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Thursday, October 18, 2012

Are your customers abusing you?

Do you have Customers that you dread talking to? You know the types, they are not happy, ever, and have a seemingly endless stream of new requirements (read as: demands) of you and your team. While this post is geared toward those of us who have or are currently working in a large enterprise where database teams and IT specifically work 'for' other internal teams, it applies to everyone with customers or users.
In a large company, you often don't get to 'charge' for your services, the end users get to create requirements and hand them to you, and you don't get to make any requests of them in response, in essence your services are "free". Whenever you offer something for free, you are going to get a somewhat irrational response, people are really effected by the word or concept of "free". Dan Ariely writes about this concept in his book "Predictably Irrational", he shows us through experimentation that when the price is free, the demand will increase incredibly fast, and at the expense of reasonable decision making. I think this holds true in most transactions, whether its free cell phones or free software, if it's free demand will increase beyond what could be expected from otherwise rational consumers. to quote Dan Ariely (@danariely):
... First of all, let me say that there are many times when getting FREE! items can make perfect sense. If you find a bin of FREE! athletic socks at a department store, for instance, there is no downside to grabbing all the socks you can. The critical issue arises when FREE! becomes a struggle between a free item and another item - a struggle in which the presence of FREE! leads us to make a bad decision. *
I have never seen this concept more ably demonstrated than I have working in a large corporate IT department. There are other examples, for example this post on SQLServerCentral's forums is a great example of exactly the same thing happening but in a smaller company
Amazing what a little regulation does for requirements! After looking into PCI requirements, I also found that CSC (or other authentication methods) can never be stored. So when I brought this to the attention of the department head and suggested we look into our options with the lawyer, he quickly rescinded that particular requirement. Turns out, the CSC is not required by our CC processing software, that requirement was just put there "just in case we ever needed it."  (full thread here)
 This is a great example, since there was no cost involved, an unnecessary and in this case legally precarious, requirement was thrown in 'just in case'. For those suffering under the pile of "nice to haves" and "just in case" requirements and constant revisions, what can be done? I have found that even implementing a nominal cost for IT services can have a big impact on the way your customers will view your services. When it comes to nominal cost, it does not have to be monetary, it can be additional regulatory overheard, legal or financial risk, or an unacceptable increase in time lines that brings the needed 'costs' into the equation. The example from the recent forum thread above did not involve any financial costs, the cost was in the potential legal exposure, and the cost was too great. So how does one go about implementing a cost structure in a corporate environment that realistically does not allow you to actually charge money for your interdepartmental services?
If there is a cost center or ledger you can charge, even a nominal amount, then do it. Having to reconcile charges made between departments really isn't money being 'spent' by the company, however having to justify the expense is usually costly enough in terms of hours and headaches to really give someone pause as to whether the expenditure is necessary. I have seen this implemented and work with surprising effectiveness, if the only rationale for requesting something is "why not", then all you need to do is supply that reason. If the concept of charging for a service won't work in your workplace, then charge your customers in a different way, with time. If a requirement is changed or added last minute, address it with the requester by showing him/her what else you are working on and what will suffer delays because of this change, your charging them the opportunity cost of this new item. By having to look over everything they are asking of you and weigh the new requirement against the others, value judgments will be made and unimportant items eliminated quickly.

If you are dealing with a customer or client that is not internal, but are actual customers in the true sense of the word, then it can be trickier to handle. as evidenced here on TechCrunch in a post by @JasonKincaid
there can be a large cost to FREE! promotions, including the overhead to support additional users both with bandwidth/hardware/storage type needs, as well as the user support requirements of exponentially growing a user base that needs support but has paid you nothing in return .In this case there may be a simple answer, stop giving your app away free and you wont have these problems, but if these freeloaders are also paying customers of another of your products or services, alienating them could be costly. You will need or determine whether the traffic and 'exposure' your brand or product is getting has any payoff down the road.

So when you are considering your next set of requirements or thinking of offering a service or product for free, ask your potential customers or users, what is this worth to you? If they can't say, be prepared to propose a value yourself and be confident in asking for compensation for your hard work, and both you and your consumer will be satisfied that value is being exchanged for value.

*Ariely, Dan Predictably Irrational. New York: Harper Perennial 2010
Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions

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