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Do
You Know the ONLY Four Ways to Grow
Your Business? |
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Our mission is to provide information
and strategies to business owners and
managers for improvement in the effectiveness
of its business management so that key
objectives can be realized.
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Ted
Hofmann - Principal/Senior Consultant
John Morre - Principal/Senior Consultant
Linda Panichelli - Principal/Senior
Tax Consultant
Jim Chamberlain - Senior Consultant
CFO Plus, LLC
1450 Grant Avenue, Suite 102
Novato, CA 94945-3142 |
Toll
Free |
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866-CFO-PLUS
or 866-236-7587 |
Home Office |
: |
415-898-7879 |
Fax |
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415-456-9382 |
Email |
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thofmann@cfoplus.net
jmorre@cfoplus.net
lpanichelli@cfoplus.net
jchamberlain@cfoplus.net
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Website |
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www.cfoplus.net
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Many
people think growing a business is a complex
process, but it is simpler than most think.
In fact, if you’re seeking suggestions as
to what guidelines to follow here are four
that should become your guidepost.
- Increase
the number of customers (of the type
you want);
- Increase
the transaction frequency;
- Increase
the transaction or value of "average
sale"; and
- Increase
the effectiveness of each process in
your business.
Okay,
this seems easy enough. In fact, it may
appear to be too easy, but companies really
need only to focus and commit to these functions
for optimum success in the area of growth.
Increase the Number of Customers (of the
type you want) Getting
business through the door often proves to
be the most challenging and expensive aspect
of growing a company. It’s tempting to
assume that you automatically need to seek
new business without making sure you’ve
already tapped the business you have. However,
finding a brand new customer can cost significantly
more 'some experts estimate six times as
much' than working with the customers you
already have. What exactly does this mean?
You already have a customer base that is
sold on the services you provide. This
captured audience is just waiting for you.
Some of the best advertising you could ever
have is the kind that a satisfied customer
will do for you. These customers also provide
a higher chance of finding you the type
of business you want versus whatever simply
walks through the door. If your company
is business to business, ask customers for
referrals to other companies that operate
with a similar mindset. If your company
is business to consumer, engage activities
that draw new customers from your current
customer base.
Increase the Transaction Frequency
Once you have the right type of clients
(that means the kind you enjoy working with
and those who pay on time), you want to
ensure that they not only stay with you,
but increase the amount of business they
do with you. A one-time only customer may
not seem like the best one for you. Yet,
if the customer is the perfect fit in the
type of business you’re looking for, you
need only to foster the relationship. Customers
will come to you for different reasons.
They may have been told about your service
from someone else, or found you on their
own. The point is that the customer may
initiate the relationship, but it’s up to
you to nurture it and make it grow. When
you offer exceptional customer service and
let the client know how much they are appreciated,
you will create a client that returns again
and again. Increase
the Transaction Value, or 'average sale'
Business owners are often passive about
the amount they sell to a customer. However,
if a customer seeks you out, you have to
remember they are looking to you for your
expertise. Cross-selling is not only a
benefit to you, but to the customer as well.
When you bring more value to the customer
through multiple services or products you
provide them with more opportunity. In
turn, you have created a more valuable customer
relationship, which is easier and more cost-effective
than creating a new one. And, as customers
come back more frequently, their average
sale often increases. Increasing
price should also be considered, but is
sometimes difficult since clients become
accustomed to a certain cost. However,
when you are able to break down price, volume,
fixed costs and variable costs you’ll find
that increasing your cost means truly applying
the correct price to reflect the value of
the service or product you offer. Some companies
have taken a lesson from fast food restaurants,
and have started offering 'package' deals.
This pushes the customer to a higher price
point with the perception of receiving a
'discount' on the overall order. This technique
may be used in many industries.
It’s
important to keep in mind that companies
can lull into a comfy, cozy state of cost
coma. One manufacturer, for instance, had
not changed prices in 10 years. By increasing
the price of just one product, the company
increased profits 11 percent. The average
sale is a powerful growth mechanism.
Increase
the Effectiveness of Each Process in Your
Business
How many of us just jump into work and do
it? There may not necessarily be a defined
process, but who has the time to figure
out if there’s a better way of getting things
done? The truth is that the time you take
to increase your business’s efficiencies
will have a direct affect on a project’s
outcome and, ultimately, your profitability.
Business
is a group of people carrying out a series
of processes. If the processes in place
aren’t running as smoothly as possible,
you can lose a considerable amount of time
'and money ' on things such as overcompensation
for mistakes, inadvertent doubling up of
manpower, and troubleshooting problems.
Taking
the time to evaluate how business is generated,
whether or not the customer service chain
is efficient, and where time is lost in
the moving of products or delivery of services
can provide you with more information for
scrapping a system or improving on one that
is seeing a significant return on investment.
Performance
measurement is the machine that runs a well-performing
company. Contact us today to learn more
about the four ways to grow your business!.
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Compensation
Planning: Looking Beyond Money |
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![](images/2002-JulAug/purp_tedhofman.jpg)
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Our mission is to provide information
and strategies to business owners and
managers for improvement in the effectiveness
of its business management so that key
objectives can be realized.
|
|
Ted
Hofmann - Principal/Senior Consultant
John Morre - Principal/Senior Consultant
Linda Panichelli - Principal/Senior
Tax Consultant
Jim Chamberlain - Senior Consultant
CFO Plus, LLC
1450 Grant Avenue, Suite 102
Novato, CA 94945-3142 |
Toll
Free |
: |
866-CFO-PLUS
or 866-236-7587 |
Home Office |
: |
415-898-7879 |
Fax |
: |
415-456-9382 |
Email |
: |
thofmann@cfoplus.net
jmorre@cfoplus.net
lpanichelli@cfoplus.net
jchamberlain@cfoplus.net
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Website |
: |
www.cfoplus.net
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![](images/top-purp-end.gif) |
Our grandparents
– and many of our parents as well – went
to work every day expecting to be paid
for the time they spent on the job. In
the “olden” days, compensation planning
focused on paying employees for their
work and service to the company. If you
were a dedicated employee, you may
have stayed long enough to get the
gold watch at retirement.
Today,
our employment landscape is much different
– for many reasons. New generations of
workers don’t stay as long as their parents
or grandparents, and constantly seek greener
pastures. Literally, to keep anyone under
the age of 40 interested in staying, companies
must offer more than just pay. Sure, a
wage is a necessity, but there is much
more to compensation than just the money.
Unfortunately,
many companies and organizations sour
on new compensation plans when don’t obtain
the results they were expecting after
implementing a “best-practices” plan,
one which takes benchmarks and uses those
as best practices. Instead of achieving
desired results, their "best practice"
ends up as just another ineffective human
resources program.
In one
ongoing study of best practices, the Saratoga
Institute found that best practices more
typically occur when a specific design
approach is followed, regardless of the
plan type or the specific elements of
the plan. A plan is likely to become a
best practice when it:
- meets
the original objective for which it
was designed;
- drives
desired, positive results relative to
company culture and strategic business
objectives; and
- addresses
the specific needs, business philosophies
and operating environment of the implementing
organization.
How do you design a plan that talks to
more than compensation?
Here are ten clear-cut methods to consider:
- Rewards
must be linked to business strategy
– why do you come to work? As explained
above, employees come for much more
than pay. They come to support the company’s
strategy. Linking rewards to the conjoined
strategy emphasize the short- and long-term
mission.
.
- Explain
your plan’s objectives – participants
must know what is being rewarded and
why. When was the last time you met
with employees to tell them what their
compensation plan was all about?
.
- Behaviors
motivated by the plan must support the
company culture - anyone will tell you
that a business’ mission and vision
are the backbone of any successful venture.
Your compensation plan is directly tied
into company culture.
.
- Relate
payouts to business performance and
results – gone are the days of across-the-board
raises; pay for performance is the norm
in today’s business cycle.
.
- Plan
design must adapt to changing business
conditions – change is inevitable, and
your compensation plan must adapt to
its environment – good and bad.
.
- All
elements of the plan, including expected
performance and results, must be clearly
communicated and fully understood by
participating employees – you’re not
going to test employees to see how much
they know, but you can hold a periodic
meetings to discuss plans, even if
they haven’t changed since the last
time you met.
.
- Participating
employees must be involved in the design
process – you wouldn’t create a new
consulting division without asking employees
to be a part of the process, so why
should the design of a compensation
plan be any different? Solicit feedback;
people want to feel as if they are part
of the process, and ensuring they understand
the plan goes a long way to instill
confidence.
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- Participants
must believe the plan has value – while
you don’t want the plan to become a
mantra, you do want your employees to
honestly say their compensation plan
is something of value – more than words
on paper.
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- All
elements of the plan must be regularly
reviewed for effectiveness in meeting
stated objectives and achieving desired
results – like any marketing or sales
plan, your compensation plan also must
be reviewed on a regular basis to ensure
it meets your employees’ needs.
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- Consider
using annual benefit statements to show
employees just how much their total
compensation package is worth.
Itemize employer health, disability,
continuing education, and other contributions.
Add these to the employee’s total salary
to show a total compensation package. This technique
may be used as a recruiting tool as
well. Top candidates will always be
in demand – tip the scale in your favor
by showing just how much your company
is contributing to their
bottom lines.
The overall
theme is communications – and companies
who regularly communicate the value of their
compensation plans will be the ones who
successfully keep employees interested for
the long haul. Ensure your plan has value
by meeting with your performance measurment
consultant and discussing these steps. |
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Customer
Service Doesn't Cut It Anymore |
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![](images/2002-JulAug/blue_tedhofman.jpg)
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Our mission is to provide information
and strategies to business owners and
managers for improvement in the effectiveness
of its business management so that key
objectives can be realized.
|
|
Ted
Hofmann - Principal/Senior Consultant
John Morre - Principal/Senior Consultant
Linda Panichelli - Principal/Senior
Tax Consultant
Jim Chamberlain - Senior Consultant
CFO Plus, LLC
1450 Grant Avenue, Suite 102
Novato, CA 94945-3142 |
Toll
Free |
: |
866-CFO-PLUS
or 866-236-7587 |
Home Office |
: |
415-898-7879 |
Fax |
: |
415-456-9382 |
Email |
: |
thofmann@cfoplus.net
jmorre@cfoplus.net
lpanichelli@cfoplus.net
jchamberlain@cfoplus.net
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Website |
: |
www.cfoplus.net
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Conventional
wisdom says an organization must have
satisfied customers if it is to survive.
But today, organizations are realizing
that satisfying customers may not be enough.
Recent studies indicate that satisfied
customers are not necessarily LOYAL customers
and even though customers say they are
satisfied, they may still defect to a
competitor.
Many organizations
use a 1-5 rating system to measure customer
satisfaction with 5 indicating the highest
level of satisfaction. In most cases,
organizations are content with a score
of 3 ("satisfied").
But according
to a 1994 study reported in the Harvard
Business Review, a 3 rating indicates
that the customer is "satisfied,"
but not necessarily "loyal."
The article reported that a score from
3.5 to 4.5 indicates that customers are
indifferent. Only a score of 4.6 or above
indicates a truly loyal customer.
So how
does an organization achieve customer
loyalty? Is it simply a matter of answering
a customer call on the first ring? Offering
high speed internet access in every meeting
room? Seating only 8 instead of 10 at
function tables? Not exactly.
Achieving
customer loyalty is an ongoing process,
not a single action. An organization must
understand what customers want and provide
it, because, in the end, the only perspective
that matters is the customer's.
So
what do customers want?
The Institute has studied the issue and
found that customer expectations generally
fall into the five dimensions outlined
in the SERVQUAL model (according to Parasuraman,
A., Zeithaml, V.A., and Berry, L.L. (1988).
SERVQUAL: A Multiple Item Scale for Measuring
Consumer Perceptions of Service Quality.
Journal of Retailing, 64 (Spring):
12-37): Tangibles; Reliability; Responsiveness;
Assurance, and Empathy.
Tangibles
are the physical aspects of a service
experience such as the appearance of the
facility and staff, as well as items like
communication materials. In short, this
is the image that an organization projects.
In the hospitality industry, for example,
the facility and the staff must be neat,
clean and organized in order for the customer
experience to be satisfactory. To engender
loyalty, however, that physical image
must exceed the customer's expectation.
Some organizations take steps to create
not just a certain physical appearance,
but tangible ambiance-- selecting a soothing
color scheme, installing plush carpets
and comfortable furniture. Westin's concept
of a "Heavenly Bed" is a prime
example of an organization that is working
to inspire customer loyalty using the
tangible aspects of service quality.
Reliability
means performing the promised service
dependably and accurately, keeping promises,
and doing it right the first time. In
the hospitality industry, this can be
as simple as honoring the fees quoted
for a service and ensuring that the service
provided is the service that the customer
expects. Are you taking steps to ensure
that there are no interruptions in service
delivery? Is there a well-staffed reception
desk, an informative website, an efficient
toll-free number or strategically located
information kiosks? When guests need directions
or have a question, do they know where
to go for an answer? If a first-time guest
walked into your facility, would they
be able to find their way to their destination?
Is directional signage clear and easy
to spot? Are employees easy to identify
and prepared to answer most guest questions?
Responsiveness
refers to the timeliness of service
and the willingness to help. The loyalty
factor is engaged when an organization
responds to a customer's need before he
or she even realizes that a need exists,
or when an organization goes above and
beyond the call of duty in responding
to a request.
Several
years ago, the Institute held its annual
conference at a popular resort in South
Florida. Upon our arrival, we realized
that we had not shipped any nametag holders
for the conference. We asked our contact
at the hotel to provide directions to
the nearest office supply store. Instead
of sending us on our way, she offered
to go herself to pick up whatever we needed
so we could continue with our conference
preparations. She returned from the store
with a variety of nametag holders for
us to make a selection. We were so impressed
with her initiative and responsiveness
that we rewarded her service by returning
to the resort for our next four events.
That small investment of her time was
returned with thousands of dollars in
revenue for the hotel.
Assurance
is the knowledge, courtesy, and professionalism
that build a customer's trust. Ensuring
that representatives are knowledgeable
requires that an organization invest in
effective training initiatives. They must
be targeted and ongoing. But training
alone will not guarantee knowledgeable
representatives. Hiring right, paying
appropriately, coaching effectively, measuring
accurately and rewarding often are critical
success factors for developing knowledgeable
representatives who can resolve most issues
on the spot.
Empathy
is the caring, individualized service
that makes a customer feel valued. Loyal
customers are made when an organization
remembers their names and their likes
and dislikes. The Ritz-Carlton, for example,
has earned numerous customer service awards
by creating individual guest profiles
and offering personalized services; from
remembering a guest's preference in pillows
to making certain that their favorite
newspaper is delivered daily.
To ensure
that these five dimensions of service
quality are integrated into your day-to-day
operations requires a commitment from
management. Exceptional customer service
must be incorporated as a primary business
goal and a core value of an organization
and must be reflected in its policies
and procedures. A constant process of
performance evaluation is also necessary
to ensure that the organization remains
customer-focused.
Any organization
that understands what its customers want,
and then provides it, will be on a fast
track to achieving customer loyalty.
Reprinted
with permission from the Customer Care
Institute
www.customercare.com.
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Skip-Level
Reviews: The Benefits of 360-Degree Feedback
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![](images/2002-JulAug/green_tedhofman.jpg)
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Our mission is to provide information
and strategies to business owners and
managers for improvement in the effectiveness
of its business management so that key
objectives can be realized.
|
|
Ted
Hofmann - Principal/Senior Consultant
John Morre - Principal/Senior Consultant
Linda Panichelli - Principal/Senior
Tax Consultant
Jim Chamberlain - Senior Consultant
CFO Plus, LLC
1450 Grant Avenue, Suite 102
Novato, CA 94945-3142 |
Toll
Free |
: |
866-CFO-PLUS
or 866-236-7587 |
Home Office |
: |
415-898-7879 |
Fax |
: |
415-456-9382 |
Email |
: |
thofmann@cfoplus.net
jmorre@cfoplus.net
lpanichelli@cfoplus.net
jchamberlain@cfoplus.net
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Website |
: |
www.cfoplus.net
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![](images/top-green-end.gif) |
When
was the last time one of your employees
told you he or she had an effective performance
review? While this may be a rhetorical
question, it’s a valid one given today’s
volatile business climate and the need to
receive consistent feedback on performance.
Today,
a direct manager’s or supervisor’s review
of an employee may, indeed, not be enough
to adequately provide the employee with
enough information. One of the trends
occurring in business is the "skip-level"
review. Also known as "360-degree
feedback," employees are reviewed
by their manager or direct report’s manager,
employee peers and even subordinates.
There
are many benefits to this process. For
the individual, perception is reality
and the skip-level process helps workers
understand how others perceive them. While
many may tell each other day-in, day-out
how they feel, getting these thoughts
on paper in a stylized, confidential process
is a completely different matter. The
individual also benefits because feedback
is essential for learning, and individuals
can better manage their own performance
and careers.
Maintaining
a skip-level review also benefits the
“team” by increasing communications among
and between team members, and supports
the teamwork process by involving everyone
in developing the appraisal methodology.
Organizations, too, benefit by promoting
better career development for employees,
improving customer service by having customers
contribute to evaluations, and directing
the training process.
A
national human resources consulting firm
quantified the reasons for skip-level
reviews. According to a recent survey,
HR managers said that 360-degree feedback
is being used for management and organizational
development (58 percent), performance
appraisal (25 percent), supporting strategic
implementation and culture change (20
percent), and team development (19 percent).
Naturally,
there are a variety of methods to gather
data by using paper-based forms, diskettes
or other storage, through an electronic
network or by interviews. Scoring can
be conducted on-site or through central
scoring by an external vendor.
One,
burning question is the frequency of the
review – how often should the review be
conducted? While annual performance appraisals
usually suffice, skip-level reviews may
be done more often. Since employees need
time to make the changes proposed on the
last set of reviews – and because it takes
some time for others to perceive that
change has taken place – six-month intervals
make sense. This time frame allows people
to create change, and then get feedback
on their progress so that they can develop
next-level goals and action plans. However,
some organizations prefer to conduct surveys
of just 10 to 15 questions, focusing on
a specific topic. These smaller-size reviews
are done monthly in conjunction with training
on that certain topic.
Next comes
the matter of whom should be the reviewer(s).
The method in which organizations set
the criteria for this important step could
make or break the review depending on
a variety of circumstances. For example,
the length of time the respondent knows
the subject is important, as is the amount
of contact. You also may want to choose
reviewers who understand what the subject
does, as well as some who work well with
the subject and some who do not.
After the review is conducted, the subject
is the only person who gets a copy of
the report. The manager gets group and
organizational data, but no individual
information. While giving the data could
increase accountability and enable the
manager to quantifiably track progress,
there are a variety of pitfalls to giving
the manager a copy of the report. Here
are a few examples:
- People
will fear the process.
- Feedback
comments will not be as constructive.
- Scores
may be higher.
- Data
can become a weapon, not a development
tool.
- The
manager may lack the ability to interpret
the data appropriately.
- The
manager may reprimand the employee for
not doing well.
Another
consideration in skip-level reviews is
whether feedback should be linked to performance
appraisals. While skip-level reviews or
360-degree feedback and performance appraisals
can be complementary, they should
not be linked. If 360 is linked to compensation
decisions, it loses its power as a development
tool. With compensation as the outcome,
individuals quickly will learn how to
play the game, a.k.a., "I'll scratch
your back if you scratch mine."
If ratings
are lower than expected, morale can decrease
when the review is linked to performance
appraisal. However, when low scores are
used purely for development, the scores
tend to be viewed as constructive feedback.
Be sure that team members are coached
on the rating scale so feedback is consistent
across the board.
Introducing
skip-level reviews to a potentially resistant
organization isn’t insurmountable. First,
start at the top and conduct a pilot.
Directly address, up front, the issues
that are at the source of the resistance,
and focus on the benefits for the individual
or group. When possible, use an external
consultant to minimize fears of confidentiality
and inappropriate data usage.
Are
skip-level reviews ever inappropriate?
In some cases, yes. For example, if the
person receiving feedback is too new to
the group or organization, there probably
aren’t enough respondents who truly understand
the full scope of the individual's responsibilities.
In addition, during a time of major change
like a merger or acquisition, skip-level
review may not be very effective because
the staff is focused on other, more important,
efforts. An environment with a high degree
of mistrust is a red flag that also would
inhibit the process.
Skip-level
reviews or 360-degree feedback can be
a cost-effective, measurable method to
the appraisal process. Before embarking
on any sudden or short-term change to
the way appraisals are currently conducted,
consult with your performance measurement
advisor for his or her feedback.
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