Month: September 2012

Guest Blogger – Jalene Nemec

/ nuleadership / 9 Comments

We face unprecedented economic times in a globalized marketplace where purchasing from places as far away as China are just a click away. As a direct result companies have had to review, refocus and revamp their business scope to compete and sustain their livelihood.

Some have opted to accomplish this by changing their product line, cutting costs, slashing prices, removing excess overhead and reducing pay. All these options can prove successful and have. But there is a better solution. Improve your customer service and earn loyal customers!

Customer service by definition is to provide assistance with courtesy those who patronize a business. [1] A company that provides great customer service over their competitors creates loyal customers who will patronize their business year over year.  

The direct result of this is increased profits. Customers become loyal when they know they can trust your company to take care of their needs, even their most frivolous complaints and to do it with kindnesses.

To illustrate this, John Goodman used a simple calculation for getting customers to complain and then satisfying them. The assumption in this example is that a customer is worth at least $30 in profit over a year’s time.

The cost of handling a complaint is about $5 and at least 75% of callers are satisfied. To quantify the payoff of soliciting and handling complaints, it’s critical to know the prevalence rate of non-complainants and their loyalty, as well as the loyalty of those who complain and are not satisfied. The calculation for moving a customer with a problem from non-complainant to satisfied complainant is provided.

Payoff due to improved loyalty – Typically, moving a customer with a problem from non-complainant to complainant to a satisfied caller raises loyalty by about 30%, meaning loyalty) x (.75 satisfied) x $30 value). After covering the $5 cost of handling the complaint, one is left with $1.75 in profit and/ or an ROI of 35% ($1.75/$5 cost to handle complaint).

Over time, marketing executives have awakened to the fact that between 20% and 70% of all new customers are won by personal referrals, positive word-of-mouth. Research has also consistently shown that personal service interactions have 20 times the positive impact as advertising in fostering word-of-mouth referrals.

Payoffs due to enhanced word-of-mouth referrals: if, conservatively, one out of ten satisfied customers produce a word-of-mouth referral and one new customer worth $30 is won for every 40 who hear good things, then satisfying 10 customers adds $30 in word-of-mouth benefits, or $3 for each customer satisfied. That adds an additional $3 payoff for each satisfied customer, raising the ROI to 95%. [2]

The concept of these figures is intriguing. However they cannot come to fruition by doing nothing. Companies must be actively engaged in the task of improving and providing superior customer service.

Through my research, I determined that there were five key characteristics that lead to great customer service and ultimately increased profits. Those characteristics include: Attitude, Awareness, Accountability, Action, and Affability. Together they are my “5A-Wheel.”

Change begins with the right attitude. Before a company can change their customer service, they must establish a mission to provide quality service. Furthermore, the company should be aware of the current state of the service they provide. Change cannot be made without understanding the situation at hand. A business may question, has there been a noticeable decline in sales? If so, could it be a result of the customer service? 

The best way to kick-start change is to hold employees and managers accountable. Without effectively maintaining accountability for everyone involved, people will not see a reason to change their behavior and the business will suffer.

Holding personnel accountable is the first part of taking action. Unless a company makes a conscious decision to actively improve, change will be temporary or non-existent.

The final characteristic is affability. It seems like a minor detail, but consider some of your past consumer experiences. There were probably a few instances where an employee helped you in an “I have to” way, and there were times where you were helped in an “I want to” way.

This is the difference between attitude and affability. An employee has the right attitude if he or she understands a need to help the customer, but wanting to help the customer provides the best possible experience for everyone. 

Using these five characteristics as a guideline will help companies succeed in their customer service department. As you begin your career or start up your own business, be better than your competition and provide the customer service of yesteryear that people value, a customer service that people are loyal to.

Please share your thoughts with this guest blogger.

ABOUT THE BLOGGER

 

Jalene Nemec, MBA,  is the author of the upcoming book, Great Customer Service. She is also one of the brightest business thinkers in the world, having both extensive customer service and leadership experience.  She is a former Lincoln Memorial University MBA graduate.

REFERENCES

Entrepreneur. http://www.entrepreneur.com/encyclopedia/printthis/82148.html. 2011. (accessed   16 March 2011).

Goodman, John. “Manage Complaints to Enhance Loyalty.” Quality Progress, (2006).

[1] Entrepreneur.com

[2] Manage Complaints to Enhance Loyalty by John Goodman

Global Human Capital

/ nuleadership / 6 Comments

 

I watch and listened. Industry Leader Yasir Abdulrahman was sharing with my undergraduate class an overview of cross cultural interests as it relates to operating a business in the Middle East. Yasir explained how some managers from the U.S. had gone abroad without understanding cultural sensitivity.  It was a fatal mistake.  

Companies cannot afford to make these kinds of errors in a global environment.  After Yasir’s dynamic presentations, I knew that emerging U.S. leaders would need a broader global perspective in order to achieve future business success. 

Across the world, there is a search for talented and gifted employees.  Some companies hope they may hire the next Steve Jobs of Apple. In fact, having the right management strategy can elevate a country’s financial well-being. India and China flecks their mighty muscle due to the dominance of their outsourcing efforts.  

Countries attempt to invest more in their own educational system in order to better manage their own talented management system.  Countries seek to find strategic gaps. For example, foreign countries now hold more than $12 trillion in U.S. assets, including stocks, bonds, real estate, and more financial elements.[1] 

In fact, Japan and China are very motivated to support the American dollar so that Americans will continue to buy their goods, thus keeping their citizens working.  At a low scale, companies attempt to search for this talent with a lens of also attracting more cheap labor.

Peter Cappelli, author of Why Good People Can’t Get Jobs, explains that even with over 23 million people unemployed, companies argue they cannot find qualified workers.  According to the Manpower Group analysis, 52% of U.S. employers state they have a difficult time filling positions because of the talent shortage.[2] 

Cappelli suggest that employers are making unrealistic expectations in the process:  “Many people, especially pundits in the business press, seem to have what we might call a Home Depot view of the hiring process, in which filling a job vacancy is seen as akin to replacing a part in a washing machine….Like a replacement part, job requirements have very precise specifications. Job candidates must fit them perfectly or the job won’t be filled and the business can’t operate.”[3]

However, people aren’t machine. They aren’t perfect.  Yet, organizations maintain this Home Depot mentality and allow job positions to be unfilled until the arrival of that perfect candidate.

Human Resource Management (HRM) requires that organizations manage their workforce strategically.  Charles Hill, author of International Business, explains, “Irrespective of the desire of managers in many multinationals to build a truly global enterprise with a global workforce, the reality is the HRM practices still have to be modified.”[4]

With the significant differences between countries in labor markets, economic systems, legal systems, and other perimeters, managers must adapt their operations with an international perspective.  Consequently, staffing policies must be adjusted in order to select the right employees for the jobs that best fits the specific countries, whether a domestic employee who is being transferred or by hiring locally. 

In both cases, organizations must seek to ingrain their corporate culture even on foreign soil. John Wiedemer, Robert Wiedemer, and Cindy Spitzer, author of America’s Bubble Economy, sees an opportunity for individuals who understand the economic climate: “The fall of America’s Bubble Economy will shake up many industries, drive businesses into bankruptcy, derail countless careers, and force dramatic numbers of workers into temporary unemployment. It will also create thousands of successful companies that don’t currently exist, lead all sorts of people to rethink their life’s work, and make many, many alert entrepreneurs and investors fabulously wealthy.”[5] Therefore, organizations that can effectively recruit, manage, and retain a global workforce will have a clear advantage in the marketplace.

What does talent management mean in a global environment? How do individuals capitalize on the global trend for talent? 

© 2012 by Daryl D. Green                                    

[1] America’s Bubble Economy by John Wedemer, Robert Wedemer, and Cindy Spitzer

[2] Why Good People Can’t Get Jobs by Peter Cappelli

[3] Why Good People Can’t Get Jobs by Peter Cappelli

[4] International Business by Charles Hills

[5] America’s Bubble Economy by John Wedemer, Robert Wedemer, and Cindy Spitzer

Job Creation Model for America

/ nuleadership / 8 Comments

Things are getting tougher at home. I run into a former neighbor who stated he was looking for work. He was a corporate manager for a Fortune 500 company. Sadly, the company had made some bad business decisions that left it with the decision of laying off staff. My neighbor was one of these causalities of downsizing. 

He had been earning over $80K. He stated that he was getting many job offers because of his experience that were offering him about $40K. He could not understand his plight. I explained the employment research I had been doing over the years. It is a buyer’s market with companies being the buyers. 

Therefore, my neighbor was part of the blue plate special for businesses. These companies were searching for highly qualified workers at the fraction of the cost while staying away from recent college grads or inexperienced prospects. Unfortunately, this is the reality of employment in a financial crisis. 

Last week, the Labor Department reported job growth had slowed and thousands of Americans were giving up on their job search. Of course, these results received attentions on all political fronts in America because it is a presidential election year.  

On the campaign trail, President Barack Obama explains how the economy is improving but slowly. His opposition, Republican Presidential candidate Mitt Romney, attacks the Obama administration for failed policies on the economy. Both presidential candidates set an interesting discussion on the role of the federal government in the economy. However, the most underpinning issue is who is best suited for job creation to 23 million unemployed Americans. 

The global economy is struggling even in emerging markets like China. Why would America be different? According to the Labor Department, the economy added only 96,000 jobs in August, which was down from 141,000 jobs in July. Additionally, unemployment fell to 8.1%, from 8.3%. This is not a positive statistic. The unemployment rate fell largely because 368,000 people stopped looking for work.

 

In fact, 64% of the working–age population was either unemployed or actively seeking work which was a record 30 year high. According to some economists, at least 150,000 jobs are needed each month to simply keep pace with population growth.

Job creation is a difficult concept. According to the financial dictionary, job creation is a “process by which the number of jobs in an economy increases.” In this partisan political environment, job creation is a hot buzzword without much practical application.

Some people may argue that the government is a job creator. Yet, the federal government, being bureaucratic and having a host of mission-oriented functions, is not equipped to handle this responsibility alone.

Others folks taunt businesses as the ultimate job creators. However, businesses were never started to be job creators as its primary mission. Ricky Griffin and Michael Pustay, authors of International Business would argue that businesses were designed solely as job creators: “The fundamental reason for the existence of a business is to create value (usually in the form of profits) for its owners.”

Therefore, a multinational company’s business strategy may not be in tune with job creation in America. Outsourcing relates to pulling various tasks from within an organization and getting this particular service outside of the organization.  Outsourcing continues to be a major tool for businesses.

Thomas Friedman, author of The World is Flat, makes a distinction between outsourcing and offshoring: “Offshoring, by contrast, is when a company takes one of its factories that is operating in Canton, Ohio, and moves the whole factory offshore to Canton, China. 

Therefore, it produces the same product in the very same way, only with cheaper labor, lower taxes, and subsidized energy, and lower health-care costs.” Countries search the globe for cheaper labor without considering the long-term perspective of their business strategies. I think you need to give the definition of outsourcing here to complete the comparison. 

Consequently, shipping more jobs abroad has a rippling impact across the globe. Globalization creates a more equitable average wage across the world while reducing the earning power of developing countries and increasing the living wages for emerging countries.

According to the United Nations’ Millennium Development Report, more than1 billion people on the globe live on less than $1 a day.  Ironically, as most Americans have watched their wages decrease, most other workers across the globe sees a significant increase.

The world’s middle income class earns between $700 to $7,500 per family member. Therefore, job creation has a different meaning on a global level because it produces a variety of winners and losers. Consequently, Americans must understand that the jobs that are created may not be fully realized in their own country. 

How do you define job creation in a global environment? What team arrangement (if any) can U.S. government and U.S. businesses create to help the 23 million unemployed in our nation? 

© 2012 by Daryl D. Green

Emerging Markets

/ nuleadership / 15 Comments

I remember listening to Kenny Rogers sing “The Gambler” growing up in my community.  As many of you know, Rogers is a country artist.  I was well aware that if my friends knew I listened to country music, I would have lost my ‘cool card’ among my rapped-crazed peers.  Today, the lyrics of “The Gambler” still guide my business strategy. 

“You got to know when to hold ’em, know when to fold ’em
Know when to walk away and know when to run
You never count your money when you’re sittin’ at the table
There’ll be time enough for countin’ when the dealing’s done
Every gambler knows that the secret to survivin’
Is knowin’ what to throw away and knowing what to keep”  

If most senior leaders would guide themselves with this simple lyric, their organizations would be better off.  For example, you find a good spot in the lake where there are an abundance of fish.  You keep this secret, but then start sharing it with a few friends. Sadly, the word gets out about your special spot.  

Finally, you find yourself squeezed out from your favorite spot.  It’s a hot spot now.  The fish are being topped out.  Yet, people continue to fish there despite obtaining less fish and requiring more time to get the same results.  Even though you love the spot and have a sentimental connection with this area, you abandon this location and move to another unknown location that shows plenty of potential.  You moved not because you wanted to move; you moved because you are a fisherman who loves catching fish. 

Likewise, today’s businesses are operating abroad in order to catch more fish and obtain more profitability.  U.S. multinational companies, like Coke Cola and McDonalds, realize that America’s market is pretty saturated and riddled with hypercompetitions.  

How many more burgers or cokes can Americans continue to consume?  Additionally, companies hope to lower their costs by searching for a lower cost labor force.  Charles Hill, author of International Business, suggests that outsourcing is systematic:  “By doing this, companies hope to lower their overall cost structure or improve the quality or functionality of their product offering, thereby allowing them to compete more effectively.”[1] Therefore, emerging markets become more attractive. 

The fragility of today’s world’s economies demands that businesses act more prudently and decisively about their market strategies. Emerging markets, which were once stigmatized with the name ‘Third World’ markets, will be a dominate player in the world’s future economy.

 

The top four emerging markets include China, Brazil, India, and Russia.  According to Goldman Sach’s projects, these countries will overtake the seven largest industrialized countries (United States, Japan, Germany, France, UK, Italy, and Canada) by 2040.  Antoine va Agtmael, author of The Emerging Markets Century, argues that the prominent role of emerging markets is in future commerce.   

He predicts revolutionary changes due to these emerging markets and equates these changes to the second industrial revolution.  Some of the key success factors for these emerging companies are the following: (1) an obsessive focus on quality and design, (2) brand building, (3) logistics, (4) being ahead of competitors in adapting to changing market trends, (5) acquisition savvy, (6) sustaining an edge on competition in information technology, (7) clever niche strategies, and (8) unconventional thinking.[2]  

Additionally, these companies have a hunger to compete since their success will improve their way of life. Sadly, many Americans do not understand the level of poverty that motivates these countries. Agtmael further notes: “A new breed of companies will play a critical role in producing this shift; a select number of which truly deserve to be regarded as world class. 

In the face of these firms’ vigorous emergence on the world stage, there will be a temptation to go into protective mode….”[3]  However, globalization makes retreating a passive signal of being defeated in a world market.  Therefore, U.S. companies like IBM and Google may see themselves fighting to keep their dominance from unrecognized firms from these emerging countries with a hunger to topple established U.S. businesses. 

Discuss how U.S. companies can effectively address the competition from firms located in emerging markets. 

© 2012 by Daryl D. Green

[1] International Business by Charles Hills

[2]The Emerging Markets by Antoine va Agtmael

[3]The Emerging Markets by Antoine va Agtmael