As vice president and district manager of Bank Ones northeast Ohio division, Robin Reuther heads up Bank Ones commercial client services division in Akron, Youngstown and Cleveland. By assigning each client service consultant a specific customer base, Reuther says they are able to build one-on-one relationships with clients.
Customer service skills and product knowledge score high marks on semi-annual customer satisfaction surveys, Reuther says, noting that client satisfaction, rated on a scale from 1 to 6, is in the mid-5 range. She also receives unsolicited penned praised from clients who plaudit Bank Ones client service consultants.
We recently got a letter signed by the CEO, the CFO and an accountant from a local company that was so complimentary of the person who services their relationship. Im frequently told by clients that they feel as though this person doesnt just work for the bank, but for them, Reuther says.
No doubt, influential in the penchant to please is Bank Ones bonus program, which is based on customer satisfaction, customer retention and teamwork.
But a lot of it comes from this one-on-one relationship we have, says Reuther. Were not a call center we actually go out and visit our clients, not just when theres an issue, but to check up and make sure everythings okay. We have a face-to-face presence with the customer, which distinguishes this group from a call center environment.
When consultants arent giving their customers face time, theyre becoming better acquainted with client needs by documenting data about every incoming or outgoing call. Information is input into a PC-based system that generates reports, which are constantly scrutinized for details such as the product or service involved and how long it took to address the issue.
Were very proactive in looking at the customers business, the bank products they use and the types of issues theyre calling us about, so we can suggest ways they can make life easier for themselves, Reuther says.
Neil Cotiaux of Bank Ones public affairs office adds that, in cases in which a new associate is working the phones, Management wants to insure that the best possible service is given by that newcomer. Therefore, theyre going to listen in for a while to make sure the approach is correct, cordial, professional and factual.
On a national scale, Bank One also participates in a quality assurance program in which it internally monitors conversations between retail customers and client service representatives for example, within the credit card operation of First USA, a subsidiary of Bank One.
How to reach: Bank One (330) 972-1000
Mike Warren wasted no time in finding a catchy name for his office furniture companys tell-all pricing strategy featured earlier this fall in SBN Columbus [Total exposure, August 1999].
The ink had barely dried on our pages when Warren, president of Excel Business Systems, faxed our office announcing his pricing method which shows clients precisely how much of an orders cost goes toward Excels overhead, product expense and bottom line is now being call corporate streaking.
In addition, Warren indicated hed just used this corporate streaking concept to negotiate a $500,000-plus contract with Time Warner. Not bad for an idea thats barely a year old.
Before Jim Corrova could shut down his TAT Ristorante di Famiglia for a vacation this summer, he had one final task: making lunch and dinner for two customers for the entire week he would be gone.
They wouldnt eat anywhere else, says Corrova, who with his wife, Dolores, owns the restaurant on Columbus East Side. I was flabbergasted they would do that. Thats what you call loyalty.
Customer loyalty, in fact, is key for Corrova and Stans Restaurant owner Bill Loscko, who closes his North Columbus eatery for a two-week vacation each year. Losckos duties before he closes include donating any leftover food to Second Servings for homeless shelters and food kitchens.
Corrova and Loscko say theyre able to take the vacations because their businesses, both founded in the 50s, are well-established.
However, they still have to make many arrangements before theyre able to pull off the time away.
Consider the payoff.
About 30 years ago, everybody said I was crazy for doing it, Corrova says of his decision to close for vacation. I said, Well, if I lose business, I lose business.
Corrova loses between $35,000 and $40,000 the week hes closed; Losckos out about $45,000 a week. They both budget for the loss and keep a reserve on hand each year.
Nowadays, stress is just a killer, Loscko says. You need the time. You get burned out in this business. You need time to relax, think about other things and be with your family. To me, Id pay $45,000 to spend a week with my family. Its that important to me.
Corrovas wife, two daughters, a son and a brother also work at TAT, so if he wants family time, hes got to close.
Loscko says if he were to remain open, it would be tough to find replacements for key employees who would want to take two weeks off. Not only that, but hed have trouble if he wanted to take a vacation while his restaurant remained open.
Youd be worried about it constantly, he says. Youd be on the phone every day, and there would be no peace.
The vacation also helps refresh his staff.
Everybody has a great two weeks theyre all rested and relaxed and ready to go for the rest of the summer, Loscko says, adding that he sometimes takes the opportunity to do maintenance work, such as painting or remodeling inside the restaurant.
Work with the employees.
Of Losckos 96 employees, only two were disappointed with the two-week shut down, he says. They would have preferred to choose their own vacation dates.
I set them down and talk to them to tell them I think this is for the better good, he says, noting he tried closing for just one week the first four years he did this. He added a second week in 1998 because, It actually takes me three days to close up and another three days to open back up, and I wasnt really getting any time off.
This year, especially with Easton opening, I was worried we would lose some people, Loscko says, but we didnt lose anybody.
Corrova tries to work with employees who do not want to lose income during the one week TAT closes each year.
If I stay in town, like I did this year, we do deep cleaning like rug cleaning, and any employee who wants to work, they can come in and help and I pay them to clean, Corrova says.
Both owners say most of their employees get three weeks paid vacation total, so they can take the remainder of the time whenever they wish.
You have to be very flexible, Corrova says. Nowadays the service is so hard to get ahold of.
Notify your customers.
The sign in front of Stans Restaurant read: Closed Jun 28 to Jul 12. Gone fishing.
When Loscko first started closing for vacations, that was the intention: to fish with his father, restaurant founder Stan Loscko. This year, however, he went golfing.
Signs notifying customers are very important, Loscko and Corrova say, especially considering theyve got a slew of regulars.
In addition to using the restaurant sign, Loscko puts notices on every door of the building about 10 days before the closing. He also makes sure his answering machines outgoing message explains the vacation and the dates.
Corrova, on the other hand, starts even earlier.
We advertise on radio and hang signs in the window about two months before time, he says, adding that hell do the same when he closes for a few days during the Christmas season. He stresses that business owners considering closing during vacation should make sure the signs explain that fact. If you dont, he says, customers will think youre going out of business.
Be specific about the dates, he adds, so theres no confusion.
Be prepared when you return.
Corrova and Loscko reopen their doors to crowds of grateful customers.
Its unbelievable, Loscko says. This is like the eighth wonder of the world. Were probably up, I would say, 15 to 20 percent over an average day, and that goes on all week.
Its just like a grand opening when we first open back up in July, Corrova says. Were packed. People miss us. Thank God for that.
Joan Slattery Wall (firstname.lastname@example.org) is a reporter for SBN.
Not counting all the road construction slow-downs Central Ohio commuters have been wrestling with this year, getting downtown by car from any of Columbus 15 suburbs takes an average of 22 minutes, according to the Mid-Ohio Regional Planning Commission. Only residents of Bexley can do the commute in less, MORPC estimates. Heres how the drive times break down:
Downtown business commuting
From Distance Drive time
Bexley 4 miles 12 minutes
Canal Winchester 15 miles 25 minutes
Dublin 13 miles 27 minutes
Gahanna 8 miles 20 minutes
Grove City 9 miles 16 minutes
Groveport 12 miles 22 minutes
Hilliard 13 miles 22 minutes
Obetz 7 miles 18 minutes
Pickerington 16 miles 26 minutes
Powell 15 miles 27 minutes
Reynoldsburg 13 miles 25 minutes
Upper Arlington 9 miles 18 minutes
Westerville 16 miles 30 minutes
Whitehall 7 miles 19 minutes
Worthington 11 miles 23 minutes
Source: Mid-Ohio Regional Planning Commission
Its not every day that purchasing agents for large corporations come looking for your company. More often than not, its a struggle just to get your product in front of the right decision makers.
Connection 2000 turns that usual notion on its head, but its aimed at one specific segment of the business world women-owned businesses. The event, sponsored by the National Association of Women Business Owners, is slated for Oct. 21 from 9 a.m. to 1 p.m. at Ameritechs corporate headquarters, 6889 Snowville Road.
The procurement fair will provide female business owners with the unique opportunity to sell their goods and services to purchasing agents of major corporations, government agencies and health care institutions who are looking to expand their supplier base of female-owned businesses.
Fair admission is $45 for NAWBO members, $65 for nonmembers. For more information, contact NAWBO at 676-9262.
SBN magazine last month was recognized as one the best places to work in Northeast Ohio. The NorthCoast 99 program, co-hosted by the Employers Resource Council and Enterprise Development Inc., recognized 99 companies for their innovative and effective human resource and workplace practices.
More than 780 people attended the inaugural event Sept. 23 at Executive Caterers at Landerhaven.
Nominated businesses within a 22-county region were judged on key human resources management practices and programs including:
Safety & health
Recruitment & selection
Among other organizations honored were Continental Airlines, Invacare, Kinetico, Fredon Corp., Ohio Savings Bank, Mueller Tire, Moen, Olympic Steel, Manco, Libra Industries, Ranpak, Radix Wire, Warren Associates, Newmedia and Progressive Insurance.
The NorthCoast 99 program is not just another awards program the data that we are compiling from the 99 winners is going to set new area benchmarks for human resources management, says Patrick Perry, ERC president. The organizations that received this award are to be congratulated on recognizing that great human resources management programs and practices are at the core of business growth.
For more information on the NorthCoast 99 program and to see a list of all the winners, visit www.NorthCoast99.org.
Dustin S. Klein
It may be true that theres no escaping death or taxes, but an entire cottage industry of tax attorneys and estate planners nevertheless is organized around the time-tested belief that in many instances, one can, with the right kind of advice, legally extricate oneself from plenty of the latter.
A favorite new tool for legal tax avoidance is to exploit an anomaly between federal and Ohio tax law. For the last few years, while the beneficiaries of so-called electing small business trusts have been taxed at the federal level, they havent been similarly subject to taxation in Ohio.
But one Cleveland-area state legislator is trying to close what he considers an unwarranted loophole that arose simply as a result of lack of coordination between federal and state tax regimes. Ed Jerse, who represents the Hillcrest area of the suburban East Side, is pushing House Bill 139, which would change the Ohio Revised Code and subject these trusts to Ohio corporate tax.
The situation arose as a result of the Small Business Job Protection Act of 1996, which for the first time permitted these ESBTs to hold shares in S Corporations, which have become an increasingly popular vehicles of business incorporation because they arent subject to double taxation (only their beneficiaries, not the corporations themselves, pay income tax).
So while beneficiaries of these trusts are taxed at the federal level, they have thus far escaped taxation in Ohio, which does not tax trusts.
In testimony earlier this year before the Ohio legislatures Income Tax Subcommittee, Case Western Reserve University law professor Erik Jensen, who holds a chair named for Akron industrialist David Brennan, said the federal tax law changes, absent corresponding changes in Ohio tax law, can create a legal, but unwarranted, shelter for Ohio income tax purposes because the trusts share of corporate income falls through the cracks: It is not taxed to anyone.
A member of the faculty since 1983, and before that a practicing tax attorney in New York City, Jensen said that this problem was not created by villains; it was an accidental byproduct of a well-motivated federal tax change that unfortunately does not mesh with Ohio law.
Accidental or not, its a provision to which estate planners and tax attorneys seem to have enthusiastically steered clients to reduce their tax bills. Jerse says hes heard estimates of lost revenue that run as high as $100 million annually.
If you sell a $60 million S Corp., you would have a 7 percent tax, Jerse says. So thats $4 million on one deal that youre missing. I would imagine you could go through the law firms of Cleveland alone, and find 10 or 20 of these deals in process.
Still, Jerse has been stymied in trying to put a more precise number on the problem. For reasons he cant understand, hes thus far had no luck getting the states tax department to come up with appropriate numbers.
The tax department has basically given me absolutely nothing in helping me estimate this [the magnitude of lost tax revenue]. They keep telling me they cant figure this out, because its like trying to calculate the shadows on the wall.
The professionals whose clients are benefiting from the tax provision, meanwhile, are stuck in their own balancing act: They cant actively lobby in favor of continuing the loophole, which would only call further attention to it, but neither do they seem to want it closed.
Theyve called several times, but theyve never shown up at hearings, says Jerse of these estate tax professionals. An industry official was reticent about the issue when contacted for this story.
Arthur Andersen has no comment, said one member of Andersens Family Wealth Planning Group, Patrick Saccogna.
Nevertheless, Jerse, whose legislative career wont be affected by term limits until the year 2004, plans to push hard to get this loophole closed this year, despite the fact that the legislature wont regroup until October, and then for only a few more days in 1999. Hes spoken to the speaker of the house, and to the chairmen of the tax subcommittee and the Ways & Means committee, and nobodys expressed any opposition.
While some legislative observers think it will difficult to impossible to get action on the bill in the six or seven days of the legislative session that remain, Jerse remains optimistic. With revenues of this magnitude leaking out of state coffers, he says, I dont think theyre [legislative leaders] going to want to leave that out there. If the legislature has the will to do it ... Im going to be pushing to get it done this year.
It may be difficult to predict the outcome of the bill, but one thing seems certain: When campaign contributions from estate planners and tax attorneys are totaled at years end, dont look for Ed Jerses name to be high on the list of beneficiaries of their largesse.
John Ettorre (email@example.com) is a contributing editor at SBN.
Apex Investment partners. Investment focus: emerging growth companies of all stages in telecommunications, software and information technology industries, with additional emphasis in specialty retail and consumer products; www.apexvc.com.
ARCH Venture Partners. Investment focus: seed and early-stage ventures involving information technology, life sciences or physical sciences; www.archventure.com.
Asia Pacific Ventures. Investment focus: seed and early-stage information technology companies with proprietary and leading-edge technologies. www.apvco.com.
Aspen Ventures. Investment focus: Seed and early-stage information technology companies; www.aspenventures.com.
Asset Management Associates. Investment focus: seed and early-stage companies in the information and biological sciences markets; www.assetman.com.
Associated Venture Investors. Investment focus: venture capital partnerships specializing in seed and early-stage investments in high-technology companies positioned for high growth in their markets; www.avicapital.com.
AT&T Ventures. Investment focus: Start-up and later stage companies involving wireless communications, Internet, value-added networking, content or local service; www.attventures.com.
Atlantic Coastal Ventures. Investment focus: telecommunications companies and related service companies operating within markets that reflect convergence; www.atlanticcv.com.
Atlas Venture. Investment focus: early and late-stage information technology life sciences in Europe and the United States; www.atlasventure.com.
August Capital. Investment focus: companies with strong potential to become leaders in important information technology markets; www.augustcap.com.
Avix Ventures. Investment focus: early-stage technology companies; www.avix.com.
Nice attitude, pal
Thousands of businesses fail every year. Many of those couldnt control the most essential element in business attitude. People-Centered Profit Strategies, the new Oasis Press title by Paul Peyton, will teach you how to achieve cooperation among leaders, employees, customers and suppliers to generate a power that is unlimited in its ability to push profits upward.
Hey Sam, can you spare a dime?
Small business lending increased in 1998, but at a much slower pace than lending to large businesses, according to the Office of Advocacys recent report on bank lending.
While the total dollar volume of larger loans of $1 million or more increased by 13 percent in 1998, small business loans of less than $1 million increased at a slower rate of 6.3 percent. The volume of small business loan dollars of less than $100,000 increased only 3 percent. Loans between $100,000 and $250,000 increased 8.1 percent, and loans worth $250,000 to $1 million increased 7.7 percent.
Compared with the dollar value, the number of small business loans (loans of less than $1 million) grew more rapidly by 16.7 percent overall in 1998. Most of the growth was in the smallest loans of less than $100,000, where the dollar volume increased the least. Thus, the average very small business loan was even smaller in 1998, probably because of a boom in the use of business credit cards and lines of credit offered by banks using credit scoring models.
The fact that more loans and loan dollars are going into small business lending is some good news, but small business lending is not keeping pace, says the SBAs Chief Counsel for Advocacy Jere Glover. We encourage small businesses to look at this report as one indicator of the banks most likely to lend to them. And we are still watching the trend toward bank consolidation carefully to see whether small businesses overall share of bank lending will continue to fall.
The effects of bank consolidations continue to be a factor in small business lending. Over the last three years, the number of commercial banks filing call reports declined at a rate of almost 400 banks per year from 10,149 in 1995 to 8,966 in 1998.
Almost all of the decline was in the smallest banks with less than $100 million in assets. In 1998, more than 400 of these small banks disappeared, grew into the next size category, merged with other banks or were acquired. The number of banks in the middle ranges with $100 million to $10 billion in assets increased. Banks with $10 billion or more in assets declined from 64 to 61.
The small business lending emphasis of banks of different sizes also changed in 1998. The largest banks increased their small business lending much more than small banks, in part by promoting more small business credit cards and small lines of credit. However, their small business lending volume increased less than their assets and total business lending. As a result, the ratio of small business loans to total assets declined in these very large banks.
Meet me at the meeting
Time spent in meetings can be as much as 50 percent of the total work week, so effective meetings can have a major impact on the success and the bottom line of an organization. Productive meetings can save time and money. Not Another Meeting: A practical guide for facilitating effective meetings teaches participants and leaders how to get the most out of their meetings. Managers learn how to create objectives and agendas, establish and reinforce ground rules that keep participants on track and resolve conflict and disagreement.
The books author is Frances Micale; it is published by the Oasis Press.
Just promote it, baby
Design your own calendar for name recognition 365 days a year, says Raleigh Pinskey, author of 101 Ways to Promote Yourself. Calendar Association statistics show that only 2 percent of U.S. households are now calendar free, and that the average home has about five calendars.
You can go through the photo shoot and print it as a big four-color job, or you can buy existing calendar shells and attach your name to it. Ask any large printer or promotional items company for more information about calendar shells. Associations and organizations will often supply members with the opportunity to buy in bulk.
Depending on your need for professionalism, you could take your own pictures, then take them to a photo house to duplicate and mount. Then you buy calendars from a stationary store and attach them to the mounted photos. Take pictures during the year of the people with whom you do business, and use their photos, with permission, for your calendar.
But I wanted to retire yesterday
An Individual Retirement Account can be a great tool to maximize your retirement assets, but it does have some drawbacks:
- IRAs are not liquid. Although you can withdraw money before retirement, the penalties for doing so are stiff.
- Withdrawals made before age 59 1/2 are subject to a 10 percent penalty unless they are used for qualified medical expenses.
- Withdrawals of more than $150,000 in any year are considered excess distributions and subject to a 15 percent excise tax.
- IRAs may not be used as collateral.
For the thousands of entrepreneurs who are strapped for time and would love to have their own online operations center, MegaDepot.com is launching a new site aimed squarely at their needs. MegaDepot.com has unveiled a new name and a new site: Onvia.com. Entrepreneurs will find a one-stop source of business services, products, expert advice, and free tools, all designed to fulfill their critical need to get it done. Onvia.com is a business-to-business destination, designed around the needs of a specific niche: the emerging business marketplace.
Onvia.com was founded in 1996 (as MegaDepot.com) and has grown rapidly as an Internet-only reta iler of business products and, more recently, services. Since the second quarter of 1997, revenues have grown more than 100 percent each quarter. Currently, the company serves more than 100,000 members, and is expected to grow to more than 1,000,000 customers by the end of this year.
Unlike other sites that pass customers to several different buying environments to complete their transactions, entrepreneurs can conduct all their transactions in one place with Onvia.com, including inputting credit and registration information once, rather than many times. In addition to the availability of 25,000 products in the computer hardware, software, phone systems, office supplies, office machines and office furniture categories, key features seamlessly provided at the site include:
- Paging services
- Business credit cards
- Merchant accounts
- Debt collection
- Temporary employment/recruiting
- Long distance services
- Cellular services
- E-mail services
- Free domain name registration
- 5-Click-Store, a cost-effective way to set up an e-commerce store
- Internet access with dial-up, dedicated ISDN, DSL and T1 options
- Web hosting
Providers of these services include @Work, Verio, Sprint, Earthlink, MCI, Cable Wireless, Qwest, Skytel Paging, Advanta Business Services, Heartland Payment Services, National Credit Services and Net-Temps.
Sit down, Goliath, Im in charge here
As the information age changes the ways that companies do business, one critical theme has emerged: Small companies and sometimes even individuals have to deal with big companies more often and more directly than ever. How can a company with one or two principals come to the negotiating table on an even footing with a staff of corporate lawyers, accountants and executives?
Silver Lake Publishings new book, Negotiate Like the Big guys: How Small and Mid-size companies can balance the power in dealing with corporate giants, can answer this question. Combining her own insights with memorable case studies, worksheets and sample forms, author Susan Onaitis gives readers the tools for equalizing any advantages that larger companies may have. Topics include:
- Sizing up the people on the other side.
- Steering negotiating toward collaborative solutions.
- Handling adversarial talks gracefully.
- Determining where to start so that you dont have to give up too much.
- When to walk away and what to do when the other side walks.
- What to do when someone is lying to you.
- Smoothing out corporate culture clashes.
CR Technology, like most companies, had a business plan.
It had been crafted by people with experience, and reviewed and approved by venture capitalists you know, the guys in the dark suits who want to know how many times you brush your teeth each day before theyll even think about opening their checkbooks. The is were dotted and the ts were crossed and the plan was laid out in a boardroom, not on a cocktail napkin, but in the end, it didnt matter.
The company started out roaring in 1983 with its optical inspection systems, landing customers such as Motorola, General Electric and Delco. Within three months the phones stopped ringing and sales dried up.
We won a lot of initial business, but they were customers who were likely to not be repeat business, says Richard Amtower, president and CEO of the company. The problem was the product was geared for a very specialized client who needed a lot of engineering resources to make it work.
CR sold the cameras, processors and computers, and left it up to the manufacturer to integrate the inspection device into its complex manufacturing processes. After the first few early adopters signed up, there werent a lot of other companies willing to invest so much of their own resources into a product, or they simply didnt have the resources to even consider it.
It wasnt that hard to figure out the plan wasnt working, says Amtower. The surprising thing is someone hadnt picked up on it before. But it quickly became apparent it wasnt going to work.
Most of the market didnt have the kind of engineering support needed to use our product. We were quickly running out of business. Most of the market wanted turnkey solutions.
With the company running out of money, Amtower steered it toward the turnkey products the market was asking for. This took it out of survival mode, but created problems of its own. Every order was basically a custom one. They were labor intensive, had little chance for repeat business and had low margins.
CR Technology eventually sold the entire product line, using the money to finance a generalized visual inspection product, which is what it is successfully selling today.
You didnt have to be a rocket scientist to figure out something needed to change, says Amtower. In stark numbers, our plan called for $1 million or $2 million worth of business to be booked in the near term. Of that number, next to nothing came in.
It was so clear and obvious that it was failing, but why hadnt it been obvious before? I checked things out, talked to customers everyone was pretty positive. Thats the deception. The early adopters are all enthusiasts, and that enthusiasm can carry over.
We made up a number of plans. It seemed we were tearing up plans twice a year and writing new ones. This is becoming common for technology companies.
Amtower offers the following advice:
- Anticipate that your plan might fail, especially if you are a technology company. Dont get carried away by the initial burst of sales. Its easy to overcommit on personnel and inventory that will leave you in a severe financial bind. The initial sales are seductive.
- Cash is king. If you fall into this situation, quickly take control. Look to your employees as key resources. If you have to downsize, the employees who are left are your key to survival. Make a commitment to them.
How to reach: CR Technology, www.crtechnology.com
Todd Shryock (firstname.lastname@example.org) is SBNs special reports editor.
If your business retains stable, profitable customers, consider turning them into advocates and champions of your products and services. Its easier than you may realize to get your best customers to help you promote your business to prospects, but it requires a careful blend of technical, financial and relationship skills.
Define the bonding process for turning your best customers into advocates and champions.
How do your better customers adapt your products and services to best suit their individual needs? Do those customer relationships resemble partnerships or strategic alliances? If so, these are your potential champions.
They can help by introducing your firm to prospects. Once you determine how these customers become champions for your business, a pattern will emerge that you can duplicate.
Outline your companys process for growing advocates and champions.
From the moment you land a customer, plot the development of the relationship. Is there a point where you begin to involve them in your new product development process and customer councils? If so, what led to this point?
Is there a best way for your business to do this or is it always a random act? Try to identify the three most likely sequences that result in growing champions. But remember, companies do not become your champions or advocates, the people in them do.
Create definitions for your development from customer to champion.
Determine each stage of the process from a closed customer to an advocate or champion. Typically, a stable customer has hit some milestone in his or her relationship with your business. It could be a third purchase, the purchase of a service that increases dependency, or the exchange of previously withheld information or advice.
Pinpoint these milestones. At this point, a buyer evolves into a customer.
Then look for when the customer begins to buy multiple products and services. Its around this time when they may ask to participate in customer councils, suggest strategic alliances, or want to test pilot new products and services. At this point, the customer becomes a cross-sold or up-sold customer, and its a good sign he or she is well on the way to becoming a champion.
Customers take the final step and become champions when they give you a reference and provide ongoing referrals. It means they believe in you and your firm and will proactively help you succeed.
Determine how many champions and customers you need at each step of the development cycle.
Divide your average sale from a customer into the total sales you expect from your advocates. This gives you the number of advocates you must land. Decide how many customers you need at each step.
If you need to qualify three cross-sold or up-sold customers for each advocate you cultivate, then plan to do so. Similarly, if you need to land five customers to produce three cross-sold or up-sold buyers, then land enough customers and dedicate the resources to do the job.
Understand what your champions are worth and what you can spend to get them.
While there is always enough economic justification to invest in customer development, often, too many customer relationships whither from inattention, another form of under-spending. Here is a three-step method to ensure that doesnt happen.
1) Divide the number of customers it takes to create a champion into the revenue of a champion. If you need five customers to create a champion and a champion generates $50,000 of revenue, then a customer represents $10,000 of potential champion revenue.
2) If you decide you must spend $5,000 to create a champion, you can spend up to $1,000 cultivating each customer.
3) By subtracting the cost of developing five customers, $5,000, from the revenue of a champion $50,000, you have $45,000, the real value of a champion.
This exercise is critical because it provides a benchmark of what to invest in a champion and what to expect in return. Often, the investment will not be a direct cash outlay, but rather one of your staffs time and expertise.
Create champions effectively.
With the financial guidelines for keeping champions in place, choose your tactics. Pick your sales, marketing and customer service activities for each step of the customer development. You may want to use seminars to cross-sell or up-sell customers, but may choose to emphasize executive tours and referral kits over more sales rep visits to create champions.
Evaluate your activities, tools and programs based on how cost-effectively they deliver the number of champions and advocates you need. Your choices will be easier and less risky than ever, because they will be based on meeting your goals you have set.
If you focus on your goal of creating champions, you will have the ultimate benchmark for delivering excellent customer service. This is because a satisfied customer will refer your firm to prospects, while an unsatisfied customer wont.
Next month, well put the process to the test and see how it works.