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230: Price Myths BUSTED · Customer Service Revolution | Customer Experience & Employee Experience for Business Leaders

• 0:50
  Hey, Revolutionaries, welcome back to another episode of the Customer Service Revolution podcast with John DiJulius How are you today, John?
• 1:00
  I am fantastic, how are you?
• 1:02
  I'm doing wonderful.
• 1:03
  It's nice that we have you back in town again.
• 1:06
  Yes, it's nice to be home for a couple of days.
• 1:09
  Yeah, enjoying the fall weather in Cleveland.
• 1:12
  Yeah, yeah, yeah, yeah, that's my favorite time.
• 1:16
  Oh, yeah.
• 1:17
  Sitting around the fire and...
• 1:18
  Yeah, long sleeves.
• 1:20
  Don't like what's next, but you traveling?
• 1:25
  guy, huh?
• 1:26
  Not until November.
• 1:28
  where you had it too.
• 1:30
  November, just Florida to visit the family.
• 1:33
  Well, this will probably be out in mid-November.
• 1:36
  So probably when our listeners are hearing this, I will be in sunny Florida, let's hope.
• 1:44
  Yeah, do you have anything coming up?
• 1:46
  Yeah, I got I'm still traveling a bunch of trips until Thanksgiving.
• 1:51
  Well, I don't know.
• 1:52
  It's got pushed back to after holidays, but a lot of it's in the Caribbean, so I can't complain.
• 1:58
  That's not bad.
• 1:59
  You have shoulder surgery coming up too?
• 2:02
  yeah, yeah, yeah, yeah, yeah.
• 2:04
  In a couple days, a couple days.
• 2:08
  Yes, getting this shoulder replaced.
• 2:10
  So I'm turning into the bionic man.
• 2:12
  I'll have two new shoulders.
• 2:16
  That's fantastic.
• 2:17
  You'll be able to play ball for a lot longer.
• 2:20
  I don't know if I'm gonna be to play ball ever again.
• 2:24
  Yeah, a fake shoulder you can't throw.
• 2:27
  Oh, I thought your other one like maybe just because it's the left, you don't.
• 2:34
  Oh, I'm sorry to hear that.
• 2:38
  Well, hopefully.
• 2:39
  some years out of playing baseball.
• 2:41
  I've squeezed everything I can out of that, which...
• 2:43
  you just have to be the manager.
• 2:46
  is why I need shoulder replacement.
• 2:49
  50 years is a good record.
• 2:50
  Good run.
• 2:51
  Yeah.
• 2:53
  Hey, John, today, let's talk about a blog that you did a while back on price myth busting.
• 3:02
  You've said for years that price is the easiest excuse leaders reach for when business slows down or customers leave.
• 3:09
  Why does so many companies misdiagnose the real issue?
• 3:14
  Well, I think it's an easy crutch.
• 3:16
  It's kind of like, I think leaders use
• 3:19
  bad employees as a problem for things.
• 3:22
  That's the whole point of being a leader, right?
• 3:26
  Maybe that's why we're all going to robots.
• 3:29
  I don't know.
• 3:30
  But I think they listen to customers.
• 3:33
  My thing is when customers complain about price,
• 3:38
  I don't think it's price or that they're not willing to pay it.
• 3:41
  think the experience didn't warrant it.
• 3:44
  I think employees will say, they got it cheaper somewhere else when that's not necessarily the case.
• 3:51
  So I think there's a lot of blame placed on price when the experience didn't justify it.
• 3:59
  And is this universal when you look across industries, hospitality, banking, manufacturing?
• 4:04
  Is this a pattern that you always see?
• 4:07
  Yeah, mean, 100 % unless it's regulated price like healthcare where insurance pays for it.
• 4:16
  But in healthcare where it's elective, it definitely is.
• 4:24
  That's why I love working with elective because they work so much harder at the experience than just a typical
• 4:35
  doctor where you have to get a physical and insurance pays for it.
• 4:39
  They have to.
• 4:40
  Competition.
• 4:41
  Right.
• 4:42
  Yeah.
• 4:43
  So let's start with your first myth.
• 4:45
  You say we shouldn't just ask customers what they want, but instead give them what they can't live without.
• 4:52
  What does that really mean?
• 4:54
  Well, Steve Jobs said that, you know, and if you think about that, the companies that revolutionized their industries, if you remember what back in the day was like
• 5:05
  pre-Starbucks, pre-Zappos, pre-Amazon, pre-Airbnb, pre-Uber, like, we know
• 5:15
  the rest of the story, but I still think if you'd bring a business plan to me with Uber and Airbnb and Zappos, I would not invest, which would be a horrible decision, but they
• 5:29
  still don't seem like practical ideas.
• 5:32
  But a great example to this is in the 1970s.
• 5:37
  79 % of consumers bought coffee based on price.
• 5:42
  79 % of consumers bought coffee based on price.
• 5:47
  if you're looking to enter that market, the coffee market, that's been around for a thousand years and customers are telling you what's most important to them.
• 5:57
  Eight out of 10 people buy coffee based on
• 6:00
  price.
• 6:01
  So why would you offer anything differently?
• 6:04
  Now you fast forward to 2022 and less than 20 % of consumers buy coffee based on price, right?
• 6:17
  Total opposite swing because there was never before the 80s, there was never anybody that offered anything different based on price.
• 6:29
  It was a styrofoam cup, with or without sugar, with or without cream, right?
• 6:34
  And so it better be the cheapest because it probably all tastes the same.
• 6:38
  But today you have, you know, companies like Starbucks that offer you 170,000 different ways you're going to order it for, you know, 10 times as much or, you know, 20 times as
• 6:51
  much.
• 6:51
  You know, the in-store, you know, the experience hanging out for an hour, finishing reading a chapter in your book, cleaning up your inbox or conducting an interview can all
• 7:02
  be done at the Starbucks.
• 7:04
  And now you have the Reserve Roastery, which is their newest concept, which is really making price irrelevant.
• 7:10
  Their average cup of coffee is like $12.
• 7:13
  but you can get a cup of coffee for $50 on their menu.
• 7:16
  you you can't just listen to historical data when there's been nothing else offered.
• 7:22
  You know, it doesn't tell you the whole story.
• 7:24
  Have you been to one of those roasters?
• 7:26
  I have in Seattle.
• 7:27
  It was really cool.
• 7:28
  Have you?
• 7:30
  No, there's one in Chicago.
• 7:32
  when we go every time we go past it, there's a line out the door.
• 7:36
  And I'm like, do I want to wait 30 minutes to pay for a $15 cup of coffee?
• 7:43
  I don't know.
• 7:43
  It's just it's the Willy Wonka of coffee.
• 7:47
  mean, just just taking a tour and all the open exposed machinery and you see the grounds grounds flying across tubes above your head.
• 7:56
  can get a flight of coffee.
• 7:58
  It's kind of like a winery.
• 8:00
  It's it's it's impressive.
• 8:04
  It's majestic.
• 8:05
  I'll take a video so we can show.
• 8:08
  Yeah, you have to do that if you get to one again too, so we can show our listeners what it looks like.
• 8:12
  Yeah, yeah, I'm sure we can get one online, but yeah, it's really cool.
• 8:16
  All right.
• 8:16
  Ready?
• 8:16
  Myth number two.
• 8:18
  This one hits hard for a lot of leaders.
• 8:20
  You can't outsell high attrition.
• 8:24
  So why is that truth so important for organizations that are constantly chasing new sales?
• 8:30
  Well, again, marketing and advertising, if it's just to replace lost clients, it's a hole in the boat.
• 8:38
  So, I mean, that's really a problem that you can...
• 8:41
  In the one example we had where...
• 8:44
  Worldwide Express contacted us.
• 8:46
  They were losing almost 20 % of their existing clients a year to supposedly better prices, cheaper prices.
• 8:55
  And so we worked with them and we looked at it and that wasn't the case.
• 9:00
  They just weren't communicating with them.
• 9:02
  They weren't giving them a great experience.
• 9:04
  So we went in and worked with them.
• 9:07
  I mean, so think about that.
• 9:08
  You'd have to bring in over 20 % new business just to break even.
• 9:13
  I mean, that's a horrible business model.
• 9:16
  And so we did everything from creating their signature experience, looking at each touch point of their customer's journey.
• 9:23
  What is the things that frustrate them?
• 9:25
  You know, what is, do we have to stop doing?
• 9:28
  do consistently.
• 9:29
  lot of it goes back to being in the certainty business, and, communicating.
• 9:34
  mean, they're a logistic shipping company and people's orders are important.
• 9:40
  getting to them and, and, and, constantly communicating with them and they weren't doing that.
• 9:45
  So as a result of going through all this and creating their customer experience actions, they, but they're never and always there.
• 9:51
  their signature experience, is each touch point, looking at the service defects, what they're doing wrong, what their industry is guilty of, the non-negotiable that you have
• 10:05
  every time in the above and beyond opportunities, and then also helping them with service recovery, service avoidance, and then when something does go wrong, how you make it right.
• 10:17
  And as a result, in 18 months,
• 10:21
  we have a case study of them.
• 10:25
  Their average attrition, client retention, went from losing nearly 20 % of their customers a year to three.
• 10:37
  Only 3 % of their customers turned over following, ensuing 18 months.
• 10:43
  And then their sales went from 80 million to 120 million.
• 10:48
  And they were flat at 80 million for years and had nothing to with price.
• 10:53
  They actually were able to raise price in that time because demand went up so much.
• 10:59
  That's amazing.
• 11:00
  So what are warning signs that companies can look for that it's a retention problem disguised as a pricing problem?
• 11:08
  How do they know?
• 11:09
  Yeah, I mean, think the first thing is a client retention, right?
• 11:13
  I mean, I think that's everything.
• 11:14
  Tracking the amount of customers that continue to do business with you, whatever your business model is.
• 11:20
  And what can disguise client retention is contracts, right?
• 11:26
  Because now that customer's forced to do business with us for the next year, two years, whatever that contract is.
• 11:35
  so you have to have enough data and long enough, but if people aren't re-signing and they're not referring, we talk about earned growth that, if we haven't, I'd love to do a,
• 11:44
  a, podcast just on that.
• 11:46
  Cause I think that's the number one KPI is earned growth, which is, referrals and repeat versus bought growth, which is, advertising and earned growth is everything.
• 11:57
  I think client retention and stop sugarcoating why it is and stop asking the customer facing employees, the account executives, the lawyers, the consultants, why people aren't
• 12:09
  renewing.
• 12:09
  Because I don't think they're necessarily lying to the business, but they're being lied to.
• 12:16
  people are never going to, you hey, Denise, do you want to re-sign?
• 12:19
  No, right now we don't have it in the budget.
• 12:21
  Right now it's, you know,
• 12:23
  you this, that, whatever, and that's not the truth.
• 12:26
  You didn't justify being a great investment.
• 12:30
  Now, like with a...
• 12:32
  Worldwide Express helping them go from 19 % client attrition to 3%, helping them go from 80 million to 120 million.
• 12:44
  That's a good investment that they re-signed up with us for another three years because the return on experience there is justifiable.
• 13:40
  Myth three, make the one thing the one thing.
• 13:44
  Explain that philosophy for us.
• 13:47
  You know, over the years I've had dozens of CEOs when I've met them and on discovery and why are they hiring us?
• 13:59
  Um, they've all said the same thing.
• 14:02
  say if the de Julius group does nothing else, but help us improve this one key performance indicator, KPI by 1%, um, it'll be millions.
• 14:17
  to the top or bottom line.
• 14:19
  And now, depending on the business model, what that KPI is.
• 14:23
  But with New Day USA, a mortgage company that only served veterans, that one thing was veteran opt-outs.
• 14:32
  So the hard part when you're trying to get a mortgage or sell a mortgage is getting you approved.
• 14:40
  If I can't get you approved as an account executive, I can't do business with you, right?
• 14:44
  Alone.
• 14:45
  So that's the hard part.
• 14:48
  And then the second part of that is getting you to choose me as your account executive.
• 14:54
  Once that's done, once the finance company gets you approved and you choose to move forward, then it's pretty much a done deal.
• 15:03
  However,
• 15:04
  what Rob Posner told me from New Day is if you can help us reduce our V.O.O.s by 1 % that would mean millions.
• 15:11
  So VOO is a veteran opt out.
• 15:13
  That's after the veteran was approved.
• 15:15
  The loan was closing in December 1st.
• 15:19
  These veterans, 15 % a month were opting out before it closed.
• 15:24
  So that's fumbling the ball in the one yard line, all the work's been done.
• 15:27
  Every 1 % of a VOO is worth $200,000.
• 15:30
  So 15 % was a month, was worth over $3 million in revenue.
• 15:38
  I all the work's been done, you were approved, the process.
• 15:40
  The account executives, now these are recent college graduates.
• 15:45
  working at New Day, 22 to 26 years old said it was because the veterans were finding a better rate somewhere else.
• 15:52
  And Rob Posner, the founder of New Day and chairman and president said, you know, BS, that's not why.
• 15:58
  So we investigate, we start surveying the VOOs, the veterans who opt out.
• 16:03
  And we have found that the account executives started ghosting them.
• 16:07
  They weren't communicating with them.
• 16:09
  They were working on the
• 16:10
  next veteran that was in the pipeline that wasn't approved or didn't choose New Day yet, and they were trying to get them, but they weren't communicating with the veteran who was
• 16:20
  already approved.
• 16:21
  so there's a disconnect that we talk about that a lot of times our customer-facing employees aren't the customer.
• 16:28
  Well, a 23-year-old is working with, in New Day's case, a Vietnam veteran, someone in their 80s.
• 16:38
  So the 23-year-old
• 16:40
  probably has never served and definitely didn't serve in Vietnam and doesn't know what it's like.
• 16:46
  The other thing a 23 year old typically doesn't know is what it's like to be moving.
• 16:52
  And you know, if you're, if you're a closing date changes from December 1st to December 3rd, what's that mean?
• 16:59
  Well, that's huge.
• 17:00
  You know, what do you have lined up if you're moving or you think you're moving December 1st?
• 17:06
  Where are, what are all the things?
• 17:08
  gosh, so much, right?
• 17:09
  Not your moving trucks, your, your help if you have friends coming to help, you have everything packed.
• 17:16
  And you may have somebody who needs to get into your space, not just you're going to do it.
• 17:22
  Yeah.
• 17:23
  1st if you don't have a new place to move into.
• 17:25
  You have your internet turning off and the heat and utilities turning off at your old place and turning on.
• 17:32
  that they didn't realize what two days could mean to it and they weren't contacting.
• 17:38
  And the other reason why they weren't contacting, which is very common, is it's bad news.
• 17:43
  And you don't want to deliver bad news because you don't want to get yelled at.
• 17:46
  So sometimes it was that they would maybe reach out to the veteran, but the veteran wouldn't ask.
• 17:53
  So if the veteran didn't ask, they didn't tell.
• 17:57
  So as a result, we worked at their New Day's IT department.
• 18:01
  what happened is if the account executive didn't commit today, it's every day.
• 18:06
  Back then it was if the account executive didn't communicate with the veteran every two days, the loan would freeze.
• 18:14
  If the loan froze, the account executive couldn't get into it.
• 18:17
  If the loan froze, Rob Posner got phone, cell phone blew up.
• 18:23
  Pat Mack and the COO's phone blew up.
• 18:26
  Franco Greco, your sales supervisor, his phone blew up.
• 18:30
  You didn't want a loan to freeze.
• 18:33
  uh, uh, uh, because you have a lot of people that answer to, and as a result over the next six months, their VOOs went from 15 % to 8%.
• 18:45
  8 % still pretty high, but that 7 % in VOO reduction was a $1.4 million in revenue every month, uh, uh, increase.
• 18:58
  So it wasn't better rates.
• 19:00
  It was just, they were ghosting them.
• 19:02
  They weren't communicating.
• 19:03
  They weren't keeping, they weren't in the certainty business.
• 19:06
  So I think a lot of, I'm sure there's a lot of leaders that would argue, there's a lot of KPIs that are important.
• 19:14
  What happens when you try to focus on too many, when you make everything the one thing?
• 19:19
  Well, yeah, it's like anything else.
• 19:21
  If you have 10 reports that you run every week, you have none.
• 19:26
  just think, unless they're individualized per department, I think you should only have three to four that you look at and focus on.
• 19:35
  And they have to be pertaining to, like in this example, what we like to call return on experience, that they are directly affected.
• 19:43
  So overall sales growth, you can't pinpoint that to the experience.
• 19:50
  That might be an outcome, but not immediately.
• 19:52
  It could be how mature you are and your product, the maturity, your competition, how new you are.
• 19:59
  mean, all those things can affect sales growth.
• 20:02
  So sales growth by itself isn't just a direct reflection on the experience.
• 20:07
  All right, and myth number four, this might be my favorite one because it flips the entire pricing conversation on its head.
• 20:15
  Talk about why customers say too expensive when it's really reflection of value and experience.
• 20:23
  Yeah, so it goes back to my opening quote that when customers complain about price, it's not really the price.
• 20:30
  It's that the experience didn't warrant it.
• 20:33
  our first business, John Roberts Spa, back when I was involved day to day, we'd have some clients that didn't.
• 20:43
  return and we'd ask them why or we'd send out something and they'd say, you your prices, you know, aren't too high.
• 20:51
  so there was one case where a client complained.
• 20:54
  She got, it was a new client, no request, which means if they're not asking for anybody, they'll get the next available hairdresser, if you will.
• 21:03
  And a lot of times the next available hairdresser
• 21:07
  is our level one.
• 21:09
  We have 10 levels of hairdressers.
• 21:12
  Level one is after they graduate the apprenticeship program, they go on the floor.
• 21:16
  They may be charging $50 for a woman's haircut, but they are the least experienced.
• 21:22
  But that's who our no requests go to.
• 21:25
  This happened to be a level one designer.
• 21:28
  She didn't think it was worth the price.
• 21:30
  And so
• 21:31
  when we heard about it and we reached out to her and she told us that she just didn't think it was that great, we refunded her money and then gave her a gift certificate with
• 21:44
  one of our level six or seven hairdressers who was like at the time, $85, $90.
• 21:52
  And this is 20 some years ago.
• 21:55
  And so the level one was probably $35.
• 21:59
  Level ones today are 50 or 60.
• 22:02
  So she thought the $35 haircut was overpriced and not worth it.
• 22:09
  We gave her a gift certificate for Heather or Sandy, who was $75 at the time, to try to get her to come back and try us.
• 22:20
  20 some years later, that client's still with us.
• 22:25
  And...
• 22:26
  their hairdresser is now a level 10 who's charging $200 for a haircut.
• 22:33
  So at 35, she felt she was getting ripped off.
• 22:37
  At 75, she felt it was a bargain and continued to go to that person every six weeks.
• 22:44
  And 20 some years later is still going to that person and paying $200.
• 22:49
  So at 200, she's a bargain, but at 35, another hairdresser was a ripoff.
• 22:56
  know, lot of things to unpack there.
• 22:57
  have to improve the we had to work with and improve the $35 level one designer to justify that cost and that price and that experience.
• 23:09
  But I mean, it wasn't the price at all.
• 23:11
  She paid double and more than double for decades when at first, you know, the 35 was a ripoff.
• 23:20
  Do you still send new people to the newest person on the floor?
• 23:25
  If it's a no request, yes.
• 23:27
  So I think the way we do it, at least the way we did it when I was involved is, yeah, so our call center who takes the appointment, book it from right to left.
• 23:42
  And so usually, you know, so we might have 10 people, hairdressers at a salon, or we might have 30, depending how big the salon is.
• 23:51
  And in the book, how we schedule,
• 23:54
  is right to left.
• 23:55
  So the first couple slots are the people that just got promoted onto the floor, right or wrong.
• 24:02
  And then after that, it's based on their retention rate.
• 24:06
  So if you have the highest retention rate, you're going to be furthest to the right.
• 24:10
  If you have the lowest retention rate, you're going to be furthest to the left.
• 24:14
  And so we call furthest to the left kind of Siberia because
• 24:18
  for you to get a no request, have to, 10, 15 other service providers either have to be booked or not working for you to get a no request.
• 24:31
  So that makes everyone obsessed with their retention rate because you don't want to be farthest to left.
• 24:37
  You're going to starve.
• 24:38
  The only way you get new clients or any clients is with requests.
• 24:45
  If someone calls and asks for you, get it.
• 24:48
  But if someone's a no request and your father's still left, have to be, you know, everyone else has to be booked or unavailable for you to get one.
• 24:56
  Well, it makes sense.
• 24:57
  You want your best providers seeing your new...
• 25:02
  Yeah.
• 25:04
  But it's also top of mind awareness.
• 25:06
  It gets people obsessed with their retention rate, which has earned growth.
• 25:11
  We definitely have to do a podcast on that.
• 25:14
  Yes, and certainty business.
• 25:16
  I want to talk about certainty business.
• 25:18
  All right.
• 25:19
  That'll be a future episode listeners.
• 25:21
  But let's tie this one up for leaders who are listening who feel constant pricing pressure.
• 25:26
  What's the one mindset shift that they need to make today?
• 25:30
  I just think, you know, do due diligence and find out why.
• 25:35
  And if there's people, if you're losing customers, unretained customers, no referrals, you know, it might not be price.
• 25:42
  It might be the experience.
• 25:43
  And if there's people more expensive than you doing what you do and getting it, well, then it's not price.
• 25:51
  Right?
• 25:51
  It's the experience.
• 25:52
  It's everything that comes with it and experiences in so many things, which we've talked about, ease of doing business, expertise, friendly, know, follow up, all those things.
• 26:02
  It's just not the one thing of, you know, is this lamp or haircut worth it?
• 26:08
  There's so many things that come with that experience.
• 26:12
  All All right.
• 26:14
  You heard it from the chief revolution officer himself.
• 26:18
  Quit discounting.
• 26:20
  Yeah, this kind is a race to the bottom.
• 26:23
  Thank you.
• 26:24
  Thanks listeners and we'll see you next time.