The Jack Welch Rule for Startups: Fire bottom 1% of your customers!

I dont remember when I read Jack Welch’s Straight from gut. It must be 2004 or ’05. But I do remember the core of the book – his relentless thirst for excellence, his passion to make GE the best company in world, his management philosophy and his pioneering ideas.

There are several ideas we can copy from Jack’s journey to make our startups better. Let me tell you about one such idea and how I use it to fire bottom 1% of my customers!

During Jack’s tenure as CEO of GE, every year, he would regularly fire bottom 10% of his managers.

Each year, Welch would fire the bottom 10% of his managers. He earned a reputation for brutal candor in his meetings with executives. He would push his managers to perform, but he would reward those in the top 20% with bonuses and stock options.

[more on wikipedia]

Today, It might not seem like a bold move, but in 1982 it would have taken a lot of guts to even think about such a policy.

Why I fire bottom 1% of my customers

You know that I love my customers and strive to make them heros every day. All our products are designed to make our customers awesome at their work. So the thought of firing a customers seems to contradict with what we do.

Well let me explain.

Every business, no matter how big or small, has a tiny portion of annoying, nagging and irrational customers. In case of a large company, dealing with such annoyances is no problem because they have a lot of resources (customer service teams, marketing budgets etc.).

For a startup, if you want to please an irrational customer, you would have to do that at the cost of not helping 10 nice, rational customers. And that is not all. The negative energy you get from one annoying customer can make you unproductive and down for several hours or days.

But how do I know which customers to fire?

Oh there are always signs. I have a set of group of customers who I fire most often.

The haters

No matter what size your business is and what you do, you will always have someone hating you. If I realize that a customer hates us, I usually offer them full refund and let them go. It is easier to break-up than make-up when someone really hates you. For example, there was one person who bought my e-book a while ago. We have an automatic purchase process, so as soon as the payment is thru, we send an email with download link to get the e-book. But this person some how did not receive the email. So he sent an email which went like,

Hey … I bought your book, but I guess you were more interested in my $10 than book. Because I never got it. I think you are a cheater….

I replied with the ebook as attachment and apologized to him. This should have solved the issue. But he refused to acknowledge the receipt of book and instead went and complained about my business on PayPal. I issued full refund immediately. But this did not stop him either. He kept sending emails with abusive language and never acknowledged my replies or accepted my offer to call him and talk.

The free-riders

It goes like this: a prospective customer would drop an email and ask for a free copy to see if the product works. They promise that if it is what they want, they will purchase 100s of copies for their entire team. At this point, the request is quite normal. So I tell them to visit a page where we keep demo files / videos. These are samples that give a very good understanding of what our product is all about. But the trouble starts when they comeback and request for a full free copy.  A request like this from a student or unemployed person is quite normal as they cannot afford to buy stuff. But a department head in a large company? a sure sign of annoying customer.

The cry-babies

Whether you have an extremely simple product or selling subway tunnel drilling machines, you always find customers who require excessive hand-holding and attention. I think not all customers in this group require firing. But if it gets to a point where the cry-baby customer lets you not work on helping regular customers, you are better off firing the baby.

The buy-this-want-that-ers

I dont know what to call these people, so I gave them a name – Buy-this-and-want-that-ers. One of the things we try to do is provide a clear picture of what we are selling and give free demos. All our sales pages have sections like “Who should go for this?” and “What do you get when you buy”. These clearly state the benefits of the product and who should purchase them. We also have detailed brochures and videos to help our customers decide. And this works very well for 99.5% of our customers. But once in a while we get someone who thinks they are buying X when we are selling Y. Usually they email me and say “Hey Chandoo… I thought your product can do this. But it is not. Can you help.” And I usually offer them a full refund before even suggesting how Y (what they bought) can be used to do X (what they want).

Note: If a large fraction of your customers are in this group, then you should create X too.

The conditional buyers

Often we get customers who say things like, “We will buy this, provided you include a,b,c.”. Now this type of request is very common and easy to address in most cases. Examples of such easy requests are,

  • I would love to buy your templates, do you have any training videos to help me use them?
  • I would love to join this course, but I cant finish it 6 months as I have a busy assignment / personal thing? Can you extend me for few more weeks?
  • I would love to attend your workshop, but I may need some orientation material before attending.

All the above have obvious yes answer with some easy solution. But once in a while, we get requests like,

  • I would love to buy the templates, can you visit our office and conduct a free training on them after purchase?
  • I would love to join the course, can you also solve my work problems?
  • I would love to buy this, but can you heavily customize it so I can use it for my work?

My usual answer to these is NO. I say YES only if the number of licenses / purchases is large or there is a possibility to learn new things.

Various ways to fire customers

We do not want to hurt others, thus firing can be an unpleasant experience both firee and fired. Let me list down a few tactics I use to fire customers.

  • Discourage them from buying: This is easy, especially if the customers are in groups other than hater group.
  • Refund: This technique works well, especially for haters. My philosophy on this is simple. If someone hates you, do not have them more reasons to hate you. [related: when a customer refund leads to love]
  • Ignore: Just ignore haters and naysayers.
  • Say no: Especially if someone wants to negotiate or asks for free stuff. Tell them that you have 100s of customers who pay in full and it would be unfair for them if you offer free stuff or give un-reasonable discounts.
    • Note: If you are dealing with corporate clients (who usually buy lots of copies), then negotiations and discounts are a must.
  • Block them: The last resort. If someone absolutely hates you and wishes nothing but your total failure, just block them. You can block their IP address, email IDs so that they cannot purchase from you or reach you. You are better off focusing on your mission that one person trying to sabotage you.

Do you fire customers?

Fortunately, 99.9% of my customers are nice folks who want to learn, use and benefit from our products. Many thanks to them, I go months without a single negative experience. But when there is someone really annoying, I do not hesitate to fire them and move on.

What about you? Are you saying YES to everyone or screening your customers to serve them better? Have you fired a customer recently? Share your story in comments.

When a Refund Customer loves you, you know you have done well

Refunds are an important part of running online business. But how do you handle refund requests?

Here is the process we use at chandoo.org,

  • All products come with 30 day no-questions asked refund policy.
  • When a customer asks for a refund, I issue it as soon as possible.
  • For customers requesting refund due to specific reason, I try to do a follow-up by asking them how I can help.
  • When in doubt, I go by the principle “It is better to have a happy prospect than an unhappy customer”.

Today I want to share with you a recent email I received from Marilyn.

Marilyn bought my Project Management Excel Templates and she could not use them as she is an excel beginner. Pasted below is a screenshot of the email exchange. Read it from bottom-up.

How do you handle refunds?

What process do you use to handle refunds? How do you wow your customers / prospects with your refund policy. What awesome examples you have seen in this area? Please share using comments.

2 Lessons on Wowing your customers – From Kingfisher & Mozy

I am leaving to Maldive in a few hours and I will be away for a week. I am going there to do an Excel Workshop. But I thought, I will quickly share 2 wow experiences I faced in the last week so that we all could learn something.

Kingfisher Puts Sofas in their Airline Shuttle Bus:

Yesterday, we took a Kingfisher flight from Vizag to Chennai. After getting down at Chennai, we boarded a shuttle bus so that we could reach terminal. Everything was usual, except, they have sofas in the bus instead of boring gray-blue chairs. Big, red Sofas that made us feel relaxed, instantly!

I am sure it would not have cost Kingfisher airlines much to put those sofas in place of regular chairs. But think of all the word-of-mouth and wow-experience they created. Just impressive.

[photo of kingfisher bus from dingle-speaks]

Mozy lets go of $2

As some of you know, I use Mozy to keep online backups of my work. Recently, we bought a new desktop computer at home. So I went to Mozy’s site to add this new computer and download the backup software. Mozy is pretty cheap, they charge $5 per month per computer backed-up. So this new computer would be an extra $5 per month. But since I am adding it in the middle of month, they would charge me an $2 or so for the remainder of the current month.

At least, that is what I thought.

But nope, people at Mozy are pretty awesome. So they show me a message that goes like,

Your upgrade costs you $2 for rest of this month. Next month onwards we will bill you $10 per month. But since $2 is such a small amount, we decided to let go. Enjoy unlimited backups with Mozy.

How impressive!

How do you pleasantly surprise your customers, employees, partners?

Surprise is a such a good emotion for marketers. When used in moderation, it can result in lots of word-of-mouth and awesome experiences for everyone around us. What surprises you are going to unleash?

How to use Gmail for Fabulous Customer Service – 8 tips

As a start-up owner, one of the easiest ways you can wow your customers is to reply your customers as quickly as possible. Since my business is mildly popular, I get a lot of email everyday and I try to reply to as many of those emails as possible. And Gmail helps me in doing that in the easiest and cleanest way you can imagine. So today I want to share with you a few tips on how to use GMail to provide awesome customer experience.

1. Star your mail

On a typical day I get 120-150 emails. But out of these 60% are regular emails, like notifications for purchases, comments, twitter follows and bills & invoices. The rest of 40% are interesting mails, these are from actual people asking for help, appreciating my work / products, with payment related problems, collaboration requests, consulting work requests etc.

Now, my email routine is quite simple. Whenever I read an email, if I can reply to it in 2 minutes, I would just go ahead and do it right-away. But about 20% of time I cannot find an immediate reply (as the email may contain a big request, complex question or follow-up work). What I do with these emails is, I simply star them. You can star an email by pressing S while reading it.

And once a week or whenever I have free time, I go thru my inbox for starred email (short-cut GS) and carefully work on the items or reply to the mails.

2. Filter your e-mail

You can create rules on incoming email so that only certain mails end-up in your inbox and rest in archives or marked as read automatically. Gmail calls these rules as Filters. I use filters a lot to maximize my productivity and responsiveness.

For eg. I have a rule to mark as read & archive mails with certain subjects.

3. Canned Responses

Another beautiful feature in GMail is canned responses. These are like pre-composed messages that you can either insert in to a reply or set a rule to auto-reply. I have made canned responses for most frequently asked customer questions. For eg. I have a message with my bank account details. So if a customer asks me how do I pay thru online transfer, I just send that canned response. It is both quick and accurate.

4. Mail Forwarding

You can set up rules thru filters to automatically forward incoming email to other email addresses. This is very helpful to outsource certain portions of your work without manual intervention. For eg. I give course completion certificates to students of my online training program. So whenever they request for a certificate, I get an email. I just set up a rule so that the email is forwarded to my assistant. He sends the certificate.

5. Visually Scan your Inbox – use Labels & Colors

If star is a good way to know important mails that need work, labels are a good way to quickly see the type of mail you have in your inbox. Labels are analogous to folders in Outlook or Lotus Notes. See below snapshot to understand how labels help me.

Once I look at above list, I immediately know how many sales, how many comments, how many twitter follows, how many consulting requests I got. Without even opening a single email that is.

6. Keyboard Shortcuts – J K R F S E P N

This is another hidden gem in GMail. You can use keyboard shortcuts to very quickly read, reply, forward email. Here are a bunch of shortcuts that I use commonly.

What do you want to do?Which Key
Open an Emailo
Reply to the email you are readingr
Forward the email you are readingf
Send the email you are typingtab then enter
Go back to inboxgi (press g then i)
Go back to all mails with a stargs
Go back to all mailsga
Read next email (or select next mail if you are in inbox mode)k
Read previous email (or select)j
Apply star to the email you are readings
Archive current emaile
Compose a new emailc
Read next email in a conversation threadn
Read previous email in a threadp

More info on Gmail Keyboard Shortcuts

7. Offline Mode

Offline mode is GMail’s version of downloading emails to read later. Since my internet connection not very stable, I rely on Offline mode to read, reply to mails even when there is no net connection. When the connection is back up, GMail uploads all the changes and downloads new mail. Like magic.

8. Chat

If I find a mail from a customer or reader and I need to reply to them, I see if they are online on google chat. If so, I just chat with them. It is instant and I can help my customers better.

How do you use E-Mail for better customers service?

Please share your tips & ideas using comments. I would love to hear from you.