Why stepping over a dollar to pick up a dime is not a good idea for small businesses

It happened again.  A customer is in a recovery situation with their on-site business dependent physical server.  It has been down for 2+ days already and 15 staff members are unable to access network resources.  I am on the phone and remoted into a ‘recovered’ version of the server in which someone has rebuilt (reinstalled OS and is downloading files from cloud backup) and drive management, permissions, and configuration is all jacked up.  Oh did I mention, they also do not have AD (active directory).  My first question is, “Do you have image backup?”  “What is that?” the customer replies.

Scenario #2, It is obvious that folks have not dealt with a CIO type of consulting and not used to vCIO services, and after much discussion, because I want this customer, a friend of the owner, to subscribe to this service.  I complete an overhaul in regards to documentation and discover a bunch of things out of wack.  More importantly, their firewall is out warranty, end-of-life and double nat’d, their server is more than 3 years old, and they are “concerned” with security.   Instead, they elected to renew the last warranty on their end-of-life firewall ($49), turning down the quote that would remove all the devices (WAP, 2-FW) and streamline to one, and the server warranty extension!

Scenario #3, One of my techs ask after the new ‘rolling stock/inventory’ standards are put in place:  “are we doing Meraki hardware even for 1-5 employee operations?”  He is asking because I turned down his request to add consumer/Office Depot based routers and firewalls to the list.  I respond,  “This was also thoroughly discussed with XXX and the actual ticket/sales figures reflect otherwise (how often a consumer router was purchased and put into a small business environment recently).   We are going to be sticking with Meraki unless it is an emergency and even then, it is temporary, while they wait for their business class FW/router.   I have sold Meraki’s to 5 and under shops when I was at XXX.  My wife’s office of 3 people has a Meraki MX60W with a 3-year license.  Stewardship for any business customers at any size is not stepping over a dollar to pick up a dime.  Business can write off technology expenses.  Buying the cheapest and easiest consumer level router at OfficeMax is not what is best for the long term for a customer.  Kind of like not having image backup or AD when you have a server.  It may save you a couple $ now, but later it is going to cost you.  If customers cannot afford business class equipment, then maybe they are not a good fit.  We want to work with people who trust their consultants.  Let me know if you have any questions.”Image result for penny pincher

So, today’s article is about determining what type of customers you want.  I am suggesting that a customer who ‘steps over a dollar to save a dime” is NOT the customer you want.  Let me clarify what I mean.

  1. I am not selling people things they do not need.
  2. I do not have product hills to die on, so-to-speak, other than a) do the provide top-notch customer service, b) what is the business continuity history of said product or service in the SMB/Enterprise environment?
  3. I don’t get a commission on my recommendations.
  4. Business is about profit, but let’s face it, there is no money in hardware these days.  Everyone can surf the web and comparison shop.  It is probably why you are in this predicament in the first place.
  5. I am not going to debate or beg you about products and services I recommend.
  6. If the customer does have sticker shock, and because of your product/offering conviction know this is the right thing for them, then spread it out across a few months in a payment plan!  It is amazing to me how many customers will take a recommendation, once I offer it to them with a payment plan.  (i.e., if your setup fee is $1500, then spread it across 3 months)

Another thing I have noticed with some customer is how much time is invested in the going back-and-forth with quotes.

First, it is sticker shock, then they want me to explain why they need it, then they try to remove things from the quote, and finally crickets…   What happened?  Did I mark it up too much – no, our standard markup is the SBA.gov recommended 30%, nothing more.  When I explain why they need it, I gently remind them that this is what they asked me for and that I invested time in reviewing their site, documentation, and ticket history before I put the quote together.  Removing things, I get, as some things can be optional.  But requesting to remove the hardware warranty on your server, the BACKBONE of your business is stupid.

Here is what has happened I am convinced.

a.  The customer has been allowed to think of their technology as liabilities versus assets.  Meaning, they want to suck the life out of their investment, convinced that it should operate, function, and perform for the next 10+ years without maintenance, upgrades, or coverage.  Technology investments are assets.  They need to be maintained, upgraded, and service agreements attached to them, especially if your business is dependent upon them.

I like to share with these folks a funny analogy of what they are doing with my recommendation/quote and compare it to their/my car.  I will say something like, “Okay a Toyota Camry is 20K+, it is the consumer reports for many years running best investment, mileage, keeping it markets value etc.  It is not the most expensive car on the market, and there are better ones, but for heavy duty driving, minimal maintenance, and some budgeting, this car can go 250K+ miles.  Now, if I did what you are doing to my quote, to my Camry, this is what it looks like.  If I remove the insurance because it is optional, there are Image result for stepping over a dollar to pick up a dimeconsequences to that even though I am the ‘best driver in the world’ (I am not really but they get the point).  Or when Jeffy the 16-yr old backs out of Walmart, straight into my car while I am in it, if I don’t have insurance, the following will happen.  1) I will be fined for not insuring my car  2) because I don’t have insurance, my car is now going to need repairs to include cosmetic.  If you have never paid for cosmetic repairs — trust me, you are glad you have insurance.  3) If the damage is so bad, I might not even be able to drive it and it may be totaled.  I am now losing time trying to find new transportation etc.  Or maybe we cut the 4th tire, hey we don’t need that right?  I mean the car can drive okay with only 3 tires right.  {They usually laugh at this point}.  Or how about I remove the front windshield mirror, I mean, I already have two other mirrors on the sides and I can always turn around and look.  After cutting all the optional items and extended service agreements off the price, I tell the sales guy, to resend me a quote with the updates.  He takes it to his supervisor and because he is new, is reprimanded that the quote he is providing is 1) not legal or safe, 2) cars cannot be purchased/driven off lots without insurance, 3) allowing the customer to dictate what is best defeats the purpose of having a professionally trained representative who is up on all the laws, requirements, and is authorized to give discounts where applicable, but not compromise on non-negotiables.  Everyone usually agrees with me then but…

b.  Previous history has not been documented with this customer.  The actual kpi or ratio to time invested to the customer taking the recommendations are not solid numbers, other than bad memories that have been tainted by sleep since the last time.   Because your ticket history, documentation, and processes are not in place, you rely on your depraved memory against the PNL (profit and loss) statement for this month.  You react versus proact.

I’ve read it over and over in management books, relationship books, etc.  When you never document or measure processes, they never change.  If you don’t know how many of your customers are wasting your time with, not taking your advice, how many bills you must meticulous go through every billing period because they want to complain about these charges, how many hours you have actually refunded, in trying to keep this customer, then you are contributing to the definition of insanity.  We all know the definition, continuing to do what you have always done and expecting different results.  I keep meticulous records of my customer’s non-billable time against their billable time.  I do not trust the ‘month-to-month’ profitability that my system spits out because before me, all the variables above were not tracked and only the positive were.  The reality is looking at the negatives too.

c.  Because you reacted in the past by changing prices, adjusting quotes to accommodate the liability mentality, your quality of product and service offerings suffer.  When you do not insist upon business class devices, for instance, you wonder why your RMM (remote monitoring and management) tool never catches the alerts.  The reason is that the RMM companies do not invest time in accommodating the OfficeMax or Staples network infrastructure products because they know they are not truly a business class and were never designed to be long-term solutions.  Further, the time and effort to provide support for them before they become end-of-life in many cases are a loss for most of these vendors.  Here is a good plumb line with those products.  If the only thing being offered is a 30-day money back and no service agreement, it should tell you something.

Because you have been losing money (by not documenting your time invested in the quote they never took, adjusting your profit margin, allowing them to pick and choose optional items), there is no cash to reinvest back into your service offerings.  Therefore, over time you too, become like your customers and look for the cheapest, go against the recommendations of best practices, never educate your team with training or hold them accountable for the investment and never respond to reputable vendors who are trying to do business with you.

Also, as a result, you have techs then who think that the easiest way to handle things is to find the ‘cheapest’ one online, that does minimally what you need it to do, don’t quote warranties, and think everything is up for debate when a new authority comes on board who does NOT think like this.  Because they are not being trained with the business class products and solutions, they are not being educated on industry standards or best practices.  Your techs need to be trained and understand these big vendors.  These vendors are big not because they are profitable, but also because they;

  1. Invest in their products for the long haul.
  2. Invest in their team/vendors because an educated partner is a natural referral agent.
  3. When training is made available for free or minimal cost, the industry benefits.
  4. When someone does not take their advice or recommendation, they move on.  Maybe one or two more back and forths.  Maybe a comparison sheet, but they are not pushy, begging, or investing a lot of time in these types of people.  Why?
  5. They know they have a good product offering.  They know that some people can never be pleased and investing exuberant amounts of time in a $1000 quote is a waste of time.  They also know what works and what does not.  While they are debating with you, they are missing out on someone who trusts them and is going to take their advice.Image result for Great Customer Service Funny

So, maybe it’s time to rethink some of the long-standing screaming baby birds that you call customers.  You know the one that does not subscribe to managed services, take your quote on a business class firewall, or wants to get online and compare PC Magazine tips and tricks against your 20+ years of experience.

Go find some customers that understand that technology is an asset/investment.  Document every touch with your customers.  I read it a while back, each year you should be firing the bottom 10% of your customer base (these are the ones that are not profitable, eating up a lot of billable time, do not budget for your recommendations, scream when they go down and expect priority service).  If it is not being measured or tracked, it is not happening.  Keep your techs standardized with solid business-class tools, products, and services.  Give them time to take training, hold them accountable for it, and not everything is up for debate.  You are the business owner/executive/veteran IT consult who has years of wisdom from experiences just like these.  Don’t short change yourself or your customers and invest back in the IT industry with best practices and methods as you know you should.  I love small businesses but not small-minded mentalities.