One of the 7 deadly wastes is that of rework or over-processing. You may want to look at processes in your company to see if rework waste is hampering your efficiency.

However, be sure you analyze not just your internal steps but also those imposed on your customers.

On a recent trip to my bank’s ATM I had to deposit some checks. I had pre-made my deposit envelope for both my business and personal deposits.

As I started using the ATM, I noticed they had changed their machine. They no longer wanted deposit envelopes. They wanted me to submit my checks one-by-one into the machine.

The ATM then scanned the check, read the amount, and processed the deposit. This is a great gain for tellers. No longer would a bank employee have to open the envelope and manually process the checks. Surely this reduces errors and frees up the tellers for other work.

However, this causes a serious crunch on customer throughput.

It took me four times my normal transaction time to make my deposits. During this time, the line of cars behind me steadily grew.

The bank’s efficiency gain came by shifting the burden to the customer.

When you change your process, think about how it will change customer behavior. Just because you are more efficient doesn’t mean that your customers will be.

If one customer is less efficient because of your change, odds are others’ experience will also be adversely impacted.

Convenience fees for accepting credit cards are evil. Almost as evil as rebates.

One of the joys of running a business is having customers that pay you. They arrive with any number of payment forms. If you want to get paid, you have to juggle accepting different payment types with costs of doing such.

Unfortunately, some businesses lure you in with a “pay by credit card” promise when, in fact, you have to pay extra for the “convenience” of this service.

Small Businesses

Large stores will accept credit cards for what would seem any amount, even less than a dollar. Why? Because the cashier is just an employee. These front line folks probably don’t even know what a merchant account is or how it works. They feel no pain like you (the business owner) do at the killer fees you have to pay to process a credit card transaction.

Don’t use the excuse that you are a small business to slap a “convenience fee” on a customer. I’ve seen my share of handwritten notes taped to cash registers indicating a 25 cent fee will be applied to orders under $5. You’ve probably seen these too.

If you have such a sign on your register, consider that it may be a violation of your terms of service with the credit card companies.

As a small business owner, I know that you have to pay the merchant account and processing handlers per transaction. When you run that low dollar purchase, your fees are a higher percentage of the total than a more expensive purchase.

Nevertheless, you walk a fine line between alienating customers and violating the credit card companies’ terms of service. Neither option seems like a good one.

Online

Credit card processing is the backbone of e-commerce. Unfortunately, some government and utilities insist on charging a “convenience fee” for paying online.

I know they are just passing along their fees to the customer. But the customers don’t know that. They are just hit with a 3-4% “fee” that greatly increases their out-of-pocket expenses.

Take a look at the savings you’ll get from accepting credit cards online and they will offset the overhead of paying for people to open envelopes and manually process payments received by mail.

Just Say No

If your offline business deals with lots of transactions around a low dollar amount, maybe you shouldn’t take credit cards to begin with.

My wife reminded me of Amy’s Ice Cream here in Austin. Not only do they have “legendary” ice cream but also have an ATM in the corner of their store for your “convenience!”

There is a fabulous Mexican restaurant, Julio’s, in town that only accepts cash. The food is so good that it doesn’t matter, they are always packed with people.

Naturally, a “no credit cards” policy may be a barrier to some customers. However, if your product is superb and your service is excellent, people will come back and bring their friends, cash in hand.

Do you charge your customers for being difficult to work with? Maybe you slap them with a convenience fee for using their credit card. Or perhaps you slap them with a late fee when they don’t pay on time.

However, do you ever charge them up front, at the point of sale for not behaving?

I’d hope not.

A sign outside the JCPenney’s photo studio claims that a $9.95 per person sitting fee will be charged if the subject doesn’t behave.

Why would I ever want to take my unpredictable children to get pictures there? I wouldn’t.

If you can’t change the customer…

Instead of charging customers that don’t behave, why don’t you specialize in helping customers behave and act like you want? Kiddie Kandids specializes in children’s photography. They don’t charge fees for rowdy people. In fact, they are experts at getting kids to sit still and smile.

Your Competition Loves Your Customers

Your competition is welcoming your disgruntled customers with open arms by accepting them just the way they are.

Contrast this sitting fee dilemma with a sign that hangs up at my favorite barbecue place here in Austin: Rudy’s. It reads that if you whine, you’ll get charged $10.

On the surface this appears to be the same problem and even rude. However, the atmosphere and culture at Rudy’s immediately tells customers that this sign is a joke. Come in and enjoy some food.

Your “policies” and signs may very well be the fodder that fuels your competition to make fun of you and laugh all the way to the bank.

Customers love surprises - but only when they are good surprises. Your job is to create those positive surprises that will excite and delight customers.

Keys to a Great Customer Surprise

For customer surprises to be successful, use these “giddy-with-excitement” surprise tips.

• Free - it isn’t a surprise if you have to pay extra for it
• Unexpected - surprises come out the blue without warning and without high expectations
• Exclusive - Is your surprise a special gift for the customer that non-customers don’t get?
• Relevant - your surprise should be a good match, companion, or accessory to the main purchase.

Let’s look at an example.

LEGO Surprise

Earlier this year I ordered some LEGO Star Wars sets from lego.com. When they arrived, I opened the first set and discovered they had included a special anniversary Darth Vader mini-figurine. I was giddy with excitement.

Free: Not only was this surprise free, but it came in the cheapest LEGO set I bought. Bonus.

Unexpected: There was no indication on the packaging that 1 out of 10 boxes has a surprise. This made the discovery all the more sweet. Promoting the odds of winning a “gift” can only lead to heartache for the majority that don’t win.

Exclusive: After doing some research, I discovered that LEGO is only putting these Darth Vaders in random sets this year. Lucky me!

Relevant: What could be more relevant to my Star Wars LEGO set than the iconic Darth Vader?

What about branded surprises?

You may be tempted to give away company swag: key chains, magnets, t-shirts, etc.. Don’t do it unless it matches the criteria to a good customer surprise.

Think about it: do you like to get these company labeled products? What do you do with them? Throw them away? Exactly.

Looking at the example above, you can see it had a subtle promotion built-in. LEGO had included a figurine that will remind you how much you love LEGO and want to buy more.

Surprise Them Today

What can you do to pleasantly surprise your customers today? Remember, since they aren’t expecting it, you can start small if needed. Try surprising customers in a good way (for once) and you’ll be amazed at how they return to do business with you again. If your surprise is good enough, they may even tell some friends.

Your potential customers will arrive at the point of sale and sometimes will not be able to pay. You need to be ready for these times so that the interaction between you and the customer can go smoothly.

On a recent trip to Target, the couple ahead of me at the checkout had their credit card denied.

They argued for a minute with each other, got frustrated, told the cashier “sorry”, and walked away without their products.

I asked the cashier if that happened a lot.

She said, “Yes, all the time. And people get mad at me like I had something to do with it.”

This is one example where your front line employees are getting frustrated by customers. What are you doing to help both parties in these situations?

You Need Procedures

When you leave it up to the employees to field an awkward situation like this, they get frustrated and the customers get inconsistent experiences. Having procedures in place will help ease tense situations.

When customers’ payment fails, your employees need to:

• Know what to say to the customer. (Reassurance, guidance, explanations)
• Give alternatives on how to purchase. Maybe try cash or check instead of the denied credit card.
• Instruct the customer on what to do next. “Sorry we can’t complete your purchase today, if you …”
• Know now to handle the incomplete purchase in your systems. Are there certain keystrokes or database fields that need to be updated to cancel an order?

Sometimes customers forget their money and sincerely want to and can pay for their purchase. Treat them with respect and have a plan for them too.

Even if you are a sole proprietor, having a checklist of actions will save you time and effort when you encounter similar situations in the future.

Today’s Interaction Determines Tomorrow’s Customer

Make it smooth because today’s lost customer could come back tomorrow with cash in-hand. Don’t let a little hiccup today stress out your customers or your employees.

I went to the Apple store the other day to check out the new Macbooks. My wife wanted me to pick up an accessory for her iPod while I was there (sure thing, honey!).

After I played with the new Macbook a little, I found the iPod accessory I needed, grabbed it off the shelf, and turned around, ready to purchase.

I was lost. I didn’t know where to go.

There are no traditional registers in the store. I saw other customers sitting and waiting. I’m not sure for what.

I didn’t know if I should speak to the Apple store people in the blue t-shirts or the orange ones.

There were no clear lines.

No clear way for me to buy my selection.

I got frustrated and returned the accessory to the shelf. I turned and walked out of the store.

We ended up picking up what we needed on a subsequent visit to Target.

So how did the Apple store lose my business?

I had the product in hand. I wanted to buy. I was even willing to wait if only I knew how and where.

The Apple store is so in love with design and being different that they broke the social norms of shopping. In so doing, they risk introducing confusion to shoppers and losing money.

So now, I view the Apple Store as a “try it before you buy it” place, meaning I most likely will buy it somewhere else.

Apple still makes their money even if it doesn’t all come through their retail stores. Nevertheless, chances are, you’re not Apple. You need to convert those prospects to customers because there probably isn’t a backup to catch their money in some other venue.

Think about how you service your customers. They want to spend their money with you. Are there barriers in their way to spending money with you? Remove them and watch the cash flow.

How many times have you seen a company’s motto or slogan completely flop after seeing their employees or product in action?

Unfortunately, this probably happens too often.

Last week my family and I went to Mighty Fine Burgers here in Austin. Besides serving a mighty tasty burger, Mighty Fine employees have also internalized their name and slogan.

When I approached the counter to order, the employee asked me how I was. I said I was fine and then asked “how are you?” The response was a jubilant and resounding “Mighty Fine!”

This made me smile and set a good mood for my experience in their restaurant.

Employees that live their company’s ideals translate them from the abstract marketing to tangible meaningful experiences that customers will remember.

You’ll recall that the good folks at Zappos also live their customer-centric core values through their interactions with customers.

Mottoes and slogans mean nothing if they are not put into action.

When your customers positively feel and experience your company slogan, it will ring true in their ears every time they hear it thereafter.

However, if customers have a bad experience, any future contact with your company name or motto will remind the customer of your hypocrisy and their nasty experience.

Which would you prefer? My guess is you want happy, positive feelings and emotions that linger in your customers.

Imagine the world’s most beautiful website.

Do you have a picture in your mind? It is glorious to behold. It may even give you warm fuzzies.

Do you have the picture in your mind?

Does it look anything like this?

Probably not. The website is Craigslist. At its core, it is an online classifieds site where you can buy or sell stuff, find a place to live, etc.

Craigslist is the 11th most popular website in the United States and is in the top 40 worldwide.

Craigslist is the brainchild of Craig Newmark (thus the name “Craig’s list”). Craig’s title is an interesting one: “Customer Service Rep and Founder.”

Picture the founder of your company, sitting in a call center answering the phone all day. Customer Service Rep and Founder.

Craig lives by some simple principles. In an interview in Founders at Work, he said:

We listen. We do stuff, we follow through, and then we listen more.

So does he really listen? Yes, even if you’re skeptical, the answer is yes. A couple of years ago, I posted a blog entry criticizing a certain company and contrasting that with how great Craigslist and Craig Newmark were.

Sure enough, Craig was listening and he stopped by and left a comment on my site.

So Craig listens. In fact, not only does he and Craigslist listen, but they take action. Craig says:

What we do is almost 100 percent based on what people ask us to do.

So why should you take business advice from Craig? If you’ve ever used Craigslist, you probably never had to pay any commissions for the service. So you think, “Craigslist probably isn’t even making money. Why should I take business advice from a company that doesn’t make any money?”

Well, in fact Craigslist is pulling in some handsome revenues. Reports indicate Craigslist will make over $80 million in 2008.

So how do they make their money? Craigslist charges for select listings in a few markets. For example, not too long ago there were lots of shenanigans in the brokered apartment listings in New York City. Legitimate brokers came to Craigslist and asked to be charged. It would keep out the riff raff and improve the quality of the listings.

So Craigslist listened and acted. They now charge for some job listings in other markets and all of these together add up to some nice revenues that profitably fund the entire company.

Craigslist makes money because they listen to customers and act on that feedback.

Are you listening to customers?

Are you internalizing what they are saying and what it means for you?

And most importantly, are you taking action?

If not, you’ve got your homework!

Your company’s reliance on technology to process customer orders and requests can lead you to some trouble unless you are prepared.

My wife and I recently got a TxTag (a toll road sticker) for our car to use on the local toll roads. In theory, as we simply drive under a scanner along the highway, we are identified and charged the toll automatically.

After we installed the TxTag, we had our expectations set that we wouldn’t have to worry about stopping to pay tolls and life would be carefree.

So imagine our surprise when we got a bill from the Texas Department of Transportation for usage of the toll roads.

I was a little upset when I called their customer service number. However, the TxTag folks came through with a great customer service experience that you should mimic when your technology fails.

Tell Me Why

The first thing I was told was that sometimes the scanners don’t “see” the toll tag and thus our account couldn’t be charged. If that happens the toll cameras take a picture of the license plate and identify the owner. Since we hadn’t registered our TxTag, they couldn’t match up our account with our car.

Sometimes your technology isn’t perfect. The customer may be the unknowing victim of a shortcoming in your process or equipment. Take the time to explain why something happened. This will help people have confidence that their negative experience shouldn’t be repeated again.

Change History

Once the problem was identified with my TxTag account, the agent essentially rolled back the clock and corrected my account to reflect charges as if everything had worked properly. I got the prepaid discount and my balance was squared away.

If your process or technology has a glitch, your customers shouldn’t have to live with the consequences. Make things right. Or better yet, make things like there was never a problem to begin with.

Prevent a Relapse

In my case, the agent helped me register my tag and linked up my account with my information. Even if there is a glitch again in the future, TxTag’s fallback systems should catch it and process everything smoothly.

Once the problem is identified and the consequences reversed, you need to make sure they don’t happen again.

Knowing what products you have available for sale is not only good inventory management but good customer service.

Last week I stopped by Best Buy to buy the video game Mario Cart for the new Wii my wife got me for my birthday. While in the video game section, a Best Buy employee approached and asked what I was looking for.

He told me they didn’t have any of the game I was looking for in stock. After all, they are very popular right now. However, some would be arriving in a shipment the next day.

In this brief interaction with the Best Buy employee, he quickly explained the situation and answered my questions before I even asked them.

When customers ask about an out-of-stock or low-stock item, you need to convey three things:

1. What is the current inventory level?
2. Why is there nothing in stock?
3. When will you have more in stock?

I returned to Best Buy a few days later and found the game in stock and made the purchase. Some customers will follow this pattern, but others will need to be actively pulled back to your store.

In addition to knowing when you’ll have more product in stock, you could create a notification or waiting list that the customer could join. This will give you some very qualified sales leads that should be easily converted to purchases.