Customer Service = Profits. Or What's the Point?

We're all in business for the same reason - I don't care who you are. We conduct business to make money.

I'm not being flippant when I say that if you aren't interested - on any level - in making money for yourself and your company, then I just don't think that business is for you.

My advice instead is to work in the nonprofit realm, participate in government, or go drink some beer at the beach. Seriously.

I call myself The Savvy Capitalist to drive home the key point of everything I teach: shrewd businesspeople get the importance of sterling customer service, enlightened management practices, and the value of philanthropy. These things bring their business more profit.

While I'm currently enjoying a break from the fray of running my own business (and it's such a nice respite that I may never go back; we'll see), I built a very successful company on the concept of Enlightened Self-Interest: that doing the right thing pays.

In four years, we took Coiné Language School from two students in our living room to a valuation of $10 million (we brought in an experienced start-up CFO to guide this evaluation). Jane and I didn't end up selling, but that's another story. We built something solid. Something based on intelligent business practices.

Number one in our minds at all times was the idea that if we spoiled our customers rotten - if we gave them much more than they asked us for; indeed, much more than most even knew they might want - then we would earn their repeat business, their recommendations, and even their unsought referrals.

It worked. That last part, especially, was very cool.

When an executive calls you completely out of the blue and says one of your clients suggested you, and she'd like to give you, say, $30,000 in business.... well, you know you're doing something right.

This week, for some reason, a number of folks have challenged one of my favorite pieces of advice, taken from a seven-foot stone outside the front entrance to Stew Leonard's:

Rule #1: The customer is always right!
Rule #2: If the customer is ever wrong, reread rule #1!

"How can that be?" they've asked. Some have said, "Some customers are far from right!" Others have said, "Giving the customer what he wants every time will break your company!"

Where do I start? There is good solid truth in these objections. Just... you can't let them trip you up.

Today, let me leave you with a couple of key points. Digest them, and next time, we'll delve into more detail on how you can make these precepts come alive for your company.

1. Customer service is meant to drive profitability, not siphon it off. If you manage to get service right, you will rarely have to give the customer anything free.

2. Part of shrewd business is to not do business with customers who are unprofitable to you. You can't serve everyone no matter their needs, and you shouldn't try.

3. Yes, you can "fire" a bad customer. About once every ten years you may need to do this.

4. Many customers will be happy to pay you more in order to get the service they demand. Let them! It's a win all around.

5. A commitment to service is a long-term business strategy. If you have a short-term outlook, you will not see the value. If that's you, perhaps you're reading the wrong blog.

6. Don't take it from me: to some of my readers, a $10 million company in 4 years is nothing much. So look instead for proof of concept to these service leaders, among many others: Zappos.com. Stew Leonard's and Wegmans supermarkets. Lexus. Loving Care Home Health Care. Diamond Plumbing. Chick Fil-A. Sunshine Ace Hardware. Saratoga Technologies. Nordstrom. Mitchells/Marshs/Richards. VSM.net. Capella University. Truly Nolen.

Some are small, some are mammoth, but all hugely successful in a normal economy, and several are thriving even in this recession.

I did not invent capitalism, and I did not invent customer service. I am just the messenger.