Last night an employee sent me a link to an article about a competitor that was getting a lot of press on the front page of Digg:
http://elliottback.com/wp/archives/2007/05/03/dreamhost-sucks-at-hosting/
While I’m reluctant to name competitors directly in my post, the URL leaves me little choice. I think it is worth a read. When I first saw the link I was ready to get up on my soapbox and proclaim why this particular company was wrong and why we need to do better as an industry to earn the trust of our customers. Although I do believe that, I think the issue is not as black-and-white as I originally imagined it would be.
Looking at the issue in some detail, I did feel a lot of sympathy for the web host being dragged through the mud here. Despite what some may think, web hosting of any sort is an exceedingly tough business. I found it somewhat amusing, concerning, and disheartening to see people making wild claims about “industry guidelines” dictating how many users should be on a server and bashing the specs of that particular machine. There are no guidelines that I know of, and every host runs their business a little differently. Customer expectations are through the roof for bandwidth, storage, uptime, and support execution. The business has changed quite a bit from when my business partner and I dipped our toes in the water in 1997. We pride ourselves on having great service and while our reputation supports that, we are far from perfect. We take every misstep as a learning experience and an opportunity to improve. I know that seeing an article like that on the front page of Digg would be gut-wrenching for me, and I’m sure the owners of Dreamhost don’t feel great about it.
So from my outside perspective, where did things go wrong for this particular customer? Well, first let me sympathize with Dreamhost. Web hosting involves the interactions of many complex systems to make things. Not just networks, servers, power, cooling and other infrastructure but people, processes, and procedures. In even the best run businesses things go wrong all the time. All the time. Every day. If someone tells you differently they aren’t being honest. A big part of what separates the best from the rest is how they deal with problems and adversity. Do their processes, procedures, and culture really focus on caring for the customer and making things right when problems happen?
Customer expectations are very high for all forms of hosting, including shared. Saying “you get what you pay for” as some people did on that blog is subjective and unfair. As web hosts we are obligated to give people everything they pay for, and if we really want to be good at our craft, a whole lot more. Overselling is a harsh reality of our business. Competition on price, bandwidth, and disk space is intense. Shared hosting is a wild free-for-all on server resources that has become more and more difficult in a time where fewer and fewer sites are brochure-ware.
But make no mistake, customers expect 100% uptime, all of the disk space and bandwidth included with their plans, and enough processing power to do whatever they need with their website. Whether we like it or not, whether it is fair or reasonable, that IS the expectation.
And it will continue to be the expectation until we tell customers otherwise, emphatically and clearly.
Think burying it in your terms of service or AUP is good enough? It isn’t. No one reads that stuff, and while it may protect you legally, it certainly isn’t making happy customers or helping your reputation. The problem is that we are so involved as an industry in selling lower prices and more disk space that no one wants to tell customers about the inherent flaws in shared hosting. I’m not indicting the platform necessarily, but it certainly isn’t for everyone and has a lot of room for improvement. As customers’ expectations continue to skyrocket, we clearly need to do a better job as an industry of educating our customers on the risks associated with the platform they select. Some hosts are trying to address these limitations with shared grid, load balanced, and clustered offerings but even those have had some fairly well publicized problems lately.
Now that I have gone in more than a few directions with this post, I’ll get to what matters. How could this host have done better? It boils down to communication and ownership. Shutting down someone’s website is not something to be taken lightly, regardless of the circumstances. To quote a wise man, the needs of the many outweigh the needs of the few, and they didn’t necessarily do the wrong thing to protect their other customers on the server. But they did forget about the customer they shut down. Instead of taking an adversarial stance, they should have found a way to get him back online and worked together to find a solution. We keep isolation servers and VPS’s readily available for just this purpose. Phone calls are always preferable to emails, especially under less than ideal circumstances. Sometimes doing the right thing is expensive and involved but the customer goodwill it builds makes it worthwhile. That sure seems preferable to all the negative press this incident generated.
I have been a loyal Costco customer for at least 5 years. One of the main reasons I shop there is for their excellent, no hassle return policy. For me it started with a vacuum. A few years back, I bought a new vacuum at Costco which broke after I had it for about 8 months. I took it back, no box or instructions, just the vacuum, and they promptly refunded my money without any trouble. I repurchased the same vacuum which broke again 6 months later. Again, I returned it to Costco where I was issued a full refund. I was determined to find a different vacuum this time. As I looked around, a new model from Dyson caught my eye. Although it was very expensive, I decided that I should buy a quality model instead of continually hassling with getting a cheaper one replaced. However, looking at the price tag on the Dyson made me really think about the “20% off” coupon I had from Linens N Things. Initially I thought about going there to save some money, but I also thought “What if it breaks in 6 months?” Would they stand behind it? What about after a year? Since I was making a sizable investment, I decided that Costco’s return policy made it worthwhile spending a little more to buy it from them.
A few years later I bought a 37” LCD TV from Costco. It was a brand I had never heard of, Vizio, but because of their return policy I was comfortable buying just about anything Costco sold. I knew they stood behind it and guaranteed my satisfaction. After I got it home I proceeded to enjoy the TV for about a year, at which point it began turning off randomly. I took it back to Costco looking to exchange it for a new one. I couldn’t find my receipt and I expected to encounter some difficulty. When I got to the service desk, they promptly looked up my receipt. They asked me if I had the manual or the stand. Sheepishly I said “no” – I had thrown them away. The rep told me that she would need a manager’s approval which she promptly secured and began the process of issuing me a refund. I told her that I wasn’t looking for a refund, just an exchange. She said that their policy was to issue a store credit and that I could use the credit to purchase a replacement. Not wanting to be dishonest, I informed her that the TV was $500 cheaper now than when I originally purchased it. I wasn’t trying to get one over on them, just get a defective set replaced. She suggested that I could use the difference to get a larger TV, or put it towards anything else in their store.
At that point I was thrilled and grateful. I promptly got a cart and went to pick out a new TV. I decided that I would replace my defective TV with the same model and use the $500 difference to get a new TV for my family room. I purchased a 46” Sony LCD TV which was over three times the cost of the Vizio, but I had no hesitation in buying it from Costco. The way I look at it, Costco took great care of me that day, and I returned the favor with customer loyalty and additional purchases. I’m not sure what their margins were or how the math worked out, but hopefully we all did well that day. It probably didn’t hurt that I also bought a few hundred dollars of “odds and ends” that day too. In fact, I think it may be physically impossible to go to Costco without spending at least a couple hundred dollars.
You can probably imagine I was disappointed yesterday to see the following article:
http://www.latimes.com/business/la-fi-costco28feb28,0,7973536.story?track=mostviewed-storylevel
Costco is cutting back their return policy on electronics from “unlimited” to 90 days. The first thing that jumped out at me in that article was that their old policy was “costing them tens of millions of dollars.” That is a really short-sighted way to look at it. It may directly cost them “tens of millions of dollars” to support the policy, but what about the increased sales and customer loyalty derived from taking care of their customers in such an uncommon way? It may be much harder measure than the cost of taking back a broken year-old TV, but I can assure you that it is not insignificant. In a competitive market place like warehouse clubs, customer loyalty is difficult to earn and easy to lose. To me, this seems like a bad move, particularly since I have been the beneficiary of the policy in the past. Why would I buy a TV from Costco vs. Circuit City or Best Buy now? Maybe I’ll try Sam’s Club which is smartly and opportunistically touting that they still have a “100% satisfaction guarantee.” I’m not a fan of Wal-mart (the owner of Sam’s Club) for other reasons, but it is at least worth a look before my next purchase.
http://finance.yahoo.com/q?s=COST
Costco isn’t doing poorly. In fact, I’m not even sure that at face value “tens of millions of dollars” is an unreasonable expenditure for a company of that size to make on customer satisfaction. I’m sure I’m not the only one who was a vocal proponent of Costco due to their excellent customer service policies. I think this is a classic case of numbers-driven management winning out over a more holistic approach. I believe that where possible, it is better to spend liberally on treating customers and employees well. The direct costs may be high, but there needs to be a little faith that smart investments in treating people right will ultimately pay off in loyalty, profits, word-of-mouth, and productivity. Sure, there will always be abusers, but they tend to be the exception not the rule. Sometimes I think it is easy to focus on the abusers and shape policies accordingly, but they always prove to be a small part of the equation when looking at the big picture.
Ok, so I’m not really on top of this whole blogging thing, I’ll admit. But here is my promised follow up to why it is a bad move to fire customers.
First, I’ll say there has been a lot of interesting debate going on around some recent comments posted by the CEO of a web hosting company. I saw an email excerpt of a customer being insulted followed by the statement along the lines of “we have enough business that we can pick and choose who we deal with.”
Wow. First of all, congratulations to that CEO for having so much business you can afford to insult and fire your customers. But look out for the bus coming your way, because when it runs you over, it isn’t going to be pretty. In my humble opinion there is no way that business can sustain their success for the long haul with leadership setting that kind of example.
Look at Dell – they didn’t blatantly insult customers – they just got too aggressive with cutting costs and let the quality of support and service slip to where they lost their leadership position (not that it was ever great to begin with). Now Michael Dell is back at the helm trying to right the ship and put their company back on top. What was the first area he decided to address? Customer service.
The web hosting industry is young and raw. After doing this for nearly 10 years, that sounds a little funny but it is still true. Right now, people can get away with a lot and if you mix the right ingredients of bandwidth, disk space, pricing, and automation you can get away with some pretty lousy things and still make money. However, that just isn’t the way solid organizations are nurtured, built, and sustained. Trust me, the guys you see insulting customers, proclaiming their own greatness, and callously tossing business aside are not in it for the long haul. Our industry is still made up primarily of technologists who also find themselves running businesses. As our industry matures, I’m sure those guys will find a very lucrative exit for themselves. I’m not knocking their business model or taking away anything from the success they have had, but they’re just not positioning themselves to make the transition to the kind of mature organizations we need leading this space.
But back to the topic of “firing customers.” This is something that can be almost completely avoided in most organizations with the right training and service philosophy.
Myth 1: Abusive customers demoralize employees and increase turnover.
This may be true for employees feel unsupported by their managers or who don’t have the proper management escalation path when things get out of hand. Those really are completely different issues though, aren’t they? Don’t fall on the “fire difficult customers” strategy as a crutch to avoid dealing with bigger issues at hand. I have taken my share of customer beatings over the years and our management team is glad to do the same when situations escalate. We don’t take it personally, do what we can to make the situation right, and our employees know they can lean on their managers when things get rough. I’ll repeat, “Don’t take it personally.” If you take a contrite position, remain calm, and never ever argue with customers, you’ll find that most situations are diffused before they ever get too bad. It may be cliché, but it takes two to argue.
Myth 2: Difficult customers are unprofitable and use more support resources than they pay for.
This is true, but it is a fact of life. Pricing pressure in our industry is intense. This is not the customers’ fault. I subscribe to the theory of “it all comes out in the wash” and I would encourage you to do the same. Some customers are not going to be profitable, but you made that choice when you decided to charge $1.50 for hosting. You need to be concerned with average cost per account and profitability on a broader scale if you have the chops to compete in the high volume hosting business.
Myth 3: “Problem customers” distract management focus from the strategic goals of the company.
Only if you let them. I find that some amount of customer interaction is good at all levels of the organization because it keeps you grounded. It doesn’t need to prevent you from focusing on strategy, and sometimes it can help you identify and fix some glaring issues that you might have otherwise not have recognized. As with anything you spend time on, it’s a matter of balance. Most of the time when I call customers, I’m calling to deliver good news. That’s because I rely on my very capable staff to fix issues, research problems, and devise solutions so that I can focus on the things I do to keep our company moving. There’s no shame in delegating as long as you’re not hiding behind your employees.
Myth 4: There are some customers who will never be happy no matter what you do.
Rarely. You’re probably just not taking the time to listen to what they really want. People genuinely want to be satisfied with the services they purchase, but some customers’ have higher expectations than others. Take the time to listen with an open mind. Sometimes we tend to get indignant when someone calls us out on every little mistake we make. Instead of getting defensive, use it as an opportunity to improve and appreciate the customer for taking the time to complain. It’s a fair bet that some other customers were equally dissatisfied but didn’t take the time to tell you.
Myth 5: If I fire problem customers, I will have more time to devote to good customers.
I’m sure many hosts would appreciate it if customers came with virtual name tags, neatly categorized in advance. “Unprofitable”, “Cheap”, “Aggressive”, “Has Paranoid Delusions”, “Calls our Support Center Drunk” – if only we could know ahead of time, all our problems would be solved. Unfortunately, many people fit into many categories and few are the same on a day to day basis. Some of our best and most loyal customers have fit into some of the worst categories at times. Where do you draw the line? How do you separate the good from the bad? My answer is that you don’t. You’re much better off being prepared with sound strategies for handling any situation than you are trying to pick and choose who you do business with after they have already signed up for service. If you want to target the high end of the market or a certain type of customer, leave that to your marketing team BEFORE the sale. Once they sign up – treat them all the same – like gold.
I have quite a bit to cover today. First, a follow-up on my Dave and Buster’s experience. To their credit, corporate management has handled the situation very well so far. After a very apologetic call from the district manager, I was invited to have lunch with the vice president who is overseeing the turnaround of the Philly location. At our lunch, he made an extraordinary offer to set things right. He offered to “redo” our entire party, at our convenience, for free. Not only was I impressed by the magnitude of the offer, but his sincerity demonstrated real customer focus. The general manager who threw me out was confrontational and condescending, but the VP I had lunch with was the complete opposite. On top of that, the CEO has called me twice to apologize, and I owe him a return call today. Stay tuned for the results. Thus far I have to say that D&B has made a truly impressive effort to set things straight.
Next, the CEO of another hosting company posted to his blog recently extolling the virtues of “firing” difficult customers. This is a controversial topic that comes up pretty often in our industry. I’m actually surprised at how much negative press he is getting, because most people I talk to seem to think that firing difficult customers is perfectly acceptable. Of course, I wholeheartedly disagree and I think that “firing” customers is a terrible practice. I’ll start by being honest and saying that there have been times over the last 9 years where I have either directly terminated a customer relationship, or have given my approval for a member of our management team to do so. However, those few times have been serious, gut-wrenching business decisions that carry a fair amount of doubt, sometimes remorse, and that’s the way it should be. Parting ways with a customer is something that a serious business person cannot afford to take lightly. Not if the customer initiates it, not if you initiate it, and not even if it is a mutually agreed upon split. We work hard for our customers and our reputation which are two inseparable components of our success. Firing a difficult or abusive customer solves a short term problem (the drain on support resources), but creates long-term unhealthiness in your business. It puts former customers on the street with a never ending stream of terrible things to say about your company, and trust me, when you leave them out in the cold they’re not going to forget. They were probably unhappy to begin with, and now you have validated all of their negative sentiment. If you make a business practice of terminating difficult customers, and we all have difficult customers, how long does it really need to go on before you have critical mass of scorned ex-customers generating adverse financial impact?
Even worse, your employees will start down the “slippery slope.” Once you start drawing the line and firing customers who cross it, that line has a funny way of taking on a life of its own. It won’t be long before your employees begin encouraging managers to get trigger happy and cut ties with every customer who gets a little huffy, even those with legitimate gripes. Think about the manager who gave me the boot from Dave and Busters. He essentially “fired” me as a customer. As a newly promoted manager in a restaurant that clearly has issues with its guest service culture, he was already in attack mode when he came out to talk to me. It didn’t take much for him to determine that I “crossed the line” and should be ejected. That underscores the importance of building a strong service culture and preparing your employees to handle difficult situations constructively.
Still, I regularly hear quite a few arguments for “firing” difficult customers. I’ll list the top 5 of them here:
1. Abusive customers demoralize employees and increase turnover.
2. Difficult customers are unprofitable and use more support resources than they pay for.
3. “Problem customers” distract management focus from the strategic goals of the company.
4. There are some customers who will never be happy no matter what you do.
5. If I fire problem customers, I will have more time to devote to good customers.
Some of these sound great in theory, some are obviously absurd, and in my opinion, they’re all wrong. In my next post I’ll talk about why, and provide some of my own battle-tested strategies for working with high maintenance customers effectively.
Every year we have our company holiday party at Dave and Buster’s in Philadelphia. Despite the fact that they are lousy to deal with from a planning perspective, we have been going there for 5 years because our employees really enjoy it. This will probably be the last year.
One of our employees was playing pool when the ball jumped off the table and broke a light fixture hanging directly overhead. It was completely accidental and he wasn’t doing anything inappropriate (other than being bad at pool). Being an honest guy, he sought out a manager to own up to the situation and get things taken care of. The manager informed him it was a custom light fixture and that he would have to pay $214. Not wanting to cause a problem, he took out his credit card and paid the money.
Later on when he was at the bar, I found out about the situation. I asked him to give me the receipt so I could talk to the manager on his behalf. The first manager came out, listened to the story, and then told me that he was sorry but only the general manager could do anything about it. That was the first warning sign of bad service – managers not being empowered to take care of customers.
I waited about 10 minutes, and eventually the general manager came out to speak with me. This is where things got really good. He proceeded to tell me that “if I could go out and find a cheaper lamp, he would waive the charge for me.” When I looked puzzled, he proceeded to tell me that “it’s a custom lamp for Dave and Buster’s” and that my employee had to pay for it, end of story.
Of course, I wasn’t going to stand by and just ignore rudeness, sarcasm, and poor customer service. I told the manager that he needed to refund my employee’s card and that he could charge me for the lamp. I said that we have been coming to Dave and Buster’s for 5 years and our party had gotten bigger every year (we had 180 people this year). I let him know that I would pay for the lamp but he should know that if he charged me, we’re never having a party a D&B again.
His response was stunning. He said, “I don’t appreciate your unpleasant ultimatum!” To which I replied, “It’s not an ultimatum. You can charge me, but if you do, I’m just not coming back.” He held the line and said “Don’t threaten me.” I said, “It’s not a threat. I’m just not coming back if you charge me for the lamp. It’s your choice. But if you make an issue out of it, you’ll lose a customer due to your poor service philosophy.”
I guess he didn’t like that, because he threw the receipt at me and said “I don’t have to do anything for you” and turned his back on me. At that point, he had really pushed my buttons and I unleashed a bit of choice language similar to “that’s freaking bull snot.”
He turned around and told me that “I had crossed the line” and that he was throwing me out. I told him I just spent a ton of money on a party for 180 people and he was going to have to call the police if he wanted me to leave. He responded by getting two giant security guards to escort me out. One of them even grabbed me by the arm.
I think that is the epitome of bad service. I can’t think of a worse experience anywhere, ever. I wasn’t looking for a battle, and he didn’t need to do much to diffuse the situation. Worst case scenario he charges me for the lamp and I call corporate and complain on Monday. Instead he needlessly made it a battle that he won in the short term but will lose in the long term. You can be sure that I’ll never have another party there, and I have already complained heavily to the corporate office which has promised to take action.
In a service business and we’re faced with these types of situations all the time. I think that many companies in our industry have a tough time doing what is right for the customer considering the value of the overall relationship. Making customers happy needs to be our top priority, and too often I think companies are hung up on having them pay for the lamp. If you’re not taking care of your customers, don’t be surprised to find them blogging about it somewhere.
What does customer satisfaction mean to you? What does that have to do with greasy burgers. All good questions. As I returned to the office today with a smile and a bag of greasy burgers, Jean from our marketing team challenged me to turn my artery-clogging inspiration into a blog topic.
First, the back-story. I like to eat unhealthy foods. In particular, gigantic steaks and greasy burgers are at the top of my list. In fact, I’m a proud member of Shula’s Steakhouse 48 ounce club.
Yes, on two separate occasions I have eaten an entire 48 ounce steak in one sitting, accompanied by some appetizers, salad, and desert. At this point if you haven’t seen me before you’re probably thinking I’m quite large, but I must have a fast metabolism or something wrong with me. Anyway, I digress. We have a new burger place that just opened up nearby and the quality is exceptional. Fresh meat, great toppings (included free), and all burgers are doubles by default.
How does this relate to customer service? I went to this place for the first time today and I left with a gigantic smile. What made me happy was the quality of the product and I started thinking about how that relates to customer service. Product quality and customer service are inextricably linked. Without a quality product, even the best representative will be hard pressed to satisfy a customer, let alone exceed their expectations. As we continually refine our service philosophy at HostMySite.com, quality has been a big focus recently. In web hosting, we rely on a number of hardware and software products provided by third parties (operating systems, control panels, virtualization platforms, backup software, servers, routers, switches, and the list goes on and on). Frequently our best efforts are derailed by performance failures of something provided by a third party. That is probably one of the reasons it is so hard to find good service in the hosting industry.
I think we have a good method for dealing with those sorts of issues here. We not only focus on providing quality interactions every time a customer calls or emails, but we look for ways to insulate our customers from failures of systems provided by our vendors. In particular, one of our Infrastructure supervisors has done an awesome job of proactively addressing areas of need. His hard work has resulted in real improvements in the performance of our hosting platform and made up for some serious flaws in the products we use.
It is important to realize that just having the best intentions is not always enough. A friendly voice on the other end of the phone isn’t enough if your website isn’t running or mail isn’t being delivered. We recognize that fact which is why “Credibility” is one of our Pillars of Customer Service. We can’t have Credibility without a quality hosting offering. And you can’t have a good burger without fresh meat and good toppings.
What defines great service? It means a lot of things to a lot of people. Ultimately, if our definition of great service doesn’t match your definition, we’re not doing our job. We need to improve on our active solicitation of customer feedback and use the knowledge we gain to improve our service. In the past, we handled feedback on a very reactive basis. Praise? We share it with the organization and thank those responsible for a job well done. Complaints? We’re all over them, applying whatever resources we need to solve problems, clear hurdles, and make customers happy. But what about everything in between? Very soon, we will give our customers many more options to provide feedback easily. We are planning a CEO “kick off” customer satisfaction survey to get the ball rolling, and we plan to integrate customer feedback mechanisms into everything we do. If we close a ticket, you will have an opportunity to provide feedback. Use our control panel? Tell us what you like about our tools and what needs to be improved. We realize that we need to make it easy to provide feedback so that our customers can help us apply resources where they are needed the most. We also need to actively engage our customers in determining what new products and services we can offer that will be most useful. Look for enhanced feedback options to start appearing in the near future!
In other news, we are well under way in the constructing the next phase of our datacenter. The facility we opened in early 2004 is nearly full, and we are adding a new server room and power infrastructure that will increase our total capacity. The new phase will include 3×500 KW parallel redundant generators (up to 1.5 megawatts of output), 2×650 KVA parallel redundant Liebert UPS units, and capacity for approximately 5000 additional servers. The build is progressing quickly now and should be completed by the end of the year - just in time!
Ok…I have neglected this blog for a little while, but not for love of the topic. I’m going to do my best to be a little more disciplined at posting some of the things I write about service on a regular basis. I just returned from the Hosting Transformation Summit in Las Vegas hosted by Tier 1 Research.
While I was there, I met many interesting people in the hosting industry, including a number of CEO’s of competitors. As I was going through my contacts, I found that more than a few CEO’s at other companies had blogs. One in particular caught my interest - he was talking about dealing with a support issue where the customer had emailed him directly. He posted that the customer was surprised he was “brisk” in his response, and went on to post that he had already paid his dues by doing support for a number of years and had more important things to work on. The focus of his post was that people should do what they do best, and that he was good at marketing, not support. As you may know, that differs slightly from my philosophy, and I felt compelled to comment. My response is below:
“I found your post today interesting and I can sympathize with your situation. However, I do slightly disagree. I make my personal contact information readily available to our customers (everything short of just posting it right to our public site). We have 140 employees but I still find a fair amount of my time going to customers that contact me directly. I get copied on a handful of issues every week. Although I delegate a lot of the issues to our very capable staff, I always follow up personally. I believe that service culture is top down, and if I don’t want to take care of the customer, why should anyone else at my company? People will do what I do, not what I say, and there is a lot of merit to being a roll-up-your-sleeves type leader. Sure, 80-90% of my time is spent on non-operational issues (strategic planning, etc…), but if customer complaints become overly budensome, then it is up to my management team to look at the root cause of those issues and attack the problem at its source. I agree that it can be difficult and distracting to handle these sorts of things, but in an industry that is sorely lacking for decent service, it is gives us an edge in the marketplace for customer issues to get a little extra attention from the CEO.”
Thanks to everyone who has sent comments so far, both through email and posted online. The feedback we receive at HostMySite.com is overwhelmingly positive and we certainly appreciate it. From time to time however, we get constructive feedback from someone who is concerned. I appreciate that feedback as well. Although we’d like to have a perfect track record, we do make mistakes from time to time. As I mentioned in my last post, I believe that you can tell the most about a company by how they own up to their mistakes. When things go wrong, we strive to make them right. I know that given the chance, we will ultimately always do right by our customers. Our culture puts service before all things, including revenue. That may sound strange from a business perspective, but I believe that to get paid, we have to earn it. Service comes first. Over the last 8+ years, that has become a successful business model. Happy customers refer more customers. It seems so simple that you wonder why more companies don’t grasp the concept.
Still, occasionally things do break down. We are growing fast and hiring faster, and sometimes a new employee that doesn’t fully understand our culture will make a mistake. To be honest, it takes time to understand how we do things and to fully embrace our approach to service. We have an extensive training program, but there is so much to learn that someone may not always be able to answer your question on the first try. We do our best to make sure that our customers always have a positive experience, but we want to know if you’re unhappy for any reason.
For example, when I received some concerns and constructive feedback posted to this blog, I immediately brought the issue to Brian Raboin, our VP of Operations for review. All of the tickets associated with the issue were reviewed. We identified the mistakes, the breakdown in communication, and the root cause of the problem. Not only did we find the real cause of the issue (which turned out to be a bad switch port, not a wide area network issue), we reworked our associated communication and escalation procedures to try to prevent such a breakdown in the future. We are working on a better communication process between Network Operations and Support, and we are also making sure that service issues get escalated to management in a more efficient manner.
If a customer ever has a bad experience, I want to hear about it. We also have a great management team, especially in our Support Center, that wants to hear about it too. We will do anything and everything we can to make the situation right. When you host with us, I treat your business like it is my own. If there is something I can do for you, just ask. Your phone call or email will not go unanswered. All of the care, diligence, and hard work that have gone into building HostMySite.com are applied to make your experience a great one.
I just had a shockingly bad service experience today. For our next datacenter build out, Neil and I were sourcing some very expensive equipment. I’ll hold back on the specifics because I don’t want to smear anyone publicly, however this involves a decent sized company and a fellow Inc. 500 honoree.
Neil received a proposal for equipment which he thought was fairly good and forwarded it to me in an email. I was also looking on eBay at the same time and did a quick search for the same equipment. No one actually buys high priced data center equipment on eBay – it is just an easy way for liquidators, wholesalers, and secondary market dealers to advertise their inventory. However I saw the same equipment listed on eBay from the same dealer for almost $80,000 less than the price they quoted us. I asked Neil to inquire about the situation and to have them revise our proposal to reflect the eBay price. Immediately they backtracked and said the pricing on eBay was a mistake. Furthermore, they immediately raised the pricing on eBay by over $80,000. Now, this was an item they had been running on eBay for at least 60 days with multiple postings at the previous price.
I have to imagine that I’m not the only one who would question the vendor under these circumstances. Well…I haven’t even gotten to the good part. The president of the company called me and left a voicemail message that he heard about the situation and wanted to make things right.
I returned his call today and I was dumbfounded at his handling of the situation. He started off the call telling me that he was insulted I would insinuate they were trying to pull a fast one. He told me I should know “it was an honest mistake” and demanded that I accept that fact. He also said that there was “no way” he was going to eat the cost “no mater how angry I was” so I should just get over it now. He went on to tell me that another company far bigger than mine was also angry over the same situation and that he didn’t cave in to them so he certainly wasn’t going to cave in to me. Yeah – he’s good, but he didn’t stop there. He further inflamed the situation by saying that he is pretty much the only game in town for this type of equipment, and if I don’t buy it from him then I’m stuck buying from the manufacturer at higher prices since he controls 90% of the available inventory on the secondary market. I’m very proud of myself that I didn’t explode at some point and tell him where to go. I really might have done that if we didn’t already have a good relationship with his company. Believe it or not, they actually do a great job of servicing some of our existing equipment. After I sat there and listened to this abusive “apology”, my blood boiling, he tells me that he is sorry for the mistake and will offer a 5 year warranty at no extra cost.
Believe it or not, that’s actually a good deal. If this person had been a decent guy, and even a little contrite, I probably would have thanked him for his concern and made the purchase. Now I’m in a situation where I really don’t want to buy from him. It is a good deal, and he really does control a large portion of the secondary market for this equipment. But you can bet Neil and I will do a lot of extra work for the possibility of buying it elsewhere.
His problem is that he couldn’t handle just being sorry, he had to be right. He blamed other people and shirked responsibility for the mistake. That isn’t a good way to do business. If you make a mistake, own up to it and make the best offer you can to right the situation. If it was an honest mistake I understand that there is no way he can just eat $80k. I would have listened to any reasonable proposal to make good on the situation. He thought it would be comforting for me to hear that “people at his company received written warnings about the mistake” but that isn’t at all what I was looking for. As the leader of his organization, he is responsible for how his employees conduct themselves. Discipline is an internal matter. The point of all this is that he could have easily salvaged the business and the relationship, but his pride and ego stood in the way. In the end, people have a lot more respect for those who can admit when they are wrong. There have been countless studies on customer service showing that people appreciate an admission of error and an apology far more than a deflection of responsibility.
I think there is a great deal to be learned from this situation that we can apply at HostMySite.com. We’re very good at what we do, but we’re also human and we all make mistakes. I believe very strongly that individuals and leaders define their organizations by how they handle those mistakes.