Wednesday, 26 December 2007 19:00

Mixed message

Executives have difficulty investing in customer service and training, but they often will throw millions of dollars at marketing, advertising and branding campaigns that create an inconsistent experience to what the customer actually experiences. And here’s the kicker: Nearly every market leader has the highest satisfied customer base and usually advertises the least amount.

Instead of following the pack, take 50 percent of your marketing budget and invest in dramatically improving the level of your organization’s customer service. You will see a significantly better return on investment than you were getting for your marketing and advertising dollars. Better yet, your customer base will turn into an unpaid sales force.

The customer’s expectations of service are so low in today’s business world that organizations have a tremendous opportunity to gain a competitive advantage by focusing on service. And whatever your business — retail, hospitality or business-to-business — it has never been easier to exceed the customer’s expectations by delivering a memorable experience.

Aren’t sold yet? Consider the results of several studies that have been done comparing the top American Customer Satisfaction Index companies against the market, with regards to stock performance for the six-year period from 1997 to 2003, a period where the stock market was both up and down.

The top customer satisfaction companies (based on their ASCI scores) outperformed the

Dow Jones by 93 percent, S&P 500 by 201 percent and the NASDAQ by 335 percent, revealing that superior customer satisfaction pays off in bull and bear markets.

It’s hard to argue with the results. There are very few actions or strategies that you, as a CEO, can take that produce this type of financial return, but customer service is one of them.

In the accounting world, the economic value of satisfied customers seems to be systematically undervalued even though these customers generate substantial net cash flows with low risk. Firms that do better than their competition in terms of satisfying customers (as measured by ACSI) generate superior returns at lower systematic risk.

Every executive should know the correlation between the level of customer service his or her company provides and the bottom line. If customer service is that important, why don’t you represent it on the profit and loss statement or the balance sheet? There are line items for advertising, marketing, people development and entertainment, but there is usually nothing for customer service. Financial reporting seems to be in the dark ages with regards to how it recognizes the value of customer service and customer satisfaction.

Consider the case of, whose customer retention rate consistently hovers around 80 percent. Amazon’s typical customer is worth about five purchases. Just by Amazon improving its retention rate to 85 percent, that typical customer would now average seven purchases. When you multiply that extra two purchases by the average purchase price and then by Amazon’s 29 million users worldwide, you’re suddenly talking about a very significant amount of revenue.

It’s pretty conclusive that organizations that consistently deliver superior customer service generally enjoy repeat business, lower price elasticity, higher prices, more cross-selling opportunities, greater marketing efficiency and a host of other things that usually lead to earnings growth. It’s also been found to have a positive impact on employee loyalty, cost competitiveness, profitable performance and long-term growth.

The level of a company’s satisfaction can typically be an accurate indicator of future success. Author Joe Calloway sums up best: “If you want to see how a company is doing now, look at their current sales. If you want to know how a company will perform in the future, look at their current customer satisfaction scores.”

Your clients and customers will pay a premium for your product or service when you put an emphasis on creating relationships rather than commoditizing your wares. Organizations that deliver world-class service create loyalty and build a bank account of emotional capital with customers. World-class organizations are less affected by third-party conditions, such as escalating gasoline prices, mass mortgage fore-closures, real estate crashing, volatile stock market, what the Fed does with the interest rate or global events, as are companies who do not differentiate themselves through superior customer service.

JOHN R. DIJULIUS III is the author of “Secret Service: Hidden Systems That Deliver Unforgettable Customer Service” and “What’s The Secret” (due out April 2008). He is also president of The DiJulius Group, a firm specializing in giving companies a superior competitive advantage by helping them differentiate on delivering an experience and making price irrelevant. Reach him at

Published in Cleveland
Thursday, 25 November 2010 19:00

Get involved

There are few things more important in life than looking out for the well-being of others.

While much of this country is sharply divided along political lines, this is something we can all agree on. Philanthropy, in all its forms, has never been more important than it is now. Why else would many of the world’s billionaires have gathered to discuss best ways to give away their wealth and make a difference?

This marks the 13th year Smart Business and Medical Mutual have teamed up to present the Pillar Award for Community Service program. It’s an initiative that has evolved considerably since its inaugural goal to honor companies for giving back to the community.

Today, we recognize the tie between the for-profit and nonprofit worlds in a more holistic manner, honoring not just companies for going above and beyond but also individuals for serving on the boards of nonprofits and the heads of nonprofits for recognizing the dramatic shifts in their industries and successfully adapting.

As we head into the holiday season, it’s imperative to remember we should all be thankful for what we have. If you’re reading this column, odds are you’re better off than most Americans. Accordingly, here are three tips to consider when determining how to best leverage your means to make a difference in helping others.

Find your cause. We all have causes. They exist at our very core, forming the belief system we live by every day. Why shouldn’t our philanthropy follow that same course? Try to align your giving or volunteerism with something you personally believe in or care about; something that fits with what your company does or something that is close to your employees’ hearts.

Get involved. Writing a check is nice, but sometimes helping with manpower can have more of an impact. Examples include pitching in to build a home for Habitat for Humanity, packing food at a regional food bank, helping feed the homeless or needy at a local mission, or reading to the blind.

Make a difference. One initiative that has always impressed me has been the annual CreateAthon event undertaken by WhiteSpace Creative, a member of the Pillar Award class of 2005. During this year’s program, which was held from Sept. 16 to 17, WhiteSpace completed 30 projects for 20 nonprofit organizations across Northeast Ohio.

The bottom line is that it is all of our duties to find ways to get involved. It’s no longer a question of if, but rather of what, when and how.

Published in Akron/Canton

Marvin Montgomery, the Sales Doctor In sales, the power of a positive attitude is everything. The success you have in sales and life starts with what is going on between your ears.

What are you thinking on the way to the sales call? What is your thought process as you’re putting the proposal together? What’s going through your head as you’re sitting in front of the buyer to deliver the proposal?

If it’s all negative, then you’re already defeated. But if it’s positive, you’re more than halfway to the close. In other words, if you think you can, you will.

Doubt is a killer. If there is the least bit of doubt in your mind, you’re already putting yourself at a disadvantage. The power of positive thought works, and successful people use it all the time in their personal and professional lives.

Do you want to be successful? Then know that you can be. Remember that it’s not what happens to you, it’s what happens in you that matters. I am asked all the time how I stay so positive and how others can maintain a similar positive attitude. The answer is simple, but it takes a concentrated effort. Attitude is a choice. Expect the best and that’s usually what you get.

Here are a few tips to help you stay positive:

Laugh more. Laughter is the best medicine.

Stay fit. Being physically active will help give you positive energy.

Unload the negative. Rid yourself of the negative baggage around you.

Forget about the past. Don’t repeat negative past experiences in your head — keep your head up and look toward the future.

Appreciate what you have. If you’re always wanting something else, you won’t be happy with what you have.

Retrain your mind. List positive self-affirmations and read them back to yourself each day.

Visualize. Picture yourself as successful and positive and you will become that.

Marvin Montgomery is an author, speaker and sales training consultant at ERC, where he has assisted hundreds of organizations in improving their productivity. You can ask the Sales Doctor a question at

Published in Akron/Canton
Thursday, 26 August 2010 20:00

Priming the idea factory pump

How does your organization generate new ideas for products and services?

Do they come from you or your management team? Do ideas come from asking your employees what they think? Are you engaging your customers, vendors and stakeholders to elicit their thoughts for improvement on existing products and services or to help create new offerings?

If the answer isn’t “all of the above,” you’re leaving potentially game-changing ideas on the table. The simple truth is that innovation doesn’t happen in a vacuum, and it doesn’t happen by accident. There are five traits that all innovative organizations possess, and each is just as important of the rest.

They are open-minded and ask, “What if?” CEOs of innovative organizations lead by having no preconceived notions that the way things have been done in the past is the best way to do them in the future. They allow people to follow obscure ideas to fruition to see what happens.

They see what is not there and find opportunities that didn’t exist before. You can do this by hiring people who understand how to keep their eyes open and can identify gaps in the marketplace where there is unrealized potential. Also encourage team members to step inside their customers’ shoes and think about what they’d like to see offered that isn’t currently available.

They have a culture where innovation thrives. Develop lines for open communication at all levels of your organization. Empower and trust your employees to think creatively in how their jobs are executed. And don’t forget to provide them with the tools they need to accomplish their goals.

They have flat organizational structures. Innovation leaders recognize that innovation has no strata and understand it happens at the highest and lowest levels of their organization. They also ask customers, employees, vendors and stakeholders insightful questions that provide new ideas for consideration.

They make innovation, itself, cyclical. Innovation is, at its core, a process. Leaders who understand this require creative, systematic destruction of their products and services on a rotating basis. This ensures that the organization moves forward with new products and ideas rather than relying on the status quo to carry them through.

As you do this, make sure to set achievable goals and challenge your teams to reach these goals by creating valuable incentives for those who meet them.

Published in Akron/Canton
Monday, 26 July 2010 20:00

Gut check

I’ve been thinking a lot recently about what it takes for organizations to survive — and even thrive — during challenging times.

There is little doubt that the past two years have tested the mettle of even the most battle-tested CEO. Those that have survived have been successful because either they were proactive and adjusted before the floor fell out on them or they reacted quickly and stopped the bleeding before it became fatal.

The moves CEOs have made have been many: They’ve reduced expenses, employed creativity, diversified products and services, and focused on their customers. They have gone back to the basics, inspired their employees to dig a little deeper, and they have led their teams to go above and beyond by providing value to suppliers and clients.

Late last year, I sat next to Sunoco Chairman and CEO Lynn Elsenhans at an event hosted by Ernst & Young LLP. As we spoke, the conversation turned to how Elsenhans was handling the recession while at the helm of a multi-billion-dollar energy company.

Without hesitation, Elsenhans laid out her strategy: Do those actions that ensure the company stays strong and robust, but give employees hope and an idea of where the business is going.

So what did that mean for Sunoco?

“We had to get clear about a competitive cost structure so we could position ourselves well,” Elsenhans explained. “We invested more in our people for leadership development and addressed gaps in our leadership pipeline. We also invested in our brand to position us for the future in our industry, and then looked for ways to turn weaknesses into opportunities. It was a chance to look back and decide what’s really important.”

Earlier this year, I led a panel discussion on how executives were effectively employing technology to adapt to the economic storm. Among the panelists was Mario Shahidian, chief information officer of health care product manufacturer STERIS Corp.

Shahidian discussed how one of his greatest challenges was getting STERIS’ CEO to recognize how information technology was not a cost center but rather a profit center for the company. By adapting a new mindset, Shahidian explained how STERIS refocused its efforts to tap into its IT operations to change the very way the multibillion-dollar company did business, especially during tough times.

These types of transformations are at the very essence of what it takes to lead a company during trying times. By looking differently at how things have been done in the past and not accepting that as the status quo, CEOs and business owners can change the very course of their organizations.

Published in Akron/Canton
Friday, 25 June 2010 20:00

Professional manager or entrepreneur

There are only two types of senior executive leaders in the business world: professional managers and entrepreneurs.

That’s a bold statement, to be sure, but it’s true. While every successful leader shares a set of common traits, the reality is that the similarities end there.

Successful senior executives are decisive opportunists who possess an iron-clad stomach and understand how to take calculated risks and learn from failure. They are able to forge and foster long-term business relationships. They are persuasive and can sway a single individual’s opinion or plant the seeds needed to create groupthink. And they are closers, really good closers.

When you think about it, professional managers are akin to corporate mercenaries in that they’re hired to capture market share, increase revenue and, yes, crush the competition.

Professional managers command top dollar and their job is to get results.

Typically, they are recruited to do such things as:

  • Engineer a turnaround
  • Push or pull an organization over a hurdle and take it to the next level of growth
  • Inject innovation into processes, products and people
  • Take a company public
  • Spearhead and/or integrate an acquisition
  • Clean up or get a company ready for a sale
  • Keep the C-suite warm for a fixed period of time while the board or owners methodically undertake a long-term CEO search

Professional managers often hold MBAs from prestigious business schools, and many studied under the masters, such as Jack Welch and Wayne Huzienga.

Entrepreneurs, however, are an entirely different breed. By their very nature, entrepreneurs have a need to create something out of nothing. They’re committed to filling a gap in the marketplace that they’ve identified or are driven to revolutionize an industry. And just as important, they recognize how to innovate in ways few thought were possible.

Most entrepreneurs are serial entrepreneurs, meaning they have that proverbial fire in their bellies to take an idea through the complete business life cycle — from idea to business development to growth, and then a cash-out event (sale of company, IPO) — before starting the cycle anew. The rest are lifestyle entrepreneurs who have built businesses that allow them to live a certain level of lifestyle that they’re satisfied with maintaining.

As you read through this issue of Smart Business and our Ernst & Young Entrepreneur Of The Year Awards coverage, think about what type of leader you are.

Published in Akron/Canton
Friday, 26 March 2010 20:00

Powering the recovery

While we amble through the Great Recession toward the eventual and gradual economic recovery, several new truisms appear to be emerging.

First, as I mentioned last month, value will become the watchword for doing business. If you’re not providing value for your products and services, you’re probably not going to be a survivor.

Second, if you failed to invest in technology or drive greater efficiencies throughout your organization during the downturn, you’ve probably lost any competitive advantages you might have had prior to September 2008.

Third, your work force is going to look very different than it has in the past. The severe blow to multiple business sectors and industries has left organizations with fewer employees tasked with higher productivity expectations. Even well after the recovery, don’t expect a return to pre-recession workloads and larger staffing levels. The days of looser financial controls are gone forever.

Finally, and most significantly, women-owned businesses are poised to become the economic job-creation engine of the future.

According to a study released earlier this year by The Guardian Life Small Business Research Institute, women-owned businesses are expected to create between 5 million and 5.5 million new jobs in the U.S. within the next eight years.

That’s a whopping one-third of the 15.3 million new jobs that the Bureau of Labor Statistics expects to be created by 2018.

This dramatic change in the makeup of the nation’s businesses is due to numerous factors, among them, higher college graduation rates by women than men, a faster growth rate of female-owned versus male-owned businesses and the predicted growth of occupations traditionally dominated by women.

Another factor is at play here, one that previously was a barrier and now may serve as a competitive advantage. Women-owned businesses are more often self-funded than their male-owned business counterparts. That makes them less reliant on bank financing at a time when small business lending seems tighter than ever.

The Guardian Institute isn’t the only group to notice this swiftly rising tide.

At its November 2009 Strategic Growth Forum, Ernst & Young LLP’s global vice chair of public policy, sustainability and stakeholder engagement, Beth Brooke, made the very same observation.

“The untapped potential for this economy and the global recession lies with women entrepreneurs,” Brooke said. “The power of diversity is driving economic growth.”

Published in Akron/Canton
Friday, 25 September 2009 20:00

Simple things

I grew up in the 1970s and ’80s in an early adopter household.

My father was a technology freak, and we were one of the few households that owned a home computer — a TRS-80 model with a cassette-tape drive. We also got an Atari VCS around 1977 or 1978 and watched movies on a Sony Betamax video player.

It’s surprising I didn’t end up a computer engineer because I knew how to program in Basic and was adept at using a Novation CAT modem (a cradle device in which you stuck the phone handset), spending way too much time dialing into my favorite Bulletin Board System (the 1970s and ’80s predecessor to today’s Web sites).

One day, my father excitedly called me outside to see the latest gadget he had bought. I rushed outside and found him standing by the car, grinning. He pointed at an enormous, brick-sized lump that was tethered to the car’s dashboard by a thick spiral cord and said, proudly, “It’s a built-in car phone.”

It looked more like a blunt weapon to fend off carjackers.

That was my first exposure to mobile phones. Today, technology has advanced so far that most people can’t live without their mobile smartphones — how else would they do their banking? Even 9-year-old kids know how to text their friends.

Despite this tech surge innovation in mobile communications, it isn’t the exclusive domain of companies whose employees spend time determining how to squeeze every last function into a device. There’s also a place for companies such as this month’s cover story subject, Revol Wireless, who have gone the other direction and sought ways to simplify the mobile phone concept.

By doing so, Revol has built a niche and captured significant market share among its targeted clientele. CEO Bill Jarvis’ concept counters larger competitors and relies on offering customers lower-price plans, unlimited usage and no contracts, forsaking the bells and whistles yet keeping in mind customers’ desires to surf the Net and send text messages.

Jarvis uses a simple three-pronged filter to push Revol forward: simple, different, better.

“It’s got to pass all three,” he says. “Complexity can hinder a process in a pretty dramatic way. There’s genius in simplicity.”

Now if I can just convince my children of that before their version of mobile phones includes implants in their heads.

Contact executive editor Dustin S. Klein at

Published in Cleveland
Thursday, 08 October 2009 20:00

Bright lights

If there’s a common theme among the 2009 Cascade Capital Corp. Business Growth Award honorees, it’s that the spirit of entrepreneurship is alive and well in the region.

Despite a tough economy, 32 companies are being honored this year, having demonstrated five years of growth — either in the number of employees or in revenue. Getting to this point wasn’t easy, and dogged persistence played a huge role.

That’s where entrepreneurship comes in.

Many professional managers are problem solvers. After the founders have done all they can do, managers are brought in to take a company to the next level, to turn around organizations in trouble or to lead combined entities after mergers or acquisitions.

They do these things quite well, but that doesn’t make them entrepreneurs.

Entrepreneurs are those people who go to sleep thinking about the baby they founded. They’re the ones kept awake in the middle of the night by ideas rattling around in their heads about how to beat the competition. And they’re the people who wake up in the morning with a fire in their belly, ready to grab the helm and steer the ship through uncharted waters.

The 2009 Legacy Award winner, Shearer’s Foods Inc., and our Entrepreneurial Spirit Award honoree, Keeven White of WhiteSpace Creative, both embody an entrepreneurial spirit.

White founded his marketing agency in 1994 after working at The Little Tikes Co. He relies on a strong work ethic that was instilled in him as a youth. With more than 25 professionals who mirror his passion for wowing clients and giving back to the community, WhiteSpace has quietly become one of those scrappy, growing organizations that most people wish they worked at.

At Shearer’s, CEO Bob Shearer views his more than 800 employees as a large group of entrepreneurs, and he continually seeks ways to push future leaders forward. Shearer welcomes employee input at every level and views it as a key ingredient in forging a lean, competitive snack-food maker that has been able to grow when its competitors were struggling.

There are 30 more companies just like these two, and I invite you to read about them in this month’s issue. Their successes work as models for how to rise above the circumstances we all face in business, during good economic times and bad.

Contact executive editor Dustin S. Klein at

Published in Akron/Canton
Tuesday, 26 May 2009 20:00

Lasting impressions

Few things in life leave a stronger impression than how you’re treated by an organization as one of its customers.

It doesn’t matter if it’s the neighborhood grocery store or pharmacy, a big box retailer, restaurant, financial services firm or arts center, but whether you feel satisfied, wowed or disgruntled from your experience will influence your future encounters. And when you’re scrutinizing every dollar that you or your company spends, it doesn’t take much to realize that glowing word-of-mouth referrals or ear-bending complaints can make or break a business.

When you’re stranded in line at a store for 10 minutes because the clerk at the checkout register is busy yapping away with a co-worker rather than ringing up customers, you’ll remember the wait and the rude clerk the next time you decide where to shop.

When your server forgets to bring part of your meal or it requires numerous requests for a drink refill, you’ll keep that in mind when it’s time to ante up the tip and the next time you’re considering where to eat.

And when your credit card company raises your interest rate, along with millions of other customers who paid their accounts on time each month, you’ll remember that the next time you reach into your wallet for something to pay with.

Conversely, when your experience is positive — an airline staffer that upgrades you at no charge to first class or a restaurant manager who brings out a free dessert — you’ll remember that, too, and likely spread the word.

Later this month, Smart Business will recognize 30 organizations that have demonstrated their commitment to delivering world-class customer service.

They understand how to go above and beyond for customers, clients and vendors, essentially rendering price irrelevant. They have systems in place that ensure consistency with every encounter. They know how to make their employees feel valued.

And they have cracked the code on how to develop company cultures where delivering top-notch service isn’t just an idea, it’s a promise woven directly into the corporate fabric.

In good times and bad, your customer service experience is every bit as important as price points and merchandise quality. Those who deliver service well will reap the benefits of economic growth.

But those who ply it poorly will eventually suffer the consequences and a sadder fate.

Contact executive editor Dustin S. Klein at

Published in Akron/Canton