August 20th, 2008 07:12am
Terri Burdick
Do you know how satisfied your customers are with your products or service? Many of us have an idea of customer satisfaction that we gather through conversation or we presume satisfaction as sales increase. Some businesses take the time to formally gather customer satisfaction data through surveys or customer focus group discussions – a terrific practice. However we are getting this pulse on customer satisfaction, the real question is – “Are you satisfied customers loyal?” In other words, will they recommend you to their friends and think of you first when they again need the product or service you sell? That’s the real issue.
I continue to be away at the Graduate School of Banking and have been focusing on ways to convert customer satisfaction into customer loyalty. Today, I want to share with you some of the quotes and data that have been a part of my studies. While some are specific to the financial services industry, they are relevant in most business environments. They are a staggering reminder that customer loyalty is not what it used to be, but is as important as ever in determining a company’s success. I hope these get you thinking. I’ll share more on the topic in my next blog.
“Over 75% of customers who switch to another company had previously rated themselves as satisfied or very satisfied with the company they left.” Source: Ron Zemke, The Myth of the Satisfied Customer
“You hear from 4% of dissatisfied customers. 91% will just never come back. Opinion Research Corp.
“Only 30% of customers rating satisfaction a 4 on a scale of 1 to 5 will do business with you again.” Opinion Research Corp.“7 out of 10 complaining customers will do business with you again if you resolve the complaint in their favor. Resolve it on the spot and 95% will do business again.” Opinion Research Corp.“Companies that focus on customer satisfaction are 10-15 percent more profitable than companies that do not.” Source: Bankers News“Satisfaction is an attitude, while loyalty is a buying behavior.” Source: Jill Griffin, Market Resources Center
August 12th, 2008 06:52pm
Terri Burdick
What do you get when you put 200 bankers in the same room for two weeks? It sounds like the introduction to a bad joke, but it is my life for the next two weeks as I participate in curriculum at the Graduate School of Banking. The answer to the question is , … a ton of knowledge! Bankers are an amazing resource for learning about the impact of the current economic conditions on specific industries, communities and business owners. So, for the next week or so I’ll try to share with you some of what I’m learning that relates to small business.
The best quote from today was, “HOPE is not a strategic plan.”
I love strategic planning – an annual planning session to help you focus on where you want the Company to be in the next three years and what types of things are going to have to happen to get it there. But not everyone takes the time for such discussion. What kind of strategic thinking and planning goes on at your organization? Can you answer these questions:
· What are your Company’s strengths?
· What are your Company’s weaknesses?
· What are your Company’s opportunities?
· What are your Company’s threats?
· What do your clients expect from you?
· Why do they choose your business over your competition?
Better yet, have you communicated the answers to these questions to your employees meaningfully so they can continue to develop strengths, shore up weakness, take advantage of opportunities and minimize threats? If not, there’s a good chance your employees may not be on the same page and are focused on their own priorities or what they think is the right direction.
The most common reason for not planning is that everyone is just ‘too busy.’ My boss likes to say, “We’re too busy doing important things to do important things.” Strategic planning is a very important thing. Set aside time on your calendar now for a discussion to lay the foundation for your future.
August 5th, 2008 04:06pm
Terri Burdick
I firmly believe that employees come to work each day to do the right thing. They come with a plan to meet the needs of their customers (internal and external) while balancing the needs of their organization. That said, there are some days that miss the mark!
Each of us can offer a story (or 10!) when the service we received or the experience we had fell far short of what we expected. Here’s a sample from my last few days:
- I was informed that a parking pass I needed could only be obtained in person (granted, I had missed the deadline for requesting the pass via mail). After driving one hour to the office as directed, I was informed by the person at the desk that they couldn’t issue the parking pass for the timeframe I needed. Further, they couldn’t locate a supervisor to assist me.
- I visited a retail store with a ‘buy one, get two free’ in-store coupon. At check-out, the store’s register was not programmed to properly discount the free items. Although the cashier tried everything in her power to fix the issue, she couldn’t override what the cash register was doing. I left the store frustrated and without buying anything.
I could go on, but you get the idea. It didn’t matter that each of these places were established, quality institutions or that they had lovely, clean buildings. It didn’t matter that parking was easy. The experiences were terrible because THE EMPLOYEES LACKED THE KNOWLEDGE AND/OR AUTHORITY TO HELP ME!
Did I tell anyone about my experiences? You bet I did and I was not so kind as to omit the name of the service provider as I have been in retelling my tales on-line. It’s unlikely that I will return to the retail store (despite the fact that they have many products I use at a reasonable cost and are conveniently located) and the whole parking pass thing just reinforced my bias regarding corporate bureaucracy.
What’s the lesson here?
- Make sure your employees have the knowledge to meet their customer’s needs or have access to ready resources for getting needed information.
- Make sure your employees are empowered to make sound decisions for customers.
Your customers aren’t interested in what you CAN’T do. They are interested in what CAN be done. In some cases it may not be what the customer originally requested, but an option that may be better than nothing. Teach your employees to problem-solve with clients to move an issue or need forward.
Multiple studies have shown that most customers stop relationships with a company because of a service failure, not a product failure. Be sure that your employees focus on the needs of each customer and consistently create positive customer experiences.
July 31st, 2008 11:19am
Rick Bastian
I am hearing from clients all of the time that people are stressed by the banking mess. Two bank failures last weekend were followed by more announcements of second quarter losses by some regional banks. Confidence in the banking system has been badly shaken. For small businesses the stress is twofold. First, how do you make sure that your deposits are safe, secure, yet accessible for your business needs? Second, how do you make sure that the “credit crunch” we hear so much about doesn’t lead to your bank pulling your line of credit when you need it most? Here are some thoughts on how to become informed, get protected and formalize the availability of credit from your bank.
There has been a lot of interest in FDIC coverage of late, but there are other ways to get your deposits protected.
- FDIC coverage is normally good for up to $100,000 per account holder. Ask your bank how to use multiple accounts names to maximize the FDIC coverage. We have a client who owns a number of LLCs. He is spreading his deposits in $100,000 increments in each LLC to maximize FDIC insurance coverage. Feel free to go to go to www.fdic.gov to learn about deposit insurance on your own.
- Ask your bank if it is a CDARS affiliate. CDARs is a network of around 2000 banks that can provide FDIC coverage for up to $50 million. You deposit your money in one bank which basically swaps it out in less than $100,000 increments with other CDARs affiliates. You earn one rate and get one statement from your bank covering CDs from the other banks. The trade off is that you give up some liquidity for the FDIC insured CD. Visit www.cdars.com for more information.
- You may now sweep excess balances into a money market account. That doesn’t maximize your FDIC protection. Ask your bank instead if they can sweep it into a “repo.” In a “repo” a bank sells you a piece of its investment portfolio making your deposit essentially secured. The arrangement is usually documented with a formal agreement. It is better than CDARs when the liquidity of these funds is important.
- Another way of insuring deposits while maintaining liquidity is to ask your bank to provide a surety bond. The bank pays an insurance company to take the place of the FDIC in guaranteeing your funds above the FDCI limit. The amounts a bank buys usually have to be in increments of $500,000 but it can usually divide the amount into smaller denominations. The insurance company provides you with a certificate of insurance. A troubled bank may have difficulty qualifying for this kind of insurance. The strength of the insurance company is also an important consideration.
- Each of these options involve some level of incremental administrative burden. One of the simplest ways for a small business to protects it deposits from the risk of loss by a sudden bank failure is to preserve the “right of offset.” This option is not widely known or understood, but is a very clear option for businesses whose loan balances always exceed deposit balances for accounts in like name. As an example, if ABC company owes the bank $1 million and has $300,000 on deposit. The bank fails and the ABC company has a $700,000 loan balance as a consequence of the “right of offset” or $800,000 after FDIC coverage is taken into account. We are suggesting to some of our clients and friends that they bulk up deposit levels in entities with outstanding loans instead of running around trying to chop everything into $100,000 slices.
If this has given you a measure of comfort on protecting your bank deposit, now lets throw some ideas on how to preserve your financing options during this “credit crunch.”
- First, regardless of who your bank is, during an economic downturn, credit is a bit tighter and terms a bit tougher. I have seen stories in the national press where some big troubled banks have turned the credit spigot completely off. Don’t bet your company’s future on a banking relationship that may have worked for you in the past.
- A number of fine banks have hit some bumps in the road but will work through the challenges and come out just fine. You, however, have a obligation to know how your bank is doing. For those that don’t publish financial results, go to the FDIC website for the latest financial information including asset quality. Huge losses and a high non-performing loan to capital ratio should be warning signs.
- Look for these additional red flags: bad publicity, director resignations, staff turnover, visible deterioration in staff morale, or dramatic changes in customer service, rules of banking or borrowing.
- Be very proactive and over-communicate with your banker in tough economic times. Tell him or her where you are, why and where you are going. Have projections and assumptions. Ask for formalized written loan commitments to accommodate your future needs. The answer should not take forever. We recently picked up a very large relationship from a bank that had been sitting on a loan request for four months. Ridiculous!
- If you are not getting good vibes with any of the above, you should absolutely change banks. Smaller community banks have typically done better that the big guys. A lot of them are well capitalized and profitable.
- Beware of changing to a bank that is awash in bad real estate loans but bragging about diversification through the expansion of business lending activities. That marriage could be short-term.
- More than ever, these are times when you have a banker who really understands your business and how it is impacted by the economy. So many of the “young pups” in banking today haven’t been through a recession. These are not times for “fair weather bankers.”
July 30th, 2008 08:49am
Terri Burdick
Take a moment and form a picture in your mind of you in retirement. Don’t think too much, just make it a quick thought. What did you see? Were you relaxing on your deck with a cup of coffee, working on that much ignored to-do list, traveling to a long awaited dream destination? The activity is really unimportant, but I’m willing to make one prediction about your picture that I know I will get right. In your vision, you are HEALTHY.
FACT: Unless you have healthy lifestyle habits, this will NOT be the case.
FACT: You CAN improve your lifestyle habits and improve your future health.
FACT: A workplace wellness program can improve the lifestyle habits and productivity of your employees.
FACT: Studies show that for every $1 employers spend on wellness they can expect a $3 return between lower health care costs and improved productivity.
FACT: Adding wellness initiatives to your workplace doesn’t have to be expensive or complicated.
Today I’m going to make a case for wellness in the workplace and my next blog will provide more details about how to create a culture of wellness and how to implement wellness programs.
THE CASE FOR WELLNESS:
1. Healthcare is EXPENSIVE! As a nation in 2005 we spent $2.1 TRILLION on health care. That’s a huge number, so let’s give it some perspective. In order to spend $2.1 trillion each year, we need to spend $5 billion EACH DAY. Here’s the scary part…less than 1% of total health care expenditures are currently targeted for prevention and the US Office of Disease Prevention Health and Promotion’s ENTIRE budget is less than the salary of an NBA player. YIKES!
2. The situation will get worse unless something is done. In his book, The Coming Storm, Lawrence Koltikoff warns, “It’s 2030…you see a country where the collective population is older than that of
Florida today. You see a country where people in wheelchairs outnumber kids in strollers. You see a country with twice as many retirees, but only 18% more workers to support them. You see a country with large impoverished elderly citizens languishing in understaffed, overcrowded, substandard nursing homes…”
This is not a future to look forward to….DOUBLE YIKES!
3. Many current health problems can be prevented. Unhealthy lifestyles lead to chronic disease – smoking, poor nutrition, physical inactivity and alcohol. Chronic disease related to lifestyle account for 70% of the nation’s medical cost. (Source: Wellness Council of
America)
4. Well Designed Health Promotion Interventions Improve Health Status. For example, increased physical activity lowers the risk of ALL the following: heart disease, stroke, diabetes, prevention of weight gain, osteoporosis. I could go on and on…
WHY WELLNESS AT WORK:
- Healthier employees require less medical care.
- Healthier employees are absent less
- Healthier employees are more productive
- Full-time employees spend one-half their waking hours at work. If employers aren’t being part of the solution – they are being part of the problem!
July 28th, 2008 10:13am
Terri Burdick
I had never heard of professor Randy Pausch from
Carnegie
Mellon
University, nor of his ‘Last Lecture’ until the reports of his death last week from pancreatic cancer at the age of 47. I have, however, been moved by his message in the days since his passing.
You can get a feel for his message in today’s Rockford Register Star, Opinion of the Editorial Board, article at http://www.rrstar.com/opinions or you can read the entire transcript of his last lecture at http://download.srv.cs.cmu.edu/~pausch/Randy/pauschlastlecturetranscript.pdf. Pick the latter choice, it will be the best 30 minutes you’ve spent in a long time.
The long and short of his message is to live life fully, realize your dreams and leave an example for the next generation. He tells you at the end of the lecture that the message is really designed for his children (he has three ranging in age from 1 – 5), but there are lessons there that apply not only personally, but to our workplace and the commitments we have to our employees.
Here are a few thoughts that resonate strongly with me:
- “…have something to bring to the table, it will make you more welcome.” Each of us has times when we would like to be part of something bigger than we are today. Figure out what value you can add to the equation and you will be welcomed to try greater things.
- “…experience is what you get when you don’t get what you wanted.” I really love that idea! Don’t be afraid to try something new! Working in a small company is a little like working in a learning laboratory. We can try new things and reflect fairly quickly on the impact of the decision to our employees and clients. If we don’t get what we’d hoped, we can always tweak the idea along the way or discontinue it all together. Being honest with ourselves, our employees and our clients about what we’re trying to accomplish and communicating how things are going along with way make for an environment where change is embraced.
- His message is all integrity and the value of people and the value of giving back. Are you honoring these ideals…I mean REALLY honoring them…in the way you do business? Do you spend enough time with your client to understand their needs and then give them what they need vs. providing them all you can get them to buy? Do you work hard to make sure your clients and employees understand what they are doing or buying or do you answer just the question that was asked. At the end of the day, both of these examples are really about the integrity of your business and a reflection on you. Insuring every action has a solid base of integrity does a lot for employee retention and for securing long term client relationships.
You never know where you will learn business lessons. Randy Pausch provides us with great ones. His family and friends were blessed with the daily gift of his life. In his death we have all been included in those blessings.
July 24th, 2008 10:20am
Terri Burdick
The biggest complaint I get from employees about performance reviews is that they are boring and their managers just read a form to them. What a shame! The performance evaluation discussion is a terrific time for two-way communication and the ‘giver’ and ‘receiver’ each have responsibilities. Following are some ‘Dos and Don’ts’ for giving and receiving performance evaluations. Make sure both parties understand the expectations and you will find much more value in the discussion.
Essential Do’s and Don’ts of Giving a Performance Appraisal
§ Do your homework (be prepared!)§ Do schedule enough time so you don’t have to rush§ Do meet in a confidential, safe place§ Do break the ice with small talk§ Do start with the positives§ Do remember your intention is to motivate§ Do make eye contact§ Do encourage participation§ Do listen – actively§ Do be honest, encouraging and genuine§ Do use behavioral examples§ Do be open to new information§ Do agree upon goals for the future§ Don’t be late for the performance appraisal meeting§ Don’t take phone calls during the performance appraisal meeting§ Don’t be disorganized or distracted§ Don’t do all the talking or answer your own questions§ Don’t interrupt§ Don’t be too timid to speak the truth§ Don’t overly focus on the negatives
Essential Do’s and Don’ts of Receiving a Performance Appraisal
§ Do your homework (be prepared - review your past performance)§ Do be on time for your appointment§ Do be sincere, honest, and professional§ Do use behavioral examples to describe specifics§ Do participate – engage in the conversation§ Do make eye contact§ Do listen – actively§ Do take the time you need to formulate what you are going to say§ Do participate in identifying goals for the future§ Do speak in a well-modulated tone of voice (don’t whisper, don’t yell)§ Do add your own comments in writing if you have the need§ Don’t come in with a chip on your shoulder§ Don’t stare – and don’t focus on the ground or out the window§ Don’t be negative or aggressive§ Don’t let your emotions get the best of you§ Don’t refuse to speak§ Don’t be passive aggressive§ Don’t use sarcasm
July 21st, 2008 03:08pm
Terri Burdick
It’s become commonplace to read and hear media stories about people who are faced with terrific financial hardship. And while our communities have never been immune to such stories, many times the faces and places associated with these stories are far away. Today, however, the stories are much closer to home and involve our friends, our families, our co-workers and even ourselves.
In addition to the reality of financial hardship, there are those who prey on this misfortune with promises of ‘debt elimination,’ ‘transforming debt to wealth’ and other schemes that result in additional ruin. Fortunately, our communities have resources to help people understand their situation, evaluate options and work out a solution. As an employer, you may want to have such a referral source for employees who are struggling. If no one has come to you in need yet, sadly I believe it’s only a matter of time.
The goal of credit counseling is to not only design a plan to repay current financial obligations, but to understand what spending changes are needed to keep the situation from repeating itself. Additionally, there is a goal to repair and improve the participant’s credit score.
Credit Counseling can help with:
- Debt Management Planning – Evaluation of the existing options for dealing with current financial issues.
- Bankruptcy Filing Support – Assistance in determining if bankruptcy is the appropriate solution and guidance through the process
- Credit Report Review – A review of the impact of historical financial decisions on the person’s credit score and what can be done to improve the score over time.
- Basic Budgeting – Development of skills to prevent future financial problems
- Foreclosure Prevention – The process of foreclosure and what can be done to stay in your home.
There are quality not-for-profit credit counseling resources in our communities that charge minimally for their services. Such providers in the Stateline Area include:
- Winnebago/Boone Counties: Heidi Berardi, Family Credit Management,
4306 Charles Street, Rockford, IL,
61108
, 800-994-3328.
-
Rock
County: Consumer Credit Counseling Service,
423 Bluff Street, Beloit, WI
53511
, 608-365-1244
Providing a resource for an employee who is struggling is a terrific step to securing valuable talent.
July 15th, 2008 10:09am
Rick Bastian
A old Swedish friend of mine has been chastising me for being negative about the economy. He puts me in the same bucket with the mainstream press which loves to glorify bad news. He says that, although unemployment has crept above six percent, it still means 94 out of 100 people have jobs. And while sympathizing with those who have become victims of the sub-prime mortgage meltdown, he points out that 94 out of 100 homes are not in foreclosure. With another wiggle of his pointing finger, he argues that we are in a strong export boom which continues to give the economy strength. This economic downturn is no different than any other even though people may argue that this one is “different.”
I beg to differ.
We are in the worst financial crisis since the Great Depression. Over the weekend two critical developments occurred. First, IndyMac Bank, a $31 billion dollar institution, was seized by bank regulators. It is the second largest bank failure in US history. Second, the government agreed to bail out Fannie Mae and Freddie Mac, the two largest mortgage lenders in the country. This week a number of banking and investment companies will be announcing second quarter earnings. It is expected that additional losses in the billions will be added to the hundreds of billions that have already crippled the capital of so many large institutions. The Feds have stepped in and helped avoid two major meltdowns. That said, it is clear to me that no one has the slightest notion of the magnitude of the turmoil in the financial markets that is taking place now.
Don’t expect the real estate market to recover any time soon. It simply can’t recover until the financial markets recover. Mortgages are still hard to come by and the rules of engagement by Freddie and Fannie are changing on almost a daily basis. The market for mortgage backed securities has virtually dried up. There is probably another wave of write-downs of development loans by the banks that over-invested in this segment.
The US automobile industry is fighting for its survival. There is too much manufacturing capacity serving too many dealerships. Inventories are bloated with trucks and SUVs that nobody wants. The Big Three are aggressively trying to reinvent themselves by reducing capacity and costs. I frankly don’t know if they have the time or the resources to pull it off. In the next twelve months, scores of new and used car dealerships will be forced to close and one of the Big Three could file bankruptcy.
The airline industry is suffering the same plight. Too many planes. Too many routes. Costs out of control. The whole transportation industry has been turned upside-down. Trucks sit idle and truckers are unable to make ends meet.
Inflation has stripped people of disposable income. We can feel the inflation pain at the pump and at the check out line at the grocery store. Inflation isn’t going away anytime soon. It has become a global phenomenon. India is experiencing its worst inflation in over a dozen years. It is not alone. Central banks including our Federal Reserve will be forced to respond with interest rate hikes. Rising interest rates would not be a good sign for the real estate market.
I paint a bleak picture because, for the time being, that is all I see unless you are engaged in export related lines of business. How should you adjust your business to protect yourself?
- First, operate as if you are in “survival mode.” Aggressively cut costs and overhead.
- Don’t be a martyr to inflation. Use material and transportation surcharges and price increases to cover your costs.
- Get and stay liquid.
- Aggressively manage your collection of accounts receivable.
- Increase your available line of credit.
- Make sure your bank isn’t so troubled that it can’t support you. I have heard some pretty ugly stories of banks backing out of commitments.
July 14th, 2008 03:13pm
Terri Burdick
In a previous blog, I discussed that one of the best ways to control employee expenses is to make sure every employee on your payroll is pulling their own weight regarding performance. A terrific tool for documenting employee value is the employee performance review. I have worked with dozens of managers during my career, but I can count on one hand (and wouldn’t need all the fingers!) the number of managers who really look forward to writing an employee performance review. Why is that? Performance reviews are supposed to be a re-cap of the year a manager and employee have worked together. It’s documentation of what went well, what didn’t and the commitments you each have made for continuous improvement in the coming year. Isn’t that great stuff? Wouldn’t you want to spend time developing such a performance map? Nope, not really…. Most managers find performance evaluation a waste of time. I promise you they can be meaningful and valuable if you simply reframe the experience.
This week I’m going to blog about the importance of performance evaluation and how to make it meaningful to all parties involved.
A critical point to remember: YOU GET WHAT YOU INCENT. What do I mean by that? An employee will repeat behaviors that are rewarded – and the ‘reward’ doesn’t have to be monetary. I believe that employees come to work each day to do a good job. (I’m sure you all have examples to the contrary, but for the most part, people don’t come to work to mess up and get in trouble.) They will repeat those behaviors that you reward through word or action. A comment as simple as, “great job getting your production quota out,” or ‘thanks for helping that angry customer,’ will get a repeat performance of the behaviors that created those results. There are lots of free and easy ways to provide incentives:
- Write a thank you note to an employee. It may seem silly in some environments, but I don’t know too many employees who throw away a written thank you. I have employees that keep them for years!
- Put a ‘sticky note’ of thanks on their computer screen or machine.
- Treat an employee to a favorite snack on you (like their favorite candy bar or pack of gum).
- Publicly recognize a contribution at a department or employee meeting.
- Note specific positive behaviors in the employee performance review.
The performance appraisal is the perfect spot to reinforce those behaviors you want repeated and comment on those behaviors that aren’t working. I’m willing to bet you that you will get more of the behavior you incent over time.
Later this week we’ll look at how to prepare to write a performance review and how to conduct one successfully. Make it a great week!
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