08/03/2012 08:52 pm ET Updated Oct 03, 2012

What's Working For Us? Investing In Our Customers

I know it's not fun, but bear with me a moment and think back to 2009. Every time you turned on the television all you saw were red arrows thrusting downward next to each financial indicator. At Rackspace, we didn't need the news reports to tell us where things were heading. We could see it by monitoring our customers, who were getting much less traffic on their websites and using less computing than they had signed up for. Some asked for help. Others simply suffered in silence.

This situation confronted us with some tough decisions. We could have insisted that our customers stick to their contracts. We could have cut what we spend on our industry-leading customer service. Instead, we doubled down on support by putting our customers first. We literally reached out to customers and helped them save money by reducing their spend with us. We let customers reduce their commitments to us to right size their infrastructure with their changing business conditions. That cost us revenue in the short-term, at a time when our own business was hurting. It was a tough decision, but it was a great investment in our customers. It paid off for us then -- and it continues to work in today's choppy economy.

It's been said that when your values are clear, tough decisions get easier. Central to our values at Rackspace is providing our customers what we call Fanatical Support. This focus on exceptional service, with friendly technicians (that we call Rackers) answering calls 24/7 and empowered to go the extra mile for customers, has differentiated us from our competition. It powered us to an industry-leading 50 percent annual growth rate, before the Great Recession.

Our level of service was, and is, more expensive than that of most of our rivals, who send customers with issues to voicemail jail, a link to online FAQs or to call center employees who read soothing scripts but have no power to fix your problem. Our commitment to Fanatical Support was tested during the financial crisis. And what worked for us was to stick to our guns.

The first thing we did was create a specialized team to reach out to customers and help them through the hard times. This meant optimizing their IT configurations to make them more efficient, and reworking contract terms. What did we get in return? Our customers stayed with us. And they told their friends about us. Customer "churn," which typically rises sharply during a weak economy, held steady during 2009. In that same year, we landed a record number of new customers.

What's working for us today? A new way of putting the customer in the driver's seat. Right now, we're focused on moving Fanatical Support to a new open-source cloud computing platform that we call Open Cloud, which will allow customers to avoid the vendor lock-in that they've faced up until now -- on our platform as well as on others.

We think customers ought to be able to move anytime they see another provider offering better features or service or value. Yes, this means they can leave us on a whim. Moving to this new platform is a big risk for us. It's expensive. It's caused some short-term volatility in our business. But it's working for us. We're getting great feedback from customers about our offering that gives them the freedom to move. But by sticking to our guns and focusing on the customer, we hope they won't.

Our customer focus works only so long as we continue to hire passionate employees -- we call them "Rackers" -- who believe in it. What works for us on the hiring front is to select folks who possess both a positive attitude and sponge-like aptitude, and then train them in the requisite tech skills. We call them "geeks with great bedside manner." They're hard to find in the wild, so we grow them our own.

Our internal college, Rackspace University, spent millions last year on training for both new and veteran Rackers. We're also investing in future talent by exposing young minds to the fun they can have with science and technology. One of the many investments we make annually is sponsoring a series of robotics camps offered by Alamo Colleges. The kids who participate are in the 5th grade range, but they're learning how to build robots! Even if they don't become Rackers one day, we hope they'll create cool companies that will that will someday create new jobs and inventions and hopefully become our customers. That, we think, works for everybody.