“Fantastic” beats “efficient”

What if you decided to provide something tremendously fantastic for your customers, even though it meant great expense and hardship?

This one thing would be incontrovertible — you’d refuse to compromise on that one thing, even if it seems impossible to work out how to do it profitably.

It’s easy to identify companies who became wildly successful with this technique. Of course this is Survivor Bias at it’s finest; these examples don’t prove this is a great strategy, they just illustrate that it can work:

  • Zappos decided to sell shoes over the Internet, even though it meant eating shipping costs as customers tried shoe after shoe, constantly returning merchandise on the basis of fit or look. The convenience of online shoe shopping is a game-changer — to the tune of billions of dollars of revenue — but how could they make up the costs?
  • NetFlix decided to rent out DVDs by mail for a flat monthly rate despite massive postage and logistic costs, loss from damaged disks, and people duplicating 30 disks a month for $29.95. Customers gleefully avoid the Blockbuster none-of-these-look-good-just-pick-one-already-zombie-walk — and NetFlix just put Blockbuster out of business — but is this a workable business model?

What’s the upside of sticking to “fantastic” even when it doesn’t seem sustainable?

  • Word-of-mouth by definition. Since I defined the Something Awesome as being holy-crap-you-have-to-be-kidding-me good, word-of-mouth “advertising” is automatic. You don’t even need your own Twitter account and Facebook page and WordPress blog because your customers will spread the love for you. If word-of-mouth can replace 90% of your advertising/marketing budget, maybe you can use that money to address the challenges of extra expenses.
  • Easy to get free press. For the same reason that customers want to tell their friends, the press will find your story worth retelling.
  • Naysayers stifle competition. When everyone else thinks it’s impossible, they’re welcome to sit on the sidelines and watch you kick ass, just as Blockbuster watched NetFlix steal customers by the millions. Every time an MBA says “no” while a customer says “yes,” you’re increasing your lead.
  • “I can’t believe they can afford do it!” That’s what most people say about NetFlix and Zappos. Of course if that turns out to be true it means a bankrupted business, but if you pull it off… isn’t that one of the highest compliments a customer could ever pay a company? It has the ring of loyalty and delight. I’d rather that testimonial than “It’s a great ROI.” Snore.
  • Easy to attract passionate employees. Everyone wants to work for a company doing something genuinely wonderful for the world, and stellar people have their pick of where to work. An amazing concept means you can attract the best talent who are emotionally committed to making the company succeed.
  • Fun. In the emotional turmoil of a startup it’s easy to forget that you’re supposed to be having fun now and then. Blowing people’s minds by doing something awesome is a blast.

Sounds like a slam-dunk, so what’s the downside?

A swift death, of course. Since you’re riding on the edge of impossible, it’s quite likely you’ll end up running a charity instead of a business. If expenses are unsustainable, if you can’t innovate around the obstacles, then you run out of money. Simple.

Of course most startups terminate this way anyway don’t they? Turning a profit at a growing company is nearly impossible regardless of business model. Since it’s already difficult, why not at least give yourself an edge in having the Fantastic Thing?

At least those internal hardships — logistics, expenses, processes — are all under your control, which means you have a decent shot at addressing them. Think of all the difficulties you don’t control — competition, changing markets, new technology, fads — all of which have equally significant influence over the fate of your business. Given that, at least this challenge is something you can understand and manipulate!

And if you fail, why not at least have failed at something worthwhile?

Looking back, I wish I had done this more, and I pledge to do it in future. In fact, at WPEngine we’ve built this idea into our culture. What we’re doing today:

Ridiculously generous customer service.  We do things for free that our competitors charge $150/hour to do, such as harden our customer’s blogs against hackers, implement methods to speed up their page-load times by many seconds, replace plugins with better ones, help debug custom code, and educate our customers on better ways to use WordPress.

Instead of nickel-and-diming customers, we earn their loyalty by genuinely improving their blog, not just supplying bandwidth and a CPU. Our customers are happy paying a little more per month than our competitors because in their first month hosting with us they’ve already gotten more from their dollar than they ever did with another hosting company.

And then here’s something we aspire to, which other companies in our space like Automattic and WooThemes have already engrained in their cultures:

Contribute everything back to open source.  Traditional businesses drenched in outdated notions of the value of intellectual property would be horrified to learn that a company would give away their software for free. We should build our own WordPress plugins and make them open-source and free. We should find and fix bugs in WordPress plugins that we didn’t write and contribute those back to the original authors and the community at large. The IP attorneys would say that we’re bleeding assets, but what we’re actually doing is earning the respect, attention, and sometimes even love from the entire WordPress community. We’re earning it — not buying it — because we’re true contributors, not leaches.

I hope this is sustainable, but is it? After all, quality technical support requires an army of quality technical people, and those don’t come cheap. But already we’re seeing the side-effects of some of those benefits above. In our recent hiring spree we found terrific folks willing to work with us at less than market rates because they believe in what we’re doing and what we’re trying to be.

Even if it’s not sustainable, it’s still easier to pivot. For example, if we’re able to deliver amazing service and it turns out to be too expensive in human costs, we can pivot the target market and charge more. Yes we’ll lose some customers on the low end, but our larger customers have already told us they’d pay more. I’d rather have fewer customers who love us to death than more customers who constantly argue about price and view us as a fungible vendor.

We’ll see. But I’ll tell you this: Even if we fail — and with our current growth rate failure doesn’t seem likely — I’ll be proud of everything we did.

And that counts too.

Let’s continue the discussion in the comments. What are other techniques or examples? Am I discounting the downsides?

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  • http://delia.ene@avangate.com Delia Ene

    Fantastic post. Doing this right takes both courage and vision.

  • Anon Cowherd

    The reason you help people harden/fix their blogs and plugins is not because altruism. It’s because you don’t want them to get hacked _on your servers_.

    • http://blog.asmartbear.com Jason

      Right…. but those weren’t the reasons I gave about us going above and beyond. The reasons were that we do more customer service than we might be able to afford, and because we contribute our awesome changes back through open source instead of hoarding them.

  • Tina Randler

    In one sense I agree with the Anonymous Coward: it IS kind of a spin to say that you provide great customer service, when one aspect of your great customer service is really just a by-product of covering your own ass. But isn’t that the case with anyone who wants to provide customers with top notch service? One agent I know has a motto which I want to adopt: “I want to be the best thing that ever happened to my clients” in my chosen industry. #1. It meets MY need to be thought well of and have my excessively delighted clients be my main source of future business in the form of referrals (allowing me to spend less of my $ on advertisement) #2. It meets their needs to have someone skilled, trustworthy and knowledgeable in their corner when they need it. Win-win. No need for spin!

    • http://blog.asmartbear.com Jason

      I must not have made it clear what I mean by “great customer service.” It’s not that we just do what it says on our home page. That’s just not lying.

      What I mean is: People ask us esoteric questions about esoteric plugins. We have every right to say: “We don’t know anything about that. You’ll need to hire a WordPress consultant to dig into custom stuff.” But instead we try to dig in and help anyway.

      Another example: Their sites are loads faster right away, but there’s a ton of stuff that can only be done with manual tweaking because it depends on the site itself. We often go through and do this for customers just because we want them to have that much better of an experience, not because it saves our servers (it doesn’t).

      • Shaney

        Its called ‘going the extra mile’….. I like it!
        Its much more fun…. everyone’s so much nicer to each other!

        It stimulates happy hormones and that means happy referrals… happy referrals mean ‘a lot more money’ and a pleasant day. Purely a matter of maths. Being nice = happy day + money
        Being mercenary = not a happy day (stressed customers) + money.

        Who says being nice can’t also be a good calculating marketing strategy? Personally (excuse the pun) I think its the best!

  • Jason Nolasco

    Great post.

    Don’t these types of “fantastic” things have to be customer-facing and obvious (and therefore, easy to explain)? You get none of the benefits of good press and good word-of-mouth if your fantastic, cash-bleeding advantage isn’t something you can put on a billboard. Am I restating the obvious? Maybe. :/

    Anyways, minor correction, second set of bullets, 4th bullet:

    “…turns out to be true it’s means…”

    • Shaney

      Don’t need a bill board if its word of mouth.

      • Shaney

        sorry billboard

    • http://blog.asmartbear.com Jason

      Thanks for the correction; got it now.

  • http://www.parkgrades.com Ben Hazelwood

    Excellent advice! What are people going to say at your funeral — “He really knew how to pinch a penny” or “Heaven knows how many crazy things he tried to do, but his heart was always in the right place”…

  • Anon Coward II

    How about phone number for your customers who expect fantastic service and can’t wait for an email ticket to be resolved? Shouldn’t $50/month include that?

    • http://blog.asmartbear.com Jason

      You make a very good argument! Yes you’re right. We’re working on a VOIP phone system as we speak, and you’re completely right that not having one up to this point is inconsistent with our messaging and with the idea of this blog post specifically.

      It’s easy for me to write about what’s “right,” and very hard to actually do it!

  • Greg

    After reading this I still can’t see the case for fantastic beating effecient. I just see two oulier data points that had access to oodles and ooldes of capital. Most companies fail due to under capitalization, encouraging one to stick to your guns just because seems like a quicker way to run out of money.

    I think Apple is a better role model- do a couple of things really, really well and charge like the dickens for them.

  • http://www.getreporthelp.com Johny

    Jason – Thank you for this post. I’ve been struggling on “how to monetize” my own website. I’d rather do something amazing than just go with google adwords. People are loving my content, but I get no subscribers. Until I have a way to amaze my customers, I wont charge them. Thanks for the encouragement. You rock!

  • http://www.onearmedgraphics.com Robbie

    I agree with the spirit but don’t with the title.
    Why? I strive for efficiency, being efficient gives me the time to be fantastic.
    Being efficient gives you the foundation to build on and become fantastic.

    I actually wonder if there is a slight cultural difference in what you mean by efficient Jason. As you only use the word in the posts title I can’t guess if this is the case or not. When I think of efficiency I think of simplicity & minimalism, a finely tuned engine… that sort of thing.

    Robbie

  • http://www.freshbooks.com Corey Reid

    This is exactly what FreshBooks is doing with free telephone customer support for all our users, free or paying. It’s worked for us for years!

    People call just to see if anybody will ACTUALLY answer, and are often stunned when a real human being picks up the phone on the first or second ring. It’s a fun conversation at that point, and you’ve usually made a fan of FreshBooks at that moment.

    Is it sustainable? So far, so great!

    • Jeff

      I’ve experienced this as a Freshbooks customer, although one time they said they’d get back to me and no one did. Just sayin’.

  • http://compsci.ca/blog Tony

    It might be important to point out that at some points in Zappos history it _couldn’t_ afford to do what they were doing, and Tony Hsieh (founder/CEO) was selling his real estate at great personal loss just to get a bit more runway. Still, the Zappos story (parts of which are described in the book “Delivering Happiness”) is pretty fascinating.

  • Ron Wiebe

    I am not certain how you can claim great customer service. I switched to your hosting and then found out that customer service is actually below the average.

    1. no phone support.
    2. no free migration support
    3. poor documentation before you sign up (though to be fair there is a 15 day trial.
    4. only one sftp user account.
    5. No tracking of bandwidth and storage usage (this may be available, but just not found)
    6. Speed benefits are primarily provided by suggesting to us caching plugins.
    7. no CPanel – granted this is not needed if it is used as designed for strictly WP use.

    • Anonymous

      Oh, and the price is the same as a vps with all the above lacking features plus the ability to host multiple sites – something that adds $50/mo with wpengine.

      The only downside of a vps is that you have do ensure that due diligence is done to “hack-proof” your site.

      I love your blog, and can see that this service is great if you really do not want to futz with the back end at all, but it certainly is not for everyone. The only reason I am considering to stay is the sandbox where you can test you changes before deployment.

      • http://blog.asmartbear.com Jason

        Again, it’s just not true that “the only downside of VPS is ‘hack-proofing.'”

        If your VPS server is overloaded your site goes down. But with us although you have a “home” server, if it’s overloaded it’s shared with a dozen other servers to ensure you’re still up.

        If your VPS server has a software problem or a hardware issue or you want to upgrade software on it or any number of things, your WordPress install will be offline. In our system any server can go down (even unexpectedly) and your site is up.

        Our system includes a fast caching front-end server, plus a home Apache server (with clustered backup), plus a separately managed and optimized MySQL cluster. A single VPS doesn’t do that.

        With a VPS you can still be affected by DoS attacks. You can be hacked from a variety of vectors including both WP-specific and Linux-general. We have security appliances in front of our servers to block most of those, plus diligent tracking on our servers too. This is not a trivial thing to do, as evidenced by intelligent IT people getting hacked every day.

        The only thing in this part I agree with is “It’s certainly not for everyone.” Who said it was?

    • http://blog.asmartbear.com Jason

      So first, you’re right, it’s not nearly as good as it should be. This is a goal, not reality.

      We did just hire another full-time person who is devoted to making this better, so we are serious about it.

      Answering your specific points:

      1. As said elsewhere in these comments, we’ll have that up in a week or two. Setting up a good VOIP system that actually works is hard.

      2. Yes we do, you just pay six months instead of month-to-month. We’ve had too many people take advantage of that and then not actually switch. But, you could argue, should we do it anyway for that “stellar, money-losing service?” Yes, I think you have a good argument.

      3. Agreed.

      4. There’s only one to start, but if you ask we’ll make you more. Also we’re in the middle of building a User Portal where you’ll be able to self-service that.

      5. Correct, we track but until the User Portal is up you can’t see it. But if you ask we can provide you reports manually.

      6. Completely untrue. Not sure how you came up with that given the material on our website. First, we use really expensive hardware that’s 2x faster than the usual “cloud” or “VPS” solutions. Second we put your media on a world-wide CDN, cost included. Third we have a sophisticated, custom caching front-end which other promenant WordPress hosting providers have told me is better than anything they’ve seen. (In fact some of those people are now switching their back-end to us.) Fourth we do also use caching plugins, but we install and configure that for you. Fifth we use things like memcached to get even more performance out of those same plugins rather than the typical disk caching.

      7. no cPanel is absolutely on purpose. We’re not a general hosting provider. We do WordPress, and WordPress only. We make that clear I think.

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  • http://www.jimbocortes.posterous.com jimbcortes

    ” The IP attorneys would say that we’re bleeding assets, but what we’re actually doing is earning the respect, attention, and sometimes even love…” – very true .

  • Anonymous

    This works well about 10% of the time – most often tried with someone elses money.

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