Posts Tagged ‘Operations’
Word Of Mouth Marketing-What?
Obtaining and retaining loyal customers is about developing relationships. Companies spend $millions annually on advertising, hoping to influence the buying habits of their prospective customers.
Advertising does not build relationships, it only hopes to influence the moment and convert those few seconds into a buying decision for a product. Word of Mouth (WOM) is the best and most reliable method of promoting a product.
A Testimonial from one person to another brings with it a level of positive bias and a tested experience. These endorsements or referrals are provided from one trusted person or company to another. It is the trusted relationship that makes the recommendation more credible.
Word of Mouth (WOM) relationship building is growing rapidly due to wider use of social media applications (e.g. blogs, facebook, myspace, twitter). How can your company use a WOM approach to expand your loyal customer base? I am working with an organization that has some new and innovative ways to use this technology to help businesses grow – I will be writing more about this approach next month. To provide a little more introduction and background to WOM, I am offering you a FREE look at an e-book that is the first of a series on how to use digital applications to expand your presence in your market.
Click here for your FREE eBook access: http://wom10.com/Pages/business-tools-book
Grow Your Company with PR
In 2005 I consulted for a start-up that was owned by an entrepreneur who had a public relations back ground. I learned the value of good Public Relations (PR) and since then I have always consider it the next best form of advertising. I believe the best form of advertising is word of mouth.
PR if done correctly can be a game changer for an organization. PR can also backfire if not taken seriously and can have a negative impact on your image with prospects, customers and your industry. I recently read a blog post on bNet that outlined the 10 Breakthrough PR Techniques from a Master. The interview with Lou Hoffman, President and CEO of Hoffman Agency, provides an excellent set of techniques and examples of how to use PR to maximize its effectiveness.
Click here for the interview: http://blogs.bnet.com/ceo/?p=3620&tag=content;col2
What are your experiences, positive or negative, with PR?
Are your new products failing and you don’t know why?
We conducted a survey of several Puget Sound companies asking them which area of their business caused them the greatest concern. The issue rated the highest was the failure to introduce successful new products. When asking these companies to explain why they see this issue as their greatest challenge, the responses were as diverse as the companies themselves. Most attributed a portion of the problem to the recession, yet many couldn’t help noticing that other companies in their industry were introducing new products with some degree of success. If a company is experiencing this issue, there are probably multiple reasons why.
Here are five common reasons why new products fail:
1. Lack of market knowledge- Whether a company is new or established in a market, a common mistake is underestimating the impact of market change. Markets change for a variety of reasons, and if a company does not stay connected with their market, they may begin operating under obsolete assumptions. This leads to poor performance and often enterprise failure. A few examples of market change are as follows:
- Lower customer demand- Customers are not interested in the product or service. Three levels of consumer demand are based on the customer’s needs, wants and desires. Depending on how the customer views the importance of the product will determine if they are going to change their buying pattern. Companies that do not know how their customers view the company’s product will probably not be conscious of the reasons for the customer demand drop-off.Recessionary times tend to impact those products that customers view as wants or desires. These are usually products that entertain or follow trends, and are purchased with discretionary income (electronics, trend clothing, high-end cars, etc.). Needs are those products that are more commodity items and are thought to be indispensible (food and personal items, telephone service, public transportation, etc.).
- A change in customer preference- Customers are migrating to other products. Customer buying decisions can change for several reasons. These reasons can be due to product differences, technology developments, advertising and brand influences, regulatory requirements, and perceived value increases. Knowledge of current and upcoming market changes is critical to any company’s ability to respond and sustain operations.
- A change in sales and distribution methods-Customers want to purchase their products in a different way. The Internet has changed the buying habits of much of the world’s economy. How has it impacted your products in your market? Brick-n-mortar stores are still strong points-of-sale for products if they provide a positive buying experience. Most business-to-business and retail organizations have added Internet stores to sell their products in addition to their brick-n-mortar stores. Wholesalers and distributors are expanding and contracting in many markets, depending on the product type. If the company’s strategy is not to have a large sales force to distribute your product, then the Internet, wholesalers and distributors may be helpful. However, the wholesale/distribution route may not be the best approach if your company wants strict control over the sales and service process, and a strong relationship with your end customers.It all comes down to how the customer wants to buy your product.
2. Lack of product differentiation-The customer cannot see the value of the product being introduced. This lack of differentiation can be between your competitor’s and/or your own product. If you’re releasing a new version of an existing product, how are the two products different? Why would a customer purchase a new version, if the older product still provides value? How different is your new product when compared to the competitor’s? Differences that are valued by the customer will influence their buying decision. Look at your product’s quality and performance from the customer’s perspective.
- Quality-How does the product hold up in comparison to previous products or the competition? Consider how durable, flexible and adaptable the product or service appears to your customer base.
- Performance- How does the product perform? Take into consideration speed, usability, features, functions and how well it does what it is supposed to do.
3. Lack of brand recognition-The customer does not identify the new product with your company or prior products. Companies that are not concerned about creating brand awareness are making a critical error. It is important to balance brand recognition with the cost of creating the brand. Brands evolve over time as the customer’s perceived value from the purchase of products or company services increases. The objective is to have customers identify the purchase of your product and/or company with their most positive buying experiences just by seeing the brand (name, logo, motto, song, etc.).
4. Lack of customer support-The customer cannot get the level of support they want. A company that is only focused on the sales side of their product or service may fail to build strong customer relationships resulting in a loss of customer loyalty. Without loyalty, there is nothing to keep the customer from switching to your competition without notice. A company that is focused on developing a long term sustainable operation knows that it is imperative to develop strong relationships with their customers. This is accomplished by offering effective sales and customer support. Except for on-line Internet sales, the front line customer care effort should come from the sales force, even after the sale is closed. Customer care organizations, departments and services can help satisfy the customers when there are issues that must be resolved, but the sales person who closed the sale should still be involved. We all know it costs more to get a new customer than it does to save one. New products that are launched without a customer support effort in place are destined for problems.
5. Lack of product development process- Many new products never get to market because the company does not have a product development process. Product development should be viewed as a process, and not an ad hoc event. The process starts with an idea. The more innovative the organization the more ideas. The idea gets tested as to viability in the market. Market viability means that the company knows their customers and their buying habits. The idea gets a development assessment. The company must then determine how practical it is to create the product out of the idea. The idea then gets a value test (i.e. what is the value to the company (revenues/profits, market share, etc.) and to the customer (performance, quality, price, availability, etc.). If the idea passes all tests and assessments, then a project is chartered, prioritized and funded. A company without a process for product development is taking a significant risk of having the new product effort terminated before reaching the market.
The 12 Steps of effective businesspeople
- Do your work before you play.
- Always do more than others expect of you.
- Never quit trying to become better at something.
- Be willing to do the things you don’t like to do in order to achieve what you want.
- Be willing to accept failure and disappointment as a part of learning.
- Recognize that there is no easy or quick way to gain experience.
- Take time to appreciate the things you usually take for granted.
- Be honest in everything you do and honor your word when you make a promise to do something, EVEN if it is inconvenient.
- Respect the feelings and property of others.
- Have a desire and take action to help others.
- Never stop learning.
- Recognize that situations in life are never as bad or as good as they may seem and that you are never alone.
Entrepreneur or “PermopreneurTM”? Which are you?
Entrepreneurs are heralded by the business community as key contributors to the success of the US Economy; probably one of the most resilient economies in the world (even in a recession). New products, technologies and business ideas are the objectives of millions of aspiring Entrepreneurs throughout the world. Yet, there is an 80% failure rate in the first five years of a new business’s life in the United States. Much has been written about the reasons for such a high failure rate. Let’s consider just one factor – maybe they are not Entrepreneurs at all.
My definition of an Entrepreneur is an individual or group of individuals that take an idea, and develop that idea and manage their business to the point where it becomes sustainable. A sustainable business is an enterprise that can generate cash flow levels that support itself on a going-forward basis. It is no longer depending on investor funding or credit to support its operations. Investors that have believed in an idea, invested in an “Entrepreneur” and eventually saw their investment disappear due to company failure, know exactly what sustainability or the lack of it means to them. More than likely that Entrepreneur may have not been an Entrepreneur at all, they may have been a PermopreneurTM.
What is a “PermopreneurTM”? They are those individuals or groups that take an idea and create a business based on that idea, but are unable to generate enough cash flow to sustain their operation on its own. There are two types of PermopreneursTM; The first type are those that are blessed with the gift of turning ideas into business opportunities, and are very secure in their abilities to know when to turn the business over to professional leaders and operators. They usually employ professional operators to help raise additional funding and direct the company to sustainability. The second type of PermopreneurTM is either intentionally or unintentionally headed toward failure. They are very skilled at convincing investors to finance their idea or technology, skilled employees to join their company, and they believe they can operate their way to sustainability. Unfortunately, they don’t have the leadership ability and operating skills to keep the company from eventual failure. The end result is another failed business with a bewildered promopreneur wondering what happened with a following number of devastated investors and employees. A more sinister version of the PermopreneurTM has no intention of taking the company to sustainability. Their “rush” comes from raising money to support a luxury life-style while they look for the next idea, and the cycle is repeated. They have no intention of taking the company to cash flow sustainability. They know there are plenty of investors that fail to do a proper job of due diligence and are greedy enough to feed the PermopreneurTM ego with lots of opportunities.
I have had experience with Entrepreneurism for many years, having worked with Entrepreneurs and I have held the title myself. I have tremendous respect for those Entrepreneurs and PermopreneursTM that have successful track records for creating sustainable businesses. If you consider yourself an Entrepreneur, it would be worth your time to do a self-evaluation to honestly determine if you have the skills (not just the desire) to direct your business idea all the way to the goal line -cash flow sustainability. If you are not sure, then look for the right time to hand off the company to a skilled leader and operator and consider yourself a successful PermopreneurTM.
Marketing and Sales Differences
Marketing and sales are often used in the same sentence as though they were synonymous. This happens frequently enough that many organizations structure these functions into the same department and cost centers. Being combined in this manner is not a major issue for most organizations, as long as they understand the true functional differences between the two disciplines. Make no mistake; there is a significant difference between marketing and sales.
In simple terms, marketing is described as the process of stimulating demand for a product or service. A sale is the process of closing a sale, and I would add an important factor that is often overlooked as a part of the sales process. That is the collection of sales proceeds that are booked as revenues for the organization. However, if the organization is non-profit, then sales is the process of closing on the contribution AND collecting the funds. In many organizations, once the salesperson or team arrives back at the office with the signed contract, they consider that sale complete; and, it is then up to accounting to collect the cash from the customer or contributor.
Most sales leadership will say that sales should be selling, not collecting; and, they are correct in most cases. Then again, if the customer or contributor does not follow through by paying the funds as agreed to in the transaction, who then has the best relationship with the customer or contributor? Accounting? Doubtful. No, it is the sales person who closed the transaction initially. They should assist in the collections process if there is a need; after all, the life blood of any organization is cash flow, not signed contracts or donation pledges.
Marketing consists of a number of activities that are required to stimulate demand for a product or service. Those are covered in detail under the marketing process titled The Four Ps of Marketing by Jerome McCarthy.
Going one step further, Arago Partners LLC has published an article which expands the description of the activities of marketing to The Five Ps of Marketing ( http://www.aragopartnersllc.com/documents/MarketingandSalesDifferencesPDF.pdf) . The activities for stimulating demand for a product are the structural aspects of the product (design, feature, function, quality, etc.), the price, the placement, the promotion, and the profitability. Each of these five Ps of marketing is an activity that must be developed, tested and launched in order for the sales process to most effective. Of course, the sales process can proceed while all activities are being completed; but, they should all be in place to enhance the greatest level of effectiveness for the sales process.
As stated earlier, the sales process has the overall objective of closing the sale. Closing the sale should mean the customer signs the contract or pledge and commits to the payment of funds to consummate the transaction under the terms of the contract or pledge. So far, the emphasis of this article is to point to the differences between Sales and Marketing, and that primarily means the “closing of the sale”. The close is the final step in the sales process, so let’s discuss the initial steps that lead up to the close.
The sales process is made up of seven stages:
- Leads
- Qualifying the lead
- Contact
- Presentation
- Handling objections
- Closing the sale
- Post-sale service
Leads- Finding prospective sales clients or customers can represent up to as much as 60% of a sales person’s time, depending on the market and types of products or services being offered. Since Marketing has the objective of stimulating demand, if there is an effective marketing program in place, the availability of sales prospects should be adequate. There are several proven techniques for finding prospects: referrals, networking, and lists.
Referrals are the best form of prospect gathering. They are often from other satisfied customers and come with an endorsement from a satisfied customer, a certain amount of product or service knowledge and a certain level of commitment toward the product or service. Always make sure to show gratitude to the appropriate customer for the referral.
Networking requires the effort to reach out to prospects, to introduce them to the products or services and to let them know where to learn more about the products or services. Networking is most effective within associations, social networking groups, trade shows, publications, and events. Cold calling is usually the least effective and least desirable method; but, depending on the market and product or service, it may be the method of choice. One-on-one contact produces the most effective results but comes at the highest cost. Relationship building on a personal basis will produce the greatest results over time, if the sales process is considered a marathon and not a sprint.
Lists can be purchased or developed; but, in both cases, they will contain a number of prospects who meet a profile that should be conducive to a sale of the product or service. Lists can be developed as a result of doing a mailing, telemarketing, surveys, contests, a give-away, and follow-up from networking at large events. There are several listing organizations that will sell a directory or list of names and contact information based on a desired profile.
A method for determining the effectiveness of a lead generation program is to compare its results to the Rule of 45, which simply states that 45% of all leads should be converted into a sale.
Qualifying the lead- Converting a lead into a sale implies that the lead needs to be evaluated to see if they truly are a candidate for the product or service, which, in turn, increases the probability of closing the sale. This evaluation process requires a certain amount of information about the prospect to determine if there would be a demand for the product or service.
Are they in an industry that would have a need for the product or service? Have they shown interest in the product or service in the past, either directly or indirectly? Would their operation need the product or service? Would they have the financial strength to purchase the product or service? Are they similar to other existing or past customers? All these questions are ways to qualify the prospect before taking the next step.
Contact- Either prospects will initiate contact or the selling organization will initiate contact with the prospect. In either case, it is important to be prepared for this first contact with a plan as to what is to be accomplished. The goal is to move the prospect closer to a decision to purchase the product or service. An effective sales contact establishes a level of interest in the product or service and gains a commitment for a second contact. This can be either a face-to-face appointment or a second call with the potential to send out additional information about the product or service to be used during the second meeting. As long as the prospect’s final answer is not an unequivocal NO, then the contact was a success and there is still an opportunity to make the sale.
Presentation- This stage provides the opportunity to present the pertinent information about the product or service that is thought to be of most value to the prospect. All the reasons why the prospect should want to purchase the product or service should be explored during the presentation. Highlight the strongest benefits of the product or service as well as the potential cost savings or ability to generate greater sales by the prospect.
Show how the prospect can better compete in its marketplace due to the benefits of the product or service. If the presentation is a telephone call, try to send materials in advance of the call so that the prospect can follow along with your presentation while on the phone. If possible, tailor the presentation to the culture of the prospect. If they have a casual culture, then do not prepare a long, formal presentation. Just use talking points and brochures/catalogs that can be referenced by the talking points. Make sure to rehearse the presentation, try to anticipate any objections, and be prepared to convert the objections into positives. If the presentation is in person, arrive 10-15 minutes early, dress professionally, know who you are meeting with as well as their direct contact number, and provide handouts of the presentation materials. If applicable, bring a sample product, demonstrate it, and be prepared to make a follow-up appointment before leaving.
Handling objections-There will be objections during the sales presentation. The handling of these objections in a positive manner can still lead to the sale. It is important to address each objection head-on. Objections often point to a lack of understanding by the prospect, and their objection is a way to show they need more information about your product or service. A few proven techniques for handling objections are as follows:
Ask the prospect to explain their reasons for not wanting to purchase the product; take notes in order to be prepared to address these issues.
If the prospect is incorrect, carefully show the facts about the product that would refute the prospect’s error. Do not say “you’re wrong”, as that will put the prospect on the defensive and bring the conversation to a quick negative close.
Paraphrase the prospect’s objection to make sure you understand their position, soliciting a confirmation from the prospect that you have the correct understanding of their objection.
Closing the sale-This stage separates marketing from sales. Closing a sale requires a prospect to commit to purchase the product by signing a contract, issuing a purchase order and or making a down payment. Verbal commitments should not be considered closed sales, no matter how strong the relationship with the prospect. Sales should be considered closed once the revenues are booked on the selling firm’s accounting system and the prospect begins making payment, either partial or in full, for the product or service. There will be signs during the sales process that indicate the prospect’s readiness to purchase the product. Here are a few to look for:
- They ask about specific price, terms, warranties, availability.
- They ask about options and features, especially if customized to their application.
- They request a sample or trial of product or service. Make this a condition of the sale and make it available once the sale is closed.
- They discuss customer support.
- They ask for references from satisfied customers.
To help the prospect come to the decision to purchase, try the following:
- Incentives can help, whether in price, feature, service or delivery.
- Trials of product or service as a condition of a sale.
- Walk through all the positive reasons the prospect has already mentioned that the product or service is good for their situation. Make sure to keep a list during the sales presentation, so it can be used at this stage.
- Ask them for the sale. “We want your business. You understand the benefits of our product or service to your organization, so let’s get your order entered.”
- Fight through the objections until either the prospect declares unequivocally that they do not want the product or they move forward and enter an order.
Post-sale service-The only way to insure future sales to an existing customer base is to make sure they receive the services that they expect. Long-term relationships built upon positive service results increase the potential for additional sales from existing and referred customers. Referral prospects provide a much lower sales cost, because they come already interested in your product or service as a result of the benefits they have seen from the organization referring them. That existing customer has done most of the “heavy lifting” of the sales process and now the closing process is all that is left.
Post-sale service is most often neglected by organizations and is one of the primary causes for unsatisfied customers and loss of future business. Organizations invest heavily in marketing and public relations to promote their product and organizational image, all for the purpose to increase sales or donations. Yet, if the post-sales services are not maintained in a positive fashion, then those investments are not likely to produce the desired results.
Marketing and Sales are very much aligned in the purpose of increasing revenues for most organizations, but they clearly are different functions, requiring different skill sets and strategies. Another way to look at it is marketing hooks prospects and sales lands customers.
“You Get What You Pay For”-Rewarding Incorrectly Will Hurt You!
Most organizations will say they reward “results”, yet that is not necessarily true. Organizations establish a formal or informal process to incentivize their workforce to achieve a desired level of performance. Depending on the size and culture of the enterprise, this compensation plan may include all employees, just management or something in between. All such plans establish some target or metric that the company measures in order to determine if the plan’s thresholds are achieved or not. The establishment of these metrics is where the error usually occurs, which truly hurts the overall performance of the company. The metrics will fall into one of three categories; Intentions, Actions and Results.
Intentions-These are deliverables that are planned to be delivered in the future. This is the weakest of all metrics. It is difficult to see how an organization could build a compensation plan around rewarding for nothing more than “hope”. Yet, many corporations reward senior management for just that, “they had great intentions”. We even re-elect politicians based on their “intentions”, and we seem to accept that metric over and over again. I am not sure why? If you want to grow a culture of discontent within your company, reward your management for intentions.
Actions-These are deliverables that are focused on activity. An associate of mine uses the tag line “doing=1/2 done”. One of my favorite sayings is “don’t confuse efforts with results”. Rewarding actions or effort is a way to move initiatives forward, but not a way to get them done. I can see a compensation program that would breakdown a larger project into steps or stages, and reward based on the number of steps completed, but there are very few other examples to support rewarding actions. Rewarding actions will not hold the workforce accountable for the end result, yet there are a large number of organizations that do just that; reward the starting of something, but not the completion of it. Unfortunately, it appears many governments (local, State and Federal) seem to have adopted this method for rewarding their agency officials.
Results-Results are definite deliverables. These are usually dates, dollars, ratios, numbers or other such “objective” measurements. They are tangible events that can be tracked and measured. Compensating your management and workforce based on results will provide a greater level of accountability to your company. Without accountability, the enterprise will aimlessly move forward in a manner much like a sailing ship without a rudder.
Shifting From Accountability to Entitlement-Whose fault is it?
I recently read an article about the shift within corporate America from a workforce that expects to be held accountable, to a workforce that looks for entitlement. Why should we even be concerned with this shift? We should be concerned since a growing level of entitlement within our population is having an impact on the level of productivity found in the United States workforce. In my opinion, there are several reasons for this shift. A few key reasons for the shift to an entitlement attitude are Diluted Leadership, Unionism, Executive Compensation Levels and Government Growth. Let’s explore how these factors are contributing to this severe problem for the corporate America:
Diluted Leadership-Unfortunately I’ve noticed a decline in the level of “Leadership” in the US over the past few decades. Too often, C-Level executives are more concerned about their own careers and compensation than the overall performance of their corporation. Political Correctness continues to be a filter used before decisions are made and actions taken. These diluted leaders are not leading. You don’t find them rolling up their sleeves and taking a position in front of their company, saying “follow me”. No, they are behind closed doors, sending out others to experiment with their plans, and if successful, then they surface to gather the spotlight. I like to call these diluted leaders “empty suits”, and there are many major fortune 1000 companies that have employed these empty suites. True leaders set attainable deliverables and hold everyone accountable to the process of reaching those deliverables, even themselves. They are not afraid of holding themselves and their executive team to the same levels of accountability as they do the rest of the workforce.
Unionism- Although this may not be popular with unions and some union members, I believe that most unions have outlived their original purpose and are not providing constructive benefits to their members. There are certain skilled trade unions that maintain standards and require continuing education to upgrade the skill level of their members, but a vast majority of unions go far beyond that objective. For example, anytime a union recommends a strike to its membership, and goes as far as to whip them into a lather to carry out a strike, I believe it has gone beyond its usefulness to its members, the companies employing their members and the economy. My experience with unions over the years has convinced me that no one wins when a workforce goes on strike. The enterprise loses momentum and both the company and the union members are often unable to recover from the financial losses they incurred, possibly for several years.
Unions can promote an unhealthy level of entitlement within their membership. Ironically, if there was true corporate leadership (not diluted leadership) within more companies, unions would be less popular.
Executive Compensation- Nothing leads to the heightened level of entitlement thinking in a company more than an unreasonable level of executive compensation. A few research studies that I have read state that over 75% of the fortune 500 executives receive over 400x more than the compensation of the average American worker. European and Japanese executives have been reported to receive approximately 130x and 40x their respective average workforce compensation levels. When a workforce sees under-performing executives receive bonuses or exit packages in the $millions, it is difficult for the non-executive workforce to be understanding when the company then claims that they do not have the finances to compensate the average workforce more fairly. The crux of it is that although the general workforce may actually be compensated fairly, because the executive levels were compensated so unreasonably high, a sense of entitlement and discontent grows within all levels of the company.
Government Growth-Governments at all levels, Municipal, State and Federal are growing. One study recently reported that approximately 25% of the total US workforce is employed by government or governmental support organizations in one way or another. Despite good intentions, governmental organizations have never been shining examples of efficiency and effectiveness. A growing number of workers are searching out government positions because the job security and benefits are generally higher than the private sector, often with fewer required work hours-further fueling the entitlement attitude. Less accountability, union protection, lower levels of accountability, political filters applied to performance and a “don’t make waves and you’re safe” culture is a toxic breeding ground for entitlement attitudes.
Personal comments: My fear is that we are slowly following in the footsteps of the European Union. In the book Mind Set! (John Naisbitt), he states that the European Union leaders commited themselves to creating “the most competitive and dynamic knowledge-based economy in the world by 2010″. What have they accomplished since that commitment; Higher taxes and bigger governments, less innovation, slower productivity growth, restrictive labor laws and declining export market share and rising protectionism. Naisbitt further states “Europe is increasingly losing ground in trying to become the world’s economic driver, because it dearly embraces what one of its famous sons, Sigmund Freud, wrote: “It is easier to suffer than to act.” The EU countries all have a strong culture of entitlement which is part of the reason for their anticipated shortfall for 2010.
Seven Ways a CEO Can Hurt Your Organization
There are organizational leaders that are what I call “empty suits”. They look the part, they sound like they know what they are doing, they have impressive resumes, and yet their track records for organizational results are mediocre at best. Years ago, there was an article (author unknown) that outlined the characteristics of Chief Executive Officers who were unable to help their companies reach set objectives in spite of the positive accolades for their hiring. The article was written to open the eyes of Boards of Directors, who are responsible for hiring and managing CEOs. More recently, much has been written about the less than stellar performance of many CEO’s and the devastating impacts on their companies. I have updated the original article by adding certain characteristics that I have experienced which further defines the seven points. The presence of any one of these seven points should be enough to cause concern to the Board, and any two or more should be enough to cause a Board to take corrective action. I offer up the “Seven ways a CEO can hurt your organization”.
- Poor Leadership
- Lacks the confidence of key personnel
- Hires/retains weak people in key positions or fails to fill key roles
- Fails to grow/retain successor(s)
- Focuses on their personal benefits, not those of the organization
- Poor Vision
- Lacks clear understanding of where business is going
- Lacks focus on organization and priorities
- Is unable to strike key partnership relationships
- Poor Results
- Has major and sustained poor financial performance or missed targets
- Shows major loss of market share or competitive position
- Is unable to forecast timing/nature of recovery events
- Is more concerned with being “politically correct” than attaining measurable results
- Poor Understanding of Business
- Misses key industry trends and changes
- Lacks understanding of fundamental profitability factors
- Cannot crisply define what it takes to win
- Poor Work Habits
- Does not put heart and soul into business
- Sets bad example/role model for others
- Is not viewed in industry as a key player
- Hoards information to increase power base
- Poor Management Style
- Uses the “demand and control” management style
- Allows top management infighting, not working as a team
- Demonstrates unpredictable decision processes, leaving organization too scared to act
- Starves key programs but spares sacred cows
- Poor Board Candor/Communication
- Controls flow of information/agenda, preventing focus on or sufficient time for critical issues
- Does not allow ready access to VPs and other key individuals
- Keeps favorite non-strategic programs or perquisites out of board review and approval process
- Loads the Board with special interest persons/cronies
Full Service Professional Organization Failures: Why?
Full Service Professional Organization Failures: Why?
Professional organizations spend a great deal of time and financial resources advertising that they are full service; yet, I continue to find customers that are very dissatisfied with the services they receive. Relying on good faith and advertising claims, when selecting a full service Professional Service organization to support your needs, is not always enough to ensure satisfactory results. Here are a few thoughts to keep in mind.
The Deception
The deception, intentional or not, is that professional organizations advertise and represent themselves as being “full service” when they are not; at least not to the degree that the client expects. Examples of professional organizations that represent themselves as being “full service” are those entities that provide legal, accounting, investment, banking, insurance, engineering, and/or a variety of other consulting services. In most cases, these service providers are extremely professional, highly skilled and ethical. The client gets short-changed, however, when the service they need is a subordinate skill within the full service provider. The client receives results, but not to the level they expected based on the description that the “full service” provider promised. Why is this happening?
Hasty Diversification
Service Providers need cash flow to operate like any other business. Diversification is a way, if done correctly, that they can expand their revenue base. Those Service Providers that hold true to their core skill-set usually maintain exceptional customer loyalty. Those who diversify too quickly, into sectors they are not highly experienced in, run the risk of upsetting customers, losing business and ultimately suffering revenue losses.
When a Service Provider decides to diversify, it is important that they seriously consider and evaluate the risks associated with moving away from their core skill-set and operating culture. Often, when a firm diversifies, they choose not to make the financial commitments that are necessary in order to go first class. They instead put their “service toe” in the water to test the “revenue” temperature, before making a true commitment (i.e. allocating finances for research, training of existing employees and/or hiring experts) to the expansion. In the meantime, they advertise and prematurely represent themselves as “full service”.
Unfortunately, this is a common scene for many struggling companies. There are accounting firms that offer bookkeeping, tax, insurance, investment and retirement planning services. There are banks that offer banking, planning, investment, and retirement products. There are legal organizations that offer a wide array of legal services (personal, corporate, wills/trusts, real estate, etc.) and business development services. There are sales/marketing firms that offer marketing, web development, social media advertising, branding, graphics, and customer care support. Each of these companies may spread themselves too thin with hasty diversification. They all have a core skill set and operating culture that made them very proficient in a particular area, but not in all. So what to do?
Know that “Full” Service may not be synonymous with “Fully” Satisfied
As the prospective client, it is your responsibility to select the Service Providers that meet your needs. You may not need the “world class” provider, but you want to make sure you have selected a firm that will leave you fully satisfied with the results you receive. Here are a few steps you can take to improve your chances of receiving the services you need:
- Look to referrals from trusted colleagues that had a similar need and were satisfied with the results.
- Ask your other Service Providers for a referral.
- Regardless if a referral or not, provide the prospective firm with a detailed, written requirement of the services you need and the results you expect to receive.
- Interview the principals whenever possible.
- Ask detail probing questions about “how” and “who” will perform the service you are requesting.
- Ask if they provide frequent progress reports as to the status of your project.
- Have a written contract that clarifies the deliverables in detail.
- Don’t be afraid to question unclear situations or statements—YOU ARE IN CHARGE.
- If along the way, their weaknesses surface, try to get them back on track. If you are unsuccessful, don’t be afraid to terminate the relationship and move on.
Most enterprises gravitate to the “Full Service Provider” out of convenience. They do not want to take on the role of a “general contractor” that works with multiple Providers offering separate skilled services. This approach may initially require more time and energy, but long term it may also save you money (in fees and delayed revenues) and provide more desired results.