But what happens when that person leaves? How can you be sure your customers won't leave, too?
According to the study "How to Lose Your Star Performer without Losing Customers Too," by Neeli Bendapudi and Robert Leone of The Ohio State University's Fisher College of Business, there are ways to ensure your customers' focus remains on your company. The secret is to build company equity over employee equity. Here's how.
* Don't allow one key person to have the only contact with the customer. Use teams or rotate employees.
* Make the customer aware that your hiring/training process ensures high caliber personnel throughout the company.
* Publicize your company, employee achievements and awards.
* Emphasize the company culture and the steps you take to ensure quality customer service and interactions. How to reach: OSU Fisher College of Business, (614) 292-8511.
Ames Department Stores Inc. filed for Chapter 11 in August 2001. In January 2002, Service Merchandise announced it will cease operations after operating in bankruptcy for nearly three years. Kmart filed for Chapter 11 protection in January 2002 and closed nearly 300 stores.
With so many retail and discount stores closing or struggling to stay in business, it may seem the companies that remain competitive just need to dig in and ride out the recession. But that's not what Big Lots is doing.
Instead, the Columbus-based company has chosen to reinvent itself in an effort to focus its branding message on a national level.
The company was founded in 1967 by Sol Shenk, who had a background in auto parts manufacturing. Shenk chose to stick with what he knew, and opened an auto parts store under the Big Lots name in Ohio. In 1970, the company began operating as Consolidated Stores; by 1982, annual revenue grew to $24 million.
That same year, the company launched the Odd Lots/Big Lots closeout retail chain, locating the first Odd Lots in Columbus. These were among the first broadline, closeout stores in the country. It works this way: When Heinz makes too much ketchup, you can find the overrun at Big Lots and buy a bottle at substantial savings. Closeout retailers also take merchandise that has been discontinued, undergone package changes or that are test market products.
By 2000, the company had several years of acquisitions, growth and changes in leadership under its belt, and Michael Potter stepped in as chairman and CEO of the $3.2 billion company with nearly 1,300 stores. Consolidated had five chains at that time: Mac Frugals, Odd Lots, Big Lots, Pic 'N' Save and K*B Toys; each with its own marketing and advertising needs.
Quarterly comparable sales numbers boasted some very modest increases, but also some decreases, and with stock prices dropping, it appeared this hodge podge of regionally branded stores needed unity to gather momentum.
A "new" company is born
Potter announced major restructuring changes in March 2001, included divesting the company of K*B Toys, changing the names of all its stores -- as well as that of the company -- to Big Lots, and placing a new focus on the customer.
That meant cleaning up less than spotless stores, refurbishing them with better lighting and equipment, revamping the merchandising supply system and improving customer service.
More than a year later, many of the changes are complete; others are still in the works.
"We have about 240 stores left to convert (to the Big Lots name) by this Christmas," says Potter, who is excited by the marketing prospects of one national identity. "It is easier to be known nationally, and we can leverage our advertising, especially television."
Potter says the company has been doing its marketing homework and determined there are more long-term benefits in television advertising than in its current means of advertising, store circulars.
"Studies show that television creates a brand more efficiently," he says. "Especially three, four years down the road."
Potter says only about 15 percent of the nation recognizes the Big Lots name, compared to a 90 percent recognition rate for Wal-Mart. That is why the company is turning to more television advertising with its spokesperson, Jerry Van Dyke.
"We want to increase brand awareness," says Potter. "We've had very good response from the television ads we've already done, so we'll continue to move in that direction."
Give them what they want To make the stores more attractive to current and prospective customers, the company asked people why they shopped there -- or, more important, why they didn't.
"We did a multiyear analysis based on detailed customer studies," says Potter. "We asked what they liked and what they didn't. Our noncustomers said there were too many barriers in place."
Customers felt many of their expectations would not be met -- expectations for customer service, product inventory and physical store standards -- which the company is working feverishly to change. When it comes to inventory, Potter says consumers cannot expect the range of products offered by Target or Wal-Mart; that is simply not its mode of business or its target market.
"We are not ever going to offer as broad an assortment (as retail discount chains like Wal-Mart) from a selection standpoint," he says.
However, the company has put together a list of more than 500 items guaranteed to stay in stock.
"Customers expect to find items like bathroom tissue, light bulbs, diapers and cleaning supplies," he says.
By working with suppliers, the company has found a way to meet that expectation, although the brands may not always be the same.
"We wanted to find a way to satisfy our customers," he says.
That's not all Big Lots has done to improve its merchandise flow.
"Day after day we are relevant in our product offering mix," says Potter. "Our flow is more consistent, and our front-end buying and distribution improvements have had the most important impact on our sales."
And converted stores that were below the new, higher standards of cleanliness and service have undergone a substantial facelift. The result, says Potter, is not just happier customers, but happier employees, since employee break rooms were part of the redo.
"We have begun customer service initiatives, and our customers are noticing a significant difference in service," he says. "And we are producing a wonderful environment to work in. The stores are cleaner, brighter and safer, and our associates are doing a better job."
So what about the bottom line? The "after" Big Lots definitely appears better than the "before." But have these changes had the desired impact on the bottom line? If comparable store sales are an indication, the answer is a definite "yes."
For the first time in nearly two years, the company experienced a sales increase in the double digits, reporting an increase of 14 percent for February. And Potter says new sales figures indicate the double-digit trend will continue.
Brad McGill, a financial analyst with Banc of America Securities in New York City, agrees the company's restructuring initiatives appear to be paying off.
"We are beginning to see some signs of traction," he says. "Comparable store sales are impressive, and fourth quarter numbers are in line with expectations. It appears they are heading in the right direction."
But the company does not plan to rest on its laurels or remain satisfied with the status quo. Potter says it's full steam ahead when it comes to expansion and growth.
"We are adding 90 stores this year, and will add a similar number every year for the next 10 years," he says. "We plan to have a total of 2,500 stores at the end of 10 years." How to reach: Big Lots Inc., (614) 278-6800 or www.biglots.com
If you don't have DSL, you may want get it, especially if your company uses dial-up for connecting to the Internet.
"DSL lines are much faster than dial-ups," says David Palan, director of marketing for Sprint Business DSL. "And they are also faster on downloads than T-1 lines."
However, if your main concern is uploading files as quickly as possible, T-1s are the way to go.
Choosing a DSL line positions your company to take advantage of future technology, since dial-up service will not accommodate these technologies, says Palan.
"New technologies in the pipeline are built using IP platforms over broadband-based connections," says Palan. "These include voice command recognition systems and PDAs."
If you already have DSL, are you getting the most for your money? If a slow connection is bogging down your e-mail system or you're not getting business-quality service from your provider, you may not be getting all you could be from your DSL connection.
"There are four issues companies should look for in choosing a DSL provider: a dedicated business line, guaranteed network availability, and dedicated customer and technical service," says Palan.
Some providers offer businesses the same line as residential customers, which could be a problem.
"That's not an issue until about 3 p.m. when the kids get home and start sending streaming videos and other large files to each other," he says.
And some providers offer business customers the same representatives as residential customers, which can slow response time and productivity while employees wait for a connection.
In addition, business customers should ask potential providers what they guarantee in network availability, as this can vary from company to company. How to reach: Sprint Business DSL, 866-806-3278 or www.sprintbusinessdsl.com
Pardon the dust. After months of strategizing, a restructured Huntington Bank is emerging, and planning to make the most of its Midwest markets.
The demolition of the "old" Huntington began more than a year ago, when Frank Wobst handed over the reins of leadership to Bank One veteran Thomas Hoaglin. While at Bank One, Hoaglin experienced the success of working for the hometown favorite bank, and saw the opportunity to achieve the same results at Huntington.
Within months of taking over, Hoaglin announced his restructuring plan: Sell the Florida operations, close more than 40 branches in the Midwest, cut dividends by 20 percent and create a new corporate culture. And the underlying strategy behind the plan was to leverage Huntington's hometown team advantage.
So where do things stand as the dust settles?
"We completed the sale of the Florida franchise, reduced dividends and consolidated offices predominantly in Ohio and Michigan," says Hoaglin. "Other changes that address how we position ourselves and operate going forward -- those are a work in progress."
You can't change the corporate culture for more than 4,000 employees overnight. But Hoaglin's vision is clear.
"We decided to become the local bank with national -- or more sophisticated -- resources," Hoaglin says.
Part of this cultural change is a renewed dedication to customers.
"We have to dedicate ourselves to our customers' needs and be responsive and flexible," says Hoaglin.
To provide that flexibility, Hoaglin is giving managers more autonomy -- and accountability.
"Being close to the customer requires you to give decision-making authority to local management," Hoaglin says." And with that authority comes accountability. We want managers to apply their skills, run their businesses, but be held accountable to the results."
This decentralization led Hoaglin to re-examine his leadership team. As a result, the only regional president who wasn't replaced was Central Region President James Kunk.
Kunk, whose authority and accountability include Central Ohio and West Virginia, says his biggest challenge in the months ahead is to make good on the bank's new focus.
"We want to make sure all our people deliver and do what we say we're going to do," says Kunk. "That means making decisions at the local level and not passing the buck."
Kunk wants associates to take ownership and feel connected to the customers they serve.
"We want customers -- whether they are retail or commercial -- to have a personal relationship with our associates," says Kunk.
This relationship starts with the associate.
"In my experience, happy employees make happy customers," he says. "Associates are enjoying the new Huntington and their work. They can share ideas in a less formal way. There's a real esprit de corp, and it's not about winning. It's about being a team. And that is reflected back to the customer."
Kunk cites Hoaglin's vision as the goal for his region: To make customers feel their branch is the local community bank.
"We are the local bank, and that's something that we're proud of and I want to accentuate," says Kunk.
While there are 43 fewer community branches after the recent closures, Kunk says the customer retention rate has been higher than forecast.
"Initially there was some concern over the closings," he says. "But I feel good about the customers we've retained."
From the shareholder's perspective
Huntington's changes have made associates and shareholders alike happy. Pre-change stock prices (more than a year ago) were around $15.30 a share. The stock was priced at $19.74 as of March 8. Confidence in the leadership team and its initiatives is also on the rise.
"A year ago we had quite a few unhappy shareholders," says Hoaglin. "I have spent the last year communicating with shareholders, keeping them apprised of our progress. The response has been very positive."
Hoaglin says that overall, shareholders feel the company is heading in the right direction and look forward to seeing results this year.
"Shareholders are expecting us to deliver results in 2002," Hoaglin says. "And we are confident we can meet that expectation," despite the current economic environment.
Hoaglin says while there is no doubt the recession has had a negative impact on the bank's markets with a weaker loan demand, it is also experiencing stronger deposit growth.
"We'll do just fine," Hoaglin says. "The economy is not causing any major concerns."
And with the changes that have taken place, there won't be any more any time soon.
"We have our game plan and we'll be working hard on it. I don't anticipate any major changes of direction," he says. "We have the talent and the capability of achieving our goals."
Huntington doesn't plan to expand outside its Midwest markets anytime soon. Hoaglin feels strongly that the bank's success lies in its own backyard.
"I think we'll do best to keep our focus on the Midwest," he says. "There may be some expansion opportunities within the Midwest but we will not be expanding outside that footprint."
Pressing the hometown advantage
To emphasize Huntington's commitment to its community, the company is partnering with Mayor Michael Coleman to revitalize the city. Huntington is establishing a goal of $275 million for lending and investments over the next five years in low- and moderate-income neighborhoods.
While the majority of loans will be for home purchases and improvements, it will also be used for some small business lending programs.
"It is our intention to be more and more visible in strengthening our community," says Hoaglin. "We expect to see the mayor focusing in developing the downtown and we will play a leadership role in that initiative. There will be a lot of participants from both the public and private sectors, but we expect to be a visible player in that plan."
It seems Columbus stands to gain a great deal from the "new" Huntington Bank's commitment to community. How to reach: Huntington Bank, (614) 480-8300 or www.huntington.com
Traditionally, a company establishes credit with suppliers. Then, when it needs something, it sends employees out with a purchase order, asks the company for an invoice, and, when it comes, matches the invoice with receipts and cuts a check.
A corporate purchasing card, used like a debit card, simplifies the process. Instead of getting receipts and cutting a check, the accounting person simply gets a statement of charges, which have already been paid.
However, there are defined factors tied to the success of p-card programs, according to a study by Richard Palmer, Eastern Illinois University; Mahendra Gupta, Washington University; and Antonio Davila, Stanford University.
The study says p-cards can be a better, faster and more cost-efficient way of acquiring goods. And when programs have top management support, they are more likely to be successful.
Jean Hilliard, senior vice president and regional sales manager of Bank One's Treasury Management, agrees.
"Senior management sponsorship is No. 1 in the list," Hilliard says. "There needs to be a champion fully behind the program when it takes effect."
Hilliard says programs are also more successful when someone is in charge.
"Assigning ownership is important," she says. "That person doesn't have to manage the program full time, but there needs to be an assigned administrator."
Keeping all departments affected by the program in the loop also makes a difference.
"More than just the accounting or general ledger department should be involved," Hilliard says. "All those using the program or impacted by it should have an understanding of how it works and its benefits."
Howard Fickel, CFO of Columbus-based Corna Kokosing Construction, says his company's p-card program has been a success.
"The cost of administration takes less time," says Fickel. "And if you use the reports effectively, you do gain efficiency as well."
Fickel says Corna's program, through Bank One, provides better management and control of purchasing.
"In the past, I had requests to open accounts at retail stores all over the place," Fickel says. "It was totally unmanageable. People were purchasing items and I didn't know which project to charge them to."
Now he can control where employees charge and can see where the company is spending its money.
"Reports list purchases by employee, vendors and vendor type," he says. "I can see if we need to set up a separate credit arrangement with a particular company."
Hilliard says p-card programs are successful when expectations are clearly communicated.
"Changing the way you do things is always a challenge, but if expectations are laid out and the program is watched and improved, it can work." How to reach: Bank One Treasury Management, 248-5947
"It can be difficult for top executives to diversify," Heil says. "If key people begin selling stock, what does that say to other stockholders?"
On the other hand, it is both appropriate and smart to protect your wealth, especially for an executive approaching retirement.
"There are SEC regulations and pressure within the company to hold its stock," says Heil. "But if the ability is there to diversify, there are also tax considerations to keep in mind," as long term capital gains taxes may make selling large blocks of stocks costly.
Exactly when and how to diversify depends on your situation and your age. Heil says a professionally managed stock portfolio can help reduce the risks involved with diversifying and help meet long-term goals.
"The goal is to preserve your wealth. Putting all your eggs in one basket is where the risk is," says Heil.
Selling small amounts of company stock over a period of time can be a smart alternative -- both for the executive and the company -- to selling big blocks all at once.
"As you get closer to retirement, your investment risk should narrow," Heil says. "A younger executive with several years before retirement can sell 10 percent of the company stock over the next 10 years."
Heil advises executives to define what they want out of retirement to determine how much they need to attain that lifestyle. Then an older executive can sell the amount needed to meet that requirement, and keep the rest.
The goal is to preserve a portion of your wealth in conservative investments. Then, should something happen to stock prices, your family's lifestyle is not affected. A professional asset manager can use this portion to create a mutual fund that minimizes risk.
"Some mutual funds can be expensive to get into," Heil says. "Asset managers put together their own mutual funds selected to the risk tolerance and preferences of the investor."