How to give good customers bad news

What happens when you make a promise to your customers, and then discover that your promise will be impossible to keep?

Many years ago, my boss at The Danbury Mint had placed an ad in Smithsonian Magazine for a 1934 Packard Speedster model car. Far beating all expectations, 5,000 people ordered the car.

The problem was that the supplier he hired couldn't make the car to our standards. We were advertising precision die-cast models, and they were making cheap toys. He left the company, and I inherited the business.

Die-cast is not like digital. It takes many months to make new tooling, and then to produce the models. To make matters worse, I had to convince my superiors to leave our original supplier in Macau, to increase by a factor of five our investment in each new model car, and then I had to find suppliers actually capable of meeting the exacting standards we had advertised.

So I started writing letters to my customers, roughly at the rate of one per month. First, I explained that this was going to take much longer than we expected. In subsequent letters, I shared many of the details involved in making an accurate model of a classic car, from finding a pristine copy of the real car, to crafting a prototype, and so on.

I found two entrepreneurs in Hong Kong, and gave them enough purchase orders that they were able to start a company able to make the high-end models we needed. I found a company in Korea that made both expensive cigarette lighters - which have exacting tolerances - and model cars; they also agreed to become a supplier.

All along the way, I wrote to our customers. We didn't hire a copywriter. I was the one going to the Midwest to scout out surviving classic cars, getting on planes to Asia to supervise our new suppliers, and rejecting the first subpar models. My notes might have been a bit rough around the edges, but they were authentic.

The original Packard model was a mess; the tools were of no value and we had to start over. (This was a year into the process, and it was an exceedingly difficult decison to make.) Meanwhile, I had commissioned another model, the 1935 Duesenberg SSJ.

Holding my breath, I wrote to our 5,000 Packard customers and asked if they would like to receive the Duesenberg model first, a very different car and one which we had never before mentioned. 90% said yes, and also agreed to accept the Packard when it was ready.

In my three years running the model car line, we took $20 million in orders. After I left, the business continued to grow and prosper for more than two decades. Here's why we eventually succeeded:

1. Involve your customers: In those early months, we were amateurs with a dream. We made a lot of mistakes, but when we did, we admitted it. Customers got to share the ride with us, through all the ups and downs of launching an artistic business.

2. Offer frequent updates: My guess is that our very first customers received 15-20 "delay notices", each one in letter form. Yes, some customers were frustrated at the delays, but very few complained about the stream of letters. To the contrary, most appreciated them, to a much greater extent than I would have imagined.

3. Give customers choices: We made it easy for customers to cancel their original order; few did. We let them get another model first, or wait for the original. We even let them reserve the entire model car series before they received their first model. The end result was an extraordinarily loyal group of customers.

P.S. Some will say times have changed and no customer would wait this long today, even for a new product they really wanted. For those folks, I have one word: Kickstarter.

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Bruce Kasanoff is author of Simplify the Future, your guide to a successful career and a rewarding life. He describes his Theory of Seven world tour as "Captain Underpants meets Peter Drucker."