Business today is more competitive than ever. With a few clicks of the keyboard, every customer can research, price check and read reviews of your product or service. Many times, with one more click, they can have that same product delivered to their door from anywhere in the world. Want it tomorrow? No problem.
So how does a business succeed in this era of the empowered consumer? How can it differentiate itself? I’ve given this question a lot of thought, and the answer may lie in a practice called Customer Experience Management.
Failing on the promise
Let’s talk about customer experience. How many times has a customer service representative ended a conversation by reciting something along the lines of, “I hope you received excellent customer service today,” when the service was less than gratifying? How satisfied did you feel after hearing their script?
Most businesses pay lip service to the idea of superior customer service, but when it’s time to execute, they fail. Their departments are structured to run their own processes smoothly, not to ensure their customers think, or better yet, say, “Wow.”
CEM asserts that if we put our customer’s experience at the core of our business and subsequently construct functional departments around it, we will gain that competitive edge. Yet, truly understanding the customer’s experience while interacting with your business is easier said than done. So, how does one reinvent a company with the customer at the center?
Start at the touch points
Begin by becoming aware of your company’s touch points — all the places a customer comes into contact with your business. Keep in mind that these touch points vary widely. They include obvious departments such as telesales and customer support, but these touch points also include the clarity of the invoice/statement, your website, your ad in the newspaper, a partner or retailer and many more.
We did a quick count at my company and discovered 26 touch points! Too many for sure, since more touch points mean more opportunities for mistakes.
After you’ve identified the touch points, do some investigating. Be the mystery shopper, in person and on the phone. Listen to the language a salesperson uses to describe your product or service. Do it again. Notice the differences between what you hear depending on who is serving you. How did their actions differ from what you wish they had done?
Once you experience every touch point first hand, you might begin to feel your customers’ frustration, pain and sometimes, surprise. Then you can begin rebuilding toward a satisfying customer experience.
Use CEM as a tool
Right now at EVault, we’re working hard to reduce and improve each touch point using a CEM lens. For us, that means creating simple, valuable, authentic and pleasantly surprising exchanges.
We want each customer to feel that every interaction with EVault was worth their time, was clear that we genuinely wanted to help, and that we did something pleasingly unexpected.
How do you want your customers to feel when they interact with your business? You need to find out and then rebuild.
Terry Cunningham is president and general manager of EVault Inc., a Seagate company. He founded Crystal Services, which was purchased by Seagate in 1994 and integrated into the company’s software division, which then became Seagate Software. He has also served as president and COO of Veritas Software, and founded, built and led two other successful software companies.
Every year for the past seven years, I’ve had the privilege of hearing executives from many of the region’s top organizations passionately explain how they deliver world-class customer service. And every year, I’ve come away from this experience armed with new ideas.
This year, one idea posited gave me pause. At the same time, however, it reaffirmed one of my long-held beliefs that seems diametrically opposed to the usual mantra, “The customer is always right.”
In describing their competitive advantage, two executives cited their ability to effectively tell clients what they don’t want to hear. They reset conventional wisdom and succinctly explain to clients why what they believe to be correct often isn’t. And then, they offer better solutions. This, they said, is one reason why they have prospered.
Think about this. With the exception of trusted advisers — typically lawyers, accountants and bankers, people whom we intentionally pay to set us straight — nearly everyone else we contract with is given the expectation that we want what we want, when we want it and sometimes even how we want it done.
On the surface, telling your clients “No” flies in the face of conventional wisdom. But in reality, it makes perfect sense.
Take, for example, these two entrepreneurs. They assigned a key business success metric to telling clients “No” and then explaining why they should do something they may not want to do or are simply reluctant to incorporate. They believe that the best customer service delivery may contradict a client’s wishes. But, at the same time, it provides a better solution that will lead to even greater success — and higher client satisfaction.
A critical element of any top-notch customer service initiative is showing clients you truly care about them. You can’t give this lip service. Your actions must be real. Demonstrate a genuine desire to forge and foster a real partnership and the client will recognize whatever solutions — or services — you provide are developed because you truly believe they are what are best for the client’s organization.
Isn’t this the essence of what your clients and customers pay you for — to provide them with the best possible solution for their business pain point?
One of my friends has fired dozens of clients because they refused to listen to advice they paid him to provide or failed to incorporate solutions they paid him to create — all of which were designed to fix systematic problems with their businesses that they didn’t see. His reasoning was straightforward: Why partner with a company that you know is going to fail because their management team is already set on a solution that won’t work?
Experience painfully taught him that the end result is always the same: Clients will still blame you for their own mistakes — even if they choose that direction instead of the one you provide them with. When that happens, they say you weren’t forceful enough in selling them on your solution or that you didn’t adequately warn them they would fail.
The bottom line here is simple: Anyone can turn service delivery into a commodity. Just become an order taker. But only a select few can think differently about customer service. Those that truly understand the value of pointing out when a client is wrong in his or her assertions, and is willing to risk the loss of business in order to do what’s right for that client, will more often than not succeed. Better yet, they will gain a lifetime of trust.
Dustin S. Klein is publisher and vice president of operations of SBN Interactive, publishers of Smart Business magazine. Reach him at email@example.com or (440) 250-7026.
Trina Gordon looked at her company’s clients and could see that they wanted more. It wasn’t that Boyden World Corp. had done a bad job of meeting their needs. They just had more needs to be met.
“What we began to notice out of this downturn was challenges in the macroeconomic environment continued to persist globally,” says Gordon, president and CEO at the professional services firm.
“Clients, particularly global clients and emerging global clients all over the worldwide landscape were becoming more demanding about greater consistency and quality of service from their advisers,” she says. “What that meant was we needed to take a really hard look at what was an effective client advisory relationship.”
It can be a tough pill to swallow when you feel like you’re giving maximum effort to help your clients and then you find out that you could be doing it better.
“There’s a little bit of that in your psyche that says, ‘I want to hear the great things I’m doing,’” Gordon says. “I’m not sure I want to hear where I didn’t do as well or where I need to improve. But it’s the only way we’re going to get better at what they want us to do and deepen the relationship.”
Sometimes, you’ve got to set your ego aside, even when you’re a top 10 global executive search firm with 250 associates in more than 70 offices and 40 countries around the world.
“Sometimes partnerships tend to be more process-driven and internally focused and concerned with the practices and processes of how we do our work,” Gordon says. “In this case, we had to turn that perception completely around and push our organization facing outward at potential and existing clients. We had to build a foundation for how everything we did focused on what they told us they needed and how we performed against those needs and requirements.”
Get to the point
In the simplest terms, clients were looking for more bang for their buck with Boyden.
“Clients were no longer saying we have talent or human capital needs in emerging markets and anybody sitting in an emerging market can help us,” Gordon says. “What they began to say was we want real sector expertise, sometimes even deep functional expertise. You need to understand our business in a unique way. We began to see as a board, as a partnership, a real tipping point in how clients look at the professional services sector.”
Gordon wanted to respond swiftly, but methodically to this change in the marketplace. It needed to be done, but it needed to be done right.
“The challenge for a firm like our’s is how do you respond to those trends in a way that really adds differentiating value to clients,” Gordon says. “How were we going to uniquely stand apart from our competition and ensure that we could meet those client needs at an increasingly and more complicated demand level?”
One of the first things Gordon did was meet with all Boyden’s global partners and her leadership team. It would serve as a foundational meeting to begin developing a strategy to transform the firm.
“The message was we have this opportunistic window in our own retained search business to drive this concept forward and lead it as a premier global search firm, the first to do so,” Gordon says.
One of the next steps was a global conference in Asia where many of the firm’s key leaders sat down and defined the things that they felt the firm needed to represent going forward. These leaders had spoken with clients and gathered feedback. Now it was time to lay it all out there so Boyden could begin to shape its strategy.
“Part of what clients have shared with us is we want to have a singular kind of experience with you,” Gordon says. “That means you need to understand who we are and what our business strengths are. Understand our business. Get under our skin. Be sector specific with us. You have to demonstrate a genuine understanding of who we are, which meant the difference between a robust client relationship and one that isn’t robust.”
Know what you don’t know
There is a word of caution that must be addressed for any firm that is looking to adapt what it does for its clients. You better have a good idea of what you stand for before you begin the transformation.
“When we stray from our core expertise and we stretch out and try to do something we’re not capable of doing, we’re no longer acting with integrity and it ultimately will affect the client relationship,” Gordon says.
“We have to be able to know what our strengths are, be true to them and have the courage to say, ‘This is how we can best help you.’ We also have to be honest with the client and say, ‘This is what we can do and this is what we can’t do well.’ We’re not going to risk our relationship for the sake of saying we can be all things to a client.”
If you don’t know what your core beliefs and expertise are, then how will you know whether the thing you’re being asked to do fits in? You have to be clear about it so that you can give your best effort and performance on the project.
“It’s one thing to stretch in an area where we have done some work and there’s expertise elsewhere in our firm to help us and guide us and draw upon and bring into the client equation,” Gordon says.
“It’s another when it’s completely further afield from the core expertise of the firm. That’s where you can get into trouble with a client. And it’s very hard to recover a relationship that you’ve damaged.”
Boyden is a big firm and so there was a ton of information and data to sort through as this transformation took place. It was incumbent upon Gordon to not let it overwhelm her team.
“It’s important to take a step back, center yourself and think through what’s really important,” Gordon says. “Prioritize and move in steps. You’ll overwhelm the organization if you try to do much too soon without a coherent message, without responsible buy-in and without a very clear approach to staying true to who you are. “We’re still evolving as an organization because change is not always an easy thing. What I’ve learned is to take a deep breath and make sure you’re confident in the people around you and confident in what your clients are telling you.”
You want to please your clients and that’s obviously the most important thing. But don’t let it affect your work and force you into a pace that will result in a substandard final product.
You also need to make sure you’re cognizant of your personnel resources. What skills can your people jump right in and take on and which ones will require some level of training?
“You can’t just assume you have a completely homogenous organization that all can move forward at the same time toward this enhanced approach with clients,” Gordon says. “One of the things I tried to do very early with our leadership team was reach out to those key voices inside our firm who embody this work already and who are our greatest client advocates.”
You undoubtedly have some people in your company who can be trainers and who can help their peers grow. Tap into that resource and put it to use. And for other people who need to learn some new skills, do what you can to help them.
“There’s a lot going on inside a complex organization,” Gordon says. “Not everybody can drink from a fire hose at the same time. So you need to be able to call upon your leadership, those individuals that people respect and know that already embody this expertise with clients and utilize their knowledge base and their talent to train, teach and enrich younger partners or partners that are new to the profession. That is a continual process.”
It’s a process that will likely never be completely wrapped up. There’s always more to learn and more to figure out and Gordon says they’ll just keep on trying to do the best they can for their clients. But this process has already put the firm in a better position to serve those clients.
“Our dashboard is built, our metrics are built, so all of it is now launched,” Gordon says. “We’re at this exciting period where you’re diving off the board hand in hand with your client into this brave new milieu. I see it as a continual evolution that our own firm and each and every one of our partners will sort of continuously travel together.”
How to reach: Boyden World Corp., (312) 565-1300 or www.boyden.com
The Gordon File
Trina Gordon, president and CEO, Boyden World Corp.
Born: Alliance, Ohio
Education: Bachelor’s degree, political science; master’s degree, public administration, Auburn University
What did you want to be growing up?
From the time I was little, I always wanted to be an equine veterinarian. So my interest in Auburn, at least prior to going there, was they have one of the finest equine veterinary schools in the country. When I went there, I fell in love with the philosophy of the university, the campus and the people. But I found that the pre-veterinary program, I didn’t have the constitution for invasive medicine. So my dream of becoming an equine vet versus the leader of a professional search firm is quite different. So I switched majors, I stayed and I loved it.
What was your very first job?
In the summer, my brother and I ran a custom car detailing business part of the day out of my parents’ garage. Then in the afternoons, I ran a daycare nursery school for kids in our area. I had about 10 to 12 kids at a time and they were ages six to 10.
Who would you like to meet and why?
I love history, so if I had the opportunity to sit down with anyone, it would be Elizabeth I. I would like to know how a woman who was the first leader of a powerful, yet fledgling nation was able to bring a divided country together and bring them to global prominence. How she was able to unify them behind an individual who heretofore in their history, had never been a woman and reign long and lasting over a very respectful populace. She was able to gain the credibility of all the men around her and win respect around medieval Europe.
Be clear about your goals.
Understand your limitations.
Don’t rush just to get it done.
Nearly four years ago, when Tom Salpietra joined EYE Lighting International of North America Inc. as its president and COO, a woman approached him interested in operational development at the company.
Since Salpietra was a new leader, it was expected that he would make changes within the company to improve EYE Lighting International while keeping the best things about the company intact.
“Everybody is going to have things wrong, but if you preserve what’s right, that’s where the secret is in organizational development and implementing change,” Salpietra says. “If you screw up the things that are right, that’s where you go wrong.”
Salpietra worked with her to develop questions to interview the employees about what they liked at the company. Since this was an appreciative inquiry the study only focused on what the employees thought was sacred about EYE Lighting International, not about what needed to be fixed.
The study found that every employee was extremely engaged in the company and its business.
“This was how we developed the four basic principles around the customer,” Salpietra says. “We made the customer the center of the business and did process improvement to all the things that we do on a day-in and day-out basis.”
EYE Lighting International is a nearly $100 million U.S. division of Iwasaki Electric of Japan. The company designs and manufactures high performance lamps, luminaries and lighting-related products that serve major commercial, retail, industrial, utility and specialty application lighting markets in North and South America.
Since Salpietra’s arrival at EYE Lighting, he has been focusing on efforts to develop new technology and to keep the organization’s sights on the next big thing in the lighting industry all while maintaining employee engagement levels.
Progress your company
EYE Lighting International’s unique competitive advantage is how the company doses the arc tube of its lighting products (dosing refers to the mix of metals inside the arc tube). The market is currently producing a lot of high intensity discharge (HID) lighting but soon the market will move to LED lighting. While LED works in certain applications, it is expensive, and there are still kinks to work out in other applications where it’s not ready for prime time.
“We’re trying to shift the company from just making HID lamps to offering broader solutions in our market segment,” Salpietra says. “We’re not going to stray from our core competency, which is dosing the arc tube and making unique types of lamps. The challenge we have is if we don’t move in that direction, our years and decades of existence will start to decline.”
As a management team, EYE Lighting knew that the company didn’t have to change too much to succeed, but if it didn’t start changing and moving in a certain direction, it wouldn’t be in that same kind of comfort zone it has been three, six or 10 years from now.
“We’ve taken it very seriously that what we do today will impact the company years down the road,” Salpietra says.
With the lighting industry making a slow transition into LED, Salpietra and his team had to look for opportunities that better suited EYE Lighting’s general lighting purposes until LED is ready for the applications where the company would primarily use it.
“The merging of the two traditional technologies into ceramic metal halide gave us the ability to continue to do what we do, which is making lamps,” Salpietra says. “If that technology wasn’t there, we’d be lost and everybody would be rushing to do LED more quickly.”
What EYE Lighting has been able to do is make the regular technology much more efficient and deliver white light, which creates good color rendering and color temperatures to be able to see both in the day time and at night.
“It’s been proven that white light versus a yellow light or a blue light make a big difference in being able to see,” he says. “If you can make your light create the spectrum that matches the way the human eye wants to see the spectrum and discern it, you’ve just enhanced the way you do it.”
On top of developing new technology to enhance the company’s core offerings, EYE Lighting has been looking for broader applications to its technology and has its sights on potential partnerships that could benefit the company.
“When we do our strategic planning, we look heavily at our core competencies and what we think we can do with new technologies,” he says. “Part of every good company’s strategy has to be looking at the M&A side of things as well; you want to grow organically, but what should you do to augment that growth with outside skills and services?”
Salpietra and his team are keeping their options open for potential strategic alliances, mergers, joint ventures or buying a company outright.
“In order to grow and thrive and create jobs and create value for our customers, shareholders and employees, we’ve got to look at the overall business and determine what we can be looking at to expand our business beyond what we do day-in and day-out,” he says.
A big move that EYE Lighting made in November 2012 was the acquisition of Aphos Lighting LLC, which expedited EYE Lighting’s move into LED. The products acquired are LED-based luminaires that carry with them 14 different design patents for their optical, mechanical and thermal management performance. EYE Lighting will maintain the Aphos name for this new line that will expand its business by introducing LED luminaires to municipalities, utilities and industrial customers.
“As we’ve looked in the general lighting market space, we ask ourselves what’s our core competence and where do we want to go. We get involved in a lot of unique things that stem from our core technology.”
The other areas in which EYE Lighting participates, in addition to the general lighting market, are institutional, educational and hobby markets.
“Because we dose that arc tube differently than anybody else in the world, we’re able to recreate some spectral distributions of light,” he says. “Not just the color of light, but the intensity and what light rays are being emitted from the lamp.”
Due to this ability, EYE Lighting can make lamps that enhance plant growth, as well as lamps that can simulate solar power for use by companies or universities doing solar tests. The company also makes solar aging equipment for businesses such as Sherwin-Williams, Behr paint, automotive companies that make windshield wipers, roofing companies, and anything that’s outdoor-oriented.
“Those types of companies want to test in a lab whether or not they’re going to get a 30-year warranty, but they don’t want to test for 30 years,” Salpietra says. “The equipment nowadays has you test six to nine months to be able to project a 20- or 30-year lifespan.
“We make a machine which is called a super UV. You can put samples in the machine and within three weeks we can equate 10 to 15 years. We can also put more than just UV rays on it; we can also put water on it and chill it.”
These types of broader offerings are due to the highly engaged employees that EYE Lighting has been able to keep around the business over the years.
Keep employees engaged
With a Japanese parent company, EYE Lighting puts a lot of focus on lean manufacturing and kaizen events, and 130 employees are quick to recommend how to better the business.
“What is unique about us is that every employee on the factory floor changes positions at least once a day,” Salpietra says. “Everybody is highly cross-trained and capable of performing at least two different jobs.”
Some employees remain in the same department and move upstream in the process versus downstream. Others will go from one department that transforms the raw material, and then they go to the end of the line to do packaging.
“It allows us a tremendous amount of flexibility,” he says. “The employees love it because they don’t get bored in their daily job. Ergonomically it’s good for them because they’re not doing the same repetitive task day-in and day-out when they come here. It helps keep them alert and safe, especially when they know different jobs and how to behave around different pieces of equipment.”
One thing missing from EYE Lighting that most other manufacturers utilize is a suggestion box. Salpietra says his employees will come forward with ideas on their own, making a suggestion box unnecessary.
“Everything emanates from the floor,” he says. “When the employees change jobs by going upstream or to another department, they see the product of their work or the beginning of what comes to them to pass on to somebody else. So they inherently get together to have a kaizen event over a particular issue.”
To aid in employee’s abilities to help the company further its growth and development, Salpietra and his team implemented four core principles: customer-centric, process improvement, financial focus and talent development.
“We did this rather simplistically to make sure that it was easy for everyone to recite and keep it close to them day-in and day-out,” Salpietra says. “We keep our customer at the center of our business. We deal with process improvement, which is part of our DNA as a Japanese-owned division.
“And everyone in every organization wants to improve and enhance the skill set of employees, so we push our people to get out of their comfort zone.”
Develop your talent
To keep EYE Lighting employees on their feet and thinking about different aspects of the business, Salpietra made talent development a big part of the organization’s core principles.
“We added talent development because that captures what we do on the factory side that we want to do throughout the whole organization, which is work out of your comfort zone,” Salpietra says. “You’re going to become more knowledgeable and more valuable for yourself.”
To allow your employees to grow and develop, you have to be willing to give them the tools and resources to do so.
“You need to have an open-door policy,” he says. “The leadership, especially new leadership, has to develop two things primarily — trust as a leader and then respect comes. Then you can develop the feeling of hope. If the employees see that there’s hope in things and they become a part of that, it will help engage them.”
That engagement will also help when your company has to make a tough decision or make a change in direction.
“It’s very important that you get a lot of group interaction so that when you go to make a decision or implement a change, everybody is onboard with that,” he says. “If you engage your people and say, ‘Here’s what we’re going to do. We’re going to move in this direction and we’re going to need your help. We do not know all the answers.’
“They love to hear that because they will have questions and suggestions for the company. As much as you engage your employees, they will become engaged on their own. All of a sudden ideas and suggestions will start surfacing.”
How to reach: EYE Lighting International of North America Inc., (440) 350-7000 or www.eyelighting.com
Keep yourself in tune with your industry and where it’s going next.
Always think about ways to broaden core offerings.
Develop talent and keep employees engaged in the business.
Steve Phillips doesn’t understand why customers in today’s world wouldn’t want help from a salesperson. But he’s not so stubborn that he refuses to believe it is true.
“My son keeps talking about stranger danger, that customers don’t want to be approached by salespeople anymore,” says Phillips, president and CEO at Phillips Furniture Co. and six Ashley Furniture HomeStores in the greater St. Louis area.
“As a leader in my position, this is where I’m going to have to rely on these young people to make decisions that will put us in a great position for younger customers.”
Phillips Furniture is a family-run business that launched in 1937. Phillips doesn’t see things the way his father did. His son, Michael, the company’s vice president of advertising and merchandising, doesn’t always agree with his father’s point of view.
But it’s their ability to respect each other’s differences and then reach a consensus on how to operate the business in today’s world that allows the company to succeed.
“I’m hearing what they want, and I’m OK with what they want,” Phillips says of the younger generations that are becoming a larger part of both his customer and employee bases. “It’s just foreign to me. But as a leader, I have to be willing to let them try things that I’m not familiar with.”
Phillips says it’s not always easy to move away from behaviors that you’ve grown up with and used to achieve success. And he doesn’t always believe it’s necessary to shift away from something that has become a proven success. But if it is necessary to change, doing so beats the alternative every time.
“It is tough,” Phillips says. “But it’s tougher if you fail. If I keep dictating policy and how we’re going to do things based on how we did it in the past, I know we will die and that’s not good. So I just really trust these young people, and I trust the organization. If we truly have the customers’ best interest at heart, we’re going to do what they want, not what we want.”
It’s that idea of constantly seeking a better way to please customers that drives Phillips and his 330 employees.
Set a foundation
Perhaps one of the reasons Phillips is more agreeable to accepting new ideas is that he has been reluctant to follow the crowd when it comes to furniture salesmanship.
“The furniture business has not had the greatest reputation for integrity,” Phillips says. “A lot of people give false high prices and fake savings, and I didn’t want to do business that way. We have one price on a piece of furniture.”
The problem for Phillips is that many employees who have worked in the industry for a number of years were trained to take the misleading approach.
“There was a very specific way we wanted to do things that was not normal in the furniture business,” Phillips says. “That’s why we don’t necessarily want people who have been in the furniture business because we don’t know what their training background is.”
The solution for Phillips was to create a training program that new employees must go through before they are allowed to speak to a customer.
“So everything that we do structurally and integritywise is ingrained before they talk to their first customer,” Phillips says. “As a matter of fact, we probably don’t spend enough time talking about product. It’s more about how we do things. We have leadership round tables every month also. We have our leaders come in and we just go through what’s important to our customers.”
The goal is to have a sales team that doesn’t just talk a good game when it comes to pleasing the customer, but they can actually show how they’re going to do it.
“They have to role-play to show us, not just tell us, but show us they know how to service customers the way we want them to,” Phillips says.
That’s the end result. The steps for getting to that point where employees have the ability to display those skills must be dutifully followed if training is going to work.
“You can’t train or correct anything until you can measure it,” Phillips says. “We know how many pieces per hour some of our furniture assemblers can do and what the standard is. We know how many pieces per hour one man can unload on a truck. You can’t manage and train until you know what the issue is, which is only done through measurement.”
Once you have that data to work off of, you’ve got to put what you want to do in writing and then make sure you do it.
“If it’s not in writing, it’s not real,” Phillips says. “So everything is in writing, and you just go over it step by step. They can’t be promoted until somebody observes and there is a physical check-off that this is what they can do.”
If you don’t believe you have time to conduct training with an already cramped schedule, you’ve got to find a way to make it work.
“Training has to be a priority,” Phillips says. “If you get caught in the treadmill of doing business all the time, you’ll never get off the treadmill and start training. If you train and make it part of your culture and your business religion, you don’t think about it as being a disruption of your normal process. It is your normal process.”
Take a visible role
Many leaders will talk about how important a training program is, but then they personally move on to other things and leave the team to figure out the best way to make it work.
Phillips says you have to do more than that as CEO.
“Every training class we have for salespeople, I’m the first presenter,” Phillips says. “I take the first hour or so and tell them about the company and what we stand for.”
The company’s COO tackles the next segment and then training responsibility shifts to Phillips’ brother, Matt, who heads up training at Phillips Furniture.
“What we want these people to see is that everybody at the top also believes in everything we do,” Phillips says. “The fact that we spend so much time with them, we certainly hope that’s what they believe.”
As a way to encourage leaders to want to take part in the training process, Phillips suggests rewards for leaders whose direct reports receive promotions.
“A lot of leaders withhold knowledge or training for fear of somebody rising above them,” Phillips says. “Our managers are rewarded for having someone promoted from beneath them. We love store managers who want their assistant managers or their team leaders to be promoted. They don’t feel threatened by it.”
Focus on core values
The other piece of the puzzle for Phillips is core values. While he is open to changing training methods and operational policy, he leaves no wiggle room on his commitment to the company’s core values.
“No matter what processes or changes you make in your business, you can still hold tightly to your core values,” Phillips says. “That’s the one thing I will never negotiate — how does it look with our core values. You have to keep that out there in front.”
Arriving at the three core values that define Phillips Furniture was no easy chore. Phillips and a team of more than a dozen leaders left the company’s headquarters and headed to a remote cabin in the Ozarks. Once they arrived, it took three days to finish their work.
“There were a lot of great ideas,” Phillips says. “I just didn’t want a lot of them. We could have had 10 great core values, but I wanted to be able to sink our teeth into three or four. Once you get past three or four, they start becoming a little redundant. These were three that nobody could ever argue with.”
The three core values they decided on were “integrity above all else, honesty in all we do and service to others first.”
“If you can get your entire organization to buy in to those three things, you have a much easier time finding great leaders because leaders want to buy into something greater than a dollar,” Phillips says.
Some companies consider “making a profit” a core value and Phillips says he understands, even if he doesn’t agree with it.
“We think that’s the result of doing the first three,” Phillips says. “So we wanted the core values to produce the results that we were looking for.”
Phillips says his company wants to make a buck as much as anyone. But by focusing on other things, such as the customer experience, employee readiness and job satisfaction and giving back to the community through charitable efforts, everybody comes out ahead.
“It’s imperative that a company stand for more than a dollar,” Phillips says. ?
How to reach: Phillips Furniture, (314) 966-0047 or www.phillipsfurniture.com or Ashley Furniture HomeStore, (314) 845-3084
The Phillips File
President and CEO
Phillips Furniture Co. and Ashley Furniture HomeStores/St. Louis
Born: Dayton, Ohio
Education: I went to the University of Missouri for three years. I got married when I was 20, and I got tired of being broke, so I quit school and took a job.
What was your very first job?
Raising vegetables and selling them door-to-door. I’m an avid gardener, and I still am to this day. My first full-time job was in the furniture store while I was going to school at Mizzou.
What got you into gardening?
My dad had an extra lot next to the store. I always wanted to be a farmer my whole life, and now I do own two farms. There is something really neat about getting your hands in the soil. He gave me this plot of ground, and I had a wagon. I would load it with vegetables I grew and picked and I would take them door to door to our neighbors. I didn’t have prices. I always said pay me what you think they are worth and I got taken advantage of quite a bit. So I learned not to do that the next year.
Who has been the most influential person in your life?
It would have to be my mother and my father. From a business point of view, it would have to be my father. He was the most patient and kindest man you ever met. I never saw him raise his voice ever. I don’t know that I got those traits from him, but I’ve always admired those traits. My mother had six kids and she’s a phenomenal woman.
Don’t be afraid to change.
Make the time to do training.
Don’t choose too many core values.
As a 20-year veteran of the insurance industry, Charlie Rosson has seen his fair share of financial uncertainty, economic downturns and business struggles. So when he was promoted to CEO of Woodruff-Sawyer & Co. on Jan. 1, 2008, Rosson recognized rather quickly that his tenure was going to coincide with all three.
“Right from the start, like everybody, we were thrown a pretty difficult set of circumstances to deal with,” says Rosson, CEO of the San Francisco-based insurance services firm. “So many businesses were impacted in terms of their sales and access to capital and their business overall. The recession impacted our clients directly, and we were challenged to respond to that by coming up with more aggressive programs for them to quickly save them money and to help a lot of them through survival mode.”
Although clients were losing revenue and facing serious financial struggles of their own, the firm still needed to find ways to keep business profitable. But many clients could also no longer afford the firm’s services and products at the same rates or prices as in the past.
Like most professional service firms, Woodruff-Sawyer needed to find ways to keep clients’ businesses afloat but also avoid losing their business.
“Obviously, we had to become more efficient in the way that we do business, and we had to recognize in a lot of cases our clients weren’t willing or didn’t have the wherewithal to pay the same type of fees or commissions that they might have before the difficult time,” Rosson says.
“The way we would structure an insurance program before the financial crisis or before things got really difficult obviously wasn’t implacable anymore. So we had to kind of come to terms and help them with declining values and property, shrinking payrolls and overall downturn.”
Finding creative ways to deliver the same types of programs for clients more affordably wouldn’t be simple, especially because each client’s business was so different.
Rosson knew that the firm needed to work much more closely with clients to figure out win-win solutions.
“We had to negotiate greatly reduced premiums for them and come up with coverages that met their needs but were at a price point that they could afford,” he says.
So as Rosson and his team began talking with clients about their changing risks and opportunities, they also asked each client for a list of must-haves.
“We really had to dig in and find out what are the things our clients truly value and what things are sort of “nice to haves” that they didn’t value as much, and frankly, weren’t willing to pay for,” Rosson says.
“We’re fortunate that the clients we serve we have a great relationship with and normally have a pretty deep dialogue with them and attempt to fully understand their business,” he says. “So we can go in and talk about the services we deliver, how they’re delivered and how the team is structured, then drill into what things are important to them. Then we ask them honest questions about what things they can live without.”
Knowing your customer’s “deal breakers” can help you pinpoint the exact value that you add for them, allowing you to identify and recommend business solutions that are cost-effective but that still meet that customer’s needs.
“What clients are looking for is value, and in our case, it’s quality of advice,” Rosson says. “It’s how do we help our clients become more successful? And oftentimes when we partner up with them and really understand their business, we can help them execute a strategy that maybe they wouldn’t be able to execute without us.”
You may see opportunities to meet the future needs of your customers as trends emerge of where their businesses are moving and as new technologies come along. For example, the recession spurred the firm’s investment in technology to help address client issues.
“The current generation of buyers has already adopted technology as a core part of the way they do business, and that curve is only going to get steeper as newer generations come into the workforce and become leaders of companies,” Rosson says. “They’re going to expect that they can interact with service providers and professionals through some sort of technology medium. They’re not going to expect the traditional back and forth model that’s defined our industry for quite a while.”
Trim the excess
Once you identify your clients’ pain points and priorities, you can begin looking for ways to serve their needs more efficiently.
Rosson realized that although Woodruff-Sawyer continued to deliver valuable services and advice for clients, the firm could save time and cost by streamlining its approach — as could its clients.
“We had to get much more efficient in terms of the way we structured our teams, and we had to use technology in ways that we hadn’t before, in terms of delivering things through the Web that may have been done before either face-to-face or through some other lower-tech way to deliver service and advice,” he says. “So we are using technology in different ways, and we’re just more careful in terms of how we assign resources to client teams.”
Rosson restructured the company’s practice teams to put the focus on having the right people in the right roles, instead of just more bodies, to cut down on unnecessary costs.
“Don’t get swept away by how much revenue you think somebody can generate or how dazzling somebody is,” Rosson says. “Really do your homework and find out what that person is all about. Are they really a fit for the organization? Do they really have the client’s best interests at heart? Can they collaborate well with others? Those are really important things.”
Another way Rosson saw to improve efficiency was integrating technologies that could make communication more user-friendly for clients. Most of the technologies Woodruff-Sawyer has deployed are collaborative, meaning they enable communication between clients and associates outside of the traditional email and face-to-face meetings. In addition to saving its clients cost and time, many changes have streamlined the firm’s processes overall.
For example, the firm now issues all of its certificates online and deployed a portal called Passport, which permits document sharing and collaboration with clients over the Web to expedite projects.
Since seeing the positive impacts, Rosson has continued to pursue a direction that involves technological innovation. Recently, the firm launched an online portal for small businesses called, BizInsure, hired a chief information officer and has made investments in online business to ramp up its overall technology component.
“I’m absolutely convinced that emerging technology is going to have a disruptive impact on our business,” he says. “And I believe it’s going to be in a positive way, and we’ll be right there to capitalize on it. The way that we’re going to interact with our clients in the future is going to be different that our traditional model.”
Enable a responsive culture
Of course, it’s difficult to devise efficient and cost-effective solutions for clients if you don’t empower employees to be creative and test their ideas. Businesses that run their organizations with a heavy-handed, top-down leadership structure can easily stifle the kind of creative, engaged culture it takes to provide the most value to clients, Rosson says.
“To be a top-tier professional services firm, by definition, you want to have professionals — and you need to treat them that way,” he says. “The way to treat them that way is to respect what they do and be there if they need advice and guidance. You have to have a certain amount of structure, but listening and not being overly prescriptive or top-down in our approach has really paid dividends.”
Rosson avoids a command and control culture at Woodruff-Sawyer by furthering the firm’s corporate vision to remain an independent brokerage firm. Being a 100 percent ESOP firm gives the company a flexible infrastructure where top people feel empowered to make decisions and operate with more freedom, he says. With no shareholders, employees are able to focus on the client and do things for clients that might be difficult under a different leadership structure.
“We’re able to do things for clients in terms of being flexible and the people who are working with clients have a lot more authority to get things done for them, deploy resources and make decisions that our competitors who might have a different ownership system can’t,” Rosson says.
“Our independence is a key part of our competitive advantage and a big part of our culture.”
The independent structure has also helped the firm attract talented employees who value autonomy and the ability to be responsible to a client’s needs. And for companies that can’t do an ESOP, leadership comes into play even more. As a CEO it’s important to set the tone for your direct reports and other employees by showing that you trust their decision-making abilities.
“I truly believe that we have the best people in the industry,” Rosson says. “These are people who have arrived at a place professionally. They don’t need me to look over their shoulder or a leader to second-guess what they are doing.”
Rosson says in the future, the firm will continue to be prudent and watching the bottom line while making investments in technology and internal perpetuation to keep the firm independent. By successfully delivering insurance services in an efficient and user-friendly way for clients, the firm has not only retained clients, it’s also been extremely successful in adding new business.
“The vast majority of our growth is organic growth through just going out and telling our story,” Rosson says. “With a lot of our competitors, and the large ones, it can be very difficult or very expensive to access very sophisticated resources. What we do is deliver those same resources or the same level of advice — or even better — but do it in a way that’s less expensive and much more user-friendly.”
As a result, Woodruff-Sawyer has grown its revenue approximately 40 percent since 2007, generating approximately $70 million in revenue in 2011.
“Like so many businesses, the downturn forced us to work smarter and more efficiently and embrace technology,” Rosson says. “As the economy has slowly improved and our clients’ businesses has improved, we’ve found that we’ve been able to leverage our technology and we haven’t had to increase our costs at the same rate that maybe we would have. So we’re actually seeing that our business is healthier now, after the downturn, than it was before.” ?
How to reach: Woodruff-Sawyer & Co.,
(415) 391-2141 or www.wsandco.com
Ask customers where your business provides the most value.
Utilize technology to cut down on time and cost in customer interactions.
Empower employees to help clients by avoiding a top-down culture.
The Rosson File
Woodruff-Sawyer & Co.
Born: San Jose, Calif.
Education: B.A. in history from UCLA
On growth: If you’ve got a very strong core business — I’m so bullish on the insurance business — you don’t need to take on too much debt or be overly grandiose in your expansion plans. Expansion and acquisitions all should be driven around acquiring people who fit into the organization, really bring something to the table and add to your organization rather than just executing a geographic growth strategy or putting pins in the map. All of your expansion should be for the right reasons, with the right people with client in mind, rather than trying to fill out (geographically) with different offices all over the place.
What is your favorite part of the business?
The best part of the business is getting out and meeting with clients and prospects. That’s why most of us got into this business and what really drives the passion for it. A lot of our relationships with clients go back 10, 15 and 30 years even. That’s the most fun part of it. I think it’s also really gratifying to successfully run the business and see the impact that you can have on employees’ lives.
What would you be doing if not for your current job?
Teaching English in Argentina
What one part of your daily routine would you never change?
Interacting with our clients and prospective clients
How do you regroup on a tough day?
I try to exercise every day.
What do you for fun?
Cooking, traveling, reading, coaching kids’ sports
Most business leaders want to greatly improve customer loyalty, and I am no different.
To drive loyalty to my promotional products business, we have tried all the usual means — low prices, free shipping, membership club benefits, discounts and exclusive product offers.
Once, we even tried sending a vase of fresh flowers after each order. None of these initiatives resulted in the dramatic improvement that we sought. Over the years, we have engaged a series of expert consultants to find even more ideas to try. But in our business, customer loyalty remains a tough nut to crack.
The pharmaceutical giant Eli Lilly & Co. struggled with similar obstacles when it came to problem-solving in their business. Many were scientific, and — even though Eli Lilly’s substantial R&D group is staffed with talented technical experts — some problems resisted a solution for years. However, the company did invent a way to solve some of its problems quickly and cheaply.
Use expert advice — of others
Here is the gist of it: Eli Lilly discovered that it could solve a lot of the most intractable problems by giving them to experts from other fields. Simple? Yes. Counterintuitive? Yes. The surprise is that it seems to work.
The company put together an online network of thousands of scientists from other disciplines and “broadcast” their brain-stumping challenges to these experts from other fields. In many cases, the experts solved the problems by simply drawing on knowledge common in their own areas and applying it to Eli Lilly’s dilemma.
Eli Lilly’s scientists, we may presume, know just about all there is to know in their respective fields of expertise. Likewise, in my company, our experts know just about all there is to know about the industry, our products, our customers, competitors and so on. When the subject-matter experts can’t solve a problem, you need to cast a much wider net. If the specialists are stumped, then a solution, if found at all, will come from people outside the field.
Modify your individual process, if needed
Today, our company is using a version of Eli Lilly’s method in our business, which other organizations might also use to address their toughest problems. I didn’t have the time or means to put together a large team of experts from outside disciplines to work on my company’s challenges. So we use a modified Eli Lilly approach: We deliberately, routinely expose our in-house experts to nontraditional experiences and knowledge.
The idea is to see whether we can find our own answers by investing to acquire experiences outside those we normally encounter. In recent months, this new approach has involved my participation in a variety of eye-opening situations, including a meeting with the Cavalia producers, lots of museum visits, a guided tour of London graffiti and a design school workshop at Stanford University. On a personal level, I’m trying much harder to add new concepts and idea possibilities to my thinking.
I don’t know whether we’ll crack the customer loyalty problem in this way, but I can tell you that the ideas we discuss now are fresher than those we used to generate. That’s why my prescription for increasing the likelihood of solving the toughest problems is this: Live outside the box.
Jerry McLaughlin is CEO of Branders.com, the world’s largest and lowest-priced online promotional products company. McLaughlin can be reached at JerryMcLaughlin@branders.com.
If you ask Doug Taylor what it’s like putting on a fireworks show, he would tell you that it’s like taking the Rolling Stones on tour. There are potentially hundreds of people involved in the background and a single show can require five or six tractor trailers, a few straight trucks and more than a week to set up, using 15 to 20 people a day.
“This should all be background for our customers,” says Taylor, president and CEO of Zambelli Fireworks. “All we want our customers and the spectators to see is 15 to 20 minutes of a fantastic display, just like the Rolling Stones really only want their spectators to see them up on stage for that hour-and-a-half concert.”
Zambelli Fireworks is one of the best-known names in the fireworks industry. The company employs 50 people year-round, increasing its employment to roughly 1,500 people around the Fourth of July. Zambelli launches 2,300 firework shows across 32 states each year with nearly 600 of them being around Independence Day.
The company puts on shows for municipalities, Major League and Minor League Baseball, the NFL, MLS, professional lacrosse, amusement parks, festivals, weddings and private parties. Productions can range in cost from $3,500 to more than $500,000.
“Our company has one of the best names in the industry,” Taylor says. “We have that, but if we don’t keep working on that every day, we’re not going to have it at some point. We have to continue to earn our reputation and that level of trust with our customers.”
That reputation, the ability to put on a fantastic show and customer service focus has been challenged recently due to three major issues that have put added pressure on Zambelli. The company has had to overcome delivery disruptions from China, the challenge of the U.S. economy, the impact of increasing raw material costs and labor problems in the Chinese market, which is the source of 95 percent of the product in the U.S.
“With those combinations we’ve seen product costs go up somewhere in the range of 45 percent in the last five years,” Taylor says.
Here is how Taylor continues to put on a great show by dealing with unexpected challenges through close relationships with vendors and customers.
Expect the unexpected
There are about 14,000 fireworks shows shot on the Fourth of July in the U.S. every year. So in 2008 when China shut down two of the four ports from where fireworks are shipped, it created a 25 to 30 percent decrease in the capacity of delivery.
“An awful lot of companies didn’t get deliveries that year and there were a significant number of shows that did not end up being shot,” Taylor says. “We ended up getting most of our deliveries that year, and with a large inventory, we survived it.”
Typically, smaller companies get in a couple of containers of product each year. They use up 90 percent of it and then order more for next year. Zambelli tends to carry over a year’s worth of inventory each year.
“That way we have a lot more cushion than smaller companies can afford to have,” he says. “That certainly helps us in a time like 2008 where the shipping was such a problem, but it doesn’t mean we had the exact inventory we wanted.”
With China controlling 95 percent of the fireworks used around the world, there really wasn’t a good alternative for Zambelli to get product from.
“You can get product out of Europe from Spain and Italy, which is extraordinary product, but it’s three to five times as expensive as what you get out of China,” Taylor says. “So that’s not a good solution. We did go out and find some pockets of product because we moved very early.
“Ultimately, we had to design our shows differently based on the product that we had available within our existing inventory.”
To help combat the issue of product availability, Zambelli put a focus on communicating with its producers in China.
“We worked for years to make sure we treated our vendors as partners and that they treated us the same way,” he says. “Because of that relationship, we began to hear early that there were going to be problems. Vendor relationships are very important — making them a partner versus just a vendor.”
Aside from problems abroad in China, Zambelli faced challenges here at home due to the poor economy. A number of the company’s customers had to rethink whether they could do a fireworks show similar to what they had done in previous years or at all.
“We saw a number of cities that had to decide where they were going to spend their money,” Taylor says.
One city in Ohio was in a position where it had to lay off more than 50 employees and as much as the leaders wanted to have a fireworks show, it was politically inappropriate to lay off staff and then spend $20,000 on a fireworks show.
“We had some communities that canceled their fireworks and a number of communities that reduced the size of their fireworks,” he says.
Zambelli has been shooting shows for some customers for more than 30 years. Maintaining those kinds of customers goes back to having a good relationship.
“We didn’t want them to begin to think about talking to somebody else, because there is always a competitor that will do it cheaper,” he says. “We worked with them and gave them as good a deal as we could possibly give them. These were customers that we had for a long time, and that’s the kind of relationships that we like to maintain.”
One of the other interesting changes that occurred during this time was that if a city couldn’t afford to pay for a show anymore, it found an outside group to take it on. Zambelli has begun helping customers find ways to afford a fireworks show if they don’t have the funds necessary.
“That’s a new role for our company and for firework companies in general,” he says. “We’re working with certain larger corporations and trying to find places where they feel it would be a good investment for their brand to go in and support a community. We’ve had to change our marketing role to where we are marketing more directly to sponsors.”
The solution to this problem again comes back to building relationships and forming partnerships.
“If you look at the crux of what a true partnership is, there are going to be ups and downs,” Taylor says. “The sooner that you can anticipate what’s going to happen, the better positioned you are to adjust to it. You have to have an open line of communication with a customer or partner.
“Keeping those lines of communication open allow you to be aware of any issues. Having that communication … helps make sure we are hearing what’s important to them.”
Improve your relationships
Due to the issues with product delivery, the economy in the U.S., the challenges of increased costs of raw materials and labor problems in China, Zambelli’s ties to its vendors and customers have had to be stronger than ever.
“Many of our customers make a decision through a purchasing agent, and they’re trained to find the best deal,” Taylor says. “The easiest way for them to find the best deal is if they said, ‘We have a $10,000 budget.’ If one company offered them 900 shells and another company offered them 925 shells, they’re going to the 925-shell company, even though they don’t fully understand how that count was come by.”
That’s one point where Zambelli will work with its customers to explain it is offering a complete event, not just a number of shells.
“We’re selling the level of trust you can have in Zambelli Fireworks because of what we’ve done for years and what we’ve done for you as a customer,” Taylor says. “We’re selling you some of the highest quality product out there. We’re selling you a safety record, which is as good as anybody’s. We’re selling an entire package. We’re not selling a count of fireworks on a page.”
This level of selling has been somewhat of a transition for the Zambelli sales force, because not only has it become more competitive over the last five years, but the Zambelli sales team has had to learn to sell a turnkey package and not let people make decisions based purely on a shell count.
“It’s been an education process to not only educate our salespeople, but for them to turn around and educate our customers so they can make better decisions,” he says. “The more understanding customers have about each decision they make and why those decisions are important, the more likely they are to hire us.
“We have to develop a level of trust with our customers that they know we’re going to deliver that fantastic show. We’re focused on maintaining and improving a high level of service to our customers and maintaining our reputation.”
How to reach: Zambelli Fireworks, (800) 245-0397 or www.zambellifireworks.com
Be prepared for unexpected challenges.
Form strong partnerships with your vendors.
Find ways to improve relationships with customers.
The Taylor File
President and CEO
Born: Port Arthur, Texas
Education: Attended North Carolina State University where he received a BS degree in science education and in zoology. He also received a MBA from Indiana University in Bloomington.
What was your very first job? What did that experience teach you?
The first job I had where I was working for someone else was mowing lawns at the age of 12 or 13. The first job I viewed as a real job was working in high school at a hardware store. What I learned there more than anything was the value of customer service.
When did you get into fireworks?
The first idea I ever envisioned of being involved with a fireworks company was in early 2007. I started work as the president and CEO of Zambelli in late May 2007.
What do you like most about fireworks?
It’s a fascinating industry, and it’s related to what I said about taking the Rolling Stones on the road. It is the entertainment business and although there are all kinds of technical and regulatory issues we deal with, at the end of the day if the spectators and the customer are happy with the result, then we entertained them.
Do you have a favorite Zambelli show?
At the Kentucky Derby Festival, we have two sets of barges that are each 600 feet long in the river and in the middle is a bridge that we shoot off of 3,200 feet of bridge. We’re able to fill the sky where people miles up and down the river are watching the show. The magnitude of that is incredibly impressive. On one side it’s the emotion and importance of the event to the community, and the other end is just the artistry and magnitude of what can be done.
What is the best business advice you’ve ever received?
My father taught me that the thing that you can’t give up is that level of trust that people have to have in you.
Larry Feldman was living a double life. As assistant minority counsel of the House Banking Committee, his day job was dealing with Capitol Hill’s most pressing issues: the Chrysler bailout, alternative fuel sources and cradle-to-grave health insurance. But come lunchtime, he headed across the street to oversee an operation pretty much as critical to Washington’s well-being. Feldman, you see, managed the local Subway.
“I would do congressional hearings in the morning, run across the street, take off my jacket, put on my apron and stand behind the counter to make sure the operation was going well,” says Feldman, CEO of Subway of South Florida and Subway Development Corp. in Washington, D.C. “These lobbyists would look at my face and say, ‘You look very familiar.’ And then after lunch, I would run back, take off my jacket and do hearings.”
Since opening up his first Subway location 35 years ago, Feldman has grown his territory of restaurants to approximately 1,500 locations and 1,600 employees throughout Washington, D.C., Maryland, Virginia, Delaware and, most recently, South Florida. But his success hasn’t just earned him respect in the franchise world — it was Feldman who helped pioneer Subway’s development agent growth model in 1979 — it has also earned him a nickname: Mr. Subway.
By eliminating company-owned stores and empowering entrepreneurs to grow territories through franchised locations, Subway has become the largest fast-food chain in the world, surpassing the iconic McDonald’s with more than 37,000 locations worldwide. Here’s why the growth model is still viable and successful decades later.
As a business with locations worldwide, maintaining consistency across its many stores is critical to Subway’s reputation. So it’s important for owners like Feldman to have the proper controls in place to keep operations consistent and maintain quality throughout their territories.
One way the company does this by maintaining high standards of compliance for its store owners.
“We’re very, very strict in our requirements for compliance,” Feldman says. “Part of the support is 80 percent of my staff is made up of operations analysts. They go into the field and are in their stores at least once a month. They do full evaluations that start with cleanliness in the front window and go right on through the store, including marketing recommendations, attitude of employees — all of these things.”
Driving consistency internally is also why Subway doesn’t sell to professional chefs — who are tempted to try to “improve” on the business model.
“Chefs always are looking to create a better way,” Feldman says. “And while we’re always looking at our corporate offices to do that, and have a tremendous amount of success from franchisees who give us recommendations, it basically is that when you go into a Subway regardless of where it is around the world, that you know that you’re getting a consistent product. The look is consistent.”
For Subway, the food part of it and the product part of it can be learned and trained. The real work of the owners is growing the business in the community, from “the outside in,” whether it’s sponsoring local Little League games or working with not-for-profits.
“It’s understanding how to take those tools and get out there and market your business,” Feldman says. “We look more for people who will participate in marketing and bringing customers in, because we can teach you everything that needs to be done in the store itself.”
When the goal is consistency, you want store owners who are entrepreneurs, not industry professionals.
“They would come back after two weeks of training thinking they knew how to grow their business their way,” Feldman says. “But this doesn’t work as a large-scale concept. At the franchisee level — success is about following the model.”
Keep it simple
Subway’s simple operation — with no fryers, no grease traps, and a simple menu — makes it easy to run, and gives the company the control to easily manage food and labor costs. But how do you promote new ideas when you’re worried about overcomplicating your brand? At Subway, it’s by practicing “controlled innovation.” At the national level, the company sets aside an innovation fund specifically for testing ideas for the restaurants that are submitted to the company from customers or franchises. Every new idea goes through a thorough and carefully controlled approval and testing process.
“We can’t have everybody out there saying my grandma has a great recipe,” Feldman says. We need to go out there and try it.”
Recommendations are made through the franchisee development office. Approved ideas will go through a strict testing procedure starting with 100 stores, then 1,000, then 2,000 stores — which are checked for compliance — until the idea is reviewed for the entire system. Stores also must report daily and weekly through the computer on how many of the product are sold, what hours and so on. This info is sent to the home office in Connecticut where analysts examine the idea before sending their suggestions to corporate. The controlled process ensures ideas are only rolled out to the entire company that can be consistently executed and that complement its bigger health and price-value messages.
“So it’s not just an off-end product that’s left out there,” Feldman says. “It’s not just somebody that wants to test something on their own. There’s a very specific testing program.”
That’s not to say the company hasn’t adapted. A key reason that Subway has been able to stay relevant in the crowded fast food space is by proactively expanding its product mix to appeal to a wider range of consumers. As home of the $5 foot long, the brand has been able to capture a larger market share of people who see it as an affordable option. It was also one of the first to respond to the growing trend of health and wellness.
In the past five years Subway's variety of products has increased dramatically, all tied to the health offerings. But the company has also carried out these changes in a very conscious way, Feldman says. The company has been successful at adding the healthier options because they are just that — options.
While it now provides things like calorie counts, reduced sodium options, and diabetic menus and healthier menu items such as salads, flatbreads and lean meats, Subway has also kept its indulgent subs like its BMT, meatball and steak and cheese. Diners can still add mayo or a bag of chips.
“Choices should be there,” Feldman says.
“That has been a tremendous part of our growth; but the fact that I can also come in and get that indulgent sub as well and I’m not a health food franchise — I’m here for everyone.”
The importance of keeping it simple has only been verified by the company’s testing of newer concepts like Subway cafés, designed by Feldman’s office for national in response to landlord’s looking for a more upscale Subway. In addition to the regular menu items, Subway cafes include offerings such as paninis and gelato.
“What we found was that the landlords thought that these big fancy law firms and investment firms that the people would demand all these fancy things,” Feldman says. “But when we opened these restaurants, more than 80 percent of the purchases are still our traditional Subway fare. So people are still coming down and getting their tuna sub or cold cut combo.”
Feldman points to four areas that have been critical to Subway’s success: product, control, simplicity, and support. The brand’s ability to adapt and grow while maintaining simple and consistent operations has helped make it ubiquitously appealing while allowing it to go places other fast food chains can’t, for example, YMCA’s, school systems, colleges, universities, and hospitals.
“If you’re a food service director in a hospital, you’d say, ‘Why would I bring a McDonald’s into the lobby when our whole message is about health?’ Feldman says. “And then when you look at other competitors and they’re still back in the 80’s as a sandwich concept with some increasing regard for things like calorie count and health message because they have to be, because the public demands it.”
But Feldman says that it’s the last pillar — support — that’s played the biggest role in the company’s success.
Before the company’s development agent model, support for restaurant locations typically came from corporate employees. Now that’s changed to where franchisees have a local team to back their success anywhere in the world.
“When you live the community you have someone that’s a phone call away,” Feldman says. “It’s not calling the corporate office and saying ‘Hey, I need help when can you send somebody down?’...as opposed to somebody who could be there that day. And that’s why Subway has been so successful. We have boots on the ground in every single city in the U.S. and now in 102 countries around the world. So if I have a problem, I am there and being supported.”
The company also has one of the lowest franchise fees in the country, which Feldman says points to the profitability of the concept. Rather than making the money on the sale of franchises, the company makes money off of the profitability of the stores that it helps succeed. Having all four pieces — product, control, simplicity and support — is really what’s allowed Subway to “build a better mousetrap” than competitors in the marketplace, Feldman says. During the worst economy, Subway’s numbers are staggering. It’s achieved continual upward increases in customer base, marketing and advertising and average unit volume.
“These are all things that are basics, but I think over the years we’ve really forgotten those basics,” Feldman says. “Now more than ever, now that people are really concerned about their dollar and where that goes — you need to show them that you are the best, that you bring the best value to them, and you are there for them if there are issues.
“For us it really is a Cinderella story, in that we were very different then than we are now. When I went to college the only choice was a foot long sub. The menu was very limited. There probably were about eight sandwiches. Now, Subway has become more of the healthy alternative. We have morphed into the concept where everyone can go to get their lunch, their dinner and now their breakfast.” ?
How to reach: Subway South Florida, www.southfloridasubway.com, or Subway Development Corp. of Washington, www.subwaydcw.com
CEO, Subway of South Florida
CEO, Subway Development Corporation in Washington, D.C.
Born: Brooklyn, New York
Education: B.A., University of Bridgeport, J.D., Brooklyn Law School
What would you do if you weren’t doing your current job?
Be a lobbyist in Washington, D.C.
What would your friends be surprised to find out about you?
I cry at sappy TV commercials and movies.
If you could have dinner with one person you’ve never met, who would it be and why?
President Clinton. His caring and concern for the world and its people is admirable.
What do you to regroup on a tough day?
I watch a great action movie.
What do you do when you’re not working?
I spend time doing anything with my family.
Every business has a story. Most of us are familiar with the stories of how Starbucks and Facebook were created. These stories touch us emotionally and we connect with them. Understanding and conveying the story of your business should be part of your firm’s branding strategy. The story should reveal how and why the business was formed and some essential facts that make your business unique.
If your firm doesn’t have a story or has evolved and grown since the time of its inception, it might be time to think about writing the story or sharing how the firm has changed over time. Revisiting your story is a great way to reintroduce your firm to existing and potential customers.
About two years ago, my firm decided to put pen to paper and share our story with customers. To help with this, I enlisted the aid of a local consultant with a Ph.D. in theater/arts performance.
The consultant asked many questions, and he told us that we had a great story to tell; we just needed to think about how and why we created our firm. He advised us to think about the obstacles and challenges we endured and the lessons we learned as a result. Finally, he taught us how to weave the emotional experiences gained from both challenges and successes throughout our corporate story. Here is what we came up with.
The history of ClinicalRM
ClinicalRM embodies the vision set out by our founder and CEO Victoria Tifft in Togo, West Africa, two decades ago. Tifft served in the U.S. Peace Corps in Togo, West Africa, as an infectious disease biologist.
While in Africa, she experienced the devastating conditions that Third World countries endure firsthand. In her work to improve health conditions in Togo, she contracted malaria three times and came back to the U.S. fully committed to the idea of spending her life working to provide treatments for devastating diseases.
As part of this commitment, she worked on-site at the Walter Reed Army Institute of Research and the United States Army Medical Research Institute for Infectious Disease.
Working alongside many military and government researchers throughout the U.S. Army, Tifft gained a thorough understanding of the U.S. Army’s culture and research objectives. Opening a second operating center in Cleveland, Tifft tapped into the very rich medical, device and clinical research community in Northeast Ohio.
Just after 1999, she expanded the business into a full-service contract resource organization. Today, ClinicalRM operates nationwide and in Africa, Eastern Europe and Asia.
Ask questions of yourself
If you are a business owner, there are many benefits to sharing your story. But telling it requires you to look at your company from many angles. When putting our story on paper, our company was able to do this by asking ourselves several questions, including:
- Where did the idea for starting the company come from?
- Were there times when you thought the company wouldn’t make it — how did that feel and what did you do to overcome the obstacles?
- Were there early successes?
- What have we learned along the way?
- Was there a consistent culture and philosophy that should be highlighted?
- How is the firm different today in comparison to the beginning?
- Were there moments when you knew the company would be successful?
Analyzing the company in this manner gave us a broader perspective and allowed us to see the firm as an entity with a story — a story that needed to be told. We diligently put our story on paper, and now, we use it as a starting point for discussion with new employees and customers.
Victoria Tifft is founder and CEO of Clinical Research Management, a full-service contract research organization that offers early to late-stage clinical research services to the biotechnology and pharmaceutical industries. She can be reached at firstname.lastname@example.org.