5 Ways Squarespace Gets Service Right

I spend a lot of time diagnosing service failures, but occasionally I like to profile an organization that’s doing something right. One of those organizations is Squarespace, a company that provides (in their words) “everything you need to create an exceptional website.” Their amazing customer service is a template that we can all learn from, but I also have an ulterior motive for writing this post. I want to publicly encourage them to keep up the good work.

Here are five things we can all learn from Squarespace:

1. Offer a great product that's simple to use
I’m currently building my fourth website using Squarespace, this one for my upcoming book Service Failure. I'm not very technical and don't want to hire an expensive web designer, so Squarespace is a perfect solution. You can use Squarespace to secure your domain name, design your website, and add content all without ever touching a bit of code. Best of all, it's easy to learn and use and their stuff just works.

I wish I could say the same thing about all the technology I work with, but too often I find it difficult to master, riddled with glitches, or both. Customers can be delighted with a great product, but they can also be delighted with the absence of aggravation.

2. Provide value
Squarespace is constantly enhancing the value they provide to their customers. For example, earlier this year they changed their pricing structure to simplify their plans. In my case, they actually offered me a credit when I switched plans because they were now offering more for less.

Compare that to other well-publicized price changes, such as Netflix's 60% price hike or Bank of America's infamous plan to charge debit card users $5 per month. Pricing is clearly a sensitive topic, but you'll win a lot of hearts and minds if you give customers more for less rather than less for more.

3. Respond quickly to customer inquiries
Squarespace clearly realizes that many of their customers are technically challenged like me, but that doesn't mean we're patient when we encounter a problem. Thankfully, whenever I've sent Squarespace an email to ask for assistance I've quickly heard back from an elite member of their support team who was able to help. Their responses are fast, thorough, and professional.

This stands out from companies who don't respond quickly, respond but don't actually resolve your problem, or don't respond at all. Customers hate to wait and we really don't like going back and forth either (see my survey on email response times). When we need help we want it fast and Squarespace gets that.

4. Be authentic and human
Customers crave authenticity, and nothing kills authenticity faster than overly scripted communication. Squarespace’s website, blog posts, customer emails are all straightforward, easy to understand, and are unencumbered by flowery marketing dreck. Better yet, their support professionals are allowed to use their own unique personalities when communicating with customers.

Authenticity is a breath of fresh air when we're used to dealing with so many customer service reps who are required to stay within a tightly controlled box (I really don't like scripts). 

5. Think like a customer
Squarespace recently announced a new version of their service, Squarespace 6, that promises to be a quantum leap forward from their existing platform. At the same time, they’ve wisely opted to indefinitely support users on the old system. Why is this important? Because it recognizes the extensive time and effort many of us have put into building our websites. Providing continued support means we aren’t forced to make the change. Of course, they’re also offering to let users make the switch for free, even allow people to running both versions at the same time, so users are tempted to try out version 6.

This is an example of seeing things from a customer's point of view. A company lacking in customer focus may have become so enamored with their new technology that they forced everyone to switch. This strategy gives Squarespace a way to attract new customers or delight existing ones without giving their most loyal fans a reason to be upset.

Why companies need to cure their fee addiction

I recently dined at a restaurant with a few colleagues. Two of us ordered a glass of Red Breast Irish Whiskey after our meal. My friend asked for hers neat while I ordered mine on the rocks. Imagine my shock when I saw the bill:

That’s right, my drink was $1 more after the "rocks upcharge" was added. Charging $1 for ice has to be the dumbest fee I’ve ever seen. (If you’ve seen dumber, PLEASE let me know!)

Customers Hate Fees
The sheer outrageousness of that little fee completely ruined what was an otherwise acceptable dining experience. Just to make sure I’m not being overly sensitive, I did a little homework and discovered other customers hate fees too. Here are a few examples:

• A 2006 study by Bain & Company found that fees were one of the leading causes of customer dissatisfaction (read more in their whitepaper).
• A 2011 study by J.D. Power & Associates found that checked baggage fees decreased customer satisfaction by an average of 8.5 percentage points (here's the story).
• High-profile attempts to raise fees by companies like Bank of America have led to widespread public backlash and customer defections.

Bottom line: Fees can negatively influence customers’ perception of service, especially when the fees are for products or services that used to be free.

Companies Are Addicted
For many companies, the fee addiction is easy to explain. The company faces pressure to increase profitability from investors, the board of directors, or competitors. Charging fees seems like a good way to boost revenue, pass costs along to the customer, or both. The financial motivation associated with a new fee is generally easy to measure. Here are a few examples:

• Checked baggage fees added an estimated $3.36 billion in revenue to U.S. airlines’ bottom line in 2011 (source: MSNBC's Overhead Bin).
• Bank of America hatched their plan to charge customers using debit cards a $5 monthly fee after legislation cost them an estimated $2 billion in revenue (source: LA Times).
• Companies in a wide range of industries, from hotels to ticket brokers, use fees to make the cost of their product or service appear lower than it actually is.

Curing the Addiction
Companies will only reduce or eliminate unfriendly fees when they are convinced doing so will increase profitability. Making that case takes both data and guts.

Gathering the data isn’t always easy. It requires companies to look beyond individual transactions and examine their customers relationships. For example, when an airline charges a passenger $25 to check a bag on a flight, the airline knows it made an extra $25. What it might not know is whether the fee encouraged that passenger to book her next flight on another airline. Companies need to get closer to their customers through surveys, mining their CRM programs, and even face-to-face interactions to analyze whether fees are really a net gain or loss.

One way to add guts to the mix and make executives a bit braver is through a compelling success story. Here are a few examples from companies that resisted the urge to raise fees:

• In the mid-2000s, Charles Schwab reduced or eliminated many fees as part of its well-publicized turnaround that led the brokerage firm to increase profits from $109 million in 2002 to $1.2 billion in 2006 (read more).
• An estimated 650,000 people moved their accounts from Bank of America to a credit union in the fall of 2011 in response to an announced fee increase (source: Credit Union National Association).
• Netflix built a successful company with a business model that eliminated late fees for movie rentals. Of course, they also made two enormous blunders in 2011, but that’s a different story. 

How Netflix should have handled their price increase

Netflix alienated a lot of customers when they announced a 60% price increase on July 12. They had previously offered a plan where customers could stream unlimited movies online and rent unlimited DVDs one at a time by mail for $9.99 per month. Starting in September, Netflix will offer a DVD-only plan for $7.99/mo and an online only plan for $7.99.

Subscribers found out via email but the story soon took on a life of its own online. Netflix was flooded with angry Tweets, Facebook posts, and blog posts. Several news outlets conducted informal polls of Netflix subscribers and reported that as many as 70% were thinking of cancelling or reducing their subscription. Investors haven't been too happy either as Netflix's stock price has dropped more than 15%.

Now that I have had a few weeks to calm down and weigh my options, I can see why Netflix raised their prices. I can also think of three things they should have done that they didn't. 

Be honest and open.
It's important to be honest and open when you make a business decision that will adversely impact your customers. The economics behind the Netflix price increase actually make sense. so why not come clean? They chose to ignore the issue entirely by essentially telling customers, "Hey - here are your new prices." I still don't think many customers would be happy with a 60% price increase, but they might have been more forgiving if they knew why. (There's a great overview on Yahoo that explains the business drivers behind this decision.)

Share something positive.
Netflix should have timed their price increase around some exciting news, like an agreement to add more movies that are available for streaming online. Their strategy includes moving more customers online since streaming movies is much cheaper than shipping DVDs. Making more titles available online would let customers know where some of that price increase was going and get more customers to use the streaming service. A bit of misdirection? Yes, but we customers tend to focus on what you put in front of us. All I have to look at right now is an email says I'm have to pay 60% more for the same service.

Emphasize your strengths.
Netflix missed a chance to emphasize that they are still the best deal in town. Their announcement caused many customers like me to shop for alternatives, but the alternatives either cost more money or offer a much smaller selection. Why not point this out? Heck - why not save us the time and put a nice little chart together that illustrates how Netflix offers the best selection, service, and price even after a 60% price increase? Everyone likes to think they are getting a good deal and Netflix should have made this clearer in their announcement.

Assuming the price increase was a foregone conclusion, what else could Netflix have done better?