Isn't that catchy--customers come third?

I've gotten a lot of email from folks about last week's post about my philosophy of always putting employees first, even ahead of conventional priorities like shareholders and customers.  I'll admit that I was expecting this feedback, so I wasn't surprised when I received an email from a customer that began:

I admire your "Employees first" credo.  Respect it.  Which is going to make my complaint more difficult...

The customer went on to register a complaint and point out that maybe we should spend more time serving our customers and less time coddling our employees, since they pay the bills.  This is not an uncommon perspective (and not the first time I've heard it), but I'd like to respond to it and continue the thought from last week about how to prioritize the many constituencies that an entrepreneur/business owner has to deal with.

Customers are like oxygen
Simply put, customers are the oxygen of any business.  There's no denying that.  Without revenue, even the most high-flying, venture-capital backed, red-hot, media-adored, brilliant business will eventually fail.  And who provides that revenue?  Customers, obviously.

That's why they don't come first.  In fact, in my view of the world, they don't even come second.  First come employees.  See my post from last week for my philosophy on that.  You need employees because they build the company's products and deliver the services. Without your people, you have nothing (okay, except maybe yourself, but you count as a person too!). 

What comes next?  Well, you better have something to SELL, or else it's going to be tough to generate the oxygen, er revenue, you need to keep the company alive.  Yes, you can raise money, or take out a loan, to keep the company breathing at first, but think of borrowed or raised money as an oxygen tank, destined to run out eventually, and so precious that you want to keep it around for emergency use only, like when you're fighting an especially nasty fire.  That's why I believe that...

Your products come second
If your employees are the most important asset you have, then the products (I'm using product in a general sense here, to mean any product, good OR SERVICE) that they build/deliver are the second most important.  And in fact, they are the only assets that are truly assets.  People aren't assets, at least not in free countries, and no matter how much you invest in your people they can leave at any time.  But you OWN the intellectual property and organizational expertise that come from building, delivering and perfecting your product(s).  Not to mention that having an awesome product proposition is probably why you started your business in the first place.  What is it that your business makes/does which sets you apart from your competition.  What is it that your business makes/does which makes a mark on the world, and presumably makes the world a better place?   Your product.  What is it that makes your customers pay you money?  Your product.   Meaning...

Customers come third
I know, I know.  I can hear some of you firing up your email program now, to write me about how lame it is that Homestead puts its customers third.  Aren't we the reason Homestead exists, you will say?  Yes, I will respond.  Aren't customers always right, and always deserving of the utmost care and support?  Well usually, I will respond, hopefully with a little added tact, so as to avoid upsetting you too greatly.  The absolute truth is that businesses walk a tight rope every day, balancing the needs of customers with the needs of their employees, the realities of their financial model, and the desire to make a profit. 

There are many things Homestead could do which would make our customers happier, but we don't.  For example, I could give all Homestead members my home phone number or the cell phone numbers of all of our employees, and let you call at all hours of the day with questions.  Or we could give our products away at a loss, or even for free.  Or we could give discounts to customers who complain, and pass on the cost to the customers who love our service and exclaim that they would pay twice as much, instead of trying to keep our prices low and fair for everybody.  Or we could invest less in making our products easier to use (and therefore requiring less support) and invest more in answering our support line a minute more quickly.  All of these things would probably make a number of our customers happier, but they would all be bad business decisions that would hurt the company--PRIMARILY OUR CUSTOMERS--in the long term. 

That's why customers, I'm not afraid to say it, come third around here.

Can you guess what responsibility I believe comes fourth when building a company?  (Hint: there are five total.)  The answer next week.

Comments

[R. B. Chandler]

I will agree with you here up to a point. That point being where you begin to ignor and forget about your customers and the things that you promised them.

I have been with Homestead for a long time; way back when the web sites were free. There is not another easy-to-use web site builder that would let me do what I have done with my web site. There is still a lot left to do but I could have never done it without Homestead. Still, I remember the first SiteBuilder upgrade. We lost a number of elements some of which we never got back.

I remember asking about a Frames or Iframes element 7 or 8 years ago and today I can still get the same cut-and-paste answer that was used way back then. I remember the PhotoSite back before you sold it. While I never used it beyond just to try it out, it had some great elements that would have been nice if they had been merged with the Homestead SiteBuilder. PhotoSite had a real blog element not some lame link to my blog site element the the SiteBuilder has today.

Is Homestead just about empowering small businesses? If it is then you are ignoring the individual customer who is here trying to bring some of their dreams to life.

Homestead is so far beyond MySpace type sites it is not funny (because you can do so much more with a Homestead site) but it is strange that Homestead never went after a piece of that market.

It is great to have happy employees dedicated to the company and making a better product and even though the customers may come third in the overall picture; they need to feel as if they come first.

The world wide web is a soap box for the individual. It is the book waiting to be written but no one would publish. It is an art gallery filled with words and pictures. It is a place where our dreams can take shape and where we can share who we are with the world. This is what you gave us when you gave us Homestead. But, I ask now will you continue the journey? Or, will you stop short of giving humanity the tools for true creative freedom?

No, I think that the customer comes first at least in concept. You think of the customer and then think of what kind of product he/she will buy and then you go out and get employees to build and sell the product. What good are happy employees if there are no customers or your customers will jump ship (like rats on a sinking boat) the moment a better product comes along?

Having been with Homestead for a long time. I get a little frustrated with the Customer Service's cut-and-paste answers I've already seen a half-dozen times especially when I realize they did not take the time to read what I wrote. It is one thing to say that the customer comes third. It is quite another thing when customers feel like they are sometimes treated that way.

Yes, happy productive employees are worth their weight in gold. Yes, there is a balancing act that goes on between the needs of the customer and the needs of the company. In the world view the employees do come first and the product second. They are what is closest to you and what you have the most control over and they are the face you present to your customers. But, customers are assets too. You can always fire all your employees and get new ones (or replace them with online AI agents) but you can't do that to your customers. So even if they don't come first they need to feel like they do because you want them to keep coming back and recommending your product to other customers.

[Justin]

R.B.,
Thanks for your thoughtful comment. No, Homestead has not "forgotten" the individuals who use our service, and I assure you we are constantly worrying about how we can invest in our product, to make it both easier to use and also more powerful--for all of our customers.

Sometimes, of course, these two objectives are at odds with each other. We have large teams of software developers, designers and testers who release a new version of Homestead roughly every six weeks. Eight years into it, that's a lot of new versions (over 60 so far, to be exact).

You write:
"It is a place where our dreams can take shape and where we can share who we are with the world. This is what you gave us when you gave us Homestead. But, I ask now will you continue the journey? Or, will you stop short of giving humanity the tools for true creative freedom?"

I promise, we'll continue the journey.
--jsk

[Colleen Taylor]

This morning I felt like I came first when Andre's follow-up call woke me up. I not only impressed at how quickly Homestead contacted me -- I was impressed that they did contacted me at all! But then, if the fortune is in the follow-up, I guess it makes sense. Still, Andre was not a cut-throat salesman, he was an authentic person relating to another person. There was nothing stock nor cut-and-paste nor pushy about our conversation, which ranged from my website to Scrabble to nuns and more. He helped me think through what I wanted to do with my site and, as a result, clarified the vision for my new freelancing ventures. I think I've found my hedgehog (as per Jim Collins' Good to Great). If Homestead aims for happy employees, Andre is certainly one of them!

[Colleen Taylor]

And I'm a satisfied (potentially paying) Homestead customer who used to teach English as a second language and college level English lit, but couldn't string proper sentence syntax in my previous comment:
"I not only impressed ..." should read "I was not only impressed ..."

I'm sure readers knew what I meant, but I had to correct it, for the record.

Thanks.

[eric butler (moonglum01)]

I don’t disagree with your outlook and in fact I would say that many of the most successful companies follow this line of logic - but (isn’t there always a ‘but’?) it seems to me that this philosophy can lead to a level of corporate arrogance that has resulted in some of the most spectacular crashes of the modern era (I’m thinking of Enron especially). I’m not sure why customers even exist within the ranking system at all (not just talking about Homestead – more of a philosophical question). It seems to me that ‘customer’ exists in a totally separate realm - Tossing them in to the ranking, hummm... I don't know, seems like it would cause problems.

As a curiosity, when you refer to ranking does this equate to the breakdown of how a company allocates it’s limited resources?

[Gail R. Delaney]

Mr. Kitch

I've been a customer of Homestead's for about two years now, and I tell every new author I deal with about your company when it comes time for them to build their websites.

But that is neither here nor there.

My comment is about your post regarding customers and where they fall in priority.

I think it is safe to say that were any of these customers also employees of yours, they would have no issues with your statement. And I wish MORE companies took the view that their employees come first.

I'm an author and an editor, but until I hit it big, I also have a full time job for a big company where I am pretty much nameless and faceless. There is no doubt in any of our minds that the first priority is the almighty buck... which they believe is directly linked to our shareholders. So the shareholders come first... the employees be damned.

I have to say that I would embrace the opportunity to work for a company where I was considered an asset, not just a grunt.

So, I'm not going to berate you for putting your employees first... I'm going to praise you. First, for looking at them the way you do and second, for having the guts to say so.

Hoorah for Homestead!

Gail R Delaney

[Michelle]

I have learned in business that where you "place" customers really doesn't matter.

People don't always remember what you have done they remember "how you make them feel".

Have you ever been mad at someone and not able to remember why you were mad? You didn't remember the incident, you remembered the feeling. The feeling is what stuck with you. So, They can be "third", but make them "feel" first.

One time I was complaining about being in a long line, but when I got to the counter the customer service was so great that I went back again and again and again.

More Than a Conqueror!
Michelle

[Krystal Shantise Brownlee]

I read your response to the post you made about how customers come third, and I completely agree with you. I think in business people like to say (just to appease the customer) that customers come first, but it actions, it's shown that your first priority is everything but your customers. Is that a bad thing? No not at all! Sometimes it's just the way business works!

Krystal :)

[Justin]

Thanks to everybody for all of the great comments, and for stimulating the discussion. I also got a lot of email on the topic, so I'll address some of that in my next post.

To answer Coleen's question, my "ranking" does not equate to allocation of resources, but rather how we prioritize decisions. We won't choose customers over employees, or profits over the quality of our products, etc.
--jsk