Mike Faith describes himself as “an obsessive-compulsive kind of person.” So when he says he’s passionate about customer service, you’d better believe it.
Faith started San Francisco-based Headsets.com in 1998 with $40,000. By 2005, the 60-employee company had $31 million in revenue.
Headsets.com’s service philosophy is “Customer Love,” and Faith says it takes a CEO’s commitment to successfully implement a customer service policy. “If you don’t really believe in it yourself, it’s not going to happen,” says Faith, the company’s founder, president and CEO. Smart Business spoke with Faith about how customer service became his No. 1 priority.
How did you become a self-proclaimed customer service fanatic?
I used to run other businesses with call centers, and one of the most frustrating things I found was I couldn’t buy good headsets at fair prices with good service. I saw a huge opportunity to deliver all three as a package.
Customer service is about service. It’s about serving. It’s about acquiescing yourself to the other party. It’s always been something I believed in, but it really started to manifest itself with the headset business.
In the early days, I kind of let customer service slip and paid the price. The customers I’d spent so much money cultivating weren’t coming back, and they weren’t providing a good return on my investment. I took a long, hard look at the company and myself and appraised where I was delivering on the three principles that started the business.
I found I was competing in a race for the bottom of the price pack, which was reflected in the products I was delivering and the levels of service that came along with them. I realized I was making the same mistakes as the vendors who used to supply me, so I just stopped it.
I improved the products, the service and how we did everything, and maintained fair and reasonable prices, not bargain basement, cutthroat deals. I really turned up the service thermostat all the way. If I get into something, I tend to do it in extremes, and as we did it, I really pushed as far as I could.
How did you establish these changes?
First came the realization that the customer’s not always right. I don’t buy that one, but I do buy that the customer always deserves our respect. We can’t function without loyal customers, and they need to be treated just like that.
I simply don’t allow or condone any disrespect to a customer any time, on or off the phone. If a customer service rep rolls his or her eyes after taking a 50-minute phone call from a customer and it doesn’t end in a sale, the CSR would be disciplined or maybe even terminated for rolling their eyes.
When you do that, people get it, that ‘Wow, this really counts around here.’ It’s not negotiable. If you can’t act respectfully toward all our customers all the time, you don’t work at Headsets.com.
Secondly, I know it’s an overused phrase, but we overdeliver on every standard we set. We say we’ll respond to an e-mail in two hours; we currently have a standard of one hour. We promise three-day delivery, and we actually send everything two-day delivery. It’s a pattern that’s repeated over and over in our business: Promise high, and then overdeliver.
We make some very overt promises to our customers called our ‘Seven Promises’; we live by them on every transaction every day. They go on every mail piece and on the Web site.
One of the promises is management accountability. We make available the phone number and e-mail address of the customer service manager, the shipping manager and myself.
With 220,000 customers, if you start messing up, then those three numbers get a lot of noise pretty quickly. We don’t hide behind three layers of escalated system.
If there’s something wrong or something right we want to know about it. If a problem is going on somewhere, it won’t take weeks to get to me; I’ll actually hear about it first.
How do you get employee buy-in to your ‘Customer Love’ philosophy?
Customer love means loving your customers, believing they’re everything to you and showing that in every aspect of what you do. When we interview customer service reps, if they’re not comfortable with the phrase ‘customer love,’ then we don’t select them to work for us.
There’s a dictionary definition of love which fits quite well: ‘A deep, tender, ineffable feeling of affection and solicitude.’ If you can’t think that about your customers, then you don’t deserve to have them.
HOW TO REACH: Headsets.com, (800) 432-3738 or www.headsets.com
Smart Business San Francisco will debut in January 2007 as the newest title in the Smart Business Network chain of local management journals, and its third in California.
Each issue of Smart Business San Francisco will include:
- Cover Story: A major feature on the management strategies and business philosophy of the CEO of a major public or private company in the San Francisco area.
- Smart Leaders: A quick-reading, quotes-only feature providing a glimpse into the business and personal thgouhts of a successful local business person or civic leader.
- Fast Lane: A question-and-answer session with the CEO of a local growth company about the success strategies used to build a business;
- Tips from the Top: OfficeMax founder Michael Feuer shares the strategies that helped him build a Fortune 500 company from ground up; and
- Insights: Key local service providers share their expertise on issues critical to business.Smart Business San Francisco will saturate companies with 50 or more employees. These companies amount to 11 percent of businesses, but account for 80 percent of all buying power.
The publication will have a circulation list of 10,000 senior-level managers, which will be audited by BPA Worldwide, the leading independent audit agency for business-to-business publications. An additional 24,000 executives are expected to see the publication through pass-along readership.
About Smart Business Network
Smart Business Network is the nation's fastest-growing publisher of local management journals. Its monthly management journals are designed as concise, 32-page packages that meet the information needs of senior decision-makers of middle-market and large companies. Each edition includes feature articles on management strategies of CEOs of leading local companies as well as insights from local subject-matter experts in key business areas, including accounting, law, human resources and technology.
Smart Business Network currently publishes management journals in 19 markets in nine states:
- California: Los Angeles, Orange County, San Diego and San Francisco
- Florida: Broward/Palm Beach, Miami and Tampa Bay
- Georgia: Atlanta
- Illinois: Chicago
- Indiana: Indianapolis
- Michigan: Detroit
- Ohio: Akron/Canton, Cincinnati, Cleveland and Columbus
- Pennsylvania: Philadelphia and Pittsburgh
- Texas: Dallas and Houston
Today’s executives often work long hours at great personal sacrifice to ensure the success of the businesses that they manage. The trade off for this dedication is often the ability to build a great deal of personal wealth, while enjoying the satisfaction of knowing that this wealth can ultimately be used to improve the lives of future generations.
In reality, a smooth transfer of wealth to one’s heirs is not a guarantee, says Lance Yanagihara, a relationship manager who leads a group of Japanese-American bankers at Union Bank’s Private Bank. Without a strategic wealth plan, many people may find that a smaller portion of their wealth will make it to their intended recipient.
Smart Business spoke with Yanagihara about taking steps to preserve wealth for the next generation and about some of the potential cultural nuances of effective wealth planning.
Is there a best time to address wealth planning?
Anytime someone has begun to amass any significant amount of wealth, it is important to begin the process of wealth planning. A lot of people have a living trust, and while that’s not a bad start, those with wealth really need to go beyond the simple mechanics of a trust and explore how else they might be able to transfer wealth while reducing estate tax at the same time.
Due to several current conditions, now is a particularly good time to embark on a wealth planning process. For one thing, if a client has assets that are currently depressed in value, such as real estate, it might be an advantageous time to pass those assets on to their heirs. Using a combination of depressed asset values, discounts for transfers of minority interests, and record low interest rates, wealth transfer and estate planning can be combined to save a great deal of money. Paying gift or estate taxes based on today’s discounted values, rather than waiting until a later date when some or all of that value may have been regained, makes for good planning. Additionally, the current gift tax rate of 35 percent is at a historic low making it a great time to employ selected strategies that can lower gift tax rates to as low as 26 percent.
Passing a residence or vacation home to children using a QPRT (qualified personal residence trust) works well with depressed real estate values. The use of GRAT (grantor retained annuity trust) or CLT (charitable lead trust) can enhance wealth transfer planning with the combination of low interest rates, low valuations and higher discounts, all of which are present today.
How can working with a wealth planning specialist be beneficial?
Often, people are so busy they don’t have a chance to think about planning so it really helps to work with a professional with the experience, knowledge and objectivity to assess the situation and make specific recommendations. Also, a wealth planning strategist is in tune with the constantly changing opportunities that are available. This highly specialized knowledge and experience can translate into a much larger percentage of a client’s wealth being transferred according to their wishes.
Another potential benefit relates to working with a wealth planning specialist who offers very specific expertise aligned with the client’s unique needs. For example, our Private Bank offers experts in succession planning for business owners who need help determining the succession path of the business that they have nurtured over the years. Also, as the Japanese Segment lead, I provide specialized solutions for Japanese and Japanese-American clients including members of the Nisei generation, which is first-generation U.S.-born Japanese-Americans, many of whom are now in their 70s and 80s. Many of these people built their wealth in the aftermath of World War II, so extra care should be taken to transfer their legacy in a tax-efficient manner. This is where I feel I can add great value to these clients.
How important is being fluent in Japanese when working with the Nisei generation on wealth planning?
By definition, the Nisei were born in the U.S., so there are no language issues. But I think many of them would appreciate working with a banker who understands and shares their culture and heritage.
For those who immigrated to the U.S. after the war, or whose spouse is from Japan, however, there may be a strong preference to work with a Japanese-speaking banker. You want to make sure that they understand the options that are being presented, and sometimes the best way to do that is in their native tongue.
When someone is ready to begin planning, what are the first steps?
The process starts with an interview with a wealth planning specialist. Many people have a vague understanding of what they want, and the right wealth strategist will be able to ask pertinent questions to bring those needs to light. Once the wealth strategist has all the relevant information, he or she can develop a goal-based client analysis and then present specific implementation suggestions. After that, he or she will work with the client’s CPA and attorney to help the client implement the plan.
Wealth planning strategies have legal, tax, accounting and other implications. Consult a competent legal or tax adviser.
Lance Yanagihara is a relationship manager at the Private Bank and Japanese Segment lead at Union Bank. Reach him at Lance.Yanagihara@unionbank.com.
Any bank can make a loan, handle your business deposits and help with investments. But to establish a truly enhanced banking relationship it requires a bank with segment specialist bankers that know your industry and understand your business, says David Jochim, senior vice president and division manager at Union Bank.
“Our segment specialists for legal, medical and accounting professional service businesses are dedicated bankers who are focused on a specific industry. They manage a portfolio of similar clients and are seasoned professionals that deliver the best client experience,” Jochim says. “In addition, these individuals have the knowledge and expertise to work with the owners and executives on their personal banking needs. It’s a very holistic approach, where one point of contact, the relationship manager, can assemble the appropriate team to deliver the right products and services to the client.”
Smart Business spoke with Jochim about how a relationship with a segment specialist banker can provide substantial benefits for both your business and personal finances.
What is a segment specialist banker?
A segment specialist banker has a deep knowledge of a particular industry, whether it be law firms, medical practices or accounting firms. The banker is knowledgeable about the unique banking requirements for that industry, including its trading cycle, working capital fluctuations, capital investment requirements, expansion opportunities, real estate needs and treasury management platforms. The professionals and the businesses they own and operate are closely linked together. The specialty segment banker is in a position to assist both.
Because the banker specializes in a particular industry, they understand all the nuances of their business. They have completed industry-specific training as it relates to bank requirements and continually stay current on industry trends and issues. In short, they immerse themselves in the field and, over time, develop a keen proficiency that becomes an asset to the clients they serve.
How can forming a relationship with a segment specialist banker benefit a business?
Initially, it will save time because the business owner doesn’t have to explain the fundamentals of the industry, only specific nuances of their business. The banker will be a strong advocate within their institution for the client due to their extensive knowledge and experience. For example, if the entire industry segment is experiencing a downturn, the banker understands and can apply the appropriate actions to assist their clients accordingly. Their effort is centered on successfully helping the client weather the storm.
Another important benefit is that entering into a specialty banking relationship can often entitle the owners/partners, executives and employees of that business to a preferential array of banking products and services. In this way, all the participants of the firm can derive benefits from the relationship.
In what other ways can the owners or partners benefit from this type of relationship?
These individuals will have the ability to optimize their personal banking needs as the result of having access to the resources of a private bank. Whether they want to set up a trust to protect their heirs or develop a wealth plan to grow and preserve their assets or simply require a jumbo mortgage for a new home purchase, they now have access to a team of experts who can help them make the best financial choices.
If you want to make the switch to a segment specialist banker, where should you start?
Start by seeking out a bank that specializes in your industry. If you don’t have this information, your accountant, lawyer and industry colleagues are good resources. Then sit down with the banker to discuss your specific business goals and objectives. The banker needs to understand how they can assist you on this journey. Every client within a specific industry is unique, but they all have similar banking requirements. The banker will use his or her knowledge of the industry and your business to tailor appropriate cash management, credit and other financial solutions.
The goal is for the owners to feel confident that their banker is delivering consistent banking solutions that help the business and the individuals succeed in meeting their financial objectives.
David Jochim is senior vice president and regional director responsible for specialty banking at The Private Bank of Union Bank. Reach him at (949) 553-2520 or David.Jochim@unionbank.com.
“The hard drive business had been sold, and we had a number of businesses under a tremendous amount of pressure from the dynamics of technology,” he says. “That was the challenge — where were we going to take the company to make us be successful?”
He decided fairly quickly that the company had to transition from a device-focused OEM company to a storage systems company focused on backup recovery and archive segments of the storage industry.
“Part of your job as a leader, which is especially true in technology, is getting on the right side of gravity,” the chairman and CEO says. “There are certain things you do that just seem to work. Forces around you are helping you succeed, and the opposite is also true — when you’re pursuing something that’s just an uphill battle. Part of driving your strategy is making sure you get into a position where you’re not working against gravity — the gravity is working for you.”
That’s the biggest challenge he had to tackle as a result of Quantum’s position in product segments that were going against gravity.
“We can fight all day long to try and stop it, and no matter how good we were, that working against gravity was really a problem,” Belluzzo says. “We spent a lot of time getting ourselves in an opposite position where we’re in markets that are growing, we’re in technologies we know how to do, there are a number of things that are working for us, and we talk about that a lot. I often ask when we’re facing a business problem, ‘How much of this is gravity working for us or against us, versus we’re just not performing well?’
“No matter how good you are and how experienced you are, if you’re working in a situation that is against the laws of physics, as a leader, you’re responsible to not just fight that, but you’re also responsible to get your business and your team working so the gravity is working for you instead of against you.”
He led the company through a number of changes, and by 2006, Quantum was still under tremendous pressure. But that didn’t stop Belluzzo from borrowing $500 million to complete an acquisition.
“That really was the watershed moment in terms of getting us to where we are today,” he says. “We were struggling up to that point, and we had to do something big. This was it.”
Here’s how he used the acquisition to move Quantum forward.
Get your people in place
Acquisitions are always huge undertakings, and the key to Quantum coming out of this successfully was to integrate properly, which started with getting the people aspect in place.
“We took on a strategy that was harder to do — [take the] best of class in both companies to build a new company,” Belluzzo says. “Textbooks tell you that you acquire someone, you integrate deeply and go forward. We didn’t have all the right ingredients at Quantum to pursue our strategy, so we had to acquire and integrate in such a way that we had the best of both worlds.”
That meant that both the executive and the general employee base would be chosen from both companies.
“We took an unconventional approach to doing this,” he says. “That was essential for us to have the skill set and background that we needed to move in this new direction.”
But there are certain things you have to look at to make these decisions — it can’t just be a random selection or who you like best. Belluzzo looked at two things, the first being strength of capabilities in every area — manufacturing, sales, R&D and so on.
“I had to make the decision, ‘Which company was better at that?’” he says.
Then the second part was looking at which leader was better.
“Often, those are the same things, but other times, there was a bit of a mix,” Belluzzo says.
While he worked to pick the best from both companies, he also had to look outside both organizations at times and make hires in addition to the moves and the downsizing.
“We had to, pretty quickly, change the skill base that we had as a company,” he says. “A lot of companies that go through this fail, and I would argue that most of them fail, and part of it is because what they need to do to be successful going forward is very different than what they know how to do. That’s a very hard path to cross, and we had to be aggressive about that.”
Where he had gaps in skill sets, he looked to bring in people to fill those talent voids.
“You start by bringing on a few people who are the real experts in the field,” he says. “They help you define what else you need and how you want to get them. At Microsoft, this was a technique used often that if they were going to go into a new field, they would hire one or two key people and build around them, and we did a lot of that also.”
This comes down to a lot of personal recruiting on your behalf and talking them through your vision.
“There’s not a formula for how to do that,” Belluzzo says. “That’s what part of leadership is — to be connected with people and to recruit and to make sure you know what you want to build around.”
Ultimately, he was largely successful, but he says it’s important to recognize that you won’t get every move right.
“I feel like 80 percent of what we did initially we did right, and we had to adjust to the 20 percent that we may have done wrong in that process, because you never get it fully perfect,” he says.
That’s a key in integrating acquisitions — not getting bogged down in the decision-making process and instead forging ahead.
“We were decisive,” he says. “We were decisive, and we didn’t let things float, because we didn’t have time to let things develop. We had to be clear about what we were going to do and move forward with conviction.”
His decisions weren’t always popular though, and you have to be prepared to handle that.
“Frankly, a lot of people were dismayed at how I went through this process, because they thought I should pick people I was closest to,” he says. “I spent a lot of time with people one on one. I had a lot of input to make those decisions. I knew it was a matter of survival. I put my neck on the line to borrow this money and make this move, and I was not going to make decisions based on anything other than what would drive us to success.”
Whenever you’ve got so many major changes going on in an organization, it’s critical that you keep all the affected parties in the loop about what’s happening.
“You spend a lot of time developing a clear communication strategy, and make it clear and as direct as you can in what we are going to do,” Belluzzo says.
He spent a lot of his time visiting his teams all over the world during this process to make sure he was telling them what his plan was and what the decisions were.
“We used the traditional broad communication around employee meetings, but in addition to that, [there was] a lot of face time in front of groups. I know shortly after the launch, I flew around the world and visited almost every site to tell them what we were going to do, what the implications were, to stay very close with people through that process,” he says.
One of the challenges in communicating such a large-scale plan to such a large group of people is ensuring that what you say doesn’t get ignored.
“I don’t know if you know that immediately, but you keep following through and reinforcing the message and expect people to come on board,” Belluzzo says. “We try to make it clear that this is where we’re going, and we need you to be with us, and you can take some time to sort it out, but ultimately you have to get on board.”
You have to make the judgment call as to when people need to get on board.
“There’s no formula for that,” he says. “It depends on the person and the areas they’re in and how critical they are, but you can’t give it very much time.”
Some people self-selected out by saying that the new direction wasn’t what they wanted to do, and he was OK with that.
“You ask, ‘What are some of the success factors?’ and it’s to get a team that has the skills and believes in the future and can work together collectively to take on the challenges that are ahead,” he says.
Between what you’ve created and who’s stayed, you should be on the right path.
“You get it mostly right, but there’s subsequent changes that you inevitably need to make because it doesn’t quite work,” he says. “It is a challenge, because when you go through transformation like this, especially for us, we were de-emphasizing certain skills in the company, certain technical skills in the company, and we were embracing new things, and there are a lot of people who feel threatened by all of that. They used to do a particular thing well, and we just said, ‘We’re not going to do that anymore.’ That’s hard.”
Move ahead with your plan
As he moved forward after the acquisition, he needed to make sure that the new Quantum was on the right track, so he created a scorecard to ensure that happened.
“It would be based on a set of objectives of what we think the most important priority is,” he says. “Virtually at any point in time, I’ve got a very short list of the things I think we need to get done, and so I will communicate those. We will have metrics around them.”
Some of those are a year in duration and others will have more intermediate check-in points. He shares these across the company and they grade themselves on meeting them. Having check-ins helps ensure they’re on the right path.
“I like to lock things down and run hard for six months,” he says. “Then you kind of reflect on what’s gone well and what’s not working and what’s changed, and then you alter it and go put your heads down and run for another six months. That’s about the rhythm that we were on. We’ve not changed the goal, but we do change how we get there.”
In addition to the data, Belluzzo was also careful to pay attention to his instincts.
“There’s data and it’s intuitive,” he says. “You have to follow your intuition about it. For me, the way I know to make a change is if I’m going down a path, and I get really uncomfortable and I start challenging myself, I have a lot of internal turmoil over something, and I reach a point where I say, ‘OK, this turmoil has been here too long, and I need to find a different path.’ The faster you go through that process, the better off you are.”
When you combine your numbers and your intuition, you should know if you’re on the right side of gravity again.
“You can look at your scorecard and look at your results and say, ‘Are we improving in this area as fast as we need to?’” he says. “I would say that if my intuition feels right and the numbers and the progress look right, we keep going. The difference being you spend time looking at the future — you’re always trying to assess whether you’re moving in a direction that’s ultimately going to be successful.”
Now, more than four years after the acquisition, Quantum has reached $681.4 million in total revenue in fiscal 2010. The business has successfully transformed and is profitable.
“Borrowing money was a pretty controversial move,” Belluzzo says. “Yet that’s how we were able to put together enough of the strength that we needed to get to the point where we are today, which is a very profitable tape business and a growing disk and software business.”
How to reach: Quantum Corp., (408) 944-4000 or www.quantum.com
A sound business plan is like a road map to the land of high performance. Informed executives know a secret: The road, as the map might suggest, isn’t flat; the topography of the journey from here to there has to be carefully managed. In the business world we call that topography culture. Unless business leaders take decisive action to align their company’s culture with its strategy, that culture can actually undermine the journey. Will your culture be a roadblock or an escort? Will it hinder or accelerate your journey to high performance?
It is natural for leaders to focus on the financial and operational aspects of managing their business. Unfortunately, in many organizations leaders passively allow company culture to evolve on its own they don’t make sure the culture lines up to support achievement of the strategy. Executives of high-performing companies don’t rely on fate or human resources to achieve alignment. They create a competitive advantage by ensuring that people and functions work together toward a common purpose. In short, they guide culture.
“As organizations grow and change it’s easy to lose sight of the importance of the shared values and behaviors that underpin the execution of strategy,” says Joseph Dettmann, senior consultant in Towers Watson’s Organizational Surveys & Insights Practice. “Executives often assume that the culture will work naturally in their favor, but without the right guidance, values can be misplaced and the wrong behaviors reinforced, preventing a company from delivering on its strategy priorities.”
Smart Business spoke with Dettmann about the steps executives should take to achieve cultural alignment.
How can executives initiate the cultural alignment process?
First, take a snapshot of your organization’s current culture by defining its attributes. Start with your leadership team. Culture isn’t as soft or illusive as it seems. It can be measured reliably. Towers Watson has spent the last decade working with top-performing companies to define and validate the cultural attributes that underpin achievement of different strategies. It’s actually very clear what needs to be present for employees to be innovative, to be efficient and carefully manage costs, to deliver high-quality products to market, to have a strong customer orientation, and to build a strong brand/image from the inside (from employees) out (to the market).
From research and practice, clear attributes have emerged that serve as the foundation for a concise culture-strategy alignment assessment: The Cultural Alignment Tool. Leaders sort cultural attributes that most reflect their company’s current state, and then sort again to build a future state, selecting those attributes they believe are needed to deliver on the strategy. We evaluate the current and future states against the profiles of high-performing innovators, models of efficiency, customer-centric businesses, etc. By doing this we clarify the aspects of culture that are working in the company’s favor to be leveraged, and pinpoint the cultural barriers that will need to be torn down to get from here to high performance.
There are different paths to success, but they all start with careful measurement and a clear road map. Collectively, company executives need to build a framework for success by deciding which aspects of culture will work in their environment to create a competitive advantage. We have found that high performers tend to focus on one or two primary strategic priorities, like quality or brand recognition, and they align their culture to support them. Executives become clear on gaps between the current and future cultures and their teams drive focused actions to close those gaps.
Of course, business leaders should resist the temptation to take actions based upon anecdotal beliefs, because there actually is hard science behind the defining and shaping of corporate culture. Over the years we have collected best practices from organizations who have successfully built alignment, and who because of it have been better able to execute on their strategies and financially outperform their peers. When it comes to taking focused action, there is no need to reinvent the wheel we provide a library of best-practice actions to drive cultural alignment. Others have done the work and learned the hard lessons; leverage that to your advantage by using a smart resource like this.
Should employees not just leaders be involved in the change process?
Yes. It’s important to test the current cultural alignment and employees’ readiness for change by conducting a broader work force survey. You might already have an employee survey. If you do, make sure it is about more than just satisfaction or engagement; make sure it measures and helps to truly deliver alignment. The results will confirm or dispute leaders’ conclusions about the environment and reinforce or suggest new actions that will be most effective in lining the culture up for success. Executives can also use the information to establish a baseline and compare employees against those in high-performing organizations.
What should leaders focus on to drive change?
Here are a few things to keep in mind when driving cultural alignment:
- Measure first then take the right, focused action.
- Be a senior champion alignment starts and is reinforced at the top.
- Involve all levels of leadership real change happens grass roots.
- Don’t manage cultural change as a project it must permeate everyday work life.
- Monitor progress celebrate and course-correct when necessary.
Joseph Dettmann, Ph.D., is a senior consultant in Towers Watson’s Organizational Surveys & Insights Practice. Reach him at firstname.lastname@example.org or (415) 836-1029.
When Juvenal Chavez Sr. and his wife went grocery shopping in the United States after emigrating from Mexico, they soon realized how different the process was here than it was in their home country.
There, it had been more personal and people seemed to care about you, but here, they felt lost in the masses.
“Businesses feed you as a statistic,” he says. “They feed you as one more number. They see you as the economic value that you represent to them.”
He also recognized that many stores tried to understand the Hispanic population and spent good money trying to do so.
“They hire consultants, and they hire people with the knowledge in the area in order to understand the most about these customers,” Chavez says. “I realized that, and I understood that that would be my competitive advantage against them in that area by knowing my customer, by knowing the wishes and desires and tastes for food, the different ingredients. I know the traditions and the language and culture. I can relate not only in the basic needs while in the store but also I relate to them in its totality as a whole experience.”
So Chavez, who had been a high school teacher in Mexico, decided to go into the retail industry. He started with just one small butcher shop about 20 years ago, and from there, he’s grown it into Mi Pueblo Foods, a $300 million grocery retail chain with 17 locations and plans to add three more by next year. The founder and CEO says that focusing on “el cariño y el respecto” care and respect when it comes to both employees and customers has been the key to his success and growth.
He says, “I’m in the people business not the grocery business.”Focus on your customers
Chavez asks his employees to make eye contact each time they interact with a customer, so they don’t miss his or her face.
“I encourage my people to do that honestly, sincerely and naturally,” he says. “It’s been working since day one, and it’s working today.”
It’s a small request, but it’s huge in that it gets employees out of their own world and forces them to focus on the customer, which is one of the keys to Mi Pueblo’s growth over the years.
Chavez says that the first step to focusing on your customers begins with recognizing the extent of your knowledge. While he understood his customers’ needs better than the competition, he still needed to get to know them as individuals to make sure he really understood them on a deeper level.
“I began with the premise that I don’t know the information that I need to know in order to go out there and do business,” he says.
You have to realize you don’t know everything about your customers, and the only way to learn is to ask.
“How are you going to do that by listening and observing and asking them a lot of questions and telling them, ‘I’m here to fulfill a need for you. I’m here to serve you. How can I serve you better? Everyone began with the same piece of meat. How can I put this piece of meat in your hand, onto your table in such a way that represents more value to you?’”
He also makes sure that when he goes to his office or leaves the stores that he walks through the main sales floor so he can see what’s going on and talk to customers.
“The best place to be is where the action is taking place on the sales floor,” he says. “The worst place to be is sitting in the chair, behind the desk.”
He’s gotten great feedback by doing this. One woman pulled him aside and explained that the employees at the meat counter were throwing the meat to each other and flopping it on the counter for her, and it was disrespectful. She went on to tell him that this is the meat she will be preparing for her table at home, and she would like it handled with more respect. Chavez agreed.
“I tell my employees, ‘Imagine that this meat is a gift, and the only thing that is missing is the [tag] that says this gift is coming from me to yourself,’” he says.
It may just be one complaint from one woman, but you never know how many customers have felt the same way and not spoken up. And it’s a simple change.
“You have to use your judgment; you have to use your common sense,” Chavez says. … “You don’t have to invent anything. Everything’s already created. You don’t have to invent the wheel. There are so many processes and behaviors out there in use today by others and used in the past by others. You have to grab them and put them in practice.”
And you have to communicate to your customers about the things that you change on their behalf.
“Bring them and make them part of the change,” he says “You have to create trust and respect and you have to tell them that everything you’re doing here is with the intention to provide that environment to them. In that process, they will tell you what they want, what they don’t like or could be offensive to them.”
And even when customers don’t have complaints and instead offer compliments, he still remembers to focus on them.
“Usually, the biggest compliment you hear is when customers tell you, ‘Thank you thank you for what you’re doing for me,’” he says. “And I will tell them, ‘On the contrary, you’re the one who’s making this business successful and the reason for our existence is you, and you’re the one that keeps Mi Pueblo growing it’s not me.
“Seeing it that way and approaching it that way, and then being accessible to your customers, that’s where the customer continues to see you as the same human being you want to be seen as. No difference.”Focus on your employees
When a new store is opening, Chavez spends an entire week of his time working with the new employees. He talks to them about the vision of Mi Pueblo and about personal development, leadership, how they, too, can become leaders and how he wants to help them in life.
“The first reaction that these people express is how come this guy the founder of Mi Pueblo who doesn’t have the need to do this, is making this personal investment in us,” he says. “I can see people crying, and I can see people asking me very, very personal questions. I can see people totally committed by the second day.”
He gets that commitment from people because he takes the time to come down to their level.
“If you allow your own position to trap you, you can lose the sense of yourself,” he says. “You can lose the essence of what brought you to where you are today. … You have to realize that you are not perfect and that you are vulnerable and that you need others for you to succeed. Tell them that.”
He also takes this approach because he sees himself as more than just a CEO he’s trying to build character into each employee and improve their lives.
“The basic values and the basic vision and philosophy of the company is not changing,” he says. “It’s what’s making us successful in the past, and it’s what’s making us successful today, and the same values will make us successful in the future, so we have to make sure we are teaching most of the people.”
The key is to take the servant leadership approach.
“We’re here to serve others,” he says. “We’re not here to direct. We’re not here with a position of power or a title. We’re here with a position of responsibility of leadership to help others achieve great things in life.”
Because of this respect and care for employees, word spreads fast, and jobs are in high demand when the next store opens.
“We go through anywhere from 3,500 to 5,000 applicants to hire a couple hundred employees,” he says. “Really, in that process, you are hand-picking your people.”
It’s nice to have that many people wanting to work for you, and it allows him to pick people who will buy in to Mi Pueblo’s values and be receptive to his message and leadership approach.
Employees walk through three or four screenings so he and his team can identify if there’s a values match, and Chavez himself asks many questions of potential employees.
“‘Tell me about you. I want to know you. My intention here is to know about you,’” he says. “That’s one of the questions I ask.”
But then he goes deeper. He asks the person, “If I were to talk to your mother, husband, wife or other close relation, how would they describe you? What three or four attributes would they say embody who you are?” Then he asks the converse “What one or two things about you would that same person want to see changed in you?”
He also strives to understand what makes them tick.
“What gives you the passion, the hope, the joy?” he says. “You lose your mood, you lose your temperament, you lose your posture what do you do in order to recover yourself?”
He also asks how they got to where they are now in life and what makes them a successful person today.
“What values?” he says. “What practices? What disciplines? What education? Also, I ask them, ‘Why should I hire you? If you were me, interviewing you, why should I hire you? Tell me about it.’
“Those are most certainly simplistic questions, but they are very tough questions, and I always allow room for them to ask me any questions. I usually tell them, ‘I’ve been asking a lot of questions, and my intention was to get to know you do you have any question for me?’ I always leave room for that.”
And if they ever doubt their worth, Chavez is quick to reassure them as part of his corporate family.
“I tell them, ‘Do you have any doubts about why you’re here? Forget them. We hand-picked you. You’re here because you’re a successful person. You are here because you are part of something big in here. You may not have the skills in your hands today, and you may not have all the solutions to the situations you are dealing with today, but in a few weeks, you will have confidence and the skills in your hand, and you are the one producing the results we look to you to produce, but the values are more important to us.’”
As employees start in their actual day-to-day jobs, he continues encouraging them to stretch beyond what they see on the surface. For example, if a customer asks them something and if Chavez asks why they responded the way they did or why they weren’t able to help them, they often tell him it’s because they’re new.
“I tell them, ‘Think for a moment. No one asks if you’re new, and nobody knows you’re new. Smile. Be yourself. Be present. Be in here ready to open. Don’t let the customer know you’re new in that way. Try to impress the customer in a different positive way so you can give that positive impression,’” he says.
Those encouraging words can go a long way.
“It’s about giving counsel, trust and providing an environment to get ordinary people to be themselves,” Chavez says. “Once you give them the space and once you provide the environment and believe in them, they grow miles trying to fulfill and even, perhaps, exceed your own expectations.”
How to reach: Mi Pueblo Foods, (888) 997-7717 or www.mipueblofoods.com
Education: Bachelor of science degree and master of science degree in computer science, University of Illinois at Urbana-Champaign
What’s the best advice you’ve ever received?
Stay focused on results.
What’s one of the challenges of leadership, and how do you overcome it?
It’s just as critical to ensure that you focus on recruiting and having the best people for the team. The challenge is to ensure that you get the best out of each person. There’s no one way to get the best from each employee. In my own experience, I’ve seen many different approaches work equally successfully. There are some that challenge to get the best out of their employees. There are others that trust, and that trust, in turn, motivates employees to do the best they can, and there are others that inspire people to do their best and, of course, respect people in order to actually get them to do the best they can. However, as long as there’s a clear vision and a focused growth strategy and operational discipline, a strong team can deliver record results, as has been the case at Informatica.
“Do you just want someone to invest your money for you, or do you want someone who can pull together and manage all areas of your financial life?” he says. “A wealth management professional will not only invest your money but also act as your personal CFO, building a relationship with you to guide you through every aspect of your financial health.”
Smart Business spoke with Spector about the key differences between a traditional investment adviser and a wealth manager.
Who can benefit from wealth management services?
Almost anyone can benefit from the services that a wealth management firm offers, but most firms have hard minimums and will not work with clients who have less than $1 million of liquid investable assets. Individuals and families that value professional advice and are seeking guidance on all areas of their finances, not just the investment piece, will benefit from wealth management services.
What is the difference between wealth managers and traditional investment advisers?
At Vista, we have modeled much of our service and process based on a formula created by John Bowen, founder of CEG Worldwide: Wealth management equals investment counseling plus advance planning plus relationship management. You need to have all three of those things to provide wealth management.
A majority of advisers in the investment community call themselves wealth managers, although a study by CEG found that 93 percent of those calling themselves wealth managers were really just providing traditional investment generalist services. These investment advisers typically review a client’s portfolio, make suggested changes and then follow up with quarterly performance reviews. The focus is on the investments and the relationship is mostly transactional.
With wealth management, the investments are a piece of it, but the real value comes in the advanced planning and getting the client’s financial house in order. The wealth manager helps a client deal with a variety of issues that include estate planning, insurance planning, cash flow management, retirement planning, charitable giving, college funding, special needs trusts and asset protection, providing the individual with a top-level analysis and recommendations much the way a CFO would present findings to the CEO. In both scenarios, the client is the CEO; the difference is whether or not a CFO provides guidance and does the heavy lifting for the CEO.
How do you identify a wealth manager who’s right for you?
The people are the most important component for any relationship, so making sure that you have absolute trust in the integrity of the team is of paramount importance. You will need to understand what services the firm offers and how they are delivered. Does it have in-depth knowledge of these areas and the services it says it’s going to be providing? Does it have a process that it adheres to and a systematic way of delivering those services? It’s also wise to ask for client references.
How does the process of building a relationship with a wealth manager work?
Most firms start with a type of discovery meeting. Oftentimes the client will be asked to bring bank statements, broker statements, tax returns, wills or trusts, insurance declaration pages, outside investments and any other documents relative to his or her financial situation. The intent is for the adviser to understand the client’s goals and desires and to build a client profile that includes these goals, as well as values, significant relationships, assets, other advisers, interests and hobbies. From that, the wealth adviser can start to understand the client and begin mapping out both the investment plan as well as advanced planning issues that will need to be addressed in the coming weeks, months and years.
Whereas an investment adviser might say, ‘Here’s what you should do with that money,’ a wealth manager takes a more consultative approach, really getting to know clients and everything that is going on in their lives that could have any bearing on their finances and their financial goals.
The adviser will then develop an in-depth plan and a list of actionable opportunities. After the potential client reviews the plan and decides whether or not to move ahead, there is a commitment to the process, at which time the individual or family becomes a client and both sides agree to adhere to the plan. In our firm, we always follow up with a new client 45 days after we begin to make sure that we are all on track with expectations of each other. Then there are regular quarterly meetings, although those meetings can also be more or less often based on the client’s needs.
How do wealth advisers charge for their services?
Most wealth advisers have some form of asset fee, charging a percentage of assets under management. Some charge on a sliding scale, with the larger the amount of assets under management, the lower the fee. For example, if someone has $5 million under management and is being charged a blended rate of 0.75 percent, they would pay $37,500.
Other advisers charge that same fee, then charge other fees for ancillary services such as estate planning and insurance planning, a combination of assets under management, plus fees for a la carte services. Finally, some firms work under the notion that they’re managing much more than liquid wealth; they manage your home, rental properties, outside investments, etc., and add up all the assets on which they’re advising to determine a fee.
Michael Spector is the CEO of Vista Wealth Management, an affiliate of Burr Pilger Mayer. He can be reached at (650) 855-6806 or email@example.com.
Mark Woodward is trading in-your-face sales pitches for a few extra finger exercises. That’s why, when you visit the website of E2open Inc., you’ll go three clicks in before you even see a product name.
Right away, though, you’ll learn about the broader problems E2open aims to solve with its cloud-based supply chain management solutions that enable visibility, collaboration and control across large trading partner networks.
“Where many companies fall down is … [they] get really hung up with the details of their products and get enamored with the widget they’ve created,” says Woodward, president and CEO. “They go out and they try to sell the widget, as opposed to the business benefits of what that widget does for you. Where companies go from being marginally successful to really successful is when they change the focus from the product they’re selling to the problems that they’re solving.”
By getting his 300 employees into that mindset, Woodward led E2open to record revenue in fiscal 2010, up 20 percent from fiscal 2009.
Smart Business spoke with Woodward about shifting your focus from vitamins to aspirin.
What are the keys to growing a company?
One is just focus. You need to understand what it is you’re going to do and also be pretty focused on what you’re not going to do.
Something that we’ve done at E2open really well is understanding what the value proposition is for the customer, making sure that they understand the benefit. Before we go launching a lot of time and effort and resources behind pursuing an opportunity, we really put a lot of time and effort into qualifying that opportunity and making sure there is a business case. Make sure that you’re focusing your limited resources on the opportunities that are the highest probability to close.
A lot of people get really hung up on putting a little too much emphasis behind having a really fancy growth strategy. But if you’re really focused on growth, it’s really understanding the market you’re in, who you’re selling to, what your value proposition is and then just putting all your resources behind making that happen.
How do you gain an understanding of the marketplace?
It’s through analysts, basic research and then talking to your customers.
Sometimes companies get caught up in thinking they know better and they know the problems that need to be solved without really doing very good market research or without talking to their customers enough. It’s really important to understand not what you think your customers want but really knowing that by having those conversations with your customers.
We’ll just start off with very open-ended questions like, ‘What are your problems?’ Not even asking about our particular area but just very high-level, top-of-mind: ‘What are you thinking about? What keeps you up at night? What are your greatest challenges?’
And then, based on that, start to bore in and even ask, ‘What vendors do you look to for solving those kinds of problems?’ As you get answers, get a little more specific. Customers are usually very open to telling you about other vendors they’re working with or problems that no one has solved for them yet. That can actually help in your product strategy, as well. I’ve learned about a number of really interesting new areas, things that we didn’t even get from analysts, just purely off of customers telling us about shortcomings they had with other vendors. So the customers give you a more real-world perspective, not just the marketing spin that the analysts are hearing.
How do you position yourself to meet those needs?
You have to be careful so it’s not looked at as the sales guy looking for a sale. It’s multiple meetings with different people. That highest level meeting might be with myself or a chief technology officer or possibly head of marketing; basically, you’re just in there information-gathering.
Then if you think there’s specific opportunity for the company, you’ll follow up maybe myself, but probably with the head of worldwide sales where we start to bring in people that are more on the solution side of the business.
Customers don’t mind you selling to them if you have a solution. But there does need to be a separation between the process of information-gathering for purposes that are not specifically related to a sales process, and then the sales process itself.
How do you decide which needs you’re capable of meeting?
I would bring it back to [the executive staff] and say, ‘Here’s what we have found,’ and just open discussion up to the whole group, which will typically then lead to some assignments of tasks. We’re going to say, ‘OK, we need to now go prove out these two things. So you, vice president of marketing, go talk to XYZ analysts and ask their opinion on this. And you, head of my deployment services, go talk to three other customers and tell them what our point of view is on this and get their feedback on that.’
Then, based on that, we may make the determination, ‘OK, we now need to make a change in our product strategy,’ or, ‘In the upcoming releases of our products, we need to start moving in this kind of a direction,’ or, ‘We should go look at an acquisition in this particular area because it would take us way too long to develop ourselves into that space.’
What makes an opportunity attractive?
One way that I put it I’ve thought about it this way for a long time is, ‘Are you selling aspirin or are you selling vitamins? Is this something that really fixes a pain, or is it something that just makes somebody feel a little bit better?’ That’s an acid test for me.
I want to be selling aspirin, not vitamins, because when people don’t have money, you can do without your vitamins. But if you’ve got a really bad headache, you’re going to pay a lot of money for those aspirin. So that’s a way that I look at these kinds of things: ‘Are we truly solving a problem where our customers feel real pain, where they have a real need that they are going to pay money for? What is the business case justification for that customer?’
If you can’t find that business case, no matter how great you think it is, they’re not going to buy it.
Understand … the pain points and then what that means in terms of dollars. So you have this problem where you don’t have visibility into your inventory on the customer side. What does that mean to you?
‘Well, that means that we have to ship an extra $10 million in products and put them in these different locations just to make sure that we don’t run out. But if we had visibility, that would allow us to put the inventory there only when we needed it. Then instead of having $10 million in inventory, we could have $1 million in inventory.’
So if I could solve that problem for you and I could save you $10 million a year, it’s almost like you don’t even have to ask the question, ‘If I could save you $10 million dollars a year, would you pay me $1 million?’ It’s obvious.
How do you prioritize opportunities?
Sometimes we will create a matrix. … First prioritizing pain points of the customer low, medium, high, in terms of … how important of a problem is this to solve.
Then understand what is it that we’re good at and are we already talking to the people that we would sell that to. Then it’s understanding: What is your capability in terms of product distribution? At least for us, we want to be selling more stuff to the same buyer. We don’t want to have to have a different sales force or a whole different sales process or whole different set of relationships to sell something else. So it’s understanding: Who is the buyer, and is it the same person that we’re already talking to?
And then what would it take for us to get this thing to market? What’s the level of effort?
You’re going to have to go put all those things together, and you get input from everybody. You’ll be getting input from marketing, from sales, from R&D and from our chief technology officer, and just go through this vetting process.
You need to tell people outright that you want their honest, complete, unfiltered feedback. And then when you get it, you can’t smack them for doing it. You’ve got to make them feel like there’s a safe environment to do that. Once people give open and honest feedback, you’ve got to make them feel good about that input. It doesn’t mean you’re going to use it.
Hopefully, you ultimately get to a point in conversation where you have general consensus. But if you don’t, everyone can understand at some point a decision’s going to be made. … Then we have to move forward and execute.
How to reach: E2open Inc., (650) 645-6500 or www.e2open.com