Rewarding your loyal customers is so important. That is to say, it is critical that you make a special effort to ensure your frequent customers feel good about your business.
After all, it is the repeat customers who provide a large share of a firm's sales. They are the low-hanging fruit for every business, both easier to attract and keep. Best practices of businesses suggest that 90 percent of sales should come from existing customers and loyalty programs really do help in retaining your existing customer base.
My new job at the Jim Moran Institute requires frequent travel, and I spend a significant amount of time flying Delta. Because I flew so much last year, Delta upgraded me to the "Silver Medallion" level, which entitles me to a number of perks. There is no charge for my checked baggage, I am allowed to board early, I'm fast-tracked through TSA, and I may choose seats in better locations on the plane.
You will notice that all four of these benefits have zero incremental cost to Delta, but they all have substantial value to me — and to all frequent travelers. What Delta has successfully done is set up a loyalty program that makes their customers feel good about their frequent purchases.
Some friends and I bought a gift for another friend who was in the hospital and we all wanted to split the cost. The decision on which credit card to use for this transaction was a function of who would get the most points from the credit card company by the purchase.
Once we determined the extent of the points this one credit card vendor provided, we all were looking into getting one those cards. In this case, the loyalty program not only retained the customer, but brought in new business as well.
Winn-Dixie and PetSmart are two other companies that get it. They print the savings right there on the bottom of the receipt so customers can see it every time they use their loyalty cards.
Where most loyalty programs fall down is it takes too long to get benefits. Such is the case with both my Best Buy and my Office Depot loyalty cards. I have no idea if I have ever spent enough to get any value from them.
Now go out and make sure that you have a program in place to reward your loyal customers. And remember to build your loyalty program in such a way that customers can see the returns every time they interact with your business.
You can do this!
Sunday, October 31, 2010
Sunday, October 24, 2010
Spirituality in Business
I was recently called to assist a firm in Miami named Sonshine Communications. The communications and public relations firm is run by a very special entrepreneur, Bernadette Morris, who has held the reigns for more than 20 years. It is a very successful business, and it is also very unique in that it thoroughly incorporates spirituality into the workplace.
As Bernadette was showing me around her office, the first room we came across, right off the main entrance, was a spiritual/devotional room. When I asked about this room, Bernadette said she thought it was so important to have a quiet room for her staff to pray or meditate. I asked her staff about the room, and they said that even if they did not use the room often, it meant a lot just knowing it was there.
On the web, Sonshine Communications is described as “A Christian-based, minority-owned and operated, private corporation providing an array of value-added services in the realm of public relations, marketing, advertising and graphic design.” Additionally, when referring to its code of ethics it says, “The firm upholds a professional code of ethics in all of its creative endeavors and operates under principles of Godly living and Christian character.”
Obviously, spirituality plays a major role in this firm. It is present in every element of the business, and there is no question in my mind that much of its success can be attributed to this commitment to spirituality.
In 2003, a study published in USA Today showed that six out of 10 workers would like to see more spirituality in their workplaces. This is especially true today with Generation Y (born after 1980). This age group takes a much more holistic approach to their work life, and spirituality or religion is an integral element.
A number of empirical studies have shown that embracing spirituality will improve the bottom line of a business. A study by a University of Chicago professor found firms that make a commitment to ethics are more successful than companies that do not. A study in Business Week showed firms in Australia that adopted spirituality in their workplaces had greater productivity and less turnover. A study from MIT reported that employees want to practice their spirituality in the workplace without offending their co-workers.
Jeffrey Swartz, CEO of Timberland Shoes, uses his prayer book and his religious beliefs when formulating company policy, and often consults with his rabbi. The American Stock Exchange has a Torah study group, and Boeing offers Christian, Jewish and Muslim prayer groups to their employees.
Like Sonshine, Apple’s offices in California have a meditation room where employees are given a half hour of company time to meditate or pray. They know that doing so will improve the productivity of their staff.
I believe one of the main reasons that spirituality is now playing a bigger role in business is the presence of more women in the workplace. Women typically focus much more on spiritual values then men do. Additionally, the aging of our workforce also contributes to this trend. Baby Boomers are no longer satisfied by materialism and are looking for a deeper meaning in both their work and personal lives.
Now go out and consider how adding a spiritual dimension to your business might fit with your views and those of your staff. I promise your staff will appreciate the effort.
You can do this!
As Bernadette was showing me around her office, the first room we came across, right off the main entrance, was a spiritual/devotional room. When I asked about this room, Bernadette said she thought it was so important to have a quiet room for her staff to pray or meditate. I asked her staff about the room, and they said that even if they did not use the room often, it meant a lot just knowing it was there.
On the web, Sonshine Communications is described as “A Christian-based, minority-owned and operated, private corporation providing an array of value-added services in the realm of public relations, marketing, advertising and graphic design.” Additionally, when referring to its code of ethics it says, “The firm upholds a professional code of ethics in all of its creative endeavors and operates under principles of Godly living and Christian character.”
Obviously, spirituality plays a major role in this firm. It is present in every element of the business, and there is no question in my mind that much of its success can be attributed to this commitment to spirituality.
In 2003, a study published in USA Today showed that six out of 10 workers would like to see more spirituality in their workplaces. This is especially true today with Generation Y (born after 1980). This age group takes a much more holistic approach to their work life, and spirituality or religion is an integral element.
A number of empirical studies have shown that embracing spirituality will improve the bottom line of a business. A study by a University of Chicago professor found firms that make a commitment to ethics are more successful than companies that do not. A study in Business Week showed firms in Australia that adopted spirituality in their workplaces had greater productivity and less turnover. A study from MIT reported that employees want to practice their spirituality in the workplace without offending their co-workers.
Jeffrey Swartz, CEO of Timberland Shoes, uses his prayer book and his religious beliefs when formulating company policy, and often consults with his rabbi. The American Stock Exchange has a Torah study group, and Boeing offers Christian, Jewish and Muslim prayer groups to their employees.
Like Sonshine, Apple’s offices in California have a meditation room where employees are given a half hour of company time to meditate or pray. They know that doing so will improve the productivity of their staff.
I believe one of the main reasons that spirituality is now playing a bigger role in business is the presence of more women in the workplace. Women typically focus much more on spiritual values then men do. Additionally, the aging of our workforce also contributes to this trend. Baby Boomers are no longer satisfied by materialism and are looking for a deeper meaning in both their work and personal lives.
Now go out and consider how adding a spiritual dimension to your business might fit with your views and those of your staff. I promise your staff will appreciate the effort.
You can do this!
Sunday, October 17, 2010
Managing the Average Employee
"Hire the best. Pay them fairly. Communicate frequently. Provide challenges and rewards. Believe in them. Get out of their way and they'll knock your socks off." ~Mary Ann Allison
So much has been written about rewarding great employees and rehabilitating poor employees. However, the vast majority of the workforce does not fall into either of these categories. Most fall somewhere in the middle. I call them “c-employees.”
C-employees make up more than 80 percent of the average entrepreneur’s workforce. This group is responsible for the majority of output, yet they are all but ignored by most managers. Because they are doing ok, performing at an adequate level and not causing any problems, it is easy to overlook c-employees. But this is a dangerous path. C-employees must be managed – and managed well – in order for the organization to flourish.
A firm we were helping had a policy of rewarding great employees with cash incentives and a tough policy against staff that was performing poorly. C-employees were completely ignored, producing results that you would expect: morale had suffered dramatically. It never occurred to management that these c-employees would feel left out. They thought that since this group was not upset or complaining, everything must be okay.
It is natural for managers to want to work with their better employees since they typically share a similar work ethic, but they have to resist the temptation to devote all their time and attention to top performers. This is not to say that it is not worthwhile or productive to spend time with your better employees. Managers just must make sure that all employees are receiving a minimum level of attention. You simply can not neglect a staff member without paying a price.
Teamwork is not possible unless each worker feels like they are an important part of the team. It is every manager’s job to ensure that each member of their staff feels good about what they are doing, and that they are valued and appreciated.
To ensure my staff felt like an important part of the team, I always made it a point to greet them whenever I saw them and engage them in conversation about something they valued. Whether this topic was their family or a personal hobby, the point was spending quality time with each member of my staff and connecting on a personal level. I tried to go out of my way as often as I could so that every employee – top performer or otherwise – knew that I thought they were important.
Now go out and make sure that all your employees feel appreciated regardless of their performance level. Of course, you want to see them improve, but you can not expect your staff to up their efforts unless they know their current contributions are recognized and valued.
You can do this.
So much has been written about rewarding great employees and rehabilitating poor employees. However, the vast majority of the workforce does not fall into either of these categories. Most fall somewhere in the middle. I call them “c-employees.”
C-employees make up more than 80 percent of the average entrepreneur’s workforce. This group is responsible for the majority of output, yet they are all but ignored by most managers. Because they are doing ok, performing at an adequate level and not causing any problems, it is easy to overlook c-employees. But this is a dangerous path. C-employees must be managed – and managed well – in order for the organization to flourish.
A firm we were helping had a policy of rewarding great employees with cash incentives and a tough policy against staff that was performing poorly. C-employees were completely ignored, producing results that you would expect: morale had suffered dramatically. It never occurred to management that these c-employees would feel left out. They thought that since this group was not upset or complaining, everything must be okay.
It is natural for managers to want to work with their better employees since they typically share a similar work ethic, but they have to resist the temptation to devote all their time and attention to top performers. This is not to say that it is not worthwhile or productive to spend time with your better employees. Managers just must make sure that all employees are receiving a minimum level of attention. You simply can not neglect a staff member without paying a price.
Teamwork is not possible unless each worker feels like they are an important part of the team. It is every manager’s job to ensure that each member of their staff feels good about what they are doing, and that they are valued and appreciated.
To ensure my staff felt like an important part of the team, I always made it a point to greet them whenever I saw them and engage them in conversation about something they valued. Whether this topic was their family or a personal hobby, the point was spending quality time with each member of my staff and connecting on a personal level. I tried to go out of my way as often as I could so that every employee – top performer or otherwise – knew that I thought they were important.
Now go out and make sure that all your employees feel appreciated regardless of their performance level. Of course, you want to see them improve, but you can not expect your staff to up their efforts unless they know their current contributions are recognized and valued.
You can do this.
Sunday, October 10, 2010
Focus Your Emphasis on Your Successes
“Don't wait until everything is just right. It will never be perfect. There will always be challenges, obstacles and less than perfect conditions. So what. Get started now. With each step you take, you will grow stronger and stronger, more and more skilled, more and more successful.” ~Victor Hansen
As part of my job, I have talked to and counseled thousands of entrepreneurs. Once I have established a relationship with the entrepreneur, I walk them through the process of listing their successes and challenges to identify what we need to do to fix the business problem. Most often, they want to focus exclusively on their challenges and how they can overcome them.
For some reason, our challenges carry more weight in our lives than our successes. But if improvement is our goal, focusing solely on the challenges that stand in our way is not really the best method of getting there.
In the spiritual world there is a theory known as the Law of Attraction. The premise is that what you choose to focus on determines the things that come into your life. Honing in on the negative will produce negative effects, while reflecting on the positive will bring positive results.
Many probably remember “The Secret,” a very good DVD that came out a couple of years ago. This DVD covered the Law of Attraction and provided tons of examples and testimonials. Story after story was presented as proof of the Law’s primary assertion: focusing on the negative – your weakness – will only manifest as greater weakness.
I am a frequent speaker, and over the last 15 years, I have probably given more than 500 speeches. Additionally, as a professor, I have given lectures three times a week for the last 38 years. Clearly, public speaking is a critical element of my career, and you might be surprised to learn of a very large weakness of mine.
I have stuttered since I was three years old when my mother first took me to speech instruction to get help. I can remember times in high school when my stuttering was so bad that I could not even say the word “water.” I had to say “H2O” instead. To this day, my stuttering comes and goes depending on my stress level – stress dramatically affects my vocal cords.
From medication to speech therapy, I have tried a number of methods for controlling my stuttering. Only one thing has ever worked. The approach that produces the best results is focusing on times that I have been successful.
In years past, when I concentrated on trying not to stutter, it was worse than ever. I have adopted a different approach. Instead of focusing on my weakness, I think about how many speeches I have successfully given, or I visualize how great this speech is going to be. When I focus on my successes in this way, my speeches are normally great.
Many of the entrepreneurs we work with focus on their challenges, and of course, they generate more and more challenges as a result. One entrepreneur just wanted to talk about how poorly he understood financial statements. He was great at marketing and sales, but he did not acknowledge his strengths. He just went on and on about how he could not comprehend this element of his business.
The first thing we did was change his primary focus. Instead of honing in on the things he lacked, we focused on his strengths. This is not to say however, that we ignored his weakness. We got him set up with some great accounting help, but he came at it from a different angle, one where he focused on the things he did well.
Another entrepreneur we worked with was extremely skilled in systems implementation, but weak in the area of communications. When we focused on his strengths, his business improved dramatically, and we were able to solve the communication issue by hiring a communications director to handle the task he was not as good at.
Focusing on your strengths seems like such a simple concept, but it is one that we all tend to forget about. Most often, we dwell on our weaknesses, a practice that serves neither us nor our business.
Now go out and make sure that you are focusing on your strengths.
You can do this!
As part of my job, I have talked to and counseled thousands of entrepreneurs. Once I have established a relationship with the entrepreneur, I walk them through the process of listing their successes and challenges to identify what we need to do to fix the business problem. Most often, they want to focus exclusively on their challenges and how they can overcome them.
For some reason, our challenges carry more weight in our lives than our successes. But if improvement is our goal, focusing solely on the challenges that stand in our way is not really the best method of getting there.
In the spiritual world there is a theory known as the Law of Attraction. The premise is that what you choose to focus on determines the things that come into your life. Honing in on the negative will produce negative effects, while reflecting on the positive will bring positive results.
Many probably remember “The Secret,” a very good DVD that came out a couple of years ago. This DVD covered the Law of Attraction and provided tons of examples and testimonials. Story after story was presented as proof of the Law’s primary assertion: focusing on the negative – your weakness – will only manifest as greater weakness.
I am a frequent speaker, and over the last 15 years, I have probably given more than 500 speeches. Additionally, as a professor, I have given lectures three times a week for the last 38 years. Clearly, public speaking is a critical element of my career, and you might be surprised to learn of a very large weakness of mine.
I have stuttered since I was three years old when my mother first took me to speech instruction to get help. I can remember times in high school when my stuttering was so bad that I could not even say the word “water.” I had to say “H2O” instead. To this day, my stuttering comes and goes depending on my stress level – stress dramatically affects my vocal cords.
From medication to speech therapy, I have tried a number of methods for controlling my stuttering. Only one thing has ever worked. The approach that produces the best results is focusing on times that I have been successful.
In years past, when I concentrated on trying not to stutter, it was worse than ever. I have adopted a different approach. Instead of focusing on my weakness, I think about how many speeches I have successfully given, or I visualize how great this speech is going to be. When I focus on my successes in this way, my speeches are normally great.
Many of the entrepreneurs we work with focus on their challenges, and of course, they generate more and more challenges as a result. One entrepreneur just wanted to talk about how poorly he understood financial statements. He was great at marketing and sales, but he did not acknowledge his strengths. He just went on and on about how he could not comprehend this element of his business.
The first thing we did was change his primary focus. Instead of honing in on the things he lacked, we focused on his strengths. This is not to say however, that we ignored his weakness. We got him set up with some great accounting help, but he came at it from a different angle, one where he focused on the things he did well.
Another entrepreneur we worked with was extremely skilled in systems implementation, but weak in the area of communications. When we focused on his strengths, his business improved dramatically, and we were able to solve the communication issue by hiring a communications director to handle the task he was not as good at.
Focusing on your strengths seems like such a simple concept, but it is one that we all tend to forget about. Most often, we dwell on our weaknesses, a practice that serves neither us nor our business.
Now go out and make sure that you are focusing on your strengths.
You can do this!
Sunday, October 3, 2010
Make sure you include overhead in your pricing!
“Profit and morality are a hard combination to beat.” ~Hubert Humphrey
So many of the business owners we help have difficulty dealing with pricing. The question of where to set their prices is a critical one for every company. If set too high, the firm will not pick up much business. If set too low, they will have sales volume but no profits.
Just because a business is maximizing sales does not necessarily mean they are making money. Having revenue coming in is not the same as making a profit, but many business owners confuse the two, especially in a tight economy.
We were helping a very neat company, the owners of which really care about the community. It is important to them to do all they can to make their community a better place to live. They are constantly volunteering for so many activities, and as a result, they have added a great deal of value to the local community. In the process, they have also earned quite a bit of notoriety for their company.
While these entrepreneurs have done an enormous amount of good for the community, their business was not doing so well. They were not taking much of a salary even though the company has been in business for more than five years and is well-established. Although a tad flat, their revenues were okay, but they were not generating sufficient profits. Their net profit margin continuously hovered around one percent after paying themselves their miniscule salary
Being a service business, they were charging by the hour. They were taking just about every piece of business that walked through the door so long as they were able to cover their direct labor expenses and generate a 10 percent profit.
What they forgot to account for in their pricing model is their overhead. Fixed expenses such as rent, office salaries and utilities, to name just a few, have to be paid regardless of the amount of revenue. In the end, they were having to divert about 50 percent of their revenue to cover overhead costs.
By failing to account for overhead in their pricing model, they seriously underestimated the true cost of their services. If each customer is not assigned a fair and equal share of the overhead, one must shoulder the entire burden – or the owner loses a lot of money.
We were able to get this point across to the owners, but they still had reservations about adjusting their pricing model to include the overhead. They feared many of their customers would think their rates were too high. We suggested that the way to overcome this was to price by the job instead of by the hour. This would allow them to charge the fees they need to cover the overhead and still be competitive.
The jury is still out on this business, but the owners now have a plan for profitability that will allow them to grow and be successful. Even more importantly, they can now start taking a salary that fairly compensates them for their efforts.
Now go out and make sure the pricing model you set for your products and services is sufficient to cover all of your costs, including the overhead. If you cannot charge a high enough price to cover your direct costs, overhead and profits, you need to find another way to ensure those expenses are covered.
You can do this!
So many of the business owners we help have difficulty dealing with pricing. The question of where to set their prices is a critical one for every company. If set too high, the firm will not pick up much business. If set too low, they will have sales volume but no profits.
Just because a business is maximizing sales does not necessarily mean they are making money. Having revenue coming in is not the same as making a profit, but many business owners confuse the two, especially in a tight economy.
We were helping a very neat company, the owners of which really care about the community. It is important to them to do all they can to make their community a better place to live. They are constantly volunteering for so many activities, and as a result, they have added a great deal of value to the local community. In the process, they have also earned quite a bit of notoriety for their company.
While these entrepreneurs have done an enormous amount of good for the community, their business was not doing so well. They were not taking much of a salary even though the company has been in business for more than five years and is well-established. Although a tad flat, their revenues were okay, but they were not generating sufficient profits. Their net profit margin continuously hovered around one percent after paying themselves their miniscule salary
Being a service business, they were charging by the hour. They were taking just about every piece of business that walked through the door so long as they were able to cover their direct labor expenses and generate a 10 percent profit.
What they forgot to account for in their pricing model is their overhead. Fixed expenses such as rent, office salaries and utilities, to name just a few, have to be paid regardless of the amount of revenue. In the end, they were having to divert about 50 percent of their revenue to cover overhead costs.
By failing to account for overhead in their pricing model, they seriously underestimated the true cost of their services. If each customer is not assigned a fair and equal share of the overhead, one must shoulder the entire burden – or the owner loses a lot of money.
We were able to get this point across to the owners, but they still had reservations about adjusting their pricing model to include the overhead. They feared many of their customers would think their rates were too high. We suggested that the way to overcome this was to price by the job instead of by the hour. This would allow them to charge the fees they need to cover the overhead and still be competitive.
The jury is still out on this business, but the owners now have a plan for profitability that will allow them to grow and be successful. Even more importantly, they can now start taking a salary that fairly compensates them for their efforts.
Now go out and make sure the pricing model you set for your products and services is sufficient to cover all of your costs, including the overhead. If you cannot charge a high enough price to cover your direct costs, overhead and profits, you need to find another way to ensure those expenses are covered.
You can do this!
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