Monday, February 08, 2016

Firing your customers? You can if you're Elon Musk.

In the later stages of my career, a new philosophy of "cusotmer management" started to take hold. And that philosophy was that all customers are not created equal, and that some were more profitable and desirable than others. So what you wanted to do was cull the unprofitable customers from the herd. And, while you were at it, you were supposed to jettison customers who were "off strategy."

The trick, of course, was to identify those unprofitable and/or ottherwise undesirable entities. We seldom had the systems in place to figure out who they were. But whether we could formally identify them, or just had a gut feeling that they were too expensive to hang onto, in any case we generally didn't have the will to part with them.

Most of my career was spent in companies that sold to "the enterprise" market. I.e., we had large, complex, complicated and expensive "systems". And, as it so often turned out in my experience, the customers that turned out to be the ones we were losing our shirt on were the big names. And nothing so dazzled the places I worked like a name that someone had heard of. And those big names knew it, so they extracted all sorts of concessions and extras for the pleasure of doing business with them. In return, we seldom got anything - they weren't willing to provide a reference, or do a customer story, or sometimes even let their name appear on the customer list. Sure, you could tell someone they were a customer, but that was about it.

But, at least in theory, it makes a lot of sense to figure out how to lop off those customers that don't make you money and/or those that are a distraction from the business you really want to be in. (A hosting provider I worked for had some legacy busienss with a major porn vendor. Readers may recall that the demand for porn was a major driver for the growth of the Internet. More bandwidth, please! Anyway, we decided that there was no benefit to have a porn provider sucking way too much bandwidth up, not to mention that it was just unsavory. So we did get rid of them. A story for another day...)

Mostly, it doesn't seem to make a lot of sense to get rid of customers.

And that goes whether you're in the big old corporate B2B world I come from, or, it would seem, the consumer market.

Of course, if you go about cusotmer-elimination in a public, feudy kind of way, you do get some publicity out of it. And that might be good for business. Or maybe you just want to vent spleen, which sems to be what Elon Musk was up to when he decided not to sell a Tesla to VC Stewart Alsop after Alsop unloaded on Musk's company for putting on what he felt was a dreadful customer event.

The event was last fall, and was held to launch the Tesla Model X, which Alsop wanted to buy, to the tune that he signed up for one and put down a deposit. The Tesla Model X is a 90 MPG SUV that goes for about $80K. (Or about $130K - I've seen both prices mentioned.) So there won't be an unlimited audience for it. Counter balance that with the fact that anything Elon Musk does is going to generate plenty of interest, and the fact that the Tesla is hip and trendy. So maybe a debate on whether how well you need to treat your prospective customers would end in a draw.

Apparently Stewart Alsop didn't find the event to his liking - it didn't start on time, it was over-crowded and he didn't get the oportunity to test drive the car, the food was awful - and Alsop took to his blog, as bloggers do, to rant about what a waste of his time it was. And to crank of Musk for not even apologizing. He posted it as an open letter to Elon Musk.

Fast forward a few months, and Alsop found that Musk had canceled Alsop's order for the car.
British newspaper The Guardian has accused Musk of being "unbelievably petty" in his response to Alsop's moaning. Is it it teachable moment? The possible lesson here is you shouldn't criticize Musk or make him mad if you want to buy a Tesla, as The New York Post and The Silicon Valley Business Journal put it. (Source: Market Watch)
Quite naturally, Alsop just had to blog about the order cancel. And, Alsop being Alsop  - a former journalist turned investor, from a family of prominent journalists - a lot of folks in the tech and business media picked up on the story.

To which Musk responded with a snide tweet about it being a slow news day when his response to a "super rude customer" made the headlines.

But was Alsop being super rude?

I think not.

He was making some valid points, and he was directing them to a public figure - Elon Musk - rather than trashing the marketing folks running the event. He wasn't - IMHO - being a jerk about it. He was describing his experience from his persepctive. He was blogging. And there didn't seem to be anything untoward or particularly rude about it.

But there was Elon Musk, over-reacting. When maybe what he should have done after Alsop's first post was invite him to do a test drive.

A few years back, when the Red Sox were in their glory days and tickets were hard to come by, a wrote a humorous but out there post on my experience trying to buy tickets online. The system has been much improved. And the Red Sox have declined. So, overall, it's much easier to get tickets online these days.

But back in the day...

My screed did get a response from the Red Sox: an email from the head of marketing (which included an email he'd received from then-president Larry Lucchino about my post) saying that the Red Sox would try to improve the system and, in the meantime, offering to have someone in his office facilitate my ticket purchase. I didn't go haywire, but I was able to score tickets for a few games.

Needless to say, my next post about the Red Sox was a smilier-faced one.

But Elon Musk? I've generally been an admirer of his business and technological acumen, but I think he's out to lunch on this one. Maybe he's a marketing genius, and did it to amp up product awareness. Or maybe he was just being a jerk.

Anyway, if he wants to put me in the No Tesla Zone, he can have at it. But I really think if you're going to fire your customers, there should be a better reason than them ragging you about a crappy event your company put on.

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