The 4-Hour Workweek, Expanded and Update - Timothy Ferriss [86]
Some of these policies hint at what is perhaps the biggest time-saver of all: customer filtering.
Not All Customers Are Created Equal
Once you reach Phase III and have some cash flow, it’s time to re-evaluate your customers and thin the herd. There are good and bad versions of all things: good food, bad food; good movies, bad movies; good sex, bad sex; and, yes, good customers and bad customers.
Decide now to do business with the former and avoid the latter. I recommend looking at the customer as an equal trading partner and not as an infallible blessing of a human being to be pleased at all costs. If you offer an excellent product at an acceptable price, it is an equal trade and not a begging session between subordinate (you) and superior (customer). Be professional but never kowtow to unreasonable people.
Instead of dealing with problem customers, I recommend you prevent them from ordering in the first place.
I know dozens of NR who don’t accept Western Union or checks as payment. Some would respond to this with, “You’re giving up 10–15% of your sales!” The NR, in turn, would say, “I am, but I’m also avoiding the 10–15% of the customers who create 40% of the expenses and eat 40% of my time.” It’s classic 80/20.
Those who spend the least and ask for the most before ordering will do the same after the sale. Cutting them out is both a good lifestyle decision and a good financial decision. Low-profit and high-maintenance customers like to call operators and spend up to 30 minutes on the phone asking questions that are unimportant or answered online, costing—in my case—$24.90 (30 x $0.83) per 30-minute incident, eliminating the minuscule profit they contribute in the first place.
Those who spend the most complain the least. In addition to our premium $50–200 pricing, here are a few additional policies that attract the high-profit and low-maintenance customers we want:
Do not accept payment via Western Union, checks, or money order.
Raise wholesale minimums to 12–100 units and require a tax ID number to qualify resellers who are real businesspeople and not time-intensive novices. Don’t run a personal business school.
Refer all potential resellers to an online order form that must be printed, filled out, and faxed in. Never negotiate pricing or approve lower pricing for higher-volume orders. Cite “company policy” due to having had problems in the past.
Offer low-priced products (à la MRI’s NO2 book) instead of free products to capture contact information for follow-up sales. Offering something for free is the best way to attract time-eaters and spend money on those unwilling to return the favor.
Offer a lose-win guarantee (see boxed text) instead of free trials.
Do not accept orders from common mail fraud countries such as Nigeria.
Make your customer base an exclusive club, and treat the members well once they’ve been accepted.
The Lose-Win Guarantee—How to Sell Anything to Anyone
If you want a guarantee, buy a toaster.
—CLINT EASTWOOD
The 30-day money-back guarantee is dead. It just doesn’t have the pizzazz it once did. If a product doesn’t work, I’ve been lied to and will have to spend an afternoon at the post office to return it. This costs me more than just the price I paid for the product, both in time and actual postage. Risk elimination just isn’t enough.
This is where we enter the neglected realm of lose-win guarantees and risk reversal. The NR use what most consider an afterthought—the guarantee—as a cornerstone sales tool.
The NR aim to make it profitable for the customer even if the product fails. Lose-win guarantees not only remove risk for the consumer but put the company at financial risk.
Here are a few examples of putting your money where your mouth is.
Delivered in 30 minutes or less or it’s free!
(Domino’s Pizza built its business on this guarantee.)
We’re so confident