Archive for July, 2010

Running the Relay Race

Wednesday, July 28, 2010 by:David Zahn
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Many businesses began with two or more people excitedly agreeing to put their trust, faith, skills, and future successes in each other’s hands. Plans are made, decisions are reached, enthusiasm and excitement at what the future holds fuels late nights, weekends, and vacation time spent building the business.

However, the real test of a business, and a partnership is how well is the business performing after the initial exuberance of starting a business wears off and everyone assumes their daily role within the business.  Running a business is more akin to a relay race than it is to a sprint.

Business is akin to a relay race between partners

 Business Plan

After having some time working IN the business (creating products or services, interacting with customers, handling the cash flow issues, etc.), a certain routine becomes established and methods and procedures evolve.  However, that does not always reflect what the original plan contained.  In some instances, the reality of running a business identifies and corrects for opportunities or problems that were not foreseen when the business plan was put together.  In other cases, the daily demands of the business slowly change how the business is conducted away from the intended approach – and not for the better.

That is why it is critical for partners to occasionally connect and work ON the business.  Rather than focus on resolving the next client or customer complaint, they should share ideas on why customers are complaining at all and what they need to do about it in the future to prevent it.  Instead of just meeting each customr request for a product or service, they need to ask themselves if their business model still is appropriate or if they need to revisit that.

Alignment

With the best of intentions, people can agree to work together and split roles, responsibilities, and other aspects of the business – but until they begin to do it; the philosophies and perspectives each will rarely surface or become known.  In one business that I am familiar with, two partners both agree that they want to run their business profitably, but they disagree on how to best accomplish that. 

One partner views expenses as “bad” and seeks to minimize them as best as he can. The other partner looks at expenses diferently.  She sees certain costs, like inventory, new technology, and training for employees as ways of enhancing assets and as contributing to their ability to be profitable.  Neither is necessarily wrong, and they both seek the same thing (profit).  They just see different pathways to accomplish it.  This difference of perspective has not bubbled over into disputes or conflict, but it does have the potential to do so in the future if they don’t come to some agreement.

 Happiness

It is also appropriate for business partners to take a moment during the relay race of running their business and consider how they feel about the business and the partnership.  They would be well served to discuss:

  1. Are they enjoying the work – if not, what changes would need to be made to allow them to enjoy the work?
  2. Do they feel valued – when the partner works in the business, are they feeling that their efforts are appreciated, recognized, and acknowledged?
  3. Are they fulfilled – is the work still challenging and providing a sense of accomplishment, contribution, and reward?
  4. Is the business providing sufficient income – while it is not the only measure to be used, and in some instances it may not be the most important one, the partners need to address if the business is sufficiently profitable enough to meet the financial needs of the partners.  If it is not, then ways of accomplishing that need to be surfaced and decided.

Running a business with a partner allows for each person’s strengths to be leveraged and applied, but it also means that occasional checkpoint meetings need to happen.  Failure to discuss these issues can lead to resentment, assumptions, perceptions, and beliefs about the business and each other.  If that is allowed to continue, it can be the difference between a clean hand-off of the baton in the relay race and a disqualification because of the lack of coordination between them.

It is too easy to get drawn into the pressures of the day-to-day and lose sight of the larger race being run.  In order to manage the business and not be managed by the business, occasionally arranging for a partner meeting, even if over tacos and margaritas, will go a long way to resolving issues before they cause the parntership to implode.

Customer Service Continuation

Thursday, July 22, 2010 by:David Zahn
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On June 11th, 2010, I wrote about an incident that had occurred where a major retailer stumbled in responding to a customer raising an issue with their customer service.  Now, nearly 45 days later, it is time to revisit that scenario and see what has transpired since then.

Quick Review

Just to refresh memories, a major retailer had scheduled a delivery of a major appliance to occur between the typical four hour window that has become standard in the industry currently.  A confirmation phone call was placed the night before to re-confirm that the customer will be home to receive the appliance.  Everything was in place and the customer had acknowledged that someone would be home to receive the shipment.  Further, the customer called early the day of the delivery and tried to gauge or assess where in the queue the shipment was for the day to be absolutely certain that someone would be home at the appointed time.  The retailer responded that the shipment was still scheduled to be delivered within that four hour window. As the customer waited beyond the four hour window, a phone call was placed to the retailer to inquire when the delivery was to occur.  It was at that point that the customer was alerted that the driver assigned to that territory route had not come in that day, and therefore, the delivery needed to be rescheduled.

About three days later, a delivery was made (after the customer had to take ANOTHER day off from work to await the arrival of the appliance), and the appliance arrived dented.  The customer had to point it out to the driver of the truck, who answered, “it won’t impact the performance of the appliance.”  After some negotiation, the driver consented to reduce the cost by $50, and the customer, out of frustration and the need for the appliance, accepted.

Clearly, the customer was enraged and decided to communicate the dissatisfaction with the treatment received to more senior executives within the retailer.  What follows is the level of customer service received AFTER a complaint had been registered.

Dealing with customer service can be infuriating.

Follow up

The customer sent a letter enumerating the ways the retailer had not provided customer service nor even accurate information when asked very direct questions about product delivery times that THEY had established.  Here is what then took place:

  • A form letter was sent to the customer simply “acknowledging” receipt of the original letter and promising that someone would review the contents of the letter shortly and respond if appropriate.
  • About  4 days later, a phone call was placed by someone out of the corporate office sharing that the issue had been placed with an “escalation unit” and that a response would be given shortly.
  • When the customer had STILL not heard back from the company 3 days later, a phone call to the “escalation unit” during standard workday hours went into voicemail and was not returned.  Further adding insult to injury, the phone number was not even a toll-free number, so the customer had to incur toll charges for leaving the voicemail message.
  • The company’s response (now a week after the initial contact) was that the delivery service is contracted out and therefore, they are not responsible for any delays associated with that aspect of the customer experience.

Of course, the retailer in this instance is COMPLETELY wrong.  The customer purchased the product, contracted with them for delivery, and expected the product to arrive as scheduled.  Unfortunately, pointing fingers at a sub-contractors  does not generate confidence or loyalty with customers and serves no purpose in building relationships for future prospective purchases.

Of course, this retailer has lost much of the market dominance it once had, and the reasons are mutli-fold, but if the way they interacted with this customer is any indication of their management strategy; this is one company that will not survive much longer.  Companies must be responsive to their customers, be transparent in their communications, and provide accurate responses to questions, and deliver on their commitments.  If they choose to subcontract or outsource functions for economic or efficiency reasons, that is certainly a business decision that can work – but it must be managed appropriately, and the customer can NEVER be disadvantaged by the decision to save money.

Business is not Immune to ID Theft

Monday, July 19, 2010 by:David Zahn
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Most of us have received unsolicited phone calls, emails, and even paper mail warning us of the dangers of identity theft.  The outcomes are dire.  Bills being run up on credit accounts, legal situations arising requiring defending actions that we are unaware of, and the cost and expense of proving that the actions of others are responsible for reported debts, illegal activities, and commitments.

Identity theft is not a joke and can be very costly

 Steal Traps

Not too long ago, there had been a commercial that was both provocative as well as amusing.  In the commercial, a series of people brag about purchases they have made – only the voiceover clearly does not match the person that is supposedly talking.  In fact, the purchases have been made fraudulently through the theft of someone else’s identity.

The commercial is very clever in compelling consumers of credit card companies to protect their accounts and identities by purchasing an additional service for a fee that will track purchases, unusual expenses, or provide an insurance of sorts against expenses that were not legitimate.  The commercial focuses on the consumer and personal use of credit cards, however, the same issue exists for corporate clients.  Small businesses especially rely heavily on their credit cards, and thus, are require special vigilance in protecting their identities from criminal access.

What Is Identity Theft?

By way of definition, identity theft is what occurs when someone uses your personal identification data such as a credit card number, Social Security number, bank card Personal Identification Numbers (PIN) or name to secure credit and make fraudulent purchases. Unfortunately, most people aren’t aware they’ve been hte victim of a crime until they begin to receive collection notices or phone calls from collection agencies or creditors seeking payment for expenses that the credit holder is unaware ha sbeen incurred. According to Stamford, CT online market research firmInsightExpress (www.inisghtexpress.com), it happens more than you might think. They claim that fifteen percent of Americans have been victims of identity theft.

Businesses Are Not Immune

Businesses are as likely to be victimized by identity theft as an individual.  However, where many consumers check their statements and can easily recognize a charge they do not recall making – not all businesses are as vigilant in checking their statements (banking, credit cards, or other invoices) given the large number of suppliers that a business may interact with in any given time period.

In a recent NFIB interview on the subject, it was reported that according to Lee Smith, president and COO of Insight Express. “I don’t think the risk for a small-business owner is substantially different than the risk for consumers because a lot of small businesses do use credit cards,” Smith says. “And credit cards are a way in for criminals.”

There are ways to protect yourself, Smith says, such as locking mail boxes, shredding paperwork and mail-especially unwanted credit card solicitations-and securing credit card receipts.

And since crimes do happen, prepare yourself ahead of time, he says. “Call your financial institution and ask them what kind of identity theft protection they offer for small businesses,” he says. “The risk and protection may be different than what you get as a consumer.”

Business is not a Hobby

Thursday, July 8, 2010 by:David Zahn
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An out of state friend and I decided to get together after not seeing each other for over a year. While enjoying New Haven pizza, he began to tell me a tale of woe related to his Father’s business. According to my friend’s story, the father has been developing a real love for nature and the outdoors after having worked an office job for over 30 years. So strong is this interest, that the Father has visited national parks, studied rock formations, botany, history, and is now rather expert in certain areas of the country. The Father blogs frequently about his insights, and has developed a following among others with the same interests.

Running a business is not a hobby

But is it a Business?

While many business owners enjoy their job, think of their customers as friends, have fun doing what they do, and do not consider what they do to be work – few successful entrepreneurs would call it a hobby. A hobby is defined as, “an activity engaged in for pleasure and relaxation during spare time,” according to the Encarta Dictionary. There are two conditions that separate a hobby from a business:
1. Pleasure and relaxation – the business may be enjoyable and the work may even be relaxing for the entrepreneur, but the primary reason for the business is not to provide pleasure and relaxation. If that is what the business owner seeks, then the chances of a business failing because the other important components are not being met is high (those other components are; serving customers, making a profit, managing costs, etc.).
2. Spare time – a hobby is what is done AFTER work or business. This is a small point, but does point out the priority of focusing on business and addressing hobbies in non-work or committed time.
Where the Trouble Entered

My friend’s Dad decided that since he was often approached by others he had encountered through his hobby to offer his insight, experience, and wisdom in choosing what historical sites to visit, what time of the day to take photos, which tours to go on and which to avoid, etc.; he would open his own tour guide business. He decided that since he was likely to re-visit many of the sites others wanted his insights about anyway, he would charge a nominal fee and have them pay his expenses and even pocket some additional money for his efforts.

Problem 1: – Corporate identity – he chose to refer to the business as something akin to “Cheap as Air Tours.” With a name like that, the sense of receiving value for the cost was clearly on the low end. The prospect interested in a premium experience would be turned off and the importance of fees or cost became a real prominent determinant in the decision to use his services. Rather than focus on the tourist’s experience, uniqueness of activities, or some other differentiator, cost became the reason to choose the business.

Problem 2: Profit – having backed the business into a pricing competition with other tour companies, the proprietor was now forced to be less expensive than others or fail to live up to the company’s promise or pledge as communicated by the company name. So, the balancing act now became how to provide the service of being a tour guide at the least possible cost in order to still make profit, or to provide a larger or better experience and risk doing so on a smaller margin or even at a loss (something no business would ever do, but a hobbyist interested in sharing the experience with others might consider doing as a way of experiencing the joy of the hobby with others).

Problem 3: Marketing and Sales – while the blogs and various sites that the Father contributed to did create some initial interest among fellow hobbyists, the sustaining of a pipeline of prospects would require more aggressive marketing and sales efforts. To do so though, would require investment into website development, printed materials like brochures, advertising, etc. Unfortunately, the business is not currently able to spend on marketing and sales in a consistent and fully committed way as the profits generated to date have not been sufficient to afford that kind of expenditure. Of course, it is a conundrum in that if the investment is not made, then the profits will not ever be there.

Running a business requires rigor, discipline, management, and oversight based on creating a profit-producing entity. A hobby is a pursuit that one derives pleasure from and enjoys as part of one’s downtime or relaxation activities. While it is not impossible to create a business from one’s hobby, the skills one uses and applies are very different and require a perspective that is focused on metrics and measurements that most hobbyists do not consider when pursuing their passion.

Public Power uses Social Media Effectively

Wednesday, July 7, 2010 by:David Zahn
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Of all of the “hot topics” discussed in the business pages of newspapers, journals, industry publications, on blogs, in electronic bulletin boards, etc, none seem to be more topcial than the use of Social Media as a component of a company’s marketing efforts. However, for all of the theory, salesmanship, and enthusiasm around the potential of using Twitter, LinkedIn, Facebook, and other social media, few companies have approached it in a strategic way that shows results. 

Public Power offers reduced electricity costs and has maximized the use of social media to develop a dialogue with customers.

 

Danbury-based electric power  provider, Public Power (http://www.ppandu.com)has been successful in applying their social media efforts to communicating with prospects, customers, and others interested in reducing the costs of electricity. For many homeowners, the cost of electricity has become an onerous and they are unsure of how to take advantage of the opportunities presented by a deregulated industry and the benefits that may exist in switching providers. 

Public Power sees itself as akin to the energetic smaller company to the larger monolithic corporate giants that traditional utility companies have become.  Even more important than the money saved on the generation portion of the electric bill through their services, Public Power provides a progressive customer appreciation program that allows customers to receive deep discounts on products ranging from vacations to jewelry to everyday items including groceries.  According to the way the program works, a household can expect to receive $125 savings dollars per month and they are given $500 savings dollars when you sign up. However, they use social media to offer impeccable customer service not only via phone, but also through email, Facebook and Twitter. 

The Strategy’s Intent 

To their credit, Public Power realized that interaction with their customers and neighbors was a vital part of an overall branding and advertising strategy. However, unlike other companies that have delved into social media, they don’t believe in using social media in a “spammy” manner to advertise, so their interactions are genuine and of the highest quality. Rather than plaster the cyberwaves with self-serving messages, they  truly want to get to know the people within the areas that they service and in the process, hope to familiarize those people with the offering and company’s mission. 

Social Vs. Traditional Media 

Bob Gries, CEO of Public Power sees a clear distinction between the roles of social and traditional media. “They don’t compete at all. When a person sees a billboard or watches a commercial, they’re possibly engaged for 30 to 60 seconds. When you interact with people and they know that you are being sincere then you can generate truly unique interest in your service. We like to think that we care more than anyone else and that insanely high level of caring will beat out a commercial any day.” 

In terms of how to measure the success or evaluating social media efforts, Gries admits it is difficult to measure the exact success of a social media campaign because; “it’s almost impossible to track; how can you know if someone interacted with you on Twitter, had a great conversation and then that interaction influenced a sign up through a broker few weeks later. To get an overall feel for the success of the campaign, we step back and look at everything in a more global manner. We look at how many people are interacting with us on a daily basis through our different platforms. We also compare ourselves to our competitors that are on this space; in that particular regard, there’s no comparison and we are very proud of that.” 

There are Cautions 

Lastly, Gries notes, “There are 2 things that you have to watch out for in this space. The first is consistency. You can’t jump in with both feet for a month or so and then stop, especially if you are a commercial brand. It makes the company look fickle and uncommitted. The second is sincerity. People can detect insincerity a mile away, so if you don’t plan on caring a ton and exuding that in your message, people will be able to tell and it will reflect poorly on your brand. ” 

Social media provides an excellent opportunity to leverage the organizations’ ability to communicate in a much more direct way with customers, but it also comes with certain expectations and requirements.  Just like one would not try to talk incessantly about themselves when meeting someone at a soc gathering; it is poor form to do so through social media.  Rather, the tone of direction of the conversation is best directed at how the customer stands to benefit through the efforts of the company.