Think like a customer Featured

8:00pm EDT October 27, 2005

Ron Blake, president and CEO of Rewards Network, joined the company in March with an important mission — return Rewards Network to consistent profitable growth.

During the past year, the company had experienced a decrease in the number of customers, which resulted in decreased sales.

Rewards Network offers members cash back or airline miles when they register their credit card with the company and visit participating restaurants and hotels. But the company ran into problems when its restaurant base began to decrease — in 2004, Rewards Network lost approximately 300 restaurant merchants because they were either dissatisfied with the results or because they went out of business. And as Rewards Network’s restaurant base began to decline, so did its sales.

For Rewards Network to be profitable, consumers must join the network and visit participating merchants. And for consumers to be interested in the Rewards Network, there must be a variety of merchants where they will save money.

Blake joined the company at a critical time, and his first task was to find a way to retain merchants. Without them, Rewards Network would lose members and sales would further decline.

The concept seemed simple enough — if you improve the company in one area, it will improve in the other. But where do you start?

Learning the company
During his first eight weeks on the job, Blake followed account executives and conversed with clients. He learned about the products and services the company offers and then learned about his customers’ problems and their issues with those products and services.

“With any business, when times are challenging, it’s very difficult to take that time out and go invest that time in the field,” says Blake. “One of the advantages of coming in as the new CEO was the ability to take that time to listen to move the organization forward with a coherent plan.”

After listening to his customers and learning about the company, Blake came up with a phrase that would become the driving force behind his turnaround plan - “Think like a customer and act like an owner.”

“You have to satisfy customer need to be successful in the marketplace,” he says. “You have to understand your customer and you have to listen to your customer.”

The restaurateurs Blake talked to had different problems and needs, but they all had one thing in common — they wanted someone to listen to their problems and help them solve them. And they didn’t feel that Rewards Network had listened to them in the past.

“You have to know what their language is versus your own internal language,” says Blake. “We, as a company, have grown over the years talking about our products and services in ways that are somewhat foreign to the restaurant owner. When he thinks about how much money he wants to spend on marketing and advertising, he doesn’t want to hear some fancy term for how our product works. He wants to know, ‘Is that going to be 4 (percent) to 6 percent of my cash flow a month?’”

With valuable information from his customers, Blake began to develop and implement a turnaround plan for Rewards Network that centered around communication.

Selling the Rewards Network Way
Blake realized that everyone in the company needed to know everything there is to know about the products and services offered. They needed a uniform selling plan that everyone could follow and understand.

“There was a very strong need to get some commonality and focus in terms of how we presented our product and service to the customer,” says Blake. “As a result of that, we have instituted a companywide training program that is very customized to us. It is called Selling the Rewards Network Way. It’s the approach to selling and servicing our customers that we want everyone to use.”

At the end of the training process, there is a certification program, and all sales associates and managers must be certified in Selling the Rewards Network Way.

And what exactly is that? It’s Blake’s philosophy that Rewards Network must become a customer-first company. Employees must put themselves in their customers’ shoes, listen, understand their customers’ problems and service their customers the way that they would want to be serviced.

Rewards Network employees learned firsthand from Blake what it means to be a customer-first company.

“I had a companywide conference call scheduled to make some rather significant announcements a couple months ago,” says Blake. “I was actually with a customer listening to their concerns and needs, and it went longer than it should have. I sent my administrative assistant a note on my Blackberry that said, ‘Put the company call on hold for 30 minutes. I am not leaving this customer.’ It was one of those days when small things make a big difference.

“Interestingly enough, when she sent the note out, she said ‘Ron is with a customer. This is what it means to be a customer-first company.’”

That made it clear to everyone that the customer comes first, no matter what. Then they also needed to understand how they fit into the company’s bigger goals.

Upon his arrival, Blake provided all employees with a one-page plan for the company. It listed 10 objectives for the next 18 months. Those were only shared with Rewards Network employees, who then had to write a one-page plan that tied in with what their function and responsibility are and how they fit into one of those 10 objectives.

“I told the employees, ‘If you find yourself doing anything other than these 10 objectives, then stop,’” says Blake. “It’s our roadmap.”

Blake saw a need to restructure the sales compensation plan. He wanted a plan in which people are compensated based on the profit of the deals they sell.

“We needed to focus on a sales compensation plan for our associates that clearly aligns their interests with the shareowner,” says Blake. “Our (new) sales compensation plan is tied to gross margin. They know by selling the right product and the right service that they are going to do well in their business and that the shareholder will do well over time as a result of that.”

Blake started working on changing the sales compensation plan immediately upon arriving at Rewards Network, and the new plan became effective July 1. Now employees who make a more profitable deal receive a better reward than those who make a less profitable deal.

The company is also focusing on the retention of merchants, so employees are rewarded for renewing business. The result is an employee incentive to sell the more profitable products first and renew current merchants, which is crucial to profitability.

Employees responded positively, perhaps because the plan includes provisions that keep employee compensation consistent through the end of the year.

“If they need to retool their portfolio of restaurants, they have time to do it without taking a hit personally,” says Blake. “We wanted them focused on the market and our customers and not their paycheck. So we made sure our people had a minimum level of compensation that they could expect from here until the end of the year.”

After employees have had time to complete their training and build solid relationships with their clients, they will return to a plan that has a fixed and variable component.

“I would call what we have right now a floor to ensure that as people transition to the type of customer relationships we want to build and to have more one-on-one contact that they will not be hurt by that,” says Blake. “We have given them six months to retool things so that when we hit the ground running in 2006, they should be able to make or exceed what the current minimums are.”

Moving forward
Blake’s turnaround plan is geared toward achieving long-term results. He has faith that by forming closer, more personal relationships with clients, he can return the company to profitable growth and keep it there.

“One of the things you hate to see in this organization is not increasing our restaurant base,” says Blake. “And one of the reasons for that — to be honest — is we didn’t spend enough time working with our clients after the initial sale. With a little more focus and a little more attention, we can increase the retention of customers and help grow our customer base as time goes on.”

Blake plans to take on a lot of that responsibility himself by making sure that he meets and talks with as many customers as possible.

“Selling and servicing companies is a very one-on-one experience,” he says. “Customers buy from people, they don’t buy from companies.”

And that is why he is spending so much time training and communicating with his employees. He encourages them to continue contact with customers by picking up the phone and calling them after the initial sale, by stopping in for dinner to see how things are going. Blake wants to implement a more consultative selling process than what was used in the past.

“The challenges this company faces really revolve around our ability to execute,” he says. “The market is there. The question is, will we be able to do it in a fashion that is consistent with our customers’ needs and meet them?”

Blake is right — the market is there. Dining out has become a way of life in America. Rewards Network has a 20-year track record and a long history of success. The company still has more than 10,000 restaurants and 11,000 hotels in its portfolio, as well as 4 million members.

And Blake is confident that the future of Rewards Network is bright.

“We’re a $300 million company with plenty of room to grow,” he says. “The opportunity out there is quite huge for us.”

How to reach: Rewards Network, www.rewardsnetwork.com or (877) 491-3463