Yours or Mine?

Say I was to put a $20 bill (or a £20 note for my UK friends) on the table and offer the highest bidder the chance to win it on the flip of a coin. How much would you be willing to wager on the chance?

Views on gambling aside, logic would suggest a reasonable answer would be somewhere in the neighborhood of 20 dollars as that evens the odds of you taking my 20 while keeping yours at 50/50.

But say all you had was $20 to carry you to your next paycheck and you needed that money to buy milk for the kids. Would you still make the bet?

Conversely, say you want to buy theater tickets that cost $40, but only have $25 in your pocket. The show runs tonight only and there is no other way for you to get the extra $15. Might you consider bidding a little higher for a chance at not missing the show?

My point is this: It’s not really the price or cost of things that drives consumer behavior, but rather the value they place on those things. Yet driven no doubt by the economic downturn, it would seem both companies and consumers alike are totally obsessed with cost cutting and have completely lost sight of the total value proposition.

While I appreciate that eliminating unnecessary spending often makes sense, becoming obsessed with cost cutting, be that on the provider or consumer side, can only lead to a reduction in quality, and therefore the value of goods and services available.

Inevitably, this decline in value will further stall our economic recovery, increased pressure on our fragile environment and in the end, actually drive up real costs. In other words, it will cause a world of long term pain and little if any short term gain.

By my way of thinking, the sooner we curb our obsession with cutting costs and get back to focusing on value, the more of it we will create and the better off we’ll all be.

I’d love to hear your thoughts on this one!

For more on this topic, see my colleague, Ade McCormack's blog on Money Verses Value then return to this site by clicking on the back button.

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In Memory Of An Old Friend

The other day I found myself reading through the obituaries in the local newspaper (sadly, people my age do that sort of thing) and I came across the following entry that I thought might be worth sharing:

Today we mourn the passing of a beloved old friend, Mr. Com N. Sense, who was with us (on and off) for many years. No one knows for sure how old he was, since his birth records were long ago lost in a mountain of bureaucratic red tape.

Mr. Sense will be remembered as having cultivated such valuable lessons as: ‘the customer comes first!’ and ‘while good marketing may bring them in the door, it’s a positive customer experience that keeps them coming back!’

Com lived by simple, sales and service ethics (every customer deserves our attention and hospitality; never sell anything to anyone who has no need for it; always deliver what you promise) and grass route strategies (make it easy for the customer to do business with you and make it easy for your people to do business with the customer).

On those rare occasions when things went wrong on the sales & service front, it was Com who was there to show us that it’s not about who is wrong and who is right, but rather that what really matters is putting things right!

Com’s health began to deteriorate the day several service providers failed to acknowledge his existence as he entered the local branch of his bank. In fairness, they refused to make eye contact for fear he might expect them to leave the all-important work on their desks just to serve his needs. It declined further as a number of well intentioned, but somewhat overbearing rules and regulations were set in place. Reports from friends of being turned away from the bank because they had failed to make an appointment; being asked for references from other banks while trying opening an account, being told where and when they could do business, were but a few.

Com finally lost the will to go on after repeatedly trying to reach his bank to express his concerns from his sick bed. Rumor has it he was connected to an automated voice response system which, after numerous seemingly meaningless questions, redirected him to a line that rang and rang, but was never answered.

Com N. Sense was preceded in death by his daughter Responsibility, and his son Reason, but survived by his 3 ugly stepbrothers; It’s Not My Fault, That’s Our Policy and I'm Just Following the Rules. Com is also survived by his loving wife, Good. While understandably weakened by the loss of her husband, Good Sense is expected to make a full recovery and take up the cause where Com left off.

Memorial services for Com N. Sense will be held on Thursday at ‘The Church of Common Courtesy’ and all are invited to pay their respects. In lieu of flowers, Mrs. Sense has requested that going forward, we simply remember her husband each and every time we serve a customer.

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Champs, Chimps and Chumps

Recently a friend of mine was struggling with the dreaded task of having to let someone go. The individual in question was not getting along with customers or coworkers and as a result was costing my friend's company money; but being a very caring individual, he was still reluctant to pull the trigger.

When I heard this it brought to mind a little article I'd written some time back which, hoping to ease his pain, I shared with him. Now I'm sharing it with all of you just in case you ever find yourself in the same unenviable position.

Very early in our management careers we are told that no two people are alike and in order to succeed as managers we must learn to recognize the various personality styles and adapt our management practices to acknowledge individual and situational differences.

Most managers and supervisors have received training on, or at least read about personality profiling and style-based or situational leadership. Unfortunately this can be pretty complicated stuff and as a result, not many of us have managed to effectively apply these theories and practices in the workplace. As a simple alternative, I offer the following “Who’s Who at the Zoo” management philosophy: I admit it’s not pretty; but it is effective and far easier to remember and apply.

Despite almost countless variations on personal styles, I would suggest that the vast majority of people fit rather nicely into one of three broad categories. There are those that lead, those that follow, and those that don’t do either… or put another way… those that make things happen, those that watch things happen and those that don’t have a clue what’s happening.

In order of contribution, we’ll call these categories Champs, Chimps and Chumps. If your work group is like most, about 80% of it’s real productivity or value added comes from about 20% of your people (the Champs). The remaining 20% comes from about 70% of your staff (the Chimps) and like it or not, 10% of your employees, consciously or not, are actually working against rather than for you (the Chumps).

Imagine for a moment, a group made up of only high producers, a group made up entirely of Champs! It will never fly you say? Let me guess; You need the Chimps to get the work done right? A Champs only business would be too top heavy … all generals and not enough foot soldiers. If that is what you are thinking, perhaps we have a case of mistaken identity here and need to flesh out and better align our definition of Champs, Chimps and Chumps.

Champs aren’t just those people who run the business. A Champ can be anyone in the business who exhibits enthusiasm, energy and dedication. They exist at all levels and can be found doing just about any job that needs doing, and doing it well. In fact, in some companies, you’re more likely to find a Champ on the front line, in the warehouse, or sweeping up than you are in the executive suite.

Champs are the people who others, especially customers, gravitate to. They genuinely enjoy what they are doing and are a pleasure to be around. Champs are the ones you’re always praising (or at least you better be) and you don’t mind paying. All you need to do to keep them engaged is to give them meaningful, challenging work and continue to acknowledging their contribution.

Jumping to the other end of the spectrum, Chumps can be a little more difficult to recognize and a whole lot more difficult to manage. Chumps often disguise themselves as Chimps, and sometimes, even Champs. Fortunately, Chumps have some common attributes that will no doubt surface over time and give them away.

Chumps are generally defensive, change-adverse and close-minded. They are often found complaining and blaming or criticizing others. Argumentative by nature, they like to interrupt and have a really hard time listening to, let alone accepting, another point of view. They tend to view the customer as an intrusion and seldom engage with them at any level beyond the minimum required. Chumps are almost always self-centered and most feel the world owes them a living. If that’s not bad enough, Chumps also have the particularly annoying habit of trying to inflict others (both coworkers and customers) with their negative views and in doing so, they are working against you and your company.

So what should you do about the Chumps? While far easier said than done, the best possible thing you can do is to be rid of them, and the sooner the better! You owe it to those who do produce to do just that. You also owe it to your customers, your company and yourself. In fact, you even owe to the Chumps. Chumps are generally not happy with their current situation and probably don’t hesitate to point that out. Being change adverse however, they are very unlikely to do anything on their own to make it better. By terminating the relationship you will be helping them get on with their lives. If you can, explain this to them and encourage them to leave on their own accord. If you can’t, document your observations and follow whatever process exists in your organization for more formally (and legally) saying good-bye.

But enough about the Chumps, let’s talk more about the Chimps, or potential Champs, if you will. In most companies they represent the vast majority of employees and can be easily identified in one of two ways depending oddly enough, on age. Young Chimps may exhibit many of the same characteristics and attributes of Champs, but simply lack some of the skills, knowledge and experience required to make them high producers.

Young Chimps are generally pleasant enough, but can come across as awkward and uninformed when dealing with customers. They are frequently found asking lots of needless questions, or just hanging around looking perplexed or confused. Fortunately, Young Chimps are easily influenced and with proper care and attention, can quickly be converted to Champs. Unfortunately, left unattended, they can just as easily be converted into Chumps, especially if, shame on you, there are a number of longer serving Chumps hanging about in your business. Young Chimps don’t stay young for long, so get to them early and give them the direction and feedback they so desperately crave.

Older Chimps, on the other hand, are often recognizable by their very lack of distinguishing characteristics. They are not bad performers, but seldom do anything special. Older Chimps are generally quite, easygoing folk who are very little trouble and just seem to carry on from day-to-day. They tend to be well liked by their colleagues and often have a loyal following of longer term clients, but are unlikely to bring in any new ones. While they have the skills and knowledge to do their present job, they seem hesitant to try new things, preferring to maintain a low profile and follow the rules, even if to a fault. It is not that they are change adverse, but rather that they need to be lead through it.

Older Chimps, often as a result of being ignored for years, have lost the confidence and drive of their youth. To move from Chimp to Champ, they need to be reassured that you recognize their past contribution and potential further value. Then, they need to be realistically challenged and held accountable. Nothing reengages the older Chimp like being asked to lead (or at least help out on) a project that requires ‘someone with their level of experience and expertise’.

All be they likable creatures, Chimps, young or old, are probably costing your company money. At best they may be paying their way, but in doing so they are occupying a spot that could otherwise be filled by a Champ. Truth be known, most of us could do with a lot less Chimps. The best way to reduce their numbers is to convert them to Champs. Fortunately, Chimps were born to please and with just a little push, are ready and able learners. Whether they know it or not, they want to be Champs. So train them hard and train them well. If they have what it takes, you’ll know soon enough. If not, perhaps there is another role in your organization for which they may be better suited; but failing that, they too should be set free. Chances are they have wrongly placed themselves in an occupation for which they have no aptitude. By letting them go you will be helping them avoid future unhappiness and the possible deterioration to the dreaded Chump level. They'll do just fine working for someone else and in time, will likely thank you for help them to find their way.

So there you have it. This ‘Who’s Who at the Zoo’ approach to people management may not be perfect, but it is effective, appropriate for the times and, in the final analysis, fair. Now to bring it all together in a nice little summary; in a nutshell, the WWZ or ‘Who’s Who at the Zoo’ management philosophy says: stroke the Champs; train the Chimps; fire the Chumps.


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The Real Value of a Customer

One of the reasons customer service is what it is (as in not nearly as good as it should be) is that most organizations grossly underestimate customer value (CV) seeing it as simply the difference between the cost of providing goods or services and what the customer pays for them at point of sale.

Say for example Neil, my youngest pictured above, buys a pair of skis on sale for $800 (a ridiculous amount if you ask me, but considerably less than the ones he really wants). If the total cost of those skis (what the manufacturer/distributor charges the retailer, plus a proportionate share of operating expenses such as salaries, commissions, rent, advertising, etc.) to the shop is $700, they are likely see his CV as $100.

On the surface this might seem reasonable, but it far from tells the whole story.

First, the skis mentioned above by no means represent my son's first pair, in fact, he currently has three pair in active service (don't ask) and there are at least as many cast offs in the basement. I prefer not to think how many pair of skis he has owned and how much they cost.

It should be noted that not all of those skis were bought from the same shop and even if they had, I can understand why the retailer is not all that likely to account for purchases of years gone by when calculating Neil's value as a customer, although a little acknowledgment would be nice.

But consider this - Neil typically buys a new pair of skis every two years, either because he wears them out (what he tells me) or because something 'way better' has come along (the real reason). Given his passion for the sport, he is very likely to continue this pattern for many years to come and it would not be out of line to suggest that in the course of his lifetime he will probably go through at least 25-30 pair.

So what we are really talking about here are sales over time of somewhere between $20,000 - $25,000 and based on a 10% margin, that translates into $2,000 - $2,500 in potential value for the retailer.

But that is only part of the story. In order to ski, Neil not only needs skis, but also boots - good ones go for about $500 to $600 (replace every 3-4 years); poles - $50 to $100 (lasting 2-3 years, unless stolen); gloves - $100 (at best 2 years, but only if he doesn't lose them); goggles - at least $100 for anything decent, considerably more if you go with the built in antifogging fans (who know how long they'll last); a helmet - his mother won't let him leave home without one - $100 to $150 (good for 3-4 seasons or until he head buts a tree)...and then there's the outer wear (jackets and ski pants)... inner wear (thermal underwear, fleece, etc.)...and après ski wear...let's not even go there.

But we're not done yet. When it comes to skiing, Neil is the expert in our family, so when his brother or I need new equipment, we follow his lead. And because he can recite equipment specs in his sleep, not to mention 'drop a line' (ski cliffs/shoots/tight trees) most of us wouldn't think skiable, there's also a broader circle of friends, acquaintances and people who just happen to be riding the same chairlift who turn to him for advice as per what to buy and where to buy it.

When you add everything up over the course of his life, Neil will directly or indirectly influence the purchase of well over $100,000 in ski equipment, which would suggest that to those who sell the stuff he has a potential customer lifetime value (CLV), even at very conservative margins, well in excess of 10 grand!

It would be silly to imply that all of Neil's 'customer lifetime value' will be realized by a single shop, but one thing is for sure, little if any will go to the one that calculates his CV as $100!

So if you happen to own a ski shop, you might want to think about that the next time some lanky kid in jeans and a hoodie strolls in and tips back his baseball cap to give you and your inventory a critical glance.

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Some People Wait A Lifetime

The other day I found myself on hold while waiting to inquire about a billing issue with my telephone service provider. Unlike many similar automated queueing systems, this one did not give any indication of wait times. That said, I knew I was in it for the long haul as every few minutes the background music was interrupted by the following message:

Interested in a career in telecommunications? We currently have several openings for call centre operators.

When I first heard this, I thought: Fair enough. They are short staffed, but at least they're trying to do something about it. By the fifth or sixth time I heard it, my thoughts were becoming somewhat less charitable.

But then, about ten minutes into my wait, something happened that really lit a fuse. At first I didn't catch on as by this time I was cradling the phone on my shoulder and going about some other business. When the penny did drop, I became painfully aware of the song playing in the background. Believe it or not, it was none other than A Moment Like This which, for those of you not familiar with the lyrics, repeats almost ad nauseum the line:

"some people wait a lifetime... for a moment like this."

Don't get me wrong. I have nothing against Kelly Clarkson, or this particular piece of music. But I did find it's placement a bit over the top. Either someone at the phone company has a very warped sense of humor, or attention to detail does not feature highly in their operational imperatives. Either way, while I had to laugh, I was not amused, if you know what I mean.

As it happens, I did not have to wait an entire lifetime. It just felt like one.

After a little over 18 minutes, I was finally put through to a rather pleasant individual, who when challenged on the billing item in question (a charge of $3.99 for a 1 minute call to directory assistance) was quick to advise me that particular service was not one provided by her company, but rather one provided buy a third party and that I would have to take it up with them directly. I found it strange that they would farm out such a lucrative service (many lawyers charge less than what equates to a $239.40 hourly rate) but since they are the ones doing the billing, it is probably safe to assume they get a cut.

In any event, intrigued by this response, not to mention being somewhat opportunistic, I then asked if they also farmed out the design of their automated queueing systems. Needless to say, she failed to see the humor in this.

In the end I opted to eat the disputed charge and did not bother calling the number she gave me. Not all of us can afford to wait a lifetime for moments like this!

If your company has an automated call management system, you might want to take a moment and check out what impression it leaves with your customers. From the rest of you, we'd love to hear about any 'interesting' call management systems you may have encountered.

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Many Happy Returns!

Happy New Year! I hope you had a great holiday and got exactly what you wanted for Christmas. I also hope it was the right size, the right color and the right whatever it needed to be.

I suspect however, there are those among you who have already made, or are planning to make a visit back to the shops for some minor or major adjustments.

And for those of you, my further hope is for 'Many Happy Returns!'

Even as I write these words I realize this to be wishful thinking. After all, last year was very challenging for most retailers and by all accounts, the sales figures leading up to Christmas didn't exactly turn the tide.

What are the chances that shop owners, sale clerks and customer service folk are going to greet you and your returns with the same enthusiasm they displayed (or should have displayed) when the purchases were made?

The truth is - I've already heard a number of somewhat disturbing stories.

The first relates to the electronics store who has implemented a 15% restocking fee on all returns, a hefty price if the item in question is a computer or big screen TV. Apparently one disgruntled customer asking why this policy was not brought to their attention at the time of sale, was not so politely told "It's printed on the back of the sales receipt!" which it was.

Fair enough I suppose, but consider the fact the customer doesn't get the receipt until after the purchase; and just out of curiosity, when was the last time anyone actually read the back of a sales receipt?

Then there's the major department store that back in October and November, was so actively encouraging everyone to shop early, but now, when presented with a return, is so quick to point out their 30 day refund policy.

On the one hand, I can understand, even sympathize with these retailers. After all you can't really expect them to freely accept returns for an indefinite period; or can you?

What constitutes a fair and reasonable return policy? To be fair (and ethical) it most certainly has to be clearly understood by all parties at the time of purchase, not hidden away in small print on the back of a receipt. But what is a reasonable return period and what specific return terms and conditions actually make sense?

Not easy questions to be sure.

Perhaps the root of the answer lies in just how much the seller values the future business of their customers and how much they care about what those customers have to say about them.

Rather than explain, I'll share with you one more little story which, while not so current, may help make the point:

Some time back a pregnant woman walked into a linen store to return an unopened set of sheets purchased precisely 31 days earlier. The sales clerk, obviously annoyed by this intrusion, cleared a pile of other returns off the counter and pointed to a rather dog eared copy of their version of the 30 day refund policy.

After expressing her disappointment, the customer in question was told that if she didn't like the policy, she was welcome to shop elsewhere.

That woman just happened to be my wife and the child she was carrying is now 20. While she has since made her fair share of towel, bedding and related purchases, my wife has never forgotten the words of that clerk, and more to the point, has never once stepped foot back in that store. Furthermore, to this day, whenever someone as much as mentions the establishment in question, she recounts her experience with same level of emotion and disdain that she expressed to me on returning home that fateful day.

The lesson:

When it comes to customers expressing and acting on their dissatisfaction, there is no 30 day policy.


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Naughty or Nice?

It's that time of year again. While we're all busy decking the halls, trimming the tree and frantically rushing about in search of that last 'must have' gift; Santa is up at the Pole checking his list... looking to see who's been naughty or nice.

There has been a lot of talk in the business world of late about who has been naughty, but precious little about who has been nice. It seems over the last year or two, many a company have lost their way and should not be at all surprised to discover a lump of coal in their stockings hung by the chimney with care.

As some of you know, I teach a communications course for accounting students that touches on business ethics - go figure? And wouldn't you know it; this seems to be one of their favorite topics - again, go figure?

During a recent class discussion on ethical communication, service and reporting practices, one of the brighter lights (they're all pretty bright) asked "What do we really mean by business ethics? It all seems a bit ambiguous to me. Is there a single, simple definition that will help guide us on our way?"

Obviously, this young lady did not want to find coal in her stocking.

Unfortunately, I was 'momentarily' stumped by the question, but fortunately, another of the bright lights kindly bailed me out. He had recently been reading 'Think and Grow Rich' by Napoleon Hill and pointed out that in chapter three, Napoleon suggests we should:

"engage in no transaction which does not benefit all whom it affects”

By my way of thinking, when it comes to a single guiding principle for ethical business practice, that just about says it all!

For some, it may be too late to influence Santa's assessment of this year's performance, but soon a whole new year will begin and if we are hoping for a full stocking next Christmas, perhaps we would all be well advised to be guided by these simple words.

Merry Christmas to all... and to all, a 'good' life!

Jim

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