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Free Advice

Service Businesses

You are in a service business. I don't care what you do, who you work for or how you perceive your company, you are in a service business.

A few months ago I spoke at the annual conference of the National Association of Pipe Fabricators. During my research leading up to the talk I discovered that even though they make, fabricate and sell ductile pipe, they are really providing a service. The pipe has, for all practical purposes, become a commodity. Especially for those closest to the end-user, they are a service business.

Their emphasis is, and has to be, on flexibility, promptness and quality. My comment to them and to all groups, on this subject, is that there is never a penalty for paying special attention to your customers.

Big vs. small

That's how small business competes. It's actually how some large businesses compete. While some prefer the Wal-Mart way of trying to have the lowest prices in town, many companies of all sizes have found that they can be successful by paying attention to the customer. Within large organizations this happens too. For example, a banker with the largest bank in town can forge relationships, provide that little extra and overcome the big bank appearance. For those not in a "sales" environment this may be more difficult since there may not be the relationship and opportunity to go beyond stated policy.

Two companies that come to mind are Costco and Nordstrom. The president of Nordstrom recently spoke to my Rotary Club. He emphasized that their problems in late nineties and through 2001 stemmed from a outside officers being more focused on shareholder value instead of the customer. When they changed focus and paid attention to the customer again, as they had for decades, all of a sudden the stock price went up.

There wasn't time for me to ask my question, which was, do they get the same criticism from Wall Street that Costco gets because the analysts don't like the fact that Costco puts customers and employees ahead of shareholders? My opinion, and the opinion of most small-business owners, is that taking care of the customers and employees is what creates ongoing sales and profits. When the prime focus is simply on how to "get more" from each customer, it sounds good, but doesn't usually work. The focus has to be on providing value for your customers.

How not to do it

Too many consultants, gurus and experts have convinced businesses, especially big businesses (and especially tech companies it seems) that customers exist primarily to get more and more from. It seems the goal for many is to squeeze every last dime from everyone.

I recently had a software problem. My call to the company, for something I thought should have been posted on the FAQ section of their website, put me in touch with an aggressive person who wanted me to sign up for a help package that started at $200. This for a simple question on a product I've had for 10 years (at least three updates) and never used support before. Why would I want to pay $200 for something I will probably never use again?

I've had similar experiences with other support lines. One of them was a few years ago with the maker of a popular financial management program. Recently I was thinking about upgrading until I went to Amazon.com and read some of the customer reviews. The prevalent attitude was this company makes superficial changes, encourages upgrades, stops supporting older versions and, worst of all, almost everyone said the new version was horrible.

To conclude, as any good salesperson will tell you, you don't sell "things," you solve problems. When you pay attention to your customers so the cost of your "thing," whether it be a product or a service is perceived as being less than the cost of their problem, you will make sales. Those sales will be at a price that provides value to both sides, which means profit to you.

© Copyright John Martinka 2004. All rights reserved.