lines, like the whole experience is pretty nasty of going to Home Depot over one of those other places if I can help it, right?
And so if you're the local hardware store guy or gal, you say, okay, maybe we can't compete on price. And, and for a lot of things they can. Weber grills are going to be the same price at your local hardware store as they are at Lowe's because that's the way Weber Grill sells. Weber grills. Okay, but if I can't compete on scale and size, what can I compete on? Oh, I can compete on the fact that Brown just bought this house. It needs work. God knows it needs work. And I can be the first stop, like Bill calls me, Paul will call me. Oh, well, there's a lot of bills and Paul's and the housing market's going nuts and there people are moving in. There's going to be new sanding stuff and so can I compete on service? Yeah, I probably can. And can I. Can I charge a bit more if I have to because I can't buy on scale. Yeah, you can.
Yeah, not like 10 times more, but am I paying attention to every nickel in those place? No, I've got a project, it's Saturday, I got to get the thing done right Right.
And. And are you gonna go. Right. Your wife's saying it's got to get done. It's gonna. Are, you know, and you started late on the Saturday, and so now you're an hour behind of where you're gonna be in the thing. And are you gonna drive an extra half an hour to save 20 minutes when you. You're burning gas to do it? Probably not.
Yeah. All right, so some recap, right? We've told a lot of good stories, Mark. The service side can, in fact be a strategy. And the strategy is hang on to customers for life. If this. If the customer asks if you can do something, say yes automatically. Just don't think that you have to do it for free. And build systems, focusing on systems as much as that, smiling and saying yes. You know, I've had people that I called up and they said, how may I be of excellent service to you today? And I'm like, well, you could start by, like, stop reading a script. And actually, just.
Yet. Yes to all the above. It's a brilliant recap. And the only thing I would add is if you want. I don't define customer service. I wrote this book. It sold really well. That's lovely. I don't define customer service. You don't define customer service. The customer defines customer service. And if you want to know what they want, ask them. They will tell you, and they will tell you. Don't read from a script. I don't want to be on hold for 20 minutes. I want this. I don't want that. So if you want to know how to supply good service, ask. Ask your customers. And pretty please ask them one on one. Not with the surveys and stuff. I hate those surveys. You just interacted with Netflix. Tell us how we did on a screen. No, I'll tell you how you did. Call me up. I'll tell you, but don't talk to me. So it's survey.
I've had two surveys today alone.
Right, Exactly. And they never get to. And is there anything else you want to tell us? And you know, when you type that in, nobody's going to look at it. And so then what's the point? Yeah.
So lots of great material there. Giving people lots of things to think about and work on their own experience. Talk to your customers. Figure out what takes them off. Figure out how not to tick them off so much. The book is Customers for Life, But Paul's got 60 books now.
Paul has four kids who eat lots of food.
Go to his website, paulbbrown.com Paul bbrown.com, paul bbrownmail send him a note and go visit him. He's got more and a lifetime of wisdom of listening to and telling the stories of good and bad business. I think you'll get a lot of it. I've enjoyed having you on the show. We'll have you back to talk about your new book, and we'll tease that one at the appropriate time. But I think it's been a great conversation. I so appreciate you coming on. Let me say thanks to Lucy Summers in the background there getting our show, working it out and getting it scheduled and our guests prepared and that kind of thing. If you want to drop us a note, tell Lucy she's awesome. Send a note to infocalingcoach. We bring three shows a week like this to you. You'll find that entire back catalog at our website@scalingcoach.com or wherever you get your podcast. We do both the video and the audio versions of these shows, so if you'd like to Watch us on YouTube, go find us there. Find us on Facebook video like that. Big thanks also to Vern Harnish, author and creator of the Scaling Up Framework. Our audio is edited by Albert Burge at Podfly Productions. They do a great job for us and our show notes are written up by Ein Kodina and proofread by Tim McGowan. So if we got something wrong, blame them. Thanks again for listening. Keep Scaling Up.
