Archive for 2012

Is Business Culpable for Sandy Hook?

Monday, December 17, 2012 by:David Zahn
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In the tremendous sadness, shock, outrage, and political positioning that is occurring around the Sandy Hook Elementary School massacre, there is the search for explanation as to how it could have happened, who is to blame, what we could have done to prevent it, etc. At some point in these tragedies, businesses will come under scrutiny and fingers will be pointed in their direction.

Manufacturers

One of the targets will surely be the manufacturers of weapons, firearms, guns, etc.  There will be focus on the responsibility manufacturers have in producing, creating, advertising, and marketing products that are in any way involved in deaths, sickness, and/or injury. On the one hand, there are those that will claim that the market regulates itself and that it is up to the consumer to make an informed decision (as long as the manufacturer does not withhold information that could or would influence the decision of the consumer).  So, in the instance of firearms, cigarettes, aclcohol, and other products – the belief is that the manufacturer’s responsibility begins and ends with full disclosure and compliance with applicable laws.  So, as long as the product performs as it should (not engineered poorly, does not include tainted ingredients, or other issues that are hidden from the consumer’s ability to reasonably assess or anticipate), the product has the right to be sold and purchased in a free market environment.

Of course, the opposing view is that manufacturers have a responsibility to not produce products that are known (or some would go further still, and say that the standard is to not produce products that MAY be known) to have potential deleterious effects.  Of course, there is a slippery slope argument that is opened when looking at the interaction between products and harmful outcomes.

  • Should Mayor Bloomberg and New York City’s ban on large carbonated soft drinks be enacted more universally because of societal obesity and diabetes issues?
  • Do manufacturers of powdered milk products have a responsibility if the products are misused and mixed with unsanitary water?  Should they be prohibited from selling the product in those markets without reliably clean water?
  • Should cars be manufactured to NOT exceed speeds beyond the speed limit because some drivers choose to drive too quickly?  Should cars only be able to be started if the driver can pass a breathalyzer?
  • And on and on.

Retailers

Of course, beyond just the manufacturers’ responsibility, the retailers that sell products will also be under the microscope for selling and distributing the products.  Does a retailer have responsibility for what a shopper does after the product is purchased?

  • Does the video game retailer have liability for a student’s poor grades due to excessive playing leading to a lack of studying time devoted to schoolwork?
  • Should a retailer be held responsible for selling ice cream if the shopper misues or abuses the product and gains weight to the point of illness or disease?
  • The examples can be applied to: Liquor Stores, DIY/hardware stores, Drug Stores, etc.

While the discussion will be heated as it pertains to firearms and will be rather emotional given the passions people feel for the issue now impacting our own neighbors in our community; there is a discussion that looms ahead that we will need to have and resolve.  What role does business have in these tragedies?  Is business morally neutral?  Should business lead the discussion or merely respond to it?

Does the shopper, manufacturer, or retailer have the responsibility for outcomes?

Lessons from the Bench

Wednesday, December 12, 2012 by:David Zahn
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When the mail brought a notice alerting me that I was chosen to show up to the courthouse and possibly participate in a jury, I did what many have done – tried to think of ways to get out of it. However, whether it was a sense of civic pride, obligation, commitment, or just that I really did not have a legimate excuse (after all; everyone believes that they are just too busy, too important at work, or above the need to serve), I showed up along with many other sleepy, somewhat surly, and impatient people to serve on juries.

Business owners can learn from how judges conduct courtroom business.

Jury Selection

The first lesson was during the process of jury selection when the process of “voire dire” occurs and potential jurors have the steps of jury selection explained, expectations are managed, other members of the process are introduced and the rules of engagement is covered.

Further, the delegation of who is selected to be on a jury is left to the attorneys, not the judge.  The process forces the “leader” or “CEO” of the court to give up some control so that the process can succeed without undue influence from a single person.  Even if that person is likely to have more experience, formal training, or familiarity with the process; a strength of the courts is that people of varying backgrounds and experiences come together to collaborate to reach a binding decision.

Trial Management

In the actual conducting of the trial, it is not the judge who examines or cross-examines the witnesses (or determines who shall be a witness and who shall not be called upon to testify), but the attorneys.  The process could go much more quickly if the judge were to select who to hear from, what testimony to review, and what power to give to any one particular fact.  However, the process only asks that the judge ensure that the other parties (attorneys, witnesses, and jurors) are held accountable to upholding the requirements of protocol.  The judge does not permit evidence or testimony to be entered if it is not appropriate, the judge makes sure that there is no unfair advantage offered to one side outside the law to be followed, and maintains decorum in the courtroom.  CEO’s could take note of how the judge des not exert undue influence on the other members of the process, but does not abdicate responsibility for ensuring that the result is reached through the appropriate means and after rigorous review of facts.

Trial Conclusion

The judge provides one last context for assessing how the jury should gauge guilt.  While there is much presented in the course of a court trial, at the conclusion the judge re-reads the charges and provides interpretations of the law so that the jury is confident in their ability to reach a decision successfully.  Then, it is up to the jury to decide based on their understanding of the law, the testimony, perceptions of the truthfulness, reasonableness of witnesses, etc.  In this way, the judge ensures that the objectives of the trial are maintained and that jurors have the resources needed to make an informed decision.

Similarly, CEOs can replicate the process used by being diligent about achieving objectives, without specifying what the outcome must be ahead of time.  The jury is empowered to make the decision, and the judge’s role is to help the jury achieve the result or decision.

While business lessons are not commonly pursued inside courts and jury trials – the insights are abundant and are evident if one looks for them.

Avoiding Bad Apple Employees

Thursday, December 6, 2012 by:David Zahn
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Businesses are fond of claiming that employees are their best assets or biggest competitive advantage over other companies in the market. Yet, when it comes to properly practicing “due diligence” with new hires, the words and the music don’t always match. 

It is common for many small and growing businesses to begin their expansion by hiring part-timers, interns, family, or friends.  The perspective is that the “risk” is quite limited as the person is either known to the owner prior to hiring, or will be a relatively insignificant part of the business – and therefore is not “worth” checking up on in a cost/benefit calculation done by the owner in his or her head.  Unfortunately, all it takes is a single negligent hiring decision to torpedo good will with customers, lead to prospective issues due to damages, tie the business up in legal wrangling, etc.

Easier to do it Right the First Time

While it is easy to try to convince ourselves that “nothing bad will happen this time” or that it is not worth the energy, time, expense, etc. to do it “by the book” for any given employee, the reality is that continually having to train, retrain, source, select, and hire new employees and replacement employees for initially poorly selected employees can run into the tens of thousands of dollars.  In fact, according to a William M. Mercer, Inc. study quoted in “Don’t Hire a Fugitive” published by www.business.com, it may run upward of $10,000 for each employee!  Therefore, taking the time to conduct the employee “vetting” process properly will save the company in the long run.

One bad apple employee can lead to significant issues for employers.

The Options

The options are that the employer can do their own background searches or investigations without any third-party intervention.  This is usually done in companies that do very little hiring and so can afford the time to devote to any one individual hiring.  Relying on things that are readily verifiable either online or through a couple of quick phone calls, this is an approach that numerous companies employ.
Companies can also choose to outsource this to professionals.  Either Private Investigators or companies that provide employee screening capabilities (through online or other employee background check methods) can provide a more complete picture of the employee beyond what is documented on a resume or in an interview. 
If a third-party company is used, it is wise to ensure that they are accredited through the National Association of Professional Background Screeners (NAPBS) www.napbs.org, have the capabilities to review in-state and out-of-state prospective employees, and are familiar with the hiring company’s industry and marketplace.  Just like there needs to be background checks on employees, the same vigilance should be used in choosing the background check co0mpany.
Remaining on the right side of the law is critical in conducting these background checks.  The Fair Credit Reporting Act (FCRA) governs what is permissible and what is not when conducting background checks on prospective employees.  No background check is permitted to include:
  • Bankruptcies over 10 years in the past
  • Arrest records after 7 years
  • Collections records beyond 7 years
  • And of very recent vintage – personal passwords to social network sites like Facebook, LinkedIn, Twitter, etc.

Not every job needs to be “vetted” to the same level or include the same rigor.  A pizza delivery driver may be subject to driving record offenses, DUIs, tickets, etc. – that may be less critical for someone who is a dishwasher in the restaurant.  Similarly, a bank teller handling cash may be subject to background checks that are more focused on criminal activity involving money.

While it may seem like overkill to the employer to go through this rigorous review, it can save the company thousands of dollars in court case costs, reputation, and time and effort.  Removing the bad apples from the bunch before they can spoil the others is always a wise decision.

HR is More Than “Sick Visits”

Wednesday, November 28, 2012 by:David Zahn
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One of my close friends works for a company that has nearly tripled in size over the last couple of years due to a rather large contract that allowed for almost exponential expansion. As we visited recently and shared stories of our work (some humorous, some less so); it became apparent that the company she works for recognizes the need to view the Human Resources function differently. The awareness of the strategic importance of a well-staffed and well-run HR function has allowed the company to keep pace with the demands placed upon it by the huge growth that has occurred.

HR has to be about more than tending to the sick or punishing the failing.

Traditional View

The historical view of HR was that the function was engaged in the tactical actions of:

  • Tracking employee performance appraisal results
  • Ensuring that forms were correctly filled out for paychecks
  • Ensuring that all were enrolled in the company’s benefits
  • Contributing to compensation protocols
  • Ensuring that any contractual obligations (unions or otherwise) were met and adhered to by the company.

For most executives and employees, a call to see someone in HR meant that there was a problem to be addressed.  It might be a performance issue concern that requires rigid adherence to some process that includes:

  1. Verbal warning
  2. Written warning
  3. Termination

Or, it means that there is an administrative concern that must be followed as per the “Corporate Handbook.”  It might relate to:

  1. How “paid time off” (PTO) is to be determined
  2. Whether someone can use Family Medical Leave Act (FMLA) to cover a personal or family issue that requires the employee to be away from work for a time
  3. Or, even issues like whether the departments can hold a “holiday party” or need to refer to it differently (or not hold it at all).

In short, the HR function was viewed as a hurdle or an impediment to be overcome by the “real” business leaders who were focused on; profit, market share, sales dollars, efficiency of systems, etc.  In fact, in the classes I teach at the University of New Haven’s graduate school programs – I often am met with horror when I share that as an outside consultant my view of HR is that they are a department that can say, NO to a project.  However, they rarely are authorized to say, YES without getting approval from another business leader.

The More Progressive View

What this company realizes is that there is an entirely different side to the HR role.  HR is not just about tending to the problems or “sick visits” to provide some intervention to correct a bad situation.  It can also be about developing and nurturing the organization through opportunities to get people to excel at their current positions.  It may include:

  1. Selection criteria – giving careful thought to the “what counts” factors for the existing job, but also for future promotion opportunities and needs.
  2. Orientation and on-boarding – a serious concern for the company that went through tremendous expansion.  They had to bring many new employees into the fold and get them to be productive quickly (or risk having the contract in jeopardy).
  3. Mentorship – aligning newer employees with more experienced hands to provide a “go-to resource” to answer questions.
  4. Succession Planning – as the company continues to grow, there will be additional needs in the managerial ranks, a need to “backfill” positions that are vacant as employees leave or retire, etc.
  5. Training – the needs of the company continue to evolve and so there are needs to both upgrade skills on new technology, managerial competencies, industry changes, etc.  HR can meet many of those needs when properly aligned with the business units.
  6. Career Development – assessing the needs of both the company and the individual employee to ensure that there is a fit for current and future assignments and creating a path for people to follow in their career development is a crucial requirement of the company.

The paradigm of HR being the “grim reaper” that is to be avoided (because it is never good news when HR is requesting to see you) to an integral part of the company’s future potential is one that is changing in many organizations.  For it to be successful requires that it be led by someone that is visionary, practical, business-minded, and not simply focused on the “forms and procedures” side of the role.  While those are necessities (especially in dealing with legal issues, union contracts, filing requirements, etc.), they are best matched with someone who wishes to also provide opportunities for “well-care” or developmental experiences to allow employees (and the organiation as a whole) to maximize their value and contributions.

P-O-Inted Observations on Collaborative Promotion Optimization

Tuesday, November 13, 2012 by:David Zahn
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The Promotion Optimization Institute (P-O-I) just concluded their Fall Joint Business Planning Summit in Chicago, IL and attendees and participants left with as many questions as they received answers.  Under most circumstances that would signal trouble for an industry association; after all, the general expectation is that conference participants will be able to bring their questions and concerns and receive all answers before they leave.  However, for the Promotion Optimization Institute, LLC and CEO Michael Kantor, it was purposeful and part of his overarching plan and strategy to have the Summit conclude with attendees having collected questions to answer upon their return back to their jobs and roles in their companies.

P-O-I is focused on increasing efficiencies and effectiveness of retailer/manufacturer relationships through collaboration.

The 4th P-O-I Summit focused on the importance and relevance of collaboration as a strategic weapon between trading partners.  With a skillful building of the topics impacting promotion collaboration and optimization, Kantor was able to create a thematic imperative that pulsed through each presentation provided to the attendees and raised the importance of assessing and examining the industry assumptions and accepted practices or “givens” before determining what actions to initiate.

The day and a half event kicked off with a Keynote Presentation and Panel Discussion that set the tone at the onset when Dr. John Stanton, Professor of Food Marketing at St. Joseph’s University animatedly admitted, “This is hard stuff!  We are all self-interested parties with our own objectives, metrics, tools, and evaluation criteria.  So what works for Sales may conflict with Marketing; what Operations values differ from IT, what sellers pursue may be in contrast to what buyers or procurement seeks; and Shoppers are often forgotten in the discussions held between retailers and manufacturers.”  Stanton was aided in his presentation by his colleague; Dr. Ron Klimberg who focused on the quantitative or business intelligence challenges facing those trying to collaborate in their striving to have one version of the truth, and an agreed upon set of data all could accept; and the very specific challenges and applications were given a very real face in the successes, struggles, and steps shared by Rob Colarossi, VP of Category Development at Hostess Foods on his journey to improving his Trade Promotion Management (TPM) efforts from a collection of homegrown databases, forms, spreadsheets, and the like to a more automated approach that gives visibility into the business opportunities while managing expenses.

TPM to TPO

With the theme of promotion collaboration established, the conference attendees then heard how Del Monte approached their journey to move up the ladder from Trade Promotion Management (TPM) to Trade Promotion Optimization (TPO) and become more focused on leveraging their insights into actionable tactics that mutually benefit both Del Monte and their retail partners.  In what would be referred to often and used an example by other presenters, Pam Brown, Director of Trade Promotions and her team spoke of the importance of establishing clear goals, securing senior executive backing, and creating the training and support necessary for people to harness the power of the tools and processes to improve their performance.  The importance of having a vision and outlining a migratory path to achieve that vision was reinforced through the three (3) year journey outlined by Del Monte’s Trade Promotion team that included a change of CEOs, delays in approvals, expectations of near immediate turnaround, etc.

The Summit then allowed for attendees to attend breakout sessions based on their interests in either new research conducted by P-O-I and CapGemini, tools used by Manufacturers/Retailers to optimize trade investment, align assortment, improve loyalty measures, or to network further with other attendees at the booths set up by vendors and sponsors to allow for additional learning or connections with industry experts.  The P-O-I provided snacks and beverages ensured that the vendor booths were always busy with demos, discussions, and people congregating to better understand how to apply the tools.

As one of the invited international attendees and a presenter, Trevor Barrett discussed how international food manufacturer, Premier Foods, PLC was able to migrate to a unified TPO system across numerous customers (retailers), categories, countries, and acquisitions of brands; each with their own nuanced way of doing business.  The complexity of being able to retain a consistency of approach in such a dynamic environment was facilitated by a reliance on SAP applications that allowed Premier to track, manage, monitor and correct trade performance in categories as diverse as bread and cakes, sauces, soups, etc. 

Dale Hagemeyer of Gartner Research provided some context for those attendees looking to assess how all of the various vendors score or compare to each other on strengths of offerings (always a dicey proposition to pull off when many of those vendors were in attendance!).  Hagemeyer explained the metrics he used, how he evaluated the offerings, but reiterated that “more is not always better” if the need can be met with a vendor that is better suited to the opportunity and can provide it without extraneous features.  While concluding that the scoring was somewhat subjective and based on his assessment, few disputed his approach or differed in their assessments of the vendors and capabilities.

Six Sigma Process as a Tool

Kevin Kroymann, Hormel’s National Trade Marketing Manager then shared in very personal terms that resonated with the attendees how critical it is in the meat (or any commodity driven business) to be very mindful of ROI and to maximize efficiencies and effectiveness in creating trade events.  Sharing  insights into how the Six Sigma culture of Hormel and the values it maintains infuse the approach taken by Hormel Trade Marketing both within the company and with their retail partners; Kroymann’s pride in the successes they have had against bigger competitors was clearly evident and in large measure the result of the ability to collaborate more effectively with retailers based on more skillful use of insights, trade promotion analytic capabilities, and the understanding of how to best communicate that with their trading partners.

Steve Jankauskas, Vice President of Business Development for Annie’s Inc. opened many attendees’ eyes by sharing how Annie’s is able to leverage insights that go far beyond the “standard” price elasticity studies available from syndicated data providers through the use of Sequoya’s predictive modeling capabilities.  By sharing examples of how Annie’s has been able to collaborate with their retail partners to maintain or even raise prices based on the insights derived from the research on shopper price tolerances and the impact on purchase behaviors; Jankauskas proved that meeting price points or being the lowest cost in the market is not always the best strategy for either the retailer or the manufacturer.

Day one of the Summit concluded with a truly inspiring story of success from Gabe Gabriel, CEO of the retailer, Haggan & TOP.  Leaning on his considerable experience with both Pepsi and Albertson’s, and coupling that with his background as an Army Ranger, Gabriel shared how Haggan transformed itself from a nearly defunct and irrelevant retailer with no point of strong differentiation from competition into a very competitive retailer that shoppers and employees now view quite positively.  The photos of “before and after” were enough to keep the late afternoon attendees spellbound, but the passion and enthusiasm he spoke with of the collaboration with manufacturers aiding in the transformation was enough to convince all in attendance of the positive future Haggan has under his tutelage. 

Collaboration is to Co-Labor

Day two began with Win Weber of Winston Weber and Associates, Inc. challenging the attendees to consider whether they truly have a collaborative strategy at all, and if so, whether they are incorporating all of the necessary components.  He began his presentation by making a clear distinction between “joint business planning” where one party or the other gains an advantage over the other and collaborative planning where the gain is mutual.  Then, Weber shared his company’s multi-stepped process for ensuring that regardless of the level of sophistication or willingness of the retailer to collaborate; there was a viable business planning approach that was consistent in intent, although not in detail or allocation of resources.

The mid-morning presentation was given by Accenture’s Alex Kushnir and Gary Adams who addressed the benefits of Business Services for certain processes and business needs and SaaS or homegrown developed and maintained solutions for other situations.  When looking at the benefits of off-loading some of the “non-value added tasks and functions” of owning the databases, updating software, and ensuring access at all times to the data versus increased time with trading partners to collaborate; the opportunities became obvious when the right circumstances were identified.

The next presentation was on “Big Data” and was given by Hitachi Consulting.  Using Schwan’s as the example, Hitachi was able to show how all of the varying and disparate sources of data can be “harmonized” regardless of whether it was strictly quantitative, tightly controlled and collected, or pulled from social media postings.  By collecting the data where it resides and being able to aggregate it into something meaningful that Schwan’s is able to use in planning and initiating activities with retailers that is proactively addressing opportunities (as opposed to reactively responding after significant lagtimes), Schwan’s was able to improve distribution, improve incremental opportunities, and develop more accurate forecasts.

Brian Fox, VP of Category Management at Ralcorp (formerly American Italian Pasta Company) discussed how the introduction of LEAN techniques allowed for the company to go from inefficient spending due to poor forecasting, inventory management, and poorly planned product launches, etc. to a company that is viewed as a strong partner that retailers now rely upon and choose to develop strategies with; all the while continuing to improve their strategic and executional strengths.  Fox explained how this was all done under the tightest of budgetary constraints..  With enormous pride and enthusiasm for the process, Fox invited the attendees to make it their own and to implement it in their companies.

The next presentation was given by Megan Margraff, Chief Analytic Officer for Spire, LLC who showed how aligning promotional performance with shopper behavior over time can provide greater context and insight than merely measuring the “lift” of a given event during the promotional period.  With numerous examples, Margraff demonstrated how promotion duration, purchase cycle times, incrementality vs. subsidization, etc. all impact each other and failure to identify their effects on each other may provide a less than accurate view of the value of any given promotional event.

After a day and a half of intense and challenging presentations that forced attendees to examine their own strategies and processes; their own training and reinforcement, and their own tools and applications, many were glad for the experience – and had pages of notes, and a few questions to ask themselves and others in their organizations they were taking back to answer in order to continuously improve their own efforts. The next P-O-I Summit is April 14-16, 2013 in Chicago, IL

P-O-I has as one of its core purposes, the education, and certification of professionals in the industry to become more collaborative.  With that intent, P-O-I is launching (March, 2013) a curriculum for professionals to complete to become certified in collaborative marketing (see: http://p-o-i.org/ccm.php).

The Certified Collaborative Marketer (CCM)™ credential is the advanced professional certification that with POI and Dr. John L. Stanton at Saint Joseph’s University delivers tangible value to CPG/Retail Leaders. It demonstrates your command of the critical sales, marketing, and merchandising collaborative skills demanded by today’s evolving Retail/CPG environment to create and optimize; promotional plans, assortments, brand/category/store sales and profits. The CCM is unique among CPG and Retail professional credentials — designed specifically for sales, marketing, and merchandising professionals (e.g. Grocery, Drug, Mass, Club, Dollar).

A Collaborative Marketer understands mutual KPI’s (e.g., item/category profit, volume, share, promotion optimization, in stock position, trip and basket volume/profitability), translating into significant advantage for your company, and career advancement for you.

Roles that are considered as candidates for the CCM Program
• CPG Sales/Mktg.
• Category Mgt.
• Supply Chain Management
• Trade Marketing
• Sales Finance
• Brand Marketing
• S&OP (Demand Planning)
• Retail Marketing
• Retail Advertising
• Purchasing
• Retail Category Management
• Retail Marketing
• Loyalty and Analytics
• Retail Merchandising
• Pricing

Achieving the CCM demonstrates your professional expertise in planning, executing, analysis, shopper insights, leadership, and decision support – essential skills sought after by successful CPG/Retail executive team leaders.

PRACTICAL RELEVANCE & INDUSTRY ENGAGEMENT
The CCM offers the critical knowledge, skills, and abilities needed to collaborate both internally and with trading partners effectively, to effectively compete in today’s complex CPG/Retail environment. The POI Education Advisory Board members are successfully leading the way in key leadership roles at top companies from CPG, Retail, and solutions providers around the world. Onsite orientation/classes SJU consists of 1.5 days 12-20+ Retailer/Manufacturer Executives who move through the program together.

CONVENIENCE AND FLEXIBILITY
Busy professionals can take advantage of the various learning formats at their desks, or at convenient locations. Certification will be achieved in a blended format using both classroom and online content. Onsite orientation and Collaborative Marketing exercise are held at Saint Joseph’s University, Philadelphia, PA. 15 minutes from Philadelphia International Airport (PHL). Hotel/Travel recommendations to follow.

RETURN ON INVESTMENT
The CCM delivers a solid return on your investment. Certified Collaborative Marketers (CCM)™ will be able to effectively collaborate both internally, and with partners on a variety of subject areas promotional plans, assortments, category sales and profit. The CCM will understand mutual KPI’s (assortment, brand, category, volume, share, promotion, in stock position, basket building, in store execution, etc.) deliver capabilities and results for companies that they would otherwise have to outsource and continually subsidize.

 

Loyalty, Customer Service, and Sales

Saturday, October 27, 2012 by:David Zahn
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I recently completed delivering a training session at a client site that took me nearly fully across the country. Using the opportunity to visit friends I don’t get to see too often on the West Coast, I extended the trip to permit me to double up on prospecting with clients in the Pacific time zone and spend some time with my friends. As my friends picked me up at the airport, we immediately fell into the pattern of catching each other up on our businesses, personal pursuits, families, etc. It was during a conversation about the power of the relationships that exists between sales people and their prospects and customers that we both came to a common insight – loyalty is as fragile as the next interaction’s success.

Training’s Failure

The relationship between customer and sales is critical.

My friends shared that in their business, it is not unusual for sales people to just “drop in” and try to catch a meeting when and where they can in between other commitments and appointments. In those hurried and harried impromptu discussions, the following invariably happens:

1. The sales person follows some “script” that is designed to get “Yes” answers from their prospect (simplistic and obvious questions like, “is profit important to you and your business?” – that are guaranteed to get a “Yes” in response).
2. The sales person makes reference to the friend’s child or family, personal interests, or some other pursuit based on an overheard conversation, photo in the office, or eavesdropping in an attempt to “build rapport” – but without any real (or invited) prior discussion between them.
3. The sales person assumes that the friend is prepared to share their needs, wants, desires for the business in a first meeting with a virtual stranger.

The reality is that many sales people never advance past the first meeting or are only given cursory attention when they “visit” – and don’t realize that it is because they are following the sales process they have previously been told to use. Because they are so focused on the steps of their training – they are losing sales opportunities. What is happening is that my friend (and nearly every business owner) is feeling the disconnect that occurs when they are treated as a bit player in someone else’s play. The prospect is expected to read their lines as if a Director and Scriptwriter had staged the interaction with the expectation that there be no variation or deviation. Except, the prospect views it more like an improvisation and is not beholden to the confines of a script. My friend bristles at being expected to comply with an expectation she did not help create nor agree to; and often ends the meeting as soon as she sees the above occurring.

What Does Work

However, in the course of the discussion with my friends; one example did shine through in discussing a particular sales person’s efforts to differentiate from competition. The company this sales woman represented was holding a promotion for end-user customers that offered a rebate if the customer were to purchase a year’s worth of product at one time. A customer of my friends’ business complied and made a purchase only to not receive the expected rebate check within the stated timeframes. In pursuing why the rebate was not offered, it seemed the company claimed all sorts of excuses and used various stall and delay tactics that infuriated the customer.

When the rebate was finally released, the customer was dissatisfied and wanted additional compensation for their trouble in securing the original rebate. The requested compensation far exceeded the value of the original rebate and was in no way reasonable; though the customer was clearly frustrated and angry by the series of events that had transpired and was not without reason for expecting some additional customer service efforts.

It was at this point, that the sales person from that company and my friends had a discussion that illuminated the reality of the situation. Here is what the two of them came to recognize as a result of this unfortunate exchange between the end-user and the company:

My friend’s perception:

• The product being sold is interchangeable or nearly the same as many other commercially available products and does not have a unique status or compelling competitive advantage.
• The company supporting the product has no marketplace differentiation that creates a reason to do business with it (and may actually be at a disadvantage if this episode is indicative of how they treat the customers of my friends’ business!).
• There is no price, service, logistical, or other business variable that gives the nod in the company’s favor over other competitors.
• The sales person is the ONLY reason that my friends’ business continues to do business with the company.

The sales person’s perception:

• The value of the relationship between my friends’ business and her company was worth saving and working on (or even improving).
• If the relationship was damaged in any way by the way the company had handled the end-user customer’s situation, then the sales person was prepared to “make good” on it in any way that the two of them could agree.
• If, in the estimation of my friends, the request by the end-user customer was appropriate (or even if it was inappropriate, but would salvage the relationship between my friends’ business and the company), the sales person was going to authorize/find a way to approve the request in an effort to maintain harmony between their businesses.

While my friend and the sales person negotiated what they felt was “fair compensation” as an offer to the end-user customer among themselves – what they really were negotiating was their relationship and the strength of loyalty to each other. The end-user customer represented a microscopic amount of business to the sales person’s business, but the relationship with my friends’ business was deemed important enough to absorb any additional expense in an effort to make the end-user happy.

My friends further shared that should this sales person leave her current position and be replaced by another sales person, the goodwill generated by this sales person would not transfer to the replacement. Loyalty has to be re-earned with each new relationship or interaction and is constantly set back to zero when an event occurs that calls that loyalty into question.

Aiming the Arrow at the Target

Tuesday, October 16, 2012 by:David Zahn
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Business results are down, sales are in decline, errors are creeping into production, profits are in decline, margins are in a freefall, and things just aren’t being done as effectively and efficiently as before.  For many business leaders, that is the time when they reach for their trusted “go-to” reaction and decide to heap training upon their organization.  All it will take is some good old-fashioned remedial instruction to realign people’s efforts and get things back to expected levels of performance.

Unfortunately, that is not always appropriate and may not provide the organization (or the boss) with what is the expected outcome.  Before engaging in the “knee-jerk” reaction of foisting training upon direct reports, it is necessary to better understand whether employees really NEED to be trained at all.  In certain instances, the issues preventing success may be beyond the reach of trainers and training to impact.

Start with the KSAs

Training and trainers are capable of impacting the following:

  • Knowledge – do employees KNOW what to do, why to do it, and understand their role/importance of what they do to the entire organization’s functioning and success.
  • Skills – do job incumbents have the capability to DO the job (they kow what comes first, what to do next, how to recognize what needs to be done, have the manual dexterity, mental acuity, etc. required to successfully complete the job’s tasks).
  • Abilities – do employees have the capacity to integrate the work tasks into their performance completely, correctly, appropriately, timely, etc.

If the job not being performed correctly cannot be addressed through improving the above three things, it is not a training issue.  It may be addressed through changing compensation, incentives, or evaluation systems.  Potentially it may be improved through better resource availability (employees can be trained to use software, but if they do not have computers on their desks, it won’t change performance) or through different reporting relationships (supporting different functions or departments, etc.).

Training is best applied to situations where there is potential to close a gap between current KSA levels and those needed to meet existing or future business needs. To do that, the company must first understand the current KSA level before determining whether training is appropriate, and if so; what that training is to contain.

Before training employees, be sure you know what needs to be trained.

How to Uncover a KSA Need

There are a few ways that one can truly determine the current status of KSAs within the organization.  The following are among the most commonly used ways.

Observations – simply watching or observing how someone does the task and identifying if it is being done correctly, according to standards, what difficulties emerge in the completion of the job, etc.  The positives of this approach is that it is an ”objective” view of performance.  It is not dependent on one’s memory or perceptions.  It is the actual performance.  On the other hand, if the employee is aware that it s/he is being observed – it may lead to a change in behavior (the so-called Hawthorne Effect).

Interviews – asking people to reflect and share on what they believe, perceive, observe, etc.  The positives are that it is not especially expensive, can be done reasonably quickly (as compared to observation).  However, there are decisions to be made (who to interview?  The job-holder, the boss, the subordinate, the peers/co-workers, the customers, etc.?).  It is also dependent on people accurately reflecting reality and not just feeding the interviewer what they want to hear.

Survey – having people complete either an online or paper-based surveys and having them respond to prompted questions about their performance can be quickly administered and very inexpensively scored and measured.  The same concerns that exist for interviews apply here as well – with the additional hindrance of inabilities to read body language, ask follow-up questions, confirm understanding.

Test/Role Play/Simulations/Gaming/Case Study – employees can be assessed by putting them into situations and then analyzing their performance.  Similar to observations, these approaches allow for behavior to be seen “as it would occur” (assuming it is a well designed activity).  This approach does allow for controlling variables so that the behavior to be measured can be isolated and extraneous factors are limited or eliminated.  However, these approaches can be expensive to create in a way that is realistic in some situations or may be subject to influences beyond those that are intended.

Training may be the right answer to performance issues within companies.  However, for it to be effective, it should be targeted to the specific behaviors it is meant to impact or influence.

Do You Measure Customer Equity?

Monday, October 8, 2012 by:David Zahn
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As a business person, executive, or entrepreneur there are many specific measures employed to gauge business success. Some of them are quite familiar to business people; profit, sales dollars, market share, number of customers, and costs among others. However, while those are certainly indicative of success and appropriate to be tracked; they do not give as accurate a picture of FUTURE success if they are not balanced by a measure known as “customer equity.”

Customer Equity is a key measure for determining future business potential

What Most of Us Know

Most business people and financial executives are comfortable talking about standard profit and loss or balance sheet kinds of measures.  Assets and liabilities are understood and easily identified.  Concepts of equity as it pertains to capital or equipment ownership and value attained or retained are commonly discussed.

We also appreciate the notion of tracking costs incurred to acquire new business and/or retain existing business.  Though we do not always follow through on it, we at least understand the concepts and believe we SHOULD be tracking them.

What we Don’t Know

Do we know the following:

  1. How much value is there in “loyalty” (assuming we can even qualify what that means and looks like to begin to put a quantification to it)?
  2. What is the lifetime value of a consumer/customer worth to the organization (LTV)?
  3. What is the Customer Value Proposition (CVP)?
  4. Where does PROFITABLE Volume Growth (PVG) come from?

What We Have

We have large reams of data on our customers (through frequent shopper programs, credit card tracking, email and other online engagement strategies, including social media) that remain often untouched or analyzed.  Other than providing opportunity for discount programs, most businesses struggle with what to do with the information.

Where We Are

We are in a strange quandary.  We collect more information about our customers and shoppers than ever before thanks to “Big Data” and the ability to have computing power at such reasonable costs available to “slog through data.”  However, we often feel like we know less than ever about:

  1. Customer motivations
  2. Customer decision-making
  3. Customer commitments

By recognizing what our customers seek and providing an opportunity to meet those needs or desires by guiding the shopper/customer through their purchase decision barriers to a level of comfort that allows them to make a purchase decision confidently; businesses could improve everything from:

  1. Their “close rates” or conversion of shoppers to buyers
  2. Profitability (upgrading or migrating certain purchases from less profitable options to more profitable ones)
  3. Volume or dollar sales (add-on sales, incremental purchases, etc.)
  4. Margin (typically less expensive to service existing customers than to acquire new ones)
  5. Share (developing loyalty through repeat purchases, more frequent shopping occasions, larger purchases per occasion, etc.).

The focus on the “hard numbers” without recognition and understanding of the relationship aspects that fuel the results reported in the hard numbers will rarely tell the whoe story.  It is only by going back to the dynamics of the relationship and measuring the “customer equity” components that true forecasting will ever be accomplished.  Otherwise, one can only rely on past results and hope that nothing changes today or into the future.  Starting with that false premise can only lead to poor assumptions, missed targets, and becoming bewildered at why projections are so far off expectation levels.

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