Roy's Blog

May 19, 2014

Your Customers are Your Most Valuable Assets

When asked to identify their valuable assets, many mention things like people, employees, shareholders or technology.

Their customers are rarely mentioned.

Asset value is measured on the returns generated by them.

Have you ever calculated the Future Value (revenues) of your top 10 customers over a future period?

It is a HUGE number.

If you have 5 customers spending a total of $5 Million per year with you, and they are with you for another 10 years, at the end of the decade 10 they are “worth” about $75 million (at an implied interest rate of 5%).

Would you say an asset worth $75 million should attract your investment attention?

I would think so, yet most organizations don’t think of their existing customer base as assets requiring investment to maintain.

My observation is organizations almost ASSUME customers will be loyal and will stay with little or no attention. How often does your CEO call your largest customer?

The irony is that most organizations are quite willing to throw money at trying to acquire NEW customers by offering freebies (come over and get a free 42” LG LED TV) and special promotions (come over and get the first 3 months free) to entice people to leave their existing supplier.

A new customer acquired isn’t an asset until they have proven their loyalty.

Why invest in a POTENTIAL asset when you have current assets that require attention?

Doesn’t make much sense to me.

Lavish the goodies on your “$75 million Club”.

They will return the favour.

Cheers, Roy

BE DiFFERENT or be dead Book Series

Other articles you might like…

Gems of leadership from Grandma
How to develop an employee performance plan
What customer service is NOT
Don’t bring me the problem…

May 12, 2014

5 Steps to Develop a Employee Performance Plan

First, do you need one?

YES, if you want to create a pay-for-performance culture.
YES, if you want to align employee actions with the priorities of the organization.
YES, if you want performance to improve over time.
YES, if you want objectivity in how performance is evaluated.

NO, if you prefer subjectivity, no structure and dysfunction in the organization as everyone does their own thing.

For the “Yes’s” these are the 5 steps I used to build performance management systems in my 30+ executive leadership career.

They work.

1. Decide on the COMPONENTS of your plan. I suggest two: one for Corporate results; one for Personal results. I don’t agree with the 4-component “Balanced Scorecard” method; too complicated; too many messages to employees; too many objectives. Focus on the critical FEW rather than the possible MANY.

2. WEIGHT each component. I suggest 75% Corporate; 25% Personal. These can be adjusted but I recommend a strong incentive to hit corporate targets.

3. SET CORPORATE OBJECTIVES.  These objectives will be shared with every employee. I suggest no more than 3 or 4 that represent the priorities of the company. Choose metrics that people feel they can influence as well. My fav’s: Top line revenue, operating earnings (EBITDA),  quality of service as perceived by the customer.

4. SET PERSONAL OBJECTIVES. Make them quantifiable (a due date to compete a task works); no more than 3; align with corporate strategic goals.

5. REVIEW progress toward objectives with employees quarterly; the “Performance Evaluation Meeting”.

There you go. Done.

Work with it and improve it as you go.

Cheers, Roy

BE DiFFERENT or be dead Book Series

Other articles you might like…

Do you flit or do you lead?
What customer service is NOT
Don’t bring me the problem…
Great leaders look for “the pony”

May 5, 2014

What Customer service is NOT

Some organizations talk about providing customer service but what they really mean is enforcing their rules that define how customers are “allowed” to do business with them.

How they buy a product. How they get information on products. How they pay. How they register a complaint.

Customer service isn’t about controlling people. Nor forcing them to do things they don’t want to do.

It’s about SERVING them.

Who typically influences the rules that control customer engagement? Internal Auditors. Systems Analysts. Process Engineers. Efficiency Experts. All focused on “the inside”.

Something’s missing.

It’s about time the REAL “C-Suite” be invited to help design the customer engagement process and the rules that should govern it.

Do you regularly review your rules, policies and procedures with your customers?

Do you allow THEM to help determine what they should look like?

Cheers, Roy

BE DiFFERENT or be dead Book Series

Other articles you might like…

Don’t bring me the problem…
Great leaders look for “the pony”
Old school leadership is out
Do you flit or do you lead?

April 28, 2014

Don’t bring me the problem bring me the solution

My best boss and mentor declared this whenever someone tried to pass a problem to him; he would have nothing of it.

He was different from many of his peers who felt obligated to be the problem solver and therefore “force” his direct reports to depend on him.

As a direct report, I wanted to learn about the business and solving problems was THE best way to do it. Having my boss provide all the answers didn’t help teach me the business and it certainly didn’t enable me to grow.

This was his approach:
1. He would insist that our problem discussion was focused on the SOLUTION I thought would work.
2. He insisted that I identify a number of potential options with pros and cons of each.
3. He expected I did my homework in terms of the CUSTOMER VALUE each option would create. This was the number one criteria he used to judge the ranking of the options I presented.
4. He probed each option; asked me tons of questions; took a copious amount of notes.
5. He asked me to consider our discussion for 24 hours before deciding on the solution I thought was best.
6, He directed me to advise him of the direction I was taking.
7. I was held accountable for the impact of my decision. I had to report back to him in 30-60 days on the results.

That was it. I defined the problem; outlined a range of potential solutions with the pros and cons of each; he added value through his questions; I made the call and was held accountable.

I learned, felt respected; developed leadership skills and mentored others on the same approach.

Cheers, Roy

BE DiFFERENT or be dead Book Series

Other articles you might like…

Do you flit or do you lead?
What’s your competitive advantage?
You can check out any time…
Great leaders look for “the pony”