Curt Harler

Thursday, 21 September 2006 20:00

Wants and needs

Knowing your target customer’s demographic profile is important in any business. But it is especially key in auto buying and selling because those demographics help auto dealers to define their target customer.

According to Carlos Dague, new car sales manager at Ganley BMW in Middleburg Heights, the latest trend in demographics is the psycho-demographic profile. But there are a lot of other demographic characteristics that depict this class of auto buyer.

Smart Business asked Dague about the demographic profile of the premium automobile buyer.

In general, what are the important demographics dealers look at?
Income is probably the No. 1 demographic. In addition to income, other factors include education, profession, hobbies and marital status, to name just a few.

What are psycho-demographics?
Psycho-demographics take demographics to another level by looking at the psychological needs and wants of the prospective customer. Many buyers know that BMWs will meet the basic need of point-A-to-point-B transport, but they have to feel the car they’re driving is more than just transportation. That is, it is an extension of their personality, which is what any premium product does, to a certain extent.

How about their income profile?
The premium automobile purchaser is well off. The income profile of our customers ranges from just below $100,000 per year to well into the six figures and up.

Does the premium car buyer typically live a particular lifestyle?
Most premium car customers are either at the top of their professions or are well on their way there. They appreciate fine, precision engineering combined with distinctive styling. They like to travel for pleasure, eat at upscale restaurants, and have an active lifestyle.

Time is as valuable — if not more valuable — than money, and they appreciate technology that is cutting edge and saves them time, especially if it has a few extra horses under the hood.

Is there a certain set of values they subscribe to?
Our customers believe in value for not only dollars spent, but they also place value on time saved and service provided. For example, customers in the prestige class appreciate valet pickup at home or office for service done with a free loaner. In addition, our customers can leave their vehicle with us when they fly out of Hopkins. We service and store their BMW until they return, saving time and money versus airport parking.

Premium cars have a prestige factor. What do demographics show here?
Prestige is certainly part of the equation, but our customers really appreciate the feel and handling of our vehicles. We’ve been using the same tag line in our advertising for almost 30 years — ‘The Ultimate Driving Machine’ — and once people drive a BMW, they understand why we haven’t changed our tag line. Plus, anything that is ‘ultimate’ has a certain amount of prestige to it, and our customers like that. 

What about the differences between new car buyers, pre-owned buyers and leasers?
Differences between these types of buyers center around three factors: length of ownership, budget and cash flow.

Typically, buyers of new BMWs tend to keep their vehicles for several years, enjoying their durability and longevity. Many buyers of the pre-owned vehicles like the reduced price of a two- to three-year-old car, especially with the Certified Pre-Owned Program, which is a factory-backed limited warranty for up to 100,000 miles or six years from original in-service date. Leasing, however, is very popular with drivers who change cars every two to three years and want the benefits of BMW’s high resale value. Lease payments can be quite a bit lower and shorter in term than purchase payments, as well as reducing the initial cost needed to start enjoying a BMW. 

Where do you get this information?
BMW, like many other consumer-oriented companies, employs demographic research firms. These firms do everything from focus group research to post-purchase surveys. This information allows them to paint quite an accurate picture of who buys/leases BMWs, where they live by ZIP code, and what they do for a living. Even what magazines they read and what they do for fun.

 

CARLOS DAGUE is the new care sales manager at Ganley BMW in Middleburg Heights. He has been selling BMWs since 1982. Reach him at (440) 843-3552 or xfive44@aol.com.

Monday, 28 August 2006 20:00

Bringing in the calls

Whether a business is calling out to potential customers or fielding inbound customer calls for orders or product information, awareness of what is involved in the process and how it fits a business plan is vital.

There are real operational differences between an inbound and an outbound call center operation.

Smart Business asked Mike Langenfeld, senior vice president at InfoCision Management Corp. in Akron to explain the differences, then asked him questions on effective inbound calling strategies.

A company getting started in teleservices needs to know the difference between inbound and outbound call centers. Can you talk a bit about each?
Inbound call centers focus on answering incoming calls. These are calls generated through direct mailings, media-driven calls to action, customer service, catalog ordering or return of a message left by that company.

Outbound call centers specialize in placing outgoing calls. These calls are generated from a list of select consumers or businesses geared toward a specific marketing appeal created to sell an item or service, gather data (such as a survey) or generate donations for an organization.

Traditionally, an inbound call center uses an ACD (automatic call distributor) or PBX (private branch exchange) system to route its incoming calls while an outbound call center would use a predictive dialer to dial outgoing calls.

However, with new advances in telemarketing technologies, there are single systems that allow a company to use agents for both inbound and outbound. This increases the efficiency by decreasing the amount of unproductive time spent waiting between calls. An agent can be assigned to an inbound program. But when call volume is low, the dialer places outbound calls for that same communicator so their time is better utilized.

What is a reasonable expectation for a company setting up an inbound call center program?
Many factors enter in to setting up an inbound program. The time frame varies based on whether it is a new program or an existing program, whether a new phone number needed or an existing number needs to be transferred.

As a rule of thumb, allow three to four weeks from the time all program requirements have been defined to the time the first call is taken. This allows the proper amount of time to set up all technology, transferring or acquiring a phone number, create scripting, train the agents, and thoroughly test all areas of the program to ensure it is ready to go live.

Where does a company start? What does it involve?
The main place to start is research. You want to research everything from equipment to which agents to hire. Call center equipment is quite expensive, so you’ll want to get it right the first time. If you plan on expanding beyond inbound to outbound, you may want to invest a little more in the beginning and get a system that can handle both.

You will also want to look at licensing and yearly maintenance agreements. The initial price may look great, but based on how that particular vendor prices their license and maintenance, you may end up paying more than expected.

Attend trade shows and telemarketing conferences to gain ‘best practices’ from other companies that have been in the industry a while.

What does a company like yours need before launching a program?
To launch a successful inbound program, we need as much information as possible. Some of it includes all phone numbers that will be used, hours of operation for the program, and expected call volumes to determine appropriate staffing. We need to know what will drive the calls (i.e. media, direct mail, etc.) and what the marketing plan is for these calls, as well as what call flow pattern should these calls take (IVR, live communicator, etc.) and knowing the expected outcome for these calls.

Call center programs are measured in many ways. What kind of service level agreement (SLA) is typical for an inbound program? How far can the SLA be expanded?

The standard agreement at IMC is 80 percent of calls being answered within 20 seconds. The SLA can be expanded to suit the client’s wishes, as well as to accommodate different types of media generations. We have clients who have asked for a ‘90 percent in 30 seconds model’ and others with a more liberal ‘70 percent in 60 seconds’ depending on the media they use and their particular goals.

MIKE LANGENFELD is senior vice president for call center operations at InfoCision Management Corp., Akron. A teleservices company, InfoCision offers marketing experts in most industry fields. It is a three-time winner of the NorthCoast 99 Award that recognizes the 99 best places to work in Northeast Ohio. Reach Langenfeld at (330) 670-5118 or mike.langenfeld@infocision.com.

Saturday, 29 July 2006 20:00

Wellness and health care

Hospitals, like other organizations, have business models that reflect their goals and their customers’ needs. There is no doubt that changes in a hospital’s business model can and does affect the patient experience.

“In the 1990s, many hospitals developed integrated delivery systems that spanned all aspects of health care, even insurance,” says Alan Bleyer, president and CEO of Akron General Health System. “We learned that there is an inherent conflict of interest between providers and insurers. We’ve changed our business model to eliminate insurance and refocus on our core capabilities: inpatient, outpatient and wellness services.”

Akron General’s mission statement, to improve the health and lives of its patients and the community, is rooted in a strong belief that wellness is the key to better health -- and, ultimately, to getting health care costs under control.

Smart Business asked Bleyer what impact a mission statement has on the escalation of health care costs and how it offers a solution.

Is it your perception that people are more aware of health care costs, and if so, why?
You can’t pick up a paper or listen to the radio without hearing about increasing health care costs. As consumers increasingly become more directly financially responsible for their own heath care, they will be more concerned about the cost. The introduction of Health Savings Accounts (HSAs) allows employees to deposit their money into savings accounts to be withdrawn for out-of-pocket expenses. Ultimately, the patients will become more prudent shoppers. A patient needing bypass surgery will demand and should be able to compare a range of prices.

We have always encouraged people to gather information before they select a provider. Patients ask a lot of questions and search for information on the Internet. They look for evaluations of the quality and care a hospital offers before making their decisions.

Hospitals should provide data about the quality of services on consumer Web sites, including cost data. A hospital must be as transparent as possible and provide access to programs and costs. We want to make it easy for people to know what to expect.

This is the beginning of a major evolution. When employers before World War II introduced health insurance, it took two decades before health insurance became a universal employer-approved benefit. Similarly, transparency of quality and price will happen over several years. A good head start is our Wellness Center, which is a prevention model.

Why does the cost of health care continue to increase?
Rapid and continuous development of new technology and the aging of the population drive contribute to this complex issue. That makes our industry unique, and these are drivers that the public often does not realize are adding costs. How we should address these issues is not clear. But it is imperative that we reduce the constant year-over-year increases in costs. We believe that wellness plays a significant part.

Why focus on wellness as a big component for reining in higher prices?
Wellness is the best way to avoid hospital visits. Think of how much we could reduce the negative effects of diabetes in Summit County alone if everyone participated in a wellness program with exercise, nutrition and weight loss. The results would be extraordinary.

An emphasis on wellness can make a difference in patients’ lives. After receiving treatment, they can easily access medically supervised rehab and continue it for years. True life changes can keep patients out of the hospital in the future.

A mission statement is a roadmap?
Yes. We will continue to focus on our core capabilities - wellness and patient care - as paramount. Wellness programs improve peoples’ lives. A hospital’s principal focus is to take care of people.

ALAN BLEYER is president and chief executive officer of Akron General Health System. Reach him at (330) 344-7679.

Today, more than ever, it’s important to avoid costly delays and unexpected overruns associated with providing solutions to corporate real estate needs. As vacancy rates drop, landlord-driven markets strike out at tenants with a harsh one-two punch. Not only are rents on the rise, but the Tenant Improvement Allowance is shrinking while the cost of construction and related services grows.

Rick Martin, who leads project management activities for Cresa Partners of Orange County, says he believes this should be anticipated, negotiated and actively managed as part of the real estate transaction process.

Smart Business talked to him about keeping project costs in line and the dreaded “gotcha.”

Where do you start with clients when planning a project?

You engage a real estate broker to find a building or negotiate rent. But it is risky to then use in-house resources to marshal the professionals, contractors and other service providers through the tangle of scope definition, service agreements, schedules, bidding, change management, risk management and nonperformance issues that are part of every project.

A key differentiator is our approach to actively protecting our client against unexpected cost and delays through the early and effective use of project management.

Do you have a process you recommend so clients can protect themselves against “gotchas”?

Project managers should bring to the table a five-step process tailored to the specific needs of each client.

It begins with the early establishment of a comprehensive master schedule that is inclusive of all transaction activities in addition to those related to design, construction, technology, furniture, fixtures, equipment and expansion/relocation. This important tool guides the efforts of the entire team and works as a ship’s rudder to keep the project on course and protects against delays and added cost.

A cost forecast provides a comprehensive accounting of all non-reoccurring expenditures including design, documentation, permits, technology, construction, furniture, fixtures, equipment, and move costs is developed by the project manager. This forecast helps the transaction manager analyze each real estate opportunity clearly, with a well-grounded understanding of the “out-of-pocket” costs associated with each location, not just the reoccurring cost of rent and operating expenses.

To determine the exact amount of space required by a business and to facilitate the creation of the cost forecast, a space use program should be developed. The project manager uses competitive forces to help select the most qualified architect to work with the team and develop the space use program — which is the accumulation, and tabular presentation of, objective and subjective space needs. Objective space needs include the size and quantity of private offices, work stations, conference rooms, work rooms, specialty areas, reception and all other space needs.

Utility and service needs such as unusual HVAC and electrical requirements should be identified. Importantly, subjective needs are also identified that may involve corporate image, or indicate the need or desire to occupy smaller or larger floor plates, multiple floors versus single floor, single-occupant building versus a multi-tenant building. This tool provides the criteria that will ultimately qualify available space for consideration and will be used to develop a space plan to evaluate each building’s efficiencies.

Each transaction should include a “work letter” and a description of “landlord’s work.” Together, these two documents should:

  •  precisely define the physical condition the space will be in when delivered to the tenant, and

  •  define specific conditions and requirements the landlord (or its lender) may have related to the use of materials, architects, engineers, and contactors, restrictions on the use of the Tenant Improvement Allowance, and other performance-related obligations.

In a strengthening landlord market, each issue within these documents will have a direct impact on cost.

What’s your advice on change orders and modifications to the work process?

The preceding four steps serve to set the course. Developing and using an implementation plan is the final step. The implementation plan steers the ship through the straits and narrows of design, engineering and construction.

By employing current market knowledge of service provider capability, contractor availability and labor and material costs, the project manager uses competitive forces to assure the best teams at the best price.

The project manager should use past success and experience to craft comprehensive service agreements that protect the client and provide for open bidding of the construction — thereby assuring the highest quality and lowest cost. Acting as the team quarterback during this phase, the project manager should continually represent the client’s best interest: protect against inappropriate change orders, prevent delays, and advising in advance of important decisions.

RICK MARTIN leads project management activities for Cresa Partners of Orange County and exclusively represents users of commercial real estate. Reach him at rmartin@cresapartners.com.

Tuesday, 25 November 2008 19:00

Reaching the unreachable

Consumers are bombarded with millionsof messages every day. In an ever-changing, expanding world of marketing, how does a company cut through theclutter to get its message heard? And whatabout the customer who always seems justbeyond reach?

According to Ken Dawson, chief marketing officer of InfoCision Management Corporation, the secret is to start a dialoguewith your customer. Unlike traditional, massmarketing strategies, the most effectiveapproaches now focus on personal connections and interactions.

“One-to-one marketing is where it starts,”says Dawson. “Companies must get awayfrom the old idea of direct marketing, whena billboard, newspaper ad or form letterwith a ‘one size fits all’ approach was theonly option. It is all about individualizedmass marketing now. Today it is quite practical — even easy — to customize messagesfor your audience. Not only do customersrespond to this approach, they are beginning to expect it.”

Smart Business spoke with Dawson abouthow you can get a better ROI and more satisfied customers by reaching out with customized offers specific to their needs.

How does a company start a one-to-one marketing strategy?

First, you have to listen to what your customer tells you. Some people prefer an activeconversation, while others prefer a more passive approach. Some will want to call you attheir convenience. Some like e-mail. Everymarketer should be aware of the preferencesof its customers. If someone asks to be takenoff a mailing list but responds to Web promotions, do what they want. It sounds simplistic,but too many companies don’t do it. This is adisastrous mistake, because it is impossibleto win a customer when they aren’t ready toreceive your information. If you know theright channel to use, and the best time of dayto contact them, you will get a positiveresponse.

Also, find out what your customer is interested in and cross-sell products and servicesto them. Buyers appreciate this and respond.Many Web sites do this, and it works wellwith phone calls and catalog sales also. For example, if a customer buys curtains, it isalmost intuitive to offer her curtain rods ortiebacks. If a buyer has children, offer himage-appropriate products in addition to otheritems for the home. Make it a one-to-oneexperience based on the demographics, hobbies and buying behaviors of your customers.

Do customers usually buy into one-to-onemarketing?

A savvy customer knows she is being targeted for a sale, but one-to-one marketingcan create a feeling of mutual respect and apositive relationship. If you purchase an itemat a big box store, it is simply a transaction —no warmth, no personalization. But, if youbuy at a mom-and-pop store, the owner islikely to talk to you, let you know the itemsyou ordered last week have come in, orinquire about your cousin’s health. It is a personal relationship that is mutually beneficial.

Businesses must do the same thing withone-to-one marketing. Move away from blanket sales and build a true relationship. Everycompany has the technology to accomplish this, but few make good use of it. Take, forexample, an automobile customer whoalways buys black sports cars. The offer hereceives should have a black sports car in it,not a red minivan.

What information should I collect?

Capture every bit of information you canand use it to create a customer profile.Examine information on gender, income, voting preferences, etc. This will help you connect your product with the needs and wantsof your customer.

Additionally, businesses should be awarethat many customers are abandoning landlines and using only their cell phones. TheFCC and the FTC heavily regulate cell phonesolicitation, and if you don’t have expressedwritten or verbal consent, you cannot call acell phone number. With number portability(allowing land line numbers to be convertedto cell numbers) regulatory compliancecould become a problem. To prevent anyissues in the future, request that data now.Every time you reach out to a customer,always include an opt-in question for phonenumbers and e-mail addresses. If you haveapproval to use a cell phone number, you willhave a big leg up on the competition. Soinvest now and leverage that data because it’sthe best way to stay in touch with a hard-to-reach customer.

Any other thoughts on one-to-one marketing?

Don’t be afraid to try new strategies or tomove your marketing budget from one areato another in order to accommodate a one-toone tactic. You won’t be sorry you made thedecision to do so. Flexibility allows you toadapt to fluctuating markets, and building apersonal relationship with a customer ispriceless. This approach will help youenhance your brand position and increaseyour ROI.

KEN DAWSON is the chief marketing officer of InfoCision Management Corp. Reach him at ken.dawson@infocision.com. In businessfor 25 years, InfoCision Management Corp. is the second-largest privately held teleservices company and a leading provider of customercare services, commercial sales and marketing for a variety of Fortune 100 companies and smaller businesses. InfoCision is also a leaderof inbound and outbound marketing for nonprofit, religious and political organizations. InfoCision operates 32 call centers at 13 locations throughout Ohio, Pennsylvania and West Virginia. For more information, visit www.infocision.com.

Tuesday, 26 August 2008 20:00

Employee control?

Employers who seek to regulate or monitor their workers’ electronic communications could be stepping into a legal quagmire. Lest they get their shoes muddy (and mess up their legal standings, too), employers should be up to date on court rulings on employee communications. The latest ruling comes from the 9th Circuit Court of Appeals in California.

Smart Business asked Michael A. McCabe, a shareholder at the Dallas law firm of Munck Carter, P.C. with expertise in e-discovery and labor and employment law, to help sort out the situation.

Let’s cut to the chase; can I legally monitor workers’ e-mail accounts?

Yes, in most states. But, you have to go about it in the right way. The key is to defeat the employee’s expectation of privacy in his or her workplace communications.

Employers can do this by distributing a policy that clearly and unambiguously states that any communication made over the company’s e-mail system is not private and will be monitored by the employer. Having established no expectation of privacy to workplace communications, the employer is on solid ground to legally monitor the communications.

Does that mean I can monitor personal communications on company computers?

This is a relatively new and dynamic area of the law that is constantly being fine-tuned. However, most courts have consistently ruled that so long as an employer’s policy dispels any expectation of privacy, it is fair game for the employer to review communications made over the employer’s e-mail system.

Some courts have gone so far as to hold that communications between employees and their lawyers cannot be privileged if the employer retains the right to review communications sent or received over the company’s e-mail system. In the words of one court, a properly drafted policy is equivalent to notifying employees that ‘the employer [is] looking over your shoulder each time you send an e-mail.’

How about monitoring other technology like cell phones, voice mail, BlackBerrys?

Written communications, in whatever form, that are transmitted over the employer’s computer system can be monitored if the employer’s policy eliminates any expectation of privacy. This same rule should apply to voice-mail communications that are transmitted over an employer’s e-mail system.

Monitoring cell phone conversations is a different story altogether. The law of most states and the federal government is that telephone conversations can be monitored if proper notice is given and consent received. In some states, only one person to the conversation needs to consent to being monitored, while in other states, all parties to the conversation must consent. That’s why you’re informed that your telephone conversation is being recorded when you call a customer service hot line.

To monitor employee’s cell phone calls, you would have to receive consent from both the employee and whomever he or she calls because you don’t know if he or she is calling one of the more restrictive states.

For all practical purposes, it would be very difficult to implement such a policy with cell phones.

But didn’t the 9th Court’s June decision draw some lines?

Not as much as you might think. The 9th Circuit ruled that Arch Wireless, a text message provider, violated the federal Stored Communications Act (SCA) by disclosing a police officer’s sexually explicit text messages to his employer, the City of Ontario Police Department, even though the city was the subscriber on the service contract. In the court’s view, Arch Wireless violated the SCA because it disclosed stored text messages to a third party without the consent of either party to the communications.

This does not, however, stop employers from monitoring e-mails that are sent entirely over their own e-mail and computer systems. The easiest way for employers to avoid the 9th Circuit’s ruling is to limit business communications to those devices that can be monitored by the employer, such as BlackBerrys and traditional e-mail.

Can I take disciplinary action against an employee for a post to an industry blog?

Probably, but it can differ from one state to the next and between public and private employers. There are several cases in which employees were fired or disciplined for material they posted on an industry or personal blog that was critical of their employer. Other employees have been disciplined for making statements online that appear to be the employer’s official position on a topic.

To avoid these problems, all employers should have a policy that prohibits employees from blogging about their employer without making their employment status known and without stating that the espoused views are personal to the employee and not the views of the employer. Furthermore, the policy should remind employees that they can be disciplined if they paint the company in a bad light.

MICHAEL A. McCABE is a shareholder at Munck Carter, P.C. and a member of the firm's labor and employment and litigation sections. He can be reached at (972) 628-3609 or mmccabe@munckcarter.com.

Tuesday, 26 August 2008 20:00

Virtual improvements

Using state-of-the-art technology is a great way to take your business to the next level. That goes for every aspect from the corporate network to the call center. Today’s state-of-the-art call centers are virtual operations.

A virtual call center and virtual call routing is more of a call center technology deployment strategy than it is a product that you can go out and purchase. The strategy starts with choosing the right call center ACD (automatic call distribution) platform, then incorporating the features you want and need, such as skills-based routing, multi-site presence, centralized administration and remote workers capabilities.

“Every forward-thinking manager should at least consider the virtual call center,” says Michael White, the senior vice president responsible for information technology infrastructure and call center technology at InfoCision Management Corp.

The virtual call center strategy gives enterprises unlimited flexibility when it comes to call center capacity. You can staff an inbound program to the bare minimum level when a client has low call volume and instantly handle spikes during high call volume situations by linking agents from several call centers together to create one large virtual call center. Using the same technology, you can reach beyond brick-and-mortar call centers to work-at-home agents.

Smart Business spoke with White about virtual call centers, how to set one up and how they can enhance your business.

How does a business begin to set up a virtual call center operation?

It starts when a business needs to have agents in multiple locations handle calls as if they were all in the same location. Traditionally, if a call center had more than one location, it would have an ACD at each location. This approach would sometimes prevent the call centers from routing calls seamlessly to the best person available to take the call. With advancements in technology, many vendors began creating systems that allow centralized hardware still manage distinct groups of agents as if they were all in the same room.

What advantages can a virtual call center bring to an organization?

A virtual call center allows calls to be routed to specific communicators based on performance, skills and training, ensuring that the best person is utilized when a customer or donor calls. This, coupled with the ability to quickly scale up the number of people on any given program, keeps abandon rates low while putting the best communicators forward. By looking across all locations for an agent with the appropriate skill to handle the call, you are not bound by the physical location or ACD hardware at that location. For example, if you have 10 inbound calls come in and only three agents available at the main call center, the technology will look for other agents in other locations who are logged in and available with the skills to handle the calls.

Is call center virtualization expensive?

Again, call center virtualization is more a strategy than a product, so with proper planning and technology, there could actually be a cost savings by eliminating hardware in multiple locations. There is also the potential reduction in technical support needed at each location. In many cases, administration tasks can be centralized. The economics relate directly to the impact of having the best person available handing a call versus the cost of having callers sit on hold in one call center while agents sit available in another center. For organizations that are struggling through those types of challenges, the concept of call center virtualization can have a huge impact on operational efficiencies.

Are there certain businesses that benefit more from a virtual approach?

That’s definitely one area where this can be a huge advantage. The ability to secure two to five agents from multiple locations or to have agents log on from home to help handle a late-night call volume spike is much easier with a virtual call center strategy. If snowstorms or inclement weather prevent agents from coming into the office, they can remain home and handle phone calls just as if they were in the office. If the cost of office real estate prevents you from running a traditional brick-and-mortar call center, virtualization can give you the ability to create an operation that is as large as, or even larger, than a traditional operation.

MICHAEL WHITE is the senior vice president responsible for information technology infrastructure and call center technology at InfoCision Management Corp. Reach him at (330) 668-1400 or Michael.White@Infocision.com. In business for 25 years, InfoCision Management Corp. is the second largest privately held teleservices company and a leading provider of customer care services, commercial sales and marketing for a variety of Fortune 100 companies and smaller businesses. InfoCision is also a leader of inbound and outbound marketing for nonprofit, religious and political organizations. InfoCision operates 32 call centers at 13 locations throughout Ohio, Pennsylvania and West Virginia. For more information, visit www.infocision.com.

Monday, 26 May 2008 20:00

Make sure you’re protected

Commercial entities, such as banks, retailers and airlines, know that some of their own employees are far more likely to steal from them than a thief outside of the organization breaking into their facilities. This “likelihood” also ports to companies that own or manage intangible assets — ideas, know-how, confidential information, inventions (patented or not), works of authorship protectable by copyright, trade secrets, trademarks, trade dress, business methods and patents.

“Employees can do serious damage to a company’s future if they walk off with their employer’s intellectual property, particularly its confidential information, including trade secrets,” says William Munck, chairman of the Dallas-based law firm of Munck Carter, P.C.

Smart Business talked to Munck to find out how a company can better protect its trade secrets and other intangible assets.

What is a ‘trade secret’?

Trade secrets may be thought of as any information having independent economic value and that is not generally known or otherwise readily ascertainable. Examples of trade secrets may be ideas, patterns, compilations, programs, formulas, methods, techniques, processes and secret devices. The courts have also found such things as machining processes, blueprints, computerized stock trading systems, customer lists, pricing information, unpublished inventions and nonpublic financial data — overhead rates and profit margins — that help companies price their goods and services to be trade secrets.

How can companies prevent exiting employees or contractors from stealing trade secrets and other IP when they leave the company?

It is impossible to prevent all trade secret theft by exiting employees or contractors. The situation is unfortunately exacerbated when a company fails to take appropriate precautions. Some tools at the company’s disposal include requiring employees and contractors, when they are engaged by the company, to sign engagement agreements, including (i) broad nondisclosure provisions and (ii) narrow noncompetition pre-visions that cooperate to prohibiting the employee or contractor from using company confidential information to compete with the company; educating employees and contractors about trade secrets and other IP and the importance of keeping confidential information, such as trade secrets, confidential; conducting exit interviews with departing employees and contractors to remind them of their duty to keep confidential information secret; limiting access to confidential information to those who need to know; and employing electronic surveillance equipment and software to limit and monitor access to confidential information.

Are noncompete agreements enforceable?

Frankly, they must be appropriately narrow in scope to be enforceable. This means that provisions must be limited, such as to geographic areas, scope of employment and duration in time. It is always recommended that such terms be included in an initial engagement/employment agreement that is executed by the employee/contractor and the company at the start of the relationship.

In the event that such language is not initially included, and the company decides that it is desirable later on to include such terms, the situation is more complicated. To add not-to-compete covenants into existing agreements, there must be additional and adequate consideration exchanged between the employee and the company for post-employment obligations.

With little USB drives, is it easy for current employees to walk off with files?

While USBs are a new tool for stealing confidential information, they are only slightly different than e-mail or other tangible mediums for copying the same. The real question is, ‘What can a company do about an attempted or actual misappropriation of confidential information or other IP?’

The company must immediately pursue injunctive relief to prevent an attempt to misappropriate confidential information from becoming an actual disclosure of the same. While such action involves retaining an attorney and filing a lawsuit, it is often necessary because once the confidential information, particularly the trade secret information, is made public, it is much more difficult, if not impossible, to restore the information to trade secret status.

It is important to note that pursuing monetary relief due to corporate misappropriation of confidential information may be more practicable. Most jurisdictions actually permit recovery of both the actual loss caused by the misappropriation as well as any unjust enrichment gained by the wrong-doer as long as the ‘enrichment’ is not included within the ‘actual loss’ portion of the analysis. If such damages are not easily proved, the company may seek to impose a ‘reasonable royalty’ damage model. If the conduct leading to the misappropriation was willful, most jurisdictions permit the awarding of punitive damages and the

WILLIAM A. MUNCK is chairman of the Intellectual Property section at Munck Carter, P.C. He concentrates his practice on domestic and foreign IP procurement, exploitation, enforcement and counseling. Dedicated to counseling clients concerning their development of offensive and defensive IP portfolios, Munck emphasizes market-focused long-range corporate strategies for private financing, public offerings, mergers, acquisitions and establishing market leadership. Reach him at wmunck@munckcarter.com.

Monday, 26 May 2008 20:00

Make sure you’re protected

Commercial entities, such as banks, retailers and airlines, know that some of their own employees are far more likely to steal from them than a thief outside of the organization breaking into their facilities. This “likelihood” also ports to companies that own or manage intangible assets — ideas, know-how, confidential information, inventions (patented or not), works of authorship protectable by copyright, trade secrets, trademarks, trade dress, business methods and patents.

“Employees can do serious damage to a company’s future if they walk off with their employer’s intellectual property, particularly its confidential information, including trade secrets,” says William Munck, chairman of the Dallas-based law firm of Munck Carter, P.C.

Smart Business talked to Munck to find out how a company can better protect its trade secrets and other intangible assets.

What is a ‘trade secret’?

Trade secrets may be thought of as any information having independent economic value and that is not generally known or otherwise readily ascertainable. Examples of trade secrets may be ideas, patterns, compilations, programs, formulas, methods, techniques, processes and secret devices. The courts have also found such things as machining processes, blueprints, computerized stock trading systems, customer lists, pricing information, unpublished inventions and nonpublic financial data — overhead rates and profit margins — that help companies price their goods and services to be trade secrets.

How can companies prevent exiting employees or contractors from stealing trade secrets and other IP when they leave the company?

It is impossible to prevent all trade secret theft by exiting employees or contractors. The situation is unfortunately exacerbated when a company fails to take appropriate precautions. Some tools at the company’s disposal include requiring employees and contractors, when they are engaged by the company, to sign engagement agreements, including (i) broad nondisclosure provisions and (ii) narrow noncompetition pre-visions that cooperate to prohibiting the employee or contractor from using company confidential information to compete with the company; educating employees and contractors about trade secrets and other IP and the importance of keeping confidential information, such as trade secrets, confidential; conducting exit interviews with departing employees and contractors to remind them of their duty to keep confidential information secret; limiting access to confidential information to those who need to know; and employing electronic surveillance equipment and software to limit and monitor access to confidential information.

Are noncompete agreements enforceable?

Frankly, they must be appropriately narrow in scope to be enforceable. This means that provisions must be limited, such as to geographic areas, scope of employment and duration in time. It is always recommended that such terms be included in an initial engagement/employment agreement that is executed by the employee/contractor and the company at the start of the relationship.

In the event that such language is not initially included, and the company decides that it is desirable later on to include such terms, the situation is more complicated. To add not-to-compete covenants into existing agreements, there must be additional and adequate consideration exchanged between the employee and the company for post-employment obligations.

With little USB drives, is it easy for current employees to walk off with files?

While USBs are a new tool for stealing confidential information, they are only slightly different than e-mail or other tangible mediums for copying the same. The real question is, ‘What can a company do about an attempted or actual misappropriation of confidential information or other IP?’

The company must immediately pursue injunctive relief to prevent an attempt to misappropriate confidential information from becoming an actual disclosure of the same. While such action involves retaining an attorney and filing a lawsuit, it is often necessary because once the confidential information, particularly the trade secret information, is made public, it is much more difficult, if not impossible, to restore the information to trade secret status.

It is important to note that pursuing monetary relief due to corporate misappropriation of confidential information may be more practicable. Most jurisdictions actually permit recovery of both the actual loss caused by the misappropriation as well as any unjust enrichment gained by the wrong-doer as long as the ‘enrichment’ is not included within the ‘actual loss’ portion of the analysis. If such damages are not easily proved, the company may seek to impose a ‘reasonable royalty’ damage model. If the conduct leading to the misappropriation was willful, most jurisdictions permit the awarding of punitive damages and the

WILLIAM A. MUNCK is chairman of the Intellectual Property section at Munck Carter, P.C. He concentrates his practice on domestic and foreign IP procurement, exploitation, enforcement and counseling. Dedicated to counseling clients concerning their development of offensive and defensive IP portfolios, Munck emphasizes market-focused long-range corporate strategies for private financing, public offerings, mergers, acquisitions and establishing market leadership. Reach him at wmunck@munckcarter.com.

Monday, 26 May 2008 20:00

Servicing needs

Like soothing oil on a sunburned back, a good merchant banker can help a company take the sting out of managing its revenue stream.

“Merchant services goes beyond the acceptance of credit cards,” says Rebecca Myers, merchant account executive at FirstMerit Bank. “Merchant services means forming a business partnership with someone who can help you optimize the way you take payments for your goods and services.”

Myers adds that it’s important to find a partner who will take the time to understand the needs of your business and help you not only look at the costs associated with accepting payments but how to grow business. Merchant services can pay back their costs handsomely — but only if the provider is chosen carefully and offers programs that fit a business’s needs.

Smart Business spoke with Myers about merchant services and how your business can get the most out of them.

What are typical merchant services, and how do they help?

Merchant services companies offer an array of products, including e-check and gift cards. E-check is the ability to convert a check into an electronic transaction in order to speed up the availability of your funds. Typically, you can also opt to have the e-check transaction guaranteed. Depending on your average ticket, eliminating one to three returned checks a month may pay for this service and will reduce your overall exposure. As an added benefit, you may be able to reduce the number of times you have to pay employees to run to the bank to make deposits.

Acceptance of credit cards can typically raise your sales volume by sheer convenience and the fact that customers are not limited by what is in their wallet.

Closed-looped gift cards, which can only be used in the store where purchased, take it one step further. On average, 56 percent of consumers spend more than what is on the gift card and typically buy bigger ticket items. This will directly help you raise your revenue and build loyalty. A new business or a business looking to lift market share will give out gift cards to employees of adjacent businesses or directly to clients in order to build traffic and gain recognition.

How do you build a comfort level with a merchant banker?

Going beyond the product offerings, stability and capability of your partner are probably most important. Retailers are contacted several times a month by merchant services providers stating they can save them money. As with everything in life, you get what you pay for. Make sure the deal is as good as you think. Because your partner is handling the lifeblood of your organization — revenue — it is imperative you know who you are doing business with and that the provider will be in business tomorrow. You don’t give credit to clients or pick suppliers without knowing their financial stability. Many merchant businesses are independent sale organizations (ISOs). While affiliated with a bank, they are not part of the bank. Do your homework on the actual provider and its stability, not just its sponsor bank. If you pick a bank that directly offers merchant services, you get the added advantage that the bank can track all of your activity from point-of-sale to what is deposited in your account. When there is a problem with settlement of your card or e-check services, this can save headaches and time trying to work through issues with two different entities.

How does the fee structure typically work?

Understanding exactly what your rates will be after converting is another homework item. Often a sales agent will show you rates that look better than your existing rates but that may not translate to true savings. If an agent does not ask you for three months of statements from different parts of your season, the agent is not providing you a reasonably accurate estimate of your costs. It is easy to show a lower rate on any type of card or activity, but first ascertain whether it is aligned well with your actual card volume types and how you take cards (over the phone versus in-person). Also, watch out for low rates coupled to an expensive leased terminal for 36 or 48 months. Many such contracts carry a high early termination fee on equipment. In addition, some are proprietary and cannot be reprogrammed for use with another provider. This leaves you in a tough situation. Even if the new provider fails to provide quality service and its pricing is not as good as you thought based on your actual volume or growing volume, it just may be too expensive to break your contracts.

Are there regulatory concerns?

One of the most important topics in card processing today is Payment Card Industry (PCI) compliance. Companies that accept, process or store credit card information need to comply with the standards set by the PCI and the card associations. PCI compliance helps you protect yourself and your customers from fraud. It is a mandate in order to accept cards. If the merchant provider you intend to do business with does not include an education — or, more importantly, have a partner to work with you directly — you will likely be surprised by additional charges and run the risk of heavy fines from being out of compliance. On top of this comes the potential of reputation risk and liability from not maintaining a level of diligence around customer data that is required in this industry.

REBECCA MYERS is a merchant account executive for FirstMerit Bank. Reach her at rebecca.myers@firstmerit.com or (800) 572-6039.