When the H1N1 virus outbreak happened, State Industrial Products was slammed with demand for its hand sanitizer 10 times higher than what it had seen in prior years. While this may be difficult for many companies to keep up with, under the leadership of Harold Uhrman, the company, which manufactures and distributes specialty chemicals, was able to successfully meet its customers’ needs.
This commitment to meeting customer needs has been crucial to the company’s success for the past 100 years, and unlike many companies, much of the organization’s customer service actually takes place after the sale. State Industrial’s sales and service teams serve about 25,000 customers each year through its Circle of Service program. These associates recognize that customers constantly face new challenges and aim to help them through finding new solutions and products.
The sales team consists of 475 account managers who work with the customer to identify new opportunities for improvement through a survey of its facility. Based on what the account manager finds, that person will then make suggestions for products or systems that solve the customer’s need or problem. The sales team even goes the extra mile by installing systems and training customers and end users on how to use the new equipment they’ve purchased.
But the service doesn’t end at just the training. Instead, the account manager visits his or her customers on a regular basis to check on the progress of the solutions, to ensure customer satisfaction, review inventory levels and support them with troubleshooting or additional product training. Additionally, the account managers make themselves available to their customers 24/7 in case there is an emergency.
The account managers always go the extra mile — even painting customers’ buildings or windows for the holidays — and this extra mile makes all the difference in State Industrial’s business.
How to reach: State Industrial Products, (216) 861-7114 or www.stateindustrial.com
Started by a group of parents who saw few true opportunities for their children with cerebral palsy, United Cerebral Palsy of Greater Cleveland has grown into a support system for people with a wide spectrum of disabilities.
The organization keeps its founding mission in mind at all times, and today, it works hard to meet the evolving needs of some of the community’s most vulnerable yet promising members through a continuum of services ranging from early intervention for infants to lifelong adult residential and vocational supports.
Patricia Otter, president and CEO of UCP of Greater Cleveland, makes sure that the organization operates under five core values. The organization is always client-centered, collaborative, compassionate, devoted to excellence and demonstrating integrity. The organization maintains that every individual with a disability has the right to thrive and to be as independent as possible within the community he or she resides.
UCP provides services to more than 1,200 individuals with disabilities from Cuyahoga County and the surrounding area each year across all lines of age, gender, race, ethnicity and socioeconomic status. In addition to direct client services, UCP contracts with local businesses to provide work opportunities for disabled individuals at the agency headquarters and in the community.
UCP has more than 125 individuals with a range of disabilities enrolled in employment programming and engages a full staff to train, place and support these clients. Collaborative business partners are given appropriate training in working with disabled individuals as well as policies and procedures for partnership. To ensure that high-quality standards are met, UCP maintains an extensive follow-along process that includes response planning, an annual survey and an evaluation.
The organization considers clients to be the heart of the agency, not simply a facet. The expectation of 100 percent excellence transcends from the board of directors to the direct care staff and is evident in all UCP facilities. Through the example set 60 years ago, UCP continues a legacy of empowering individuals with disabilities to do more.
HOW TO REACH: United Cerebral Palsy of Greater Cleveland, (216) 791-8363 or www.ucpcleveland.org
When Dolf Kahle and the employees at Visual Marking Systems Inc. sit down with a client they don’t just offer a quote straight from the blue print. They dig deeper.
Kahle, CEO of the custom graphic design firm, expects all his employees to get inside the heads of their clients and ask the questions the blue prints don’t offer answers to. The company developed an innovation center just for this purpose. When the company meets with clients prior to giving a production quote, employees will brainstorm ideas on the best way to manufacture a product for customers, cutting options, shipping and packaging methods, and best materials to use.
As a result of these brainstorming sessions, the folks at VMS typically offer ideas above and beyond what clients were expecting. By relentlessly looking for ways to improve products they demonstrate that they have their customers’ best interests at heart.
The company has several clients it considers VIP customers due to loyalty and the size of their business. However, VMS strives to make every client feel like a VIP. The company offers a plant tour that makes customers feel welcomed and provides an inside look at the business.
The tour is themed after the Hollywood Red Carpet and leaves an impression that clients remember for months. Every customer at VMS is considered a “star” and the top 10 VIP customers have their names printed on Hollywood stars on the entrance floor. After customers walk through the VMS hall of fame, they get their photo taken on a Hollywood backdrop with the VMS logo and the customer’s logo, which gets framed and the customer can take it back to the office with them.
As customers are guided through the VMS plant they participate in interactive, hands-on projects along the way. As if that wasn’t enough, VMS also writes thank-you notes to all its customers for all their hard work.
HOW TO REACH: Visual Marking Systems Inc., (330) 425-7100 or www.vmsinc.com
While every business appreciates referral sales, many seem to overlook the usefulness of referral data. Referrals are easier to close and more profitable than leads from most other sources. But more important, referral sales are the most accurate test of whether or not your customers believe that your offering works.
If you think about it, prospects are created primarily by circumstance, not by marketing. When a bee stings your child at the playground, you don’t need Madison Avenue to point out the problem. You immediately want a solution. You know that there are all kinds of pain relievers out there, but this isn’t a muscle cramp or a migraine. In this situation, you need a tailored response.
When you get to the pharmacy, you see a host of products on the shelf — everything from generic ibuprofen to something called, let’s say, Auntie Beth’s Children’s Strength All Natural Bee Sting Be Gone. I’m guessing you’ll go with the product that seems to be designed with exactly this situation and your sobbing toddler in mind. Whichever product you choose, from the business’s point of view what is most important isn’t the fact that you bought its product — it’s what happens next.
Let’s assume you go with Auntie Beth’s bee sting product. You swiftly apply the treatment. Within minutes, you and your child will make a discovery about the product that will stick with you much longer. It will become part of the story you tell the ice cream man when you wander back to the park, that you share with the rest of the family when you get home, that you tell your officemates when they ask about your weekend, and that you pass on to other parents at playgroup.
Auntie Beth’s just took the marketplace equivalent of a final exam, and whether it passes depends on one thing: Does your retelling of the bee sting story create new customers?
If the product was a dud, it gets a zero. If it worked, it becomes a hero. When an offering effectively solves a problem — when it becomes a hero — customers tell others in ways that drive referral sales.
Some businesspeople might think they already know that their products work because they have tested them in the lab. The problem with this thinking is that lab tests are constructed to determine whether the product offering does what the company intends for it to do, not what the customer wants it to do. Furthermore, controlled tests are lousy at discovering whether customer enthusiasm about the offering will be high enough to generate referral business.
You might then ask, ‘What about sales data?’ For one, nonreferral, first-time sales don’t speak to the effectiveness of your offering but rather the effectiveness of your advertising, positioning, distribution, promotions and pricing. Although repeat sales send back a more useful signal — whether customers perceive your offering to be good enough, at least some of the time — only referral sales can tell you whether your offering is really taking off.
For most businesses, referral data should be treated as the most important operating metric. Referral business is the ultimate truth-teller — and sometimes the truth it tells is a harsh one. If your referrals aren’t strong, you need to go back to work on the offering, your marketing or both. But given proper attention, referral data can point the way toward a rapidly growing market share. Once you’re able to secure referrals from referrals, you’re well on your way to market dominance for your offering.
Jerry McLaughlin is CEO of Branders.com, the world’s largest and lowest-priced online promotional products company. Contact Jerry at JMcLaughlin@branders.com.
Creating a brand-focused organization shifts it from a commodity to a position of brand preference, which equates to higher marketplace value. Making the brand the central focus of the organization helps employees understand what is on brand and what is not. This is essentially why brand development and brand commitment is a top-down initiative and is the CEO’s job.
It is all about the customer experience
In their book titled “Satisfaction,” authors Chris Denove and James D. Power IV offer research and case studies that prove the impact a great customer experience has on organizations. From their studies, I have developed a simple exercise to help companies determine the impact that improving the customer experience can have on an organization. It is eye-opening. To access that exercise, go to www.brandproblog.com/customer-experience.
Here’s the bottom line: If you’re like most businesses, the majority of your customers are relatively happy, but they have no attachment to your organization. Most companies have a small customer base that is so committed, they would never leave. According to the studies by J.D. Power and Associates, relatively happy customers have a loyalty rate of 40 percent versus committed customers, which have a 70 percent loyalty rate. It speaks volumes when you think about your customer attrition rate and the cost of customer acquisition. If you increased customer loyalty, how would that impact company sales?
As said best by Denove and Power, “Every company says that customer satisfaction is a paramount goal. … In truth, talk is cheap, particularly when it comes to customer satisfaction. … The leaders, like Lexus, Starbucks, Volvo, Nordstrom’s, BMW and Ritz Carlton have made the commitment that goes beyond conversation, below the surface and into actual daily mechanics of doing business.”
Building the culture
Employees need to feel a sense of pride, ownership and personal connection with your company, its brand and its customers. When this occurs, there is energy, excitement, empathy, passion, purpose and conviction. Employees who interface with customers play the lead role in living the brand, but all employees are members of the team and have a role in delivering the brand experience. The goal is to have every person aligned in thinking, speaking and behaving in ways that create the experience and the lasting impact that your brand promises.
There are three primary stages that employees must surpass in becoming advocates of the brand: hearing it, believing it and living it. This translates into observing from you that it is important and why it is important. As leaders, it is our job to keep the brand top-of-mind and to weave it into the fabric of our daily operating procedures. Identify barriers that prevent employees from delivering the brand promise. If you’re not sure what those are, just ask your employees.
Making the commitment
Obviously, there is a lot of work to creating a brand culture and keeping it alive within an organization. So where do you start? I suggest you start with your commitment to embrace the brand as an essential asset of your organization and then become the champion of the brand as you drive it through your organization. Building on and leveraging the brand over the next three to five years should be a part of your strategic plan. Tie the brand to specific financial goals and commit publicly to the brand promise.
To operationalize a brand requires a major shift in how the company is run. And, the most important element of bringing a brand-driven culture to life within your organization is your employees. It will require an investment in resources and training, but there is no telling the impact it can have on the future success of your company.
A few years ago, Tom Heinen found himself heading to Dick’s Sporting Goods to look for a last-minute Christmas gift on Dec. 23.
What the co-president of Heinen’s found when he got there was the best parking spaces were occupied by employee vehicles. But when he entered the store, there was no help to be found and the stock was sparse. Making his way to the checkout, there were two employees nearby, but neither seemed all that interested in helping him.
“Not either of those employees showed any sense of urgency to wait on me and get me out of the store,” he says. “I thought, ‘This is unbelievable.’”
Fast-forward one year. Once again, Heinen was at Dick’s for a last-minute gift. His first thought: “Great, here we go again.” But this time, things were different.
An employee immediately asked him if he could help him find something. Surprised, he said yes and told him he was looking for a baseball bat. The employee proceeded to tell him what aisle it was in and explain that the store had different types and if he didn’t find what he was looking for, to let him know.
Skeptical and scarred by too many bad retail experiences, he headed to the aforementioned aisle, and sure enough, it was right where the employee said. When he made his way to the checkout area, there were now two televisions showing CNN and there were two people at the register, both highly engaged, who quickly checked him out in half the time from the prior year.
While he was relieved to avoid a repeat of his prior negative experience, there was something disturbing about the rapid change.
The problem for Heinen was that he didn’t see Dick’s as being a customer-service-centered business, but in just a year, it had completely changed his experience.
“If Dick’s, who isn’t even focusing on this, can get there, we have to do something differently,” he says. “That’s when we started to make a decision to distinguish ourselves on customer service at an entirely different level.”
It’s not that customer service wasn’t always the focus of Heinen’s; in fact, it’s always been one of the grocery retailer’s primary differentiators. But what the Dick’s experience showed was that if even the big box retailers could deliver a positive customer experience, Heinen’s was going to have to take the service provided by its 2,500 people up another notch.
And this is proven by the store’s own customer surveys that indicate a satisfied customer isn’t really all that loyal but a highly satisfied customer is.
“The value of highly satisfied customers, statistically, is that they’re virtually guaranteed to come back within two weeks,” he says. “A satisfied customer, the number is like 62 percent, so there’s this huge difference between having a satisfied and highly satisfied customer.
“You want to have everybody in that top box — highly satisfied — because they’re very subject to defection if they’re not.”
The challenge is, how do you go from being good at customer service — yielding satisfied customers — to being great at customer service — yielding those coveted loyal, highly satisfied customers?
It’s not the cost of a can of green beans. It’s not the color scheme in the deli department. It’s not whether the box of stuffing is on the top shelf or the bottom.
“If you really want to have a successful company, you have to have highly satisfied associates, which leads to highly satisfied customers, which leads to profit, which allows you to continually reinvest in the company, which includes the people,” Heinen says.
Choose your destiny
If you drive down Detroit Road in the western suburb of Avon, you’ll eventually be faced with a grocery store dilemma: On one side of the street is the low-cost, no-frills Marc’s, while on the other side of the street is the service-first Heinen’s. Each provides groceries, and in a lot of cases, the exact same groceries. But the two couldn’t have a more divergent strategy. One is focused only on price, the other is focused more on service.
When Tom and his brother, Jeff, the other half of the co-president duo, took over the business after the death of their father, one of the first things they focused on was to determine what their overarching strategy should be.
When you look at how to differentiate your business, Heinen says you have to consider three different models — operational efficiency, product leadership or customer service. Operational efficiency is similar to the Wal-Mart approach of being everything to everyone or competing on price. Product leadership refers to competing on your products — whether it be quality or selection — and customer service is a focus on providing the best experience for the people with whom you do business.
“The first thing you have to do is find where do you want to excel,” he says.
For Heinen and his brother, the decision was easy: customer service. Heinen’s reputation had been built on people and service, so it was just a matter of building on this foundation.
“You have got to decide, first of all, if that’s where you want to be,” he says. “I think Marc’s is one of the best-run businesses in Northeast Ohio. It’s not one that I aspire to be like, and it’s not one that I’d be personally proud to be a part of, because it’s not what we believe in, but it’s a great business model.
“The category killer stores like Dick’s or Staples or OfficeMax, they’re helpful, but they’re not winning any customer service awards, and they don’t care,” he says. “That’s not their strategy, and that’s fine. They’re still in business, and they have a heck of a lot more stores than Heinen’s does, so how can you argue their success? And Marc’s? Marc’s makes more money than Heinen’s will ever dream about making.”
When you decide how you’re going to market, you also have to look at whether the market can support your model or not. Right now, Heinen’s has 17 stores, and the market can support that based on the desire for quality products and service. Each location is carefully chosen based on demographics that show an affinity toward choosing service over just price.
“If you can imagine that the market didn’t exist for people who cared about high-quality food and a great experience in the store, if there weren’t those people, we wouldn’t have 17 stores,” he says. “We’d have 15 stores or whatever the market could support, or we’d have to build a different type of experience for the customer.”
Marc’s doesn’t invest a lot in its people, and the service is reflective of that. But because Marc’s isn’t built on service, it’s irrelevant. Heinen’s has to invest in its people, because that’s the whole key to the strategy. If your people aren’t your first priority in a customer-service strategy, it’s not going to work.
Prioritize your people
If customer service is your chosen path to success, then start by laying out expectations at every level of the business.
Heinen uses a service pyramid to illustrate where he wants his employees to be. At the bottom of the pyramid is a category called “nice, respectful.” Just above that is “helpful.” Above that is “knowledgeable,” and above that, at the very tip and where he strives for all employees to be, is “invaluable.” But there’s no silver bullet to get there.
“When people say, ‘What’s your secret?’ — it’s not a program,” he says. “Customer service commitment isn’t a program. It has to be — no matter how many classes you do, no matter how much training you do — woven into the cultural fabric of your organization so that when people come to our organization, they understand.”
It starts with placing a strong emphasis on your people, who, in turn, have to live out that culture. One of the first things you have to do is make sure that you and your company managers are communicating and clarifying on an ongoing basis.
“You have to clarify what your expectations are, and you have to provide feedback,” he says. … “Surveys will tell you that people want to know what their job is and what’s expected of them. They want to know how they’re doing and most companies are bad at both.”
A lot of companies have jobs that aren’t glamorous but are essential to success. The people in them may aspire to greater things, so it’s important to help employees find the roles that are best suited for their personalities and interests.
“The first thing we do is we try to help determine what their passions are, so if they come into work and they’re a cashier and they decide they love the bakery, we’re going to put them in the bakery, because if people are passionate about their work, they’re happier.”
And even if a particular job may not generate passion from anyone, challenge people by keeping their jobs fresh by moving them around.
For example, someone may be a cashier 80 percent of the time, but he or she may take on an extra role of being a customer service facilitator the other 20 percent of the time. In that role, the person would work with both new and seasoned employees, one on one, to help them understand how they can be better at customer service specifically in their department. Or someone may also work as a demo coordinator, so in addition to his or her regular role, he or she would oversee all the demos that go on in the stores.
“It’s not a full-time job, but it’s a way that if someone is interested in doing something different, ‘OK, here’s a way,’” Heinen says. “It could break up the monotony.”
There’s also the tried-and-true method of motivating employees toward customer service: Pay them for it.
Heinen’s supports its employees through a gain-sharing program, which began about three years ago. Each store has set goals, including financial goals, but they’re balanced by overall customer satisfaction scores, known as O-Sat. If the stores meet their goals and their O-Sat score stays at or above their six-month average, they qualify for gain-sharing. If the company makes more than its budget, that money is put into gain-sharing, and the money is split relative to how the store performed compared to other stores — so stores that did better get more money to split among employees.
“Fundamentally, you have to incent the behaviors you want, so we incent the business side,” he says.
It’s possible for one store to make its goals, but that’s not enough — the company has to make its profit goals too.
About half of the time it’s been offered, the employees have reached the levels needed to earn gain-share.
“What it does is it creates a focus in the stores around, ‘What do we have to do?’” he says.
One store really rallied around creating a great customer experience, and it earned gain-share by recording 10 points higher than what it had ever done before, which was a huge accomplishment.
“It can have a significant impact, but at the end of the day, no matter what tools that you put in place, it’s the culture that drives the experience for the customer day-in and day-out,” he says.
Every CEO thinks he or she has an organization that provides great customer service, but there’s only one person that knows the truth (and is usually willing to share it): the customer.
Heinen’s uses a customer survey that focuses on three areas: overall satisfaction, likelihood to recommend and likelihood to return.
From there, it breaks down into specific departments, and then into product selection and helpfulness of staff.
“Again, product side, people side,” he says. “I’ve got to win on the product side; got to win on the people side.”
Spend time thinking through what belongs on your customer satisfaction survey. For instance, price questions don’t always yield useful results, because everyone always wants lower prices.
And don’t overload your customers with lengthy surveys.
“We want to keep it to five minutes, because if it’s more than five minutes, you aggravate the customer, and we don’t want to do that,” Heinen says.
To increase participation rates, the customer gets a certificate for 5 percent off an order of their choice within a given time period. But even customer service incentives are areas that might need some additional customer service attention. Initially, the discount was off the customer’s next order, which really irritated some when their next order was only $10. When they can use it within a given period, they can plan a larger trip and maximize their savings. Customers should be highly satisfied, even when it comes to giving feedback about customer service itself.
The goal is to get 60 surveys per month per store, and an outside company manages the process.
The results allow Heinen to compare not just how his stores are performing but also compare his whole company to other supermarket chains that the survey company has as clients. This helps him see how he’s doing in the industry as a whole, which happens to be very well — competitors are around 63 percent on overall satisfaction, while Heinen’s is at about 80 percent.
Driving these numbers up plays a key role in Heinen’s overall business strategy.
“This is so much part of how we run our business, whereas other companies that we know that have them, they’ll say, ‘OK, yeah, that’s information,’ but they don’t introduce it into running the business at all the way we do. And the associates, when you talk to them, they say, ‘Yeah, that’s some survey we do,’” Heinen says. “It’s a big difference.”
Walk into any Heinen’s store and ask what its O-Sat is, all of the leaders and most of the associates will likely know what it is and what it means.
Much like customers, every CEO thinks he or she has satisfied and engaged employees. But in a similar fashion, you have to take the time to ask them if they are happy and what would need to change to improve their outlook. Grumpy employees rarely deliver exceptional service.
The employee survey is administered about every 18 months, often with a shorter, “pulse” survey at the nine-month mark just to get a quick gauge. This survey focuses on whether employees would recommend Heinen’s as a place to work, if they would recommend it as a place to shop, and they rate themselves on a scale of 1 to 5 on how proud they are to work at Heinen’s.
Ninety percent of employees said they were satisfied or highly satisfied to work for the company. While it’s vital for customers to be in the “highly satisfied” category; for employees, “satisfied” is usually good enough. Why? Because customers have far more options and an easier time switching companies than an employee does, and most employees only leave a company when they are dissatisfied with how they are being treated.
The survey also delves into other issues related to employee satisfaction, such as how employees feel about their direct report, whether they feel valued, if they have the tools and equipment they need, does the manager accommodate their needs, how informed they are, how well their supervisor coaches them, how their manager values their opinion and how much clarity they have in their job.
“When we get these back, if we find out, for example, that we’re not doing a good job of coaching and that our managers aren’t communicating regularly, and they don’t understand coaching, then we say, ‘OK, this is an area we need to invest in,’” Heinen says. “It’s about taking the information and learning and applying it and putting it into place and really looking to get better. That process, we’re very married to.”
He says that as much as they want to improve things and make associates feel valued, if the store manager doesn’t get it and doesn’t want to improve, then nothing will happen.
“At the end of the day, it’s about the most important person in anyone’s life on all surveys, and that’s their direct report,” he says. “So whether you love or hate Jeff or Tom Heinen at Heinen’s, the truth is, the most important person is your department manager if you’re an associate. It’s building the relationships with them and coaching them with an effort to helping them get better, and it comes back to being as committed to their success as your own.”
Throughout all of this, Heinen has learned that it’s a long process to get improved results.
“If you strategically decide you’re going to differentiate yourself in the people arena, then that means that it’s all about, No. 1, believing and trusting in your people and then starting the journey that we started, and it takes a long time,” he says. “If you expect to see great results in a year, it’s not going to happen.
“You have to know what you’re trying to achieve, but I don’t think you ever get to the destination. You can take Nordstrom’s or any other really well recognized company for highly engaged associates, and I guarantee you that they never stop trying to get better, and they never think they’ve reached a destination. It’s just the nature of the beast.”
How to reach: Heinen’s, (216) 475-2300 or www.heinens.com.
The past few years have brought about the worst economic climate we have seen since the 1930s, and for Steve Cuntz, president and CEO of BlueStar Inc., the situation was no different.
However, Cuntz saw the economic downfall coming and prepared his company for the worst. His actions have helped BlueStar not only get through the downturn relatively unscathed but put it in a growing position and expanding globally.
“We have been successful beyond my wildest dreams,” Cuntz says. “I really anticipated more problems than we have experienced. Having been in the electronics industry long enough, the one thing you can guarantee is change.”
BlueStar is a national business-to-business distributor of point-of-sale and auto-ID products. Its ability to adapt to ever-changing conditions played a big part in its success through tough times and in its growth.
“Any time you’re growing, it’s anticipating the strain that scaling causes on an enterprise,” he says. “In any organization, your growth can put you in a position where the things you never would have dreamed of doing, now you’re going to have to do.”
BlueStar’s ability to adapt and keep its 370 employees hard at work through the downturn resulted in 2009 revenue of $365 million.
Here’s how Cuntz created a company that can weather tough economic times.
As a private company, BlueStar has sometimes had trouble getting suppliers to pay attention to it as a viable distributor.
“Since we are a privately held business, [suppliers] have a tendency to sometimes question your capability,” Cuntz says. “We manage to overcome it one supplier at a time. There’s nothing like performance that wins somebody over. It takes awhile for people to drink the tea, but once they get a taste of it, they understand what we are about. Usually in business, especially in distribution when you are doing order fulfillment and things like that, it’s just take the order and fill it. We go out and try to find new orders and try to develop new customers for our manufacturing partners, and over time, that has helped us create a major difference.”
During a time when a lot of companies were losing money and struggling to keep business, BlueStar was growing. The company used its position to help its customers, and in return, BlueStar gained valuable relationships.
“During the last recession, we bent over backward to extend credit terms and find ways of creating a business flow of capital that allowed our customers to live and keep their credit ratings while we continued to try and expand the marketplace,” Cuntz says. “That was a bit unusual, which may have had an impact to our suppliers, because during the recession, our sales actually went up. It’s ironic because a lot of what we sell is exactly what an enterprise needs to do to cut expense overhead.”
Cuntz didn’t think twice about stepping in and helping customers through their tough times. In fact, that kind of effort is a company philosophy.
“Going above and beyond is just part of our organization’s philosophy, which is ‘Give more than you receive,’” he says. “It provides a differentiator in so many ways. In the long term, it provides an advantage. Providing that extra value also provides you extra recognition, notoriety and opportunities that might not exist otherwise. You have to create a unique difference for yourself. Fill a need or a void that currently isn’t being filled. It depends on the business you’re in, but always be good for the money and always create a value-add difference for your business, and it will work.”
Hire strong employees
During the recession, companies like BlueStar had to keep people motivated by keeping them busy at work.
“It became very activity-based,” Cuntz says. “Call the customers up and let them know that if they have a deal, we want to help them close it. Call them up and tell them the good news that we’ve got extended credit. Call them up and tell them that we’ve got inventory. We didn’t cut our purchase orders, we stayed the course. We became one of the few distributors that actually had product available. They saw an immediate return on their investment because of increased activity. So it wasn’t hard to keep people motivated because they were writing orders as fast as they could.”
That motivation was also fueled by strong leadership and employees who were hired because they would grow within BlueStar and help the company succeed.
“We’ve got substantial managers in our organization,” Cuntz says. “Our philosophy is you can’t move up until you replace yourself with someone better. Our management team has continued to get better because we keep hiring better people than we are ourselves and after awhile that becomes attractive to talented people who look for a career path.
“You have to create an environment where you lead by example. Every day, people are watching you, and unless you have somebody better than you sitting behind you pushing, it’s easy to fall into that yes-man trap, and we haven’t had that. It’s very important in a growing company that you have people that want to grow.”
BlueStar’s challenge quickly changed from “How do we stay motivated?” to “How do we meet goals in this down economy?”
“You have to be honest and communicate with your employees,” Cuntz says. “You should tell them what you expect them to be doing. We use budgetary goal setting to discuss our future plans and growth. Sometimes we will use weekly meetings depending on what things are happening within the company. We have weekly meetings with our sales and marketing teams, and we communicate through terms of budgetary accomplishment and feedback loops and what we expect. Are we hitting our goals? Are we not hitting them? Why do you think that is? You have to ensure that employees are doing the things necessary to succeed. If you’re not meeting goals, then you need to communicate with staff and see what things need to be changed.”
Cuntz and BlueStar are also constantly combing for people who will bring drive and the desire to grow to the company.
“Hiring people is kind of like Glengarry Glen Ross with the ABCs of selling, ‘Always be closing,’” Cuntz says. “We use the term ‘Always be recruiting.’ I think you have to always be in the frame of mind when you see a talented person who expresses a desire to be a little bit more in life or has some desire to make a change; we just try to be sensitive to that and keep our ears open. Networking is critical. With the nature of our business, we are constantly at trade shows, and we work with hundreds of suppliers, so we are constantly networking with folks. We try to carefully define what we are looking to accomplish and what kind of skill sets and characteristics it’s going to take to fill that position. It’s not just a saying, ‘Always be recruiting.’ We are always thinking of that.”
Grow and invest
In the world of technology, the industry is never quiet. It is constantly changing and progressing forward, and it is crucial for companies like BlueStar to be able to grow, adapt and invest within those changes.
“The things that seem intuitively obvious with an enterprise package are not,” Cuntz says. “That was a real challenge for us, and it continues to be. We knew coming in that we will face change. How you change and how you succeed with that change is the real key. With a flexible mindset and a flexible business plan, you have to expect that it’s going to happen and you have to be willing to make the investments. You have to invest in change. I’m always thinking about what’s our next investment.
“You have to have some expectations of three things when you think about investing. First of all, you have to understand what the investment is thoroughly. I don’t care whether that’s stock of a Fortune 5 company or a small business. You need a real thorough understanding of who that company is and who the people that are managing the company are. The second thing is does the company have the capacity to do better than it’s currently doing? Look for the missing links. What could you do to bring about change that would help make this company or this investment more than it is? The third thing you should look at is does it fit with your culture? Also, is it attractively priced? If all those elements are in place, then you could probably move forward with that investment.”
In recent years, BlueStar has grown to a level where it has been looking to expand globally and make acquisitions that will augment and enhance its business. However, with global growth comes more changes and challenges.
“The one thing I didn’t plan on was the organizations’ cultures,” Cuntz says. “Different parts of the world have different customs, labor laws and things like that. The biggest challenge to us has been to understand not so much that the business appears to do the same kind of work that we do but to understand the underlying business development of that organization and what the thought process of those employees are. Those are the challenges of understanding if you bought a company that doesn’t match up philosophically with yours.
“You have to focus on companies that are in the core market of the kinds of products you sell. If you’re going to look for a merger or key acquisition, you have to look for key managers that are going to stay on that share your corporate philosophy. And you really have to know what it is you want to accomplish. You have to look for similarities where you don’t necessarily have to reinvent the wheel but where you can offer them something that they need that will help both of you grow.
“You have to understand the market you’re getting into and the culture of that market. Does the market have the potential to grow? What’s the economic climate? The U.S. is not the best benchmark for how most of the other parts of the world operate. You have to understand that there are other costs involved of managing foreign entities that we are not aware of. You have to have a team in those regions that can clearly explain to you what those costs are and what those opportunities are so you can make a valid decision whether that’s going to fit your business model.
“We can determine pretty quickly whether they’re of a like mindset or not. You have to sit down and say, ‘Here’s where we want to go, and here’s how far we have reached.’ And if they’re not in agreement with that, then sometimes you have to make a change. It’s going to come down to communication. Communication is not a quantifiable formula. It’s a skill set on both ends of the communication.”
If you’re the investor, it’s your job to make sure that you are being understood. And it’s your job to make sure that you understand what’s also implied or said or inferred in a relationship.
“It’s an art form, a skill set to make sure that you know your partners,” Cuntz says. “That’s something there is no formula for. You have to be completely unassuming. My method is I assume that I was not clearly understood and there’s the old saying, ‘Inspect what you expect.’ My first inclination is maybe I didn’t say it right, so I’m going to monitor the response to the communication to make sure that I’m seeing the results to the request. You have to be very, very specific.” <<
How to reach: BlueStar Inc., (866) 830-0140, or visit www.bluestarinc.com.
The Cuntz file
President and CEO
Education: Received a bachelor’s degree in accounting and a master’s degree in finance at Xavier University
What was your first job, and what did you learn from it?
My first job was as a night manager for a fast-food restaurant called Burger Chef. What I took away from that job was that I found out I didn’t have any ability to know I was making a correct hiring decision at the time I was making it. Some people interview well and wind up being terrible employees, and some people are terrible at being interviewed, but they make tremendous employees.
What is the best piece of business advice you’ve received?
Always spend less than what you make. The gentleman I heard that from was my loan officer, Bob Herman, who actually helped BlueStar get going when I became CEO. I asked him, ‘What advice do you have for me, because I don’t want to ever let you down?’ He said, ‘Steve, you’ve got to spend less than what you make and you got to set money aside for contingencies, and the businesses that fail to do that usually don’t make it.’
What do you enjoy most about your job and why?
I really enjoy setting budgets and goals and then hitting them. I’m a very goal-oriented person. It’s kind of an architectural thing. You put it up on the board, and you look at it and wonder if you can build that thing, and then you put together plans to achieve it.
If you could invite any three people, past or present to dinner, whom would you invite and why?
I would love to have George Washington, Albert Einstein and Lou Gehrig to dinner. I would be curious to know how Washington kept it together in the face of that kind of adversity. His skills and leadership just floored me.
Guys like Einstein, I’ve admired my entire life, because I wish I’d been a better science student. Einstein was able to take really complex ideas and make them really simple. I still don’t understand half of what Einstein talked about. And Lou Gehrig, to me, was an icon. He was a natural-born leader and had the respect of his teammates and was one of the first truly great athletes that also was a role model.
David Taiclet wasn’t ready for the scene at the Fannie May store in Oak Lawn, Ill., when he showed up around 7 a.m. that day in November 2004. He was there to prepare for the chocolate maker’s first soft launch, scheduled two hours from then, that would set off a chain of reopenings and reignite the brand.
“When a retailer does a soft launch, it means we don’t do a lot of publicity about it, because we’re just trying to get organized to open the store, and then we’ll do a grand opening maybe a couple of days later,” Taiclet says. “We picked that store, because we didn’t think it would attract a lot of attention.”
He wasn’t expecting to find a line of people flooding out the door flocked by TV news crews — not much different from the scene 30 days and 45 stores later when he reopened the flagship store downtown at Michigan Avenue and Wacker Drive, where 800 customers stood in a line three blocks long.
“Picture this: You’re at this store, and you have these TV cameras there,” Taiclet says. “And the TV camera starts talking to a customer who just came out of the store, ‘Hey, I have so-and-so customer right here. What do you think of the product?’ And she’s like, ‘Well, I haven’t tasted it yet.’ So she opens her product up, grabs one and puts it in her mouth and starts chewing on it.’”
Now, keep in mind, this wasn’t quite the same Fannie May that many Midwesterners had fallen in love with when the brand’s mouth-watering sweets became tradition. When the chocolate maker’s parent company, Archibald Candy Corp., sank into its second bankruptcy in 2004, it closed the plant and 250 retail stores and started looking for a buyer. It found one in Taiclet’s company, Alpine Confections Inc., which had recently purchased Harry London, another chocolate company, out of bankruptcy.
So what would the response be now, with new ownership and a few other changes in store?
“She’s like, ‘This is the best Pixie I’ve ever tasted,’” Taiclet says, continuing his story with a reference to the chocolate-covered caramel candy. “You couldn’t pay for that kind of public relations and marketing to say, ‘Hey look, Fannie May is back and our product is outstanding.’”
It was proof that during the tough times that shuttered Fannie May, customer affection didn’t falter.
During the relaunch and beyond — like when 1-800-Flowers.com Inc. acquired Fannie May in 2006 and, after a couple years, asked Taiclet to stay on board as president of the gourmet food and gift basket group — customer service has been Taiclet’s focus. He leads 1,100 full-time and 1,500 seasonal employees under brands like Fannie May, Harry London, Cheryl&Co., The Popcorn Factory and 1-800-Baskets.com with the goal of maintaining the customer experience while staying relevant.
“If you look at any brand, they’re going to have ups and downs through their life,” Taiclet says. “But what makes it an enduring brand is the experience that customers have with it. You can talk about a brand being a logo. You can talk about a brand being a recipe. But a brand is really the experience a customer has with it. As long as you stay focused on that customer experience and maintaining the integrity of that experience, the company may go through ups and downs financially, but in general, you’re going to have a long, successful run.”
Although the soft launch turnout was surprising, Taiclet already knew about the bond between customers and Fannie May. It’s crucial you understand your brand through consumers’ eyes, too.
Taiclet learned about the customer experience during due diligence, when he had a three-month window to accumulate information before the acquisition. He spent that time with customers and previous retail store managers alike, even hiring back many employees to tap into their understanding of the brand. Then he compiled the feedback.
“The most important thing is we focused on, what is the great part of the customer experience?” he says. “What is the relationship this customer has with the brand? What’s the most important thing? We realized there’s this love affair between the customer and the brand. That love affair is the product quality, one; two, the tradition that people had with this product.
“When people described our brand, it was like, ‘Hey, it’s tradition. It’s a trusted friend. It never fails. I know it’s going to be good. You can’t go wrong with this.’”
From those consumer descriptions of the brand, Taiclet knew that going forward, product quality would have to stand up to the legacy of recipes that hadn’t even changed when ingredients ran low during World War II. Of course, hiring back the same employees and using the same recipes helped ensure that the product would stay the same. But he was so concerned about quality that he sent old and new samples to a university food research group for scientific analysis.
Understanding the customer experience takes more than upfront research — it’s an ongoing endeavor. When 1-800-Flowers.com acquired Taiclet’s brands, he was able to leverage its e-commerce platform and social media presence — in other words, become more accessible to consumers and get more personal with customers.
“Feedback has become a lot easier these days, both good and bad,” he says. “You’re deepening your relationship with your customers by offering them these [interactive] opportunities. You get instant feedback. It doesn’t get any better than that.”
Direct contact can even be a business in itself. The company acquired DesignPac Gifts, which created wholesale gift baskets for third-party retailers. Tapping into the capability and name recognition of 1-800-Flowers.com, DesignPac sprouted a direct-to-consumer brand called 1-800-Baskets.com, which has become the fastest-growing brand in the company.
But customer interaction can get even more personal than e-commerce or Twitter can allow. You need to get out and interact with customers, too. Taiclet regularly visits stores, plants and distribution centers, both to work alongside employees and to chat with customers. Whether he’s stocking shelves or attempting to giftwrap boxes — which, he’ll admit, is not one of his strongest skills — he’s facing customers and getting a glimpse into their experience.
“Our management team is active and involved, and I think we know what our customers are saying,” he says. “We live in a world where it’s not hard to get customer feedback, and if you just go stand in a retail store, you know. If you’re standing in your distribution center and you’re seeing the product go out the door, you know the kind of experience that your customers are probably getting.”
Keep things fresh
While it’s crucial to understand what has kept your customers coming back, you shouldn’t limit your brand to what has been successful in the past. After all, you want customers to keep coming back in the future, too.
“What’s important to be relevant to your customer is the tried and true but also that you’re out there being interesting and new, as well,” Taiclet says. “It’s a fine line. But it’s important that you’re giving people a reason to come in: ‘Oh, what’s new?’”
You need to marry the tradition of your brand with a few fresh touches. The challenge is determining whether any changes or additions will influence the overall brand perception.
“Look, not everything you do is going to work,” Taiclet says. “We’re not afraid to try some things. But I can tell you we’re not going to change the things that we know work.”
So don’t mess with the staples of your brand — like the customer experience — that you identify as important through feedback. You can take small steps to improve those things, but you shouldn’t change the game completely.
Many of the new Fannie May products, for example, partner the famous chocolates with other well-loved snacks, like ice cream and Eli’s Cheesecake — and these don’t replace traditional favorites like Pixies, Trinidads and Mint Meltaways.
But most of the changes came simply as an effort to “freshen up” the stores through signage, displays and uniforms.
“Clearly, when we came back, people were quickly pointing out differences,” Taiclet says. “But any differences, we tried to make sure they had nothing to do with customer satisfaction. I mean, the uniforms were a brighter color because we wanted to freshen the look. So the changes that we did make were with the understanding that this would be seen as a positive.”
To help lessen any shock when customers walked in and saw the differences, Taiclet communicated changes they could expect and what those meant.
“At the end, I think they came to appreciate why it was different — it just presented the product better,” he says. “[We] told the customer what it was: ‘Here’s a small little change to tell you that, hey, we’re a new Fannie May, but at the same time, we didn’t mess with the quality of the product.’”
Maintaining your brand’s legacy while keeping it relevant really translates into sustainable growth. It’s a balance that Taiclet thinks will differentiate his brands.
“Companies get themselves in trouble trying to grow at all costs and to grow anywhere and everywhere,” he says. “What we’re trying to do is grow in a smart, sustainable way.”
Along with keeping an ear to customers to confirm that his blend of tradition and freshness is keeping them satisfied, Taiclet also uses financial analysis to temper growth. Before opening a store, for example, he evaluates economics to predict returns. Even though he could have opened eight stores last year, he only opened the five where analysis signaled the best chance for success. At the end of the year, there were a total of 85 company-owned stores, and he also recently launched a franchising program.
“We could grow aggressively on the wholesale side through some of our third-party retailers,” he says. “But it is incredibly competitive in certain areas and we’re going to make darn sure that we don’t get too aggressive. We could go out in that wholesale market and sell a lot of product and grow the top line, but it might not necessarily grow the bottom line. When we talk about ‘grow smartly,’ that’s what I’m talking about is that you’re constantly finessing between top-line growth and bottom-line growth.”
Taiclet has found that balance by focusing on the customer experience.
“We’re fortunate that we have growth opportunities, [and it’s] because we have focused on those things,” Taiclet says. “We just need to be thoughtful and prudent about the different directions we could grow and make sure it’s profitable, sustainable growth and not just one-off. There’s a lot of one-off places to grow for a lot of companies.”
The long-term test for Taiclet is that any changes or growth ventures won’t lead the company astray from the customer experience that has made Fannie May the No. 1 chocolate brand in the Midwest. That focus has helped him grow the entire gourmet food and gift basket business to about a third of the revenue generated by 1-800-Flowers.com — about $250 million.
“(It’s about) the relationship of your product with the customer and the customer experience,” Taiclet says. “Across all of our food brands, what we’re trying to focus on is the positive relationship that a consumer has with you and your product. It is that experience that embodies your brand — and that is your brand, really.”
How to reach: 1-800-Flowers.com Inc., (800) 356-9377 or www.1800flowers.com
The Taiclet file
President, Gourmet Food and Gift Baskets Group
Born: Monterey, Ind., a town of 200
Education: Graduated from Notre Dame in 1985 on Army ROTC scholarship, then served four years active duty. Earned MBA from Harvard Business School in 1991.
What was your first job, and what did you learn from it?
I grew up in a family business; my father owned the local grain elevator. So I grew up working in that business, doing everything. That was probably my first experience with customers and doing anything you could to keep customers happy — and farmers are a tough group of customers.
I’m a Fannie May Pixie fan.
If you could have any superpower, what would it be and why?
I’m married with four kids, and I love my family. If I could just have the power to have those moments with my family that are very special to last a little longer, maybe go back in time and relive a couple of them, that would be pretty cool.
What’s your favorite way to relieve stress?
One, I like spending time with my family. Two, I don’t read a lot of books, but I’m a voracious newspaper/magazine reader. Wall Street Journal, New York Times, Fortune and The Economist are my four things I like to carry around. And if I have a lot of time, I love to fly fish.
What’s the best business advice you’ve ever received?
The best advice I ever got was probably from my father, who said, ‘Surround yourself with good people — both your friends and your businesspeople — because it will make not only you better but your organization better. Throughout my life, whether it was in college or the army or when I owned my own business or worked for others, I’ve always focused on: Am I surrounded by good people, and have I hired good people? I would say that’s been one of the elements of Fannie May’s success is that we’ve attracted, hired and retained really good people to the organization.
Favorite local spot for a business lunch?
Maybe it’s because of my roots growing up in a small town, but I love the local diners and I love the local flavor. We have a plant in Lake Forest and there’s a Liberty Restaurant in Libertyville, Ill. In Glen Ellen, Ill., there’s a small restaurant called Baroney’s there that we’ll go to. In Cleveland, there’s Gasoline Alley down in Bath, but for formal dinners in Cleveland, Ken Stewart’s Lodge is my favorite. And then in Chicago it’s typically, for a formal dinner, Gibson’s. I typically stay at a place called The Talbot Hotel downtown Chicago on Delaware street and there’s a casual dinner right across the street called The Feast Restaurant that I think has really interesting food and wine.
One of the most destructive characteristics of our current culture is the belief of so many people that no matter what happens, it isn’t their fault; they are not responsible. Smoke three packs of cigarettes a day and get cancer. It’s the tobacco companies’ fault for making cigarettes. Eat Big Macs and french fries while sitting around watching Oprah, and then blame McDonald’s for obesity. Let a child play with a lighter and gasoline, and then blame the pajama company because he lit himself on fire.
We make our own decisions in life and we are responsible for our own actions and our own inaction.
I am responsible. Responsible is defined as: involving personal accountability, able to be trusted or depended upon, characterized by good judgment or sound thinking.
Anybody can lay blame for problems or failure at the feet of others. It takes strength, character and courage to stand up and say, “I am responsible,” and then deal with the consequences. When confronted with a challenge beyond our control, it is easy to say, “It’s not my problem,” and give up. It takes determination and effort to grapple with an issue and see it through to successful resolution.
Our job is to perform for our customers. Customers are not always reasonable, customers are not always fair, customers are not always rational, and sometimes customers don’t even know what they really want. Despite those challenges, we must find and satisfy our customers’ needs because, ultimately, our customers will judge us based upon how well we meet or frustrate those needs — real and perceived. If we fail to meet their delivery needs, if we provide defective product, if we don’t respond to questions or concerns in a timely manner, if we promise to take an action and then fail to take it, customers don’t really care why. Our fault, the customer’s fault, our supplier’s fault, nobody’s fault — it doesn’t matter. All that matters is: Did we execute or did we not? Laying the blame for failure elsewhere doesn’t change anything.
One of the first customer calls I ever went on was to address a quality problem that we were having. I was a fresh-faced 22-year-old representing our company alone for the first time. As soon as I walked into the conference room, I knew I was dead meat. Production staff, engineers, buyers and the general manager were all there to greet me, and they weren’t happy. Rather than submit to the beating I knew was coming, I landed the first punch myself by accepting that we were responsible for the problem. I told them what happened, what we were doing to fix it and what they could expect from us. I could see the anger and hostility fade as they were replaced by a mixture of relief that we were fixing the problem and disappointment that the beating wasn’t going to be any fun.
I learned a valuable lesson. Our customers need us to stand up and accept responsibility and accountability for achieving agreed-upon objectives. They need us to communicate how we are going to get the job done, and then they need us to keep them apprised of our actions and our progress. Customers need to know that we will seek help, advice and support when needed. They need to know that we will call on critical resources with the required skill and expertise. Customers need to know that once we take on a job, we own the job, we own the results, and they can count on us to get the job done. When things go wrong, as they will from time to time, our customers need to know that we will stand up, be responsible and take the action we need to take to fix the problem.
Over the course of this next month, your challenge, should you decide to accept it, is to demonstrate to your customers that you are responsible. Demonstrate that you are accountable and that they can trust you to stick with it until the job is done.
Scott Morey is president of Morey Corp. In this role, he provides overall strategic direction and leadership for the company. He specifically oversees manufacturing, operations, finance and accounting, sales, engineering, product development, and technology strategy. During his 36-year tenure, the company has experienced marked growth and an expansion of service and product offerings. Morey has also played a key role in developing and implementing the company’s best-in-class program management and quality systems. He serves on the board of directors for Morey Corp. and 10G (a joint venture with Caterpillar). He is also a member The Young Presidents’ Organization.
The people at TravelCenters of America LLC believe in being resilient, in the ability to survive many pitfalls in the business world and in living to fight another day.
But they can’t survive poor customer service. Which is why it’s a top priority for the company to deliver an excellent customer service experience every day, to every customer.
Existing in a commodity-driven marketplace, with competitors offering many of the same products and services, TravelCenters — led by Managing Director, President and CEO Thomas O’Brien — has recognized that customer service must be its market differentiator.
The company keeps its repeat customers coming back through its loyalty program, UltraOne, which began a major upgrade last year. VIP members receive benefits such as upgraded shower credits that don’t expire, free dinners on their birthdays and free parking at sites that normally charge a fee.
TravelCenters also focuses on customer service through efficient processes. When a customer comes into a service site for a repair, a swipe of his loyalty card will bring up all pertinent information about his company and his truck, meaning that the driver is easily recognized at any TravelCenters location throughout the country.
The system also allows site employees to look up the details of the customer’s last three visits to a TravelCenters site. Staff members can use the information to make each customer’s visit more personal. Employees are able to inquire about tires a customer purchased on a previous visit and offer a free tire pressure measurement and inflation service.
Employee training goes hand in hand with better systems and technology. With that in mind, TravelCenters has created a career path for each employee, with training completion monitored and reported on electronically. The training program, called Q-Force, is taught in four-hour sessions, 10 times a year to the company’s work force of truck service advisers, who are generally the first employees to greet and service a customer.
How to reach: TravelCenters of America LLC, (440) 808-9100 or www.tatravelcenters.com