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Engage in a Constructive Leadership Dialogue

Conduct Soul-searching Interviews with Outsiders

Engage in a Constructive Leadership Dialogue If you are a leader, what is your most important job? As stated by John Kotter, leaders groom organizations for transformation and help them manage as they struggle through it. That is their foremost job. However, how do they go about doing it? Jack Welch, former CEO of General Electric, once said: “My main job was developing talent. I was a gardener providing water and other nourishment to our top 750 people. Of course, I had to pull out some weeds, too.”

Evidently, setting a direction for the future is an important aspect of leadership. Telling what the organization should become in the long term and how it should get there becomes the foremost duty. Soon after taking the helm of IBM, Lou Gerstner announced, “The last thing IBM needs right now is a vision.” Some people nailed his hide to the wall for that statement. He explains that reporters dropped the words “right now” from his statement. Gerstner felt that IBM was long on vision statements, but short on getting the job done. Fixing the company was all about execution.

Creating a Culture of Leadership

Execution is nothing but aligning people, motivating them, and creating a culture of leadership. Kotter contrasts execution with equally important but managerial duties such as planning, budgeting, organizing, staffing, controlling, and problem solving. The value of a wonderful strategy is only achieved when it is carried out. And it is the people who make the grand vision a reality. That’s why, as Jack Welch points out, leaders need to make it a priority to plant and nourish talented people at every level.

If you lead a big organization like General Electric, you might have assets at your disposal like the GE John F. Welch Leadership Center at Crotonville, the world’s first major corporate business school. Here everyone from important customers and partners to present and future GE leaders come together to identify opportunities and debate issues. But few organizations have the resources to invest like GE. They can’t operate a dedicated leadership center.

Creating a Culture of Leadership The constraint of a smaller budget is hardly an excuse to not operate key levers that drive superior performance in people. Going back to Welch’s garden analogy, some aspects of cultivation are free, such as sunshine. But how you choose to orient your garden in relationship to the sun makes all the difference. If you place your garden under a large shade tree, you cut it off from necessary nourishment.

While a leader needs to have a strong sense of the direction, cultivating new culture by changing people’s frame of mind and behaviors is the hardest part. In doing so, they can follow the profit-at-any-price model by relying on fear, pressure, and greed, or they can follow a more sensible leadership model based on inspiration, motivation, and enthusiasm.

Four Bad Leadership Models

Even leaders who articulate a convincing vision, inspire followers, and display passion and courage to take on challenges can have wasteful traits that limit them. These tend to manifest themselves in four ways:

  • Know-it-alls: They start believing that they know and do this better than anybody, and believe that they don’t need others as much as others need them. So they tend to treat others as dispensable and tune them out.
  • Micromanagers: They get mired in minutiae and sometimes miss the forest for the trees. By measuring too much, they measure nothing.
  • Perfectionists: They spend too much time doing things right rather than doing the right things, thereby losing focus. They take any constructive feedback as a direct hit and return what they see as not-so-friendly fire.
  • Detached: They become emotionally distant and lose the intimacy and connection to other people. To any push-back, they respond: “Tough! If I can do it, so can you.”

When these behaviors occur, the results follow quickly: Any constructive confrontation within the executive team ends almost immediately. Honest exchange of ideas on options and their pros and cons ceases. What is happening on the ground to the foot soldiers becomes irrelevant. The pressure people feel becomes unbearable. The “guilt trip” that nobody else is pulling their weight becomes harder to take. Any semblance of work-life balance is lost. Conversations become one-way streets, and people feel like glorified order-takers. It seems like they have ceded all authority to the boss.

The leader is quickly surrounded by loyal sycophants in the inner circle who simply want to ride the coattails. Everyone else is in the outer circle-albeit with more self-esteem, yet fearful to say that the emperor has no clothes. Soon people start telling the leader what the leader wants to hear, lest their heads are chopped off. Collaboration comes to a grinding halt, and providing lip service becomes the politically correct thing to do. Everyone looks out for themselves, and any mutually shared goals, if they exist, take a back seat. Any sense of intimacy, camaraderie, and belonging on the team becomes non-existent.

Any concept of a team breaks down. Any sense of empowerment evaporates. The vision of the leader becomes a pipe dream. The strategic plan to get there suddenly has strong disbelievers. The short-term results, obtained through draconian measures, become harder to sustain. As Michael Maccoby notes: “Narcissistic leaders can self-destruct and lead their people astray.” So, there is plenty of leadership, but little followership.

Foster Competencies to Compete in the Future

Foster Competencies to Compete in the Future A key challenge for leaders competing for the future is to foster competencies that provide access to tomorrow’s opportunities. Further, as discussed by Gary Hamel and C. K. Prahalad in Competing for the Future, leaders need to find innovative applications of the current competencies. Leaders must objectively assess and proactively improve the caliber of the executive team and the organization as a whole.

However, before a leader can assess the caliber of the executive team, he must take stock of his own. Surveys—whether leadership or 360 degree—are popular and necessary, but rarely tell the leader the whole story. Objective, confidential, and focused interviews by an outsider with each individual on the executive team can deliver unvarnished truth-rich information about what’s really happening behind closed doors. Is there a true strategic alignment? How is the leadership style perceived? How much constructive confrontation occurs? Do people collaborate or simply provide lip service? Is everyone pulling in the same direction?

There are five prerequisites to getting the most from these interviews:

  1. Right reason. First, conduct the interviews for the right reason: improving leadership by eliminating unproductive behaviors. If the hidden agenda is to vilify non-performers or to find scapegoats, the approach backfires.
  2. Objectivity. You need an objective outsider to hold the mirror. This person must not be afraid to find out the truth and tell it like it is.
  3. Confidentiality. The interviews have to be treated as confidential, and the interviewer can’t make any direct attribution to a specific individual. Despite all the talk about openness, blackballing is still a common practice.
  4. Specificity. While recognizing that everyone’s reality is different, the interviews have to focus on direct observations, experiences, and involvement rather than hearsay.
  5. Commitment. There must be a commitment to develop an action plan at the individual and team level.

If these criteria are met, the insights gained from interviews can help create a high-performance culture. The honest feedback and recommendations can raise the candor and constructive dialogue.

Baseball manager Tommy Lasorda said leading people is like holding a dove in your hand. “If you hold it too tightly, you kill it; but if you hold it too loosely, you lose it.” Finding that delicate balance between providing nourishment and pulling weeds is the key to effective leadership. But it begins with looking in the mirror.

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Posted in Leaders and Innovators

Tap the Power of Your Viral Customers

Viral Customers are Your Brand Ambassadors

Viral Customers are Your Brand Ambassadors Whether you are aware of it or not, customers are talking about you this very minute. They are offering opinions, trading experiences, and influencing other customers about you—your company, products, services, and reputation.

Welcome to the world of the “viral customer,” the turbocharged version of the word-of-mouth customer. If you’re not aware of your company’s viral customers, you need to be. If you haven’t geared your company to their growing influence, you had better start now. These talkative, influential customers will play a critical role in the future of your marketing schemes, loyalty programs, customer service efforts, public relations outreach, brand management, privacy policies, and bottom line.

The Internet has created a generation of so-called “viral customers.” Viral customers can be champions or destroyers. They can talk trash about you or trumpet your worth. Which route they take depends on you.

  • If customers are happy with their encounters with you, they are likely to tell lots of their friends. In essence, they become viral ambassadors who will rave about your company to others to create a gush of goodwill. These ambassadors can be valuable, low-cost avenues for building existing relationships, recruiting new customers and keeping old customers happy for life.
  • But if customers are not satisfied, watch out. So-called “viral rebels” can destroy your products, brands, and reputation as they share negative experiences. Moreover, at the moment of negative feedback, they’re likely to be in a “switch mode,” ready to find someone else to satisfy them in ways that your company hasn’t or won’t.

Are you paying attention to what your own viral customers are saying and doing? We’ve found that some companies and industries are more “viral” than others. Customers are much more likely to pass along opinions to others about insurance firms, health maintenance companies, utilities, banks, long-distance and wireless telephone companies, mail delivery services, Internet service providers and auto manufacturers.

What’s at stake is more than the lifetime value of a single customer. Everyone in the viral rebel’s sphere of influence is also at stake, because even though the original customer may walk away from you, he or she is not necessarily finished. The bad-mouthing continues. Suddenly, one person’s negative encounter becomes everyone’s shared experience, and you’re left to pick up the pieces, re-establish ties, win confidence, and regain long-term loyalty.

Some Brands and Issues are More Viral Than Others

Some Brands and Issues are More Viral Than Others Certain brands elicit highly viral customer buzz. Billing issues typically fly off the virility chart. Other hot-button issues involve safety among automakers, baggage claim among airlines, customer service at e-commerce sites, hygiene at restaurants, and staff attitude at retail stores.

If you listen to your viral customers, you will know whether your marketing budget is based on the correct assumptions. You’ll be able to apply one-to-one marketing principles to customer feedback, making your customer insight even richer and more robust. You will know which brands are working. You’ll know your company customer service record, because you will have real-time feedback from the customers. You will identify trouble spots or opportunities well in advance, enabling you to take advantage of positive feedback or stop negative feedback before it explodes.

As you analyze the customer insight you receive, you become wiser and more adaptable, smarter and better able to react, respond, and retool. You start giving customers what they want—easy and convenient communication. They want to be heard. They want to help others, and they want a forum that fits their propensity to rant or rave.

In a world governed by customer insight, all feedback is gold and every complaint is a gift. Raw data guides us, but insight that has quality and meaning enlightens us. Anticipation beats perspiration, and the only way to know what is around the next bend is to pay attention to the curve as it develops.

Here’s five things you can do to tap the power of viral customers:

  • Identify them. Viral customers communicate with you frequently by e-mail, letter or phone. They send copies to others, are passionate or emotional about their experiences and are among the first to try new products or services.
  • Make communication easy. Offer as many ways as possible for customers to get in touch with you-a toll-free phone number, Web-site e-mail address, third-party feedback service, street address or special mailing address.
  • Respond quickly. Respond quickly and in the same fashion. Be empathetic.
  • Mine the negative comments. Respond decisively so that the customer decides to remain in your camp. Don’t give a reason to bolt to the competition.
  • Build the relationship. Add communicative customers to a preferred-customer list. Extend special offers, ask their input on new products and services, and ask how you can improve the relationship. The more you integrate the relationship, the stronger it will be.
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Posted in Business and Strategy Management and Leadership

How American Express Realizes the Enormous Opportunity of eService

The internet represents an enormous opportunity to transform and improve old businesses and engage in new ones.

American Express is constantly transforming its business, eventually putting American Express’s old products out of business with new product innovations. All of its Internet initiatives are designed to accelerate its business transformation by capitalizing on interactive capabilities.

The assets that have made American Express one of the leading global financial services companies are highly relevant on the Internet.

American Express eStrategy #1: Become or Remain a Leader in Online Payments American Express has one of the most recognized and respected brands in the world, representing security, integrity and trust. American Express has a large card member base with 50 million cards in force worldwide. It owns or manages nearly $300 billion of assets for its 2.3 million financial services customers. In addition, it transacts with millions of merchants in over 200 countries and territories. It has a broad and diverse product set catering to the financial and travel-related needs of its consumer, small business, and corporate customers.

American Express provides superior value and service to its customers, and runs first-class operations that are nimble enough to conceive and launch major products in Internet time. The Internet is an extension of its business, and American Express believes the “bricks and clicks” strategy will ultimately prevail. In fact, an increasing number of online-only players have recently announced the desire to acquire physical assets as their virtual business models have run their course.

American Express’s eStrategy consists of four parts.

American Express eStrategy #1: Become or Remain a Leader in Online Payments

Currently, of the $5 trillion in consumer payments in the U.S., only about 30 percent occurs on card-related payment products. In addition, of this $5 trillion, less than 1 percent is transacted online. However, as a greater share of spending moves online, most spending will occur on plastic or its electronic cousins as consumers and merchants look for standard ways to transact in a secure fashion. The three key drivers of success as an online payments provider will be merchant acceptance, authentication, and security.

  • On merchant acceptance, American Express has 97 percent coverage of the 100 top e-commerce sites, which accounts for approximately 70 percent of all online spending. In addition, of the top 500 sites, American Express has 95 percent coverage.
  • On authentication and security, American Express’s Online Fraud Protection Guarantee, Private Payment, and Online Wallet allow customers to shop in a secure fashion. Private Payments provides customers with choice and protection when shopping online. Online Wallet offers one-click order fulfillment and form-fill capability that allows users to automatically and securely checkout virtually anywhere on the Internet. The Blue smart chip offers an extra layer of authentication and protection.

As corporations move their purchasing to dynamic online exchanges, they have a need for payment, financing, trust facilitation, and risk management products to support these transactions. American Express is positioning itself to support these types of transactions.

American Express eStrategy #2: Become a Preferred Ecommerce Destination

American Express eStrategy #2: Become a Preferred Ecommerce Destination Becoming a preferred destination for American Express’s current and potential customers who are looking for content, products, and services across financial services, lifestyle, and travel. AmericanExpress.com is the nexus for all of its product and service offerings. This website receives over two million visitors a month.

Many of the products it is developing—such as Membership B@nking and its Online Brokerage—require new skills and capabilities. To succeed, American Express has focused on simple product functionality with differentiating value propositions, all introduced in Internet time. American Express’s Membership B@nking offering includes no-fee interest checking and account access through the American Express ATM network, the second largest in the U.S. And American Express Brokerage offers free online trading for accounts over $100,000.

Despite American Express’s relatively light marketing efforts, response to these offerings has been extremely positive. This popularity attests to the power that an established physical world company can wield by extending the strength of its brand onto the Internet in a way that offers its customers something of value.

American Express has a comprehensive web offering. To simplify the interaction for customers, American Express gives them the flexibility to customize their on-line dealings with American Express through “My American Express.” It has also added Online Extras to The Offer Zone where customers can access savings with local restaurants, merchants, and online retailers.

Another feature is American Express Online Services, the common entry point to all of American Express’s card products and services. Upon authentication, Online Services allows customers to access their American Express accounts as well as special or new offers. Based on a customer’s preference, it can communicate offers, services, and information directly to the customer’s e-mail address.

Through the combination of American Express’s physical assets and web site, it can serve customers when, where and how they want. American Express is increasing share of wallet with customers and providing them with greater levels of service by broadening American Express’s relationships across multiple channels.

American Express eStrategy #3: Provide Online Service that American Express’s Customers Value

American Express eStrategy #4: Improve American Express's Operating Structures Provide online service that American Express’s customers value across all of its entire businesses and products. Online Services already has several servicing options including Bill presentment and bill payment, Membership Rewards account management and online redemptions, and online card applications. American Express also is continuing to develop its online services for merchant, small business, and corporate customers.

If a customer encounters a problem adding an additional card to their Online Services account, a pop-up button will appear that they can click on to reach a customer service representative in real-time to resolve the issue.

Another application, American Express @ Work, moves customer-servicing capabilities online. American Express’s goal is to make the interactive channel one of the preferred methods of servicing.

American Express eStrategy #4: Improve American Express’s Operating Structures

American Express eStrategy #3: Provide Online Service that American Express's Customers Value Use interactive capabilities to dramatically improve American Express’s operating structures through reengineering on the cost and revenue sides. American Express constantly reengineers its business activities to increase its value to American Express’s customers, employees, and shareholders and to develop new capabilities and products. Most of its online reengineering initiatives focus on using the Internet as an additional channel to conduct functions such as online account acquisition, program enrollments, order fulfillment, and targeted, customized marketing campaigns.

American Express’s eStrategy Integrates the Internet with Core Banking Operations

Going forward, American Express plans to use the Internet to change the way it interact with customers, which can have a substantial impact on its cost structure and business processes. American Express is moving to integrate the Internet more closely into its operations and redesign its processes to allow it to be more nimble and proactive in meeting the needs of its customers. Consumers today expect to pay less online for the same products and services they once received through physical channels. Reengineering enables American Express to adjust its cost structure to meet customers’ needs and ensure that they receive superior value.

Create and implement a plan to improve your eService. You might seek ways to use the internet to change how you interact with customers

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Posted in Investing and Finance Management and Leadership

Five Criteria by Which Customers Judge Service Quality

Five Criteria by Which Customers Judge Service Quality

  1. Reliability: Consistency in performance dependability. Examples: accuracy in billing, keeping records correctly, performing the service at the designated time.
  2. Tangibles: Physical evidence of the service. Examples: physical features, appearance of personnel, tools used to provide the service.
  3. Responsiveness: employees’willingness or readiness to provide service. Examples: mailing the transaction slip immediately, calling back the customer quickly, giving prompt service.
  4. 'Raving Fans' by Ken Blanchard (ISBN 0688123163) Assurance: employees’ knowledge and ability to convey trust and confidence. Examples: Knowledge and skill of contact personnel, company name or reputation, personal trait or contact personnel
  5. Empathy: caring and individualized attention to customers. Examples: learning customers’ specific requirements, consideration for the customers.

Read this popular book: Raving Fans: A Revolutionary Approach to Customer Service by Ken Blanchard and Sheldon Bowles.

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Posted in Business and Strategy

How to Enfranchise Customers in the E-commerce Era

Putting customers back in the equation

How to Enfranchise Customers in the E-commerce Era The internet has dramatically advanced the ways business can deliver products and services, and meet customer needs. However, while e-business has succeeded at leveraging technology to enhance business productivity, it has done little to enfranchise customers. Countless web sites that aim to provide a seamless shopping experience simply are not designed for the needs of the user. Customers needing support often have to abandon their shopping carts to get their questions answered. Many end up turning to the phone to get the information they need, or they just give up. Most e-businesses lack the human touch.

Customer needs will continue to change as technology plays a greater role in our lives. To be successful in the future, businesses will have to add the customer viewpoint into the equation, and seek to satisfy unmet customer needs. Rather than concentrating on e-business, companies will need to reorganize as c-businesses, orienting their operations around customer need sets across all channels and touch points, from the perspective of all products and services, and for each customer group, whether on the consumer level, small businesses, or large enterprises.

Six Drivers of Change in eCommerce

Let’s examine these emerging customer need sets, the drivers of change, and how certain businesses are prospering in the new c-business age.

  1. Information overload. The Web has unleashed a plethora of information. The result of this easy access to information is that people are seeking knowledge in context. Presenting data in the context of the customer’s needs transforms it and makes it far more valuable. The financial services company USAA doesn’t inundate its clients with sales pitches and junk mail. It takes a highly targeted marketing approach based on major events in them customers’ lives. When you’re about to buy a house, have a baby, or send a child off to college, USAA will contact you with information about products and services tailored for these needs.
  2. Six Drivers of Change in eCommerce More choices. Today, there is a wider variety of goods and services than ever before. This surfeit of choices is leading people to demand more personalized service and customized goods. Look at cars. Henry Ford told his customers they could get a Model T “in any color you want, as long as it’s black.” The computer industry long took the same approach-only this time with beige. Apple changed the landscape with its iMac, providing consumers with true choice. But Mac enthusiasts still have a hard time getting options they want built right into their systems. Dell, on the other hand, customizes virtually every PC it sells to its customers’ specifications. As advances in technology and manufacturing make it easier for firms to tailor their offerings, customers will increasingly expect personalized service.
  3. Automation. It has become possible for businesses to automate nearly every aspect of the customer interaction. This increase in automation leaves most of us with a yen for the human touch. But for corporations to deliver quality, human scale service, customers will need to make concessions in terms of privacy. Smart e-businesses will prove to their customers that these sacrifices will be worth it. Already, enterprises with good “corporate memory” are succeeding. Consider FedEx, which provides a reassuring presence by putting kiosks in the offices of their best customers. FedEx also provides real value through its Web site by letting customers track deliveries.
  4. 'Ecommerce Evolved' by Tanner Larsson (ISBN 1534619348) Pervasiveness. The pervasiveness of information and services is another driver of change. Having the capability to get whatever you want, whenever you want it is driving a need for control and integration. For example, we can get email on wireless handhelds, and order groceries online. However, is anybody helping people remember what’s supposed to be on their grocery shopping list? Webvan has made inroads in this area, but they still must overcome entrenched shopping habits. As these platforms develop, they provide resources essential for national growth and reduce the market inefficiencies that slow the pace of development.
  5. New pricing models. A heightened awareness of value is the direct result of new pricing models and pressures. Customers don’t necessarily look for the best prices, but they do look for value. In the airline industry declines in service and fluid pricing models have made it difficult for people to determine what is and what isn’t a good deal. Companies that can clearly define their value proposition are having more success in meeting customer expectations and needs.
  6. New entrants in the marketplace. New entrants can now establish themselves in the marketplace with relative ease. Barriers to entry are so much lower now that business can expand into new sectors virtually overnight. For customers, this leads to increased choices, but it also raises questions of trust. Customers look for clues that they can rely on their provider, which is why companies need to build trust through their online and offline presences.

Determine How You Can Deliver Better Attention, Choice, and Value in E-commerce

E-business may have radically changed the ways companies and people buy goods and services, but the essential elements of the buyer/seller equation are timeless. Customers want personal attention, they want choice, and they want good value. Solving the marketer’s dilemma will not be easy.

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Posted in Business and Strategy

Employees Must Have a Vested Interest in the Success of the Business

Robert Frost once said, “Isn’t it a shame that when we get up in the morning our minds work furiously—until we come to work.”

In the new economy, we need to equip people to think and act like owners. Everyone must come to work fully engaged and ready to make difference. A global revolution is under way, and it calls for gutsy leaders—people who can inspire knowledge workers idea merchants, and business innovator to exercise their own brand of leadership. The future belongs to those who use the power of culture to feed the entrepreneurial spirit.

Here are eight ways you can create a culture where people have a stake in the success of your business.

  • Employees Must Have a Vested Interest in the Success of the Business Recognize that ownership is more than a stock certificate. Ownership is a state of mind, a way of looking at the world and approaching work. Owners are people who step out from behind titles and job descriptions to act on behalf of the customer and the company. Non-owners hide behind position descriptions (“It’s not my job.”) and throw problems over functional walls (“Let me transfer you to…”) as an excuse for inaction. Owners cater to the purpose of the organization—its mission, vision, values, and strategy. Non-owners cater to the boss. Owners focus on the business results of their actions regardless of who is watching. Non-owners focus on the chain of command Owners ask the tough question: “How can we make it better?” Preoccupied with safety, non-owners gravitate toward the comfort of the status quo where things are more predictable and less disruptive.
  • Develop leaders who know how to liberate talent. Ownership is about giving people the freedom to act and removing the fears that cause lack of initiative. Unforgiving, zero-defect cultures foster cautious inactivity that kills the ownership mentality. People who don’t feel safe live under an umbrella of fear that makes them reluctant to make decisions, own problems, admit mistakes, take on projects, and act in ways that grow the business. When people cling to safety, they have no commitment to ownership; accountability vanishes, and self-preservation arises. Ownership is trusting that employees will operate with the company’s best interests in mind. Putting our trust in these people tells them that we think they are trustworthy. It suggests that we have faith in their character and competence. It boosts their self-confidence. Strengthen a person’s self-confidence and you strengthen his or her ability to think and act like an owner of the business. Herb Kelleher, Southwest’s chairman, says, “You build self-confidence when you give people the room to take risks and fail. You don’t condemn them when they fail. You just say, “We’ve just spent a good bit on your education; we hope to see you apply it in the future.”
  • Build a corporate culture of employee ownership Lay out the guiding principles. As a leader, you have to be confident that when the decisive moment comes, those who have assumed ownership will exercise common sense and good judgment. As the one assuming ownership, you have to be confident that what you are doing is the right thing because, after all, with ownership comes responsibility and accountability. Exercising good judgment and doing the right thing result from a clear understanding of the company’s guiding principles. Your firm’s business purpose and strategies, its mission, vision, values, and philosophy all define those principles. In essence, they create a set of helpful boundaries. When the boundaries are clear, employees have more freedom to step up, take action, and assume ownership for getting things done. When the boundaries are fuzzy, people get nervous and cautious. The result is a culture characterized by compliance instead of commitment.
  • Help people become business literate. When people understand how revenues and costs translate into profits, they become business literate. How many people on the front lines of your organization understand how the company makes money? How many of them are capable of reading a financial statement? If you asked them how much it costs to run their part of the business, could they tell you? How can we expect them to cut costs if they don’t know what those costs are to begin with? When people start asking cost questions, they are starting to think and act like owners of the business. The true experts are people at the point of action. Smart leaders open the books and equip these people with the financial information they need. When employees become business literate, they look for ways to drive costs down.
  • Make information relevant, fun, and interesting. The key to creating business literacy is getting people to internalize the information. If busy people do not see the information you put out as relevant, fun, and interesting, they are less likely to use it or be impacted by it. Information is relevant only when it is useful. If the salespeople at Sears knew that only three cents out of every dollar shows up as profit at the end of the day, they might be more passionate about watching costs and serving customers. Southwest Airlines’ annual profit-and-loss statement is written simply and illustrated with icons and cartoons, making it compelling to read and easy to understand.
  • 'The Truth About Employee Engagement' by Patrick Lencioni (ISBN 111923798X) Eliminate the “class” mentality. Leaders who are serious about leveraging the knowledge of every person must also eliminate the “class” mentality-socially prescribed or stereotypic boxes. This mentality undermines work in three ways. First, it strips the individual worker of his or her dignity and lowers morale. It essentially says, “We don’t believe in you enough to trust you with this information. It ensures that power resides at the top and widens the gap of inequality. Second, it doesn’t capitalize on people’s knowledge. The company pays for insight it never receives. Third, it crushes the entrepreneurial spirit. People stop caring, learning, and growing. When a financial statement is written so that only a CFO can understand it, forget about getting the frontline involved in a dialogue about cost containment. You breed compliance versus commitment. If your frontline people aren’t interested in reading a profit-and-loss statement, assess whether your information is too complicated or too mundane to capture their interest.
  • Show people how the business affects them personally. Most of the 18-year-old ramp agents at Southwest are business literate. They know that when they push a plane just 30 seconds late, that delay could translate into one hour and 45 minutes at the end of 11 flights in a day. Southwest would have to add 35 more planes at $30 million each to maintain its schedule. That could mean wage concessions, profit sharing, and lowered job security. They know how their job performance creates results, and how those results affect their lives. Southwest has made information relevant and interesting to its employees.
  • Give people a stake. Stock options and profit sharing can be powerful incentives to think and act like owners. However, just because people have stock options, they won’t necessarily think and act like owners. When you offer stock options and profit sharing without the culture to support these motivational tools it’s like putting new tires on a car that needs an alignment. When you add stock options and profit sharing to the rest of this list, you reward and reinforce people for behaving in ways that are consistent with an established culture. In doing so, you leverage the power of the incentive!

Build a corporate culture of employee ownership.

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Posted in Management and Leadership

Customer Feedback Systems to Go Beyond Customer Expectations

Customer Feedback Systems to Go Beyond Customer Expectations

There used to be a sofa in Microsoft’s telephone customer support center called “the Mail Merge couch”—named for a feature in Microsoft’s word-processing program that lets users customize form letters. The early version of Mail Merge was so complicated that whenever a customer called for help, Microsoft’s representative would lie down on the couch, knowing the conversation was likely to take a long time.

Clearly, something was wrong with that feature. Microsoft fixed the problem in the next generation of Word (and eliminated the need for the couch), but the story illustrates just how important customer feedback can be.

Most business managers understand that using customer feedback to guide the development and improvement of products and services is critical to success. However, some companies and individual managers are better than others are at collecting feedback and using it to make strategy decisions.

Nine Customer Feedback Rules for Managers

Managers who want to help their companies be customer-driven might observe the following nine rules.

  1. Create a system for effectively soliciting customer feedback, and then put that system to work. Boeing uses extensive customer involvement when developing new jetliner models. United Airlines influenced the design of both the 767 and the 777, and British Airways and Eastern Airlines participated in developing of the 757. As a result, the airlines were able to tailor the planes to their specific needs and preferences.
  2. Make sure your feedback system provides reliable information from a cross-section of customers. When a company has thousands or millions of customers, it can’t involve many of them in the product design, but it can involve a representative sample of customers.
  3. Make it easy for customers to provide feedback. Some companies offer a customer-feedback phone number. Surveys are another system for gathering feedback, but many people, including me, are not willing to spend much time answering them. Observing customers while they are using existing products and services is habitually the only way to identify hidden frustrations that they may not even be deliberately conscious of.
  4. Microsoft's Nine Customer Feedback Rules for Managers Send e-mail surveys to customers and offer incentives to fill them out and return them. The incentive may be a little digital money or coupons to buy products at a discount. The electronic survey will be immensely efficient for the company, because the survey results will be in electronic form, making results easier to compile and analyze. Some companies already use the Internet in this way. Encyclopedia Britannica recently e-mailed people who had accepted a free seven-day trial of the company’s online reference, offering another free week to those willing to fill out an online survey about their reactions to the product and its price.
  5. Use focus group and customer councils. Getting a few customers together to discuss their reactions to current and new products or services is another good way to collect customer feedback, although these groups and councils, too, have their limitations.
  6. Go beyond what market research tells you. The transition to graphical computing is an example of an instance where Microsoft needed to go beyond what Microsoft’s market research was telling us. Most software customers who were surveyed did not know they would prefer graphical computing because they had not tried it. Microsoft believed that customers would prefer the new way of interacting with their computers, even though Microsoft’s market research was not very positive. Microsoft’s gamble proved right.
  7. Log and evaluate all service requests, customer suggestions, and product complaints. Microsoft logs and evaluates hundreds of thousands of calls made to Microsoft’s support technicians every year. Put yourself in your customers’ shoes. Observe them using products and watch for frustrations they may not even notice.
  8. Require that the software engineers who develop products spend some time listening to calls from customers. These engineers need to get firsthand feedback. To get the attention of Microsoft’s group managers, Microsoft charges their departments for the cost of providing technical support to customers who use their products.
  9. Request, receive, and act on input from your salespeople. Microsoft seeks and use input for the people who are out in the field with customers. In this industry, customers are eager to share their ideas, frustrations, and enthusiasm. Microsoft is also lucky to be in an industry where products are so adaptable. Whereas it might take an automobile company five years to retool a car model to adapt to customer preferences, software companies can—and do—update their products constantly in response to customer input.

Beyond Customer Feedback

Customer feedback is critical to success of a business No system of market research is foolproof, of course. Even companies that do a good job of listening to customers can make mistakes. Business partners are relying on questionable information to make customer-related decisions. Our new understanding of customer-related decision making should be the starting point for a research approach that has impact on a greater proportion of high-value customer-related decisions.

I am a strong believer that heeding customer feedback is critical to success in any business, especially a dynamic, fast-moving industry such as ours. Despite Microsoft’s willingness to look beyond customer input, 80 percent of the improvements in products like Windows result from customer feedback. Experience has taught us that it is also important to trust your instincts, to take risks, and to provide leadership, even when the customer is not demanding that you do so.

Apply these rules to your business and use the feedback to make improvements. Companies often make the blunder of organizing customer feedback systems around one structure—say lines of business or channel—and employee feedback systems around another—say geography or function. In the end, well-designed feedback loops facilitate employees to be more empowered and companies to be more approachable, creating the competitive edge companies need to adapt and thrive.

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Marketing Demographics by Age

Marketing Demographics by Age

Companies seeking long-term business growth can find it by emphasizing the earning power of young workers, near-retirees, and women.

We all want to be treated equally and fairly during the buying and service process, regardless of our age. Let’s examine how you, as a service provider, can give exceptional service by understanding the needs and values of each age group.

Marketing to The Veterans

Marketing to The Veterans These people were born before 1943. Their beliefs and values include: Everyone should adhere and conform to the same rules, regulations, and policies. Those who are older or in positions of authority automatically deserve respect. Patience is an important virtue. The bigger the better. Personal pleasure is secondary to job responsibilities and tasks.

To win them over as a lifetime customers, make them feel special by remembering their name. Honor them by calling them Mr. or Mrs. or Sir and Ma’am. Thank them for their patronage with a personal note. Add a personal touch, and show genuine interest in them as a person.

Marketing to The Boomers

Marketing to The Boomers These people were born between 1943 and 1960. Their beliefs include: If it’s not working, either fix it or move on and find something better. They value personal growth, health, and wellness. They are optimistic. They believe they are the star and deserve center stage.

To keep them as lifetime customers, provide service that treats them as individuals, not just clients. Be personable. They value personal relationships that grow with time. Be solution oriented. If you can’t fix something, be honest; and then offer alternatives. Boomers value their time and want solutions now. Don’t tell Boomers what they can do.

Marketing to Generation X

Marketing to Generation X Baby Busters or 20-somethings were born between 1960 and 1980. They have a need to be self-reliant. They value family and friends. They tend to be informal and look for fun in every situation. They treat everyone as an equal regardless of “rank” but tend to be skeptical. They have respect for knowledge and technology.

If you want them to do business with your company, show interest in their family and friends, and admire their children if they are tagging along, or their pictures are prominently displayed on their desk. Treat them as equals. Approach situations in a relaxed and informal manner. Let them ask questions and seek information. Show that you have nothing to hide. Use technology to demonstrate your product and services.

Marketing to The Nexters

Marketing to The Nexters Generation Y or the Internet Generation were born between 1980 and 2000. They tend to be optimistic, street smart and very computer and technology literate. Achievement oriented, they are also strong believers in civic duty. They learn flexibility early since many come from divorced families.

If you want these customers to do business with your company, appeal to their strengths. These young people like to spend money, and they are more likely to purchase your product if your business donates to non-profit organizations. Also, appeal to their technical shrewdness. If it makes life more convenient, easier or is the latest in technology, they will probably want it.

Conclusion: For successful marketing by age-demographics, consider each age group and customize your service

Service providers can give exceptional service by understanding the needs and values of each age group. I give these guidelines to assist you in providing the best possible customer care, but nothing will ever surpass kind and equal treatment to each and every customer you serve.

Learn to present information in a different manner to appeal to core values, which are different for each generation.

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Customer Satisfaction Begins with Employee Engagement

The quickest ticket to customer satisfaction is through dependable, excellent service. As companies contend for competitive advantage, many find that refining service quality and customer satisfaction can be intangible. The first step to realizing both is to raise employee engagement.

'180 Ways To Build Employee Engagement' by Brian Gareau, Al Lucia (ISBN 193553792X) All organizations benefit from having an engaged workforce. But for those whose success pivots on delivering excellent customer service, a superior kind of employee engagement, customer-focused engagement, has an even tougher effect. Customer- focused engagement occurs when employee work groups are committed to (and passionate about) producing excellent service to their customers.

Employees won’t become engaged with service quality just because you demand them to. It takes time and effort to nurture an environment where engagement can set in and grow. With the right leadership, resources and information, you can shape the environment to engage employees and focus their efforts where it matters most—on customer satisfaction.

Correlation Between Employee Satisfaction and Customer Satisfaction

Evidence for Employee Engagement for Customer Satisfaction

Will an investment in employee engagement pay for itself through increased customer satisfaction?

We gauged satisfaction levels of 50 firms using the American Customer Satisfaction Index (ACSI). To measure customer-focused engagement, we probed employees to rate elements like, “We help customers beyond what is required,” and “The norm here is to help customers.”

'The Employee Engagement Mindset' by Timothy R. Clark (ISBN 0071788298) When we charted the employee survey results for each company against ASCI score for that company, we discovered that the higher the level of customer-focused engagement, the better the score on customer satisfaction. Actually, we see an absolute correlation between employee engagement and customer satisfaction. When you enhance customer-focused engagement, you will increase customer satisfaction.

Companies whose employees are highly engaged with customer service are rated the highest in customer satisfaction. Raising customer-focused employee engagement translates into dollars on the bottom line, possibly a lot of dollars. A mere one-point rise in your ASCI score can boost your ROI by an average of 11.4 percent!

What Gets Measured Gets Attention

Prior to you can increase engagement, you first must gage it. An precise measure of employee engagement requires a special survey—not the employee satisfaction survey. There is a distinction between employee satisfaction and engagement.

  • Satisfied employees feel enjoyable, satisfied, content, and comfortable. And they tend to have low absence, low turnover, and low substance abuse. But they may be neither engaged nor driven to expend extra effort in their work or for customers.
  • In contrast, engaged employees perform in ways that enhance the customer experience. They go the extra mile in the interest of service quality and customer satisfaction. When your customers receive superior service every day, it can have a spectacular impact on your financial health.

Engaged employees (focused on customers) feel fervent about providing excellent service, energized by helping customers, involved in their work, trusting of their manager. They feel safe to make decisions, take risks, or speak up with worries. They are committed to the goal of providing service excellence. They create relationships with customers, not just fill orders; anticipate customer needs; support coworkers so that they can provide service excellence; take initiative to ensure consistent service; and find answers to customer questions.

Creating Employee Engagement for Customer Satisfaction

Creating Employee Engagement for Customer Satisfaction

Engaging employees is not simply a matter of telling them what to do. The way to change someone’s work performance is to first change the way they feel about their jobs. Tailor your programs around six areas:

  1. Job design. When jobs are thought-provoking and allow employees to use all of their talents, they feel involved. Time passes quickly, and effort required to do the work is easy to give. Engagement is high when employees are working to achieve detailed difficult goals—goals they accept as judicious and attainable, but ones that also provide a “stretch.”
  2. Immediate managers. Managers play a big role in how employees feel about their jobs. Impartiality and trust shown to the employees by their managers will create a culture of engagement in the work group, ensuring a collective, organized effort in serving customers.
  3. Service message. Most of the service message employees receive comes from cues from their immediate manager as to what is important. Managers must recognize and strengthen service excellence, ensure that obstacles to excellence are removed, and set goals for service excellence. Without everything employees experience focuses their efforts on service quality and customer satisfaction, customer satisfaction likely won’t emerge.
  4. Resources. When employees feel they have the resources they need to do their jobs well, they are more involved in their customer service.
  5. HR policies. Organizations that ensure their HR management systems promote customer satisfaction—who gets hired, how they are trained, what is measured in performance management—produce customer-focused engagement.
  6. Benchmarking. You need baseline knowledge about employee engagement levels and customer satisfaction before you make changes. Use surveys and other assessment tools to measure employee engagement occasionally to evaluate progress.

Employee engagement has become such a hot theme that great groups of consultants and authors are undeniably banging on your door as we speak, armed with sufficient action plans and PowerPoint presentations to make your head spin. When employees are satisfied and engaged, the outcome is deeper customer connections and an raised customer experience.

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Lessons from Jeff Bezos and Amazon

Amazon.com and Jeff Bezos

Amazon has played a key role in the structural shift away from brick-and-mortar retail, and it may lay waste to many other retailers in the years to come.

'The Everything Store: Jeff Bezos and the Age of Amazon' by Brad Stone (ISBN 0316219266) Brad Stone’s The Everything Store—Jeff Bezos and the Age of Amazon quotes Bezos for a foundation of understanding what makes Amazon different: “We are genuinely customer-centric, we are genuinely long term-oriented, and we genuinely like to invent… Very few companies have all those 3 elements.”

  • Customer Focus: Amazon’s mission statement is to “raise the bar across industries, and around the world, for what it means to be customer-focused.” The first of the company’s Core Values is “customer obsession.” Bezos has been known to keep an empty chair at the conference table at meetings to ensure that the decision makers know that the customer needs to be represented at the table.

  • Long-Term Orientation: Jeff Bezos, the founder and chief executive of Amazon, owes much of his success to his ability to look beyond the short-term view of things. In the 1997 IPO documents, Jeff Bezos declared, “It’s all about the long term, … we may make decisions and weigh tradeoffs differently than some companies” and urged them to make sure that a long-term approach “is consistent with your investment policy.” Amazon’s management and employees “are working to build something important, something that matters to our customers, something that we can tell our grandchildren about,” he added.

  • Innovation: Amazon continues to be the most innovative retailer in the world. Amazon has not only continued to revolutionize retail through numerous innovations that improve the customer experience and drive consumers to buy more goods from the company. Not only has Amazon emerged as the undisputed e-commerce champ, but the CEO has embarked on the most ambitious new growth initiatives in the company’s history. The plan to sell access to Amazon’s vaunted computing infrastructure has taken off with startups and recently with some corporations. Amazon is one of the true innovators in Web-based computing, offering pay-as-you-go access to virtual servers and data storage space.

Recommended Book: “Jeff Bezos and the Age of Amazon” by Brad Stone is an excellent introduction to the founding of Amazon and the vision and strategy employed by Jeff Bezos to transform Amazon.com into a retailing powerhouse.

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