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6 Posts authored by: CommunityTeam

Off Season Training

Posted by CommunityTeam Jun 5, 2009
All Four Seasons
Running a seasonal business presents a particular set of challenges-and opportunities

By Max Berry

Running a seasonal business may seem like an entrepreneur's dream: Work hard for part of the year and earn enough for the whole of it. But running a seasonal business, just like any other kind, is a yearlong endeavor-one that requires meticulous time management and an extra degree of financial savvy. Here are ten ways to get the most out of your seasonal business at every time of the year.


1. Take Advantage of the Off-Season
Banish the notion of down time altogether: By developing an airtight business plan during your off-season, you can ensure that the money you earn once things pick up again is managed effectively. The off-season is also an excellent time to develop a marketing plan; while you have a minute, poll your patrons to better understand how to serve them and use the information you gather to develop new ideas. You can use your slow season to take care of logistical matters as well. Make sure your lease is in order, lock in your staff as early as possible, and negotiate pay rates before you draw up your budget.


2. Make The Most of the On-Season
One of the perks of running a seasonal business is that, during the busy period, demand for your product or service is high. But the accompanying cash flow can create a false sense of security heading into those lean months ahead. Be financially mature, now matter how booming your business is for those few months. Pay yourself a livable-but not extravagant-salary, put all the money you can into a business savings account, and don't farm out jobs you could do yourself.


3. Diversify
Don't feel like your business is bound to one product or service. You can add to your income by hosting some "extracurricular" events to complement the services you already provide. If you run an art gallery, approach an artist whose work you're displaying about offering art classes at night. If you run a surf or ski shop, try offering lessons on the side.


4. Remember the Locals
Even if tourists represent the bulk of your business, don't forget to cater to the locals too. This can be an especially effective way to drum up business in the off-season, when the tourists are gone. Seasonal restaurants, in particular, can treat the end of tourist season as its own kind of beginning. A well-publicized locals night, celebrating the end of a successful tourist season, will remind your year-round regulars that you're there for them too, and will strengthen your business' place in the community.


5. Have Two Business Models
Rather than shutting down completely, adjust your business model to accommodate the seasonal shift in customer needs. Many summer camps keep revenue flowing in the fall and winter by renting space for special events, retreats, and conferences. It's also regular practice for restaurants that cut back on their hours in the off-season to remain open year-round for private events and holiday parties. While these events will provide a less consistent cash flow than the day-to-day business of your "on" season, patrons will pay more for private use of your space.


6. Make The Scene
Be on the lookout for events to help promote your business; trade shows run year round and taking part in local festivals, fairs, and holiday activities is a great way to increase brand visibility and make a personal connection with the people in your community. Include your goods or services in a local charity auction-whether it is during your busy season or not-to keep your business fresh in peoples' minds.


7. Appeal to the Entire Family
You may eliminate the off-season altogether by appealing to several demographics at once. Don't forget, if you run a restaurant, lounge, or other public community space, that every season is sports season. A television and a liquor license will attract a large crowd on game day, whether that game involves hoops or mitts. But stay family friendly. Games and a special menu for the kids-as well as a smoke-free environment-will make your business a viable destination for anyone's night out.


8. Give Them Something to Get Into
If there is one particular season that sags for your business, give it some life by initiating year-round clubs and competitive leagues for your customers. Bars and restaurants can bring in business with billiard leagues or regular darts tournaments; bookstores can host regular book club meetings and creative writing workshops; and restaurants can offer a series of cooking classes specializing in local fare and holiday favorites.


9. Start a Complementary Business
Perhaps the surest way to survive a seasonal business' down period is to start another business for another season. Some landscapers, for instance, do interior floral arrangements and design work in the winter. As long as the two businesses are complementary, the reputation you've built through one will lend you credibility in the other.


10. Stay In Touch
Stay fresh in your customers' minds by starting a mailing list. This way you can send periodic updates on developments in your business, new products, and information on when you'll be opening for the season. You can also send valued customers special offers and discounts to keep them coming back. A quality web site, with a section for similar news items and updates, will also give you a way stay at your customers' service throughout the year.
Here are some tips on how to deal with unhappy customers and where to draw the line in resolving their problems

By Christopher Freeburn


Small business owners understand the necessity of attracting customers to their business. But keeping those customers happy and coming back means more than just offering good products and services at reasonable prices. It means properly dealing with the inevitable complaints from customers who have a problem with your company's products or services, or with the way in which they were delivered.


Knowing how to properly resolve customer complaints is crucial. According to a recent study by the Technical Assistance Research Programs Institute, 91 percent of customers who have an unsatisfactory experience at a business while making an expensive purchase will not do business with that company again. And even when the item purchased was inexpensive, the study found that more than half of the customers surveyed indicated that they would shop elsewhere after an unresolved complaint.


In most cases, losing a customer over a complaint is unnecessary, says John Tschohl, president of the Service Quality Institute. "Nine times out of ten, just a little bit of effort by the business to address the customer's complaint would have soothed the situation and probably kept the customer coming back." Indeed, if your business handles the situation properly, not only can a customer's dissatisfaction be remedied, but you can also build additional loyalty to your business. "If a customer sees that your business is responsive to his or her problems, they are actually more likely to come back to your for additional purchases, since they know that they can count on your to help them through any future issues," Tschohl adds. Not only does this make for repeat individual customers, but it can help spread a positive image of your company through word of mouth, since satisfied customers ar

Steps to address complaints



Listen carefully. "The most important thing in handling a customer complaint is making sure that the customer feels that he or she is being heard," says Tschohl. Nothing increases customer anger more than the impression that the company doesn't care. "Whether it's the business owner himself or a salesman or representative talking with the customer, it's important to make sure the customer knows that someone is listening." Tschohl advises empathizing with the customer and reassuring him or her about the importance of their complaint and your desire for continued business.


"When customers feel that their complaints have fallen on deaf ears, they will probably take their business elsewhere in the future," says Tschohl. "Worse for your business, they are very likely to tell their friends and family about the experience," he adds. A disgruntled customer can spread his or her dissatisfaction by word of mouth in a way that can turn a potentially large number of prospective customers away from your business. If your business happens to be in a small town, this effect can be magnified, since small communities have limited customer bases.


Admit any errors on your part. Even the best companies sometimes make mistakes and even small errors can irritate customers who were counting on you to deliver the right goods or services on time. If your company did indeed make a mistake, the best thing you can do, Tschohl says, is to admit the error and work toward correcting it. If the wrong product was sent to the customer, for instance, ship them the correct product without charge. If you can't correct the error itself, offer some form of compensation for the customer's lost time or inconvenience.


Apologize. "Say your sorry that they've had a bad experience and that you want to make things right. Just saying you're sorry-even if you admit no blame-goes a long way toward cooling off someone who's upset," Tschohl notes. Customers want some acknowledgement of their distress, and in some cases Tschohl says that just providing that acknowledgement may be enough, even if there is nothing else you can do for the customer.


Offer solutions. In most cases, customer complaints can be resolved by offering something small like a discount on future purchases, or by granting a refund. "It's better to lose some money settling a customer complaint than to lose additional business," Tschohl says, "because 87 percent of angry customers will tell their friends about what happened, and that could cost you a lot more in potential business."


Follow up. Once you have reached a solution with the customer, be sure to follow up after a little time has passed. Not only does this allow you to see if the complaint has been fully addressed, but it reinforces the customer's impression that your company really does care about keeping their business. That will go a long way toward moving your company's relationship with that customer beyond the problem and toward future purchases.
By Max Berry

A faltering economy may not seem like the ideal environment for attracting new customers. But, even when consumer confidence is low, there is plenty a small business owner can do to instill faith in his existing customers and court the attention of those looking for a business to believe in. The secret, as always, comes down to the golden rule: Be good to them and they'll be good to you.


Back To Basics
"If it's not essential to your business, don't do it," says Ed Hess, Professor of Business Administration & Batten Executive-in-Residence at the University of Virginia's Darden Graduate School of Business. "You have more leeway in the good times, more cushion for mistakes, more room to experiment."


According to Hess, when the economy takes a serious turn south, experimentation is one of the first things to which a small business owner should bid adieu. Dreaming up innovative services and marketing strategies may earn an entrepreneur big business in a time when consumers are looking for the next big thing. But when they, like you, are just struggling to get by, they'll appreciate a straightforward approach. "The closer you are to basic, fundamental needs, the better chance you've got of attracting new business," says Hess.


This strict reliance on the fundamentals-which Hess identifies as quality of product, caring customer service, and strong cash flow-is also a cautious way to proceed in unpredictable times. "Even if your business is doing well," Hess advises, "you need to operate as if the economic downturn will last a long time or might get worse before it gets better."


But beyond keeping you safe rather than sorry, returning to the fundamentals may actually reacquaint you with the most basic-and valuable-tenets of entrepreneurship. As Hess points out, "Hard times focus the mentality of a small business owner back to the fundamentals of customer service and customer acquisitions."



Target the Right Customers
The first step to attracting new customers in any economic climate is pleasing your regulars. "Get close to your regular customers," advises Hess. "Those are relationships that will pay off in the good times." Moreover, the word-of-mouth buzz you gain from them will be a huge boon in attracting new business.

Getting close to your regular customers in an economy that is tough for both of you may involve offering longer warranties and easier return policies on products, or special deals and discounts for your most valued patrons. Your customers have to bear with bad economic times just as much as you do. Let them know you're in it together by reaching out to them and making your relationship as hassle-free as possible. Show some empathy and you'll receive it in return.

Even so, when times are tough, you can't give too much away. "Certain customers you bend with," says Hess. "Others, you can't. It has to be a strategic decision, not global and across the board." Not every customer who patronizes your business should benefit from special offers or discounts. Get in touch with your most loyal customers and offer them an exclusive deal. The fact that you're remembering them in particular, rather than throwing up a sign in the window that says "Sale!" will go a long way toward building that empathy.

Target new customers just as carefully. Look at the demographics of your usual patrons and don't waste resources trying to attract an entirely different set of customers. "Small business owners need to be more tactical and focused in hard economic times," says Hess. "A manager should not use broad-based marketing. You have to think, ‘Who are my customers and who will keep spending?' It's like a rifle shot, not spraying a field."



A Silver Lining
Believe it or not, an economic downturn offers its own kind of opportunities to America's small business owners, if they know how to take advantage of them. "Now is an opportunistic time," says Hess.

While the professor stops short of positing that, disaffected by major corporations, consumers will run to the open arms of America's small business owners ("That's soap opera stuff," he says), he does see an upside to down times: "Other businesses are getting in trouble and their customers have to go somewhere."

Hess makes a compelling point. The most sustainable businesses, the ones providing the best value and customer service, will endure while others fail. And those that survive, naturally, will pick up business from those that don't. The trick is to strive toward running the kind of business that can last. "The economy is out of your control," says Hess. "Focus on what you can control and be very, very proactive."

Firing a customer

Posted by CommunityTeam Oct 5, 2007
The customer is always right, right? Wrong.
By Reed Richardson

Ordinarily, a statement like this might seem like heresy in the business world, considering all the time and effort spent pursuing and landing customers in the first place. But to Larry Selden, business professor emeritus at Columbia University, this is exactly the kind of radical approach more businesses should be adopting.

"This doesn't fit the way most managers run and measure-and thus think about-their businesses," he acknowledges in his 2003 book Angel Customers and Demon Customers. But Selden, who co-authored the book with Fortune senior editor-at-large Geoffrey Colvin, writes that based on their research almost every company "consists of both profitable and unprofitable customers-angels and potential demons. Some customers are making your company more valuable while some are draining value from it."


The costs from these "demon customers" can be staggering. In his book, Selden estimates the bottom 20 percent of customers can often generate losses totaling more than 100 percent of a company's profits. At the same time, many business experts note the existence of an "80/20" rule with regard to "angel" customers, whereby roughly 80 percent of a company's profits come from the top 20 percent of its customers. But the first step toward improved profitability involves differentiating between the "angels" and the "demons."

Perhaps the most effective way to do this is through activity-based costing. Rather than using traditional accounting methods that tend to distort cost information by heavily weighting labor and materials over support operations, the ABC method traces all costs back to individual product lines or services. Most small businesses make the mistake of only looking at how much an account or customer brings in, instead of assessing the their true net value.

Once you begin to determine your customers' true worth, then you can start to tier your services to match profitability, focusing greater support to your top level of customers. What to do with the bottom 10 or 20 percent of your customers, however, remains controversial. Some business experts advocate ruthlessly cutting those customers loose, while others, like Selden, believe you should at least attempt to "exorcise" those "demon" customers first, using tactics such as discouraging returns or upselling.

Still, the best opportunity to identify "angels" and "demons" occurs before they become customers. By properly sizing up prospects, your business can expend less energy and make more money without having to "fire" anyone.


Below, we've identified four categories of bad customers that can suck the life and profits out of your small business. For each one, we've also suggested a corresponding strategy for ridding yourself of these "demons" that's more nuanced than just telling them "You're Fired!"

1. Exceptions to the Rule. These are customers whose needs don't line up with your small business's areas of expertise. Often, they're either pushing you to provide new services before you're ready or they're still clinging to an old product line and haven't recognized that your business's focus has changed.

How to "Fire" them: Schedule a face-to-face meeting and patiently, but firmly, explain the gaps between their needs and your company's capabilities. If they are uninterested or incapable of switching over to your current products or services, refer them to a reputable business that can satisfy their needs and extend your current business arrangement for a few more weeks to allow them a smooth transition.

2. More for Less-ers. This customer focuses solely on price and is constantly pressing you for more while at the same time expecting to pay less. The only value they see in your company is measured in how good a deal you're giving them.

How to "Fire" them: Rather than just hit these customers with an up-charge that they're sure to bitterly reject, give them a choice between accepting a price increase or adding on other premium services offered by your business. If they accept the latter, you might still be able to convert them into a loyal, profitable customer. Even if neither offer appeals to them, chances are they will leave on good terms, feeling like it was their decision to go, rather than yours.

3. Whiners and Beefers: Some customers live to complain and feel like the "customer is always right" mantra is an excuse to act rudely and make ridiculous demands. Even if they seem like profitable clients, there are often hidden costs-like increased customer service calls and lowered morale-that make them worthy of getting the boot.

How to "Fire" them: Explain to the customer that, based on the frequency of their complaints, it's apparent that your small business will never be able to satisfy them. So, as part of your commitment to providing them the level of service they desire, politely let them know that you're referring them to another company. (Let your competitor deal with the headaches.)

4. Indecisive Wafflers: These customers promise big payoffs or lots of sales, but rarely follow through. And when they do commit to a purchase or a project, they often ignore your advice and end up disappointed or ask for endless changes and abandon the project before it's finished. If you're not careful, their dithering can ruin a hard-earned reputation for having satisfied customers.

How to "Fire" them: In the retail world, notifying your customers upfront about your returns policy and then strictly enforcing it can often weed out perennial browsers and serial complainers. In a professional practice or b-to-b environment, requiring both potential and current clients to commit to written, contractual deadlines as well as ongoing payments can help prevent them from becoming afflicted with constant "what if" syndrome.

Reed Richardson is a writer/associate editor for Business 24/7 magazine.
Need more time back in your day?
By Michaela Cavallaro

If so here are some simple steps you can take to save more time each day, be more efficient and concentrate more on the core of your business. You spend all your time putting out fires. When management is busy dealing with the crisis du jour, there's no time to figure out how to prevent the problems in the first place. Key employees burn out, and the business loses its way. Owners and managers who spend all their time putting out brush fires often overlook more fundamental issues that can threaten a business. "We can pay so much attention to getting the product out the door that we don't notice the product was in its death throes," says Jamie Walters, founder of San Francisco-based Ivy-Sea Inc., a consulting firm that focuses on leadership and entrepreneurship. Walters also is author of Big Vision, Small Business, a book about the role of vision in small businesses.


Revisit your vision for your business. Walters has great empathy for the demanding schedules entrepreneurs face-she's one herself-but she maintains that it's crucial to schedule time for what she calls a "vision checkin." The idea is to take time to ponder and shape the priorities and direction of your organization. Run the results past trusted advisors, who might point out blind spots. That done, you can work on specific strategies (several of which we'll address below) to get your work-life back on track. Owners and managers spend their time doing jobs someone else could do as well or better.

Ashlyn Gomez, who runs a Dalton, Pa.,marketing firm called Inkwell Business Writing, is reluctant to hand off responsibility to even the most trusted employee. "Entrepreneurs tend to be do-it-yourselfers, so it takes time to learn to actually trust and value the contributions of others,"she says. She's right about that. But business owners and managers who underestimate their staff and fail to delegate often find themselves overwhelmed. The results can be hard on your firm's bottom line-not to mention your mental health.

Delegate. The first step is to decide which tasks you should delegate. Mark Ellwood of Pace Productivity, a Toronto consulting firm, recommends pondering two questions: First, how does your business make its money? Second, how much of your time are you spending on the tasks that are directly related to that goal? For example, let's say you are a partner in a law firm that makes its profits finding clients and performing their legal work. You probably should focus on those tasks, not on administrative jobs that an office manager can easily do or oversee.Many entrepreneurs claim they can't afford to pay someone else to do a certain job-or they insist that no one else will know how to do the work right. Chances are, neither claim is true, but such errors of judgment can lead to dismal results.

Ellwood's verdict: "Delegation is where entrepreneurs are most likely to fail." You might start by delegating tasks such as administrative work and Web site development. Ellwood himself hires a specialist to implement his concepts for his website. He could certainly learn HTML, but it's far more efficient to pay someone else to do it while he focuses on meeting with new clients.

What if your employees are too busy to take on more work? Consider hiring a new person, or outsourcing some of the work. That way, Ellwood can do the work for which clients pay him: analyzing the results of their time studies and recommending how they can be more efficient. This kind of letting go isn't always easy, but it can be very liberating.You overlook or underestimate ways to use technology to make your company more efficient. That knowledge can be an important resource as you work to help your employees become more productive.

"A lot of what we see is small business owners either misusing or not taking advantage of software to streamline what they do," says Dave Waldrop, director of business development for Microsoft. Waldrop and others on his team do this by emphasizing the right applications for the right job and encouraging small businesses to link them all together. "For example, if a small business owner is using an Excel spreadsheet to manage payroll, it's functional, but it's not really what the program was designed to do," he says.

As an alternative, he recommends to his clients that they start using more comprehensive small business accounting software, which can now be used to track cash flow from the point-of-sale as well as automatically link to your payroll provider. "This can save you lot of time and it reduces the chances for mistakes," Waldrop points out, "because you're not having to re-enter financial data several times over." In addition, more and more small business owners are combining accounting programs like Microsoft's Office Accounting Pro or Intuit's QuickBooks with small business management software suites like those offered by Microsoft, NetSuite, or Hyperion Solutions to create helpful "business dashboards." The purpose of these dashboards is to distill all of a small business's sales, inventory, and financial data down into a single page of real-time, key performance indicators which, in turn, can be used by an owner or manager to make better informed, more timely decisions.

Focusing on the big picture rather than getting bogged down in the details is the real goal, here. Or, as Waldrop puts it: "We want to prevent small business owners from always getting stuck in the back office, we want to keep them in the front office." Whatever your strategy for enhancing productivity, it's helpful to lead by example. Case in point: If you interrupt whatever you're doing to respond immediately to employees' emails, they'll get the idea that they should do the same. Similarly, employees who see you making time to meet with your advisors about the company's strategic direction, communicating your goals clearly, and delegating or outsourcing appropriate tasks, are likely to follow suit. Chances are, your company will be the better for it.

Michaela Cavallaro is a freelance writer. In 2005, he was named the National Small Business Journalist of the Year by the U.S. Small Business Administration.
The latest management theories all support one basic conclusion: Happy customers come back.
By Chris Freeburn

It's a truism that keeping customers happy keeps customers coming back. But what are the best ways to maintain customer satisfaction, beyond providing the best product or service you can? How can small businesses maximize customer satisfaction and translate that into repeat business and good word of mouth?

According to John Tschohl, president of the Service Quality Institute, "Ninety-five percent of all business owners believe that their companies are exceeding customer expectations in terms of service." That, Tschohl says, is far from the truth. Indeed, lousy service and poor communication ranks as one of the top consumer complaints, he adds. In a competitive economy, becoming a customer service leader is one of the least expensive ways of improving performance. In fact, in today's highly competitive business environment, Tschohl calls good customer service "a matter of survival."

For Abacus Plumbing, based in Houston, Texas, customer service has become a driving focus. According to company vice president Alan O'Neill, Abacus incorporates customer service into every aspect of its business, focusing heavily on training and customer feedback. "Our motto is: do what you say you are going to do, when you say that you're going to do it," O'Neill says. In addition to training all new employees to be responsive to customer needs, Abacus maintains constant communication with the customer during every stage of the sales process. This includes calling the customer before and after sales and servicing calls to gather the customer's feeling about the experience. This attention to customer service resulted in Abacus receiving a Houston Better Business Bureau's 2006 excellence award.


The First Step
Tschohl emphasizes that the first step in improving customer service is understanding how critical it is to your business. "Small business owners are much worse than large business when it comes to addressing customer concerns," Tschohl says. "Too many operate under the idea that there are an infinite number of customers and if someone doesn't like how they run their business, too bad." This is a serious error, he says. "If you want to take your small business and become a big, profitable company, you need customers to be satisfied. You need them to keep coming back, and you need them to tell their friends about your business."

Coupled with this is the problem that few small business owners understand how customers actually experience doing business with their company. "Most business owners have no idea how their customers see them. They don't know what it's like to do business with their own company, because that's not a situation they've ever observed first hand."

This lack of understanding can lead business owners to misjudge the efficacy of their own sales and customer care practices. Tschohl recommends asking your customers directly about their experience with your business. "Sit down and ask them about their experience," Tschohl advises. "Don't wait for a complaint. Ask them for suggestions on how you could do things better. Or what they don't like. Talking directly to your customers is the fastest and cheapest way to gauge how your company is doing customer service-wise. Customer surveys are effective. He also advises providing a means for customers to give feedback at the time of purchase. "A little card at the sales desk, or a postage paid postcard that arrives with a delivery," he suggests. "Anything that lets your customers let you know how they feel right away."

Handling Complaints
Dealing with dissatisfied customers is one of the most important and delicate interactions a business faces. "Ninety-one percent of unhappy customers who made a big purchase will never come back," Tschohl warns, citing a study by the Technical Assistance Research Programs Institute. But even among small-item purchasers, 63 percent will go elsewhere if they feel dissatisfied with their experience, Tschohl adds. This can have a dramatic impact on a business's bottom line. Tschohl cites research indicating that reducing non-returning, dissatisfied customers by just five percent can double a company's profits.

"The most important thing in handling a customer complaint," Tschohl says, "is making sure that the customer feels that he or she is being heard." Nothing increases customer anger more than the impression that the company doesn't care. "Whether it's the business owner himself or a salesman or representative talking with the customer, it's important to make sure the customer knows that someone is listening." Tschohl advises empathizing with the customer and reassuring him or her about the importance of their complaint and their continued business with the company.

"Suggest alternatives," Tschohl says. "Provide a variety of options for resolving the complaint." He also suggests apologizing to the customer in a way that doesn't blame anyone for the problem. "Say your sorry that they've had a bad experience and that you want to make things right. Just saying you're sorry-even if you admit no blame-goes a long way toward cooling off someone who's upset." Shifting the blame elsewhere won't work and may only further antagonize the customer.

Finally, come to some resolution. "It's better to lose some money settling a customer complaint than to lose additional business," Tschohl says, "because 87 percent of angry customers will tell their friends about what happened, and that could cost you a lot more in potential business."

Recovering From Mistakes
No company gets it right all the time. Mistakes happen. A customer gets sent the wrong order. Errors occur in billing. Two clients are accidentally booked for the same time slot. Preventing errors is an important task for any company, but dealing with mistakes is equally critical, says customer service consultant Peggy Morrow, principal at Peggy Morrow & Associates.

"How you handle a mistake will directly determine whether you ever see that customer again," Morrow says. "Most customers are perfectly willing to overlook a mistake on your part so long as they feel you've truly apologized for the error and offered them something in return." Compensating the customer for a perceived loss-their time or convenience, for example-goes a long way to smoothing ruffled feathers, Morrow says.

"Always offer the customer choices," Morrow says. Depending on the context of the mistake, that can be anything from a discount on future purchases, a full refund, a service upgrade, or a preferred change in scheduling. "Angry customers usually feel a loss of control. By giving them a range of options to make up for the error, you are putting them back in control of the situation," she advises. That will mitigate any annoyance the customer feels over the mistake and leave the impression that your company greatly values its customers.

Customer Relationship Management
Business experts have transformed the basic art of customer service into a management strategy in the form of Customer Relationship Management (CRM). In the 1990's CRM became a buzzword in business management, spawning a legion of CRM experts and software applications meant to automate the CRM process for companies. CRM specialists have defined the entire sales process as critical to maintaining customer loyalty and satisfaction. "Implementing a CRM strategy begins with planning your business operations based on customer desires rather than on predetermined business goals," says Bob Thompson, president of "The idea is that for your business to succeed, it must be customer-centric. That means that every aspect of your business should be concerned with ensuring the satisfaction of your customers all the way through their interaction with your company."

Opening an informed dialogue with your customers is a critical element in constructing a functional CRM strategy, Thompson says. "Listening to what your customers have to say about their experience and about what they want to see your company do is the bedrock on which you begin to mold a CRM plan for your business."

Once you have determined what your customers want from your company, you must evaluate every aspect of your organization to determine how each department works toward satisfying those goals, Thompson says. And you must be prepared to reshape operations to fit the CRM strategy. "This can mean retraining employees or altering major parts of the business structure," Thompson says, "but it is crucial if the CRM strategy is to succeed. Thompson strongly recommends retaining a CRM consultant to assist with designing and implementing a CRM strategy for your business. "Experience in implementing CRM concepts is essential to effectively reorganizing a business," he says.

A wide variety of CRM software applications exist to help companies collect, analyze, and manage data about their customers and the effectiveness of their CRM strategy. But Thompson warns that too many companies simply purchase the software without implementing a company wide CRM strategy first. "Much of the disappointment with CRM software comes from company's that didn't do the organizational preparation first," he explains.

But choosing the right CRM software for your business is also critical. The variety of CRM software applications, designed to work with virtually any sized business, can bewilder the small business owner. Thompson suggests working with a CRM consultant to select the software that best fits your business's structure and needs. "The key is not to make the mistake a lot of companies did early on," Thompson adds, "which was to see the software as the heart of CRM. It's not. Software can give you valuable information on your company's performance with customers, but the key to successful CRM is developing a strategy based on input from your customers and then tailoring your business to meet those needs. Buying software is secondary to having the right strategy to begin with."

CRM meets CEM
According to Thompson, if CRM was the buzzword of the '90s, a new term, "customer experience management" (CEM), is the favored catchphrase among business management professionals in the 21st century. Whereas CRM focuses on maintaining the relationship between businesses and their customers, CEM focuses solely on mapping, analyzing, and improving the customer's experience with the business. "The ideal of CEM's proponents," Thompson explains, "is to turn a company's products into desirable experiences." He cites Apple's iPod and Starbucks coffee as examples of products that have been effectively transformed into something more than a mere MP3 player or overpriced cup of coffee. "People buy these products-at a premium-not just for the item itself, but for the experience of having it."

According to Thompson, CEM should be part of CRM, but often isn't. The critical difference is that CRM focuses on a customer's value to the business, while CEM identifies the business's value to the customer. CRM is functional, while CEM is emotional, Thompson says. They are closely related, but subtly different, he adds, noting that 80 percent of CEM practices mirror CRM strategies. Still, Thompson cites a recent study conducted by his group that found that only 22 percent of customers thought that companies provide a "an excellent customer experience," and another study revealed that companies that scored higher in implementation of CEM strategies had markedly higher profit growth.

Training Employees to Aid Customer Happiness
Whether you decide to implement a comprehensive CRM or CEM strategy, or simply take steps to improve your company's interaction with customers, customer service experts agree that the most effective thing you can do is to make sure your employees reflect this goal.

Keith Kirk, owner of St. Paul, Minnesota-based Greener Pastures and Seasonal Lighting, discovered the financial benefits of training his 22 employees in customer service. Facing slowing sales and high office costs he instituted a customer service training program for all employees at his company. When his first group of salespeople didn't respond as well as he hoped, he fired them and recruited a new team. "You have to find people who are willing to go the extra mile to take care of customers," Kirk says, adding, "not everyone's cut out for that." Kirk says that the better trained staff handle much more work and keep many more customers coming back.

"Creating a customer service-oriented culture within your business is extremely important," Peggy Morrow advises. "Share the results of customer feedback and surveys with your employees so that they can see how customers are responding," she suggests, "and cultivate a sense of group responsibility for performance."

Morrow also suggests rewarding employees who "go the extra mile" to make customers happy. Such rewards can take the form of a bonus, or an extra vacation day, or even a plaque or mention in a company newsletter. "It's also important to be very clear about the way employees are to treat and interact with customers," she says, "but employees need to have enough flexibility when dealing with a customer-especially a dissatisfied customer-that they can handle a customer complaint without frustrating the customer any more."

Finally, Morrow notes that there are some people who are simply not suited to interacting with customers. "No amount of training or company culture will overcome this," she says. "If you have an employee who does not show any desire or motivation to please customers, it is better to remove that employee," she adds, noting that a surprising number of companies tolerate customer service representatives who show disinterest toward customers. "It certainly doesn't win them any new business," she says.


Make customer service a focus from the top down. Don't just rely on your sales people or customer representatives. Senior managers and company owners must be just as focused. Lead by example.

Hire carefully. Not everyone is temperamentally suited for dealing with customers. Make sure the people you hire are capable of dealing with upset customers without losing their cool. Remove any employees who are inattentive to customer needs.

Train your employees. Make sure your employees know your customer service goals and have been fully trained in how to handle dissatisfied customers. All company policies for dealing with customer issues should be clearly stated and understood by employees. Your employees must understand how important customer service is to the company's success.

Know your customers. Talk directly with your customers about their experience dealing with your firm. Find out who they are and what you can do to improve their experience with your company. Provide methods for them to leave feedback.

Communicate feedback to your employees. Customer responses should be distributed among your employees, so that they can understand the customers' experience. Deal with complaints quickly. Customer dissatisfaction will only grow the longer it takes you to respond to a complaint. A fast response, and a willingness to work with the customer, can turn an upset customer into a repeat customer.

Chris Freeburn is an associate editor/writer for Business 24/7 magazine.

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