Achieving Success Requires Risk

“Success comes to those who dare to dream dreams and are foolish enough to try and make them come true.” - Vinod Khosla: Venture capitalist, co-founder of Sun Microsystems, and avid hang-glider.

How do you manage risk in your business? Are you foolish enough to try to make your dreams come true? What good is a life littered with unfulfilled dreams? Maybe we’d all be better off if we did a little hang-gliding…

“Man cannot discover new oceans unless he has the courage to lose sight of the shore.” - Andre Gide, French writer, humanist, and Nobel Prize winner

Sun Tzu on Leadership - Part 6 of 6

“Regard your soldiers as your children, and they will follow you into the deepest valleys; look upon the as your own beloved sons, and they will stand by you even unto death.” - Sun Tzu, The Art of War

Leadership - Not Just Management

As a business owner or manager, how do you motivate your troops? Do you manage employees by budgeting, controlling and staffing, or do you lead by setting a direction, aligning people and motivating? George Ambler over at The Practice of Leadership explains the difference extremely well:

• The manager relies on control; the leader inspires trust.
• The manager administers; the leader innovates.
• The manager accepts reality; the leader investigates it.

There’s plenty more where those came from at the above link, be sure to take a look.

John Kotter does a fantastic job describing the difference between management and leadership in an article he wrote for the Harvard Business Review. He drives the point home with a military analogy:

A peacetime army can usually survive with good administration and management up and down the hierarchy, occupied with good leadership concentrated at the very top. A wartime army, however, needs competent leadership at all levels. No one yet has figured out how to manage people effectively into battle; they must be led.

Take Braveheart, for example (yes, I’m seriously going to reference Braveheart in a quasi-academic setting). William Wallace was a leader who knew how to motivate troops to tackle insurmountable odds. Of course, the thing about insurmountable odds is they’re really tough to… surmount. As a business owner, the trick is to motivate and inspire your employees toward a goal that isn’t doomed to fail from the beginning (see my previous post on choosing the path of least resistance).

Inspire, Lead by Example

So how was William Wallace so effective as a leader? There were three main reasons:

• He was extremely passionate and believed in the cause
• He led by example and never asked a subordinate to do something he wouldn’t do himself
• There was a clear benefit to following his lead (in this case, the chance of winning their freedom)

Here’s another story that really illustrates the techniques of leadership. A commentary on The Art of War, written by Tu Mu, shows how a famous general, Wu Ch’i, inspired his troops:

He wore the same clothes and ate the same food as the meanest of his soldiers… and shared every hardship with his men. One of his soldiers was suffering from an abscess, and Wu Ch`i himself sucked out the virus. The soldier’s mother, hearing this, began wailing and lamenting. Somebody asked her, saying: ‘Why do you cry? Your son is only a common soldier, and yet the commander-in-chief himself has sucked the poison from his sore.’ The woman replied, ‘Many years ago, Lord Wu performed a similar service for my husband, who never left him afterwards, and finally met his death at the hands of the enemy. And now that he has done the same for my son, he too will fall fighting I know not where.’

Again, this is probably an example you probably won’t (and shouldn’t) encounter in your own life. There are probably better techniques for removing poison these days, but there’s no question that it would inspire loyalty. Lord Wu lived among his troops, fought beside them, and would do anything to protect them. No wonder they were willing to dedicate their lives to his service.

By comparison, you’ve got it easy. If you’re an entrepreneur like me, your passion should be obvious. Share your passion and your vision with your employees. Include them in that vision. Show them how they’re an integral part of reaching the goal, and let them know that they will be rewarded for their part.

How do you (or should you) inspire your troops? Drop me a comment with your thoughts, and while you’re at it, subscribe to this blog.

Sun Tzu on Adaptability - Part 5 of 6

“Water shapes it course according to the nature of the ground over which it flows; the soldier works out his victory in relation to the foe whom he is facing. Therefore, just as water retains no constant shape, so in warfare there are no constant conditions. He who can modify his tactics in relation to his opponent and thereby succeed in winning, may be called a heaven-born captain.” - Sun Tzu, The Art of War

Learn Good Business Sense from Water

It might sound a little crazy at first, but we could all learn a few lessons from water. How much time and energy do we waste in an uphill battle with ineffective marketing, poor CRM, and ineffective information systems? How many of the tedious chores in your business could be automated and integrated? Isn’t it time to stop fighting the current and look for an easier way? When the water of a river runs into a boulder, it adapts, changes course, and finds a way to its ultimate goal no worse for wear.

Sun Tzu wasn’t the only one who felt we could all learn from the properties of water. A few weeks ago, Harrison at MenWithPens discussed the Book of Water in The Book of Five Rings, an ancient Japanese sword fighting guide. The author, Miyamoto Musashi says “Fixation is the way to death, fluidity is the way to life.”

Bruce Lee, one of the great martial artists of our time had this to say: “Empty your mind, be formless, shapeless–like water. Now you put water into a cup, it becomes the cup. You put water into a bottle, it becomes the bottle. You put it in a teapot, it becomes the teapot. Now water can *flow* or it can *crash*! Be water, my friend.”

Of course, they were talking about deadly combat, but the same clearly applies to businesses in today’s economy. Consumer needs and expectations are changing so quickly that being anything other than fluid and adaptive is suicide. Technology has changed everything. Old industries like traditional newspapers are facing extinction unless they can find a new place in the digital world.

How Can We Adapt?

Fortunately, small businesses have a real advantage in this area. As I’ve mentioned before, big businesses are choked by their own bureaucracy. American car makers have faced recent criticism for their inability to innovate and adapt to changing consumer demands. As a small business owner, however, there are probably only a few stakeholders for you to consult with on any decision. You may run it by your partners, employees or spouse, but ultimately decisions are likely up to you. YOU have the power to drive change, to keep your company responsive to your customers’ changing needs and tastes. Here’s how:

Keep Learning

No matter what business you’re in, there are always people you can learn from. First, there are tons of great books out there on managing your business. Pick up a few of these and learn some things you didn’t know that you didn’t know. Or maybe you could teach yourself how to use a new technology, or some of the more obscure features in Microsoft Office. I came across a company called VTC that offers awesome online training videos. I think I’ve even got a 30-day free trial coupon around here somewhere… drop me a note if you’re interested. The web’s full of great resources, just look around!

Watch the Trends

Subscribe to magazines or blogs specific to your industry. Keep an eye on the trends as they develop and ask yourself how you can position your business to take advantage of them. For example, I read an article about the growing impact the blogosphere was having on small businesses and decided soon after to launch OnYourBusiness. With tens of thousands of new blogs starting every day, there’s definitely a trend in that direction. If you’re keeping track of experts’ opinions in your industry, you’ll be ready to meet those changes as they happen. There won’t be any big surprise when consumers start demanding something else, and you’ll be able to react before your competitors.

Talk to your Customers

No one knows how consumer needs are changing quite like the consumers. Ask them what their needs are, how your product or service fits those needs, and what you could do to make things better. Better yet, survey them about the trends you’ve been reading about in your industry and see how they really feel. If their needs are heading in new directions, perhaps your business should too. Or maybe they’re just not in your target market anymore, in which case there’s no sense fighting against the current. Just go with the flow…

What’s next?

The end of the series! I’m getting a little Sun Tzu’ed out.

Sun Tzu on Leadership - Part 6 of 6

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Sun Tzu on Leveraging Strength - Part 4 of 6

“The general who thoroughly understand the advantages that accompany variation of tactics knows how to handle his troops. The general who does not understand these, may be well acquainted with the configuration of the country, yet he will not be able to turn his knowledge to practical account.” - Sun Tzu, The Art of War

An Uphill Battle

We live in an increasingly competitive world, where the top 20% of businesses own 80% of the market. Are you in that top 20%? Probably not. So how do you protect your little business in a market full of giants? How does a local retailer compete with the likes of Wal-Mart? Kmart tried to compete with Wal-Mart’s low cost strategy and it ended in bankruptcy. If Kmart couldn’t beat Wal-Mart in a price war, how can you hope to? Well… you can’t.

Enter the Internet. Suddenly small businesses could reach consumers worldwide. No longer were they limited to a local market. A small business owner’s dream come true, right? Sadly, that knife cuts both ways. In his book, Clear Blogging: How People Blogging Are Changing the World and How You Can Join Them, Bob Walsh discusses this problem, which he calls the “Internet Price.” Sure, you can reach customers everywhere, but suddenly your local clients can access businesses everywhere. Now, rather than a few local competitors, your business is fighting thousands of other businesses worldwide. Businesses that offer the same product at a fraction of the price you might charge. Even service businesses are no longer safe. Software development, IT consulting, and even so-called “knowledge processes” like legal and marketing research are now being sent overseas. Worse yet, a Stanford study says they’ll work for $500/year.

Fighting the Internet Price

“If, on the other hand, in the midst of difficulties we are always ready to seize an advantage, we may extricate ourselves from misfortune.” - Sun Tzu, The Art of War

True, small businesses may be facing an increasingly competitive marketplace. True, mega corporations like Wal-Mart have a stranglehold on the cost leadership segment. So how do you fight back? How do you keep your business from failing like Kmart did? Again, Sun Tzu has the answer: “Carefully compare the opposing army with your own, so that you may know where strength is superabundant and where it is deficient.”

You can’t beat the Goliaths of the world on price, but you can leverage strengths where they are weak. Here’s how:

Differentiate Yourself

Make your product or service stand out from the crowd. Deliver at a quality that your competitors can’t match. Use eco-friendly materials and business practices. Whatever you do, make sure that your marketing focuses on these differences. If your product is better but your customers don’t know it, what good is that? Marketing alone can be a great form of differentiation - get creative! For god’s sake, if Pet Rocks made someone rich, surely your business can do the same.

Be Responsive

In working with a few large corporate clients, I’ve learned one thing: big businesses are SLOW. Once they decide they want to do something, they have to get the approval of 43 different corporate managers, run it by legal, justify it to their shareholders, put in a request for funding, and then justify the project to the new corporate managers because 30% of the original 43 have died of old age since the initial request was made.

In my business, if a client comes to me with a request, I turn my head slightly, run it by my partner, turn my head back, mull it over for a bit, and give my client a response. I can do this because small businesses aren’t shackled by bureaucracy. We can respond quickly and respond to their needs before old age takes them.

Cultivate Personal Relationships

This is a big one. As I’ve mentioned in the past, I hate dealing with customer service reps. I put it off for days or weeks if I can because I know that they’re going to put me on hold for an hour and then someone I can barely understand will ask me to hold again while he accesses my account history. Where’s the personal touch? Big businesses can’t afford it, but we can. I keep all my client data in my phone so when a client calls, I greet them by name. Little things like this make people feel important. Take the time to get to know your clients. Treat them like people rather than numbers. In an increasingly impersonal world, people are willing to pay extra for that personal touch.

From Survival to Success

Most small business owners start out just hoping to survive. Far too many fail because they never find a way to stand out. Their business is just another nameless, faceless company vying for consumers’ hard-earned money. It’s important to develop your business in such a way that it holds meaning for your customer.

Take your doctor, for instance. You might tell people “I go to Dr. ____ because my family has known him for years, he’s extremely capable, and he genuinely seems to care about my wellbeing.” You might recommend a specific tax consultant because he found all kinds of tax deductions and saved your business from an audit. What meaning does your business hold for your customers?

Big companies may own most of the market, but there’s still plenty of room for small businesses. The key to survival is to determine what aspects of their business leave the customer wanting more, and then structure your business to make it happen. Use your small size to outmaneuver your competition. Deliver exceptional service and tell your customer how your business is different.

Remember: avoid your competitor’s strengths and instead attack their weaknesses.

What’s next?

Sun Tzu on Adapting to Your Environment - Part 5 of 6

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Sun Tzu on Business Tactics - Part 3 of 6

“Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” - Sun Tzu, The Art of War

A Shot in the Dark

Let’s face facts. These days, if you don’t have a clearly defined target market, your business is in trouble. How are you going to reach the people most likely to buy your product if you’re not even sure who they are? Naomi from IttyBiz says it better than I could:

Imagine the target is, um, a target. And you’re the dude with the gun or the bow and arrow or whatever. If you hit the target right in the middle, you get 50 points. If you hit the outside circle, you get 10. If you aim at 50, you might get 50 or you might get 10. If you aim at 10, you might get 10 or you might get nothing.

So why are you aiming at 10?

Your target demographic is your version of perfection. These are the people who are begging for your product or service. They have money to spend and they want to spend it on you. Maybe they don’t know it yet, but you do, and that’s all that counts.

It’s time to start developing some tactics to start bringing in more bulls-eyes and stop wasting energy on shots you take with a hope and a prayer that they’ll hit something.

Know Your Target Demographics

Start by breaking your clients down into demographic groups. Web Marketing Resources defines demographics and psychographics like this: “Demographics refer to statistics like age, income and location. Psychographics refers to preferences, interests and personality characteristics.” It was recently revealed that Best Buy takes this approach to an extreme. They actually create personas for each of their demographics:

Source: The Consumerist

While Best Buy’s methods may be a bit overkill, imagine what having this sort of data could do for your business. Is your marketing plan tailored to each demographic, or is it a One-Size-Fits-Some approach?

Making no mistakes is what establishes the certainty of victory, for it means conquering the enemy that is already defeated.

- Sun Tzu

If you know what motivates your customers, what they want and need, you’re well ahead of the game.

Know Yourself

Clearly defining your target market and demographics is a good start. You’ve defined what your ideal customer looks like to you. Now ask yourself, “What does my business look like to my target customer?”

• Is your shop/restaurant/office clean and inviting?
• Does your website look professional, up-to-date, and provide the right information?
• Take a good look at your business’s weaknesses and see if there’s some way to turn them into strengths.
• Are you offering goods or services your target market values? How do you express this to each demographic?
• Do people even know your business exists?

Understanding your business and the way it’s perceived will go a long way. Just understanding isn’t enough though. A successful business is built on continuous improvement. A good owner also knows what they don’t know, creating partnerships and learning opportunities to improve their limitations.

Measurement and Calculation

Here comes the hard part. How do you accurately forecast sales as a new business? As a growing business? As a service business? There’s always going to be an excuse to put off market forecasting. Why? Because it’s hard. It forces you to take a serious look at your business and set some quantifiable goals. For some great advice on this topic, pick up a copy of On Target : The Book on Marketing Plans. It offers some great tips on how to generate those initial sales forecasts. For instance:

• Use census data to determine the number of people in your target market.
• Find out what data is available in similar markets, or what has been gathered by your competitors.
• Build on whatever past data you have available, and go with your gut instinct.
• Most importantly: GET STARTED! Next year you’ll be able to look back on the data you’ve gathered this year.

Set some expectations for your business. Make sure they’re clear, quantifiable, and have a well-defined due date. “I’m going to lose weight” is not a clear goal. How much are you going to lose, and by when? “We’re going to increase sales” is just as useless. Instead, try “We’re going to increase online sales by 20% in the next 18 months by advertising through channels X, Y and Z.”

See how much more clear that is? 18 months from now it will be very clear whether or not you met your goal. By now this should be easy. You should know your customers better than they know themselves. You should know their demographics and their psychographics. You know what makes them tick. Your business is structured to give them exactly what they need in the best possible environment. You’ve set measurable goals, forecasted sales, and you revisit the numbers regularly. With that kind of preparation, you’ve got a tremendous advantage over the competition.

If you know your customer and you know your business, your success will not stand in doubt.

What’s next?

Sun Tzu on Leveraging Advantage - Part 4 of 6

Sun Tzu on Managing Troops - Part 2 of 6

“The consummate leader cultivates the Moral Law and strictly adheres to method and discipline; thus it is in his power to control success.” - Sun Tzu, The Art of War

Discipline and Accountability

When Sun Tzu wrote The Art of War, the reigning king asked him to prove the merit of his work by applying it to a group of untrained women. To do so, Sun Tzu organized 180 women into formation and named the king’s two favorite concubines as officers. Here’s what happened:

Sun Tzu went on: “When I say ‘Eyes front,’ you must look straight ahead. When I say ‘Left turn,’ you must face towards your left hand. When I say ‘Right turn,’ you must face towards your right hand.

Again the girls assented. The words of command having been thus explained, he set up the halberds and battle-axes in order to begin the drill. Then, to the sound of drums, he gave the order ‘Right turn.’ But the girls only burst out laughing. Sun Tzu said: ‘If words of command are not clear and distinct, if orders are not thoroughly understood, then the general is to blame.‘

So he started drilling them again, and this time gave the order ‘Left turn,’ whereupon the girls once more burst into fits of laughter. Sun Tzu: ‘If words of command are not clear and distinct, if orders are not thoroughly understood, the general is to blame. But if his orders are clear, and the soldiers nevertheless disobey, then it is the fault of the officers.‘

So saying, he ordered the leaders of the two companies to be beheaded… and straightaway installed the pair next in order as leaders in their place. When this had been done, the drum was sounded for the drill once more; and the girls went through all the evolutions, turning to the right or to the left, marching ahead or wheeling back, kneeling or standing, with perfect accuracy and precision, not venturing to utter a sound. Then Sun Tzu sent a messenger to the King saying: ‘Your soldiers, Sire, are now properly drilled and disciplined, and ready for your majesty’s inspection. They can be put to any use that their sovereign may desire; bid them go through fire and water, and they will not disobey.”

Before I continue, I want to point out that I’m not advocating the beheading of concubines or employees. Such practices within your business would likely have a devastating impact on morale.

The principle, though, is a good one. If you clearly outline your expectations and the penalty for failing to meet them, they must then be enforced. If they’re not enforced, they’re meaningless and your entire staff will realize this. The best way to handle this, in my opinion, is to get your employees to help set the penalties for breaking the rules. Decide collectively what should happen to someone who is habitually late for work. Then, when the situation arises, be sure you follow through. Sun Tzu explains it like this: “If a general shows confidence in his men but always insists on his orders being obeyed, the gain will be mutual.”

Reward for Success

“For them to perceive the advantage of defeating the enemy, they must also have their rewards.” - Sun Tzu, The Art of War

I realize the story above comes across a little harsh and Machiavellian, but there is a flip side to properly managing your troops. Discipline must come first, but you should also reward your employees for their hard work. In war, the victorious general should share the spoils of war with his men because it was by their effort and their sacrifice that victory was achieved. Likewise if your business has an extremely successful year, your employees should reap some of that reward. They were the ones who made it happen. They were the ones following your (sometimes totally unreasonable) orders. Shouldn’t they get a little something for all their hard work?

If employees aren’t rewarded for their performance, the only incentive is to avoid being punished for doing poorly. This is a great way to breed an apathetic and mediocre workforce. So give them praise and encouragement. Share with them the spoils of war, and they’ll be ready to fight.

What’s Next?

Sun Tzu on Tactics - Part 3 of 6*

*Coming Soon, check back in a few days…

Sun Tzu, The Art of War and Your Business - Part 1 of 6

“Opportunities multiply as they are seized.” - Sun Tzu, The Art of War

I was inspired by a recent post by Harry over at Men With Pens. His post was a study of The Book of Five Rings, “A classic text on the Japanese Way of the Sword,” as it applies to writing and working as a freelancer. He discusses the five elements of swordplay and how they are equally relevant to writing and, I would argue, all aspects of running a business. I won’t try to summarize the entire post, because you should really check it out for yourself, but here are the five elements: Ground (Building your foundation - discipline and stability), Water (Adaptability - staying calm in the face of adversity and change), Fire (Taking Action - putting your passion to good use), Wind (Style - finding the best approach), and The Void (Attitude - what binds it all together). Seriously, go read the whole post, it’s well worth your time.

Harry’s post reminded me of something I had long since forgotten. When I was 15 I started a neighborhood lawn mowing business, and one of my clients (AKA neighbors) gave me a copy of Sun Tzu’s The Art of War and told me I could learn everything I needed to know about business from that book. I thought he was crazy at the time, but years later, after running a business, I get it.

Corporate America - Our Battlefield

Sun Tzu was a Chinese general and military strategist in the sixth century BC. His book, The Art of War, consists of 13 chapters, each devoted to one of the aspects of warfare. Even though the book was written 2500 years ago, the concepts are still applicable today. Because the free market is governed by the interplay of competing businesses, many of Sun Tzu’s lessons have withstood the test of time. Historians have claimed that Napoleon, one of history’s greatest strategists, studied The Art of War. More recently, executives at corporations like Google and Microsft have begun to apply its lessons in the corporate world.

While I definitely think the book is worth checking out, some parts are more relevant than others. Take, for instance, Sun Tzu’s theories on the use of fire to destroy an enemy’s camp. I could give you a very creative interpretation of its application, but it would either be complete BS or it would give you the impression that I support arson. Instead, let me break down what I think are the most relevant of his teachings:

Managing Your Troops: The art of discipline, accountability, respect and admiration.

Tactics, Measurement and Calculation: The art of planning so that you have ensured victory before you’ve begun.

Leveraging Advantage: The art of avoiding strength and attacking weakness.

Adaptation: The art of reacting to circumstance, changing tactics, and constantly innovating.

Leadership: The art of balancing responsibilities, doing what’s right, and inspiring loyalty.

*Coming Soon, why not subscribe and make sure you catch the rest of the series?

As Sun Tzu said,

“If you know the enemy and know yourself, your victory will not stand in doubt; if you know Heaven and know Earth, you may make your victory complete.”

Never underestimate the power of planning. Develop a solid business plan and revisit it regularly to see how things are progressing. Do the same for marketing with a comprehensive marketing strategy. Analyze your market and your competition. Train your staff and reward them for a job well done. Apply these concepts to your business and it will grow.

I’ll see you on the battlefield.

The Cost of Poor Service

Don’t Waste My Time

My last post about customer service got me thinking about other experiences I’ve had as a consumer recently. A few months ago I was having some issues with the company that hosts my website (IPowerWeb.com). I called them and spent an hour on hold before finally reaching someone. He assured me that the problem would be taken care of within 24 hours and I would be informed as things progressed. A week later I called again, waited an hour again, and got the same explanation. He said they’d give it “top priority.” Several weeks later the problem still wasn’t resolved. I spoke with someone via their online chat support, and they finally pushed me over the edge:

Clem: Hi Kyle. I apologize for the wait time. My name is Clement, how are you today?
Kyle: i’m doing fine thanks, how are you?
Clem: I am great.
Clem: We apologize for any inconvenience this may have caused you. Currently, our internal tools are not functioning. Hence, I am unable to check your account. Could you please contact us after few minutes, so that we can assist you in a better way? Our internal tools will work fine after few hours.
Kyle: I just spent 45 minutes on hold on both the phone and this chat. And this was after receiving no response to emails I have been sending for two weeks. Am I going to have to wait on hold again in a few hours?
Clem: We apologize for any inconvenience this may have caused you. Currently, our internal tools are not functioning. Hence, I am unable to check your account. Could you please contact us after few minutes, so that we can assist you in a better way? Our internal tools will work fine after few hours.
Kyle: I’m really not impressed with the service I’ve received in the last few weeks. I just waited in line 45 minutes to be told to call back later so I can wait in line again?
Clem: Did you receive my last message?
Kyle: I did, did you receive mine?
Clem: I apologize for any inconvenience this has caused you.
Clem: We apologize for any inconvenience this may have caused you. Currently, our internal tools are not functioning. Hence, I am unable to check your account. Could you please contact us after few minutes, so that we can assist you in a better way? Our internal tools will work fine after few hours.
Kyle: Can someone from support get in contact with me when the tools are functioning again? I’ve had very little luck contacting you, and I can guarantee I won’t put you on hold
Clem: Unfortunately, we will not contact you. Please make sure to contact after 15 minutes.
Clem: I apologize for any inconvenience this has caused you.
Kyle: Can you at least tell me why my last three emails to tech support have gone completely unanswered?
Clem: I apologize for any inconvenience this has caused you.
Clem: We apologize for any inconvenience this may have caused you. Currently, our internal tools are not functioning. Hence, I am unable to check your account. Could you please contact us after few minutes, so that we can assist you in a better way? Our internal tools will work fine after few hours.
Kyle: I understood the message the first 3 times
Chat session has been terminated by the site operator.

Needless to say, I terminated our contract with them, and took all of my clients’ accounts with me. I was livid after this conversation, which was just the cherry on top of several weeks of abysmal service. Not only did I take my business elsewhere, but I’ve instructed everyone I know to steer clear of IPowerWeb.

Lessons to be Learned

I mentioned in my last post that if you can make a customer say “Wow! What great service!” they’ll be Customers For Life. On the other hand, if you treat customers poorly it could come back to haunt you. You will almost certainly lose their business, but the cost could be even higher…

Take this blogger, for instance, who had horrible experiences with Sprint/Nextel.

Or this one, which talks about Dell’s plummeting customer service ratings.

Which reminds me… I’ve had my own run-ins with Dell. A few months back I plugged in my nearly-brand-new laptop and got an unbelievable electrical shock from it that left my arm numb the rest of the day. It fried the computer too, which I was actually far more concerned about. I called Dell, unhappy but civil, and explained what happened. His response? “We apologize that our product caused you this pain, and suggest that you put some ointment on the shocked area, then carefully unplug the computer.” Ointment? Really? Thanks Dell.

Avoiding Customer Service Disasters

A recent study by the University of Colorado indicates that Customer Service scores in service businesses are dependent upon five main factors:

1. Timeliness of initial response to the customer’s request/problem.
2. Clarity of the employee’s initial understanding of the customer’s request/problem.
3. Completeness of the resolution provided by the company.
4. Timeliness of the resolution provided by the company.
5. Courtesy of all employees involved in providing the resolution.

It’s not brain surgery. Respond to customer needs quickly, completely, and courteously and they’ll be happy! If I spend an hour on hold, it won’t matter if the service I receive is stellar. I wasted an hour listening to your crappy elevator music on hold.

7 Keys to Happy Customers

1. Respond to customers quickly. We live in an impatient world. We’ve all gotten irritated by having to wait three minutes at a drive through window. Same idea here - your customers will appreciate that you’re not wasting their time.
2. Make customers feel important. Let them know you appreciate their business, and want to make sure they’re happy.
3. If you screwed up, admit it. Then make things right. Offer them a free month of service, a free upgrade, or a small gift. Studies have shown that even the most inconsequential gift improves a person’s perceptions of the gift giver.
4. Keep your customer informed. If something is going to take longer than expected, call them and let them know. Give them periodic updates so they know what’s going on. Wagonwork Collision Center, a collision repair shop in Alexandria, VA, calls their customers twice a week with updates on the repair process.
5. Ask yourself: “What would a remarkable leader do?” Kevin Eikenberry says “Remarkable leaders set the pace in creating a mindset that is focused on customers and meeting/exceeding their needs.” Don’t just meet your customers’ needs. Predict them. Exceed their expectations so that they can’t wait to come back.
6. Hire and train the right people. Some people just aren’t cut out to be working with customers. Guy Kawasaki says it has to start from the top. As the owner or manager, you’re setting an example to be followed. Treat customers right and then make sure your employees are too. You’d be surprised how much impact your actions have on your company’s culture.
7. Measure your results. Every company, large or small, needs to follow up with customers. Ask them if they’re satisfied with the relationship, if there’s anything you could do to make it better,  etc.. My company conducts phone surveys semi-annually, tracks all the responses in a database, and looks for improvements and shortcomings over time. We do this for some of our clients as well. Without the stats to prove it, how can you be sure you’re satisfying your customer?

Your customers are too important to your business to leave these things to chance. Document your standard operating procedures (the “How-To” guide to running your business) and make sure they’re followed. Make sure everyone in your organization is focused on delivering the best possible experience to your customers. Maybe one day the rest of the world will catch on and I won’t have any customer service horror stories to tell. We can dream, right?

Customer Service: Is it Dead?

Crappy Service - An Epidemic

Last week I walked into a sandwich shop and the woman at the counter, without even making eye contact, asked “What are you havin’?” in the most uninterested way possible. It took me a second to respond because I was so taken aback. I thought “If I’m going to be treated like this, maybe I should take my money to the restaurant next door.” What’s really sad though is that most people don’t even think twice when they are treated this way as customers. Is anyone else bothered by this?

The Cost of Poor Service

Do companies realize how detrimental poor service can be to their bottom line? Consider these statistics:

• Acquiring new customers can cost five times more than satisfying and retaining current customers.
• A 2% increase in customer retention has the same effect on profits as cutting costs by 10%.
• The average company loses 10% of its customers each year
  • Source - Living on the Edge of Chaos: Leading Schools into the Global Age

• 68% of lost customers are turned away by the negative attitude or indifference of a service provider.
  • Source - Survey conducted by the American Society for Quality

Can your business afford to lose 10% of its customers every year? How can you keep even your most demanding customers satisfied?

Forget About Satisfying Your Customers

Several years ago my company decided to forget about satisfying our customers. You heard me. We decided that any business could satisfy their customers. Customer expectations are so low these days that as long as they get what they came for without being verbally abused, they’ll be satisfied. What we wanted were Raving Fans. (Do yourself a favor and pick up a copy of this book… It’s a quick read and it’ll totally change the way you approach your business).

How do you get raving fans? I remember a conversation i had with Michael Giarrizzo Sr. on my very first business trip. His family has virtually owned the collision repair market in Ohio for decades. Their company, DCR Systems, routinely receives 100% Customer Satisfaction ratings because they believe in creating raving fans. Michael told us about a customer who left his garage door opener in his car, when he was supposed to put it in his rental. Giarrizzo called him, asked for his work address, and delivered the door opener to the man at his office. The customer didn’t have to ask, didn’t have to pick it up, and wasn’t inconvenienced by not having the door opener that night when he got home. With that simple action, Giarrizzo earned a customer for life.

Creating “Wow” Moments

The Ritz-Carlton is well known for their exceptional customer service. Bellmen are trained to look for name tags on luggage as guests arrive. They then use hidden radios to inform the desk clerks of the guests’ names, and the guests are then mysteriously addressed by name. Wow!

It’s a simple concept: if your service makes a customer stop and say “Wow!”, they’re going to come back the next time they need your product or service. They’re going to tell friends and family about their experience and recommend you to everyone they know. Examples are everywhere…

Stephen from Freakonomics writes about his Wow moment with Zappos, a popular shoe retailer:

My wife had ordered a pair of sandals from Zappos. When they arrived, she found that they didn’t fit. She tried to order the right size, but Zappos was sold out of her size. So here’s what the company offered: she could return the sandals (for free), Zappos would refund the purchase price and they’d send her a $25 coupon toward her next purchase.

But wait — there’s more! Zappos also offered to try to locate a pair of the sandals in her size from another vendor. (Hah! Sure, they will!) Fifteen minutes later, the company called my wife and told her they’d found her sandals, in her size, at another online merchant — “and,” the Zappos clerk told her, “they’re even cheaper at this other site!”

Another blogger, Zaz LaMar, wrote a post called “I Heart Zappos” after a particularly heartwarming encounter with the company.

Just search Google for “blog great customer service” and you’ll find countless links to happy bloggers telling the world about the experiences they’ve had with companies that made them say “Wow!” These raving fans are providing businesses with free advertising and testimonials simply because they were so impressed. What could be better??

How do you wow your customers? How do you keep them from taking their business elsewhere? As a consumer, have you ever had a “Wow” Moment? Tell us about it!

Business Owner or Hat Rack?

As an entrepreneur, business owner or manager, how many hats do you wear? Dave McClure, Master of 500 Hats, “refers to the many hats that entrepreneurs have to wear as they get a new startup venture off the ground. It’s also a reminder to entrepreneurs to spend time identifying all those hats, find talented people to wear them productively, and gradually take off & transfer the hats to others who can best help the business grow. “

As a small business owner, I’ve worn more than my share of hats. I mentioned in my last post that I’ve been the project manager, programmer, designer, account manager, marketing manager, and so on. Chris Garrett pointed out that by starting my own blog, I’ve just given myself ten more hats to worry about. Now I’m writing, researching, networking, etc. in addition to all the things I’m already doing. It occurred to me that I’m spending more time as a hat rack than as a business owner. A business owner should be negotiating deals, formulating strategies. A hat rack keeps hats from falling on the ground, getting trampled and lost.

Sadly, for most entrepreneurs this is a necessary evil. If I’d had the cash for a professional accountant, I would have hired one. God knows I’m clueless when it comes to accounting. Matt Inglot points out in his blog that the areas we struggle in tend to be the hats we spend the least time wearing. That explains why, before we hired an accountant, our accounting hats only showed up once a year in early April.

You can learn a lot about yourself by looking at the way you solve problems like drooping sales. A tech-savvy owner might put his programming hat on and implement a cutting-edge CRM application to better track leads and customer information. A marketer will put his marketing hat on and find new ways to reach customers or new target markets to enter. The engineer will reach for his inventor’s hat and start working on his next big idea, guaranteed to draw crowds of customers. Which hat do you reach for? A true entrepreneur will consider each hat in turn, weighing his options until he comes up with the best combination of hats for the task at hand.

Unloading a Few Hats

The hardest thing for most business owners to do is let someone else wear a few hats. In The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It, Michael Gerber outlines some of the dangers of taking this step. By hiring people to do the jobs I hate, I’m ensuring that they get the attention they deserve. But to whose standards? Not mine. I’m just trusting that the new guy knows what he’s doing. And then when he cooks the books and disappears with all of my money, who do I have to blame?

The critical component in effectively delegating tasks is learning how to handle each task yourself, THEN deciding how to delegate. You’re in charge. You have to set the rules.

Start by creating an Organizational Chart. It may seem ridiculous in a company with one to three employees, but this is critical. Take a look at my company’s first org chart. Initially, all of those boxes were filled with just two names.

Once you have the chart, create a position contract and job description for each box. For each position, what are the expectations? As VP of Marketing, what are my responsibilities? How do I know I’m fulfilling them? Who do I report to? Who reports to me? This should all be clearly defined when there are only a few employees, because it will get much harder the larger the company gets.

You should now have an Organizational Chart and a stack of position contracts. For each box that has your name on it, sign the position contract to seal the deal. This is especially important in partnerships, where responsibilities are not clearly defined. There’s got to be some accountability right from the start.

As you grow, you now have the structure to hire employees and present them with clearly defined roles. Each new employee takes one of your hats, and signs a contract indicating that they understand what is expected of them. This is just a small step forward, but it’s a step most small businesses never take. Once you start hiring, you need to worry about training, communication, record keeping, and all sorts of other things well beyond the scope of this post. More on all that later…

Your turn… what hats are you wearing? What hat do you instinctively reach for when there’s work to be done?

Other Bloggers on The E-Myth

Naomi at IttyBiz wrote a (not surprisingly) great post last week about how to make the jump toward starting a business when you hate your current job. Johnathan posted a number of statistics from the book over at WiseVisions. Marc Melvin presents a great summary of the goal behind The E-Myth: creating a “place of community that has purpose, order, and meaning… A place where the generally disorganized thinking that pervades our culture becomes organized and clearly focused on a specific worthwhile result.” Michael Gerber’s blog is definitely worth checking out too. Pick up a copy of The E-Myth, it’ll be worth your while.