Category Archives: Service

Would You Dedicate Staff to a Single Client? Five Considerations

Situation: A company has received an inquiry from a large client requesting that they dedicate a significant portion of their staff to that client. The company hasn’t done this in the past, and the CEO seeks advice on the advisability of this choice. Would you dedicate significant staff to a single client?

Advice from the CEOs:

  • Provided that the terms offered by the client are favorable, the proposition may make sense. However, there are certain terms that you may want to assure are included in the contract:
    • In return for your dedicating choice staff to this project, ask for a substantial upfront payment – perhaps 50% of the total contract – to reimburse you for the opportunity costs that you incur committing your resources to the project.
    • Insist that the contract allows interchangeability of personnel if circumstances prevent initial personnel from continuing with the project.
  • Internally, work to assure that this project does not adversely impact your culture.
  • Talk to other companies that you know who have had similar arrangements with large clients. This will give you an understanding of the benefits and pitfalls of the arrangements.
  • Do everything that you can to assure that this project does not distract from your broader business strategy. Cash from the project may be nice, but if it inhibits your overall business strategy it may not be worth it.
  • If the employees assigned to this project are not happy with their assignment, the project may lead to unwanted turnover.

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How Do You Cope with a Changing Market? Five Options

Situation: A company’s major competitor is closing shop. When this happens the company will be the sole large local service provider. Municipal and many large projects require multiple bids. The CEO is concerned that out-of-area companies will underbid the company’s union scale operation. How do you maintain your position in a changing local market?

Advice from the CEOs:

  • If your municipality has union scale wage rules, find a way to monitor wage compliance of out-of-area operations. These companies may say that they pay union scale, but the municipalities and others won’t have the staff to monitor them. This will be up to you.
  • Talk to local elected authorities and impress upon them the importance of supporting local businesses. Remind them of wage compliance problems that localities have seen in the past. Suggest that they look at local content requirements to help keep business and business revenue funding in the local economy.
  • Emphasize the maintenance aspect of your jobs. If a local company both builds and later maintains the project, they will know the subtleties of the design and will be able to provide better and more cost-effecting ongoing maintenance.
  • Educate clients with monitoring, measurement and compliance checklists that highlight the benefits of using local contractors and maintenance service.
  • If the other company approaches you about buying his business focus on the ROI produced by the other company’s costs and profits, but under your pay-scale. If this looks promising, have a conversation with the owner and see what he wants. Prompt the owner to talk and listen carefully to what he has to say. If you don’t want to buy the full business, there are other options:
    • Hire his key employees on a $/hour plus commission basis on retained sales.
    • Purchase his customer list, or giving him something for any maintenance contracts that come over to you within a set time period.

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How Do You Respond to Market Changes? Three Options

Situation: A company has a successful product, but the market is changing. Previous customers were savvy, but the market is shifting to more naïve customers who don’t understand how to use the product. How so you respond when the market for your product changes?

  • What you are seeing is a typical market evolution. (See Clayton Christensen’s book Crossing the Chasm.)
    • When a new product is introduced, early adopters are typically savvy users who quickly grasp the utility of the product. They don’t mind some inconvenience provided the product is useful.
    • As the market matures and starts to attract mainstream customers, new users will not be as sophisticated and expect the product to be easy to use.
    • If you don’t adapt to these new customers your product will languish as new competitors enter the market with user-friendly adaptations.
  • The path is clear. Figure out how to make your product easy to use. If you use a GUI (graphic user interface) make the GUI intuitive. Allow customers to get what they need with as few choices or clicks as possible.
    • These changes may alienate more sophisticated customers, but they usually only represent a small segment of your potential market.
  • Add a customer-friendly service component. This builds a service income base around the product. You have different options.
    • Align the customer with appropriate level of resource – you may not require high level resources to assist the customer, particularly if the product is one where the service consultant only needs to be one page ahead of the user.
    • Outsource the service component to a partner or use independent contractors.
  • Consider a remote monitor system:
    • A dashboard interface with easy to read visuals or messages that tell the customer when service is needed. This will enable them to perform simple maintenance using your tools, or alert them when they need to contact you for service.
    • An example is Norton’s evolving system of products that enables an unsophisticated home computer user to either use Norton tools to perform routine maintenance, or directs them to the Norton web site for assistance or more sophisticated solutions.

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What Are The Best Ways to Create a Presence in China? Six Suggestions

Situation: A company’s major customers are expanding their manufacturing in China. They want the company to be able to service their Chinese locations. If you don’t already have a presence in China, what are the best ways to create a presence in China? In addition, how do you get the cash produced by these operations out of China?

Advice from the CEOs:

  • Increasingly, multinational businesses with operations in China seek vendors who can seamlessly handle all of their domestic and international needs. In China, the objective is to be able to translate service output into English so that US managers can monitor the output and assure that Chinese operations are meeting the same or similar basic standards as their domestic and other foreign operations. If your company can’t do this large contracts are at risk.
  • Look for local partners, including partners located in Hong Kong or Japan who can deliver service in China to your standards. You want partners who you can risk-manage.
  • It is interesting to look at the Japanese approach to China. Japanese concerns known to CEOs around the table only transfer highly developed, late stage manufacturing projects to China.
  • As you look at partners who have capabilities in China there are a number of qualities that you want to investigate:
    • Competence and honesty.
    • Loyalty – a partner who will stick with your company and not just take the new knowledge and start to compete with you.
    • Absence of graft and record of compliance with the Foreign Corrupt Practices regulations.
  • If you work with Chinese partners, work with two of them. Do not give them exclusive agreements, and do not tell them about one-another. This is critical to protecting any IP that you will be using in China.
  • We’ve learned over the past year that taking cash from your Chinese operations out of China is difficult. The Chinese government imposes heavy fees and levies on companies exporting earned capital because they want this capital to remain in China. Given this, you must ask yourself whether this is important to you. [like]

How Do You Shift From Regional to National Operations? Three Foci

Situation: A company has a network of regional offices, operating under loose oversight from the home office. Increasingly, large customers are asking for national service agreements, but the company struggles to coordinate uniform national service delivery. How do you shift from independent regional to coordinated national operations?

Advice from the CEOs:

  • If you want to act like a national company, then organize like a national company. Create a national account office which will take the lead in negotiating national contracts. That office will then coordinate with the regional offices to assure that service delivery occurs according to contract.
    • As the national office is built, it will be important for them to understand how service delivery may vary between states because of differences in state regulations. This will require a manager who is experienced and knowledgeable in your field. This may be a promising current regional manager or an outside individual from your industry.
    • You will also want to define customer categories which will enable you to classify current and prospective customers as regional or national accounts. You may want to consider three customer categories, for example Regional, Emerging National and National Accounts.
  • The key to success will lie in your incentive and professional development structures.
    • If region managers receive their incentives and promotions primarily for developing regional business, then this is where they will focus.
    • If you want the region managers to shift their activity and priorities to creating and servicing national contracts, then bias both your incentives and professional development programs accordingly.
    • For region managers, continuity of business will be a top priority, as this enables them to maintain region performance. To come on-board with the new program, they must perceive a value for both themselves and their customers.
  • Once you have determined your structure, look for high profile wins that drive the structure. Reward and promote those who produce these wins.
    • These producers will become your champions for change.
    • The message will spread quickly across the organization.

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How Do You Build Consistency and Reliability as You Scale Up? Three Keys

Interview with Greg Hartwell, CEO and Managing Director, Homecare California, Inc.

Situation: Fast growing companies find it difficult to manage consistency and reliability of service as they scale to their next level of growth. They need to systematize what works and leverage technology to enjoy the benefits of scale. How do you build consistency and reliability as you scale up?

Advice from Greg Hartwell:

  • Invest time and effort to build an experienced management team. As a small company building a new service delivery model, it is helpful for the founders to know all roles so that you have a sense of what’s needed for each role.
    • Be open to hiring people from other industries. This brings a fresh perspective and broadens the pool of talent. There’s value in industry experience, but attitude and cultural fit are key.
    • The split between tactical and strategic skills is 80 / 20. Basic skills are necessary, but specialized knowledge can be learned.
  • Institutionalize how you recruit, screen, hire, train and retain. How do you do it like Disney – attracting and hiring the best of the best?
    • Know your market and the personality of those who will excel. This greatly simplifies the screening process.
    • Work hard on training. Our customer-focus starts with our employees. We complement natural talent with training that focuses on soft skills, and on consistency and reliability of service.
    • Find great advisors who can help build a training and retention system that works for you.
    • Minimize turnover by compensating people well, and treating them even better. Build a culture of recognition and shared experience that emphasizes the importance of the team and its members.
  • Embrace technology which enhances your ability to scale.
    • Don’t wait for something bad to happen and then rush to fix it. Anticipate and prevent mishaps.
    • Leverage communication technologies to tighten the bond between client and provider agency. Provide added services that are valuable and affordable.
    • Hand-held device technology is developing rapidly. Leverage this to increase consistency and reliability of service, enhance case reporting, reduce human error, reduce the ratio of supervisors to caregivers, and increase productivity. Be at the head of your industry class!

You can contact Greg Hartwell at [email protected], www.homecare-california.com

Key Words: Fast, Growth, Consistency, Reliability, System, Technology, Benefit, Management, Requirement, Talent, Recruit, Hire, Train

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How Does a B2B Company Learn B2C? Three Lessons

Interview with Ross Johnston, CEO, DiskCorp

Situation: A well-established B2B company is starting to work with B2C retailers. It is finding that both the internal and external perspectives of B2C companies are very different. How does a B2B company work differently with B2C companies?

Advice from Ross Johnston:

  • In the OEM market, manufacturers control all warranty obligations, have tightly controlled procedures for handling and tracking returned goods and are very focused on product quality and operational efficiency.
  • Leading B2C retailers have a very different perspective. Their focus is on the customer: on encouraging great customer experience and repeat customer visits. Products are sold to big box retailers without warranty, and the retailers provide their own warranty programs. This results in far more returns than for OEMs. Further, product is returned for a wide variety of reasons from failure to work as advertised to the customer simply changing their mind. There is also a wide range in how returned products are handled – from throwing them in the dumpster to returning undamaged items to stock, and few records are kept.
  • Our challenge is to help retailer and big box customers design, develop and implement recycling and cost recovery systems in our market. This means both developing procedures for the retailers and new channels to cost recovery markets.
    • First, they need processes to triage returned goods into broad categories: new or near new goods condition for resale; goods which require refurbishing or recycling; and goods for environmentally appropriate disposal.
    • Second, we have created a software tracking solution – a reverse logistics program – to track returned goods from receipt to their eventual disposition with full end-to-end P&L analysis. This can yield up to a 45% gross margin on returned goods which is shared with the retailer.
    • We develop additional processes that vary by retailer to help them handle the flow of returned goods.
    • We want to provide the retailer with an end-to-end operational platform that turns a cost center into a profit center and reduces long-term liability exposure that accompanies landfill disposal.

You can contact Ross Johnston at [email protected]

Key Words: B2B, B2C, OEM, Warranty, Procedures, Focus, Product, Customer, Return, Refurbish, Disposal, Process, Tracking

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How Do You Focus on Execution and Delivery? Three Observations

Interview with Doug Merritt, President & CEO, Baynote

Situation: A company has a proven technology and satisfied customers. To achieve their goals, they need delivery on sales and service to ramp revenue. At the same time, new opportunities arise daily. How do you keep the team focused on execution and delivery?

Advice from Doug Merritt:

  • The first thing to focus on is focus itself. Most of us don’t suffer from lack of opportunities, but from an inability to make hard choices and diligently pursue the few critical or high pay-off options. To tell the difference between gold nuggets and distracting bright shiny objects, you must have a clear strategy and priorities on customers and channels you want to develop. It is critical to choose the right opportunities that will optimize achievement of the strategic plan and to say not to those that don’t. This must be constantly reaffirmed through a simple set of metrics around your optimal customer set, revenue ramp, and quality of services delivered.
  • The second thing is attracting the right talent. A small and rapidly growing company has little time and resources to effectively train fresh talent. If scale is the issue, it’s important to identify and attract experienced individuals – those who have proven their ability to deliver and who bring along a high quality, proven, loyal following. Top talent that can open the purse strings of your target customers. This means hiring rock stars who do this better than you can! The challenge for the CEO is remembering that success almost always comes from hiring people who can do their jobs much better than you ever could. The CEO’s unique talent isn’t being the smartest person in the room – it’s your ability to build and guide an organization that will achieve more than you can alone.
  • Third is to keep the team focused on the most important priorities. The CEO needs to generate a crisp vision and to distribute information that maintains focus on that vision. Most “Type A” overachievers want to do lots of things well. The key is doing the right things well. You do this by measuring, and by creating transparency around the few key levers that drive the strategy.  It helps your cause to say no to a visible and enticing “bright shiny object” that, in the past, the team would have reluctantly accepted.  Finally, it also helps to create a few large and non-negotiable milestones that get the company to focus, as a unit, on achievement.   Ultimately, the CEO needs to coach and guide their team to do the right things right.

You can contact Doug Merritt at [email protected]

Key Words: Delivery, Execution, Focus, Opportunity, Priorities, Customer, Channel, Plan, Metrics, Talent, Experience, Ego, Team, Vision, Information, Listen, Learn

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How Do You Find and Focus on Your Promoters? Five Factors

Interview with Richard Owen, CEO, Satmetrix Systems

Situation: If you are not creating promoters of your product or service, you are inhibiting your own growth. Growth is challenging and if you don’t have positive word of mouth it becomes more expensive. How do you find and focus on your promoters?

Advice from Richard Owen:

  • Calculate and understand your “Net Promoter Score” – the percentage difference between “promoters” and detractors.” Promoters are those customers who would highly recommend your business, detractors have a negative perspective.
  • It is important to attend these two audiences – “detractors”, who create negative word of mouth, and “promoters” who create positive word of mouth. Detractors can be targeted for service recovery. At the same time, you must identify your promoters and find ways to get them to actively let others know about your business. Both negative and positive effects are being amplified today by social networks.
  • Understand what your business does that creates detractors and promoters. Gather and analyze root cause data to provide insights around the actions you and your team should take to change the balance in your favor.
  • Hold employees accountable by “stack ranking” the customer performance of each of your teams or employees. In part, this helps you to understand areas of strength and weakness and allows you to create individualized or group action and coaching plans. There is also a tendency for groups below the average to improve performance because they are being measured.
  • These are simple ideas, but making this work in practice can be a challenge. Setting up an effective system takes more leadership than leaders typically realize and is often counter to the short term realities of most companies. Success requires a long-term perspective and an external versus internal focus. And, of course, the right systems!
  • While the leadership of many mid-market companies are as sophisticated as that in large companies, mid-market companies lack the resources of large companies. A focus on action around promoters and detractors allows a company to get 90% of the value for 10% of the effort in customer experience management.

You can contact Richard Owen at [email protected]

Key Words:  Promoter, Growth, Word of Mouth, Positive, Negative, Cost, Data, Customer, Metric, Coach, SMB, Perspective, Effectiveness, Resources

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In Challenging Times Do You Cut Losses? Three Considerations

Situation: A company lost money last year, but turned the corner with a profitable final quarter. One of the company’s divisions continues to lose money, though the losses are small compared to the total picture. The CEO is considering cutting this business. What factors should the CEO consider in making this decision?

Advice from the CEOs:

  • What expense factors contributed to the loss?
    • The biggest factor was allocation of vehicle and space expense. This division has seasonal revenue but carries the allocated expenses for the full year.
  • Make sure that your allocated expenses are fair to the business. Do overhead allocations reflect utilization? Unless closing the business eliminates vehicles or space, if you terminate this business these expenses will be borne by the rest of the company.
    • Study your allocations by shifting the allocation made to this business to other businesses. What is the impact on their profitability?
    • If you find that the current allocation does not reflect utilization and adjust accordingly, does the business still lose money?
    • If this division covers its direct expenses along with most of its allocated expenses, a small loss in this division may be preferable to a reduction in profitability of other businesses from closing the division.
  • How strategic is this division to the overall business mix?
    • Is this business essential to your product/service mix or just a customer convenience? If you terminated the business will customers be upset?
    • Do competitors offer this service, and would you be disadvantaged by discontinuing it?
  • What are the alternatives?
    • Can you raise prices to increase profitability and refuse business that does not meet this pricing?
    • Can you restrict the offering to less price sensitive customers?
    • Can you refer customers to other vendors or sub out this business?
    • Can you reduce the scope of the offering while adjusting pricing to enhance profitability?
    • Can you source other labor alternatives to reduce cost?

Category: Strategy, Service

Key Words: Profitable, Loss, Division, Business, Critical, Factors, Expense, Allocation, Seasonal, Overhead, Loss Limit, Customer, Price, Competition, Offering, Scope, Labor, Skilled, Contractor

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