When business travelers or leaders need an icebreaker, a surefire subject is war stories of inferior customer service.
No topic builds rapport faster than the inept waiter, the inaccurate reservation or the incompetent returns department. Recently, while participating in such a discussion, I wondered, if customer service is so bad during boom years, what do we have to look forward to in tighter times?
With cutbacks and spending freezes, how does a business leader determine the appropriate investment in customer service? If service is great, should it be scaled back to save money? If it is deficient, will further investment create a competitive advantage?
There's no easy answer. But before thinking about how to spend more or less money serving customers, remember the reasons for customer service.
Assess the objectives
Customer service has taken on a life and importance well beyond its mission or purpose. Thanks to commercials, gurus and lawyers, when you make mundane, everyday purchases, you are told to expect a near-religious experience.
With such high expectations, it's no wonder that disappointment follows. One critical misstep by a vendor, and his or her otherwise excellent performance is ruined. Conversely, when you get a product repaired or upgraded, you may become an overnight advocate for a company and its products.
Given the consumer's irrational expectations, what is a business leader to do? How can an intelligent investment in customer service be made? To start, every firm should individually define customer service for its business by customizing this generic statement: The goal of our customer service is to enable customers to effectively purchase and consume more products or services.
Simply stated, if you can create a relationship between better service and increased sales, it is possible to measure investments and expectations for the delivery of customer service.
While there are countless ways to measure customer satisfaction and service, consider this: If a customer demonstrates satisfaction by spending more, referring you to another customer or serving as a reference for your firm, then your customer service is effective.
While this definition may be trite for many customer service experts, the value of this approach is the financial connection it creates. Take your total investment in customer service and divide it by the value of incremental referrals, references and sales traceable to your investment in customer service.
That will allow you to derive the cost and value of your customer service.
You can expand the equation to accommodate the reactive nature of the times. During tough times, business owners are more concerned with saving sales and customers than growing sales and finding new customers.
Compare this cost and value to other investments and cost-cutting initiatives under consideration. To fine-tune the analysis to your individual circumstances, here are examples of measurements of customer service in tough times. Which one best fits your business's challenges to justify investments in people, money, resources and time?
* Number of orders saved
* Number of referrals made
* Number of references sought
* Number of reorders secured
* Number of cross-sales/up-sales made
* Number of lost customers saved
Today, when sacred cows are suddenly suspect and scapegoats are many, customer service is often sacrosanct or too poor to cut further. Rather than make an arbitrary decision, examine what you expect of your firm and develop clear measurements of value.
You may be surprised. Not only will you feel you have a better handle on this area, but it is one that should stay relatively constant in good times and bad.
If all else fails, do not despair. Remember how poor customer service is throughout this country. What would it take for your firm to stand out? If added customer service could create measurable results, consider doing what it takes.
Your customers will thank you, as will your bottom line. Andy Birol (email@example.com) is president of PACER Associates Inc., a Solon-based firm that provides expert advice to owners and leaders who need to grow their businesses. He can be reached at (440) 349-1970 or at www.pacerassociates.com.
It's comprised of three components -- approaching the handoff, the handoff itself and leaving the fly zone. It's imperative to treat each phase as equally important. This month, we'll tackle the first of those phases.
For your impending handoff to be flawless, both the incoming and outgoing owners need to get ready. Doing it right is tough and it differs depending on which role you play -- the successor or the receiver -- but contains the same three basic tasks.
* Reconcile your personal goals with your business's needs.
* Set, agree and meet each other's expectations.
* Do whatever it takes, not what is easy.
Getting ready when you are the leader
Whether you are leaving the business in a state of survival, success or significance, you have created an entity separate from you. Accept that you and your business will go your separate ways, and make sure you have a separate way to go.
Don't just pick your successor; define what you need to hand over the reins and when you intend to do so. Gaming your offspring with false hopes or unachievable goals is just as destructive as giving it all to them on a silver platter without any commitment in return.
Growing a business is hard enough without transitioning it between loved ones. Understand that the needs of the business come first, and as its leader, don't ever confuse what your business needs with who your children are. Just as you would when interviewing any employee, determine what your child can do, will do and how he or she will do the job.
Getting ready when you are the follower
Whether you were preordained to take over the family business or you are the prodigal son pressed into service at the 11th hour, ask yourself why you are taking over the business.
If you don't want to grow it, don't take it over. Too often, the next generation lives out a professional lifetime based on guilt, blind sacrifice and fatalism.
Taking over the family business does not have to be an all-or-nothing proposition. There are an infinite number of ways to structure responsibilities, timing, investment and ownership.
If you remember that the business is not yours until you have earned it in the eyes of your parents, employees, customers and vendors, it will mean a lot more to you, and you will take leading it a lot more seriously. If you and your parents cannot come to terms on expectations, then move on.
You may share a last name with your parents' business, but otherwise, do you belong there? Understand your best and highest use and objectively decide what you need to learn, endure and accomplish to lead the business.
After first working elsewhere, accept and accomplish not only the company tasks that are critical but the ones that only an owner would care enough to complete. Andrew Birol is president of Birol Growth Consulting, a Solon-based firm that helps grow businesses by growing their best and highest uses. Reach him at (440) 349-1970.
* While risk-takers get excited about taking chances, and experienced entrepreneurs learn to take good risks, the risk-averse often get defensive when asked to take even a small chance.
* Risk-takers are envied by those who yearn to take risks and serve as role models for those who have enough confidence to try.
* The risk-averse often resent successful risk-takers. Each time a risk-taker is successful, it causes the risk-avoider to question his or her approach.
* The risk-averse are the first to rush to comfort risk-takers who fail. While charity is a virtue, many risk-averse people gain validation by comforting risk-takers.
* In organizations where taking risks is discouraged, mediocrity, groupthink and the "not invented here" mentality is likely to result.
* Risk aversion has nothing to do with being conservative, older or powerful. Many who are liberal, younger or powerless also remain locked in their comfort zones, no matter how miserable they are.
* While respect for the Almighty, one's employer or any legitimate institution or tradition is sensible, anyone who transfers their complete fate and destiny out of their own hands is fully risk-averse. They are denying personal risk or responsibility by pushing it away. When we absolve ourselves of personal responsibility, we open the door to anarchy, fanaticism and fatalism. Perhaps large corporations can manage people like sheep, but no entrepreneur can or should.
Why is such an understanding of risk and how people react to risk-taking important to your business?
As an owner who needs to grow his or her business, you must surround yourself with risk-takers and nurture those who try. The concept of risk is at the core of entrepreneurship, competition and even excellence. If employees will not assume intelligent risk, how can they succeed or serve you and your business?
Risk little, win little. Andrew J. Birol is president of Birol Growth Consulting and co-founder of Independent Entrepreneur. He helps owners grow their businesses by understanding and targeting their best and highest use. Reach him at (440) 349-1970, at firstname.lastname@example.org
"If you are so confident that you can help me," he said, "name your competition."
I thought about it for a moment before replying, "When it comes right down to it, my toughest competitor is inertia."
He gave me a strange look.
"I've never heard of that firm," he said. "Are they based in Cleveland?"
Deadpan, I told him, "Actually, they have offices all over Northeast Ohio."
While this exchange was humorous, it's reflective of the state of malaise in the regional business market. The lack of activity by most business owners creates unique opportunities for the contrarians among us.
If you have conviction -- and a true belief in your company's product or service -- there is no better time to act. By making aggressive moves now, you:
* Compete with fewer people, as many have quit trying. As Woody Allen said, showing up is half the battle.
* Can choose from a multitude of sellers, the best of whom are eager to deliver excellent value. The winnowing-out process is causing the surviving suppliers in most sectors to have improved their service.
* Are able to focus on serving the more committed customers who will put your services and products to best use. Serious customers today are ones who have their affairs in order and have clear goals they intend to hit regardless of the economy.
If you are assertively doing business in this marketplace, identify and do business with companies that are equally bold. Bargains, value and timing have never been better if you know where you are going and what you plan to do. Andrew J. Birol is president of Birol Growth Consulting and co-founder of Independent Entrepreneur. He helps owners grow their businesses by understanding and targeting their best and highest use. Reach him at (440) 349-1970, by email at email@example.com
And not just any new products, but those that help your customers and better fulfill their needs, while accelerating the growth of your business and creating more opportunities for your target market to do business with you.
Whether you are a products or services firm, consider adding a few new products, especially if four or more of these seven points apply:
* You're looking at sheer exhaustion or burnout from making and selling what you do in the way you always have, while leaving no time or room for growth.
* Parts of your sales efforts are becoming less consultative.
* You' haven't created a standardized version of your product/service for less affluent, smaller or distant customers.
* Standardizing what you make and sell will increase overall gross margins.
* You recognize that some of what you have traditionally customized needs to become standardized.
* You face growing competition from new, lower cost and possibly Internet-enabled competitors.
* Your business is contracting, and it appears that overhead is to blame.
Many business leaders miss the point that launching new products is a world away from delivering existing ones. The classic financial operational issues arise once an idea is set in motion. But even before this, your business needs to understand the implications of adding products and "productizing" its best and highest use. There are six key questions.
* How will I adapt what I have to start standardizing and also create new products?
* What will it take and how can I be objective in determining what products to introduce?
* Will these products bring me new customers and/or new business?
* What are the key factors these products need to succeed?
* What outside resources may be required and how will they be used?
* How can I create a new product system with optimum return?
Sometimes you need a guide to help you covert what you do best into new products or services. Don't be afraid to ask an expert for help. Andrew J. Birol is president of Birol Growth Consulting and co-founder of Independent Entrepreneur. He helps owners grow their businesses by understanding and targeting their best and highest use. Reach him at (440) 349-1970, at firstname.lastname@example.org or or on the Web at www.andybirol.com.
Since clients usually retain individuals instead of firms, this makes sense. The creation of an aura around individuals delivering expertise is critical and reinforces credibility.
Traditionally, professional service firms market their image mainly through promotional means such as seminars and forums, public relations and image advertising. The problem with these efforts is that many firms assume this is marketing.
The reality is that these seminars may be informational, but they can also be a distraction from the real opportunities for, and challenges of, growth. Thats because often, the real answer to growth lies in other parts of the marketing mix. This includes target marketing, product development, pricing and distribution.
But many professional service firms de-emphasize these areas because they are much more personal, and this can be hard to face. Here are ideas worth pursuing:
Service firms grow through personal relationships with a few key clients, which over time become the firms base of business. Targeting markets requires choosing clients by more objective means and perhaps replacing those who have become friends.
In a service firm, the partners are the products. Assess partners performance and activities, then package and manage them appropriately.
Billing by hours fortifies the value of individuals and their degrees. The more degrees a firm can feature, the more it can bill. But clients buy solutions to their problems, not hours of talent. Isnt the selling of hours more of a convenience for internal accounting?
Should the actual work product always be delivered through human means? Should personal selling and marketing be done to prospects or the intermediaries who influence them? Are referrals the real way to grow clients? And where does the Internet fit in?
Answer these questions, and youre well on your way to a solution.
Whether or not the marketing of professional services can be completely objective is always a problem. After all, it is tough when the owner, the president and the product are one and the same.
But professional services firms do go overboard. It happens when:
- There is a perception that professional services cannot be marketed and sold in a quantifiable and measurable manner.
- The individual in charge of marketing is neither a partner nor or a degreed professional in the firms line of work.
- Marketing decisions are made mostly for partners with the most tenure and billings.
- Partner differences impede marketing decision-making.
So what is practical, possible and appropriate for moving toward becoming a market-driven organization? Here are some key steps:
1. Recognize that a firms core competence must include marketing.
2. Bring in outside objectivity. Extreme competence in ones profession does not necessarily translate into marketing expertise.
3. Remove organizational barriers between marketing and the executive committee. Dont hold marketing decisions hostage to differences between partners.
4. Understand that the Internet is changing the very core of how professional services are delivered and marketed. Determine your firms Internet marketing strategy, not just its Web site.
5. Look at the firms base of business in terms of all of the ingredients of the marketing mix, not just promotional activities.
Some providers of professional services are nostalgic for a time when excellence was measured by their own profession. Today, all of us need to focus on marketing our businesses in addition to marketing our professions.
Andy Birol (email@example.com) is president of PACER Associates Inc., a Solon-based consulting firm working with companies that need to focus on the best ways to find, keep and grow more customers. Andy can be reached at (440) 349-1970 or at www.pacerassociates.com.
You distribute branded products or services on a regional level. Or, you represent a manufacturer or licensor in a specific industry.
On the one hand, you are proud (and thankful) to have such a strategic relationship. On the other hand, you know you are too dependent for your own good. To make things worse, every year, your supplier demands more sales or concessions to carry the brand or he or she will add more distributors or cancel your contract.
What can you do? You can't risk trashing the relationship, but you can't let your margins erode any further. The options for replacing your supplier with a competitor are bleak, at best, so start by remembering that your supplier works with you and consider these factors:
- You are great at building relationships that your vendor cannot or will not.
- Your supplier has tried and failed to perform your function.
- The Internet hasn't delivered the business it hoped for.
- Your service, expertise and market knowledge are invaluable to your vendor.
The last point is your salvation. Whether you charge for it or not, your experience in your marketplace is your best and highest use. How you choose to exploit this will dramatically impact your success.
Here are some great things you can do to reduce the threat of the supplier Goliath in your David business.
Keep detailed records of more than just your customer transactions. Understand their preferences, attitudes, interests and behaviors.
Focus on tightly defined market niches. Understand the 20 percent of your customer base that provides 80 percent of your revenue. Know them cold.
Determine what part of your customers needs are unfulfilled by the supplier's brand and what part is filled by the service you provide. Remember, a brand creates greater demand for a "one-size-fits-all" product or service than does an unbranded product.
The converse of this is good news to you because a brand cannot meet all the needs of its customers to the same extent. There will always be a segment of customers whose needs are not completely met by the manufacturer's brand.
Focus on these differences and the customers whose needs are not fully met. With these customers in your gun-sights, start adding value and services to keep them:
Become their advocate in disputes with the manufacturer.
Provide guidance, service, installation and warranties over and above those of the manufacturer's.
Reinforce your personal relationships with this segment at every chance. Communicate often and provide information of value.
If you build an incremental, stronger relationship with the best customers of your business and your supplier's brand, you will regain clout with your vendor. Remember, your relationship with your customers is why your supplier does business with you.
In fact, it is likely that if you were to sell your business to your supplier or someone else, the purchase price would depend on how good your customer relationships are.
No matter how bullied or exploited your supplier may make you feel, it is more important how your customers feel about you. Those relationships are always valuable. Ironically, it is exactly that reason that also gives you power in working with your brand supplier.
So stand up, stand tall and serve your customers well. Andy Birol (firstname.lastname@example.org) is president of PACER Associates Inc., a Solon-based firm that provides expert advice to owners and leaders who need to grow their businesses. He can be reached at (440) 349-1970 or at www.pacerassociates.com.
While every employee can contribute to growing the top line of a company, three groups have primary responsibility for sales: Sales, customer service and marketing groups. To focus each group's efforts and each member's compensation on growth, let's use the framework of the PACER Process, developed to help business owners build stronger businesses.
Sales departments find new business and grow more sales by working with prospects and customers. Sales management means moving customers through the acquisition funnel from suspects to prospects to qualified prospects to developed to closed deals.
To pay sales managers and staff for growth, determine which stage of the funnel is the hardest and most critical hurdle in closing new customers. Learn which activities and which salespeople move the most business through this step and compensate them the most.
If developing a prospect is the hardest step, pay those who develop prospects more than those who close business. If the same people do more than one job, pay them separately for each prospect they develop and each one they close.
Inside sales and service groups typically focus most of their efforts on keeping and growing existing customers. These groups succeed when their retention and development efforts push customers through these funnels: The retention sales funnel, which includes one-time buyer/win back; reordering buyer; and customer; and the development funnel, made up of customer; cross-sold customer (multiple products or services); and advocate (will push your business to others).
Turning a reordering buyer into a stable customer is a key step. If it takes three reorders for a buyer to become a loyal customer, pay reps more for getting those three sales in a row. If inside sales reps are excellent at cross-selling, compensate them for specific successes.
Marketing teams can influence all three sales funnels when they develop new markets and products, and generate awareness of the company. So compensate them on how much impact the programs and tactics they develop have on growth.
A referral program that generates the needed number of new customers and sales means incentive compensation based on actual sales can be paid to the marketing staff. And if a program to generate inquiries from prospects is working, compensate your marketing department.
There is a direct link between compensation and growth, and it is possible to pay anyone in sales, marketing or customer service based on how their contribution translates into business growth.
The first step is to understand how the business really finds, keeps and grows its customers. This requires time and objectivity not available in most companies, and few go on to the next step and compensate staff for their specific roles.
But if more companies did, their owners could really say, "Of course my people are focused on growing my business. That's why I pay them." Andrew J. Birol (email@example.com) is president of Birol Growth Consulting, which helps business owners grow their companies. He can be reached at (440) 349-1970 or at www.birolgrowthconsulting.com.
Good advertising agency relationships are hard to forge. But if you put your mind to it, you'll find that if you commit yourself to the process, you'll get better results.
Here are five steps to help you build a friendly and productive relationship with your ad agency.
Define your agency needs
Determine what kind of advertising you're buying and pick an agency that does that kind best. It is usually one of the following:
* Institutional (promotes the company)
* Product or service (sells what you make)
* Market or segment (addresses narrow customer needs)
As you learn what methods and tools are best suited for your company, pick or change your agency to one that fits your needs. Those may include direct mail, broadcast, sales support or Internet marketing and advertising.
Link goals to your agency's objectives
Agreement is imperative to success. Any agency effort should be tied to quantifiable goals in terms of finding, keeping and winning back customers or growing your customer base.
Understand your reasons for hiring an agency
Agencies can do all of the following, but often at a high cost. However, there are some things that are so routine and/or costly they should be done in-house.
* Creative development. The development of concepts, copy and design is best purchased from the experts, the advertising agency.
* Execution. When ideas are turned into production-ready storyboards and schedules, proofs and mailings are needed, an in-house person can share the burden and reduce the cost.
* Production of advertising campaigns. If you foresee a recurring need to place ads, print materials and develop Web sites, bringing this function in-house will save you time and money. Good project and outside vendor management is a commodity and you should require that this be performed in-house.
Choose your agency after defining your needs
Too often, owners choose agencies with their hearts instead of their heads. To make a good decision, ask to evaluate the agency instead of having it pitch you. It should get paid to pitch after you've chosen the firm that best meets your business objectives.
Then, ask the agency's other clients how well it defined their advertising objectives and how these objectives were met in terms of price quality and timeliness.
Manage your agency, projects and objectives
Understand the old adage that in advertising you can only get two of these three: low price, high quality, fast turnaround. Decide what you need and make sure the agency knows it. Be a good client and respond immediately to the agency's need for input, feedback and approvals. It is only trying to help you. Demand regular meetings where your objectives are tied to actual results.
If you don't manage your agency, it will manage you. It has too much at risk to let critical business decisions impacting advertising go unmade. So manage your agency's objectives and performance just as you would any in-house function.
And if advertising is a key success factor to your business, then manage it in-house and only go outside for the creative ideas.
Regardless of how you split the work, if you stay on top of your job, you just might end up raving about your agency. Andy Birol (firstname.lastname@example.org) is president of PACER Associates Inc., a Solon-based firm that provides expert advice to owners and leaders who need to grow their businesses. He can be reached at (440) 349-1970 or at www.pacerassociates.com.
Yet many intelligent and driven business executives are frustrated with this. How can something so simple be so unobtainable and hard to execute?
It's understandable that most people react with avoidance or anger when given simple advice and no way to take it. The next time I hear ''Pursue your dream'' from a motivational speaker, I'm going to chase him out of the room.
Many business leaders still are unsure of their professional reason for being. And most pursue this quarter's objectives assuming that achieving these will lead to success and happiness.
Without defaulting to the spiritual for answers, let me suggest a practical and secular solution. If a business leader focuses on best and highest use, good things are more likely to happen.
What is your best and highest use?
For individuals and organizations, your ''best'' represents your preferred choice among the things you do well. ''Highest'' represents that which is most valued by employers, customers or partners. ''Use'' is the value you provide to others.
A company's best and highest use is where the mission and vision statement hit reality. Can you or your company do it? Does anyone out there want it?
How to determine your best and highest use
Document the challenges, situations and tasks at which you have succeeded. Make a list of the practical and impractical things you do well.
For example, until recently, Firestone successfully maintained long-term relationships with Ford. Tylenol succeeded in handling a tampering incident that would have destroyed most brands. Both can build on these experiences.
List the tasks, relationships and experiences you've enjoyed. Look for examples in your personal, professional or corporate life. When we see Charlton Heston serve as president of the NRA, we see he enjoys the role as much as he did when he played Ben Hur. This drives success, confidence and self-esteem.
Discover what your clients, customers and staff like about you. Have someone question your constituents. The feedback is always remarkable. My client, Inside Prospects, may have the best list of businesses in Cleveland, but their customers swear by the personal service and care that their president, Sandy Szuch, provides on any project, whether or not it involves a list.
Understand your strengths. Distill what you've learned through the above and simplify it. For example, GE, based on its reputation, resources and breadth of businesses, can truly claim to ''Bring good things to life.''
Stop dwelling on your weaknesses and know your blind spots. Too many organizational leaders are proud of themselves in ways that don't matter or they try to become things they can't. The fact that a business is family-held or has survived for 100 years rarely matters to outsiders. But many companies waste millions promoting such irrelevant features and services to their customers. Dwell on your strengths.
Synthesize, apply and focus. With an objective outsider, put it all together. The combination of your company's skills, experience and expertise stated in terms of what an employer, customer, prospect or a marketplace wants is where you should focus.
Here are some good examples:
- Mike Tyson's skill of intimidating people applied inside the boxing ring.
- Martha Stewart's ability to define grace in everyday living leveraged across her homemaking product empire.
- Microsoft's expertise at exploiting other developers' inventions into tools required by every business.
When you've determined and applied the above steps, you'll be surprised at the results. Your confidence and comfort zone will increase with the affirmation you receive from your employers, clients and partners.
In turn, you will not feel so dependent on individual buyers or employers because if they don't value your services, others will. And, all those motivational speakers won't bother you any more.
Andy Birol is president of PACER Associates Inc., a Solon-based firm that provides expert advice to owners and leaders who need to grow their businesses.He can be reached at (440) 349-1970