Derek Sivers: Philosophy of Customer Service

Derek Sivers delivers. Rhyming out of the way, Founder of CD Baby, Derek delivers a unique talk for BoS on the Philosophy six great mindsets for customer service, and how it can reap dividends, as it did for him at his own company.

Transcript

CD Baby had lots of well funded competitors but after a few years they were all gone and we kind of dominated our niche of selling independent music. Okay, so CD Baby had 150,000 musicians, 2 million buying customers, $139 million in revenue and we paid $83 million directly to the musicians but I still didn’t know why it was successful. I never did any marketing. It was just this project that I started and word of mouth just kind of made it explode so I honestly didn’t know why people liked it. So whenever I would go out and talk with my musician clients, and I’d go out to conferences and events, I would always ask people why they liked CD Baby or why they chose CD Baby to sell their music. Often it would mean that I would just quietly sit and listen as they were raving to their friends saying, “Dude you don’t know about CD Baby?

I gotta tell ya, these guys are awesome! “ And guess what they said. Was it the pricing? Was it the features? Was it my classy amateurish design? No. The number one answer, by far, anytime someone raved about CD Baby, I couldn’t believe how many times I heard this answer.

The number one thing was, they pick up the phone, and that was it.

That was the number one reason why people said that they chose CD Baby over Amazon and all these other companies to sell their music. It’s because they would say either, I called you and you answered on the second ring, blew my mind or, I had a real problem, I called you guys up and you totally hooked me up, or you replied to my email with something personal within two minutes. So that’s why I send all my business to you and that’s why they would tell their other musician friends, “You gotta use these guys. They’re awesome. You can reach them. They pick up the phone.” So that was it. I mean, who could’ve guessed that all these other things we do, the features, the pricing, the partnerships and marketing, everything else you do doesn’t matter as much as somebody saying, these people pick up their phone. That’s why I’m going with them. So I ended up structuring the business to match this priority. I had 85 employees and that was 50 people in the warehouse, 28 people doing full time customer service and then just 5 of us that did some other stuff. That was the whole company. So since then, many entrepreneurs and interviewers and such have asked for my customer service tips and tricks but I recently realized it’s not something that you can add on top of what you’re doing. It really comes more from a core philosophy.

It has to come from a mindset and I’m no expert on the subject and I’m too shy to tell you the things I’m actually an expert on, but I’ve learned a few things from doing this for 16 years.

So here are the six key mindsets that I think guide great customer service.

Number one, most important is that you can afford to be generous.

I think this is the most important mindset that underlies everything. Before engaging in communication with any customers or clients is that your business is secure. The reason I say this is that, well even if it’s not, you have to feel that it is because you have to feel this sense of abundance that money is coming your way, you’re doing well. You’re not in any danger. You’re one of the lucky ones. Most people are not so fortunate. You can afford to be generous with your time, your policies, etcetera because I think that all good service comes from this mindset of generosity and abundance. So if you think of all the examples of great service you’ve received in the past. So for example, if you got free refills of coffee, or a business that lets you use their toilets even though you’re not a paying customer, or a place that gives you extra milk and sugar if you need it, or a rep that spends a whole hour with you on the phone to answer all of your dumb naïve questions about their product, all of these things are coming from a place of generosity, but on the flip side, if you contrast it with all of the bad customer experiences you’ve had, most of them come from this place of scarcity, like not letting you use the toilets without making a purchase, charging an additional fifty cents for extra sauce, or sales people who won’t give you a minute of their time because you don’t look like you have big money.

All of those – they’re acting like they’re scared they’re going to go out of business if they give you that extra sauce. But I was recently reading that, what are they called, anthropologist that study people who are trapped in the cycle of poverty often say that the reason people get trapped in the cycle is that when you’re in a state of poverty, you’re forced into this survival mode of short term thinking. You can’t engage in any long term strategic thinking because you’re just trying to survive. So I think the businesses that have this thinking, no we have to be really careful and defensive. We have to watch our bottom line. Don’t give them free sauce! Charge them fifty cents! It’s this kind of short term survival thinking that I think ends up keeping them in this loop, but if you really feel secure and abundant and you have plenty to share, than this feeling of generosity kind of flows down into all of your interactions with customers.

So share and be nice. Give refunds and take a little loss because you can afford it. That’s the mindset, but of course it’s also smart business because losing ten cents on extra sauce can mean winning the loyalty of a customer who will spend a thousand dollars with your over the next ten years and tell 20 friends that you guys are amazing.

Philosophy number two, is that the customer is more important than the company.

What this means is, well, for example, let me back up.

Think of a time where you had to make a big decision in your life, like one of those big fork-in-the-road, oh my god I don’t know what to do.

For example, if you were ever offered two jobs, one that was going to pay you a lot of money but have no freedom and another one that was going to pay you less money but give you a lot more freedom. You go back and forth. You go, god I don’t know what to do. The pros and the cons. You make a list of all these things and eventually you made a decision, but I like to say that when you finally made a decision, it’s because you finally decided on which value was most important to you.

So in that little example, you decided either the money is more important to me, or the freedom is more important to me but it really comes down to having to decide which value is most important and most of us never make that decision until we’re forced to. Until we’re given one of these forks in the road, we say, god I don’t know what to do. But I’d like to suggest that if you want to provide great customer service, you make this decision upfront. That you just decide upfront that we’re going to prioritize that whatever’s best for the customer over the bottom line of the company and then you make sure that everybody in the company knows this. So you can’t micro manage every detail of what’s going to happen in every customer interaction, so instead you make sure that everybody in the company knows that whenever they have to make a decision about what is the right thing to do, they always do whatever’s best for the customer. Whatever would make the customer the happiest and don’t worry about the company. Again, like number one, the company’s fine. Don’t worry about it. Focus on the customer.

Philosophy number three, Customer Service is a profit center.

So is, Kathy Siera still here? No? Oh, hi Kathy! You’re the reason I’m here. Umm, well, both you and Mark. I was already a big fan of the conference and Mark had asked me to come. I thought may- yeah, I think so. I’d like to. And then I went through the page and said, oh shit, Kathy’s gonna be there. I’m there. [laughter]

So, I’m a big fan of Kathy and her work and her writing and her blogs and so this morning she gave this amazing talk and she talked about how so many companies optimize down to every last pixel this stuff that gets you to buy and then once you click the buy now button, once you’re inside the product, you don’t get so much attention anymore. You’re not so AB optimized. And so for years you’ve been kind of calling on companies and people to continue to improve the experience inside and after the purchase but she didn’t explicitly say why companies don’t do this, but I think it’s pretty obvious, is that, everybody thinks that- everybody knows that the stuff that you do until that sale is clearly profitable. It’s kind of business 101, business for dummies you can say.

Get them to make the sale, that’s where the profit comes from. But I think it takes more wisdom, experience and long term thinking to understand that keeping your existing customers thrilled is even more profitable than trying to get them in, in the first place. So customer service is not an expense that needs to be lessened, it’s a core profit center, like sales. It’s something you put your best people on, not your cheapest. You’ve heard the old business truism, that it’s something like five times harder to get a new client than it is to get repeat business from an existing client. So I think this is where you put it into practice.

If you hire the sweetest most charming people and make sure they have all the time in the world to spend with your clients, making sure that the clients feel heard so that they’re so happy with your service that they’ll tell everyone they know. If you hire enough people so that they actually have time to pick up the phone instead of routing people into the automated phone system, and then when those people get so busy that they have barely enough time to keep up with all of the incoming emails or phone calls or whatever it is, you need to hire somebody before it gets to that point because what you don’t want to get is somebody who’s barely keeping up by firing off those quick little replies. Sometimes that’s almost as bad as doing nothing at all. If they’re too busy, they’re feeling that frustration and sending out succinct little replies.

Get somebody before that happens so they have time to spend with each customer.

Philosophy number four, every interaction is your moment to shine.

I think probably only one percent of your customers or clients will ever bother to make a customer service interaction, so when they do I think this is really your time to shine. That five minutes spent with this person is going to shape their impression of your company more than your name, your price, your design, your website, your features all combined. You got those five minutes on the phone where you’re going to completely shape their decision of you. So I think this is your shining moment to be the best you can be and blow them away with how cool it was to contact you. If you teach your customer service to be efficient, I think it sends this message that, I don’t really want to talk to you, let’s get this over with quick. You know that if you call a friend and they’re being like, “yeah, yeah, uh huh, alright, whatever, bye.” It’s kind of like, I don’t want to talk to you right now.

So I think too many companies do this customer service thing where they teach their reps to be as quick as possible, as efficient as possible, but think about what message that’s sending out. So since that’s what everyone else does, I recommend doing the opposite. Take a few inefficient moments to get to know everyone who contacts you. For example, at CD Baby when somebody would call up and say, “I’m thinking about selling my music with you. Can I talk with somebody about that?” We say, “sure, no problem, what’s your name?” They’d say, Mark. We’d say, you have a website? They’d say, yeah and tell us their website. We’d say, hold on a second, pull up the website and say cool, is that you there on the front page? They say, yeah, yeah that’s me. I say cool, hold on. Let me listen to your music for a second. No way, cool and you listen to like thirty seconds of their music, and I can tell you from being an independent self promoting musician for 15 years. When somebody actually listens to your music, even for one minute and gives you their attention, it’s like, you remember it for the rest of your life. It’s so touching, like, he listened to my music. Like the guy at the company. The guy that picked up the phone listened to my music. You got a bond for life and it took us all of fucking two minutes to add that to the call, you know what I mean. So we always would train all of the reps at CD Baby like, make this a policy and not in some systematic, monochrome, monochrome? You know what I mean, monotone scripted way but to just engage in conversation for a few minutes.

Most of the people that worked for me were musicians themselves so that helped.

But this isn’t just some sales technique. This is just good human behavior and it makes life better and it makes work more fun when you’ve got a context for the people that you’re working with all day, and it’s the right thing to do and it pays off.

So one last idea is that when customers would call to buy music, we also have this toll free number that customers could use to call up if they wanted to buy a CD mail order and just felt like calling instead of using the website. We had a toll free number that could do that and it was great whenever they would call because we would ask them. We’d take the order and while we’re putting the order together we would say, so where did you hear of this artist? And they’d say, “Oh, well we were down in Florida and we saw them playing. I’d say oh cool, do you often go out to listen to music at clubs? Yeah, cool. Or they would tell me that they heard it on WEXP radio and they’d tell me what show and we’re learning all this stuff about where these customers are hearing of new music or, you know. It’s just taking that few minutes to not make your interactions efficient but making them decidedly inefficient leads to better interactions.

So lastly, imagine what you would do if Paul McCartney called. You would drop everything, gush some praise. “Oh my god! Paul McCartney!” And you’d be so thrilled that he was contacting you that you would give him all the time in the world for whatever he wants. So I think that’s how we should treat everyone that contacts us. And why not? You know. You don’t have time? Well, make time ‘cause that’s how everyone deserves to be treated.

Last thing, you know that there’s this research that says that we don’t smile because we’re happy, we actually smile first and the physical act of smiling is what makes you feel happy. So I think that the act of acting your best and kind of being on your best behavior and being super nice and interested in other people and friendly.

Even if you weren’t really in the mood to do it, actually kind of leads you to be your best.

Okay, what number am I on, number five. Lose every fight.

I love this. I think that customer service usually starts when someone has a problem and they’re usually upset but kind of like you need to feel secure for your business to be generous, I think you need to feel secure to decide to lose every fight. What this means is, whenever someone’s upset, just let them know that they are so right and you are so wrong. You are so sorry. They win, you lose and you are prepared to do whatever it takes to make them happy again. I’m saying this but let’s admit that it’s hard to turn off that human nature that when somebody’s attacking you, you kind of bristle and you want to attack back. To feel that things are directed to you personally. Especially if you’ve created the site or the service that somebody is criticizing. You can’t help to kind of want to show them that no they’re wrong and you’re right damnit! But almost every week, still I have to kind of catch myself starting to write one of those responses, but after years of getting burned for doing that, I finally kind of catch myself and replace it with something angelic instead. You know that scene in the movies, or TV where someone is saying something that they think is secret or saying something kind of nasty or insulting about somebody and they realize that their microphone is on so they immediately kind of straighten up and correct themselves and say the publicly acceptable thing instead. Well, your microphone is on and there’s no private communication in customer service. That anything you say is very likely to be put on someone’s blog or Facebook or retweeted and immediately seen by everyone.

So make sure you don’t indulge yourself in that need to lash out ‘cause that stuff gets reposted everywhere. So you have to be the best version of yourself. You must let them win every fight. You must humbly bow to your superior and make them happy. And kind of like how I said about how smiling makes you happy. I think that the act of doing this everyday I think it’s actually very peaceful. I kind of think of it like daily empathy practice. And over the years my company had a few huge evangelists. People that would just go tell everyone that you have to sell your music at CD Baby. You have to buy all your music at CD Baby. These guys are awesome. They’re very loud evangelists. I never really understood why and a few times, I would go back into that person’s communication history with us and look at the first email they ever sent, or the first time they called and what’s funny is, I very often found out that those very loud evangelists usually contacted us when they were very loudly upset about something.

They would contact us being so mad about a problem, you know, screw you guys. You screwed up my order. And they’d be so upset and then we’d somehow win them over and calm them. Replace their, whatever it took and they would turn into our loudest evangelist. So I think the lesson learned is that loud people are loud people whether they’re complaining or praising. So when you get some loud complaint try to think of it as an opportunity to do whatever it takes to make them so happy that they become one of those loud evangelists.

So lastly, you can rebelliously right the wrongs of the world.

You know there’s this little passive aggressive move we all do. That when we don’t like how someone is behaving, we instinctively kind of take the high road to show them how to behave, right. You know this thing that you do, like if somebody’s speaking too loud in a quiet place you speak to them extra soft. Show them that it’s not okay. And if someone is being a complete slob you may straighten up your area first before telling them what a slob they are. You just kind of take the high road and show them how it should be done, right. So I think this is kind of a little defiant act that says no, you’re doing it wrong. Here, watch me. I’ll show you how it’s done.

So I think that your business is like your little part of the world where you can right all of the wrongs of the world and show them how it’s done.

To do this you need to be rebellious. Don’t follow norms. When you’re starting a company or wondering what to do next or you’re at any kind of crossroads, don’t just do what the other companies are doing. Instead think of the worse experiences you’ve ever had and do the opposite from that. You’ll end up doing something different and also you get to show them how wrong they were. It’s very cathartic. Thank you. [applause] Questions? I’ll do questions, sure!

Mark: Questions? Let’s start here. I’ll start out with the first one. You got very, very non-data approach to this stuff. I love, I mean I just love that this feels like the right thing to do. It’s very- it’s not very valley and VV. Everyone’s sort of focusing on data and how can I get more money. So really, one of the reasons I wanted you to come back is that you are very kind of human in your approach. Have you got any data that can back up those sorts of assertions? This feels like the right thing to do. Have you got any kind of numbers that the data people can look at and go, yeah.

Sivers: Not really, you know. That’s funny, I had to laugh because when I was writing this talk, I had this funny intro that said, well you know the thing that impressed me about the Business of Software Conference is how it’s so specific and everybody’s got all this data and these numbers and all this AB testing. So I actually put together- I had this intro with these numbers of saying, you know, I spoke to this many clients at this many conferences and this many people said this and then I realized it was really long winded and boring and I cut the whole intro. [laughter] But no, honestly, I really don’t. A lot of this stuff was very unmeasured. I’m one of those people that- I ended up just turning off my web server logs too because I realized that years had gone by and I’ve never really looked at them, so I admire the people that measure the hell out of things and I aspire to do that but I have not yet, so.

Question:  I’m hearing what you’re saying. I think it’s great if you’ve got a lot of customers very low value or potentially low value sales. I come from a business where we’ve got a few very high value sales. We’re talking about a few multimillion dollar sales. How applicable is what you’ve talking to that sort of industry, do you think? Sivers: The real answer is, I hope to never find out. [laughter] Sorry. I know there’s this thing where when I’m on stage I’m supposed to act smart or something but I have no idea and it was actually one of my… Question: Thanks for answering. Sivers: Yeah, sorry. But it was one of my founding ideas is I saw a lot of businesses starting at the same time I did. I started CD Baby way back in end of 1997 beginning of 1998.

The first dot com boom and it’s still going. I sold the company a few years ago. But around that time I saw a lot of my friends in New York City starting companies that were geared towards a few big clients and it always just seemed like hell to me because they were so dependent on a few key people. So I’ve always tried to make a point of making businesses with tons of small clients giving me, I mean, most people paid us $35 or so and so if somebody had a giant complaint I’d say so, here’s your $35 bucks. I’m sorry. Question: So you, you can basically, you can afford to give something away. Whereas you can’t have- we can’t have someone in our support team giving away half a million dollars worth of value. Sivers: Okay, well that said, there’s- have you seen this book called, The Art of Profitability? Okay, you might wanna jot that down because actually, the very first chapter has something called the customer solution profit. The author’s name is Adrian Slyvoski. Art of Profitability. Brilliant little book. Told in a funny way. He actually creates two fictional characters having a conversation to tell that book. I think he wrote a couple of dry academic books before that and maybe didn’t get enough response so he made this- Art of Profitability is about these two people having a conversation, kind of a teacher and student style, but he talks about this one thing called the customer solution profit where he found some software companies that had done exceptionally well, better than the competitors and the way that they had done it is by, I feel like, I wish I could draw something. They would have a few big clients, like you’re talking about, they would go into the company and lose a lot of money at first by embedding people inside the company to deeply customize what they were doing for that customer.

Have a couple of people working inside the company for free saying we just keep them there. They’re there for whatever you want 24/7 and by doing this, they deeply customize their software for that client. Took a loss in the first year or two but then that customer was so deeply intertwined with their software that they remained at a premium for years to follow. That’s one little idea that might help that I’ve heard of.

Question: Thank you. Hi Derek, my name is Clark. I mean this nicely, were you born this way or did you figure it out? Just watching you here, it sounds like your company reflects your personality. So tell us about your mother. [laughter]

Sivers: Honestly, I think a lot of it is that rebellion thing that I was talking about near the end. I set up CD Baby as a rebellion against the traditional music distribution models because I was a self promoting musician myself and I got shit on over and over and over again by these traditional distributors that would say, it works like this, how many units can you sell, well if you can’t sell that many in three months then you’re out and never talk to us again. Or, hey, you sold a lot of units, maybe we’ll pay you in a couple years. Give us some more. Or, you know, who the hell are you. You’re nobody famous. Don’t contact us again. Or, you know, submitting my music to be performed at festivals or whatever and always kind of getting hung up on because we didn’t have a big following. Like over and over and over again. It was really depressing and so when I set up my own thing. I set up this mission. I did it just as a hobby at first. I set up this little website to help a few of my friends and it really came from, kind of like the hackers space, it kind of came from this community spirit.

You know I’ve got this credit card merchant account. All my friends want one so instead of every one of my friend’s friends having to go get one, because back in 1997 it was like a thousand dollars in set up fees and a lot of work. I did all that work. I built the whole ecommerce website and all that stuff so I just shared it with my friends. So the whole DNA of the business was coming from a nice place. You know what I mean. But then even when I realized that I had accidentally started a business that it wasn’t just a hobby for my friends, I decided to get somewhat serious about it.

I gave myself four missions.

God I haven’t talked about this in a long time.

1. I said, okay, if I’m gonna do this thing I’m gonna make it like a little dream come true otherwise it’s not worth doing. So it’s like number one, the musicians will get paid every week ‘cause in traditional distribution you get paid once a year or something like that. I was like no, CD Baby, every musician gets paid every week, number one.
2. Number two, they’ll never get kicked out for not selling enough. You could sell one CD every ten years and I’ll keep you here forever, I don’t care.
3. Number three, no paid placement. The people, the guys that can afford it will never bump out the guys that can’t afford it. That’s never fair. And,
4. I forget what number four was. But it was like four things like that that I said, if I’m gonna do this thing, it’s gotta be kind of a dream come true like this, but yeah it was definitely done out of this spirit of rebellion so kind of like, fuck you big evil companies. I’ll show you how this shit can be done. And thrive and be done right and it, if it doesn’t than I’d rather it go away.

So um yeah I guess I’m probably a nice guy generally, but a lot of this was just very pragmatic and especially when you get feedback. When musicians and customers would keep telling me that the reason that they like CD Baby is because we’re so cool, we’re so easy to reach, because we pay every week. You know, it just, it feeds back and so it leads you to want to do more of what’s working.

sp3: Hi, Max from MakePositive, now I know that when you sold your company you gave all the money away to charity. The founder of my company has just given away all his shares. Everyone thinks when I say that is he’s gone completely mad is the first reaction. I mean, what do you think of that?

Sivers: Why did he do it? You know?

sp3: He doesn’t believe in money. He thinks money is the wrong motivation for the world and wanted to make a statement.

Sivers: Everyone’s got their own reasons. Yeah, I don’t know. There’s a very typical way that people are supposed to do things and I think it’s kind of funny that, you know I come from this background in music and you can imagine if you see somebody who’s, imagine a business man in a suit saying, okay right, I wanna do music now. They’re taking piano lessons and they sit down at the piano and they’re doing things very stiff and proper. And a good musician will say, c’mon man, loosen up. Maybe it takes a few years to kind of get comfortable so you can just play. You don’t need to worry so much about the correct fingerings and the lessons you learn, just play. And I often feel that way about business. I feel that people get so fucking conservative and they kind of look at others and they want so badly to succeed that they try to imitate other models and they think I should act like this or we need to do what these guys are doing but I see it a lot more as just creative expression.

So I don’t, it doesn’t really feel like there’s a right and a wrong way and I think more people should express their individuality when it comes to choices like that. Like, I’m gonna give away all my shares or whatever it may be. I think that’s not done enough, so I think it’s kind of healthy when some people do that publicly. I was never going to, when I did it, it was just my little secret. I was never going to tell anybody that I had done it and then some guy with some little podcast was interviewing me and we were 45 minutes into the podcast and, sorry to those who have a podcast but, whoever listens 45 minutes into a podcast. So when he asked me this question of like, how much did you sell CD Baby for, I thought, nobody’s gonna listen this far into this so I told my answer and then he said, what’d you do with the money, and I said I gave it away, and what. He ended up making it the headline of his interview. “Derek Sivers sells CD Baby for $22 million and gives it all away. I was like aww fuck! So I was outed but then I realized, writing it up, I ended up writing a blog posting about it ‘cause I said well as long as I’m outed I might as well share this because maybe somebody a few years from now will at least know that that’s something they could do. You know. No, I bumped into him in a bathroom once though. He looks just like my dad. [laughter]

sp4: Hello, Chris Massey from Redgate. I can see how this works as a seed. It’s like grow a business from this philosophy but given that you’re talking about institutionalize emotional security, have you’ve ever seen a business that isn’t doing this retrofit and kind of adopt it? ‘Cause you’re trying to push something that it feels like, it’s almost a state of mind rather than a practice.

Sivers: It would have to be one of those kind of business reinvention stories. You’re right. It’s really deeply ingrained. I don’t study a lot of other businesses.

sp4: It feels like you could adopt the practices, and try and kind of, like smiling right. If you do these a lot eventually the thought, the mindset behind it will kind of become ingrained maybe. I don’t know, I haven’t seen that kind of dramatic shift anywhere from a company anywhere that was doing this to a company that is. I don’t know if you had any experiences with that.

Sivers: I don’t have any examples. Companies are just people right. It’s hard to remember that sometimes. They seem like big machines but really its people inside. I think at least from my experience, most people are very welcomed to this. Like even inside a company. If you tell people like, look, no matter what happens just do whatever’s best for the company, I mean for the customer. Yeah, fuck them! [laughter] Just do whatever’s best for the customer. Don’t worry about us, refund their money. Don’t worry about it. Like refund double their money if they’re upset. I don’t care. I think individuals are very happy to hear policies like that. It makes them happier to do their job and it’s very clear. It gives them a lot of clarity. Instead of some foggy ambiguous, well we believe in quality, service and dependability which means nothing, or instead of giving a big stack of, here’s 105 stacks of possible scenarios, make sure you match up your scenario with one of these. Giving a simple rule like that, I think it’s really easy to communicate inside a bigger organization.

You know what I mean. It’s like an easy rule of thumb. It also really helps to have stories. Everybody knows it. It’s kind of a cliché but stories travel better right. There’s a reason that we still know Aesop’s Fables and not Aesop’s bullet points. Because they were turned into these little stories of foxes and hares and whatnot and those things can travel for two thousand years whereas little bullet points can’t. So I think if you have a couple stories that you can use inside a company to make an example. I think my customer service guys ended up getting these little urban legends themselves. There was one, people who ordered through the site were allowed, there was a little box at the end of the order where after you put your CD into your shopping cart and you are about to pay it says, any special request. And it would say, yes, anything and it would just give them a little text area box. And most people would leave it blank or say cool thanks but every now and then people would do a funny little request in there. Like, I’m in the mood for some cinnamon gum, please include. And so I always told the guys in the warehouse if you get any of these special request get some money from the little jar and head out to the store and do whatever they ask. And it would become this kind of fun challenge when they would get it right. So they’d go include some cinnamon gum. And of course the customers, “holy shit!”[laughter] And of course they’d blog about it and tell everybody. And if you guys want to see a fun story, I think if you go to sivers.org/squid I think I made a little short URL that one time, somebody ordered a CD where the cover of the CD was somebody’s head with a squid on top of it and so the person placing the order said I would also like some squid with my order please. Thank you. Believe it or not somebody had recently sent us some CDs from Korea and they had enclosed a shrink wrapped dried squid and the guys at the warehouse had kind of hung it up on the memorabilia board along with funny pictures of Gary Coleman or whatever and they said, “dude, somebody just asked for squid! Let’s do it!” And they included the squid in the order and so the guy who got it went on to Youtube and told this story into the camera of how he placed this order at CD Baby and it has a few hundred thousand views of him telling the story about CD Baby including the squid. Anyway, the point is, if you have a few stories like this that people can tell as little urban legends inside the company, it communicates it better than saying, dit dit dit. You know. That said, a simple rule. Always do what’s best for the customer. As cliché as that sounds, like put it into practice. I think it can transform internally pretty easily. Thanks for being welcoming by the way. I’ve never given this talk before and I literally was kind of writing it some more this morning and put together the PowerPoint presentation over lunch so thanks for being welcoming and cool today.

sp5: Hello, my name is Anna I work for tech support. So my question is, I know you’re saying it’s really good to be generous to the customer but what if they’re being unreasonable or trying to get things out of you? How do you react to that?

Sivers: Let them. It’s what I meant about let them win the fight. You’d be surprised that I think, again, you gotta come from that place of knowing that you’re not gonna go out of business because of one crazy customer and taking a loss it can often be the smartest thing you’ve done ‘cause worse case scenario, they just go away and you never hear from them again and you took a little loss and they grumble to themselves and they live in their shack with a shotgun and nobody comes near. [laughter]

But usually, I found many times that people that are really, really upset, and we took a loss on refunding all their money even though we’ve done all the work, including, wait am I, I’m being filmed. Well I won’t tell you that the girl from Ipanema pissed me off and we got into a fight and I sent her all her money back, but the… even if you’ve done all of the work and you’re gonna take a loss and you refund their money in full and all that stuff, you’ll find often, at least I did, that those people will often come back to you later apologizing. Maybe they were just in a really bad time in their lives and then they’ll always have a good story to tell everybody else. I think the unstated assumption in all of this is that people are very, very connected now and word gets around so fast that if anybody feels scammed by you they’re so likely to go start one of those, this company sucks websites or go write many blog posts about what a scam you are. Every person needs to really go away feeling that they won. Do you know what I mean? Let them win the fight every time even if you take a little loss. It’s okay. Question: Thank you. Question: Just a couple years ago. This is a plug for your book. Couple years ago, I got your book on kindle, read it and really loved it. So short question is, sequel, another book, something else coming?

Sivers: Umm, yeah. [laughter] Question: Thanks. [applause]

Derek Sivers

Derek Sivers has been a musician, circus performer, entrepreneur, TED speaker, and book publisher. Long ago he started CD Baby, and wrote a great little book about it called “Anything You Want”.

He’s working on three new books, and he tends to share his insights on sivers.org, so go see for yourself. Originally from California, he moved to Singapore and New Zealand for a few years each before moving to Oxford just this year, we think just to be closer to the Business of Software gang.

More from Derek.

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