One Customer At A Time
Many of you have dreams of one day quitting your job and supporting yourself with your software, book, or other sales. If you’re reading this you are probably bright, creative, and ambitious, and you probably have a particular disease that’s endemic among online entrepreneurs. It’s a disease that holds you back from your real potential. It’s a disease that has a simple cure (although maybe not an easy one).
You think analytics are your customers. You think “sales” are an abstract thing you get from traffic.
You think clicks are people, but they aren’t. Every person who buys whatever you sell has a family, they have sheets that are a particular color, and a favorite flavor of ice cream.
They are individuals, and if you’re already to the point of having made sales, I bet you don’t know squat about any of them.
Here’s the power of knowing individuals:
Men’s Clothing in the 80s
My grandfather Don Klages owned a men’s clothing store in downtown Palo Alto called Wiedeman’s for many years*. In the 1980s he worked with a software company to build what may have been the first retail customer relationship management software, complete with a green text interface, and running on UNIX.
He was very clever to have been forward looking enough to have it built, but that’s not the point of this story.
The reason he built the software was to keep track of his customers’ details. Why hello Mr. Smith, you’re looking trim. It’s been, what? 7 months since I saw you? How is that blazer you got last time holding up? And how is your wife Delores?
He had a personalized relationship with thousands of customers. He knew their names, their spouse’s names, where their kids go to college, not to mention their clothing preferences and buying history. He knew all that even before he had the software, but the software allowed him to keep track of it even as his customer base grew.
The Wine Sale
Here’s an example of what becomes possible if you’re paying attention to your customers at that level of detail.
In 1988, when George H.W. Bush was inaugurated, he ordered a particular California chardonnay for the ceremony. Without missing a beat, my grandfather called the winery and ordered 50 cases of the same wine. (It would’ve been around $15 a bottle, but he bartered with clothing. That’s a lesson in itself.)
He then wrote a letter to his top 600 customers, which he could easily list using his software. The letter said thanks for being one of my best customers. As a gift, he had a free bottle of the fine chardonnay that Bush had ordered for his inauguration. All they had to do was come down to the store and claim it.
About 350 of those 600 customers did exactly that. They came, and they spent an average of $600 on new clothes when they showed up. For those of you keeping score so far, he gave away a little over $5,000 worth of wine, which he acquired for about $2,000 worth of clothing. He made about $210,000 on that promotion alone (nearly $400,000 in today’s dollars).
But the story isn’t over. Remember, my grandfather was keeping track.
The next year, he sent a letter out to those 350 customers who came. In it he thanked them for coming the previous year, and said he hoped they enjoyed the Chardonnay. And for being such great customers, he had bought them a bottle of Sauvignon blanc this year.
To the 250 that hadn’t come to claim their bottle the previous year, he also wrote a letter. It said that last year he offered them a bottle of wine for being such good customers, but he noticed they hadn’t come to claim it. He said he could only assume that they hadn’t come because they weren’t partial to Chardonnay, so this year he had bought them Sauvignon blanc instead, and to come pick up their free bottle at the store.
That round of letters got an even bigger response. The people who showed up the previous year were happy to show up again, and those who had not were shocked and delighted to know that their presence was missed, and they wondered how the hell he knew from a year ago that they hadn’t shown up.
He grossed over $300,000 for that promotion, which is well over half a million dollars in 2010 money, and he did it by spending a tiny fraction of that amount, and by paying attention to his individual customers.
One Customer At A Time
A couple hundred customers would allow most of you to quit your job. If you’re selling a subscription to your software for $15 a month, and you have bare minimum expenses of $3,000, then you only need 200 customers.
At that level, you don’t need to figure out how to “scale” or what kinds of promotions will bring massive traffic. What you need is to find people who are good fits for your offering, call them on the phone and sell it to them.
Instead of fretting over whether to spend money on Adwords, why don’t you spend a couple hours a day talking to people? If you get three people to sign up every week day, then you’ll go from 0 to 200 customers in about three months without any kind of additional promotion.
You sit behind a computer all day, and that’s fine for when you’re being creative, but if you want to get traction in your business, the best way to do it is to stand up, walk out of the room, and go talk to people. Individual people, who have families, hobbies, and bad hair days.
Don’t treat customers like analytics. They are people–talk to them, one at a time.
- For those of you in the Silicon Valley, he now rents the building to the Restoration Hardware on University.
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