Last Updated May 17, 2010 8:26 PM EDT
My family enjoyed running a hands-on small business, but when The Saunders Group got big, we spent more time dealing with tax issues, personnel and real estate, and not as much dealing with products and customers. My father said it's better to sell your business when you want to than when you have to, so we accepted an offer for the business in 1998.
During that sale, I witnessed what can happen when a buyer and seller don't believe in the same set of values. For example, when my father turned over the keys to the new owners of the business, they started calling our suppliers "vendors" and assigning them numbers instead of names. I know this sounds silly, but it took the humanity out of the relationship: It seems to me that a vendor number has no humanity, but a supplier with a name is someone with whom your mutual success is intertwined. The buyers ultimately filed for Chapter 11 bankruptcy in 2003, and many people who'd worked for us lost their jobs.
Putting the customer first
I got out before the company went bankrupt. After a year of working for the new ownership, I was very frustrated and decided to go off on my own. I had done some product design for The Saunders Group, and it had always been my favorite part of the business. I decided a laptop bag company would allow me to continue to exercise that creativity, and so I started Skooba Design in 1999 in my home. We've outgrown two buildings since then. We sell primarily through retailers, mostly online.
The laptop bag market was-and still is-saturated. When you are in an overcrowded business, the only things that can set you apart are your product and the service you provide. I think service can distinguish a company more than its product. There are a lot of companies making laptop bags-some cheaper than ours, some more expensive than ours. So the customer has to feel he wants to do business with you. That means you have to ship quickly, answer the phone, and avoid making people jump though hoops.
The Zappos model
Zappos, the online shoe and clothing shop, has extraordinary customer service: free shipping and free return shipping within 365 days of purchase. It trains its customer service people intensively. By the end of the training period, if the customer service representative thinks he can't live up to expectations, he is paid $1,000 not to accept the job, because Zappos knows a bad employee costs more than that.
If you call Zappos, it takes just moments to get a human being. There is no offsite call center, no rush to get off the phone, no time limit. They charge full price for most of what they sell, which is unheard of online. But even if you want to return a product a year later, they will pay for the return shipping.
I ordered from Zappos a pair of sailing shoes-which I am very picky about-at 8 p.m. on a weeknight. I got them at 9 a.m. the next day. Of course, I was freaking out about how great Zappos is. But I didn't like the way the shoes fit. I called to exchange them, and Zappos emailed me a UPS label for the return and immediately shipped me a new pair. The next day I got my new shoes. This company, which Amazon bought for $847 million in 2009, acts like a mom and pop.
There is no way they didn't lose money with that order of mine. That is why I will never shop anywhere else for shoes, and will tell everyone I know about my experience. And that's why their service will make money for them in the long run.
Bringing the Zappos model to laptop bags
When it comes to hiring, I can tightly control the type of people who work in our environment because our company is small-just eight employees. The number-one thing I rate applicants on is personality and chemistry. You can teach people skills, but you can't teach personality.
All of my employees have a free rein when it comes to helping customers. If they want to give an unhappy customer something for free-a free upgrade to overnight shipping, a complimentary camera strap-I say, do it. It's not going to put us out of business. If making a person happy is going to cost more than $100, the employee needs to run it by me. But up to that amount, they can do whatever it takes to make the customer happy.
For example, a gentleman bought a bag from us a few weeks ago and wrote us with a few complaints: his bag didn't fit his computer as expected and the minimum purchase requirement for one of our coupon codes was slightly more than his purchase.
I wrote him a long letter explaining the sizing system for our bags, as well as the reasoning behind the coupons. But I also told him that if the bag didn't fit we'd happily exchange it for another or refund it entirely and cover all shipping costs. I also told him that if he wanted to keep the bag, we'd give him the discount he missed out on, and we'd refund his shipping charge. He chose to keep the bag and complimented me on our service. A week later, he wrote me a note saying, "I am really trying to help you guys sell some bags!"
We have grown every year. In 2005, in a joint venture with MAC Group, an Elmsford, N.Y.-based company, we took over Tenba, a 30-year-old camera bag brand. In that relationship, we are in charge of the design, product development and warehousing of the bags-though they are not Skooba branded bags-and MAC Group is in charge of customer service, sales and marketing. We have more than 100 employees working in our joint venture.
We don't disclose annual revenues these days, but prior to entering the joint venture five years ago, Skooba's sales had reached about $1.5 million. Since the joint venture, Tenba's revenues have tripled. Skooba's revenues have gone up as well, though not at that rate.
How does our approach to customer service affect our bottom line? I can't give you a scientific answer, but we have a strong track record of turning an angry customer into a supporter. I will do anything it takes to make that happen. After all, no company has ever gone broke taking care of people.
For years, Michael Hess has been making back-of-the-napkin notes for a book he is writing about customer service, which will include real world examples of disastrous customer service and best practices.
--As told to Caitlin Elsaesser