Tag Archives: Customer

How Do You Respond to a Breach in Policy? Five Suggestions

Situation: A company recently terminated their lowest performing sales representative. Prior to surrendering the company computer, the employee sent a goodbye email blast to the company and customer email lists. This action was a breach of company confidentiality policy. How do you respond to a breach in company policy?

Advice from the CEOs:

  • Have the human resources manager send out a company-wide message specifying how this misconduct violated company policy and the potential impact on the company. In the same message, re-emphasize company confidentiality policy and the importance of complying with policy. Follow-up with conversations between managers and employees about the importance of company confidentiality.
  • Consider having all employees sign a new company confidentiality agreement every 6 months. This should be accompanied by explanations of company policy and conversations to reinforce the importance of complying with policy.
  • As a follow-up to this situation, be proactive by informing affected clients that this individual has left the company and let clients know who their new sales representative is.
  • Be aware in your internal communications that this action may have been an honest mistake, not intended to harm the company. If this is the case and your internal response is too strong, this may have a negative impact on other employees.
  • If the individual goes to work for a competitor, send the new employer a copy of the termination agreement signed by the employee and put them on notice that you will prosecute any violations of prior confidentiality agreements.

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How Do You Create a Value Proposition? A Three-Round Process

Situation: A company wants to effectively position itself for a recovery. The CEO believes that it is time to sit down with his team and focus on those areas which will help them to emerge during the recovery not only stronger than they were when the recession started, but ahead of their competition. How do you create a value proposition?

Advice from the CEOs:

  • Creating your Value Proposition starts by analyzing and understanding your most important strength. Is it Product Leadership, Operational Excellence, or Customer Intimacy?
  • No company can succeed today trying to be all things to all people. Choosing one discipline as your most important strength is the choice of winners.
  • To set your Value Agenda, ask your team “How do we compete and win in our marketplace?” This is not a single discussion, but requires three rounds – best done as three different sessions.

o  Round 1 focuses on understanding where you stand in your marketplace.

o  Round 2 focuses on understanding what your customers perceive as your “unmatched value.”

o  Round 3 focuses on building an operating model that enhances your unmatched value and helps to consistently communicate this to your clientele.

  • Once the three rounds are completed, formulate the top findings of each round into your Value Agenda for the company.

o  A Value-Driven Operating Model gives your company the ability to deliver on your Value Proposition.

o  Your Value Discipline is the combination of operating model and value proposition that will allow you to be the best in your market.

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Can Bonus Plans Differ Between Departments? Four Thoughts

Situation: A CEO wants to build a new bonus program for the company’s professional services team. He wants to include a customer satisfaction component, because the group is historically weak in this area. Does it make sense to have a different bonus plan for professional services personnel and managers than for product development personnel and managers? Can bonus plans differ between departments?

Advice from the CEOs:

  • Many companies have different bonus structures for different departments. This is natural because different departments have different functions. For example, Sales may evaluated for bonuses based on a combination of revenue and gross margin achievement, while Finance is evaluated on profitability and Product Development is evaluated on hitting product launch schedules and new product sales.
  • Changing bonus structures can be a sensitive matter. If the team impacted is not included in the process of drafting the new plan, changes may be perceived as negative. If this is the case, it’s better to frame the new program so that you limit your commitment to it to just one year, and let the team know that this may change this next year.
  • How do you go about including customer satisfaction surveys as a component of bonus calculation?
    • If you want to use customer satisfaction as part of the plan, benchmark customer service satisfaction before you launch the plan. If you don’t benchmark, how do you know whether performance improves?
    • Survey response rates will be an issue – you won’t get 100% and may get a survey response rate of 10% or worse. Be prepared for this and make sure that data with a low response rate will support your objectives.
    • A survey is a lagging metric. If you can find a measurable leading metric to use as well this is better.
    • Be careful of how the survey is drafted and who conducts it. Both can bias results.
  • As an alternative to making customer satisfaction part of a bonus plan, consider starting a customer satisfaction or loyalty program. The most important question to ask will be: would you recommend us to your peers?  Any low response guarantees a follow-up call from the company.

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What are Best Ways to Boost Cash Flow? Five Guidelines

Situation: A company is frequently short of cash at payroll time. It has good revenue and profitability, but timing of receipts can make it difficult to meet payroll. Are the CEO and CFO doing something wrong, and what changes should they look at to better manage cash flow needs? What are best ways to boost cash flow?

  • All financing begins with your cash flow pattern! Your ability to manage cash flow is the foundation of credit worthiness. It is both a reflection of past performance and specific future performance expectations.
    • What can you do to optimize your situation?
      • First – put your own house in order!
      • Review your business model and the aspects of the business model that are causing cash flow challenges. Based on what you find, fine-tune your business model and its cash flow capacity. If receipts are the challenge, work with your customers to focus on timely payments.
      • Understand your financing needs in their full context. What short-term financing options are available? Will your bank offer you better terms on your line of credit to keep your business.
    • Stop, think and analyze before you act.
      • Framing:  View the problem in its full context!
      • Alternatives:  Consider all relevant choices!
      • Trade-offs:  Get more than you are giving up!
  • It is important to fine tune your business model, not just in slack times when you have the time, but also in good times so that you are well-prepared for the next slack period.
  • When times are flush, set aside funds to invest in analysis of your business model.
  • Special thanks and in memory of Eric Helfert, PhD for his advice in this discussion.

Do Balanced Scorecards Aid Decision-Making? Three Factors

Situation: A company is investigating Balanced Scorecards as a management tool.  They want to get the perspective of others who have used Balanced Scorecards on how these are used and where they are effective and ineffective. Do Balanced Scorecards aid decision-making?

Advice from the CEOs:

  • To make good decisions in times of uncertainty one needs readily available up-to-date information on the key drivers of the business. Balanced Scorecards answer four important questions:
    • How does the customer view us? (Customer metrics)
    • At what must we excel? (Key Performance Indicators and Internal Business Processes)
    • How do we continue to improve and create value? (Learning/Growth & HR metrics)
    • How do we look to our investors? (Financial metrics)
  • To effectively use Balanced Scorecards employees must be empowered to make necessary changes, and there must be an effective system for prioritizing efforts – so that when a company has multiple opportunities they can decide what to do first, second, and so on.
  • Empowering people to make a necessary change
    • To improve project estimating systems, identify those who are best at estimating project timelines and costs. Have them develop a template of their process, focusing on how they complete projects on schedule. Implement this template across your estimating function.
    • To improve project on-time completion, shift the development focus to calendar and, if necessary, narrow specs to hit the deadlines.
    • To focus scope of work issues, decide test procedures up-front then work on deliverables that will determine whether requirements have been met. From this, develop project assumptions and budgets. Create a template that focuses on internal best practices and clones these for other projects.
  • Queuing Systems & Priorities
    • Define the vision of success. Then drill down to what’s most important. Look at impact of different options on the organization and performance. Finally, force this issue – if we can only do three projects what will they be?

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How Do You Build Market Awareness on a Small Budget? Seven Ideas

Situation: A small technology company has a handful of major customers. They are very good at what they do and want to expand and diversify their customer base. The challenge is that they don’t have the funds for large-scale marketing.  As an additional twist, for now they prefer to stay under the radar of their largest competitors.  How do you build market awareness on a small budget?

Advice from the CEOs:

  • Start with the basics. Define your market niche and build from there.  Create a beachhead in this niche and generate strong testimonials from your current customers.  Segue to tradeshows and broader marketing opportunities as you build marketing strength.
  • You already have several marquis clients. Look for opportunities in other divisions within these client companies. The work that you have done for existing divisions makes you credible.
  • Network with your current clients to develop other opportunities. They won’t want to help their competitors; however, if you can improve what they receive from their other vendors they may provide introductions for you.
  • As a small company, focus on a single market where you have strength and credibility.  You don’t want to spread yourselves too thin.
  • Find a good customer and solve their problem well. Create an evangelist who will tell others about you.
  • Look for speaker opportunities at high visibility events within your market niche.
  • Consider webinars, these are inexpensive and if you promote them to decisions makers in your target niche you can quickly build credibility.

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How Can You Best Reduce Costs? Six Points

Situation: A company wants to reduce their cost of engineering. They are considering outsource options, both domestic and overseas, as well as remote offices in lower cost regions domestically. How can you best reduce costs?

Advice from the CEOs:

  • An emphasis on cost may be misplaced. Consider instead of where you can offer the best value to your customers or clients. Focus on and compete in best part of your market – the place where you possess the strongest advantage; then worry about cost.
  • Outsource companies can be dangerous partners. Assume you only profit from the first job that you give them and that they may be your competitor the next time around.
  • We’ve learned from the last decade of experience in Asia that cost advantages are often temporary. Salaries for top talent in India and China now approach those in the US. This experience is likely to be repeated in Southeast Asia.
  • Focus on high dollar services and opportunities.
    • There are limitations to offshore talent – especially in complex, multi-step development projects. Keep high dollar projects in-house because they justify higher prices and margins.
    • When you outsource, negotiate retainer contracts with additional charges for work above and beyond the scope specified in the retainer.
  • What do you want to be? Consider your options:
    • Become a project management company and outsource development.
    • Be a development company and just look for cost effective sources of labor.
    • Start your own outsource company – a split-off staffed by your own employees – and feed them work.
  • Before you invest substantial time or money, do a test.

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When is “Good Enough” Enough? Five Factors

Situation: A company is about to launch a Beta version of their web-based software. The CEO strives for perfection. What is sufficient for launch, and can the company tolerate imperfections in Beta version? When is “good enough” enough?

Advice from the CEOs:

  • Many successful software companies – think Microsoft – have realized that finishing the last 10-20% of a new release can be as expensive and time consuming as the first 80-90%. The challenges are often greater and it’s difficult to prioritize the final pieces. So they release when the software is 80-90% complete, prioritize the final pieces based on user feedback, and focus on quick response to user feedback.
  • You really have no idea how users will experience a new web-based program until you hear it from them. They will tell you what does and does not need to be fixed. They may even be able to help you fix it! Craig’s list stinks from a pure GUI perspective, but is highly popular and successful.
  • Get the Beta program out ASAP. What you perceive as imperfections may not appear as problems to young Beta users, and may in a way add a quirky appeal to the user experience.
  • Find a customer or group of customers who will pay for the program. Only this proves its actual worth. There can be conditions for a Beta release and discounts, but if nobody is willing to pay, where is the value?
  • Consider releasing your Beta version in a college campus environment and invite both participation and feedback. College students are very web-savvy, more tolerant of Beta programs, and crave the opportunity to contribute.
    • As an additional bonus, when you are ready to launch, college students are great at helping you generate buzz and early adoption because they talk to so many of their friends from both college and high school.

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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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How Do You Identify New Customers? Four Alternatives

Situation: A company wants to expand its markets and customer base. Currently their business is dominated by a single customer. What best practices have you developed for identifying new customers and markets?

  • The key to getting new customers is to devote dedicated time to this task.
    • If your company is populated by engineer or software specialists, consider hiring a sales professional – a commission based hunter sales person who has experience landing big accounts in markets similar to yours. You may pay this person a good percentage of sales for brining in this business, but gaining the additional business can be worth it.
  • Much depends upon your relationship with your large customer. When a single client has rights over or ownership of the technology of the company but is not pursuing broader markets that the company is interested in, is it feasible to negotiate rights to pursue this business?
    • The larger client will pursue their own interests, not those of the smaller vendor. Perhaps a win-win deal can be worked out, but it may be difficult – particularly if the larger client is concerned that use of the technology in other markets could affect its interests in their primary markets.
    • Be very careful in this situation. The easiest tactic for the larger company to defend itself from a perceived threat is to sue and simply bury the smaller vendor through legal expenses. While the smaller company may be legally within its rights, deep pockets can beat shallow pockets through attrition.
  • In the case that the larger client simply continues to buy all capacity of the smaller company, an alternative is to raise rates, or perhaps to just say no.
  • Consider recreating the opportunity – create your own adjunct proprietary product with your own software or design talent and expand your horizons with this product.
    • Be aware, the large client can still sue if there is any appearance that your proprietary product impinges on their product rights. As in the case above, the larger company has the resources to bury the smaller company in legal expenses regardless of who is legally correct.

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