Fire Your Customers! – Part 1 of 3

December 20, 2006Culture, Customer Satisfaction, Customer Service, Employees, Little Things, Big Differences 9 Comments

Well, that is what Justin Kitch, the CEO and founder of Homestead.com suggests – to an extent. He talked about it on his blog. Basically, Justin has adopted a model where his company priories. They make decisions of what to do based on their priorities.
This isn’t a new thing, but I haven’t heard of it done like this before. Justin calls his list of priories the Homestead Creed, which he summarizes like:

  1. We put our employees first, who in turn…
  2. Build world class products and services, which…
  3. Delight our customers, and in doing all of the above remember to…
  4. Serve our community, all of which allows us to…
  5. Build shareholder value.

I have never seen products make such a list and I find it interesting that they include it. The others are pretty common among such lists (including the order). However, I don’t like to see a list that includes customers as the third priority.

Justin explains his views about this here and here. He says that products are solid intellectual property that a company can always have. His points are justified and make sense, but it is just weird to see customers as a business’s third priority. I respect him for posting them with such explanations, but it is just odd.

I have seen what is involved with providing web hosting and I am almost positive that any leader of any successful web hosting company will tell you that providing great customer service is much harder to do than the technical (product) aspects of the service. Providing good customer service is far more unique and much harder to do than web hosting, or for that matter, many products or services.

Web hosting giant Rackspace believes in it (see question #3 in Service Untitled’s interview with David Bryce of Rackspace), Mike Faith does (see question #8 – his company sells telephone headsets – pretty simple product), and so do other companies that have set themselves apart through customer service.

Danny Meyer of Union Square Hospitality Group (talked about here) believes in something he calls Enlightened Hospitality. It is quite similar to Homestead’s Creed, but prioritizes slightly differently:

  1. Employees
  2. Guests (customers)
  3. Community
  4. Vendors (suppliers/partners)
  5. Shareholders

Personally, I think Danny’s system makes more sense. True, a big part of the reason why people visit restaurants Danny owns like Union Square Cafe is the food (their physical product), but the service is what gets them to come back. Service is important and the philosophy can be applied to Homestead as well.

Many customers want good service almost as much (if not more) as they want a good product. They will pick companies that provide great service and remain loyal to them. That is how customer service can be so powerful.

Justin is a firm believer in empowerment and encourages his employees to treat the customers they deal with as their customers, and Homestead as their business. So, how and why would you fire customers? All about that tomorrow.

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9 Responses to “Fire Your Customers! – Part 1 of 3”

  1. Jazmac said:

    Dec 20, 06 at 2:13 pm

    The fist priority, the first responsibility, of any business is to the shareholders. The shareholders have assumed the risk and invested their capital in the business. When putting shareholder value first, a company must develop and deliver a good product, take good care of their employees that do the work of developing the product and taking care of the customers and finally take care of the customers. With out these three top priorities in place, the first priority, shareholder value can not be fulfilled.

  2. Brian said:

    Dec 20, 06 at 4:37 pm

    1. Staff (ours)
    2. Clients
    3. Everything else, like thought leadership, being super-creative, being cool

    Different version:
    1. Integrity
    2. Profitability

    If we can’t do both, then we quit. And sometimes that involves firing clients, sometimes firing staff.

  3. Glenn Ross said:

    Dec 20, 06 at 9:24 pm

    I disagree with Jazmac, and I agree with Brian. Jazmac, that’s a good theory, but like Marxism, it doesn’t work in reality. If you hire the right people who sell quality products or services while doing their best to exceed their customers’ needs, then shareholder value will take care of itself.

    Regards,

    Glenn

  4. Service Untitled said:

    Dec 20, 06 at 9:27 pm

    I agree with Glenn. I think if you make your employees happy, who will, in theory, make your customers happy, then the business results (and subsequently service to shareholders) will be good.

    I think most shareholders in companies will agree with a model that puts customers and employees ahead of them. Keep in mind that their results are based off of customer happiness. If customers aren’t happy, chances are they won’t buy. If they won’t buy, there won’t be money for shareholders.

  5. Anonymous Cog said:

    Dec 20, 06 at 10:06 pm

    Hi,

    Just stopping by to wish you a Merry Christmas.

    AC

  6. Glenn Ross said:

    Dec 21, 06 at 7:27 pm

    Exactly, Service Untitled. A business doesn’t make money by selling to its shareholders. It makes money by selling to its customers.

  7. Fire Your Crappy Customers - The Homestead Hubbub » Instigator Blog said:

    Jan 11, 07 at 12:49 pm

    […] Doug at Service Untitled does a 3-part series on firing customers reflecting on Justin’s blog post. It’s a great, very detailed read. […]

  8. Service Untitled » Sprint fires customers. - customer service and customer service experience blog said:

    Jul 10, 07 at 11:35 am

    […] Part 1 – Introduction and about internal priorities (staff before customers, etc.) […]

  9. Service Untitled » The Star System for Customers - customer service and customer service experience blog said:

    Mar 11, 08 at 10:38 pm

    […] I’ve written about firing your customers before. It is a topic that interests a lot of companies, especially smaller ones that don’t have the time to deal with really annoying customers on a constant basis. A reader made an interesting suggestion about how to deal with the problem, though. He suggested using what he described as a star system; essentially, you rate customers on some sort of fairly objective basis (i. e. 1 to 5 stars). The rating is based on their value as a customer – how often they buy, what they buy, who they’re referred, how often the company has screwed up with them in the past, if they are an active customer (i. e. lots of feedback, etc.). Customers that meet certain criteria are given a star rating. Say I am a customer of company X and I’m a good customer – I buy their most expensive products, I visit their store and buy something at least once a week, I refer others, I have a store credit card, they have screwed up one or two times and I am still a customer, I talk to the store manager every now and then, etc. Basically, I am a good customer who helps the company / store. I would be a 5 star customer. If, on the other hand, I was a customer of a services company and used their lowest end plan, called them 3 times a day, never referred anyone, and have canceled twice before, that would make a 1 star customer. […]