“All you can eat” is an entirely different price than “very, very cheap.”

Traditional economics says that lowering the marginal price from $2 to $1 should have a similar effect to lowering it from $1 to $0 — but experience and experiments have both shown that the traditional demand curve acts in an odd manner when we reach $0 marginal cost. Jet Blue’s executives should have known better. But the Jet Blue management team is not alone.

Many executives assume their customers are more rational than they really are. For example, most leaders believe in enhancing the options given to customers, but increased choice can actually freeze decision-making by overwhelming the shopper. Excessive options is a key reason that an average of 60% of all online shoppers abandon their purchases mid-stream.

Read more at Design Your Customers’ Decisions – Harvard Business Publishing, 26 Aug 2009

Flickr photo credit: pawpaw67

Coulton isn’t the only artist who is trying to come up with new ways of cultivating an audience and making a living in a post-label, post-studio, post-publisher world, where big advances and development deals are essentially a thing of the past for emerging talent. For my new book Fans, Friends & Followers, I spoke with thirty filmmakers, musicians, writers and comedians who’ve been developing new strategies for building a fan base that can support the work they want to do. Many of their strategies would be equally effective for businesses trying to generate buzz and attract loyal customers – without an enormous marketing budget.

Coulton, for instance, has discovered that by giving his fans an opportunity to collaborate with him, they’re more likely to feel like active, engaged supporters – more likely to purchase CDs, merchandise, downloads, and concert tickets.

Here are just three of the ways Coulton has invited his followers to get involved with his career, each of which could be applied by many kinds of businesses. …read more at Customer Strategy Tips from an Indie Rocker – Harvard Business Publishing, published 17 April 2009.

Photo credit: Dale May Photography

As a fellow small business owner, what would you advise the shopkeeper to do?

Dear Madame:

I am writing to express my distress about the encounter my friend and I experienced in your shop on Saturday, July 9. I am also writing to suggest a remedy.

My friend and I were first-time visitors to your store, but eager to shop there. I had seen your shop a number of times on my way to the city center, and a co-worker and neighboring resident had expressed her enthusiasm for it. In any case, my friend is soon to be married in September and, because she wears an usually large size, I thought this would be the perfect place to take her for a wedding gift.

As first-time visitors, we were very taken with the intimate-wear on the racks. I was pleased when a shopwoman approached us regarding a fitting, and my friend readily agreed. Not surprisingly, my friend had been too consumed with checking out your impressive selection rather than reading any wall signs. So was I. That means she received an unpleasant shock when she was told that the fitting would cost her $5.

Although my friend apologized for her ignorance and the shopwoman agreed to waive the fee, the situation still escalated unpleasantly. Indeed, both the shopwoman and you, the owner, insisted that a couple of signs stated the $5 policy. What was troubling, however, was your insistence that we should have noticed the signs, which we inferred as either (1) “any dummy could have seen it” or (2) “you deliberately chose to ignore it so you could misuse our services.” Not surprisingly, we left without shopping further or expressing an interest to return for a later purchase.

Because I have worked in customer service positions, I am not so foolish as to assert “the customer is always right.” But I do believe that customers should be given the benefit of the doubt and that deferring to misunderstanding more often than not serves to shore up good feeling and repeat business. Why did we not hear “we’re sorry for the misunderstanding, please come back again” from you or your staff?

Well, there is still opportunity for that. I would like to support a boutique shop such as yours and would like to recommend your business to my similarly-busty peers. I am enclosing the address of my friend below and I am requesting that you send a note of apology to her for yesterday’s incident and an invitation to her to return. I am certain that she would receive it well, and that she would signal to me a willingness to shop at your store again. Her name is Name Withheld and her address is 3200 Nameless Avenue, Apt. 301, Anycity, VA 12345.

Thank you for your prompt action. I look forward to hearing from you.

Sincerely,

Your Customer?

Readers, your advice for the shopkeeper?

Flickr photo credit: James@mannequindisplay.com

See the video below and a related, more positive piece from the Boston Business Journal, 3 February 2009.

Flickr photo credit: gregs stuff

If you’ve been freelancing for long, then there’s no doubt you’ve read some of the horror stories about bad clients. You may have even run into a few bad clients in your own business.

Over the years, I have noticed that most bad clients seem to fall into certain common patterns. In this post, I share those patterns with you. Keep in mind that none of these bad client types are specific to any one client that I’ve ever worked with. Rather, these examples are a generalization of the many different characteristics a bad client can take. Personally, I rarely ever have to deal with a bad client in my business, and I’ll explain how you too can avoid them later on in the article. …more at 10 Types of Bad Clients and How To Avoid Them – FreelanceFolder, published 17 March 2009.

Flickr photo credit: marblegravy

Businesses cannot exist without customers, so it’s sadly ironic that many, if not most, businesses, actually understand so little about them. As a company grows, a smaller and smaller percentage of the staff interacts with the customers. In fact, those folks on the “front line” (think call centers, service counters, retail stores) are typically among the lowest-paid and have the least authority.

Meanwhile, back at headquarters fundamental decisions are made with extremely limited information about customers. There, understanding the customer is often considered someone else’s responsibility, because, “we have a department for that.” No department has a complete view of the customer, however, and so in place of true understanding are models and frameworks that attempt to describe the customer. Many companies don’t go beyond demographics and market segmentation. While it’s helpful to know how they break down by age, sex, income, region, and other easily measurable characteristics, there’s actually very little you can actually do with that information. In order to become customer experience-driven, you need to go beyond who your customers are, and understand what they do. …more at It’s Not Who Your Customers Are, It’s How They Behave – Peter Merholz – HarvardBusiness.org, published on 11 February 2009

Flickr photo credit: Roger B.

A: You probably can’t.

The new client concluded, fairly or unfairly (but fairly, I think) that if things are going wrong already, at the start of your working relationship, it does not bode well for work down the road.

But I suggest that a bigger issue is at play, namely, the value and power of first impressions. And especially in this economy, first impressions are more important than ever.

Back in my UCLA days, I once got a job as at a new pizza joint. My roommate at the time gave me some advice that has served me well ever since. “When you get a new job,” he told me, “work extra hard the first month. Do extra without being asked. Say yes to everything. They will see what a good, hard worker you are, and forever more will look at you through that lens.” I must say that I have since found this to be quite accurate. …more at Ask an Expert: You’ve got to impress clients from the get-go – USATODAY.com, published 16 February 2009

Flickr photo credit: cursedthing

Flickr photo credit: Duchamp

To secure a long-term customer, sales personnel need to “look beyond the sale.” They need to form a relationship with the customer, solving all of the customer’s needs and providing ongoing value of products and services.

The basis for establishing such a relationship is to address the five key needs of every customer. These include…Don’t Make a Sale, Make a Long-Term Customer – NFIB.com.

Flickr photo credit: KateMonkey

Let’s not sugar-coat it: It’s looking pretty darn ugly out there. I’m no economist, so I’m not about to predict the markets or the stability of the economy, but I am an internet marketer, and what I can say–with confidence–is that a downturn in the economy does not have to be a major roadblock for your internet business.

One key to surviving–even thriving–during this period of uncertainty is to know your customers… read more at 5 Steps to Customer Loyalty Surveys That Work – Creating an effective and informative survey – Entrepreneur.com.

Flickr photo credit: Wessex Archeology