Hug Your Customers

Note: This was originally posted on the old site on June 30, 2003.

I just read a great book over the weekend.  The book is called Hug Your Customers by Jack Mitchell. Mitchell is the CEO of a high end clothing retailer in Connecticut. They have only two stores, but they do a stunning amount of business out of those stores (65 million a year). The reason they sell so much is not because of the clothes (which are all brands you buy elsewhere, and probably at a lower price) but their service. They go to extraordinary lengths to help their customers. In this book Mitchell lays out all the things his company does to make customers keep coming back.

Clothing retailing is a face to face business, so much of what Mitchell does relies on being actually in the physical presence of the customer. Nonetheless, there is a lot here that can be applied to an online business where you never even see the customer. Here are some of the things Mitchell discusses in his book.

The number one principle of his company is that everyone in the company comes in contact with the customers. Everyone sells on the floor at least sometime. Even the CEO. This is really important and I think an online business should be the same way. Everybody in the company should answer emails from customers. Certainly it is that way here (of course there are only two of us). It's only by that constant contact with the customer that you know what customers are thinking and what they want. Without that daily contact with the customer, it's easy to lose sight of what the company is about.

As a related point, Mitchell believes that you should know who your top customers are. His company knows exactly who spends the most money in their stores, and he knows their names and even knows a lot about them (I would kill for Mitchell's customer software system where he tracks all this stuff, I really want software like that). He knows who his top 100 customers are. Now I can't really say I know who my top 100 customers are by sales volume, because we only have a very few products, so once someone has bought them all, that is it (which is, of course, one of the problems with my business - too few products). But I do know a large group of what I'd call my "most active" customers - that is, the customers who email me often, show up on the top scores list or post on the discussion forum regularly. I don't know if there are a hundred of them that I could name, but there are a lot of them in any case. Although these people represent a small part of my sales, they represent a large part of the community of players of my games. They are the core group that I think about when I'm thinking about what kinds of new games would appeal to my customers.

Mitchell keeps track of every purchase every customer makes. The salesperson can call that up when you come into the store and determine what you might need to buy. It's amazing. Have I mentioned that I really want his computer system? He's got a database of information about over 115,000 customers. That 65 million divided by 115,000 gives you 565 dollars revenue per customer per year. Yes, there are definitely advantages to a business where you have a high average sale. I get only $25 per sale ($50 in the cases when a customer buys both major games at once). And this information is not limited to just what the customers buy. They try to find out everything about a person (by just asking in conversation). If they find out the customers dog's name, they put that down in the database too.

All this just makes me think about my dream customer software package. This software would integrate our customer orders database and our email databases. Not only could you see all the orders each customer has made, but you could see all their emails as well. It would put them together in the same database. And if someone emailed us before they ordered, it would be able to go back and pull those emails too and put them in with the order. That would be just fantastic, you could see every contact with the customer, orders and emails combined. This kind of database would just do wonders for us, since you could see the entire history of our relationship with the customer all in one place.

Mitchell also emphasizes knowing the score. By that he means that you need to know how much sales you are getting today, how you are doing for the month and year so far, and how this compares to previous years. This is something I started doing very early on, and I'm fanatic about it. I like to know how we are doing all the time. I like to know how many sales we've had in the last 24 hours, so I know how the business is doing. And I like to know it many, many, many times per day. One of the great things about RegNow, our order processor, is that since at least 1998 they've had a running 24 hours sales total on the main sales report page. So I can call up our orders anytime and see what we've sold in the last 24 hours (at least via RegNow, which is a large portion of our sales). The funny thing is that I get the feeling that this is not a big thing for other people, because several times over the years RegNow has tried to take this off their order report. One time recently they did it on a Friday evening and I was without my sales total for a whole weekend. It just drove me crazy all weekend long. I didn't know how we were doing. I yelled and screamed loud enough that they got it back up there quickly. But to me, this is one of the best things about their system, and unbelievably I've never seen another payment processor in the shareware business that does this. You gotta know the score.

Anyway, this book has given me food for thought for a long time.  The book has a web site at hugyourcustomers.com.

Comments

[Craig]

Actually, such a database doesn't seem like it would be too hard. I'm coming from a history of making such apps, so I'm not talking out of my butt.

It would surprise me to find that there aren't a bunch of options out there that do what you're looking for.

[cliffski]

So its not just me obsessed with monitering sales then. I really like the monitor feature under Plimus, you can see who has looked at the order page, when, how often, and the time delay between a download, an order page view and the completed payment.