Support fee arrogance

Is there a benchmark for small business software support? In bigger businesses the expectation is that annual software support and updates cost around 20% of the purchase price. I am interested because we have just converted a client from another system. They were paying over $4,000 for software they purchased years ago for $6,000. Such a support fee seems a rip off. Our support charges have not changed in over four years and sit at around 10% of list price.

Who forgot to renew the encryption key and locked out 2000 newsagents?

Our help desk has been hammered this week with more than 400 calls from our newsagent clients having trouble accessing data from magazine distributors. The problem came about because XchangeIT, the company owned by the magazine distributors had not renewed encryption software. Their help desk (of 1 or 2) went into meltdown and they put the answering machine. That soon became full. So, newsagents turned to their software companies. On top of the 400 support calls we took, at least another 200 of our customers accessed advice from our website.

All this activity took resources away from our main focus – supporting our users with queries about our point of sale and home delivery software. The poor communication from the suppliers and inadequate backup support meant we had to fund their mistake. Then, once the dust had settled, they had the audacity to engage in spin, claiming that the problem was minor and that few were affected.

There are very few industries where suppliers would cause data problems in such a magnitude and then succeed in turning their back on helping their customers resolve the problems. Such are the challenges of the newsagency channel.

What XchangeIT does for newsagents is fantastic. My complaint always has been that a help desk supporting newsagents needs to operate 24 hours a day. The XchangeIT coverage is inadequate – hence the calls to our office on matters not related to us. There is a lack of respect from the XchangeIT team for what companies like mine do for them.

The software licence fee scam

One of our competitors has a facility in their software which claims to stop the system running if the annual software support fee is not paid. Oh, they have now started calling it a “licence fee”. Anyway, there is a pop-up at support renewal time saying the system will stop running if support is not paid. The Age ran a story about this more than ten years ago. I was interviewed as was a Director of the competitor company. The Age article raised some good questions about the practice, questions which remain today. This approach of holding users to ransom to protect your revenue stream is offensive to me. It demonstrates a lack of belief in your own product. It preys on the weak and ought to stop.

If you are considering purchasing software for your small business be sure to ask what the support fees are and whether your software will stop working if you elect to now take out support coverage. Get the answers in writing.

Passing on the takeover opportunity

I have been approached to consider taking over a competitor. While approaches have been made in the past, this time was different for reasons I will not go into here. The opportunity will not proceed unless the proposition is modified.

I know from the experience of April 2000 when I purchased RED Software from that one has to approach any takeover opportunity carefully. Due Diligence did not uncover the landmines laying in wait within RED Software and it was not until the deal was concluded and the money paid that the problems were uncovered. Our problems with RED began when we discovered that Scientology principles underpinned the business, making operational aspects cumbersome and some processes questionable. That experience and the years cleaning up the mess have left me cautious about takeovers – even more so of a competitor of long standing. No matter how well you know a competitor, there are bound to be landmines – Scientology or not.

Sure, I’d like the customers who would come with a takeover but I’m better off winning them through superior software and service than paying someone money to walk away while I and my team clean up their mess. It’s happening. Clients are shifting. Maybe this is why the approach was made.

I am not blogging this as part of any negotiation. This opportunity has not come to that. It’s more my way of saying to myself that no matter how strong the lure of getting bigger, any takeover opportunity has to be viewed with the perspective that only a reminder of history can bring.

Footnote: some reading here will try and guess the name of the competitor. It is worth noting that across several markets we have more than twenty competitors.

Melbourne Airport sucks

At Melbourne Airport two months ago I was held on one side of security, while a lady took off her shoes, while my laptop and bag went through the machine. I calmly called out the one of the several guards on the other side, alerting them to the backlog and the risk to my laptop. He told me to calm down. Sure enough, my laptop was crunched, fell off the conveyer and hit the ground. The guard watched it happen. When I got through I asked why he didn’t do anything. “What do you want me to do mate?”.

The day this happened I went to the airport website and lodged a complaint. The response? Nothing. Melbourne Airport customer service sucks. Their website did not even email me a copy of the complaint I lodged – poor web design!

On Saturday night, a friend cut themselves on a bottle which seemed to have a manufacturing problem. I reported the incident through the importer’s website yesterday morning and within an hour they were in contact and providing exceptional service. They took the complaint seriously.

If companies are going to provide customer service access via their website they need to provide service. Service means a timely response. In the case of Melbourne Airport it is clear they don’t understand the concept of service.

At Tower Systems we strive to provide exceptional service every time. Whether or customers contact us by phone, email, through our website or through our software internal support tools we treat every contact the same. Our customers deserve timely and professional service. We don’t let their contact for assistance sit in the ether somewhere hoping it will go away.

Customer service is serious business. In the case of my software company it is at the heart of everything we do.

CRM misstep

It took two weeks for us to find that the Sugar CRM solution was not appropriate to our needs. Once we discovered that our customisation would be lost with each new version of the software they load we knew Sugar was not for us. As it’s a hosted application we do not have the same control as locally run software. So, we have signed up for 30 days with SAGE. So far so good. Like most software companies, implementing internal systems has been a challenge for us. We’re approaching the CRM project differently – trying hard to treat ourselves as we would clients. If only it were that easy.

Label businesses for social responsibility

SRR3.JPGIt was disappointing to hear that Qantas is working on shifting more work overseas in the name of profit. It’s as bad as Australia Post now sourcing much of what they sell from China. These profits are coming at a cost to Australia which will not be measured for years to come. A year ago in this place I floated the idea of establishing a Social Responsibility Index for business. If it’s good enough for food, surely it’s good enough for the country. A Social Responsibility Index could take into account, for example, Qantas moving jobs offshore and rate them accordingly. Here’s what I said earlier about this:

I’d like to see a social responsibility index established to allow consumers to compare businesses. It is a point of difference more important that price yet it won’t matter until it is too late for many small businesses. Small businesses can compete with the chain stores by being actively socially responsible and using a rating system (like my idea above) to rate their performance against four key criteria. The better we in small business educate consumers about the difference our businesses make compared to others the sooner we can achieve some traction to counter massive advertising budgets. I see such a rating system as a practical step towards greater social responsibility for all businesses. While some tout their businesses as socially responsible, the lack of a transparent measure means that consumers can only go marketing noise and too often this is more hype than substance.

A responsible government would implement something along the lines of the ratings I suggest and provide consumers with a trusted measure. It would put my small businesses on an even footing with big business and demonstrate the difference of the pursuit of a higher share price versus the goals of small business proprietors.

Two years to achieve ATO victory

My dispute with the Australian Taxation Office has finally been resolved. It took two years, at twelve letters, countless phone calls and a face to face meeting. On Friday I received a letter, full of public service double speak as usual, saying they agreed with my position and that I owed nothing further. I actually spent more than I saved to achieve this outcome.

Based on my experience it seems that their spend on pursuing people is the inverse of the amount in dispute. That’s in the past now. The dispute is finally over.

User Meeting invitation

We have scheduled two more user meetings for our Melbourne and Sydney offices. Melbourne (Elsternwick) is Thursday October 26 at 10am and Sydney (Miranda) is Tuesday October 31 at 10am. These meetings are for people who have been using the system for six months or more. We will go through our new software, Retailer 2, in detail and possibly make copies available for users to take away and install. People not using our software are most welcome to attend and get a feel for the Tower difference. Please book by emailing your details to bookings@towersystems.com.au.

Married to Renata

renata.gifRenata Keran turns 19 today, in company years. My relationship with Renata has been one of the most enduring of my life.

There were the awkward early years, navigating her second job (we headhunted Renata from a client), the messy years (dancing on the bar at Senates, being carried up the stairs to the bath…), the family years, 21st, engagement, wedding (350 guests!!!!) and the homemaker years (houses, houses and houses). Many wonderful memories, not one of which I would change.

Renata does more to carry forward the heart and soul of this company than anyone. She is our parent, conscience and our mother confessor.

Happy Birthday Renata. My life is the richer for knowing you.

Security system helps in sexual harassment claim

We received a call from a client this week with news that the new security system we installed has helped resolve a sexual harassment claim. It provided evidence that the claim had no basis in fact leading to the compliant being withdrawn. It’s a good outcome and a use of the camera technology we have not anticipated when we developed our point of sale integrated solution.

Dumb and dumber

Some days our help desk team face extraordinarily frustrating situations. Take today. A user called with a problem. The old computer had fritzed. Since our update CDs have a full copy of the software, getting running on another computer is easy. The problem was the data. The user’s comments were “yeah, I was going to get around to that”. It’s in our printed monthly newsletter, our weekly email newsletter and covered in all of our user meetings. It took us a few hours to grab data from here and there and get him running again. We did it for free because we knew he would arc up if we talked about it being billable. In the meantime it took one of our team offline while we helped the dumb user.

We don’t know what to do to sort the minority of users out who ignore the need to backup. Nothing works including publicly shaming them. In the meantime they soak up resources which should be used for more responsible users.

The social responsibility of retail rents

I have seen rental data for a major centre showing that the major traffic pulling independents like newsagents and pharmacies are paying eight to ten times the rent of a supermarket. While landlords will have all manner of reasons for this, the extent of the difference seems to me to be indefensible. Landlords would not have some national chains if small businesses were not encouraged to develop their model and grow into national operations.

Communities need small businesses – they provide better learning opportunities for people entering the workforce, they are more flexible in terms of hours and they are more likely to pass on local traditions. Landlords have a social obligation to foster small businesses and to provide fair rent.

It is unreasonable for independent retailers to subsidise the supermarkets.

The nonsense of petrol discounts

blogcoles.JPGDo they think we are stupid these petrol companies? They must. They scream 4 cents a litre off here if you do this or 6 cents a litre off there if you do that. Look at the latest offer from Coles (above). Do they think people will not see through the con? Whatever happened to providing quality products at the best price, plain and simple?

These discount games based on purchases of other products are a rip off.

The CRM decision, finally

blogsugar.JPGWe have selected Sugar as our CRM solution. This decision has taken a year to make. Being slow about making the decision has afforded us an opportunity to see various solutions evolve. Sugar won because of the flexibility demonstrated to us and success stories in similar businesses. Now comes the fun part – implementation.

Shonky hardware support deals

We recommend that our clients do not contract for hardware support coverage and that they instead bank what they would have spent for use if hardware does fail. This can save an average small business around $3,000 a year – enough for ten average call outs or a couple of new computers.

This is on my mind today because of a story I have heard of a small business which paid their supplier $3,000 and, a week after reporting a serious problem, is yet to get satisfaction. In fact, it took two days for them to get a call back. When I questioned them they said they understood all computer companies to be this slow. It’s nuts. If you pay $3,000 for hardware support then you ought to get hardware support – on time and delivering a viable outcome. I’ve told them to cancel the contract and request a refund.

Managing the category

We are pressuring greeting card companies to get serious in helping their retail partners to manage the category. Currently there is no common categorisation of greeting cards – making management at the retail store very challenging. Here’s what we published this week in our supplier newsletter:

A call for greeting card category standards
While magazine publishers and distributors long ago reached agreement on category standards, greeting card companies continue to fail newsagents. The lack of standards makes store level reporting, within the greeting card category, challenging. In our software newsagents have exceptional reporting tools – return on floor space, return on shelf space, supplier comparisons, ROI – there are many angles from which newsagents can analyse data gathered by the system. It is impossible for newsagents to determine the best card supplier in their store. This denies them the opportunity to be business like.

Some newsagents are so frustrated by this experience that they are planning to place barcode stickers on cards before they are placed on the shelf.

Card manufacturers must act urgently and together to sort this out. Every month the current situation continues is another month newsagents are not able to have the best possible information available to build their business.
The IT standards necessary to manage this already exist.

We take our role in representing the needs of our customers to their suppliers seriously. If we can get suppliers on the same page on this topic the time saving for our customers could be considerable.

The benefits of being your own user

blog-fhn.JPGWe are reaping rewards this week from being a user of our Point of Sale software. Last Tuesday night we installed a major update (beta release) to our software in our two retail businesses. This provides us with practical experience without inconveniencing paying users. Having our own employees using the software they gain first hand experience with the update and this enables us to see what needs to be tweaked to ensure that what we deliver our paying users is valuable to them. Without our own retail businesses we’d otherwise rely on use feedback and any software developer knows that can be problematic. Developers know the boundaries whereas users often don’t report issues thinking they may be transient or caused by non software factors.

This update is especially challenging because we have replaced our database engine and we plan to ship the change without on site interaction. By placing our developers on site for the update and time following they were able to see the software under the pump of a busy retail business. This shortens the update process and increases the scope of updates. Our approach is efficient for all stakeholders.

Even though our experience tells us that users will be able to install this update themselves, we will install it in several other sites to ensure that what we experienced in our own business was not a once off.. Had we not had access to our own retail business the final version of the update (due in a few weeks) would not have been as good.

I’d encourage all vertical market software developers to own their own fully operational user site. Certainly in our case it provides an unassailable competitive advantage.