Listen to your Customers!

"The excellence of a gift lies in its appropriateness rather than in its value".

Charles Dudley Warren


I was recently in a restaurant and went to use the bathroom. When I walked into the bathroom the floor was flooded with over a half inch of water. I went out and told the owner about the water, and I could see how angry he was at me for just telling him about this very critical problem. He knew he had to deal with both the mess and potential damages from this water and he was not a happy camper. However, he should have been so grateful of my comments as it alerted to problem before it got much worse and he had the opportunity to alert other clients.

This entrepreneur should have thanked me for this information but I am sure he was cussing me in his mind out for the inconvenience that I was causing him. He just did not realize how important negative customer comments could be.

There are three types of input that an entrepreneur receives from their customers. First, there is the good and great comments from customers which are wonderful to see but really do not add much new in information but they are great to receive. Negative comments are the real nuggets since they give each entrepreneur new information about something that is not working in their business. Finally, there are people who have things to say about your business but choose not to come back or give you a chance to correct the problem.

Negative comments are golden opportunities that you cannot afford to ignore for two reasons. First they give you chance to correct a problem before it gets worse and second these negative comments give you an opportunity to salvage the customer before they decide not to come back to your business. An upset customer that you can convert normally becomes a very strong supporter of your business.

In order to receive valid customer you must be listening to what customers are saying and what they are doing. One CEO of a bank, purposely kept his office just to side of the bank’s main floor so he could see and hear what his customers were saying about his bank. By keeping the office close to the main floor, he was telling all of the bank’s customers that he cared about their opinions and wanted their input especially the negative comments.

The most troubling customer comments are those that just leave and do not tell us what the problems are but tell so many of their friends and relatives about our failings. While these are comments are difficult to capture, they are the most valuable. The best way to get this information is to go out of your way to contact customers that have not come back recently or those that might not have renewed a contract with your business. Additionally, customer satisfaction surveys are a great way to solicit customer comments from those customers that would not directly tell us about problems they have incurred.

Listening to your customers both those that tell you directly and information that you might have to solicit are golden nuggets that you have to really appreciate and value.

Now go out and make sure you have a system to encourage customers to comment about your business paying so much attention to the negative comments. Additionally, make sure you have a system in place to collect information from customers who have left your business.

You can do this!

Small Business and Banking

If we had no winter, the spring would not be so pleasant; if we did not sometimes taste of adversity, prosperity would not be so welcome.

~Anne Dudley Bradstreet

Getting a small business loan now is extremely difficult as so many financial institutions – both community and national – are not giving them out at all. If loans are being offered, the requirements are onerous with heavy collateral requirements and a heavy commitment to a down payment.

Our government has done so much to bail out big business and big banks, but little of this has shown up to help small business, which is the lifeblood of our country. We had one firm that had just gotten a contract from the state of Florida to provide workers in the medical field. They had a purchase order obligating them to supply over 100 jobs employment for over nine months, but they needed additional funding to cover the initial payroll, which amounted to about $150 thousand.

The state was going to guarantee payment once the workers were found, but this young firm just could not get the initial financing necessary to sustain them until they got the first payment from the state. The firm had tried almost every bank, but none were willing to loan them funds. They were just unwilling to take the risk required to create jobs that are so vital to our economy.

Our national government is throwing trillions of dollars into the Troubled Assets Relief Program (TARP), stimulus spending and now into health care, but these dollars have been ineffective at reducing the unemployment rate. These dollars are missing the mark because they are bypassing small business, which is the job-generating engine for our economy. If we are to get out of this recession and get people to work, we have to find some way to finance the growth of small business.

For most small businesses, there are, however, several avenues to acquire the funds that are needed to grow and build the infrastructure for the coming recovery. Firstly, look to credit unions as many of these financial institutions have funds available and are now offering small business loans with very attractive rates.

Additionally, the Small Business Administration (SBA) has a great program called the “504” loan program, which furnishes loans to small businesses. SBA “504” loans offer small business owners and manufacturers access to low interest, long-term and fixed-rate financing with only 10 percent down payment requirements for the purchase, construction or renovation of owner-occupied commercial real estate and/or the acquisition of industrial equipment or other fixed assets. “504” loans are delivered exclusively by non-profit Certified Development Companies (CDCs) regulated by the SBA. A firm called Florida First Capital Finance, which has offices throughout Florida, offers these services as well.

Finally, if you need financing, consider raising funds from your friends or relatives, a method that is typically called bootstrap financing. There are so many wealthy investors that love to loan money to small businesses if the deal is right. Obviously, these lenders or “angels” do not carry signs that say, “We have money to loan”; rather, you need to find them by asking your accountant and possibly your banker if they know of any.

While the opportunities for acquiring funds to expand your business are exceedingly limited right now, there are still vehicles available to you to raise money. It takes much more work than it used to, but it can be done! Like most things, raising funds – especially in this market – is tough, but with a plan it can happen.

You can do this!

Lean on your Suppliers

There are risks and costs to a program of action. But they are far less than the long-range risks and costs of comfortable inaction.
~John Fitzgerald Kennedy

Going through these very difficult economic times, controlling cost is one of the major things that you can do to really help your bottom line. Now is the time to renegotiate everything from rent to cost of goods sold.

So many of your vendors are having such trouble with falling sales that they are now willing to take significant price reductions, but you must ask for them. Your suppliers need to retain you as a customer now more than ever, and they should be willing to do most anything that is reasonable to keep your business.

We were helping a firm that purchased over $5 million a year from its primary suppliers. These suppliers had quickly passed along their cost increases—particularly transportation costs—to this business. Now that sales were falling off, the company needed some relief if it was going to survive.

When asked why they had not requested a price break before, the comment was, “Our purchasing agent just does not feel comfortable in asking for these.” As you can imagine, I went livid and asked the owner if a savings of $1 million (20% of $5 million) was worth asking for.

He finally got the point that now things had changed and that unless he was willing to demand price reductions from his suppliers, he might not be around much longer. He was able to get his purchasing agent to buy in by giving him a percentage of the savings from the cost reductions they secured and by very clearly demonstrating how to ask vendors for price breaks.

At first, the purchasing agent just wanted the vendor to give them a better price. The owner, however, mandated that the purchasing agent start off asking for a 20% price reduction from those suppliers that they knew had nice profit margins and could afford it. Starting with a number established an expectation that was reasonable rather than just asking for any type of price break.

When asking for price reductions, nothing should be off limits. Whether it is consultants’ salaries or office supplies, you must demand price reductions in these market conditions. You must ensure that your company has a cost structure that is workable in today’s economy. Your viability depends on this.

Even if you have signed a contract for service, these should be renegotiated as well. A recent study found that six out of every ten chief information officers are renegotiating existing contractual agreements. When renegotiating, your leverage is that these contracts will have to be renewed in the future, and your willingness to renew is going to be a function of this renegotiation process.

Now go out and initiate a process of renegotiating each and every one of your purchase contracts. This just cannot wait. It must be done as quickly as possible to get the benefits flowing into your company.

You can do this!

See the potential in each of your workers!

Believing in people before they have proved themselves is the key to motivating people to reach their potential.
~John C. Maxwell

I think that one of the biggest mistakes managers make is failing to see the potential in every one of their staff members. It is so easy to form beliefs about your staff only on the basis of their past behavior rather than recognizing the unique potential that each one brings to the workforce each and every day. For example, if a staff member is constantly making mistakes on a certain type of report, many managers would define the employee in terms of those errors rather than seeing their unbridled potential.

Jim Moran, the founder of the Jim Moran Institute, was very successful in the automotive industry. In the years before his death, I had numerous opportunities to spend time with him and observe the way he treated other people. Without exception, he made his staff – and me too – feel great. This was not because he always had kind words for everyone, but rather because those around him really sensed that he saw their real potential. It was like having a sudden gust of wind to buoy you up. He was loved and cherished by so many people because he made them feel good simply by seeing their hidden potential.

So many managers try to coach their employees; however, the tendency is to change the employee’s behavior on a certain task. For example, if I am coaching a staff member, and I am discussing the problems they had in their last report, I am getting bogged down in the details. However, if I can encourage them to see their own potential for greatness, I am coaching to the potential, and the details will get resolved as a result.

As a manager, you can get so much more out of your employees if you can just visualize each one’s inherent potential. Just imagine a baseball manager trying to coach a hitter that has been in a slump and has not had a hit in 10 appearances at bat. The manager could coach the player to go out and practice more, or he could tell the player to be patient and wait until the slump eventually ends. However, a great manager would convey the potential that he knows is within his player and help him to see this as well.

I frequently have to stop and take note of the greatness in all of the support staff around me. If I do not do this, I see them as obstacles, which is not good. I must see the potential of each person that I work with, as that allows me to have a very special relationship with them. As a coach, I need to see their greatness and show them how they can see this greatness as well. For some reason, it is so much easier for an outsider to see the potential in an employee than it is for the employee to see their own.

Now go out and do the best you can to see the potential in each and every one of your staff members.

You can do this!

Text Messaging for your Business

If it keeps up, man will atrophy all his limbs but the push-button finger.
~Frank Lloyd Wright

One of the newer trends out there is the use of text messaging technology in business. Text messaging, which is sometimes referred to as SMS (short message service), allows businesses to instantaneously send brief messages to their customers’ cell phones. Text messaging does not replace other types of advertising; rather, it should be thought of as a tool to use only in certain circumstances. Normally, you would use text messaging when you want a rapid response from your customers, and the message to them must be short and simple.

Many carriers limit the length of your text message, but shooting for somewhere in the vicinity of 150 characters is a good guideline to follow. I frequently receive text messages from Tropical Smoothie, and both Dunkin’ Donuts and McDonald’s have had a great deal of success using this tool in their marketing campaigns.
There are many companies out there that will help you use SMS, and the gold standard is MessageMedia, which boasts more than eight thousand business and government customers. SMS services make text messaging a fairly easy process. Simply provide the cell numbers and the message, and the SMS service will deliver your message to your customers. You can pay per message, but a newer approach involves the use of teaser messages that ask recipients to reply if they want more information. In these cases, some firms only charge for the second message, which shows that the customer has responded.

So many people think that only the younger generations use text messaging, but it is quickly spreading throughout the entire customer base. Younger generations are still using text messaging much more than baby boomers – Nielsen Research found that teens and young adults send an amazing three thousand text messages a month; however, the total usage of text messages has nearly tripled each year with all generations using this application. The latest data I saw showed that there are more than three billion text messages sent every day. Additionally, for most customers, text messages are generally looked at before email messages.

One of the best uses of text messaging that I have seen is by restaurants that send customers the same evening’s drink specials. Text messaging is most valuable when applied to consumer decisions that can be made quickly and do not involve large amounts of money. I would never think a Rolls Royce dealer would send out a text announcing a sale on cars, but McDonald’s offering a half-priced Big Mac via text message would make perfect sense.

When using text messaging, there are a couple of issues to be conscious of. It is vital to get your customers to agree to receive the text message or have an opt-in agreement. Additionally, you should limit the use of this tool to only those cases when you have something of real value to offer your customers.

Now go out and see if text messaging makes sense for your business. If it does, then develop a plan for implementing this very effective tool.

You can do this!

Customer Service Performance Standards

Being on par in terms of price and quality only gets you into the game. Service wins the game.
~Tony Alessandra

So many of the businesses that we assist at the Jim Moran Institute have customer service problems. Many of them are related to a lack of awareness of the issues, but so many more are rooted in the absence of performance standards.

It is great to set a goal of having outstanding customer service, but without a way of measuring or evaluating your staff on their performance, how effective could this goal be? With any goal you must be able to measure your progress and whether you have reached it.

Each element of customer service must have a measurable goal to attest to the progress that is being made. For example, the primary elements in customer service are greeting the customer, responding quickly to their requests, fulfilling their orders in a timely manner and dealing with problems. For each of these elements, you must establish a standard – or even a “gold” standard – to ensure that each employee knows both what is required and how their performance will be measured.

When greeting a customer in a physical location, the performance standard might be that each customer should be greeted with a smile within 30 or 60 seconds of their arrival. Making each customer feel welcome in your business is so important, and putting a time stamp on the greeting ensures that this critical element of customer service occurs without delay.

The second standard relates to how quickly your business responds to customers’ requests. Every business must adopt the standard that all customers receive a call-back within eight business hours of their inquiry. If you ever call me, my voicemail message does not say that I will get back with you as soon as possible (terrible customer service); rather, I say I will return your call within four hours. Customers’ emails must be acted upon within the same eight-hour window.

When a customer places an order, the time it takes to process and fulfill that order must be set and monitored. Here the standard might be that 98 percent of all goods ordered must be shipped within 48 hours. Too often I have ordered something over the internet only to have it delivered a month later with no explanation as to the delay.
The final standard involves dealing with customers’ problems. Here we want the issue to be fixed and dealt with in a prescribed way. Nothing drives a customer crazier than having a problem and being unable to get it fixed. I like to think that every business should be grateful for each customer that comes to them with a problem as this allows the business to identify the issue and then fix it. A standard here might be that each customer complaint should be remedied within 48 hours of receiving notice.

The bottom line is that in order to have outstanding customer service, you must have standards in place that will allow you to measure how you are progressing toward your customer service goals. Now go out and make sure that you have established customer service standards at your business.

You can do this!

The "Ritz" customer service experience.

You’ll never have a product or price advantage again. They can be easily duplicated, but a strong customer service culture can’t be copied.

~Jerry Fritz


If you have followed this column for a while, you know that one of my favorite topics is customer service. A business must focus on this in order to be successful.

Recently, I was able to attend a customer service seminar at the Ritz Carlton in Phoenix. This was by far one of the best seminars I have ever attended -- not only because of the topic, but more importantly because we were able to live the customer service experience at the Ritz 24/7. The Ritz makes the customer the top priority for each and every staff member both through the hiring process and continuous training. I learned so much that will be the subject of future columns.

One of the things that is so powerful about the Ritz Carlton is that each employee carries a card that states, “We are ladies and gentlemen serving ladies and gentlemen.” This one simple sentence clearly says that how we interact with our customers should be no different than how we interact with each other. Time after time I witnessed exceptional civility between the employees as they worked together.

Each Ritz employee is so thoroughly trained in customer service that it is almost as though they have radar implants that allow them to anticipate each guest’s needs before they know what they want. At the Ritz, they would never ask a client if they would like an umbrella when they see it is raining. Rather, they would go out and hand them an umbrella. It is a subtle distinction, but it is an important one when trying to anticipate what a customer wants.
One classic story told at the seminar was about a maid who was cleaning a guest’s bathroom when she noticed that all of the toothpaste had been squeezed out of the tube. While the hotel provides house brands for those guests who forget to bring toothpaste with them, this maid went to the drug store across the street to buy the guest’s identical brand. She left the toothpaste with a note on the counter by the sink. This is great customer service!
I think staffing at the Ritz is critical as the staff is ultimately responsible for delivering exceptional customer service. For every open position, the Ritz takes ten applicants and interviews each candidate at least five times before making a job offer. Not only does the Ritz value its existing employees, but it knows that the heart of customer service is getting and keeping a great staff. In fact, turnover at the Ritz is approximately one third of the industry average.

Now go out, evaluate your customer service and make sure it is the best it can be. Customer service does not cost. It pays.

You can do this!