In this episode of the “Art of Value Podcast”, we simulate an “After Action Review” similar to what the military does as a performance review. We’ll be talking in terms of business though. Some topics will be things that worked, things that did not, and what they can do to improve.
Please find a full audio transcript below:
Speaker 1: This is the Art of Value podcast. Discover value, create options, and start pricing. Artofvalue.com.
Susan: When a customer calls you, they don’t want to think it’s going to take six months to start the project that they want done today, because that’s why they’re calling. They have this need.
Kirk: Welcome to the Art of Value show, my name is Kirk Bowman, the visionary of value. This is the show where we discover value, create options, and start pricing. At the top of the show I’d like to give a shout out to Daniel at smarttradesmen.com. He left a review for us on iTunes. He said, “Kirk knows his stuff. When the value of what you offer aligns with what you charge, everyone wins. No money is left on the table, and you have a happy customer. Every business needs to hear this powerful message.” Daniel, thank you for that review. Why do I read reviews at the top of the show? The answer is simple: it’s my way of saying thank you for giving something to the show.
If you’d like for me to mention your name and website at the top of the show, just leave a review for us on iTunes. My guest on today’s show is Susan Fennema, the project manager at MightyData. During this episode, we’re going to have what we call an after action review. It’s a term that comes out of the Army. After a mission, all the officers and enlisted personnel get together in a room, there’s no rank in the room, and they talk about what worked, what didn’t work, and what do they need to improve.Susan and I are going to have a similar conversation about our business. We’re going to look at a few customer situations that happened to us over the past couple of months. At the top of the show, we’ll look at, how do you create a quick win? Where did we get the idea for creating a quick win, and what is the value of it to the customer? Next, we’ll look at a scoping mistake we made on a project. Talk about why it happened, and what we can do next time to avoid the same mistake. Then Susan and I are going to revisit the topic of the nondisclosure agreement. Carrie Dales and I debated this in a previous episode. Susan and I are going to refine our discussion, and hopefully give you some more value as you consider how to use nondisclosure agreements in your business. Now, let’s go to today’s episode.
Female: Discover value, create options, and start pricing. Artofvalue.com.
Kirk: Welcome to the Art of Value show, my friend and coworker, Susan Fennema. Susan, it’s good to see you again.
Susan: It’s good to see you too, always nice to get together in person as well since we get to use this as an excuse to do that.
Kirk: Well, it’s interesting. We only live 20 minutes apart, but yet, we don’t even see each other on a monthly basis, but we work together every day.
Susan: Exactly. It’s almost like we see each other every day.
Kirk: Well, I guess we do see each other virtually, but to see each other in person.
Susan: Yes, definitely.
Kirk: I thought it would be fun to have you come back on the show, and let’s just talk about some of the things that are going on in our software business. We’ve been operating MightyData undervalue pricing for over five years now. It’s become part of our blood, part of our DNA, who we are. At the same time, we make decisions every day based on this philosophy, and we begin to take it for granted. What you and I have done is, in the show prep, we said, “All right, let’s take half a dozen customer situations that we dealt with over the last month, and let’s just talk about, how do we deal with that from a value perspective? Does that work?
Susan: Yep, absolutely.
Kirk: The first one that I got on my list is how to offer a quick win. Let me provide some background for this. In the past with MightyData, we’ve done a very deep dive on something we call discovery, or needs analysis. It was a high dollar to go with it. Recently, I’ve decided to change that and see if I could sell a smaller size discovery on the first phone call. That was the challenge.
Susan: It worked.
Kirk: It worked, it’s worked twice so far. What are your thoughts on offering a quick win to the customer? Why has that been successful for us? Why is it something probably we should have done sooner?
Susan: I think the biggest thing is exactly what you’re calling it. Quick. They’re ready to move. When a customer calls you, they don’t want to think it’s going to take six months to start the project that they want done today, because that’s why they’re calling. They have this need. Being able to start today, and keep moving, and learn how to create what they need as they go, instead of, “Okay, let’s take this in a very small step, and then it’s going to take a month until we get it done.” All that. We’re able to turn these around faster as well, and we’re able to focus on just the first phase, instead of the entire big picture, which is very overwhelming to them, and sometimes to us.
Kirk: What got me thinking along this line was number one, the fact that you’ve said, basically, discovery engagements were taking longer than they should. At the same time, I was like, “You know what? I’m getting tired of having to have three phone calls just to get to the discovery phase.” I was like, “Can I sell something that’s a lower dollar amount, that offers immediate value to the customer, and get a win for both sides?” In other words, can I offer the customer something that they go, “I want that, and I want it even though we just started talking.” At the same time, it was a quick engagement.
It’s interesting, one of our other topics is going to be about an NDA, and that’s also one of the things that moved me in this direction was I was like, “Oh, I’m so tired of doing NDAs. Maybe I could bypass the NDA, at the end of the call.”
Susan: Well, and it makes you feel more like you’re willing to do an NDA if you’ve sold something in that first call. Being able, on the first call, to move the project forward instead of saying, “Oh, send me something and we’ll talk again in a week after I look at it.” It speeds the whole process up, and it helps you engage and start to know the customer. It makes you figure out faster whether or not you’re a good fit together.
Kirk: Exactly. To do this well, it has to be something that, number one, is what I would call an impulse buy for the customer. We’re talking low four figures.
Susan: Right. It can’t be $10,000 to be an impulse buy.
Kirk: Exactly. Depending on your business, it, maybe for your business it’s a low five figure. Or it may be in the hundreds. You got to decide what is an impulse buy for your customer. We know our customers, this is the right price point. Also, I wouldn’t thinking about it from the standpoint of, how do I make a quick buck? I was literally thinking about it from the standpoint of, how do I create quick value?
Susan: Oh, right. This has created so much value for the customer. It’s probably a bigger return on their investment than actually any of the software development we would do for them. What they learn through this process is often times more than what we learn through the process. Which is interesting.
Kirk: Well, and one of the other things that we have put on our prep list was the idea of helping the customer help themselves. This quick discovery process has done that. That’s what you’re referring to.
Susan: Right, so one of the things that you’ve done is you’ve put together a questionnaire, and it goes very in-depth. The first time I read the questionnaire, my response was, “Oh my goodness, this is so hard.” Then I thought, “Wait, but that’s supposed to be the point, you’re supposed to be thinking about these answers as it pertains to your business.” The answers that we have gotten from our customers have really shown that they had to think about it.
We even had one that tried to go back and say, “Well, it doesn’t really apply because we don’t really have customers, we have members.” I said, “Okay, but then your customers are your members, so you need to be answering these questions with that in mind.” They went back and they gave it another shot, and they did great. The insights that they gave us were spectacular, and I think that they definitely learned stuff along the way as well. We’ve heard that feedback from some of our customers.
Kirk: Right, so point number one is, look for a quick win that you can offer your customer. Something that you can actually offer them at the end of the first phone call. You have a 45 minute discussion, and you’re able to offer them something that’s value, and this is probably going to fall in the category of productized consulting. It’s going to be fairly standard offering, you’re going to either have a fixed price point, or you’re going to know the range, and you’re just going to throw it out there at the end of the first call.
What you’re referring to is the fact that we’ve had some interesting response from the customers we’ve done this with so far. We’ve gotten some pushback. I think in every case so far, in one case, we encourage them. Their response was something along the lines of, “I think you’re going to see from our answers, this is not really a fit for us.” We read their answers, and we’re like, “No, that’s exactly what we need, please finish.” Fast forward to, they filled it out, we had a conversation, and their feedback was, “This process is so valuable, you’re making us think about things we’d never thought of.”
Susan: Right, and then how that changes their business. Whether or not we do development for them. The value that they take from that is tremendous, because sometimes they might change, or at least they have cemented in their head what they actually do. What is the process they actually follow, as opposed to what they always thought it might be?
Kirk: It’s interesting is, we’re talking about discoveries, not really discovery for us, it’s discovery for the customer.
Susan: It is, it is. They are learning more about themselves in having to teach it to us so to speak. What we’re learning is, it makes diagnosing a lot easier so that we can prescribe properly to reference some of our previous guests on the show.
Kirk: Right. You’re referring to, for example, the episode with Blair. The title of that episode was something along the lines of Diagnosed before He Prescribed Them Price. That’s what we’re talking about here. It’s interesting, I’m thinking about another customer, and obviously, we’re leaving out customer names intentionally. I’m thinking about another customer where we offered this quick win, they bought it, we send them the questionnaire, and literally, over half the questions came back N/A.
Susan: We kicked that one right back and said, “No, this is not going to work. You’re going to have to actually answer the questions.” It turns out in the instance that I believe the wrong person was answering, or trying to answer the questions. We redirected it to the project lead, the project champion as we’ve talked about before, to go and seek out the answers. If he did not know them himself, to make sure he was seeking them out in the proper people.
Kirk: I completely agree. One of two things happened in this situation I think. Either they didn’t think it was important, so they asked somebody other than the lead to fill it out, or the lead was on vacation. I’m not sure which, but one of those two happened. What I’m encouraged by is, I got to admit, there was some fear on my part of going, “We got to kick this back.” I was afraid they might come back and say, “Well, you’re making us work too hard, so we just don’t want to do it. That’s not what happened.
Susan: It’s not what happened, and if that were the response, then that tells us something too. Because the whole thing is not going to work. If they cannot be open, and they cannot share that information, how on earth are they going to be able to work through a technical detailed software development project. It tells us right up front we’re not a fit. We have learned from that. In this case, they just said absolutely this was not the right person to do it, and they put the right person on it, and we do not have the answers yet, but I know that they’re working on it more diligently.
Kirk: I would add, in both these cases that we’re talking about, in both instances, there was some form of resistance or pushback. We had to have the courage to go, “No, you need to do this.”
Susan: To do it without being in their face. It does take a little bit of political feedback to them, you can’t just say, “No, you have to do it. You’re wrong.” You have to be nice about it and provide an explanation as to what value they are going to get out of it. I think that they saw that.
Kirk: Right. You can tell somebody no, but you can do it in a polite way. Or better yet, tell them no by saying yes. We’re talking about having tact.
Susan: Yes. Something I had to learn over the years. I write it better than I speak it.
Kirk: Well, you know what? When I’m having trouble with tact, I usually ask you to jump in.
Susan: Yes, that’s when I jump in and say, “Kirk, let me give this a shot. (laughs) run it back by you later.”
Kirk: I think there’s a good point there, there’s some wisdom. So many practitioners and professional services are solo-preneurs. They’re solo-entrepreneurs, freelancers. You need to have a peer that you can run things by. Don’t just respond. In both these cases where we got some resistance, we did not say the first thing that we thought of, we ran it by each other. Now, you and I, I really think of us as peers in the business. We’re actually working in the same company, but you can do this if you’re a graphic designer. Man, find somebody else. You’re probably already talking to them on Slack, or Facebook messaging, or something anyway. Get their in-
Susan: Or your husband, or your wife. Your significant other. Whoever it may be, you trust that person. I’ve certainly run things by my husband before I’ve responded just to say, “Hey, you’re coming into this situation, you know nothing about it. Um, w- what does this say to you? How is my response? Because I’m angry when I’m writing it. I don’t want to convey anger. Take a look at it, tell me what you think.” That personal touch from someone who has no clue what you’re talking about, they can read into your words a little bit more than somebody who is a little closer to it might be able to.
Kirk: Exactly. We talked about this same situation before. We call it a pricing Council. It’s really just, hey, if you’re isolated, regardless of what it is, get feedback. Get input. Ask somebody else to try to put what you are thinking into words, and in this case where we got the pushback together, and I’ll put most of the credit to you, because that’s where it goes, I just said, “Man, this response is crap.” You put that into very eloquent language.
Susan: Well, I do have a degree in journalism. It’s good for something I guess.
Kirk: I would agree. Anything else we want to offer on these two ideas of creating a quick win, the idea of selling a quick win at the end of the first call, but it has to have substantial value. Then two, helping the customer help themselves. Anything else in this bucket?
Susan: As far as it goes, I think from the perspective of the business owner, I think it’s such a quick, easy, positive feeling to be able to quickly make money, to quickly provide value. That inspiration gets you excited about the customer, it gets you involved, it gets you moving on their projects, and not wanting to back burner it. It makes you want to do it, which is also, I think, very valuable from a business perspective.
Kirk: As I reflect on the sales situations with both these customers, I know with the first one, I think the reason they chose us was because we were willing to move so quick. I think they were actually talking to others, and we were just, after 45 minutes I was like, “Well, here’s step one, do you want to do it?” They were like, “Well, shoot, let’s go.” It really became an impulse buy. All right, so let’s transition our conversation a little bit to creating value. There’s a couple different scenarios that we’ve encountered recently that I think are common. We’re not unique, we’re not the only people this happens to, and so we want to bring those out in the line and go, “How do we deal with those from a value perspective?” Let’s talk about creating value in a rushed situation. What are your thoughts on that?
Susan: Well, rush situations are always challenging, especially for software development, because there’s so much stuff you have to figure out before you can put a price on it. At the same time, the value to the customer of needing something done quickly, man, that’s really invaluable. When they are, in this case, talking about submitting a report to a mediator that could be millions of dollars worth of income to them and their customers. Being able to turn it around quickly enough that they can actually benefit from it is where the value is. It’s more than, who cares about the technology? We know we can do that. It’s, how fast can we do it?
We were able to use some of the tools that we use at MightyData that allow things to go fast, and we were able to get a change request to the customer, get paid in a day and a half, get it on the developer schedule in a day, and he was then able to knock it out in about 2 ½ days. We had a little bit of rollover on that one, and we probably under priced that one in retrospect just because of the urgency of not being able to schedule, and needing to have developers work after hours. Those kinds of things that were not really planned for, expected upfront.
Kirk: There’s two things you said that I want to draw out. Number one, you’re talking about the value of a quick turnaround. FedEx has taught us this. When you absolutely, positively have to get it there overnight, we’re saying there is value in quick turnaround, and there is value in the quick turnaround itself in addition to the value of what it is you’re turning around.
Susan: Correct, correct. Because the first shot, it’s custom software development. The first shot you make at it, it’s hardly ever perfect the first time. The going back, and fixing, and tweaking was part of the part that took longer than we expected, and also, because we were dealing with, it’s a law firm, submitting things to mediators, a dead giveaway on that one, but as a law firm, there are times they have to be in court, they just flat out are not available.
There is no way around it, it’s not their call. It’s somebody else’s call to make them unavailable. We were able, in this instance, to shift a half a day of work somewhere else for them, even though that was not in the scope. It was in the spirit of the agreement with them, so we stuck by the spirit of the agreement. I do think that I probably could have managed scope a little bit better because it did drag out a little longer than we expected as far as some of the tweaks went, but at the same time, it’s an ongoing customer, it’s a customer we really like, and being able to provide that value in a short period of time was really what he was paying for.
Kirk: The other point that you mentioned that I wanted to draw out is the fact that because it’s a rushed situation, gets your adrenaline going. All of a sudden, that adrenaline starts affecting your decision-making process, and what will happen in a rushed situation is, number one, you will probably oversimplify the scope, and two, you’ll probably undervalue it.
Susan: Yes, and that happened in this case. What was presented to the customer, if you go back and read it, is what we delivered. Boo on us for not actually pricing it a little higher. If it had been priced a little higher, the fringe stuff that we dealt with would not have been a big deal at all.
Kirk: Well, and we went ahead and did what the spirit of the agreement was and said, “You know what? The mistake’s on us.”
Susan: Yes, exactly.
Kirk: I think what I would want to draw out is see rush opportunities as an opportunity, not as an aggravation. Realize there is value in the quick turnaround itself, and then don’t let the adrenaline of the situation influence your pricing.
Susan: Yes, exactly. Understand that, I guess, the customer also has that same adrenaline at that point as well. They’re pretty desperate when they’re coming to you like that.
Kirk: The other thing that I just realized is, because the adrenaline is influencing your pricing, that’s where we felt like we messed up on the scope. You just said a second ago, if we priced it higher, we wouldn’t have felt like we messed up on the scope. It wasn’t a scoping issue, it was a pricing issue.
Susan: It was, that’s absolutely correct. We should have given him a little bit more flexibility. He was able to actually get an extension with the mediator, which is something I, from my perspective, I didn’t expect that to be able to happen. Then once that happened, it was able to get drug out longer than expected.
Kirk: Anything else you’d add on that one before I move to another situation?
Susan: I don’t think so. I think that one’s pretty well covered. We have had a situation with another customer too where what we scoped was just absolutely not at all what it ended up being. We also abided by that price, and made that customer very happy. In that case, we actually told the customer that we under priced and under scoped the project, but that it was our fault. We apologized and said it is going to take more time. I’m sorry, that’s where you’re going to have to give us some grace, and he did.
Kirk: Right. Now, the particular situation you’re referring to here was not a rushed situation?
Susan: It was not a rushed situation, that’s correct.
Kirk: It was basically a rewrite of their website. This was a significant, custom function on the website that really affected their marketing. You go to their services page, and I think four out of the six links on their services page go to this one function. It’s a big part of their marketing, that early outreach to the customer self-service tool. We grossly underestimate. What we did was, we were honest with the customer and we said, “Look, we under scoped and under priced to this one. It’s not your problem, t’is ours, but we’re letting you know.” Essentially, we did a verbal change request. We said, “Look, we’re not going to charge you more money, but we are going to need more time, and here’s why.” Fortunately, it was a good customer who understood.
Susan: Yes, and he actually even came back and said, “Listen, I don’t want to put you in that situation. I- You know, o- let, let’s, let’s make it work out.” We said, “Nope, it’s our fault. W- we’re not going to let you do that. That’s part of the service we offer is sticking by our price. We’re not going to change it.”
Kirk: I had forgotten about that. What you’re referring to is the customer actually came back to us toward the end and said, “Look, if I need to pay you extra for this, I’m willing.” You and I had a discussion where we considered it, and we said, “No, it was our mistake.” We went back to the customer and said, “We appreciate it, we’re going to politely decline, and we just want you to know we are also not trying to make it up on the next one.”
Susan: Right. It was important to us or him to know we stood by it. Sometimes we make a lot of money off of these things. Sometimes you mess up.
Kirk: I think that’s a really honest thing to say. People think about value pricing as money flying out of your pockets on the way to the bank. There are those times, but we still make mistakes. We’ve been doing this over five years, you still make a mistake. I think what I would encourage someone else is, don’t be scared to make a mistake, and don’t let the fear of making a mistake keep you from taking the first step.
Susan: Absolutely. Because it does make a difference. I will tell you how much easier it is to deal with all of the situations if you’re following this method. Because, if we were pricing by the hour, or that poor guy that we grossly underestimated and underpriced, I have no idea how much he would have had to pay us. It would have not been worth it. He would have not gotten the value out of it.
Kirk: Well, he probably would’ve gotten angry. He probably wouldn’t still be a customer.
Susan: A good customer.
Kirk: A very good customer. It’s also interesting to me, in this situation, that we took the risk off the customer is what we did when we put a scope in our price, and signed the dotted line. This customer has gotten used to that with us. Although, I don’t know that it went through our heads, at least not mine, I realize now after the fact what we did is we reinforced the idea that we got your back. We will take on the risk, we’re not going to go hourly and put the risk on you, we’re going to put the risk on us. If we make a mistake, we’re going to do the right thing.
Susan: I think he values that as much as he values any work we do for him.
Kirk: I agree. I agree. Of course, he’s such a nice guy. It’s interesting, we’re overlapping a couple customers here as we talk about challenging situations. We like both of them, but I would say the like is in different ways, right?
Susan: It’s very different, it’s very different. It’s interesting, right now we’re in a very awesome situation of really liking all of our customers. They’re all very, very different. We have one who’s highly detailed. Detailed to the point that you’re like, “Okay, that’s too much information.” Then you have one that is if you follow Dave Ramsey, he’s a very high D, very high D personality and sometimes you’re like I cannot move forward with that limited amount of information, I’m going to need more. Then we have this other one that we’re talking about who is very logical, very reasonable. Sometimes you don’t get the information the first time, but if you just ask a clarifying question he is very honest and he’ll get right to you.
Kirk: You know I never thought about it, but this process allows us to adapt to the personality style of the customer, but yet it’s still the same process. We’re not varying the process per customer. I mean, maybe a little, but not so much. We follow the process we have.
Susan: We just adapt the communication style which is the purpose of knowing those profiles. If you haven’t followed them or used them, you should check them out. I’ll put a link in the show note.
Kirk: That would be awesome. What we’re talking about is the profile. Along the idea of this challenging customer I want to go back to the rush situation where it’s interesting, were talking about two challenging situations, the common factor in both is we underpriced it. They’re different, one was a long-term project and we really just pants down around our ankles, right?
Susan: In over our heads.
Kirk: Of course, we had some good friends who helped us get out of it.
Susan: Yes, absolutely.
Kirk: I’d love to give them a shout out, but just because of confidentiality I can’t. You know who you are. You should be listening to the show. For the other customer, this quick turnaround, it became challenging because of the quick turnaround. It’s real interesting, this almost feels like therapy for us, because we’re doing it, this is a live after action review without names. That’s what this is.
Susan: That’s a good point. I like it.
Kirk: Anything else along these lines of challenging situations?
Susan: I think that covers it for the short term at least, I’ll have more by the time I get back to my desk.
Kirk: We had another interesting situation come up, and it was just this week. We had presented a change request to one of our favorite customers, they’re very easy to work with, very levelheaded. We got a question from them that we’d never gotten before. What was the question that we got?
Susan: Their question was, I think that we didn’t finish this scope from a previous change request. My eyes about popped out of my head, because I was like there’s just no way, there is just no way that’s possible. Let me find out, I didn’t immediately again, you have to communicate well. You cannot just react. I said listen, if that happened, I’m very sorry, that is not how we do business, can you please let me know what you’re referring to. They were able to provide me the information, and I did some research, and because we keep good historical records using [inaudible 00:28:01] that is a plug there for them. I was able to go back to the exact dates that the work was done, and was able to tell him exactly what had been accomplished in that. He immediately agreed after I was able to send him that email, and said, “You’re right, that is not what I thought it was, but you’re right that was covered. Thanks, we’ll get you a check for this new one.”
Kirk: This question the first time, I don’t think this customer has ever asked this question before. Second, it came in on a Friday afternoon. Third, it came in right at the same time that basically they had asked us for more work, we had sent them the change request, and to me it’s one of the worst situations. The customers ask for new work, we send them a change request, the next step is to sign and pay, and they go, “Wait a minute, something we paid for.” This was like six months ago, I don’t think you guys finished that.”
Susan: It was even better, because they had already signed it. They basically were saying, “Hey, can I get a credit of this towards this new one?”
Kirk: Right, and so I remember, and this came out on Friday so it gives me the weekend to think about it, which my brain does. I remember going, “Okay, so what’s going on here? Is this because the dollar amount is the same as the other, or they get confused?” I noticed there was a new name attached to the email which I was not aware of who this individual was. I was like, “Okay, somebody else raising this question internally, and it’s just coming through our main contact.” I was basically trying to go, what’s going on here behind the scenes, not taking it at face value, but thinking behind it what could trigger this.
Susan: Well, I will tell you right up front what I learned from the next one. We don’t always put every single task, every single to do item into our change request. Sometimes we reference a list that has been put into base camp. We are referencing this list, we’ve already talked about everything on this list, all the scope is in this list. This is the price to do this list. Well, seven months later after everything is checked off, and some things have been actually … This one involves some discovery on some items. They were moved to different lists, things like that. It wasn’t as clear-cut, so one of the things I learned, and I even told the customer in the future we will make sure that we’re going to itemize those things, even if it’s just a here is your list of the links to them so that they’re there.
Kirk: We didn’t have the links to the basecamp items in the change request?
Susan: Not in that one.
Kirk: Okay, and that’s something we normally do?
Susan: Right, normally. I believe that in this instance we were under the gun to get it to them quickly, so we did it the quick way, and again, lesson learned.
Kirk: Creates a question for us six, seven months later, a moment of adrenaline stress on a Friday afternoon going, “Shoot, we’re not going to get this business, and now were going to have to go back and redo something else we just did.”
Susan: I will tell you that I know how I manage products, and I knew there was no way we didn’t do it. I just knew it.
Kirk: Well, and I’ve got to be honest, the adrenaline fear that came from me was really just kind of on the monetary side, it was like, “Oh, I was counting on this cash coming in, it’s not going to be.” The other part of it was just like, “Darn, business is over today. I know Susan is going to take care of this, but it’s not going to be till Monday.”
Susan: It did take me until almost 1 o’clock on Monday, so I hope you’re okay.
Kirk: I survived. We’re recording this the following day, so I’ve had some sleep. We used base camp religiously. We have really hammered out a process that we follow religiously. By the way, I’ll even add I probably follow it religiously 70% of the time. Will you give me that much credit?
Susan: Maybe, what do they call the Catholics who don’t go to church on a regular anymore? A lapsed Catholic.
Kirk: Apparently, I need to go to confessional. We used base camp as our Bible, I call it an online diary of the project. We had a couple situations where an issue arose with the customer that we could not agree on, and so they decided to stop working with us and move on. We gave them a copy of their base camp project when they left.
Susan: Right. We were able to export it, and send all of their history, they can have it for their reference, they can send it to their new person. We are not using it as a way to keep information away from a customer. To that point too, if the customer does leave, man, it hurts. It really hurts, but you have to give them grace as you would want if you left.
Kirk: You know it’s interesting, this is literally a thought off the top of my head, but by the way, if you run your business based on value pricing, this is how your mind will work. I was just listening to us talk about the value we were able to hand a customer when they left, and I’m thinking, my first thought was when ask for it, go, “Well, here’s the price to get it.” That feels like you’re slapping them upside the face. Maybe we say in kind of the guidelines of how we operate, we say, “Look, you are always free to come and go. We will maintain an online diary of your project. If you would like a copy of that to take with you, here’s the price.” Because I actually think there is additional value, and I don’t know if that’s a good idea or bad idea, I’m thinking out loud.
Susan: I think it might be a good value if it’s done up front. In these two instances, it was obviously after the whole thing was done. I think if that were put into an upfront customer agreement, think that that would be actually an awesome thing. Which kind of brings me to customer agreements versus NDAs. I think we wanted to talk about that today.
Kirk: Oh my goodness, yeah NDAs. So, Carrie [Dills 00:33:38] and I wood shedded this some on the last show, but I’m just going to be straightforward, your idea is not worth anything. Ideas without execution are not worth anything. So many times when we’re doing software, people want to protect an idea. First of all, we’ve been in business for 20 years. Never been sued for violating confidentiality, or NDA, or anything like that. When you put an NDA as a condition on the early relationship, and what I’m talking about is let’s say we’ve had a 50-minute conversation, I say, “Okay, send me some of these documents so I can get an idea, they’re like, “Sign an NDA.” Wait, I thought the whole purpose of this was for us to decide if we want a date. You and I talked about how this is essentially like asking somebody to sign a prenup before you go on a date.
Susan: Right, it is like that. Now, I do see the situation where if you’re say a pharmaceutical company, or a doctor, a doctor’s office, things are regulated by HIPAA. They just cannot send you a file that has any of that personal data in it at all. I mean, they are breaking a whole bunch of federal laws. In those instances, having an NDA that basically says, “Hey, I’m not going to take your data and sell it to somebody.” I see that that makes them more comfortable. I think it’s interesting that people don’t understand that if we were in the business of mining your data and stealing it, that we wouldn’t be in the business that we are in. Just doesn’t work.
The information that we are privy to as we work on this, these software. We know as much about HR information, sometimes Social Security numbers, all sorts of information that we have access to when we’re working on projects with customers. What are we going to do with it? Were not going to go steal people’s identities, were not going to do anything like that. But, they don’t know us yet, so they think that by signing this information, or the signing of an NDA, it means that we trust each other now. It really doesn’t mean that at all. It specifically means we don’t.
Kirk: Exactly, and I guess that’s why I have an objection too. It just sets a tone of mistrust on the entire relationship. As I’m thinking through this idea of trust, I’ll be honest, this idea of NDA’s is one thing, but led me to the quick win discovery idea. I was like, “Okay, well let’s up. You want to build trust, I’m going to put it on the line. Pay me some money.”
Susan: Are you saying that money buys your trust?
Kirk: Do not put words in my mouth, please. I am saying that at least from my vantage point as a business owner and a service provider, I’m willing to sign an agreement like an NDA when we are entering into a contractual relationship, there is an exchange of value. There is a concept, and this is going back to my business law classes in college.
I won’t say how long ago, but the idea is that in order to have a valid contract, there has to be offer and acceptance, there has to be an exchange of value. I can’t remember the legal terms for this, but literally it is one of the things they look at for a valid contract is the exchange. Was it an actual exchange? In my mind, when I offer an NDA, and there’s no, it’s not tied to actually doing business, I’m offering value and I’m not getting compensated for it. It’s peace of mind, and I know you’re calling that trust, but-
Susan: I almost feel like there should be a one page document that says, “We are not going to use your data. Please sign this so that we can continue this process, and then when we actually get to the point of the real customer agreement, we’ll execute it.”
Kirk: One of the things that I think every NDA, or nondisclosure should have in it, is mutual. At least in a business relationship. I understand there may be exceptions in unique circumstances. In general, the whole point this is coming up, is we’re provider, they’re a customer, we each we are willing to offer services, they’re seeking our type of services, so we’re basically trying to have a conversation. We’re going out for coffee at Starbucks, not literally, but virtually to figure out are we going to go on a first date. I guess this idea that we’re going out for coffee, were not going on a vacation together.
Susan: We’re not talking about moving in. You don’t get a drawer, you don’t get a toothbrush at my house. None of that stuff.
Kirk: I so did not see shacking up coming into this conversation, but I guess I opened the door with the whole prenup thing.
Susan: Just trying to be equal to all people’s choices.
Kirk: The idea that it’s a one page document, basically says, “Hey, we’re going to exchange some confidential information so we can decide if this is a good business relationship for both of us. We both agree not to disclose what we learn. End of statement.”
Susan: The problem is is that you get into situations where you try to submit something that simple, and somebody says, “Well, I’m going to send it to my lawyer.”
Kirk: Seriously, you have to send a document, a one-page document to an attorney to decide if you’re going to do business?
Susan: Well, and we’ve had that situation where we have a standard agreement, we have a standard NDA. We have used it for I’m assuming 20 years, I’ve only been here over five, so it’s been the same one, we’ve used it the whole time I’ve been here. It’s sort of like when you go to sign an apartment lease, and you want to make edits to the apartment lease thing. Okay, tens of thousands of people have signed the same lease. If there is a problem with it, your lawyer is not going to edit it, they’ll just move on to the next person. That’s part of where we are getting too, where if you want your lawyer to edit this, we’re just going to move on to the next person. We don’t have time to run this by our lawyer. There is an expense in running it by your lawyer. We have not entered into any sort of agreement to exchange any sort of money, but you’re already asking us for an out-of-pocket expense.
Kirk: I warned you this is how my brain works, I’m sitting here going, “Okay, there is value to the customer to edit our agreement. What price can I put on that?”
Susan: That sounds about right.
Kirk: Yeah, that’s not going to fly. Yeah, I love the idea that you came up with of signing on apartments. No, they’re not going to change that. They’re leasing probably hundred or more apartments.
Susan: It’s the same with buying a house, it’s the same with buying a car. The documentation for all of this is the same. You have a blank here or there you have to fill in, and that’s the part you have to check that was correct. Well, why are you arguing with all this other stuff that’s just been used forever, for everyone? It doesn’t make any sense.
Kirk: The way I look at an NDA, is I think it’s really just to say, “Okay, these are the ground rules.” Right? I know some other consultants that actually when the idea of an NDA comes up, they’ll say, “I’m going to give you our Master services agreement.” They are actually going to say, “Look, this is- these are all the guidelines or business rules that we’re going to agree this is how we’re going to agree to commit business.” It’s things like noncompete, things like nonsolicitation of employees. So on and so forth. It really just says these are the ground rules.
Susan: I think that sounds great if you’re about to enter into an actual financial project that you’re moving forward on. I’ve talked to you for five minutes, that’s too much.
Kirk: I haven’t tried this approach, but I do know the person that I’m referring to that has, I’m either going to have a conversation with her, or I may just try it. This one point I’ll add, we are kind of opening up a kimono in this discussion, your hearing about the good, the bad, and ugly. Our business is not stagnant, stale, fixed. We are constantly adapting, learning, changing.
Susan: We have processes, but the processes, and I believe this strongly as the writer of the processes, and the documenter of the processes, they are there so you have the guideline, and then when something changes, when something modifies, you update the process. You don’t just say, “Well, no, that’s not how we do it. That’s not the process.” You have to grow, there has to be room for more.
Kirk: I’ll add, number one, there’s value in processes. When I mean value, there is value to the customer in processes. The processes you have in place to do business are a big part of what you need to be educating your customer on before they decide to be a customer. Because that creates value for them. You need to explain in that light.
Susan: And that they have to feel comfortable that you do it on a regular basis, that you’re not reinventing the wheel every single time.
Kirk: Yeah, I take my car into my mechanic, and I’ve got to replace one of the piston heads, I don’t want to feel like the guy, “Hey Jim, could you order the manual for that little car there? We got to do this thing we’ve never done before.” No, you want to feel like, I’ve got your back. Here’s what I want to end with. Let’s talk about the value of a repeat customer. We got one customer that quite frankly may be one of my favorite customers being in business over 20. We’ve talked about some of the mistakes we’ve made with them, but the fact that they stayed with us. What is the value of a repeat customer?
Susan: It’s invaluable. That trust that they have. The benefit of the doubt that they give you. The honesty that they come with. Asking whether or not the project was complete instead of actually just going away and feeling cheated by asking and allowing us to make them understand that they weren’t cheated. Then they understood it. That’s invaluable. They’re cutting edge, they want to keep doing things, they want to have the best, they have a laundry list of stuff we just keep trying to get to for them. It’s great to work with them, they’re logical, they’re straightforward, they’re friendly, they’re nice. I mean, how do you put a price on that?
Kirk: Well, what you described is kind of our ideal customer. At least some of the traits. Obviously, the big value of a repeat customer is there’s more business. There’s more revenue, but it is interesting, when I asked you what is valuable, that was not what you said. You immediately went to how much you enjoy working with them, to the quality of the relationship. I think that says a lot about how you want to think about the customers you do repeat business with. It’s not a number, it’s a relationship.
Susan: It is a relationship, and the money is a byproduct. People always say money can’t buy happiness, it can go quite a ways to get you there. It can’t buy happiness. You can be working with a whole bunch of people that you can’t stand and it’s miserable. There’s no amount of money that can make it worth it. When you get customers, and like we were talking about, we have a lot of them right now, all of our customers right now we actually like them. That is huge.
Kirk: I think you’ve set forward the couple that are in these new road mapping in phases. They’re all repeat customers.
Susan: Yes.
Kirk: It’s interesting, my mind is going back to … Because what’s the opposite of a repeat customer, as a customer who doesn’t repeat. I’m thinking of one from last fall, and this whole thing came off the rails regarding an NDA. We’d never addressed it upfront, and it was interesting, at that time I thought the best way to address it was just to ignore it, and now I think the best way is to address it up front but with a simple, straightforward document. That was actually a customer we’d liked, and all of a sudden it came off the rails over something so silly.
Susan: It really was, and it was communication. He had been a repeat customer as well, and it was one of those things, and there came to a sticking point that I think neither party was willing to budge on, and if that had been covered before we ever started anything, I don’t think it would have ever been a problem.
Kirk: The lesson learned here is don’t let fear motivate you to avoid addressing something. Communicate.
Susan: Right. If nothing else, it helps you understand earlier that there is a sticking point you’re not going to get past. As opposed to dragging things out over time, spending more money with lawyers, and effort, and everything else that you put into something, that’s not going to work.
Kirk: Feels like we’re bringing it back up. This is a contrast, a repeat customer versus a non-repeat customer. The life of a customer in our business is around three years. We’ve had a few customers may be going to four, but I don’t think I can think of a customer, I can think of a few, but their in a whole different category. It’s really not in our software business, it’s in the line that’s from a decade ago. In general, in the software business, I don’t think we have any customers that go past three years. At least on this project. Something always happens, they get bought out, they retire, they grow, something happens.
Susan: Or they feel comfortable that the software is doing what they need, and they might call us in two years and ask us to upgrade them from one version to the next four that they skipped, but they got the value that they needed.
Kirk: I guess that’s one thing to think about on this idea of a repeat customer, if the customer doesn’t repeat, why is it? Is it because there was some type of disagreement that caused the relationship to end? Or, was it because you delivered on the value so well they didn’t need you anymore?
Susan: Right, that can happen as well, and they probably still do need you, but they don’t realize it.
Kirk: Well, and that’s where we’ve got to go back to helping the customer help themselves. Well, Susan this has been a great discussion, I want to give you a chance to plug something I know you’re getting to do coming up this fall. Mutual friend of ours Molly Conley is putting on a conference for freelancers and consultants. It’s this worklife balance, think the website is findyourmoose.com. You’ve got to go check out the website just to find out what the heck does consulting and a moose have to do with each other. The point is, you’re speaking at that conference. You want to tell us a little bit about that?
Susan: I am. I’m going to speak on how to make things happen. Going to be specifically setting goals, managing to do lists, managing priorities, all of those things that apply to business as well as your personal life. I’ll be speaking under a brand called Beyond the Chaos which is my brand. It’s been around for about six years, I do it part time, little stuff on the side. Mostly personal organization, but I’m trying to branch out a little bit more into helping other people manage their life. It’s really about taking control of your life, your business, your world. Making things have less chaos.
Kirk: If you’re in Chicagoland, or close, and you’d like to check out Susan’s talk about managing chaos, go check her out, or you’ve got to go to the conference and you’ll find that at findyourmoose.com.
Susan: It’s going to be fun.
Kirk: Susan, it’s been great having you on the show again, our discussion always goes in new ways. I learned, that’s what amazes me, is we talk about the situations that occur, and just by talking through them I have new realizations, new insights.
Susan: I agree, I do too, we learn from each other every day.
Kirk: My favorite take away from this episode is the idea of creating a quick win. What service can you offer your customer at the end of the first phone call that creates significant value at a price that is almost an impulse buy? Something that can help create trust and build a business relationship right away. You can find the show notes for this episode which Susan wrote at artofvalue.com/57. I’d appreciate it if you’d leave a rating and review for us on iTunes. You can do that by going to artofvalue.com/itunes. My guest on the next show will be Kai Davis. Kai is an e-commerce consultant who has moved into business development and online lead generation. We’re going to talk about how has he created standardized offerings in his business. Until then, go create more value.
Female: Artofvalue.com.