Monday, April 25, 2016

Responding to Criticism

Let’s face it, opinions are like... well, let’s not go there. You get the picture--everybody has one, especially when you have a business that deals with the public. From the outside looking in, everything has a simple solution. Sometimes it’s a matter of putting better systems in place, which of course, I can help you with. Sometimes it’s a matter of putting better people in place, which I can also help you with. But sometimes, our best intentions backfire, and you have to respond to real criticism. In my experience, here are the best moves for the best outcomes.

Online reviews
Not all bad reviews are worth getting upset over, but when you see a trend, you best pay attention. Whether it’s Yelp, Google, or Facebook, people want to tell the world about their everyday experiences, and you’re in the line of fire. It’s basically a numbers game, and there are ways to generate more positive reviews that will push the bad ones to the bottom and level out the score (yep, I can help you with that, too). But in the meantime, how do you respond? Human nature is to defend, to be right, but consider this: when you win an argument with a customer, you lose. So, how do you save face without losing a customer?

Suck it up! Remember, their perspective is valid, unless it’s vengeful retaliation, i.e., disgruntled employee. Now, if it’s a faceless one-review wonder on Yelp, remember that it will get filtered out by their algorithm. On the other hand, if you got a bad review from the “Elite Member” with 436 friends and a couple hundred reviews, a tactful response is in order.

First, thank them for their feedback, and for bringing the issue to your attention. Whether they are just looking for a fight, or they’re legitimately upset, this will diffuse their anger and make them realize they are dealing with a reasonable human being. If this is really a one-off incident, assure them that this has never happened, that you appreciate the opportunity to address the issue within your operation, and also with them as (hopefully) a repeat customer. Offer to welcome them back with a gift card of equal or greater value to the purchase with which they were displeased. When they return, they are likely to amend their review. Voila.

In store complaints

In store complaints should be handled swiftly and kindly. I once fired someone for arguing with a customer who insisted what they got was not what they ordered. For the love of Pete, apologize and give them what they (think they) ordered! Better yet, offer them a free refill or dessert for the mix-up. Again, this is an opportunity! Going above and beyond will turn that customer into a walking advertisement for your business, rather than just a mildly-pleased, perhaps-still-annoyed, maybe-might-come-back-because-it’s-convenient, customer. It sometimes helps to put yourself in their shoes. What treatment would you prefer? What would get you to go back?

The savior

We’ve all had the unsolicited recommendations--from friends, customers, and strangers alike. Sometimes they’re totally awesome. Most of the time, there’s a practical reason why you haven’t “done it that way” before. Regardless, be polite. Say thank you, have a chat, and offer them a free drink. If you argue, or prove them wrong, what exactly do you get out of that? Let them be your savior (and tell all their friends about it).

The take away

Most people who are dissatisfied will just never come back. Start looking at complaints as an opportunity to correct a part of your operation—and whatever you do, don’t ignore them! It’s also an opportunity to generate a loyal customer. If someone does you the favor of voicing a complaint, whether in person or online, now you know s/he isn’t shy. So, make it right and you’ll not only have a loyal customer, you’ll have a brand ambassador.

Friday, April 22, 2016

Top 5 Things I Wish I Would Have Done Differently

1. Developed a five and ten year plan. Two years into opening our first location, we decided it was time to grow and we opened our second location, with minimal expense. (It was also with minimal research and it closed five years later, never having been worth the hassle.)  Two years later, we decided to purchase the building where our first location was situated, and borrowed a substantial amount of money to add kitchen space, and another 30 seats. (More on the building purchase decision later.) For now, the point I’m trying to make is that the decision to expand did not take into consideration the amount of time it would take to pay off the debt and how that would affect our lives outside of the business. We probably would have been better off keeping the space as it was, with only three more years of debt payments. Instead, a majority of the profit now went to servicing debt, and would for another 10 years. How long do you want to do this for, and at what expense? What are your alternatives? Think about it. Hard. And write a plan! That process will force you to be thoughtful about your growth.

2. Trusted my gut. Oh, and all of my friends and neighbors who warned me about getting into business with a notoriously unscrupulous character. When the building where our first shop was located went up for sale, I knew the rent would sky rocket. I convinced myself that it was better to have a small piece of the pie with someone I didn’t trust, than no pie at all. Despite having a partnership agreement in place, I lost my investment. Remember, any agreement is only as good as the amount of money you have to enforce it, and he could outspend me ten-fold. Long, long story short: the lawsuits are settled and I learned my outrageously expensive lesson--I won’t be doing business with "notoriety" anymore, and you shouldn’t either.

3. Hired a lawyer to draft a more functional partnership agreement. When I decided to start Mugshots, I was hell bent on a 50/50 ownership with my partner; we were in this together! Despite working with a lawyer to get the business entity set up, we didn’t get any advice on the implications of a 50/50 partnership when it came time to make big decisions. The irony here is that the lawyer was pro-bono through a non-profit (you get what you pay for), and his practice area was bankruptcy. When no one has the majority ownership and/or roles and decision making aren’t clearly defined in the agreement, you end up in a stalemate and you spend money on lawyers instead of on your business. Pony up the money in the start-up phase for a contract lawyer to draft your agreement; address the ownership structure and decision making before you end up in a stalemate. You’ll save a lot of time, money, and aggravation in the long run.

4. Financed through equity rather than bank loans. When you raise money, you have a built in board of advisors who are vested in the business. If you recruit the right investors, you have people with business experience who share your vision. They can help you navigate through the growth process, and help you make tough decisions. The bank generally only calls if you miss a payment. Not only that, when things go south or you’ve decided this isn’t what you want to do anymore, your investors will be much more flexible. Walking away with a bank loan? That personal guarantee makes sure you’re on the hook 100%. Check out this article on the pros and cons of both: http://www.nfib.com/content/resources/money/ital-50036/

5. Hired a consultant. It took nearly two years to get our first location open:  finding space, negotiating a lease, financing, the construction phase, navigating Licenses & Inspections, and the Health Department. I’m smart--I could figure all of this out! And I did. But it took nearly two years. Based on the fact that we grossed nearly $600k in the first year, it probably would have been worth hiring the experts to get open sooner. And I’m not just saying this because I want to sell you my expertise. I absolutely do. But come on! This isn’t rocket science. Make a relatively small investment in a consultant, and start making money sooner. It’s a no brainer.