energizing breakthrough performance

Customer Retention: Do Your Employees Understand its Effect on Their Paychecks?

Author: ; Published: Nov 30, 2009; Category: Customer Service; Tags: , , ; No Comments»

cut in pay

Just about every business owner or corporation executive who is awake understands that it is far more costly to obtain a new customer than retain an existing one. This concept is even more near and dear to core tenets of running a business—in an uncertain economy.

Here’s the dilemma that consumers witness over and over like a recurring bad dream: Many employees who interact with customers do not understand the importance of customer loyalty to the bottom line of a company. Repeat customers help pay your salary. Fewer repeat customers, more expense required to find new ones… something might need to be cut from the budget… like your salary!

Granted some customers can be difficult; however, when a loyal customer has an issue, the customer service representative needs to be motivated to deal with it effectively AND know how to create a win-win resolution.

Consider this example: A customer takes his out-of-warranty vehicle for a routine oil change, and is told at the end of that service that the vehicle has a slow leak that needs to be addressed in the near future. Cost for this “recommended repair”—as written on invoice—is $1100. The customer is in shock. Not being a trust-fund baby, he says he needs to sleep on it.

The customer does some research and finds out that part of the problem is that the entire transmission has to be taken out to fix this small leak at a cost of $92/hour plus parts. It appears that since very few of these types of repairs have been made by this service department that the customer is paying, in part, for the staff’s learning curve. Further, upon following up with the service department, the customer is informed that the original quote was incorrect, it is really $1800 to repair the leak and, by the way, “You need a 30,000-mile service which costs an additional $600.” Now the customer has gone from shock to hopping mad. He is ready to leave his vehicle parked outside his house and buy a clunker for the $2400—and put a bumper sticker on the clunker that says “My other car is an X but I cannot afford to drive it.”

How should the dealership’s service department deal with this situation? Here are some options:

  1. Make certain that each employee is carefully trained so that when he/she quotes a price for a repair, especially when it is in writing, that it is correct.
  2. Stand by any inaccurate price quotes, giving the customer the benefit of the doubt.
  3. Charge the customer $1800 for the 30,000-mile service AND the repair of the leak to compensate for the inaccurate quote and encourage repeat business.
  4. Tell the customer that they are sorry
  5. Ignore the situation entirely

The answers that are more likely to help the dealership keep the customer? Hopefully, you know that they are a combination of 1, 2, and 3 above.

Final thoughts:

  • A customer really doesn’t want to hear that someone is sorry for someone misquoting a price. “Sorry,” does not put more money in his/her bank account.
  • Make certain that your staff knows what they are doing when they interact with customers. Each person needs to understand the importance of retaining loyal customers to their individual financial livelihood.
  • Each employee needs to be given license to ask a manager when they find themselves in deep water rather than risk alienating a loyal customer.

If you and your employees are in tune on the importance of customer retention, you will keep more customers and run a much more profitable business.

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Matrix Teams: Getting Past the Chanting Stage

Author: ; Published: Nov 19, 2009; Category: Cross-Functional Teams, Matrix Management; Tags: , , ; No Comments»

 

Matrix teams can be especially useful as part of a renewal initiative. For a couple of decades, the mantra in organizations has been “we need to break down the silos,” but such renewal initiatives too rarely get past the chanting stage. Matrix teams are cross-functional teams which pursue shared objectives using shared resources. Such teams break down the silos by placing staff drawn from different disciplines shoulder-to-shoulder, either physically and/or virtually, with one another to pursue a common objective.

A constant theme throughout my book, Matrix Management Success: Method Not Magic, is that today’s organizational problems are complex and daunting. The problems are multidisciplinary in nature and multidisciplinary approaches are essential to meeting the challenge—not just at the top of the organization, but also at the middle and at the front-line level.

We would still be waiting for many of the beneficial drugs that make life better today were it not for the use of multi-disciplinary drug development teams by global pharmaceutical companies Beyond the pharmaceutical companies, many other household-name organizations use matrix teams to achieve important benefits, including companies such as ExxonMobil, Boeing, and Parsons Engineering.

Public sector organizations are also using matrix teams to great advantage, including the US Navy Bureau of Medicine, the National Oceanic and Atmospheric Administration, the Food and Drug Administration Center for Radiological Devices, and the Defense Finance and Accounting Service, to name a few. There are some emerging examples of both private and public sector organizations which are linking their matrix teams to the matrix teams of other strategic partners; this is the next frontier in creating breakthrough global networks of organizations that don’t just cooperate on paper, but which also collaborate day-to-day at the working level to get work done. It’s another way to make renewal a viral phenomenon.

Many traditional, vertical hierarchies are simply out of breath as they grapple with multidisciplinary challenges. Vertical organizations are structured perfectly to solve one-dimensional problems but the bad news is that virtually all of the one-dimensional problems in the modern world have already been solved! Squeezing traditional hierarchies harder is not the pathway to progress; you may increase your engine speed RPM, with accompanying employee fatigue and burnout, but the squeeze doesn’t increase your ground speed, to use an automotive analogy. Such approaches lead to head scratching: “How can our employees work so hard and such long days and make so little progress?”

It’s time for organizational structures to catch up to reality. Catching up to reality is one way to describe necessary renewal. Unleashing the power of the horizontal organization using cross-functional matrix teams is a proven way to renew your organization by releasing talent to conquer complexity, increasing speed and agility while ensuring the highest-and-best use of all of your assets.

Cross-functional teams have been around for more than sixty years, but recent improvements in communications and information technology along with increases in employee education and sophistication levels have fueled its wider use. It takes care and due diligence to make them work, but when they work well they are powerhouses of innovation and productivity and a vital pathway to organizational renewal.

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Transfer Knowledge Before It’s Too Late: Avoid the Coming Brain Drain with Mentoring

Author: ; Published: Nov 15, 2009; Category: Strategic Planning, Workforce Succession Planning; Tags: , , , ; 4 Comments»

 

The Director of the 2010 Census recently remarked in the Washington Post that he is concerned about the imminent brain drain in the US Bureau of the Census owing to projected retirements. He pondered how this development could impact adversely a 2010 census which promises to be more than a little controversial at best. His solution? The older employees should take 15 minutes to sit down and have coffee with the younger ones to “transfer knowledge.” It begins to make you wonder about the level of compensation afforded to Census executives and managers if the knowledge can be transferred successfully over a cup of coffee, be it tall or grande. Sad. Starbucks will like this “strategy,” but the thoughtful citizen will not.

The passing of the mantle of leadership in American government and business is nigh. Baby Boomers have begun leaving the scene in one way or another but the question is: Are they ensuring that the transfer of knowledge and expertise will be smooth and complete? Too often, it’s being left to “someone else”—the next person “on watch” as it were.

The problem is that most of the time, the next person on watch is the very person who needs to be mentored for the job! Look at public utilities, such as water and wastewater districts and you will usually find the same predicament. The need for making a smooth transition is ubiquitous, yet the level of systematic and concentrated effort is usually paltry. Indeed, if Y2K proved to be a sheep in wolf’s clothing, the passing of the baton to a new generation has the potential to be a wolf in sheep’s clothing.

The Defense Finance and Accounting Service (DFAS) is a 14,000-employee federal agency that performs a vital function—it pays our military heroes, our defense contractors, along with the President and a few other notables. A few years back, then-DFAS Director, Thomas Bloom, was concerned about ensuring uninterrupted performance as the mantle of leadership is passed from one generation to another. Indeed, the leadership demographics were cause for pause. The top leadership team of 20 executives was at or quickly nearing retirement age. Not remarkable on the face of it. However, the average age of the next lower echelon was actually older than the top leadership team! Go down yet another level and the employees were still no younger, on average. This is the condition at many organizations, particularly public organizations where no less than 50% of the employees are retirement-eligible as this is written.

DFAS started working on this challenge in 2001. Tom Bloom certainly wasn’t content with the idea that a couple cups of coffee would do the trick. The agency instituted a mentoring program. Strategic Futures Consulting Group has now trained more than 2500 of the agency’s employees in how to do quality mentoring. Creating an embedded mentoring culture in a large organization takes time—probably a decade, give or take. When it comes to renewing organizations by preparing the workforce adequately, leaving things to chance or leaving things to the next leader won’t do.

The strategic future is now: Organizations should ensure their perpetuity while those who can transfer productive knowledge are still on the payroll, not after they have already departed.

Should we say “if it ain’t broke, don’t fix it,” even when our lying eyes promise us that it is fixin’ to be broke? Today is the time to prepare for tomorrow.

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