Customer focus no longer means just researching current and future needs in order to design expected or desired goods and services. Instead, a rising trend in business today is co-creating value with customers.
Value is created when a product and buyer come together within a particular use situation. Some examples include retailers getting the customer involved in the shopping experience to save time (Home Depot’s self-checkout) or costs (IKEA’s assembly and delivery by customers), smartphone personalization through app selection and Dell’s online built-to-order computers are others.
Another is utilizing management consultants who collaborate with clients to add value in research projects.
Co-creation of value can lower costs, increase benefits and improve the overall service experience for both the organization and the user. As the table below explains, co-creation of value has a dual emphasis on the customer and company as value creators and is an applicable business strategy in a wide variety of market contexts. Airlines, supermarkets, supply chains, theaters, theme parks and retailers have all embraced co-creation of service opportunities through self-serve initiatives such as check-in, checkout, price checks, information/purchase kiosks and other technology enhancements.
Value Creation and Marketing Opportunities
|Marketing Strategy||Market Emphasis||Value-Creation Focus||Corporate Examples|
|Market driven||Established market||Customer||Coca-Cola, Procter & Gamble, Toyota|
|Market driving||Emerging or imagined markets||Company||Google, IKEA, Virgin Group|
|Co-creation of value||Established, emerging or imagined markets||Customer and company (simultaneous)||Amazon, Apple, LinkedIn|
A great example of the new co-creation of value model is illustrated in the case of Crushpad, a Sonoma, Calif., winery. Crushpad is a state-of-the-art winery where customers choose their level of involvement for small lot wine-making — typically 25 to 100 cases — based on their interest in the production process.
The company allows customers to develop wine-making plans, engage in hands-on activities, such as sorting, de-stemming, crushing, fermenting, pressing into barrels, labeling and packaging bottles, and even distributing and marketing the products. Wine enthusiasts, restaurants and retailers have co-created value with Crushpad, and as a result, the business has launched more than 150 world-class brands.
The rock music industry has also experimented with co-creation of value. Radiohead’s “In Rainbows” album was sold directly to more than 2 million consumers who paid what they felt the music was worth. The symphonic band Renaissance also raised more than $92,000 from 860 loyal fans to record a new CD called “Grandine il Vento.”
Innovation and creative collaboration allow the smartest — not necessarily the biggest — companies to win in the marketplace.
Here are six questions to think about as your company ponders the idea of co-creation of value.
1. Do you strive to continually exceed customer expectations?
2. Does your view of value creation go beyond the firm (to include the customer)?
3. Do you actively seek to create an extended community of users?
4. Is personalizing the customer experience a major part of your marketing strategy?
5. Is your marketing team truly obsessed with researching and improving customer experiences?
6. Do you nurture and forge enduring business relationships with customers and collaborators?
Art Weinstein, Ph.D., is a professor of marketing at Nova Southeastern University and author of “Superior Customer Value: Strategies for Winning and Retaining Customers.” Visit his website www.artweinstein.com or reach him at firstname.lastname@example.org or (954) 262-5097.
For 28 years, the late Fred Krum developed the vision for Akron-Canton Airport (CAK), a vision that changed the relationship between the airport and its customers. It involved low fares and complimentary Wi-Fi and massage chairs for passengers. It called for $250 million to modernize airport facilities. The vision was to create “a better way to go” for airline passengers.
Krum cast the vision, and now Rick McQueen is carrying it forward.
“Every decision we make, we think about how it impacts our customers, and we make sure that that continues to be a positive impact,” says McQueen, who became president and CEO after Krum retired in 2008. “We want to be a good partner for this region and we want to give back.”
First-time visitors may be surprised at the effort a regional airport would put into delighting its customers — for example, furnishing new guests with gift bags upon arrival, filled with handy items such as ChapStick, Purell and a personal note from McQueen — or offering complimentary Cinnabon coupons on customer appreciation days and free shirts on “T-shirt Tuesdays.”
CAK has also made strides to improve travel experiences, from retrofitting its website with innovative, interactive content to leading the industry in its hands-on social media strategies and partnerships with low-fare carriers.
“We do not want for our customers to feel like there are bricks and mortar between us — that there’s pavement between us — but that we are all doing the same to serve this community, to get them where they need to go, on time, at a price that they can afford,” says Kristie VanAuken, senior vice president and chief marketing and communications officer for CAK.
This philosophy has paid dividends and not just for the airport. In addition to breaking passenger records for 12 out of the last 15 years, CAK has gradually grown its annual economic impact in Northeast Ohio to about $400 million and 2,250 jobs. Smart Business spoke with McQueen and VanAuken about how CAK continues to refine the vision of “a better way to go” through innovation around the customer experience.
Q. How do new technologies such as digital and social media complement the airport’s vision?
? KV: There are a couple of reasons why it really makes sense for us, one being because of the broad adoption. Two, because it’s extremely transparent, and we are a very transparent organization by choice and by orientation as being a government agency. And because it’s really cool to be in conversation with our customers and to learn from them what they want and what they like.
The website was very much a product of what we’ve done on the social media front, and then it was figuring out how do we integrate our strong brand voice — this ‘better way to go’ theory’ — which really has deep meaning for all of us here.
? RM: This also goes back to our low-fare commitment. What’s the first thing that you are looking for when you go online to look for an airline ticket — lowest price, right? So if our carriers have the lowest price, and it’s so easy now to go online and check all these different fares, it helps us to have that position where people recognize us.
Q. What were the challenges of building a presence on these new platforms?
? KV: You don’t deliver content on social media the same way you do on the website or in the same way you do in a TV ad, but they all have to make sense together. I often go back to this analogy of a rock band. So it’s not everybody strumming the same instrument and the same tune at the same time, but every instrument has to play its part. And it all has to come together to make beautiful music.
Last year, we spent a lot of time thinking about the integration of our brand voice, how the public relations effort really needs to be in concert with everything — stakeholders, airline relations and all of the ways we communicate the things that matter to the community. It needed to have that familiar voice of the airport, that warm, transparent, authentic voice.
Q. You have such a strong brand focus. How does it translate into your new media strategies?
? KV: It’s not a top-down strategy. The great thing about social media is that it’s all about the customers themselves. We get to go to their space. Social media is all about what matters to them. It’s their space and we are often welcomed into that, and that is a privilege.
We’re honored every time someone even posts something to our wall. Because the way we look at it is, ‘Look, that customer could do anything with those 30 seconds, but they chose to spend those 30 seconds posting something to our wall. It was the most important thing at that moment to them.’ In our minds, that kind of commitment deserves a swift response and deserves our friendly and compassionate answer to whatever it is that they’re going through.
Q. So how does the airport respond to this feedback?
? KV: There are two people on my staff, including myself part-time, who monitor and listen every day to what’s going on in the social media realm. But we’re not trying to supplant our current infrastructure for customer service. We have a customer service manager. If something comes up that needs individualized attention, we bring him in. He’s very skilled at quickly responding to customer needs, working on behalf of a customer who needs to interface with an airline or a car rental company.
Another way to look at it is what do our customers really care about? They tell us all the time, and we respond to that. They want free Wi-Fi. Great, they get it. They really respond to our sparkling clean facilities. They want clean bathrooms. … So we listen. We’re looking at all times for something that we can improve. We’re also listening for areas that maybe we should pay more attention to.
Q. What does it take to stay so responsive?
? RM: It’s another level of dedication that most people don’t realize.
I use the analogy of a house of cards shaped in a pyramid. I’m sitting at the top of the pyramid just because of who I am, but if I don’t do my job, the house of cards will fall. If our custodians and our building maintenance folks and our operations people, middle management folks don’t do theirs, imagine if you just take one card out. What happens is the house of cards falls as well. So we all have to work together.
? KV: There are a lot of different ways that we’re trying to use the technology to try to engage people where they are. There’s a lot of give and take. We try to send information out that they would find valuable. But we also like to bring in our people and our family orientation here.
Q. Is it just the marketing team that’s involved?
? KV: We’ve got five in-house bloggers. We feel like there are a lot of viewpoints on the airfield that are interesting, maybe some behind-the-scenes looks that you simply don’t get from the marketing people. I can’t give you the inside track on some cool thing that’s happening on our operations side or even go out there and talk about construction of our new runway because it’s just not in my DNA like it is theirs. Of course, Rick does his ‘Prez says’ once a month, and that’s an open forum for our customers to ask the top dog here any question that they want.
Q. Ever have any really tough questions?
? RM: We’ll have somewhere between 20 to 25 questions each month, and quite frankly, the hardest questions to answer are the ones such as, ‘What’s your favorite airplane?’ Well, that’s hard because I like them all! If it’s just about the operation of the airport — I’ve been here for almost 30 years — those are actually easy for me to answer. But it is great to hear what people have to say, and on occasion, they have suggestions on how we can improve our service, and we’re always interested to hear them. A lot of times, they have new destinations that they’d like to see because they travel there all the time with their families.
Q. How do you reinforce the vision for employees?
? RM: Part of our strategy has always included people or other employees here in the facilities that don’t necessarily even work for us — for instance, the courtesy van drivers. We contract the parking lot out. Those folks don’t directly report to us. But they have to buy in to the idea that we need to be ‘a better way to go’ and that we need to take good care of our customers.
Even the Transportation Security Administration go down and talk to all of their new employees about how we want them to interact with our customers, that our niche as a marketplace is very customer-driven, and we really do live and die by our tagline.
We give away ‘Better Way to Go’ awards on a monthly basis. If someone has gone above and beyond the call of duty, whether they’re our employees or an airline employee or a car rental employee, whoever — we give them an award. They come up, and I get to talk to them for a few minutes, thank them personally. We give them a little tchotchke, which is an airport bag or a watch or something of that nature. So we try to reach out and develop the culture that will permeate the place and keep the message front and center — that we need to be a better way to go and that customer service has to be a priority.
Q. What can other leaders do to make their company more customer-centric?
? RM: You have to make your employees part of the solution and empower them to make decisions and to do things, to buy in and take ownership. I also think it’s key for them to look around their industry and not be afraid to take other people’s ideas and make them your own.
[That applies to] a lot of the customer amenities that people really like here, for instance, a cell phone lot where you can come in, and as long as you stay with your vehicle, you don’t have to go into the paid parking lot. With the advent of the cell phone, people call you and say, ‘Hey, I just got off the airplane … can you swing around and pick me up?’ Our customer service manager saw that at another airport, but we thought it was such as really good idea we incorporated it into our culture as well.
Q. With the recession, ticket price remains a major factor for airline passengers. Will you be able to keep offering low fares?
? RM: It’s interesting because, of course, we don’t set the airfares here — the airlines do. But how we can influence those fares is by the mix of air carriers we have here.
We developed that relationship when AirTran came in 1997, and we’ve been able to keep that leadership as we’ve moved forward. In fact, we just did a study and it shows that currently because of AirTran and now Frontier Airlines, the people in Northeast Ohio are saving about $90 million a year in air travel, because of these low fares.
Q. You also have a new partnership with Southwest Airlines, correct?
? KV: It’s very exciting for us to start thinking about our partnership with Southwest Airlines. They have committed to staying at CAK and growing here. It’s such important news for this community because it means that we can continue to offer low fares.
On the communications side specifically, we’re going to look at other media that are out there. We’re currently experimenting in Google+. We’re looking with great interest at Pinterest. (The company has since started a Pinterest account). We’re already on Foursquare. We’ll keep looking at the ways our customers want to be in a relationship with us.
? RM: We’re in the midst of the master plan right now, which is one of the things that the Federal Aviation Administration asks us to do anyway — but it couldn’t be coming at a better time for us, coming off of record passenger years — one of the key things for me I learned a long time ago from Fred — and that is to always keep abreast of what’s going on out there because we need to be positioned to take advantage of whatever opportunity comes our way. And we don’t know what those opportunities are. <<
How to reach: Akron-Canton Airport, (888) 434 2359 or www.akroncantonairport.com
The CAK Files
President and CEO
Senior vice president and chief marketing and communications officer
Rick, born: North Canton, Ohio
Kristie, born: Lansing, Mich.
Rick, education: Walsh University
Kristie, education: Austin College (BA), then Western Michigan University (MPA)
What are some things CAK does to make airline travel more fun for people?
Kristie: We had a wonderful customer appreciation day on Valentine’s Day this year. What we wanted to do is delight and excite them, give them that ‘wow’ experience. But on Customer Appreciation Day, it was for everyone who was in the building. It was our opportunity to say thanks for being our customer … so we just wanted to treat them right. We had cupcakes and we had flowers and cookies and free coffee and Cinnabon treats. We also partnered with Delta Airlines and for its first flight of the day we had customized gift bags for every customer that had a bag coming out on our bag belt. So the first thing that the customers saw were gifts for them, individually named, and it was so cool to be down there and see the delight on their faces as they’re searching for their bags and snapping photos. It just created happiness.
Rick: Another thing we’ve been doing is on our website in order to encourage more participation is free T-shirt Tuesdays. You’d be surprised at how many people I see who say, ‘Hey, I keep entering but when am I going to win a T-shirt?’ It’s amazing what people will do for a T-shirt. But once again it’s fun, and it gives them a chance to feel like they are part of what we’re doing.
Kristie: We’ve given away about 400 T-shirts.
Don Knauss has built a career transforming new brands into household names, from debuting Simply Orange at the Minute Maid Co., Coca-Cola Zero as president of Coca-Cola North America or launching Green Works — one of the most successful new products in consumer packaged goods in the last decade — as chairman and CEO of The Clorox Co.
While the road hasn’t always been easy, Knauss says there’s one characteristic that will never change when it comes to what makes brands successful: People trust them. “At the end of the day, a brand is a promise of performance,” says Knauss, who joined Clorox in 2006. “It really is about creating trust with the consumer.”
Advances in technology have only magnified the role trust plays in consumer decision-making, Knauss says. Before people even set foot in a store to buy a product, they can research user reviews, look up product information and find out what other people think about the best practices of the brand as well as the company that makes it.
Coming on as the new CEO, Knauss quickly realized that Clorox, a company with products in more than 100 countries, needed to meet consumers’ need for trust and transparency if it was going to continue to get their vote as customers.
Here’s how Knauss created a corporate responsibility strategy at Clorox that’s not just good for consumers; it’s also good for business.
Make it a priority
One of the most important steps in the success of Clorox’s corporate responsibility initiatives dates back to 2006, when Knauss and his executive leadership team first formalized the company’s commitment to corporate responsibility (CR).
What began with a meeting about Clorox’s centennial business strategy — the company turns 100 in 2013 — quickly turned into a call to action as the group examined four “megatrends” going on in the business world, including health and wellness, sustainability, multicultural shifts and, of course, affordability. As Knauss and his team dove into the causes behind each trend, they kept coming back to the issue of corporate responsibility.
“Consumers were not only evaluating brands on strictly the performance of that brand, but they were also evaluating it on who was providing the brand to them,” Knauss says. “Was it a company they trusted? Was it a company that had the same core values that they espoused? And was it somebody that they wanted to do business with?”
Over the years, Clorox has grown from its trademark bleach and cleaning products to manufacturing and selling everything from salad dressing to water filters, cat litter and trash bags. And like many other brand-driven enterprises, it’s spent years focusing on its commitment to build trust with its customers.
But in that meeting, Knauss and his team realized that it was time to take the extra step. They needed to make the company’s commitment to corporate responsibility a formal strategy with clear metrics and goals.
“It was that insight to seeing the connection consumers were making between brands and companies that made us even drive it harder,” Knauss says.
“As an offshoot of health and wellness and sustainability, it really got us doubling down on our corporate responsibility of what do we want to stand for?”
They narrowed Clorox’s focus to five pillars of corporate responsibility: performance, planet, people, products and purpose. And they went about setting goals for each pillar. Some of these included making sustainability improvements to 25 percent of the product portfolio by 2013, reducing waste and moving to more sustainable product materials.
They also structured the goals in phases — annual goals as well as a three-year plan — allowing the leaders to adapt the strategy over time as consumer or economic trends play out. As you build a foundation for CR in your organization, the most important thing to consider is whether the goals you set are realistic, so that people internally and externally will take them seriously, Knauss says.
“If you set unrealistic goals, you can create some pretty bad behavior throughout the organization,” he says.
“So we thought it was a combination of getting the strategy right, getting the strategy focused on trends, sustainability being one of those trends, and then linking that to how do we do a better job from a corporate responsibility standpoint against the planet, against our people, against the purpose of the company.”
Creating a formal CR strategy gave Clorox the foundation it needed to drive the commitment throughout the organization. From there, Knauss says it was up to the company’s leadership to build alignment on the strategy, or “tone at the top.”
“It starts with the top,” he says. “So a CEO or COO really has to drive this thing if you’re going to get traction with the rest of the company, and then get traction with outside constituents.
“You have to keep people informed. So it’s not just me talking to the executive committee. It’s me sending out voice mails, emails, connecting with the rest of the organization on the kind of progress we’re making.”
As a leader, Knauss says he utilizes a piece of business advice he received from Don Keough, the former president of the Coca-Cola Co., when he’s trying to get buy-in from stakeholders.
“When I took over as president of Coca-Cola North America, I asked him, ‘Don, what kind of advice would you give me?’” Knauss says. “And he said, ‘Don’t act like a big shot.’
“One of the things I’ve learned is that as you move up in an organization, you’re given more power. The less you use that power, the more authority you’re given by people — in the sense that power is the ability to compel people to do things. Authority is really more about persuading people to do things.”
To get buy-in from shareholders about the CR strategy, Knauss simply reminded them how the integrity of the company that produces a brand translates into a consumer’s buying decisions, and therefore, profitability.
“Everyone understands the evolution of the consumer over time and how the consumer isn’t just evaluating the brand but the company that provides that brand — and is it somebody they really want to do business with,” Knauss says. “I think people intellectually get that. They get that intuitively. It’s just reminding them how important it is that our values and the focus on our corporate responsibility align with the values of our consumers.
“It was easy to make the leap from building trust with consumers — anchored in the performance of the brands — to building trust with investors by anchoring the trust in the performance of the stock and the company’s ability to deliver shareholder returns.”
Having a strong CR strategy means nothing if you don’t accomplish any of the goals you set out to achieve. So to keep your organization accountable for progress, you need to find ways to keep them engaged in the goals and focused on their success.
One way to do this is by tying those goals to monetary incentives.
Because Knauss knew he would rely heavily on his executive committee to communicate and lead progress on CR initiatives, he decided to pay the company’s senior executives part of their annual compensation based on Clorox’s ability to deliver against its environment goals, such as for greenhouse gas emissions, wastewater reduction, energy use and solid waste.
“If you really want to get traction, you not only have to measure it, you have to pay people on it,” Knauss says. “So it’s first, getting the focus right, including defining the metrics that you want to measure progress with, second, getting alignment throughout the organization that these are the right pillars and the right metrics, and then lastly, the discipline — putting the routines in place to monitor the progress against those on a quarterly basis, at least.”
In addition, people throughout the organization need to understand how important CR programs are to the consumers you sell your brands to, Knauss says.
So to help people see this link between CR and company performance, the organization released its first official corporate responsibility report in 2010. It also highlighted its CR strategy throughout the 2011 annual report, titled “Think Outside the Bottle.” In both instances, Clorox emphasized how CR ties into the company’s vision and mission for employees and consumers.
Building this kind of high-level engagement with employees is important short-term because it drives progress on your goals and long-term because it also helps you attract and retain the best talent, Knauss says.
“That’s what it’s all about, is the best talent,” he says. “So when you look at what we’re trying to do from a business standpoint and not what we’re trying to do from a corporate responsibility standpoint, all of that together really drives a high level of engagement with our employees. At the end of the day, that’s how you win.”
The No. 1 way to stay accountable to your CR progress is probably the most obvious. Because CR also reflects corporate values, you need to also link the goals and programs back to the wants and needs of consumers.
With the increasing availability of information, many companies have, at times, suffered financially because of their lack of transparency in corporate practices — think Wal-Mart, British Petroleum and Nike.
Demonstrating transparency with consumers is increasingly important for companies who want to prove that their commitment to the customer is genuine.
“It’s so fundamentally different in terms of the consumer’s access to information — the ability to really say, ‘Look, I want to do business with people whose values align with my own,’” Knauss says.
“You’re really putting your brands at risk if those brands and the company don’t connect and communicate this sense of value.”
Instead of going on the defense, Clorox has used the transparency of digital and social media as a way to increase the amount of information it shares with its consumers.
For example, when Knauss and his team saw that consumers across segments were showing more concern about what kind of ingredients were in products, and especially cleaning products, they implemented an initiative to disclose all of the preservatives, dyes and fragrance ingredients in the company’s U.S. and Canadian cleaning, disinfecting and laundry products.
Although the company was the first in its industry to do so, it eventually became a leader in ingredient disclosure as other businesses followed suit.
“A consumer can go on our website, pull up any one of our brands, and it will give full disclosure of whatever ingredients are in there,” Knauss says. “So it’s an example of the transparency that we’re not only trying to bring to the financial side … but to the consumer side of the company by letting consumers know exactly what they’re buying.”
Another example is the website for its brand Green Works, which offers users tips on how to create a greener lifestyle and features a sustainability blog called “Green Mommy in a Plastic World,” with posts such as “Seven things to do with your kids’ artwork.”
Because the ability to connect and get feedback is now so immediate, most companies can only benefit from policies such as increased transparency, communication and disclosure, Knauss says.
“There are just so many different ways of connecting, so you’ve got to be where the consumer is,” Knauss says. “So I think everybody intuitively gets that. But we’ve certainly seen a big payout.”
In addition, many initiatives that have helped Clorox reduce its environmental footprint, such as using greener packaging, have also reduced cost. Today, all of its segments have bounced back from recession lows, bringing the company to $5.2 billion sales last year. And the fact that 90 percent of Clorox brands are No. 1 or No. 2 in the spaces that they compete in is just further proof that corporate responsibility and profitability can — and do — go hand in hand.
“If you don’t have a solid strategy around corporate responsibility and articulate that strategy to people in a compelling way, you’re missing half of the demand creation equation,” Knauss says. <<
How to reach: The Clorox Co., (510) 271-7000 or www.thecloroxcompany.com
- Create a formal commitment.
- Get key groups on board.
- Find ways to raise engagement.
The Knauss File
Chairman and CEO
The Clorox Co.
Born: Highland, Ind.
Education: Indiana University
First job: Officer in the United States Marine Corps
What is one part of your daily routine that you wouldn’t change?
Senior corporate jobs are very demanding, not only mentally but physically, particularly given the extensive travel needed. I work out six to seven days a week. That physical exercise is a great release, and a high level of fitness is critical to being able to execute my job with excellence. I highly recommend a vigorous exercise program for everyone, but especially for those in high-pressure jobs.
If you could have dinner with one person you’ve never met, who would it be and why?
Margaret Thatcher. She was an incredibly effective prime minister during a very tumultuous time. I would like to understand her approach to leadership — the traits she valued the most in people for them to be truly effective and drive real progress whatever their role in life.
What is your favorite part of your job?
The aspect of my job I most enjoy is helping to define and sustain the values of our culture. The CEO must set a ‘tone at the top’ to win in the marketplace and, importantly, to win in the right way. It is extremely important to define the traits you expect from your leadership team and your entire company. I believe a values-based culture anchored in integrity, optimism, compassion, humility and curiosity will attract and keep the best people engaged.
As a 26-year-old with long hair and sideburns that merged into a mustache, Bob Weltman asked his father if he could be put in charge of the collection department of his law firm. His father trusted his son’s work ethic and belief that he could run the department much better than it had been, so he said, “Yes.”
From that day on, Weltman has been leading people by example at Weltman, Weinberg & Reis Co., a law firm with more than 1,200 employees and annual revenue of more than $100 million. He has always prided himself on working harder and longer than anyone else to stay on top.
“My leadership style is one by example,” Weltman says. “I never ask my employees to do anything that I could not do. I always got to work before my employees. I always worked as hard as my employees and I always worked longer than my employees. I was totally dedicated to my job.”
Ever since Weltman held a job bagging groceries as a youngster, he has maintained his work-hard-to-be-successful attitude throughout college and into his professional career.
“My background in working hard was something that I adopted a long time ago,” Weltman says. “If you’re going to accept the responsibility, do it with all your energy and give it all the time that’s necessary to succeed.”
Today, Weltman has lost the long hair and his sideburns, but the mustache and work ethic remain strong. Here is what Weltman has learned in his 50 years of business.
What have been some of your biggest challenges over your career?
The challenge of running a business — profitability. That is always a challenge. Even though we’re in the service business and we’re lawyers, making a profit at the end of the day is a challenge. When you attend any meeting in this law firm and you didn’t know what we were, you would think we manufactured widgets. The meetings we have are all business-driven with business ideas.
I don’t know how you can exist in today’s world in business without taking business courses. If you’re thinking of being a doctor or a lawyer, a businessman, an accountant or anything in the business world, you’ve got to take business classes.
No. 2 is the management of people. Everybody who works here has their own set of problems. You’re trying to merge together a whole bunch of different people with a whole bunch of different problems into one and to motivate them to give their job the best.
If you get too involved in an employee’s personal problems, it can drag you down and distract from what your primary focus is. So being able to merge together people from all different types of backgrounds into one is very, very important.
You have to try to create a team effort. A team is only as good as the weakest link. You’ve got to set the bar high. Saying it can’t be done is not acceptable. I’d rather you try something and fail than say it can’t be done. Don’t be afraid to fail. When you decide to make a decision, measure the chance of success versus the chance of failure.
Don’t do something that can be fatal to the organization. If there is a higher degree of success than there is failure, measure what happens if there is failure because if the failure is detrimental to the organization, then you don’t want to make the decision. You have to learn from those failures.
You take the failures that you have had and try to build them into something that is positive. You want to teach your employees to also take some degree of risk to what they’re doing.
Throughout 50 years, what are the biggest changes you’ve seen in business?
I was a very, very rough employer. I demanded perfection. Even though I knew perfection could not be obtained, I demanded it. I was very rough on the people who worked with me. Some stuck around, and others went other ways.
I remember that I ran into a friend of mine who worked for me at one time and had left. We were reminiscing about the old days, and he told me a story about something I did to him that interfered with his personal life. I knew he was going out one night, and I gave him a stack of files to work and have ready to review the next day.
I don’t remember if I did it intentionally, but he said he had to skip his social event to work on them. I went back to the office and told my son the story. My son said, ‘You know what I would have done? I would have quit.’
There has been a shift from the job meaning everything to you to balance in life. We went from people who worked because they had to work to put food on the table to a period of time where people started making more money and a balance of life became almost as important to being dedicated to the job.
Another change in the industry has been what the clients focus on. Originally, clients came to you because you could give them the best results. Giving good service to the client along with good results used to be the motivating factor.
After 9/11, the client’s focus became security. Now we have security badges, security entrances. In some of our offices, we have security cameras. The clients became very security conscious.
More recently, since the 2008 recession, compliance is bigger. Now they want to know the procedures you’re following to keep us out of trouble. Now the focus isn’t so much on performance; it is how well you’re treating the customer. The emphasis has gone from performance to security to compliance, and those organizations that will be in compliance will get a higher rating than those organizations that have better performance quantitatively.
How important has relationship building been to you?
I feel that when a client comes to me with a problem, they’re coming to me for help. I feel honored to represent a client and help them, and I want to give them something back in return.
I treat clients like friends. I try to establish a personal relationship with them and make a connection with them and a bond so that they can come to me for help, and I’ll drop whatever I’m doing to help them. Once they come to me for help, I want to work my hardest to make sure I achieve a result.
You have to make the connection and gain the confidence of that person. You’ve got to get the client or the person to believe that what you’re doing is in their best interest. You’ve got to put their welfare ahead of any other selfish or personal motivation that you may have. You have to give the client the impression that you’re working for them to achieve the best result and that making money is secondary.
I’ve said many times to a client when they come to me with a challenging collection problem and they say, ‘How much are you going to charge me?’ I say to them, ‘I don’t want what I’m going to charge you to stand in the way of me getting you the best result. Pay me what you think I’m worth when it’s done.’
You have to let them know that money and the profit motive is not the main motivation of why you’re doing it.
When clients come and present me with their problem, I tell them, ‘You’ve now given me this problem. You have to walk out of this room and dismiss it from your mind, because if two of us worry about the problem, there’s too much energy being wasted at solving the problem. Once you come to me with a problem, I want you to divorce yourself from that problem and allow me to handle it and try to get you a solution.’
Where did your hard work ethic come from?
There was a book called ‘Bounce,’ and it was the question as to whether greatness is genetic or something you have to work hard to achieve. The theme of that book was that hard work is what makes you good at what you do. I worked very, very hard at what I do, and I still work very hard.
My day starts at night when I take home boxes of files, which I work on until 10 at night. I get to work at 6:30 in the morning, so my day is 6:30 a.m. to 10 p.m. In order to be good at what you do, you have to put a lot of hours in. It’s not something that just comes your way. It’s something that you got to devote a lot of hard work and a lot of time to.
With all your great athletes, people say they were born with greatness, but from LeBron James to Jimmy Brown, they worked very hard at what they did. Mark Spitz didn’t just jump in a pool and win gold medals. He worked endless hours to achieve greatness. You have to stay focused.
I’m always focused on the job. I have blinders as to anything else that’s going on around me. It’s like a sporting event — when you’re on the basketball court, you have to be able to separate yourself from the rest of the world. Or it’s like a relief pitcher in baseball — when you give up a hit or give up a home run, you’ve got to go out on the mound and separate yourself from what happened in the past because you can’t let it be the driver for what happens in the future.
What have you done to keep up with the industry as it has grown?
Reading, listening and attending lectures is very important. When I attend seminars, I don’t necessarily go there to learn what the message of the seminar is; I go there to learn what the problems are in the industry. I try to figure out solutions for those problems. As a result, that created different departments in our firm and different ways of handling things.
If you don’t do these things, you’re missing out. When I read a newspaper, I look at what’s in that article that can help further the organization. Is that a marketing opportunity? Is that an opportunity for business? I try to always transfer what I see and hear and read into how I can incorporate that at our firm to make the firm a better organization.
I’m big on sports, so I’ll look to sports to see how management decisions are made. I look at how players are treated and the education of players and how they learn what the game is all about. It’s all about the ‘Bounce’ theory — are you given the job at the time that’s necessary to be the best at what you can do?
What have been some keys to keeping the firm a leader in its industry?
I’ve been a visionary in running the firm. We were one of the first law firms in our field to have more than one office. We were the first law firm to have a probate collection department.
I like to be the first at what we’re doing, and the reason why is if you’re the first, there is no measure of competition. If everybody is talking about it, then it’s too late. That’s why, when you go to conferences, you listen to what the underlying message is and not what is being said.
I’m also the kind of person that when I come up with an idea, I want to implement it immediately and get started on it. All of us are very busy and none of us are sitting here waiting for the client to call us or walk in the door, but when you’re presented with something new, you have to be able to start working on that problem immediately without losing any concentration on what your daily task is. A lot of people are very slow at appropriating something new. When you think of something to do, you have to start it.
How to reach: Weltman, Weinberg & Reis Co. LPA, (216) 685-1000 or www.weltman.com
- Give 100 percent to your current job.
- Build relationships with your clients.
- Be a leader and focus on solving problems.
The Weltman File
Weltman, Weinberg and Reis Co. LPA
Born: Cleveland, Ohio
Education: Received a BBA and a master’s in finance from the The Ohio State University and a JD from the Case Western Reserve University School of Law
What was your very first job and what did you take away from that experience?
I got a job working in a grocery store. I used to bag groceries and take them to people’s cars and then run back to beat the others in line. The average tip was a quarter. That was one of the first experiences where I realized how easy it was to be successful; you just had to work hard.
Who is someone you look up to?
My favorite baseball player is Lou Gehrig. He never missed a day of work.
What are a few of your favorite sports memories?
I went to Cal Ripken night when he set the record for most consecutive games. I was there for the Indians game when Kenny Lofton scored from second base on a passed ball. I attended the Ohio State championship game against Miami where it went into overtime at the Fiesta Bowl. I attended the World Series in 1995 and 1997 for the Indians.
What has been one of your proudest moments over your 50-year career?
It was going to my father and asking him if I could run the collection department and him having enough confidence in me to do it.
If you could invite three people to dinner, who would invite?
George Steinbrenner, Bill Gates and Thomas Edison. Innovative, creative people.
“Nowadays people know the price of everything and the value of nothing.”
— Oscar Wilde, “The Picture of Dorian Gray” (1891)
Value is probably one of the most frequently used words in business. Yet it is extremely difficult to define, to measure its drivers and fully capture it with customers. Given that most companies create their own social construction of value, we propose to explore what it might mean and introduce some practical steps to increase your understanding of it.
We focus on the definition of value proposed in 1998 by James Anderson and James Narus. Value is the “monetary terms of the technical, economic, service, and social benefits a customer firm receives in exchange for the price it pays for a market offering, taking into consideration competing suppliers’ offering and prices.”
Why is it that few suppliers in business markets are able to define and measure value?
In a 2008 survey of business executives, 79 percent attributed this difficulty to a lack of capabilities and skills needed to assess value, apply the appropriate methods, and extract the exact value differential between two products.
Second to the value-assessment issue, communicating value to the market was associated by 65 percent of the executives with difficulty in elevating the value message above the advertising noise in the market.
Bottom line: there is a need for more research related not only to theory on value but also to marketing tools for understanding, measuring and delivering value in business markets.
Scholars agree that there are six characteristics of business value that make value difficult to measure: value is 1) a subjective concept, 2) a trade-off between benefits and sacrifices, 3) multidimensional, 4) defined relative to competitors, 5) segment-specific, and 6) future-oriented.
At Ardex America, we have embraced the difficulty and complexity of measuring value and have put long-lasting value at the center of everything we do. We adopted Andreas Hinterhuber’s approach that value in business markets is composed of six tangible and intangible benefit categories: product quality, delivery capabilities, services, ease of doing business, vendor characteristics, and self-enhancement (social status, prestige, aspirational benefits).
Our mission is to be able to measure the level of value we provide customers in each of these categories. To quantify economic value correctly, we have implemented a six-step approach called Economic Value Analysis:
Identify the cost of the competitive product and the process that customers view as the best alternative. Understand who you’re competing against for your customer’s share of wallet and who might be able to substitute for your products or services in your customer’s mind.
Segment the market: Understand why customers buy from you and what needs you satisfy; identify the true nature of these needs and the level of differentiation you enjoy in each segment.
Identify all factors that differentiate the product from the competitive product and process. Identify value drivers or unique selling propositions that really differentiate you. The rule of thumb is that you cannot have more than half a dozen. These product or service drivers are your real USPs.
Determine the value to the customer of these differentiating factors: Quantify value drivers using assessment techniques such as engineering assessment, value-in-use analysis or focus groups.
This is where it gets complex! We have done well for product-related drivers and are now moving to less-tangible elements of our value proposition. Determining the value of services remains a challenge, however, and it is ongoing work.
Add the reference value and the differential economic value to determine total economic value: Define a price point by adding the reference value (price of next-best alternative) to the differential economic value you generated for your customers. At this stage you might decide to share some of the value surplus with customers to entice them to keep doing business with you while paying a premium.
Use the value pool to estimate future sales at specific price points. Assess price elasticity by market segment based on various price points and relevant volume levels. For each segment you can then establish your value positioning and your pricing strategy.
The process is not easy. It requires skills, capabilities and sweat equity. But you deserve to capture some or most of the value you create for your customers. Before you can capture it, however, you must understand it and measure it well.
Join us for more discussions on value and pricing management during a regional pricing workshop on Oct. 11, 2012 in downtown Pittsburgh.
Stephan Liozu is president and CEO of Ardex America Inc. (www.ardex.com), an innovative and high-performance building-materials company located in Pittsburgh. He is also a Ph.D. candidate in management at Case Western Reserve University and can be reached at email@example.com or www.stephanliozu.com.
Most companies start with outstanding customer value propositions. But as time passes, and customers change, the once-upon-a-time on-target value propositions become out of date. Soon customers become dissatisfied because vendors don’t seem to understand their current needs. They begin to believe they’ve outgrown their vendors and start to look for new answers to their problems.
This isn’t true of every company. Some companies make staying close to their customers and understanding their changing needs a top priority. These companies use a process to check themselves and ensure that they’re constantly staying on top of changing customer priorities. The process starts by asking several questions:
1. Who is your customer? What do they do? What are their challenges?
2. Have your clients aged? Have their needs changed?
3. What is your customers’ cost structure in this economy? Do your bells and whistles deliver the value they did in boom times?
4. Is your customer using technology to do some of your core offerings?
5. How well do you truly know your customers? How often do you visit your customers?
If you don’t know the answers to these questions, then it’s time to get back to basics. Here are a few steps to get you going.
Step 1: Get to know your customer again.
Recently, our company found that many of the people with closest ties to our clients were starting to retire. We put together a customer visit “blitz” to visit all our existing customers and prospects within our existing accounts. We made sure they knew who we were and what we did, but most of all, we listened. We inquired about new challenges and took time to learn how we could understand the root of their problems.
The point is, if you want to understand your customer’s changing needs, don’t just visit the people you are familiar with — get out on the front lines with the people doing the core work and buying new products or services. Find out what your customer’s requirements are for timing, cost and quality. Really listen to your customers so that you can understand their goals and the obstacles that prevent them from reaching those goals.
Step 2: Re-center yourself in your customer’s new world.
After listening to your customer, develop a new value proposition. We realized that our customer’s budget constraints were far more severe than we originally thought. Our customer had no choice — they had to do more for less. We had to figure out a way to whittle down what wasn’t essential and find ways to add real value through technology, resourcing, and efficiencies.
Step 3: Change.
Ouch, yes — change. Your staff will be entrenched in the way they do things, or the products you offer, but change will be imperative. Without it, you risk losing your business over time.
Put your staff in a room and present your “new” client’s needs to them. Ask them, “If we had to start over today, how would we support this type of a client?” You may need to develop high-level processes, add resources or create a realistic profit-loss statement. Then, ask your management team to look at how that differs from where you are today. Create strategies that will allow you to execute and deliver your new value proposition.
Present your customer’s “new” need. Create a new value proposition. Go back to answering your customer’s requirements of time, cost, quality, and peace of mind. The result will be a path to change that’s been developed by your people in a non-threatening, problem-solving way. And best of all, it will be in sync with your client’s needs.
Victoria Tifft is founder and CEO of Clinical Research Management, a full-service contract research organization that offers early to late-stage clinical research services to the biotechnology and pharmaceutical industries. She can be reached at firstname.lastname@example.org. Clinical Research Management Director of Business Development, Lori Gipp, assisted in the writing of this article.
Does your company have alignment between its mission, its vision and its strategy? If you don’t, you may want to ask yourself if everyone on your team is on the same page as to what those terms mean to your business.
Maybe you’re like a former client of ours who knew that having a clearly stated and motivating mission was important, but wasn’t sure what a “mission” was or how to lead his team to either create one or uncover the one they were already living.
It may be that “mission” is not something that motivates you as a leader. It’s perfectly natural that some aspects of an organizational identity are not equally motivating to us as leaders.
At the same time, as leaders, we need to recognize that we work with and lead others who do find “mission” to be important. They will evaluate us as leaders and our organization based on whether or not we have a clear mission and whether or not we can deliver on that mission.
One of the most common definitions for mission is to answer the question, “Why do we exist?” For example, Nestlé Purina PetCare has a mission to “enrich the lives of pets and the people who love them.” Notice they didn’t declare a mission to sell the best (or most) pet food or pet care products. While we can safely assume that they want to do both, they’ve chosen to declare a reason for being that connects to those they serve: pets and consumers.
Answering the question of why you exist is helpful to many, but it can sometimes be too abstract for certain organizations and people who prefer the concrete. It can sound like you’re about to launch into a discussion of Socrates’ view of virtue rather than address concrete business issues. There are alternatives that get at the same concept in more concrete ways.
The first is to ask a broad cross section of employees the question, “What problems do we solve for our clients/customers?” Of course, one can also ask your clients/customers directly, “What problems do we solve for you?” This phrasing often helps employees and clients describe the value that you bring in a more concrete form. From that data, one can begin to see patterns that demonstrate the value that you bring to your external stakeholders.
You could also ask employees and customers, “How do we help you?” or “What difference do we make in your life/business?” Follow it up with, “Tell me about why that is important to you?” and you can get to answers that resonate more on an emotional level.
Imagine someone asking a consumer, Mrs. Johnson, who buys Nestlé Purina’s Dog Chow the following series of questions:
Interviewer: Tell me about why you buy Purina Dog Chow.
Mrs. Johnson: Our dog, Butch, likes it.
Interviewer: What other reasons are there?
Mrs. Johnson: He’s been very healthy eating Dog Chow, so that’s important to us.
Interviewer: So tell me why that is important to you and your family. The answer may seem obvious, but go ahead and tell me anyway.
Mrs. Johnson: Well, I know that when I buy Dog Chow, Butch is going to be happy, healthy and ready to play with our family. He has brought immense joy to our family, and we want that to last for as long as possible.
You have a choice when you describe your mission. You can make a laundry list of things you do, or you can describe the difference that you make in the lives of those we serve.
Andy Kanefield is the founder of Dialect, Inc. and co-author of “Uncommon Sense: One CEO’s Tale of Getting in Sync.” Dialect helps organizations improve alignment and translation of organizational identity. To explore how to better align your business to an inspiring mission, you may reach Kanefield at (314) 863-4400 or email@example.com.
It was a dream that made absolutely no sense to Michael Landau. But this was his sister and he loved her very much and so he set out to help her make it happen.
“I not only knew nothing about the hair and beauty business when this started, I also have no hair,” Landau says. “I’m completely bald and I didn’t understand why women would want a [professional] blowout, why they needed a blowout or why they would pay someone else to get a blowout.”
Landau’s sister, Alli Webb, had launched a small mobile hair blowout business in Los Angeles and it really took off. It was so successful that she couldn’t keep up with the demand, so Landau decided to step in and try to take the concept to the next level.
“I lent her the money to do her first store,” Landau says.
The response was staggering.
“We had an eight-chair shop in Brentwood,” Landau says. “When you’re in the restaurant business, sometimes it’s a good problem to have when you can’t get a reservation because you seem hot. For us, our clients were getting so annoyed that they couldn’t get in.”
Landau and Webb quickly opened three more stores and they were just as jammed with business. This new company named Drybar simply could not grow fast enough. Waiting lists were 40 and 50 people deep on the weekends and customers were driving from all over the city to get their hair blown out.
“It was fast and furious,” Landau says. “For the first year, it was all hands on deck, chaotic, working around the clock 24 hours just to keep the door open and everything happening the way it should.”
The company has grown in a little more than two years to more than 850 employees who do about 24,000 blowouts each month. A dozen new locations are expected to open this year, doubling the size of Drybar.
“It was just amazing how people were coming from what felt like all walks of life and they were traveling an hour or an hour and a half from different cities all over L.A.,” Webb says. “It was really amazing and humbling and gave us the fuel to keep going.”
So what’s the key to succeeding when your business grows infinitely faster than you ever imagined it could? Landau says it all comes back to satisfying your customers, even if that means chasing them out the door, following them down the street and buying them a cup of coffee to make them happy.
Keep your customers content
If you asked Webb about the moment her brother chased a disgruntled customer out the door at Drybar, she might tell you Michael had it coming. It was his zeal, after all, that often left the store bursting at the seams.
“In those very early days, Michael would be in the shop sitting in the back answering the phone and telling anybody, ‘Yeah, come in, come over!’” Webb says. “I was like, ‘No, stop, because we had a line out the door.’ We didn’t have enough stylists, but Michael couldn’t say no because he was just so happy and excited to have all the interest.”
But back to the unhappy customer. She saw a sign that said walk-ins were welcome and came in, but quickly discovered it was going to be a long time until she was serviced. Then she had a bad experience with a cashier and that just made things worse.
“I witnessed this whole thing,” Landau says. “I watched the woman leave the store so upset. So I followed her out and ran down the street because I was determined to not let this person leave so upset.”
He brought gift certificates and tried to give them to her as a peace offering. She wouldn’t accept it and continued walking and Landau thought he had indeed lost her. But then he decided to give it one more shot.
“It was in front of a Starbucks and I said, ‘It’s going to ruin my week if I can’t apologize properly to you. Can I buy you a cup of coffee?’” Landau says. “She actually got a kick out of it and we went inside, and I bought her a cup of coffee and I started talking to her.
“The bottom line is this woman ended up not only becoming such a great client, but she told so many of her friends about that story and how the owner did this and did that.
“We learned early on that you can take a negative situation and really turn it into a positive. It’s one thing when people just like you. But it’s another thing when a leader is put to the test in terms of dealing with a negative situation or a problem. That’s where you can show your true colors and turn a customer around and keep them for life.”
When you have a business that is really taking off, that’s obviously a great thing. But there’s also the potential to create hard feelings if someone doesn’t get to experience your business because of the high volume. You won’t please everyone, but you’ve got to try.
“We’re dealing with a high volume of customers and sometimes, things go wrong,” Webb says. “Michael and I established early on that we care so much about the customer and the customer experience and we want everybody to be happy and we don’t want to let even one person leave unhappy. You see that with our girls and all our people in the shop how they bend over backward for the customers.”
In an attempt to ease the chaos in the stores, and reduce the risk of another disgruntled customer storming out of the store, Landau and Webb decided to move the act of taking reservations to an off-site location.
“We hired and trained very quickly a call receptionist who could work from home and just plug in the Internet phone to the computer and we could route our phone calls to them,” Landau says. “It was such a breath of fresh air because now our customers were calling and it was a quiet place where they could have a conversation, the client could hear us and we could hear them. That really took the pressure off in one certain aspect in a major way.”
Manage your culture
In the styling business, it’s obviously critical that you have people who can do great things with their hands. But if their personality is abrasive, you may not get much return business.
“We’ve come across great stylists who are amazing at hair, but they are just not all that friendly or personable,” Webb says. “To us, that’s not a winning combination and that’s not what we look for. Unfortunately I’ve had to let stylists go who were fantastic at hair, but they were divas or they didn’t share our over-the-top customer service. That is definitely a challenge.”
Landau learned just how much people value great customer service and a welcoming personality when he finally gave into his sister and let a stylist go who had great skills, but not a lot of personal skills.
“Alli really wanted to get rid of her and I was so scared because she had such a following and so many people coming to her,” Landau says. “We debated ad nauseam over it and Alli won and we got rid of her. I have to tell you she was so right. The whole attitude in the shop changed. There was such a change in the energy and the vibe of the shop in terms of the other stylists and how they got along.”
Webb says you can’t underestimate the value of having team players who your employees and customers like being around.
“If you’re causing problems with the staff and the stylists and bringing things down, it’s just not a good fit,” Webb says. “It’s not going to work.”
Landau says Drybar has found success by developing leaders and grooming them for more responsibility in the company.
“As we grew and became more sophisticated organizationally, we tried to bring in more experienced managers,” Landau says. “It didn’t work as well. They didn’t have the respect of their co-workers. For us, it just works so much better when we bring people from within that we’ve had a chance to get to know and we’ve nurtured.”
You need to share with people what your vision and culture is all about and make sure they understand it so they can live it with your customers.
“There’s a lot of training that we do, but I think it’s more philosophical,” Landau says. “We’ve worked on defining and articulating what our core values are as an organization and making sure our key managers have an active part in that.
“That way, there can be broad-based buy-in for that, and you’re making sure you’re building a foundation where people really understand what the vision is. They can become leaders within their individual organizations and kind of extend that.”
Get good people
When a business is growing as fast as Drybar, there can often be a lot of pressure when it comes to hiring. You need people fast and you may be tempted to skip a few steps just to get people out on the floor faster.
It would be a mistake. But there are ways you can learn more quickly whether a person is a good fit for your organization.
At least for me personally, I feel like I can tell when I’m interviewing somebody if they’ve done their homework on Drybar,” Webb says. “They know a lot about us. Our website is pretty extensive and they come in with that hunger and excitement saying, ‘Oh, I’ve been looking for something like this. I love styling hair and I really want to be part of it.’
“You can get that as opposed to the person who comes in and says, ‘Oh, you guys don’t do haircuts?’ That person hasn’t taken the time or the interest to really see who we are. That would create a huge red flag for me. You haven’t even checked out our website.”
If a prospective employee is more concerned about their own future, that’s not always a good thing. You want people who want to grow as individuals, but in an interview, you want people who are excited about what you do.
“You really have to dig deeper,” Landau says. “We would rather have somebody who is so passionate about what we’re doing and our brand and about what’s going on and who really wants to be here because that person, we can teach certain stuff. But you can’t teach that passion. You can see that attitude.”
Webb says she always has her eyes open for people who show the ability to be a leader so that she can provide encouragement and get them to show even more.
“We’re always looking at people and we’re always even encouraging stylists who are showing more leadership capability and tremendous enthusiasm and passion for the brand and the company to consider management,” Webb says. “We put a bug in their ear and that starts it.”•
- Keep your customers happy.
- You can’t cover up a bad attitude.
- Encourage people who show leadership.
The Webb and Landau Files
Born: We were both born in Long Island, N.Y., but grew up in Boca Raton, Fla.
Education: For 25 years, our family had a retail clothing store that both Alli and I grew up in, sweeping the floors. It’s where we really learned many of our philosophies on customer service. We come from a family that is a fourth-generation retailer. It was just what all the kids in our family did.
Webb on working with her parents: I feel like I learned so much early on. My first job was actually in retail because that’s all I knew and that’s what my parents did. But I remember so well being young and treating wherever I worked like I owned it because that’s what my parents did. I feel so incredibly grateful for how much of those values we got from our parents without even really knowing it. A lot of that comes through in our business now and it helps us to be successful.
Who has been the biggest influence on Landau? Seth Godin. I speak to him or e-mail him on a daily basis and he’s just been a mentor of mine. His philosophies on marketing have shaped everything that I do and I definitely, without being overly dramatic, wouldn’t be who I am today without Seth.
Who has been the biggest influence on Webb? Michael thinks it’s Michael. He has taught me a lot, even in Drybar, with more of the business side. I still kid him that I’ve taught him about the hair side. But I think if I had to pick, it’s probably mostly my parents.
Learn more about Drybar at:
How to reach: Drybar, (877) 379-2279 or www.thedrybar.com
Your good reputation is your company’s most significant piece of equity. Are you monitoring and protecting its value?
Most brand detractors won’t go to your corporate website, Facebook page or Twitter account to complain. Instead, if aggravated enough, they’re going to tell anyone willing to listen why they should stop doing business with you. Word of your brand’s perceived inadequacies can travel at the speed of light and can destroy your good reputation within nanoseconds.
One in every five people is likely to speak their mind and bash brands through online channels. Research shows that people do not practice as much self-control in their online behavior as they would in person, or through other channels.
One negative social media comment can cost your company 30 customers. Conversely, a positive social media review could lead to 30 new customers.
A study by Convergys cited bad reviews or comments on a social network sites reach an average of 45 people. Of these, two out of every three never rebroadcast or play into the discussion. Instead, they silently commit to avoiding the brand being slammed. It is estimated that companies are losing about 12 percent of their customers that way. This can spell the difference between a company’s success and failure.
Cherry Tree also did research that found that while 22 percent receive a poor experience, only 2 percent actually complain, 98 percent of dissatisfied customers never complain with 55 percent of those customers at risk and 45 percent actually defecting.
The Convergys research focused on the impact between pre-purchase informational browsing by prospective customers, and its correlation to lost business. The study reinforced that the consumer experience now begins when the consumer logs on.
Don’t kid yourself into thinking that poor service, defective products or manufacturing glitches aren’t dissected in the social space. Tens of thousands of social sites with review mechanisms exist and more launch each day. Check them to see what’s being said about your company.
Think about it: One bad tweet can equal 30 customers lost. That means, with social media, great customer service is essential to the preservation of a company’s reputation.
Each second a dissatisfied customer is bashing a brand online, are they bashing yours?
If someone posts bad news or misinformation about your brand, how many of the people reading the post will then share it with their contacts? How many people reading the re-posting will then rebroadcast it themselves? The reposting or retweeting possibilities are both frightening and endless.
Think about the impact all that broadcast reposting and retweeting has on your company’s bottom line.
How much is your average sale? Multiply that number by 30 to determine revenues lost by each negative review you receive. How many times have you Googled a company, brand or individual prior to your doing business with them? How many times has your search influenced your purchasing decision?
Before doing business with you, potential business partners and customers are going to want to learn as much as possible about you. In the eyes of the potential customer, what appears in the search results on Google, Yahoo and Bing define your company. False, erroneous or misleading postings found in search engine results cost corporations hundreds of thousands of dollars each day.
It doesn’t matter whether the negative comments are from a competitor, a news site, a message board, a blogger or disgruntled employee – their impact can lead to devastating financial challenges. What will they find when they search?
Perhaps it’s time for you to begin formulating a plan to protect your good reputation.
Adrienne Lenhoff is president and CEO of Buzzphoria Social Media Marketing and Online Reputation Management, Shazaaam PR and Marketing Communications, and Promo Marketing Team, which conducts product sampling, mobile tours and events. She can be reached at firstname.lastname@example.org.
On Monday morning, the watercooler talk among VF Corp. employees looks more like a Yelp review than the typical weekend replay. Employees chime in about The North Face jackets they wore skiing, the Lucy yoga pants they tested out and the Jansport backpacks they took hiking.
Steve Rendle, vice president of VF Corp. and the group president of its Outdoor and Action Sports Americas division, says this comes with the territory of being part of the world’s largest apparel manufacturer — with $7 billion in revenue and a portfolio of global consumer products brands.
“We choose not to sit in our ivory tower and predict what the consumer wants,” Rendle says. “We’re fortunate that our employees to a great degree are our consumers.”
A 25-year veteran in the outdoor industry, Rendle was president of The North Face for seven years before heading up VF’s Outdoor and Action Sports Americas unit last year. Based in San Francisco, he manages a portfolio of eight, activity-driven brands, including three worth more than $1 billion each — The North Face, Timberland and Vans.
Rendle is tasked with leading the brand strategies that will resonate with VF’s customers over the world. When it comes to front-end operations, he says there are very specific skills sets that help the company cultivate connections between its brands and consumers. The most significant is how the company develops its brand strategies: by making them a lifestyle. The company calls this “the art and science of apparel.”
“It’s that deep immersion into that consumer and understanding the consumer’s needs and expectations of our business that helps us really fine tune how we apply our business initiatives to grow our businesses,” Rendle says.
Here’s how Rendle uses these strategies to develop VF’s fastest-growing division of brands.
The first step in developing a brand lifestyle is figuring out who the brand’s potential customers are in the marketplace.
“It’s taking an approach of first understanding who the consumers are,” Rendle says. “The ‘who’ aspect is a very important part, and we invest a tremendous amount of money corporately and from our brands to understand our consumers through global segmentation studies.”
While research from focus groups and surveys is beneficial from a targeted point of view, understanding a customer’s lifestyle takes a deeper level of interaction, beyond a phone call or email. You can look at annual research or employee feedback to get ideas about what customers are going to want, but to understand who they are requires a deeper level of knowledge only possible through one-on-one interaction.
“First and foremost, we’re an organization built of passionate consumers,” Rendle says. “But that’s not enough. We want to go into the marketplace. We want to think about our brands globally and do a lot of qualitative and quantitative research to engage with these consumers and understand how they think of our brands. What do they expect from our brands? And more importantly, how would they like us to communicate with them?”
Branded events are one way that Rendle and his team get answers to these questions. Sponsoring fun, action-oriented events that engage consumers allows the company to interact with people in environments that reflect their interests and lifestyles, giving the company a better idea of “who” they are.
“We’re able to engage and understand how they’re thinking about us, how they’re thinking about this particular event and learning about their product needs,” Rendle says.
In addition to the millions of followers that Vans and The North Face have in the digital realm, both brands also generate a tremendous following by putting on popular outdoor events. Rendle frequently travels with the product and sales teams to see how the brands are represented in retail, but also attends the key brand events to learn how they are connecting with consumers.
The North Face hosts its “Endurance Challenge,” a series of endurance races across the globe that attract 1,000 to 3,000 runners per event. These races are a great opportunity to meet runners who fit the brand’s performance market as well as hold mini “expos” for families so that they can interact with the brand, Rendle says.
Similarly, Vans uses its national Vans Warped Tour, a day-long outdoor music and action sports event to connect with some of its key consumer groups, from skateboarders, to musicians and BMXers. With a history as the original skate shoe manufacturer, Vans now focuses on the broader market of men’s and women’s footwear and apparel. So as the partial owner and operator of the summer concert series — the longest running in the U.S. — it draws more than 600,000 people each year and offers a direct line to its youth audience.
“It’s a very impressive music-driven event, but it’s also an event where we’re able to touch the consumers and listen and learn as they interact with the music culture how they’re thinking about the brand, the brand’s products and how the brand is communicating from a marketing standpoint,” Rendle says. “Events are a powerful tool to not only tell the stories of our brands but to interact with those consumers.”
Ask the experts
It’s important to understand not just who your customer is but also what he or she expects from you. Because there is whole host of running footwear and running apparel competitors for The North Face, for example, the brand can’t gain market share just by resonating today’s consumer trends today. It also must stay abreast of the running lifestyle and how it’s changing. To do that, the company uses brand ambassadors.
Each of VF’s Outdoor and Action Sports Americas brands, specifically The North Face and Vans, partners with teams of professional athletes to participate with the brands at a high level, engaging with different products and contributing ideas. The North Face has more than 70 such athletes active around the world.
These brand ambassadors help provide insight into what the brand’s customers want and will want in the future.
“The North Face is the best example, where we have the mantra of ‘athlete-tested, expedition proven’ as that primary input into our product engine,” Rendle says. “We can make sure that we’re building the most authentic and technically relevant products possible that enable our consumers to enjoy their outdoor experience to the greatest degree.”
Tapping brand ambassadors is also useful for brand innovation and product development. Your “experts” in a brand lifestyle can help you identify pain points or product ideas that you may not spot or study based on customer or employee feedback alone.
A prime example is when The North Face runner Kami Semick participated in a high altitude race in the French Alps. After nearly contracting hypothermia from the cold, wet environment, she helped the brand identify a key need for lighter-weight apparel to protect athletes from adverse moisture and weather. Semick worked with the product teams to design a new technology for the brand’s fabrics that eliminates the distraction of moisture when during athletic performance. This year, the company is releasing about 100 new products featuring the FlashDry technology.
“North Face is the brand that provides the ultimate outdoor protection,” Rendle says. “So we bring that thinking and that knowledge base into running apparel.”
Concentrate your efforts
With global brands, you need to do lot of work to identify who your potential customers are. But equally important is figuring out your brand identity. To put it into perspective, brands such as The North Face are trying to capture market share in a $320 billion global market in the outdoor and action sports business, Rendle says.
Figuring out how to position these brands in the marketplace requires Rendle and his team to spend a lot of time looking at the macro-market to size up opportunities.
“That’s building the business strategies using the consumer insights and the market intelligence to help us craft very clearly focused strategies that we execute on five-year basis,” he says. “It’s always the rolling five-year plan and looking very specifically at where those opportunities are to drive our growth.”
Looking at the larger, macro market data, VF applies filters to examine the size of different opportunities:
What is the business doing specifically from a retail standpoint? What are the best ways of communicating to the consumer within those specific segments? Who are the competitors?
In this process, it’s necessary to look at brand competitors from a very critical point of view as far as what are they good at, Rendle says.
“We’re trying to understand what makes them unique — what are their points of difference and what things are more parody,” he says. “Then we look for those white spaces where we know that our brand naturally plays or places that we should be focusing to look for incremental growth.”
The points of difference are unique to your brand, whereas your points of parity are things you need to do just to stay in business — fit of garment, for example.
“It’s not really something that we would own, versus a specific focus or an innovative platform might be a unique point of difference and gives us an emotional connection to the consumer,” Rendle says.
An example is the women’s yoga brand, Lucy. While Lucy was the first brand in the women’s training space, it lost its way before VF acquired it in 2008, giving the Canadian brand Lulu a lead in sales and brand recognition.
“When we look at the difference between those two consumers — the Lulu consumer and the Lucy consumer — we see some very distinct differences in how she thinks, how she acts, how she wants to interact with her brand and honestly how she looks at those activities,” Rendle says.
The company also uses its brands’ leveragable platforms, or things that each brand does well, to position fellow brands stronger in the marketplace. The key is to utilize each brand’s strengths, without losing sight of how each brand consumer — and consumer lifestyle — is different.
“We focus on understanding the brand’s purpose and really understanding what we stand for and what our unique value to our consumer is,” Rendle says.
“It’s making sure I help those brands remain autonomous because it is those specific brand identities and cultures that make these brands successful. At the same time, it’s helping them leverage the VF platforms to scale and access capabilities at a much more effective price.”
After applying these kinds of lenses to see what a brand does well, you can learn how to build “permission” with customers to bring new lines to market where you don’t have established expertise, Rendle says.
The ability to introduce new products to consumers is a critical step in making a brand’s products part of a “lifestyle” the can continue to grow and evolve. Currently, The North Face is trying to do this with the footwear segment — using running apparel to break into running shoes.
“For us to sell footwear it needs to be uniquely different and bring some specific value that other brands are not,” Rendle says. “Where we know we have permission to compete first is in the trail, so really playing off of that outdoor heritage and enabling consumers to run off the road and onto the trail.”
The way the company creates its brand strategies is also changing the way Rendle and his employees think about the business, Rendle says. By creating brand lifestyles that resonate with consumers, the Outdoor and Action Sports Americas division has grown from less than 10 percent of VF’s total sales in 2000 to close to 50 percent.
“It’s helped us understand that this deep connection into the consumer’s lifestyle gives us a unique point of difference, and a unique way of competing against the many number of other choices that consumers have to make in their apparel purchases,” he says.
How to reach: VF Corp., (336) 424-6000 or www.vfc.com
1. Use events to connect with customers.
2. Create brand ambassadors.
3. Find your points of difference and parity.
The Rendle File
vice president and group president, Outdoor and Action Sports Americas
Born: Spokane, Wash.
Education: Bachelor of science, the University of Washington
What do you like most about your job?
I get to get up every day and come to work and participate in businesses and touch activities that I really love. I grew up skiing. I grew up climbing. I’m a very active outdoor user. I’ve dabbled in surf. I’m not a skater but I absolutely enjoy those people as much as I do those that I’ve grown up with. I get to live and play in a marketplace that I’m just deeply passionate about. To also build that passion of building success, in this case successful businesses that add shareholder value — I may very well have one of the best jobs in our company.
On his transition from president of The North Face to division group president: First you have to immerse yourself in the businesses. I’m fortunate enough that I’ve worked with each of these brand leaders as a peer for many years. But I needed to take a step back, remember that my job is not to only think only of The North Face, but to think about eight specific brands, their contributions to our portfolio and the larger VF. It is just to take a step back and forget about what I loved so much, and begin to understand that I have eight things that I get to love.
How do you regroup after a tough day?
My best tool for sorting out a difficult day is to get outside for some sort of physical activity. My favorite choice is to jump on my road bike and roll out for a long ride. No distractions. Just time to focus on the activity and subconsciously sort out my thoughts.