In this three-part essay, I will explore practical ways that we can hear from our customers.

Revenue is generated by solving problems that people find valuable.

Profit is generated through the risk of providing a good solution.

Adapted from Peter Drucker

Ultimately, profit is the most important part as you could be bringing in $1MM of revenue, but losing every dime of that.

When starting a business, the newly-minted CEO is responsible for understanding what mechanisms will bring revenue and how much profit is generated from this. It is during these days that she will seek discussions with her audience to determine product fit. This is to determine whether or not this idea will be profitable.

Business happens. Time goes by. Revenues grow (usually). Free time is sucked away into the endless vacuum of running a business.

As a result, profits slowly decrease. Why? Because the solution is more known and thus there is less risk. There is likely more competition thus more minds are focused on reducing the risk.

The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.

Peter Drucker

Who am I? I wear a number of hats. I have written and sold ebooks and practice exams for a couple of years. These help people become certified on the Magento platform. I also helped people with their online stores (Magento and BigCommerce) for over 10 years. While I have learned a lot from my own experiences and observations, I am confident that there are even more ways to listen to our customers.

How do we listen to our customers?

I will identify six mechanisms for understanding customer feedback. There are more, but as merchants, these are our biggest touchpoints.

These areas will be discussed in descending value. Higher in the list is more valuable. Lower has less returns.

One thing to remember is that you might not have much feedback from customers if they are just “ok” with buying from you (net promoter 7 or 8). Unfortunately, a silent audience is one that is also vulnerable to moving to a different brand.

• Reactively listen to angry customers.
• Proactively eating our own dogfood.
• Proactively talking to our customer base.
• Proactively establishing a feedback pipeline from customer service teams.
• Proactively survey customer base.
• Reactively listen to public customer venting.

As you can see, some of these inputs are proactive and others are reactive.

Key point: We will strive to quickly and reasonably react, but will commit to taking consistent proactive steps.

Reactively listen to angry customers.

Unfortunately, stuff happens. I mess up. Some days it seems that I get more wrong than right.

Maybe there is a mistake in a product that I have created. Maybe someone fails their real exam after paying me to help them pass.

“The key is to set realistic customer expectations and then not to just meet them, but to exceed them—preferably in unexpected ways and helpful ways.”

Richard Branson

As I try to be an external observer of myself, I see/agree that anger/disappointment in transactions come from broken expectations.

• We naturally expect that this order will be shipped the next business day.
• We rightly expect that this product will perform as advertised.
• We expect that this product will be able to be used without consulting the user guide.
• We expect that customer service will respond within 30 minutes to our complaint.

This applies to me in that I sell practice exams and study guides to prepare people for taking a certification. While I don’t have factors such as supply chain or fulfillment (“UPS lost the package”), I do have other factors like the user’s experience and how much effort they invest in using my products.

When someone fails their exam after using my products, how do I respond?

There is a chance that my customer did not apply themselves to using my product. That’s impossible to fix, right? I can’t force people to use my products the way I want them to be used. I can, though, set their expectations on how they should be used—with the goal of shattering those expectations.

How do I apply this to my business?

We need to understand how we contributed to this problem. I find it easy to over-react in either direction: 1) this is 100% the customer’s fault and do nothing or 2) let’s change the entire website, policies, etc. so this never happens again.

First, we must remember that we will never be able to anticipate everything. And those things we do anticipate are likely never to happen or at least to the extent originally imagined.

Make it right.

In reviewing my past, I find that when I have a problem with a company, my emotions are heightened. I am not happy. As humans, I believe we want good outcomes. I find that when the company makes it right, these heightened emotions swing toward the positive, to be “heightenedly” (if that’s a word) happier.

One upset customer can sound off and reduce your revenue significantly. I like to think that my policies are in effect until the time of purchase, and then they go out the door.

You are probably thinking, “People will take advantage of me.” Sure. Two to three percent (max) will. These people will take advantage of anything and everything. People take advantage of my offers.

People hate having the Ten Commandments of Internal Policies thrown at them (one of them being a 20% restocking fee—what!?) This is especially true when comparing small businesses to the veritable giant, Amazon. Amazon can afford some losses, so they prioritize customer service. Small businesses can’t afford these losses so they have to use policies to hopefully prevent problems—but they risk losing trust.

Many of our customers feel a slight twinge of doubt the first time click the veritable Purchase button on our store. Don’t you feel that? Why? There is a good chance that Amazon sells the same product—or at least something that should get the job done. Our customers know that Amazon will make it right. The small business? That’s questionable. Sticking to rules at this point in the game will eliminate them as a customer and will incur a cascading effect where they will encourage others away from coming to you.

“But that might put me out of business!” I’ve heard this and felt it. I had a student who was asked for a refund. They were clearly outside of the refund policy from several angles. I exchanged several emails with them to determine their insistence on the refund. Then, I decided to give it. Yes, I had that gut feeling of “man, I don’t want to do this.”

This person’s response said: “your business value is clear and respectful.”

Don’t give a refund right away.

Use this as an opportunity to understand what went wrong. Why do they need it? What is wrong with your products? Of course, don’t put it that way, but that is the summary.

Give the refund only after the second or third email exchange.

Make measured changes from feedback.

I want to strike a balance. In most situations, there is likely 30% of the customer’s mistake and 70% of our mistake. The customer is not always right. Our culpability is higher thanks to the fact that many other customers are likely experiencing this problem—until we get it right, which may be never.

The most productive way to look at a problem is that it is our fault.

• Do we set improper customer expectations?
• How are we balancing our guarantees with the fulfillment of these promises?
• How can we better communicate the challenges we are facing?

In the beginning, I had quite a few people fail their certification because they thought that the practice test was a question dump (questions stolen from the real test). These people worked like crazy by memorizing dozens of questions! Props to them but that was misguided study.

I made many incremental changes as a result of these learnings and these helped. I added questions. I made them harder. I changed the verbiage. I added warnings. Over time, this helped. We noticed that each step made a small difference. These added up.

The lightbulb moment came when I used my own product as I prepared for a certification (next subject). While I wrote much of the practice test software and almost all of the practice test questions, I found that I had never taken the test as a real candidate would.

Example of how to alienate customers.

I like to purchase bulk food. A particular company has a unique “last-mile” delivery system where people meet a truck driver at a designated time. I must drive to the drop point and pick up my food. Very well.

This takes over an hour of my time if the truck is on time. That’s why we get better prices, so I’m ok to take the extra time.

But, do you want to know what is maddening? I can place an order, but there is no guarantee that my ordered items will ship—even though at the time when I place my order it says “all items in stock”. They even list how many are in stock!

This company has no inventory reservation system.

My order ships without the most important items. These items were the very and only reason I placed the order. But I did order a few other items, too.

I email their customer service and get this as a response:

We're sorry that we ran out of the item before your order shipped.  

That is all they had to say. They offered no recourse. But worst of all, they offered no future solution. They could have said, “yes, we are working toward an inventory reservation system, but have not completed it yet.” Or, “we are getting much feedback about this and we promise that these inventory issues will be corrected as soon as possible.”

I had also asked to cancel my order. Their response:

Your order has already shipped. 

My friends, this is bad, bad customer service. Please take this as an example of how not to run a business.

In summary

• We realize unless we intervene, profits will diminish over time.
• We must quickly respond to customer complaints.
• We must ensure that the resolution will help the customer understand that they will be a one-time occurance.