Thursday, March 26, 2015

How to Kill Your Business

I should be an expert on this topic, since it took me almost three years to officially crush the life out of my studio maintenance and equipment repair business. However, intentionally ending a business isn’t really the subject I’m referring to here. I might talk about that some time in the future, but not now. What this rant is about is unintentionally (I think) killing a business with crap service.

Way back in the mid-1980’s, I got caught up in the US manufacturing quality movement as a manager at QSC Audio Products. Because we were trying to qualify as a Dolby and LucasFilm theater system vendor, we needed to up our manufacturing, quality control, and customer service game substantially. At first it seemed like an almost impossible task, since we were probably a 10-15% defective out-of-box vendor and LucasFilm wanted something more along the lines of 0.001% reliability figure. We, however, would be satisfied with 3-sigma ( a little better than 99% reliable) performance as a baby-step toward first-world quality standards.

I found the Phil Crosby “Quality Is Free” book and took one of his courses in L.A. That turned me on to W. Edwards Deming and his books. Those two sources got me and the company headed in the right direction. After a second 3-day Crosby seminar, I ended up getting a part-time gig as a Crosby quality instructor, which I kept for about two years. Early in my classes, the Ford guys were just starting to put some meat behind the “Quality Is Job One” campaign and Don Peterson had just taken over the whole company. (An engineer running an engineering company, imagine that?) Those guys were hungry for ideas because Ford had a habit of replacing engineering guys with MBA morons and they all knew there was a small window in which they could jack up Ford product quality before the company went back to business as usual and form (and advertising) over function. Having those determined and desperate engineers in my classes put a lot of pressure on me and the Crosby organization to provide a lot of value in a short lecture.

One of the QIF lectures included something I remember being called “the 5/5/5 rule.” Whatever it’s called, it comes from the restaurant business. The basic idea is that it takes $50 in advertising to get a customer to try a new restaurant. 5 seconds of poor service will alienate that customer. It will take $5,000 in advertising to get them to try the restaurant a second time. This was a big deal to lots of us, including the Ford engineers. Along with the customer service variation on the Pareto Effect, which is much more discriminating than Pareto’s 80/20 ratio: 1 to 10% of your customers will complain about a product failure while the other 90-99% will simply stop buying your products. Knowing that the cost of poor service is high and hidden and that the likelihood that your customers will tell you when you’ve screwed-up is low is huge. It means that you have to take the few who care enough to complain seriously enough that paying attention to your customers becomes a habit.

The fact that most businesses do the opposite pretty much wraps up the secret to killing a business. Half-assed, intentionally asshole-ish, inattention, or even a few seconds of distracted service will send customers out the door with the intention of never coming back. If you don’t believe me, you are either a very forgiving customer or seriously in denial. Most customers “forgive” poor service by checking the business off of their list of preferred vendors. They might even do it unconsciously, but nevertheless the effect is the same as aggressively complaining about the service/product and shouting “I’m never coming back!”

I realized how far this unconscious effect can carry the other day when my wife delivered her lesson from our winter trapped in VW-powered Winnebago, “Never have your house attached to your vehicle.” She thought the problem was that our Class C RV did not allow us to separate our living quarters from the vehicle. Since she is incapable of driving a vehicle with a trailer, her lesson essentially says “Stay in motels or stay home.”

My lesson, also delivered almost automatically, has been “Never buy anything from Volkswagen and, ideally, avoid all German vehicles.” I have followed that by describing the miserable service I received from two VW dealers in Albuquerque, the stories I heard about VW service from unhappy VW owners all over the country, and so on. As I write this, I am realizing how many times I’ve told this story and heard it repeated back to me from other people with similar, often second-hand, versions of the same message. By ignoring customer complaints (and VW may be completely immune to customer feedback), VW has created a community of VW-haters who are spreading the word faster than any advertising campaign could hope to compete. Now that’s a perfect example of “how to kill your business.”

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Wirebender Audio Rants

Over the dozen years I taught audio engineering at Musictech College and McNally Smith College of Music, I accumulated a lot of material that might be useful to all sorts of budding audio techs and musicians. This site will include comments and questions about professional audio standards, practices, and equipment. I will add occasional product reviews with as many objective and irrational opinions as possible.