Special Orders DO Upset Us -- Alienating a Customer for Life in 1 Easy Step

Every now and then a customer asks for something that's outside your normal business process. Special terms. Special handling. Customized products or services. And you endear them for life if you say yes, right? Maybe not -- you could be asking for some real trouble. Special requests only please customers if they're fully supported by your own business processes. If not, you're asking for trouble -- perhaps an alienated customer for life, or even worse, one who's likely to tell others.

I had a recent near-textbook experience involving two vendors -- one of which I'm a raving fan and the other with which I'll never do business again. In May, I got a call from a nationally-known source of mailing lists, Hoover's, owned by Dunn and Bradstreet. A very capable sales rep named Adam understood my resistance -- that I wasn't ready to sign up for a 12-month subscription to a mailing list service because my experience with mailing list vendors has been universally terrible. The lists are lousy, they miss a huge number of companies that ought to be included in your query parameters, and they're not (as claimed by the vendors) verified or validated.

So, I told Adam I'd be willing to subscribe only with the option to cancel within the first 30 days of the agreement if I wasn't satisfied with the quality of their lists. That's where the fun started. That provision had to undergo legal review, and they actually sent me a multi-page contract to sign. In that agreement, they worked in a 10-day cancellation notice, effectively making it a 20-day cancellation option. I objected, and Adam couldn't make the 10-day notice go away, but he was able to make it a 40-day cancellation privilege with a 10-day notice. A preview of coming bureaucratic attractions, it now appears.

I signed up, agreed to pay two months in advance on my AMEX card (Adam assured me he'd credit the 2nd month if I cancelled), and started pulling lists. Their lists were not only lousy, but lousier than lists I'd gotten elsewhere. As many as 5 people were listed as President of the same company, in several cases. Sometimes with different names, other times with slight variations on the same names. So much for "validation" of the data that's being provided.

At 20 days into the agreement, I'd pulled the agreed-upon number of names for the first month and discovered that my fears were confirmed -- that their lists were no better (worse, actually) than anyone else's. I emailed Adam that I was canceling, and why. He gave it a decent recovery attempt, then agreed by email to process my credit for the 2nd month's deposit (about $300). Then the real fun began. I was watching my AMEX statement for the credit, and imagine my surprise when a third month's charge showed up! Not only not cancelled, but still billing me. And then the same the following month. After several email exchanges, I was escalated to a Vice President named Amy, who insisted on a phone call so we could read the email thread together from the start. Amy said "I'll need to research this and call you back". That was 3 weeks ago, and the last I've heard from Hoover's.

AMEX, on the other hand, handled this with their typical efficiency and consistency. They processed the disputes on the 3rd and 4th month's erroneous billings and issued me credits -- one phone call each. After no response from Hoover's on the 2nd month's credit, I finally called AMEX and filed a dispute for the prepaid 2nd month, and I expect they'll handle that similarly.

So, I have a major vendor with whom I've had not just a bad experience but a terrible experience. I had to go to extra effort to get almost $1,000 in over-billings back, due to their non-responsiveness. Thankfully, I had AMEX on my side.  I'm still a Raving Fan of those guys. 

Hoovers' mistake? Promising a customer a non-standard agreement that they clearly had no mechanism by which to deliver. They're set up to take an order, take 2 months' subscription fee upfront and automatically bill the next 10 months. They do that well. They would do better to just disqualify customers who want something different.

In this environment of hard-to-get orders, are you tempted to comply with special customer requests? Are you setting yourself a minefield by doing so? Perhaps it's worth making sure special requests have their own special approval channel, where someone can ensure that your company really has a business process that's flexible and bulletproof enough to handle them.

If you've taken special orders you wish you'd never heard of, please click "Comments" below and share that experience with others. 

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Terry Weaver


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

Another Business-to-Business Peer Lending Story

As the lending freeze for small business continues, business owners are continuing to find non-traditional sources of capital. In this case, a member of Chief Executive Boards International has discovered a privately-funded, privately managed small business loan program, sponsored by Michelin North America. He's expecting approval shortly on a $100,000 loan at prime rate with a 5-year amortization schedule. 

A consistently solid corporate citizen, Michelin realized that many businesses, whether directly connected to Michelin or not, were having trouble growing due to the current drought in available commercial lending.  So, they decided to do something about it, making $2 million available to businesses that were "disadvantaged" under a fairly broad set of criteria. In this case, "disadvantaged" includes economically disadvantaged -- like not being able to get bank financing because 2009 was a lousy year for your business.  Unlike the nonsense SBA ARC program, they're willing to loan real money -- up to $100,000 for up to 5 years at or near prime rate.

It's not a guarantee program that a bank has to buy into -- it's their own loan program, and applications are approved by their own staff. The application process is somewhat rigorous, as you'd expect, but the criteria for these loans are interesting:

• Creation of Jobs -- Viable projects that can demonstrate the potential to create quality, sustainable jobs
• Market sector and geographical location -- A start-up or existing small-and medium-sized businesses located within the trade area of their North American Headquarters
• Viability -- Supported by a viable business plan, together with relevant financial information
• Uses of funding -- Projects that are linked to the creation of jobs, such as purchase of capital equipment, process improvement, working capital and marketing. 

Note that applicants don't need to have a direct business connection to Michelin, such as being a Michelin supplier.  They grasp the idea that a solid small business base will strengthen not only their suppliers but also provide jobs for people who will eventually need tires.  

Michelin is providing the funding, and then outsourcing loan servicing to a local bank. Here's another example of a company that has a lot of cash on hand deciding to not only sweeten their return (they're not getting prime rate anywhere else) but also do something for the community, as well. They're betting they'll get the money back over the next 5 years, and so am I.   Link to Michelin Loans Site

If you've found similar non-traditional sources of lending in this upside-down financial market, please click "Comments" below and share them with others.

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Terry Weaver


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

The Best Thing Isn't Necessarily the Easiest Thing

A Chief Executive Boards International member made a profound, yet simple observation in a recent meeting. In commenting on another member's uncertainty of his own priorities, he said, "The best thing for you to do isn't necessarily the easiest thing to do." Worth some consideration -- there are usually dozens of ideas, strategies, initiatives or activities you could be working on.

It's not uncommon for the easiest or more comfortable choice to get priority vs. the thing that could be most important or most significant to your business. Why? Because that is sometimes the HARD thing to get done. Perhaps hard in several ways:

• Unfamiliar -- Something you or the organization have never done before
• Uncomfortable -- Terminating an employee, a tough collection action with a customer
• Expensive -- Spending money on people or things that are important long term, but painful short term
• Unpopular -- Taking actions that customers, suppliers or employees don't like

Are you putting off doing something important because it's hard? Have a look at the priority list of your own strategies and see if there's something that you need to just grit your teeth and do.

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Terry Weaver


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

Time to Recalibrate Your Year-End Tax Strategy

As the tax year end approaches, the smart thing to do is minimize taxable income by stalling income and accelerating expenses, right?  Maybe not -- at least for awhile.  This axiomatic, ingrained belief among business owners may cost you a lot of money if you stick with it for the next couple of years.  It came up today in a Chief Executive Boards International meeting, stated as if it was a physical law of the universe.  It's not.  Don't delay -- you have 4 months left to make some major changes in your year-end tax strategies, and they may need to be completely revamped from what you're used to.

Why? The game has changed. Let's examine the assumptions -- that we're going to have to pay tax on the income sometime, and later is better than sooner, since we get to hold onto the cash and keep it earning interest for us. Embedded in that assumption is that the tax rate later is the same as the tax rate sooner, right?

The changed game is that you're probably not earning meaningful interest on the deferred taxes, and also that the tax rate you will be paying in the future is going to be higher than this year's tax rate.  Further, if your 2010 income is likely to be soft, you may have the further advantage of being able to accelerate income into an even lower marginal bracket this year, as well.

The fact is that on ordinary income the highest federal bracket will go up from 35% this year to 40.8% next year, including the effect of some lost itemized deductions.  In 2013, left unchanged, the maximum rate on "unearned" income like dividends and interest goes to a stunning 44.6%. As far as capital gains are concerned, this year's 15% rate goes to 21.2% next year, and since you'll be patriotically helping to pay for the health care of the nation (whether you want to or not), to 25% for 2013.

So, what's the better plan?  For most taxpayers, it's the reverse of decades of conventional wisdom.  Accelerate income. Stall expenses and deductions. For every dollar of taxable income you move into this year, you have a "window" into which you can accelerate 2012 income into 2011 for some of the same benefits.

This also might be a good year to convert some of your tax-deferred IRA investment into a Roth 401(k).  Pay the income tax now at rates lower than we're likely to see for awhile and your future gains become tax-free for life.  See: "Roth IRA Conversions -- Potentially Great Opportunity for 2010" for more details.

If you have a point of view on changes in tax strategy for 2010 vs. prior years, please click on "Comments" below and share them with others.

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Terry Weaver


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

5 Ways to Incentivize Better Employee Health

Are you wondering whether you can charge your employees to offset the cost of their unhealthy lifestyle choices, or to motivate healthy behavior changes?   Apparently you can.   Per a recent Market Watch article:

"According to a Hewitt survey released earlier this year, almost half of large U.S. employers say they currently use or plan to use financial penalties over the next three to five years for employees who do not participate in certain health improvement programs. Such penalties will likely take the form of higher health insurance premiums or deductibles, or higher out-of-pocket expenses than employees who are deemed healthy must pay."

A member of Chief Executive Boards International sent me an article from MarketWatch that included various ways you might help recover your costs of unhealthy behavior or (better yet) motivate changes in lifestyle choices:

• Raise all deductibles, perhaps to $2000, with a $500 credit for those participating in screening for cholesterol, blood pressure, tobacco risks, etc.   
• Higher premium copays for smokers
• 10% premiuim copay discount for non-smokers or smokers who enroll in a smoke-cessation program
• Higher premium copays for those with high body-mass indices
• 10% premium copay discount for participation in wellness or exercise programs

Of course, plenty of gray areas exist, depending upon health conditions outside an employee's control.  Read the full MarketWatch article....

If you have taken steps to economically motivate or penalize employees for health-related lifestyle choices, please click on "Comments" below and share them with others.

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Terry Weaver


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