Damage control for entrepreneurs

Meet two business owners who recovered after customer service disasters.

As told to Emily Maltby, FSb contributor

I reorganized my entire business after losing a major client.
By Bob Massie, CEO of Marketing Informatics

The toughest lesson I ever had in customer service was when things went really wrong. Soon after I launched my direct-marketing firm, Marketing Informatics (marketinginformatics.com), I fought hard to acquire a large client - a national public policy think tank - that had received a grant from the Lilly Endowment to expand their membership. We were hired to conduct the market research and to orchestrate a direct mail campaign to boost donations. I assembled a team of my most trusted employees and handed off the project.

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Bob Massie, CEO, Marketing Informatics
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David Levi, CEO, Integrated Visual Systems
Your experiences

When the job was finished a few months later, I proudly went to visit the client, but had my head handed to me. My client had received a call from a postmaster in rural Indiana when an address on a mailing was undeliverable. On that tip, the client soon discovered that the majority of the mail was not sent to the correct recipients and some mail was never delivered at all. My company had essentially taken their grant and flushed it.

Back at my Indianapolis office, my team explained that although they suspected a problem, their main concern was completing the project in a timely manner. They incorrectly assumed that the quality of the mailing was secondary to speedy service. The non-profit made us redo the job and then fired us. Correcting the debacle was detrimental to my young company. It took us months to recover financially.

Since then I've tried to make sure a mistake like that would never happen again. Because I can't monitor all our projects, I now check that each team is fully aware of the client's needs and priorities. This means involving my employees further upstream when the goals for the project are being defined. I insist that my staffers communicate regularly with each client and report any hint of a problem to me immediately. I also work hard to break down barriers between different departments in my company. The more each department shares information about what my customers need, the better we can serve their interests.

Today my 80-person company brings in $15 million a year in revenue and serves 84 clients. I can be legitimately proud of our customer service now, thanks to one hard lesson learned.

Quiz: Does your customer-service stink?

After our sofware installation project hit a roadblock, I threw every resource I had at the problem.
By David Levi, CEO of Integrated Visual Systems

Like most small firms, my company, Integrated Visual Systems (ivsi.com) in Matthews, N.C, depends on customer referrals to survive. So when I heard that one of our big software-installation projects had gone awry, I was sure our reputation would suffer - and as a result, so would our growth.

A large apparel manufacturer had hired us to design an inventory system for its five warehouses. We developed a program that printed unique bar-code labels that warehouse personnel would attach to some 200,000 items. Over several months, we installed $1 million worth of custom software.

Three weeks before the launch, one of our engineers conducted a test run in the client's warehouse in Mexico. When he scanned one of the bar-code labels, he knew there was a major problem. Instead of unique numbers, the program was receiving the same data for every item. All the labels had to be reprinted and re-attached to the merchandise. I phoned the client and took responsibility for the problem. I assured him he'd bear no extra costs and the job would stay on schedule.

We created a new program and sent extra printers and label stock from our inventory to the warehouses. We also rented lift trucks to provide extra access to the upper racks. Our entire staff of 20 employees went from our headquarters in Matthews, N.C., to the customer's main facility to relabel the items. IVS absorbed the cost of air travel, accommodations, and meals for everyone for three consecutive weekends. We asked for (and received) volunteers from the client's staff to work on the weekends. We paid their overtime wages. Some $35,000 later, the system launched flawlessly on the scheduled date.

Afterward I met with the facility manager to apologize again for our error. To my surprise, he said that he now felt more confident in his decision to hire us than he had when the contracts were signed. Experience had taught him that there are no perfect installations, but there are perfect reactions to a problem.

Some companies never admit errors. Others acknowledge them but expect the customer to bear the cost of fixing them. By admitting and correcting our mistake, we made our relationship with the client stronger. Nearly a quarter of the customers we work with today came from that client's referrals. Top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.