Entrepreneur Life Lessons: Never Cheat Your Customers -- Ever

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Recently, the girlfriend and I went to a local cafe to grab a light snack before lunch. It was a sunny Saturday in Toronto, Canada, and we were enjoying some together time on the weekend.

We saw a quaint looking coffee shop -- The Grind Cafe -- in the underground at Toronto’s busiest intersection – Yonge and Bloor streets.

The gourmet tea selection won us over, and we each picked one to try, along with a puff pastry filled with cheese and other yummy stuff.

The cost for our light snack came to $11.42.

The barista behind the counter asked for $11.45.

With the elimination of one-cent from Canadian currency, the federal government has implemented guidelines for business owners in rounding to the next whole cent.

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According to their guidelines, $11.42 should be rounded down to $11.40 – NOT up to $11.45. Actually, it’s also basic elementary school math – round up for numbers ending in five or higher, and down for everything else.

“It’s only three cents,” protested the man behind the counter when we politely reminded him of his error.

Yes, it is only three lonely cents, however that’s not the point. You don’t reject your customer’s objection, you should politely answer it – even if you’re wrong – because picking a fight with a customer just isn’t good business.

We paid the extra three cents, though as we sat in the lovely cafe, sipping on our teas, the experience just wasn’t as cozy as we had hoped.

Great customer service makes people swoon, and want more – horrible customer service makes you want to head for the exit and never look back.

As we exited the cafe, we strolled past a Shopper’s Drug Mart – one of the largest chain of pharmacies in Canada, owned by the Weston Family (they own Loblaws grocery stores and the President’s Choice, and No Name labels of products).

We needed a few items we know we’d find there, so we went in.

“Do you need a bag for that?” the person behind the counter asked, as we were at the check out.

We did, which she proceeded to charge us five cents for.

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In 2009, the City of Toronto implemented a poorly executed by-law, requiring retailers to charge five cents for every plastic bag given to a customer. It was poorly implemented, because it wasn’t enforced, nor was it ever really clear where that nickel per bag was going.

The city claims it was being put into an environmental fund, to promote environmental practices and keep the city clean. However, as it was up to each retailer to manage the collection and distribution of the funds, most of those fees just went back into the pockets of greedy retailers looking to make a buck.

The original intent of the five cent fee was to reduce plastic bag use, in favor of reusable cloth bags.

In 2013, under Toronto Mayor Rob Ford, he killed the five cent per plastic fee, however, because it never was managed well, the city didn’t end the program well either, leaving it in the hands of greedy retailers.

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If the city really wanted to reduce or eliminate plastic bags from the city’s landfill, they should have banned them outright – which they eventually did – however the plastics industry sued and the city quietly cancelled their ban in 2013.

So, now wherever you go in Toronto – and even in the areas surrounding it – you never know if you the customer will get dinged an extra five cents for giving someone your business.

“Where does the five cents go?” I ask the kid behind the counter at the Shoppers Drug Mart.

“I dunno, probably somewhere good,” she says.

Yes, it probably lines the pockets of the executives running Canada’s largest pharmacy-retail chain.

Although charging for plastic bags does reduce their use – a City of Toronto report claims a 53 percent drop in 2012 over the three years since the five-cent fee was initiated – that’s a drop of 215 million plastic bags – the money collected for an environmental initiative shouldn’t be used as a revenue stream off the backs of customers.

Never lie to a customer, because if and when you get caught, you’ll never see that customer again. And worse, using a social cause (such as environmentalism) as a way to make money is the ultimate way to cheat your customer.

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This got us thinking about our earlier experience with the Grind Cafe. We figured, if that store wrongly rounds up it’s prices for everyone, then that three-cents quickly adds up, giving them an additional revenue stream. For every 20 customers wrongly rounded up, that’s about a dollar in profits. That adds up day-in, day-out.

However, again, you never want to cheat your customers, because that’s not a great way to keep them coming back.

Numerous studies prove it’s a lot easier to please and retain customers, than to pay for marketing and advertising to acquire new ones, some going so far to say it costs between four to ten percent more to acquire new costumers.

So you never want to do anything – anything – which could cost you a customer, especially cheat them out of their hard earned money, such as the examples used above.

There are great retailers that don’t round up – when they should round down – and that don’t nickel and dime their customers over a plastic bag. Or those that do charge for plastic bags honestly, inform and educate their staff as to where those funds are actually going, rather than “somewhere good,” which in business, just doesn’t cut it.

What’s the entrepreneurial lesson here?

Simple.

Be honest with your customers unless you want them to feel cheated, lied too, and that something just isn’t right.

Because once your customer feels that something just isn’t right, they stop being your customer. And you never want anyone once willing to pay for whatever you sell, to stop paying for what you sell – ever.

Having Trouble Keeping Customers? Maybe You’re Not Giving Them What You’re Selling Them

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Computer programmers know all too well what “vapourware” is.

Vapourware, is when the sales guys get so caught up in the sale, they tell a potential customer that your software product does “X” – when in fact, it doesn’t.

“X” is something that particular customer has always wanted done.

So, naturally, they buy.

Next day, the head programmer is freaking out, because he’s been told to make the software product do “X” within an unreasonably short amount of time.

Because software development usually takes more time than less, the sales guys keep stalling the new customer, to buy time for the developers to create the feature which never existed in the first place.

Hence the term, “vapourware” because the software to do “X” never existed before – but was sold as if it was.

Vapourware occurs in all industries and sectors, not just ones based on software.

Anytime a company makes a claim about their products or services which is NOT true – that’s a form of vapourware.

For the company, it’s a seemingly great way to steal customers from the competition.

Internet Service Providers are a great example of this – each one promises faster, more reliable service than their competition.

The second they have a disruption in their service, which causes a massive slowdown or shutdown, all those customers that were falsely promised faster, more reliable service, call to complain.

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It’s why so many of us have jumped back and forth from one Internet Service Provider to another, and even back again.

Why?

There is a misconception in business, that constantly bringing in new customers sustains a business. This misconception starts at the top, and flows down throughout all levels of a business.

When this misconception reaches the marketing and sales teams, they figure they can say or do anything to convince a potential customer to become a new customer, because it's the new customers which sustain the business.

Why is that a misconception?

Here are the latest stats from some of the business world’s best sources:

1.     A customer is four times more likely to defect to a competitor if the problem is service-related than price- or product-related – Bain & Company.

2.     The probability of selling to an existing customer is 60% to 70%. The probability of selling to a new prospect is 5% to 20% -- Marketing Metrics.

3.     For every customer complaint there are 26 other unhappy customers who have remained silent – Lee Resource.

4.     96% of unhappy customers don’t complain, however 91% of those will simply leave and never come back – 1Financial Training services.

5.     A dissatisfied customer will tell between 9-15 people about their experience. Around 13% of dissatisfied customers tell more than 20 people. – White House Office of Consumer Affairs.

6.     70% of buying experiences are based on how the customer feels they are being treated – McKinsey.

7.     55% of customers would pay extra to guarantee a better service – Defaqto research.

8.     It takes 12 positive experiences to make up for one unresolved negative experience –“Understanding Customers” by Ruby Newell-Legner.

9.     A 5% reduction in the customer defection rate can increase profits by 5% to 95% – Bain & Company.

10.  It costs 6 to 7 times more to acquire a new customer than to retain an existing one – Bain & Company.

So what can we learn from this?

Constantly bringing in new customers is important to any business, however, it is far more important to take care of your current customers, because keeping them happy is what drives your business.

What’s all this have to do with “vapourware” and selling products and services that don’t exist?

It’s the broken promises we make to our customers which cause the biggest headaches, and lead to the highest customer turn-over.

Sell your customers on the Sun, the Moon and everything in between, but if you can’t deliver that, then when they find out – and they always find out – that customer will drop you like a hot potato.

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Leaving you with one less customer – or a hundred, or a thousand, or even a million fewer customers – because the more you promise but don’t deliver, the quicker your customers will come and go.

Like a revolving door of customers.

Consider this, there is a high end coffee shop in one of the poorest parts of Toronto. They sell exceptional coffees, lattes, teas, fancy drinks and gourmet baked goods, at high-end prices. They provide up-scale service too – if you get anything from them that’s not just right, they’ll immediately take it back and replace it free, without any questions. Your satisfaction is their top priority.

Yet, this high end coffee shop, is in one of the poorest areas Toronto.

How do they stay in business?

The people in the area can’t afford a $5 cup of coffee every day.

The answer – they have regular, repeat customers. The coffee shop has been in business over twenty years, and over that time, has built a large following of people that will come from all over the city, to munch on a $4 cookie, while sipping a $5 hot caffeinated beverage.

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Years ago, the area was more prosperous, and those living there were well to do. As the neighborhood changed, the wealthy customers left the neighborhood.

Had this coffee shop relied on attracting new customers to sustain itself, it would have gone out of business a long time ago. However, they've constantly delivered what they promised – exceptional foods, drinks and service.

So their customers keep coming back. Despite no longer living or working in the area.

Do you tell your customers one thing, but deliver another?

Do you have issues retaining customers?

Perhaps you should look at your products and services, to make sure they deliver what you are telling your customers they deliver.

Because it’s easier to keep current customers, rather than replace them with new ones.

Want to Get Ahead in Business? Be Helpful

My schedule is always full. Starting a business is no small feat, it isn’t uncommon for me to put in 12-hour days, six or seven days a week – I sleep the eighth day of the week.

Eighth day?

Despite my hectic life, when complete strangers call me up and ask for help, I make the time to listen, and do what I can, if possible.

Be it a fellow entrepreneur, looking for guidance, an unemployed person looking for work, a recent university graduate looking for their big break, I’ve been approached by and helped many people, in many different situations.

Karma may be real, or some idea invented by a creative genius that just needed a word for the phrase: “what goes around comes around,” but that phrase does have truth embedded within.

Over my years as a print and broadcast journalist I saw all too often how what goes around comes around. Eager, young, fellow journalists, that stepped on and over others to climb to the top. Now, many of those people are out of work, struggling put food on their table.

When I was in the corporate world, I also saw how what goes around comes around too.

People kissing up to their bosses, or their boss’ boss, always looking for an opportunity to put others down so they appeared to be the only light in a dark room. They’ll probably die in a dark room, alone, because in the end, what goes around does come around.

All throughout my journalism career and my time in the corporate world, I was always very helpful.

I helped others track down sources, secure interviews with hard to reach people, or even just bounce story ideas off of – regardless of my own deadlines. I’d help PhotoShop images even though they had nothing to do with my project, I’d take on mundane tasks to assist an over-worked colleague, I’d even just listen to someone vent if they had a bad day.

My colleagues and teams all loved me, because no matter how dim their day was looking, they knew they could come to me, and I’d do whatever I could, no matter how busy I was.

And on occasion, when I needed an ear to listen, or an extra set of hands to help out, I could always count on someone to be there for me.

Because what goes around really does come around.

Not that I’d intentionally do things to reduce my workload. I think it’s part of being a good person to just be helpful whenever someone is in need.

If you’re walking out of a building, and you see someone walking toward you to enter that building, arms loaded with packages, do you not hold the door so they don’t stumble and drop their armful?

Maybe you don’t.

Sadly, in our ever increasingly busy world, I’ve noticed our society has become less compassionate and caring over the years.

Twenty years ago, it wasn’t uncommon for someone to hold the door for others behind them, to let others into their lane of traffic when their lane was about to end, to help a frail senior citizen across the street.

These days, people walk through doors as if they are the only ones that matter, they rush up practically scraping the bumper of the car in front to intentionally block anyone from cutting in front of them, and that frail senior gets honked at by drivers frustrated that they are still crossing the street, despite the light changing color.

We certainly live in less helpful times, which is really too bad.

Because what goes around comes around.

This is especially true when you’re building a business.

No one can build a business alone. You need a lot of help. You are the new person in the big bold world of business.

If you’ve been strutting through doorways letting the door slam behind you, you may prematurely end your business, before it even has a shot of existing.

No one likes someone that constantly ignores others, puts their self-interests ahead of anyone else’s, and barricades themselves in their office tower, ignoring calls from anyone they feel beneath them.

One day, the phone will stop ringing from those you ignore – they’ll get the message. And so too, will others who talk to those who you’ve ignored, pissed-off, upset, stabbed in the back, or in any other way been unkind too.

And one day, when you reach out to someone because you need a hand, and we all do eventually, your phone calls will be ignored.

Because what goes around does come around.

Karma really is a bitch. But she’s a fair and bright one at that.

Even direct competitive giants in the tech world, founder of Microsoft, Bill Gates and Apple’s founder, Steve Jobs, returned each other’s calls.

And we’ve all seen how successful Microsoft and Apple have become.

Being helpful shouldn’t be a second thought.

Always be helpful, no matter what.

Because what goes around, comes around.

Don't Just Tell Me About Your Product/Service -- SHOW ME

This past weekend I went to the Delicious Food Fest in Toronto, held at the Canadian National Exhibition grounds.

The Delicious Food Show in Toronto.

A three-day long convention, where foodies munched on zillions of samples of everything from organic burgers, free-range cookies, and wine that won't hurt your liver.

Well, maybe not quite the last two, but everywhere we went, we kept hearing how everything was organic, gluten-free, all natural, free-range, herbal, holistic, and sugar free.

Obviously, these are the trendy buzz words when marketing food stuffs today.

And for the most part, the people peddling these ultra healthy foods looked to be in great shape themselves.

Maybe the show should have been called the Good Food Fest, instead of the Delicious Food Fest? 

Oh, wait, they have that show too. I think it's held later in the year.

My biggest problem with the Delicious Food Fest is one I find common among entrepreneurs -- if you are going to say something -- show it.

Tossing trendy buzz words about is impressive, but show me how your food will make me a healthier person, don't just tell me.

Free-range cookies?

If I cut gluten out of my diet, what will I look like?

Ah -- there lies the problem of saying something without showing it. Unless you have a real medical condition, like celiacs disease, cutting gluten out of your diet doesn't do much for your health.

Gluten is a protein complex in wheat products, and is the only known treatment for celiacs disease, where people lack the enzyme to break down this complex protein.

Despite all the health hype about gluten-free diets, there isn't any scientific, medically sound evidence to support those diets in those that don't have celiacs disease.

Makes it hard to show me how gluten-free cookies, cakes and even pasta will make me a better person.

As most of us our visual people, if we can't be shown something, we won't buy into it, which means we won't whip out our cash and pay for it.

And if people don't pay for your product or service, good luck making any money out of it.

The key is to find something within your products that you can show. I tell people pushing products to me all the time -- don't tell me -- SHOW ME.

Show me how your healthy cookies will cut my waistline. Show me how your new fangled gizmo can save lives. 

Show me -- and then show everyone else.

Because end of day, the companies that excel are the ones showing us how their products and services benefit us in some way.

So don't tell me -- SHOW ME.

Tesla: An Example of How Being Hot Can Cool Off Customer Relations to the Point of Being Cold

Motor Trend's Car of the Year Issue

Things were looking up for Elon Musk's Tesla Motors after Motor Trend named it's Model S the car of the year.

The highly respected auto magazine's annual car of the year story -- featuring the all electric Model S -- made international headlines as newspapers, radio and television news outlets carried the story.

Suddenly, the world woke up to a whole new way to drive, as it was the first time a non-combustion gas-powered vehicle won the much coveted Car of the Year award.

Being a motorhead, I love cars. I watch numerous automotive podcasts and television shows, and I've been a fan of Tesla since they first came out with their sporty two-seat all electric Roadster model.

However, the cutting edge car company is an example of what happens when being hot can suddenly cool you off to the point of alienating your customers.

About a month ago, I went to a Tesla dealership in Toronto Canada. Unlike traditional car dealerships, Tesla's are located inside high-end shopping malls, so while you're picking out your next pair of blue jeans, you can pick up a brand new car.

Cool concept, to change the buying experience. Make it more of a retail customer-friendly store, than a cold, stale parking lot, filled with shiny cars and fast-talking sales people.

Tesla stores are like retail outlets in a mall.

Though a lack of sales people was a big issue at Tesla's store. When I went into the luxuriously appointed Tesla store -- complete with massive touch-screen TVs allowing you to customize your car -- there were only two kids working the store.

One was closely watching the one and only car on display in the store, as parents let their screaming kids hop in and out of the car, while they texted on their mobile devices.

The other sales person had about 20 people swarmed around him all hollering questions at the poor kid, that looked overwhelmed, uncomfortable, and frustrated with his career choice.

I was patiently standing around, roaming the store, looking at all the cool swag -- they have Telsa-branded hats, shirts and other items on sale, so if you never get to talk to a sales person, at least you can pretend you did.

I waited about 25-minutes, while my girlfriend sat waiting for me on a bench outside the store doing her crosswords.

Cool tech in the Tesla store allows you to 

customize your car.

Eventually, I did get to ask some questions about the car, and getting a test drive -- because who buys a car without first taking it out for a spin?

All the exasperated sales person said to all my questions, was to check out the website!

I waited for almost half-an-hour just to be told to go to the website. 

Nice.

I'm thinking that if I were to buy one of these electric vehicles, what if something went wrong? Would I experience the same horrible customer experience? 

I did go to the website the next day, found some information and signed up for a test drive.

It's been over a month, and I haven't even received an email thanking me for my interest!

NOT A SINGLE COMMUNICATION.

Anyone who's in business to stay in business can see right off the bat that's exceptionally piss poor performance. 

Tesla Swag -- buy a Tesla T-Shirt so even if you can't
get an answer about their cars, you can still promote
their brand.

You never ignore a potential customer -- because that potential customer will move on.

There is only one Tesla. But there are lots of other luxury cars that offer far better customer support -- which at their price point, is ultimately what their customer's expect.

A typical base-model Tesla Model S comes in over $80K.

We're talking high-end, high performance, and exceptional customer service from their competition at BMW, Mercedes, Cadillac, and Lexus, just to name a few.

Yes, Tesla is the car of the year, big whoop.

As a potential customer, I expect -- NO -- I demand the same if not better customer service as their competition, otherwise, I'm not buying their car.

Tesla is an example of what happens when your company goes viral, and everyone is coming to you.

Can you spot the salesperson at the Tesla Store?
Neither could we.

That's any company's dream.

How you deal with that, determines whether your company will continue it's momentum, or fizzle out due to letting it go to your head.

And that, unfortunately appears to be what happened with Tesla. After becoming the poster child for the Electric Vehicle (EV) market, they let all that wonderful press go to their head -- because their customer service is so bad, I wouldn't tell my worst enemies to go their.

So be like Tesla -- invent and create amazing products. But don't be like Tesla, and give up on your customers, before they become your customers.