Customers are a terrible thing!

If you have the fortune of being in a startup type of company, you have the luxury of probably not having any customers yet. You might have some strong possibilities that you’re talking to, but nobody has formally paid you money yet (other than your investors!). You also don’t have any type of product on the market. That means no support headaches. Nobody screaming at you to fix anything. Nobody telling you that they have to have some particular thing as soon as freaking possible. You are free to focus your attention on getting together the initial version of whatever product or service you intend to offer.


Fast forward a few months – you’re now officially “in business.” You’ve started selling to those long-sought-after customers and the money is starting to flow. Unfortunately, so are the headaches. Now you’ve got folks out there who are actually relying on your product or service. They paid good money, and they expect everything to be perfect. And they also feel that they have the right to dictate your future direction. Not that that is a bad thing, but it is a distracting thing.

So, now, all that wonderful focus you were able to have at the beginning is getting diluted by the problems and suggestions of your newfound customer base. Hence, “customers are a terrible thing” – they make you focus on and do things that you might rather not. It’s frustrating having to divert so much time to these tasks, especially if you still have a long list of stuff you wish you had done the first time around.

You have two choices here. One, do the best possible job in the first pass at whatever product or service you’re planning to offer so that you’ll be able to avoid most of the requests and complaints. Good luck with that. Of course, you may never get to market, ever, probably resulting in running out of funds before a good revenue flow gets going.

Or, two, appreciate your customers for what they’re doing – telling you exactly what you need to do to provide more value to them. By fixing problems and providing things they specifically request, you are helping them, providing more value for what they’re paying, all while you are increasing your company’s value as well. Everybody wins.

In fact, the key point here is to include some of your likely customers early in the process. Even if you are a well-established company, this applies if you’re beginning work on some new product as well. Get those customers into your shop and pick their brains clean to the nub. But don’t stop there. Bring them in as often as you can (even if via phone or video conference) to see the work in progress and offer fine-tuning to your ideas as you go.

That will prevent you from marching down completely invalid paths, providing overly complex solutions, or adding things that “get in the way” rather than adding true value. Development of your solution will not take longer than it otherwise would. Indeed, by saving all the backtracking, false starts, and duplicated efforts, you will save – significantly – in the long run.

Having 100% of your customers be satisfied 100% of the time is impossible, so accept the fact that you’ll have to speak with a few of the peeved ones occasionally. Do not avoid these interactions – unpleasant as they might sound. On the surface, these situations appear to have all the excitement of a good rope burn. But, handled deftly, you have the opportunity to turn them around and transform a customer from miserable to delighted.

More on that next time.

Cost of health insurance... OUCH!

To folks who wonder about what affect the affordable care act will have on small businesses, here’s a specific example. I’m not going to get political about this… I’m just relating facts…

I handle the policy work for Mindnest’s company’s benefits. At the warning of our insurance broker a few months ago, we renewed our plan in December of last year (a few months early) to avoid having to renew this coming March on the 1-year anniversary. Our total premium increased about 15%.

We had renewed through our broker, but we just received the direct information from the insurance company itself, giving us the info for renewing this March (seems that group didn’t get the word we had already renewed through the broker).  Bottom line: our premium would be going up 64%, but the employees would also be subject to this:

• out of network coinsurance increased
• doctor visit coinsurance increased
• specialist coinsurance increased
• DOUBLING of out of pocket max (from $8000 to $16000)
• drug costs significantly increased

If we were really renewing now, and if we wanted to maintain the best plan we could, while sticking with about the same premiums we were paying, we’d have to go to a lower plan, but that would hit our employees with this:

• big increases in coinsurances
• doubling of coinsurances to see doctors and specialists
• doubling of deductibles
• TRIPLING of max out of pockets (each family could spend up to $25000 a year)
• more than doubling of drug costs

Note that all of these other costs are items that directly hit the employee, not me the employer. So even if we were to hold OUR costs the same, the employee takes a huge hit. The inherent value of the insurance has been decreased.

So, as small employers are asked to double their costs for providing health insurance, they certainly may choose to do that, but how many will simply dump their employees into the exchanges and pay a small fine instead? Or, how many will hold the line (or pull back) on salaries, bonuses, and other benefits to compensate for the extra burden? I guess we shall see.

Say what you mean!

Back last June, I blogged about negotiating in good faith (see the original post here). As the primary example of lousy negotiating environments, I used buying new or used cars. The dealerships will do everything in their power to overwhelm you. They will have you bargain with people who have no power to bargain. They will try to slip stuff by you. And on, and on, and on. And this is with the "nicer" guys.

Time has a way of blurring old memories, so when I re-entered the car purchase process a couple weeks ago, I was expecting that maybe things weren't as bad as I had remembered. Ha.

Once again, we found ourselves talking to the sales guys (they had a team assigned to us), but each round of discussions had to go to some other guy, hidden far away, for his feedback. Getting a warranty thrown in required bargaining with yet another guy, and even some aspects required bargaining with the finance guy who was doing all the final paperwork. At pretty much every point in the process, somebody was figuring out how to throw in a few more of our bucks... without telling us.

All this would have been much easier if the guys we were working with had looked like or acted like scumbags. But the problem was they seemed like genuinely nice guys. Oh sure, they have a job to do, and everyone knows that. But this large dealership, and the nice guys, made it appear like all would be pretty straightforward. Their congeniality would have made it very easy to trust that they were working things out as they said they were, and that the final papers and numbers would have reflected exactly what they said it would. Only our careful checking and rechecking of figures allowed us to insert a few, "uh... wait a second..." checkpoints. It was obvious that alot of the chat, humor, and general friendliness was intentionally designed to impart a feeling of trust that would allow them to do a little more under the table manipulation.

Here's the sad part. Even if they had managed to insert the extra cost items they were trying to slip in, their total take would have been increased by only a tiny percentage. For the most part, I was willing to put them into a short list of dealerships I would be willing to deal with again. But now, they've lost future business from me. Was that really worth it for them? I would think not.

In your own business (and personal) dealings, don't be these guys. Say what you mean and mean what you say. Make your customers and suppliers comfortable in your negotiations. You may still get a deal with someone (you might be the only choice at the moment), but you may be losing out on future business with them. And people talk. Word gets around. When word about you gets around, make sure people have nice things to say.