I heard a story from a friend the other day that I've seen played out on the Internet dozens of times. A blogger who writes about restaurants wrote a post that was critical of the restaurant.

The restaurant owner's lawyer sent a cease and desist letter, claiming libel. In this case the blogger just folded and took down the post, but put up a copy of the lawyer letter with the offending lines redacted.

So the restaurant gets an article in the SERPs below the fold that indicates somebody was really unhappy, but they don't know why. That would be enough to keep me away...

Follow the Rules of Business

The restaurant owner, in this case, completely blew it. They violated several important rules of business:

• Never Take Business Advice From Your Lawyer. Your lawyer knows absolutely nothing about how to run a business. They went to law school and work in a law firm. That's about as far away from the business world as you can get. If you need advice on how to overcharge clients for working more hours than are in a day, then perhaps your lawyer is where to go. But for a PR situation, a lawyer is exactly the wrong person to call. The lawyer doesn't get to bill your hundreds of hours if you decide to just ignore something. Your lawyer wants you to outspend the other side with a big lawsuit. In the end, the only people that ever come out ahead in these situations are the lawyers. If you're fortunate enough to find a great lawyer like we have that understands the needs of a business, then you're fortunate. But most businesses are not, and they tend to defer to them.
• Make Love Not War. An angry customer is an opportunity, not a call to war. Some of your most fiercely loyal customers will be those people that started out with a complaint that you made right. Yes, there are some customers that are complete jerks that you just can't make happy, but you should at least give every customer a few chances.
• It Never Pays to Threaten Someone with a Megaphone. In this case the blogger just had a small following. But the lawyer didn't know that. It could have just as easily been a blogger with 40K+ subscribers. That simple cease and desist letter could have been plastered everywhere across the internet. As it is, the blog post is now below the fold when you Google for the restaurant's name. But if they had gotten someone who knew a little about SEO angry at them they could have ended up with a negative blog post outranking their city search listing (they don't have a site of their own).

A Better and Less Expensive Outcome

So this restaurant owner, who probably doesn't understand anything about Web 2.0 or that whole intarweb thing, probably spent $300 to have a big name law firm bully a blogger into taking down a negative post. Worse yet, the lawyer probably found the post by "policing their trademark". That's when you pay your lawyer $300/hour to Google your company name and send nastygrams to anyone that dares talk about you in a negative light. My guess is they lost several hundred customers because this guy has a pretty good local following.

Here's how it could have been done differently in a Web 2.0 approach. Instead of launching the sharks at the blogger, the restaurant owner could have engaged his customer and called or emailed him and said "I see that we didn't live up to your expectations. How about giving us another try, lunch is on us?" At the very least the blogger would now have a real human face to associate with the restaurant rather than an institution. He might very well have written another post along the lines of "Well, this food isn't my cup of tea, but the owners sure are nice people and a lot of people like this restaurant." Or better yet, the blogger might have had some valid criticisms that the restaurant could have addressed. That could easily have turned things around and they might have gotten good PR out of the situation. Instead of alienating several hundred people, they might have gained many new customers.

Whatever he did, using the lawyers wasn't the right move. It would have been much less expensive and effective to go comment on the blog and tell their own side of the story. They probably could have found a few dozen customers that would have done the same thing. If the blogger wouldn't move, the story could have become about how the blogger totally missed the point. Instead of a negative, they could have generated a big buzz for themselves.

Old and Busted or New Hotness

Their way cost them $300 lawyers fees and probably thousands in lost revenue. It's a very 1980s approach to business. It's like having your secretary print out your email so you can read it. The Web 2.0 way would have cost about $10 for the free lunch, and might have gained them several thousand in revenue from new customers.

Is your customer retention strategy Old and Busted or New Hotness? Your choice.

Today's article at Bruce Clay was about avoiding a PR nightmare. He rightly suggests that the easiest way is to be smart and not get into one in the first place, which is easy advice, but then he knocks one out of the park by giving a 1-2 punch to the most human of impulses, retaliation:

1. Refrain from personal attacks. At all costs. There are no exceptions.
2. Refrain from responding to personal attacks. At all costs. There are no exceptions.

Not content to summarize a Dali Lamaesque ("We are not anti-China, we are pro-Tibet" - how clean is that?) truth clearly, he goes on to give you a good physical marker you can use to guide yourself:

As a general rule, if your hands are shaking after you have finished typing out your five page rebuttal to their argument, DO NOT PRESS PUBLISH.

Perfect.

Politics

Not the politics of the personal, which is what the above is all about, but the politics of, er, politics. For example, I was using Brian Schaler's Digg Status tool and got an interesting error message.

I'm not sure if he's kidding about how people complain about Bush on Digg or is encouraging people to complain about Bush on Digg.

It doesn't matter, but the possibility of offending a large number of people is certainly present.

Around here we have the usual mix of big-L and little-l libertarians, democrats, liberals, conservatives, and republicans. I think we even have a communist and an economist. But our ironclad rule is:

1. No politics while you're representing the company

If a client brings up politics we are polite (no matter how much we agree or thing he's crazy) and move right along.

I have an English friend (nu-Labor if you follow that stuff) who finds American's willingness to talk politics at work with customers appalling. I think I agree with him.

At least. Which is a pretty good piece of pocket money. I suspect even Warren Buffet would slow down to pick that up.

I attribute this to SEO because even thought it was a change in business process coupled with good SEO that made it happen it could not have happened without SEO.

Fair warning to people looking for "advanced" techniques - they ain't here. But what I'm going to talk about is a LOT more valuable than a trick that may or may not work with Google next week or next year.

Best Ever YouMoz Article

Let's look at the real money quote that J Kelly Garrett put in his amazingly excellent SEO article at YouMoz. This piece of advice will serve you while you climb up the value chain from a specialist to a trusted business advisor:

I took the pile [of papers, documentation, etc], pushed it aside, and asked him [the business owner] to tell me about himself. This is a common technique of mine, whether it is a small business owner, or the Chairman of the Board for Burlington Northern Railroad.

He wasn't asking to hear about the guy's soccer team, he wanted to get the gestalt around the company. What is important about the environment, goals, challenges, employees, culture, customers, etc, etc, etc.

It's Not About the Technology

Really, it's not. Not even in SEO. I wasn't about the technology in OO programming. It wasn't about the technology in robotics. It wasn't about the technology during the dang moon shots either.

It's about how the technology serves the business and makes it more successful. Sometimes 'success' means one or more of:

• Improved profit
• Increased revenue
• Decreased risk
• Stronger resilience
• Faster new product introduction
• and on and on...

But if the technology isn't in service to the goals of the business then it will eventually fail.

The $2M Piece of Advice

I know exactly when I finally understood this. No kidding.

I left one job as a consultant making $55/hour doing NeXTStep programming (hey, that was LOT of money back then) and got another one making $75/hour. The had two slots to fill - lead programmer ($50/hour) and technology business advocate ($75/hour).

For some reason, don't know why, during the interview I was homing in on the business objectives of the billing audit system they were building. I kept asking about change management (people, not source!), about deployment, about disruption, etc, etc.

Next thing I knew I was walking about into the freezing flipping cold in Chicago holding onto a 50% raise. Bubba, you don't get too many of those.

If you work that out - 48 weeks a year, 40 hours a week, 40 work years in a lifetime - you find out that that change in focus gets you a $1,920,000 raise.

Actually, it's even more than that because you keep the advantage while you march up the food chain.

Back to The SEO Example

What really struck me about Garrett's example was that the business took the fairly traditional and predictable approach of getting some SEO guys to graft web and SEO onto a traditional "ring and pitch" business.

The SEO guys put together a campaign that generates 2,500 leads and it kills the guy because:

• ROI goes from "signup" to 2 years.
  
• "He is looking at ROIs that should apply to heavy machinery and commercial aircraft."
• Growth rate drops from 19% to 3% because of process issues:
• "growth rate has plummeted from 19% per year to 3% per year because he is in the office answering the phone all the time with close rates of 12% [down from 97%]"
  

Actually, there were a lot of issues, but those are the two killers. Look at what happened - his profits got pushed out a year from acquisition AND instead of looking at an yearly "takehome" increase of $67,032 he was seeing an increase of $10,584. That is an opportunity cost of over $55K!

You can go broke quickly making money that way.

Do the math

I'm just going to quote Garrett's point in toto because it sums up the whole problem so neatly:

SEO Firm Declares “Success.” The PPC campaign is bringing in over 2500 hits per month. Closing the sales is not really their job. They just need to work with the business owner to further tweak everything to bring in more hits. “Obviously” the copywriting needs work to further capture the ones that do get there, or there is something wrong with the business, or whatever...but we are getting people to the site. Just wait till the site starts to rank higher with the search engines!

Remember, the owner is now going broke pretty quickly, has sunk a fair bit of capital into the new venture AND is probably pretty much apoplectic. In fact, if he's like any dial-and-smile salesguy I know, physical and financial threats are probably in the offing.

What's the Solution?

I won't repeat the meat of the article but basically Garrett becomes and advisor and helps the owner re-engineer his business so that he goes back to ROI on close. But most importantly the business growth goes back up to the previous 19% and then all the way up to 28%.

So, back to the math - previous to the first campaign the owner was looking at a yearly "raise" of $67K based on growth. The slap-on-SEO campaign took him down to a $10K raise. The SEO+BPR campaign took him to a $98K yearly raise. Thus the title of this post because the SEO catalyzed a $31,752 additional raise.

I'd like to read a lot more articles like this, and I hope he keeps writing.

I've given Cari.net a hard time about giving almost good customer service and TracFone for looking like they just don't care about their image. So here is an example of an excellent proactive response to a potentially serious problem. We use Redbox (automated DVD vending jukebox) a lot for kid and probably-do-not-want-to-own (ex: I am Legend) films. It's not perfect, and their online rental interface could certainly use a tuneup, but it's a buck a night and that saves me three bucks a movie for new releases, so I will put up with a lot.

However, apparently someone put a credit card skimmer on a machine somewhere so below is their response:

To Our Valued Customers:

A few days ago redbox detected and removed an illegal credit card skimming device at one of our 7,400 locations. At the same time, redbox also discovered evidence of skimming attempts in two other locations. Skimming involves the placement of an illegal device above the credit/debit card reader on a vending machine, ATM, or in this case a redbox. These devices are used to illegally read or store personal credit card information.

Even if your redbox was not targeted, it never hurts to pay a little extra attention and check for any unusual activities or changes at your local redbox. If you suspect your redbox has been tampered with (click this link to see pictures of skimmer devices: http://www.redbox.com/creditcardsecurity/ ) please call 866-REDBOX3, e-mail alerts@redbox.com , or notify the store/restaurant manager of your concerns immediately.

Although there is no evidence currently that these skimming attempts were successful, consumer security is a top priority for redbox. Reviewing transaction records, there is a possibility that up to 150 customers may have been affected. Although only a small percentage of the millions of customers who use redbox each month, redbox has notified the major credit card companies so that they can monitor the situation. The redbox team is also working with local authorities to investigate the incidents and ensure your security.

Skimming is not new (click this link for more details: http://www.uboc.com/ ). It has been attempted numerous times on ATMs, gas station pumps, and now redbox has been targeted. Redbox has been aware of these industry threats and has spent significant time and resources to prepare for them. The 7,400 redbox locations are visited frequently by redbox associates to maintain smooth operations and an optimum customer experience. In this case, a redbox associate found evidence of skimming attempts and initiated the actions in the team's response plan (including this e-mail message).

Redbox greatly values our customer relationships. As a result, redbox is open and direct in our communications about this type of situation. The redbox team also utilizes industry-leading technology to ensure you have a safe shopping experience and aggressively combats attempts by criminals to defraud customers. Please see the questions and answers below for some additional details on skimming and how redbox ensures the safety of your account information.

Sincerely,

Trina Graham-Hodo
Director, Customer Service

Bill Caputo
Director, Security

Ok, so far so good - clear explanation, promise to stay vigilent. And well written too!

And then they go the extra mile and provide you with more information using outside "expert" sources to help you understand the issue.

Additional Questions / Answers:

Q. What is credit card skimming?

A. Skimming is the theft of credit card information used in an otherwise legitimate transaction. It often involves the placement of an illegal device above the credit/debit card reader on a vending machine, ATM, or in this case a redbox. For more info click these links:
http://en.wikipedia.org/wiki/Credit_card_fraud#Skimming
http://www.uboc.com/about/main/0,,2485_703976951,00.html

Q. What does redbox do to protect consumer credit card information?

A. Redbox employs state-of-the-art security technology to ensure the privacy and security of our customers' data before, during, and after their visit to our kiosks. Customer credit card information is encrypted the moment it's swiped through our readers. Redbox uses further layers of encryption to protect all data transfers, too. Kiosks are also actively monitored and regularly inspected both on-site and remotely. Redbox never moves or stores unencrypted customer information. Credit card information can not be accessed by outsiders or even by redbox employees once the card is swiped at a kiosk.

Q. Where can I get more information on credit card skimmers?

A. Please use these links to get more information on credit card skimmers:
http://en.wikipedia.org/wiki/Credit_card_fraud#Skimming
http://www.usatoday.com/tech/news/computersecurity/infotheft/2007-07-31-gift-cards_N.htm
http://www.uboc.com/about/main/0,,2485_703976951,00.html

Q. How do I know if a skimmer is on my redbox?

A. Redbox credit/debit card readers are standardized for all locations. Click this link for pictures of the two approved readers and some examples of skimmer devices: http://www.redbox.com/creditcardsecurity/

Q. Who should I call if I have questions?

If you suspect your credit card information was improperly used, contact your financial institution immediately. If you have specific concerns related to this incident and redbox, please visit http://www.redbox.com/creditcardsecurity/ or call 866-REDBOX3. Please do not reply to this email.

Perfect job, IMHO. Responsive, attentive, explanatory, links to authority sites to inform you, etc. Good job guys.

I was over on Mixed Martial Arts and saw the best google ad in a long time:

It'd take a long time to make a million bucks at $20K/month! 

But, for some reason, it seemed very apropos given that the topic was Entrecard taking $112K on a pre-money valuation of $998K. It wasn't the odd numbers that caught my attention because that sort of thing is always negotiated and you get some strange round-offs.

It was the odd deal.

First, What is Entrecard?

It takes a bit of time to tease out what is going on since there are no fees, etc. It turns out that their business plan is to get footprint (they are on 6,500+ blogs) through cooperative advertising.

Imagine if instead of getting paid when someone clicked an adsense link on your blog you got a google credit to buy a keyword. Also then you'd have to imagine that you could click on the ads on your site and get paid for that too, but put that aside for a moment.

Short Term Revenue

To bring in short term cash:

Once per day we will allow a larger company to drop their card into the inbox across the entire network. This will not appear on your website anywhere, but rather only in your inbox when you log into entrecard. You will also receive 5 bonus credits for visiting these sponsors. We will also allow for sponsorship opportunities for our system emails and all of our RSS feeds.

Longer Term Revenue

Once the network is very very large:

When the [Entrecard] economy is in great shape, we will roll out a credit exchange for bloggers to sell their credits to advertisers, and we will take a commission.

So you can sell advertising slots (and thus traffic) like, well, like you do today for lots of other people.

A Revenue Model

Since Entrecard has 6,500 blogs in their network and can place an ad a day on each of them, that means they can serve up 2.3M ad/days/year. If every ad/day gets 10 views and they get a CPM of a quarter that is $6K/year in revenue across your revenue.

Which is not bad to start off with, because if you can scale up your blog network to fifteen or twenty million you have some serious dough rolling in.

I'm not dissing 6,500 blogs, but there are probably a million or more created every single day and these guys are getting naught point diddly percent of them. I looked through their "featured" page and didn't see any biggies.

I reckon that this model is pretty much stuck to the bottom end of the market. This is not stupid because that is the biggest part of the market, and if you can serve it right and with low costs, then you can get very very big - see WalMart.

And this "traffic for an ad-a-day" model really works in the bottom end of the market where people live on their sitemeter stats and are excited when they break a 100 for a week in a row.

Why do I say low volume blogs only? Because a big traffic blog doesn't want marginal traffic from other blogs, it wants placed ads (at best) or expensive adsense ads (at least).

Also, as a side note, this is why google bought blogger and why it has always amazed me that adsense isn't a default on all blogs. (Yes, I understand why, but they barely push it.)

You can also see that they aren't exactly ramping crazy revenue or traffic - look at the valuation.

Clearly these guys are not getting valuation based on hype. Facebook is losing money hand over fist and is "worth" billions pre-money to Microsoft (who are not stupid).

So they are getting their valuation based on revenue.

As a side note: this is why I would NEVER have released the details of this deal. Your competitors and the general public can find out a lot from a little.

Valuation Information

Ignore the $112K number because it's really three numbers: $34K in three tranches. So the revenue valuation ends up with the end-of-period revenue of the company - or in a year. Differently put, Andrew Te paid $112K for 15% of a company based on it's valuation at the end of a year.

Nice trick, and that tells us that the Entrecard guys really needed that money.

I know $34K can sound like a lot of money, and if you've hooked yourself up into Amazon's Web Services (like I said you shouldn't), then you've got to write that check every month. I know they're there because their model spreadsheet showed hundreds of thousands of bloggers signing on every month and they (thought they) needed the capacity - and I might have done the same.

For example, if your last 12 months revenue was $50K, then the investor will say: "Five times trailing is a pre-money of $250K."

But if the last month was $8K and this month was $10K, then you'd say "At a growth rate of $2K/month over the next 12 months our revenue will be $252K so our five times leading valuation is $1.26M!"

And if you're hot hot hot then you say, "Our growth rate is 25%/month so our yearly revenue will be $670K and our five times leading valuation is $3.3M."

So, yeah, if you're trying to figure out how strong someone is you can kind of look at their valuation and see what they managed to pull off.

The Devil Is In The Details

One of the things you often see with tranche based investment is some really tough conditions for the seller. Looking at the valuation options you can see that the Entrecard guys fell towards the bottom.

How can I say that? Well, remember that they're really only getting $34K, which is what percent of $250K? Right.

If they use the money to keep paying Amazon and to, say, quadruple their blog base, then, hey-ho, they get the next $34K. And so on.

And if they miss their numbers, I am betting that there is some ugly change of control stuff in there.

Conclusion

Look, I'm not saying they shouldn't have taken the money, and I'm not dissing their business plan. I hope to never be in the position of having to take VC money again, and if I do, I hope it's a big big pile for a teeny tiny piece of the pie.

Sigh.  Once again they almost avoid being the rotten apple of my eye.  My not so snarky comments in red.

This evening Cari.net will conduct an emergency maintenance window to provide additional protection and redundancy for the C2 Data Center. [Planned emergency maintence window. Nice!] Every attempt is made to provide advance notice of these windows; however, in the interest of our customers ,it has been decided that postponing these actions may subject our customers to undue risk. [We forgot to send the email, we got the Special Post Mortem Version of D&D.]

At 12:00am this evening (Friday, March 28th) [Ooops, 12:00am Friday was this morning, around 18 hours ago.  You probably mean midnight tonight, or Saturday morning.][Wait, what time zone?], Cari.net Network Service Teams will install an additional BGP router [Oooooh.] within the C2 data center. This router will provide load sharing and additional redundancy to this segment of our network.

The maintenance will begin promptly at midnight and is expected to take approximately 15 minutes. Service impact should be minimal, though customers with equipment or services located in C2 may notice brief periods of latency and intermittent loss of connectivity during this short window as BGP tables are recalculated. [Is my stuff in C2?  How would I know.  Don't you know?  Why don't you tell me?] Senior Networking Team members will be onsite managing this event. [Blame will be allocated immediately!]

This work is being done to augment changes made during the March 21st window and to provide protection against additional large-scale network problems in the future. [We are not sure we fixed it right last time.   Now we're pretty sure it's the fuel injectors and not the distributor.] Customers located in Cari.net’s C5 facility will be unaffected by this maintenance window. [Probably.]

 Golly.  I am starting to think that Dilbert's PHB works there.

We use a TracFone for our "on call" phone. We used to just rotate phone numbers but then you have to keep track of everyone's number and every once in a while someone will blow through their plan because of a support call and that is both annoying and expensive.

TracFone Is A Great Deal

Someone did some research and found that for under $100 we could get a simple phone, 800 minutes of airtime, and a year to use them. And if the phone was lost then we could get a new phone for $20 and swap the airtime for free.

Perfect.

When we signed up (over the internet, a fairly painful process but not requiring any human contact and associated sales pitch!) we signed up for "specials on airtime." I actually like looking at this sort of advertising because you can see that a company can spend a fortune on it and do a poor job.

Missing the Spellchecker

But this is a special case - this is the third email where the TracFone guys have mis-spelled "instantly" as "instanstly." And I've dropped them a note on their "contact us" page to let them know. Never a reply and clearly they haven't changed it.

So maybe they're missing more than a spell checker - maybe they're missing a while customer service department.

Another Useless SERP

Oh, and I checked with the wise and all powerful google - the word "instanstly" only occurs 2,190 times with 406 mentions in the primary index. So I am pretty sure that this blog post will rank first pretty quickly. That is some long tail!

I also looked for "instanstly trac" to see if anyone had written anything about this - 10 results total. Now, I've had some queries that returned nothing, but I can't recall anything returning only 10.

Well, when I wrote about this handy utility to see if your site was really down, little did I know that I'd really need to know it right away:

Hmmm, could it be the hosting company:

Well, yes it is. I am soooo disappointed in cari.net right now - years of great service and then a very very bad week.

So I give them a call and here is my conversation:

Me: Can you give me a status?

The Guy: Not really, all the network guys are downstairs with the vendor reps so there is nobody to ask.

Me: The vendors are there?

The Guy: Yes, the outage started in one part of the network and has been rolling over our data centers for the last few hours.

Me: Great.

The Guy: Don't worry, they're calling in everyone they can find to come help.

Me: Somehow that is not so reassuring.

I have a nice long post about Google, Digg, Page Rank Penalties, and why we all need a diversification strategy away from the top few social networking and bookmarking sites. But I have to go call all our affected customers (not everything is on Cari.Net - I am professionally paranoid) and tell them what is going on.

Apropos of my earlier post on customer service, we just *enjoyed* a brief outage from our generally excellent hosting company, cari.net.  Ok, these things happen, it was for an hour or so, and life moves on.  And then they send us the post-incident report:

Broadcast storm of undetermined origin caused link flapping which in turn caused HSRP and spanning tree failures. The broadcast storm apparently began in C2 data center, disrupting traffic on key corporate vlans as well as hosted servers. The C2 core router's CPU became overloaded and inter-data center links were non-responsive, causing STP recalculations and HSRP failures. Key corporate infrastructure became inaccessible as multiple routers attempted to take over (or relinquish) gateway IPs as spanning tree calculated switching paths appeared and disappeared. The C2 router shares switching infrastructure with the C3 core and the initial state of the data center interconnections had most traffic passing through the C5 data center. The broadcast storm cascaded through both the primary and backup C5 distribution networks, leaving access switches with no egress. The broadcast storm propagated through the shared switching infrastructure of the C3 data center facility. Both prima! ry and redundant customer colocation access routers were affected and the storm propagated to the customer access switches. As a result, many customer access devices (in the colocation cabinets) were left in a non-functioning state and required a reboot to restore services. Cisco engineers are on site to determine the root cause of the issue. In the interim we have taken the steps to deploy additional equipment and to remove certain HSRP and redundant switch paths to reduce the severity of link flapping in 100% resolution is proven.

An excellent example of spending money to give terrible customer service. 

All I can think of is John Cleese saying "My goodness, LINK FLAPPING!" and doing a silly walk.  I'm sure that is not the customer reaction they had in mind.

I've been travelling with my family up in French speaking Canada so, of course, customer service and communication are in the forefront of my mind.  For those of you who look North and see a mirror, let me assure you that in the central right hand part of Canada you'll get a chance to practice your French.  Your 18th century French, but still.  So, to summarize, I got on an airline with a buncha kids AND landed in a country where the primary language and culture is French.

Communication

Fewer than 20% of the people I've needed to deal with have spoken no English, but at least another 40% have had very limited English skills.  How do I know they aren't just 'pretending' to speak only French?  Well, I have approximately 100 words of guide-book French memorized and that is usually enough to drive any Gallic waiter in a haughty two star Paris 'straunt into instant perfect English.  I assume that the same holds true in Canada.

The problem here is that I am dealing with people in the service industry: hotels, full-service gas stations (remember those?), bakeries, etc.

It's as if a high tech company took their customer service and outsourced it to a country where English was a second language.  Like, say, Chennai or Bangalore.

Startling Realization

It's would be pretty easy to get an executive at HP or GE to reconsider offshoring customer service by taking them to old Quebec City, pointing at a shop and telling them to get directions to the Funicular.  Then ask them to imagine my mother trying to figure out how to unjam her inkjet with the help of Prashant in a noisy call center.

But We Do It Too

We recently released the Yahoo Store SEO Analyzer and one of our beta members dropped a mention into the excellent Y!Store Forums.  As you might imagine, a LOT of people showed up to try the tool and some of them had some interesting problems that we just hadn't found in testing.

Instead of having our techie guys hop on and answer the questions in gruesome and excruciating detail, I made them explain and show me what was going on so that I could explain in a useful fashion.

Free Customer Service Isn't

It costs money to have your offshore guy deliver the service, and in the short/medium term it is probably cheaper than having someone in a square state deliver the same service.  And I am sure that some bright spark MBA can come up with a chart showing that in the end the lower customer retention actually drives profits.

But, frankly, baloney.

It's not free to spend $1.25 to not solve a problem for a consumer rather than $4.50 to actually solve it.  And then lose a customer. I could probably prove the opposite in a spreadsheet too (after all, I have gotten VC money) but anyone in the real world knows it is false as can be.

Results Count

My mom will never buy another HP Inkjet printer again, she's so scarred from that call.  Now, she's a bit long in the tooth and all, but I figure that is 8 printers that HP won't sell.  Plus when we went to get her a new laptop there were no HP products in the mix.  Ooops.

Her wireless printer adaptor died (power surge) and she went and got a new one.  (My mom is not a techie, but she can usually follow directions - clearely a trait that skipped a generation!)  Of course it did NOT work out of the box so she had to call customer service  - this time she got someone in Manila.  Same weak English.  But well trained - he carefully walked her through each step, and when he couldn't fix it (her WAP was set to secure) he passed her to somebody in ... Russia.  They quickly determined the fix and walked her through it.  In the end it took 75 minutes, but all offshore time.  She is now a huge fan of ... Cisco.

The Bottom Line

You can temporarily boost the bottom line by not providing "free" customer service, but in the end it'll simply cost you money.  My simple suggestions, all of which require upfront investment but can be executed with the losest cost resources availabe:

• Recognize that free customer service can be a cost or a profit center
• Training is critical
• Documentation is necessary
• Set customer expectations up front, especially for complex products

It's really not rocket science.