Chief Executive Boards Blog: September 2009

Saturday, September 26, 2009

Who's Getting the Most Return from Your 401(k) Plan?

Who is getting the most return from your 401(k) plan --your participants or your plan fiduciary? Hidden fees are killing a surprising number of small companies' 401(k) returns -- by a haircut of 3% or more in annual fund performance. If your 401(k) plan is more than a few years old, or if your fiduciary is a bank or insurance company, your plan participants (including yourself) are probably paying huge hidden fees, resulting in below-par investment results.

Here's a CEBI Alert on how to find and fix that problem.....

As a business owner, you have a short window to make plan changes before your 2010 plan year starts. Most 401(k) plans operate on a calendar year basis. Changes in plan provisions or Safe Harbor elections need to be made at least 30 days before the plan year begins. You have some time to adjust your 401(k) strategy for 2010, but not a whole lot.

While you may have looked at Safe Harbor provisions before (which allow you and other highly-compensated people to max out your 401(k) contributions), you'll want to have a look at some ideas you might consider.....

Let us know what you find in reviewing your 401(k) plan. Please click Comments below and share your observations.

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Terry Weaver

CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

Saturday, September 19, 2009

The Frugality Horse Has Left the Barn -- Time to Switch Horses

A friend of mine regularly says, "You can't save your way to success." If your company is still standing and you're even slightly cash positive, you can stop nailing the cost reduction barn door shut -- that horse has left the barn. Frugality has its limitations. It's time to focus on investing (yes, spending) some money to take advantage of the economic recovery.

In case you're still wondering, the US economy is indeed recovering. Not at a rapid rate (thankfully, that would have been an inflation worry), but steadily, and on a broadening basis. Consider the number of broad economic indicators that have recently turned:

Industrial production is up (2 months running)
Capacity utilization is up (2 months running)
The housing market index is up (3 months running)
Consumer debt is flat (people are not paying down debt vs.spending as previously thought)
Rail carloadings are up - highest since December 2008 (Warren Buffet watches this key indicator)
Retail sales are up (August)
Monetary policy is keeping interest rates low (stimulative)
History suggests a "double-dip" recession is unlikely unless the Fed pushes us into one (by reducing money supply, thereby raising interest rates)

Yes, rising unemployment is still in the news (sells papers). In fact, you'll probably see unemployment in the news for a while longer. But unemployment is a lagging indicator, and doesn't generally turn until the final leg of most recoveries.

So, if you're still focused on reducing expenses, you're behind the curve. That horse has left the barn. Were you quick enough on the downturn with your cutbacks? No? Are you going to be late again in stepping up your investments to take advantage of the recovery?

Granted, the timing of economic recovery will be slightly different from sector to sector. Some have been improving for several months. Others will lag another few months -- perhaps another quarter.

The time to switch gears is now (if not now, it's really close). If you're anywhere near cash breakeven to cash positive, it's time to make a move. Refocus your attention from cutting expenses and saving money to making some strategic investments in growing your business -- grabbing some market share on the upturn while your competitors are still napping.

You might want to consider some scenario planning. What would it take, for example, to get the orders and step up your run rates by 10%? By 15%? By 25%? What would it be worth spending to accomplish each of those scenarios?

So, do you think I'm right or wrong? Please click Comments below and share your opinion.

Thursday, September 17, 2009

Is Your Customer Saying, "Make Me Smarter"?

Your customers have short memories. Your prospects' memories are even shorter. You spend a fortune finding prospects, making sales calls and presenting your products or services. Yet, two to four weeks later those same prospects have little recall of who you are or what you do. And worse yet, if a competitor happens to stop by a couple of months later, the prospect may have thought some more about the ideas you planted, despite having forgotten you, and the competitor gets the order! Bummer.

Customers ask themselves "What have you done for me -- lately?" And sometimes they can't answer the question on their own -- you and your products start looking to them like a familiar piece of old furniture.

What's the answer? Maintaining Front of Mind with your customers and clients -- overcoming the natural "decay curve" of human memory, as well as the obscurity bred by familiarity. If the idea of "Front of Mind" is new to you, click the icon for a video overview (turn up your sound).

A brilliant Front of Mind strategy surfaced in a recent Chief Executive Boards International meeting. One of our members summed up his customers' expectations as, "Make me smarter." Tell me something I don't know. Remind me of something I forgot. Expand my knowledge.

A tall order -- where are you going to get that kind of material? Here's what he does. He subscribes to a McKenzie newsletter, and reads it with his "customer hat" on. He combs each issue, looking for ideas that might be useful to any given customer, and then emails the info to them. After all, the customer didn't say he had to think up everything himself, did she?

I know a company that issues a well-read quarterly email newsletter, in which almost ALL the content is from other sources -- industry journals, business press, etc. It doesn't need to be original -- it needs to be relevant. And your value-added to that process is sorting through the blizzard of available info and sending your customers and prospects just the snippets they need. And, of course, a short footer plus your logo in the signature block is all it takes to remind them of who you are and what you do.

Every one of these "touches" renews your customers' or prospects' recall. And makes it a whole lot more likely that when they decide they need what you sell, you'll get the call. Isn't that worth a specific Front of Mind strategy?

If you have a Front of Mind strategy that's working for you, would you click "Comments" below and share it with others?

Saturday, September 12, 2009

Own the High Ground in Your Prospect's Organization

Every army wants to own the high ground on the battlefield. On the competitive battlefield, you want to own the high ground as well, don't you? How many times in your career have you lost an order because:

There was a surprise decision-maker lurking in the background?
Your competition got to a higher rung on the prospect's organizational ladder than you did?
Your champion in the prospect company got fired, and you were out in the cold?
Your champion in the prospect company got promoted or moved, and you were out in the cold?

In his presentation at a Chief Executive Boards International Summit, member Scott McMillian of Advanced Applications, advised, "Go Wide". You want to know and engage with as many people as possible at a prospect (or customer) company. And at as many levels as possible, right? So maybe it's "Go Deep", as well.

Yet working your way up the prospect's organization can be tough, especially if you have a longstanding relationship with a given contact. It's very awkward to make contacts above him without offending him -- he's likely to question your motives, and even perhaps undermine your efforts to do so. If he happens to have his own self-esteem issues, he may even see you as a threat.

So, what to do? The IBM selling playbook has a strategy for this -- "Meet the Boss". Here's how it works:

You plant this idea in your contact's head, saying, "Jack, we've been working together for awhile, and I think it would be good to make sure our companies are as well aligned as we are. How about if we have lunch and you bring your boss and I bring mine, so they can meet each other? And while we're at it, we'll have an opportunity to remind both of them what a great job we're doing for our respective companies." Who could resist?

Of course, you can play your way through variations on this theme. Say you're working with Plant Maintenance and you really need a contact in Manufacturing Engineering -- same thing -- "Jack, you bring your Manufacturing Engineer and I'll bring one of our Engineers. That way, we won't have either of those guys throwing rocks at our idea when it comes up for funding." etc. etc.

Meet the Boss can be played as many layers up as makes sense. Once the "bosses" get acquainted, then you can leverage it up one more notch.

And, of course, besides "Go Wide", be sure and "Go Deep". The more weblike the contact map between your company and the customer's or prospect's company is, the better. If any one of your champions on the other side bites the dust, you have multiple points of traction by which to rebuild a relationship with the successor. Time is of the essence, as well. The moment you sense a turnover situation with any of your contacts, swoop down to protect your turf on all fronts.

Here are some additional ideas on how to "Go Wide". If you have some of your own, please click "Comments" below and share them with others.

Monday, September 7, 2009

Customer Experience - Vol. 1

Loyal customers come back. Raving Fans bring others with them. What's the difference? Perhaps it's the combination of the tangibles of the product or service you deliver (the outcome of the transaction) and the customer experience you deliver in the process.

In a discussion on raving fans in a meeting of Chief Executive Boards International, member Harry Loyle of Portrait Avenue said, "We're mostly about the experience -- lots of places can take great photos. And it turns out that a part of the customer experience any mom wants is a sparkling clean bathroom."

They really do believe in that experience part -- in fact, the headline on their "about" web page is," Fun, Interactive Experience".

Imagine that -- tens of thousands of dollars worth of equipment, years of training and experience by the photographer, and it's about the bathrooms! This is a great example of a company that's focused on customer experience, figured out at least one important component, and then propagated that to every location.

If you missed the earlier article on Creating Raving Fans, you might want to have a look.

If your company has an unusual customer experience insight, please click Comments below and share it with us. .

Friday, September 4, 2009

Creating Raving Fans

In a recent series of local meetings of Chief Executive Boards International, we opened with a discussion of a Customer Satisfaction Matrix I was shown years ago by my friend Frank DeVita, founder and owner of DeVita & Associates.

Here's the premise: Most organizations focus most of their Customer Satisfaction time and metrics on the outcome of a transaction or project. Outcome is important -- measuring things like quality, on-time delivery, return rates, etc. has brought the world a long way, particularly in manufacturing. But services can be measured in terms of outcome, as well -- Did it get fixed? Did it get fixed on time? Did it stay fixed? Etc. etc.

Outcome alone will not ensure your long-term success with a customer. Rather, creating a "raving fan" is a more appropriate goal -- to create a customer who's out there advocating for you, recommending you, and bringing you up in conversation unprompted. This is the stuff "word of mouth" is all about. What else does it take besides a great outcome? A great customer experience. Customers are people, too, and they remember just how easy (or hard) it was to do business with you. They remember not only how it ended, but also how it felt during the process. Did they have to call you for updates, or did you provide them at the appropriate intervals? How many rings did it take for them to get an answer, or were they able to get around the "dial through Hell" inbound call menu (raving fans expect a hotline -- not to be treated like any other random phone call that rings into your business).

It's the combination of outcome and customer experience that creates a raving fan, and there are several gradations below that point:

Raving Fans -- They're out recommending you and mentioning your name unprompted

Loyal Customers -- They're solid with you, and would probably stiff-arm a competitor who called up and suggested he come over to "get acquainted." Their response, "I'm well-served by my current supplier."

At Risk Customers -- They're still on board, but would probably grant an appointment to a competitor who called up and suggested he come over to "get acquainted." And, left alone, may decide to try his product or service

Searching -- These customers have been poorly served in either outcome or experience, and had mediocre results on the other, as well. They're out actively seeking an alternative to your product or service

Gone -- Most of us have one or more of these -- when you look back, it's usually a "perfect storm" of not only marginal outcome, but also a bad customer experience, to boot.

I'm willing to presume that most companies today do something to measure, track and improve the outcome of whatever deliverable they provide. What is it that you're doing to measure, track and improve the experience your customers or clients have in their ongoing relationship with you? This is the "foreword" article of several in which we'll highlight things real CEBI member companies are doing to measure, track and improve customer experience. Stay tuned.

If you've developed some ways to measure, track and improve customer experience, please click "Comments" below and share them with others.

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