Considering Affinity in Client Relationships

Posted on August 18, 2011 by Ralph Dandrea — No Comments ↓

Affinity is a term that is bandied about without much thought behind it. So what is an affinity?

Affinity is a liking for or attraction to a person, thing or idea.

In short, it’s a connection and our connection to our clients is instrumental in our business success. Affinity is what keeps our clients returning … the feeling that we understand them and they us.

It is a team feeling, one of common ground and understanding. It’s when someone says, “I know exactly what you mean!”

Ideally, affinity should be a two-way street not a dead end, one way road. And when it’s at its best, the client/business relationship is joyful and symbiotic. We care about our clients and they care about us. Everyone should view their clients this way and be proactive in caring for their core concerns.

When affinity is at its lowest – the client doesn’t care and neither do we – it’s like ill-fitting dentures. Nothing is right and it’s always painful to deal with. We get to the point where we’re asking why we bother keeping this client around when it’s clear that we are of no value to them.

Working to Improve Affinity

Let’s begin our discussion of affinity by looking at the following scenario:

Sara has just been diagnosed with fibromyalgia and counts on our client, WebDoc, for increasing amounts of information. She wants updates and news of new pharmaceutical human trials because she’d like to participate in one.

WebDoc relies on Servers Plus to keep their servers and hosting in top shape so Sara – and the millions of fibromyalgia sufferers like her – can keep current with the latest research and information. WebDoc wants to be the only medical search site that Sara relies on.

The following chart shows the relationship between and the results of our affinity towards the client and the client’s affinity towards us:

Scenario #1: Low Affinity Toward Client and Us – Bottom Left Quadrant

This is a no-win quadrant for everyone involved. The real question we have as a provider is whether we really want the client we’re dealing with. There are some common obstacles we’ll both have to leap through to make them a client we care about but aren’t sure we want to take the time or effort.

Sara has a flare up that is different from the ones she’s had before. Because she has relied on WebDoc in the past for reliable, up-to-date information, she goes to the site again. This time it’s 3 AM and she’s in excruciating pain and hoping for, at the very least, some kind of explanation she can relate to that will ease her mind.

Sara knows that some of the pain comes about because she worries so much about it but she also knows that the pain isn’t all in her head. When she lands on her favorite site, she sees a site maintenance notice advising that WebDoc would be down from midnight to 3:30 AM in her time zone. While frustrated, Sara decides she can wait another half hour and decides to read while she waits.

She gives it an extra 15 minutes, knowing that sometimes it takes a bit longer to get a site upgraded with new information. By 4 AM, the site was still not back online and she was starting to panic. She sends an email to client support through her own email account and waits for an answer.

WebDoc’s webmasters see the flood of emails coming in about not being able to access the site and want us to respond quickly. We get to it when we can and have the site back up by the end of the day. WebDoc has called a few times – without a returned call — but Servers Plus’s only advantage is their cheap price. For a while, WebDoc might figure that they’ll deal with the aftermath even if they bleed subscribers.

The client in this quadrant is the most difficult to deal with because no one cares about anyone else which is obvious from the fact that Servers Plus hasn’t bothered to call WebDoc and WebDoc isn’t putting the heat on Servers Plus. It’s a lose-lose for both sides due to apathy.

Sara has been let down by WebDoc because she couldn’t find an answer to her new pain fast enough to give her peace of mind. Servers Plus has let WebDoc down because, well, they just couldn’t care less about their clients’ needs which is found in our inability to get the site maintenance done on time.

What can be done about this relationship? It’s a horrible fit at best because of the following obstacles:

  • WebDoc isn’t worth the time – Servers Plus is not making enough money on the account to make it worthwhile. WebDoc fails to perform by allowing Servers Plus to not acknowledge their lack of responsiveness.
  • Servers Plus sees WebDoc as idiots – In the past, they’ve made Servers Plus feel unimportant by ridiculing their service. In fact, it’s become one of their favorite pastimes and that just layers the annoyance

When there is low affinity from both sides, we don’t care about the client and the client doesn’t care about us. Any hopes for a decent working relationship are dashed due to the lack of commitment and concern on the part of the client and the company.

Lack of responsiveness is a symptom of low affinity. We can’t get answers to the questions we have and vice versa. The relationship becomes one of just doing enough to get by rather than being proactive to make it better. The client would only put up with our lack of responsiveness if we’re the cheapest game in town and they’re getting what they pay for. But they’ll leave in a heartbeat for someone cheaper or better.

Is there a resolution to this problem? Yes, and it’s raising our effective price to the point where the client will either be more responsive to our needs for information in order to give them better service or they’ll move on and leave.

Scenario #2: Low Affinity Toward Client/High Affinity Toward Us– Bottom Right Quadrant

This quadrant has high affinity from our client but low affinity from us. This is how it might shake out for WebDoc:

Same scenario as #1, but this time WebDoc is rabid to get the problem fixed. They call in to the Servers Plus office at 3:35 AM when the site hasn’t come back online and get voicemail.

“Hi, this is Don from WebDoc and our site maintenance was supposed to be finished by now. I know it’s early in the morning but we do have clients in other time zones that want access to our information. Also, it’s imperative that all of the new articles sent to you two weeks ago are placed online in the correct sections. Last time we had to bug you to get the pieces put on the pages they were meant for. Please call me right away at 555-993-0500, extension 3435. I’ll call you back if I don’t hear from you soon.”

SP gets the message but is busy doing other things and will get back to them as soon as they can. After another three voicemail messages from Don, SP finally gets back to him and tell him they are working as quickly as possible and should have the site back up shortly. In fact, it takes another day to have the site back online.

Clearly, WebDoc cares about Servers Plus and our service to them; Servers Plus couldn’t care less about WebDoc.

The problem, though, is that if we neglect a client long enough they could shift over into the lower left quadrant of low affinity between client and company. Another problem that is plaguing us in this situation is that a client in this quadrant isn’t likely to make the investment to move on. Why? They like us – we’re bigger and cheaper.

So why is the client “underperforming” for us? Because they’re not financially feasible. We don’t charge enough to have them be worth our while. That makes it a difficult situation at best because without a higher effective price, the work is pretty meaningless. A symptom of low affinity from the client towards us is their lack of acknowledgement of a job well done.

Is there an answer for a client like this? The best answer is to raise the effective price to offset the annoyance. The client could be redeemable if we’re charging enough for our services.

Scenario #3: High Affinity Toward Client/Low Affinity Toward Us – Upper
Left Quadrant

This quadrant is the reverse of what we just talked about. In this situation, we care very much about the client but the client doesn’t care much about us. This is where service comes into play, including how we can address a client’s core concerns more productively and proactively.

Here’s how this would play out for WebDoc:

Same facts as scenario #2 but with this twist: We’ve returned Don’s call promptly and received his voicemail. We’ve even called his cell and when he finally answers, he’s annoyed that we’ve tracked him down this way.

“Who’s this? Where did you get my cell number?”

“Don, this is Mark at Servers Plus. I’m sorry to call you on your cell but I got your voicemail when I returned your call.” “Oh. How did you even get this number?”

“You gave it to us for times when we couldn’t get you on your direct line,” Mark replies.

“Oh.”

“I just wanted you to know that we’re nearly finished with your site upgrade and should have you back online within the hour. All of the articles have been loaded and, since we were unable to get you back online by 3:30 as promised, we’re giving you a discount on next quarter’s bill.”

“Oh. Okay. Thanks.” Click

Clearly, Don isn’t impressed with the fact that Mark has done everything he could to track him down and deal with his core issues. In fact, he was quite underwhelmed that Mark had offered a discount without first being asked to do so.

How do we get a client like that to care as much as we do? We must become more strategic and find ways to support them in delivering what their clients want. In the case of WebDoc, the answer may be found in how we deal with their clients’ needs for information.

We could make finding the information much easier and develop an application that makes connecting and interacting with WebDoc simple.

This kind of client is a huge challenge because we’re trying to serve them by helping their clients and that’s a bit like playing telephone – sometimes it’s hard to service all of them well because the message is garbled in the transmission from their client to our client and on to us. This client is quick to complain but not quick to praise.

We need to have our client see us as instrumental in resolving their core concerns and not just an option to use occasionally. We must be instrumental in helping the client to create value for its customers. Once this happens, this client will move from the upper left quadrant to the upper right.

Scenario #4: High Affinity Toward Client and Toward Us – Upper Right
Quadrant

Being in this quadrant with a client is pure symbiosis. The relationship is joyful, with mutual care and concern on both ends. This type of relationship can only exist if we take on the client’s concerns as our own.

However, this does not mean that you can sit back and relax with this client. You must always strive to maintain a productive and rewarding relationship. It’s like marriage: the hard work starts when you put the rings on.

Here’s how this scenario would play out between Servers Plus and WebDoc:

Same scenario as #2 but the conversation is much, much different: Mark gets Don on his cell phone to tell him that the upgrade is nearly done.

“Hey, Mark, wow! I’m really impressed that you went the extra mile to find me. My voicemail is on because I’m hip deep in another problem.”

“No problem, Don. You’re a valued client and we want to make sure you’re properly taken care of. The site upgrade took a little longer than I anticipated it would so I want to help you clean up the impact it had on your business.”

“Well, thanks, but I certainly understand how you can get backed up. It’s really no problem”

“I’ll even go one better – let’s plan to talk next week about how we can help you serve your clients even more.”

This scenario not only shows Servers Plus as being the reliable company for WebDoc but they’ve offered to get together with the client to talk about any other concerns that may have cropped up since the site upgrade to help keep the relationship moving forward. We need to be proactive in this relationship and not wait for a complaint before responding and reacting to the client.

It’s this kind of work that will help us keep our clients in this quadrant. We need to continue to be instrumental in fulfilling their core concerns and, especially, proactive in our approach to their company. If we don’t work at this relationship, it will wilt and die and slowly creep over into the upper left quadrant.

It’s all about maintaining the relationship and helping it to flourish. When affinity is high for both sides, the relationship will grow and thrive. Not only is the client getting what it paid for, we’re receiving a reasonable effective price for the work we do.

 

© 2012 Ralph Dandrea. All rights reserved.

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The Commitment Conversation

Posted on August 11, 2011 by Ralph Dandrea — No Comments ↓

The commitment conversation is the first of three critical conversations for supervisors to have with team members and prospective hires. It is intended to give supervisors the benefit of knowing the commitment level of each team member at any given time, while in exchange rewarding those team members for their honesty and candidness.

A company is essentially a commitment machine. It achieves its goals when everyone works toward the same mission, vision, and values.

Why We Need the Commitment Conversation
The commitment conversation provides clarity about the status of team members’ dedication to our organization. A lack of clarity can create anxiety and surprise, which leads to unworkable situations. With an honest discussion, we can avoid surprising scenarios, such as the abrupt departure of a key player, which can result in anything from a week of anxiety to a mismanaged client to a devastating blow to a project. Why put ourselves and everyone else in such a position when simply being clear and truthful about where we stand will produce workability? This is a conversation about integrity as to how we conduct ourselves, treat our coworkers, and ensure that our clients are not affected by our personal choices. It is a way of raising the bar on commitment within organizations.

Most companies hire team members and assume that they are committed…until they’re not. The evidence of their defection usually arrives in the form of a letter of resignation. That certainly says they’re not committed. Between the time when they took the job and when their supervisor received their two-weeks’ notice, we might have wondered whether they were committed, but we didn’t know for sure until they quit. Wouldn’t it be a better idea to discuss our concerns when we see clues that a team member may not be happy working at our organization?

People are so afraid to talk about commitment, but these types of conversations can pave the way to better relationships and even better departures.

There are clear advantages to having frequent discussions with team members about their level of work satisfaction. Ask them specific questions about whether they’re enjoying their work, whether they’re feeling committed to it, and if there is any reason they might want to look elsewhere, and they’ll usually say that they’re happy and that things are going great. If a team member, citing boredom, mentions maybe going back to school, that could be the beginning of the decommitment process, and we can be glad that we won’t be surprised by it. In the past, we’ve had a team member give us notice on a Tuesday that his new job started the following Monday. That resulted in a lot of chaos for his team members, as well as a loss of dignity that prevents him from contacting any one of us to this day, even if we could be of help in his new career.

When I have this conversation with team members who show that they are committed to the organization, I always ask if there is anything getting in the way of feeling good about what they’re doing now. I focus on making sure that they have opportunities to grow. On the other hand, when someone is presenting evidence of being uncommitted, then I have a more serious conversation about what can be done about it. If I’m interested in making sure that I retain that team member, then I’ll get a little more in depth, maybe even considering if there is a possibility for creating an opportunity at ITX that would be more satisfying. If the team member’s desires can’t be fulfilled here, I accept that and thank the individual for letting me know that there is no longer a commitment. I also ask the team member to keep me updated about the job search and to let me know if I can help with a recommendation upon finding the ideal position. This lays the groundwork for being able to transition the team member’s responsibilities while maintaining a positive, productive atmosphere. There are no hard feelings because we’ve been straight with each other. Now, we can plan for the departure by getting everything organized and transferred to somebody else. I also let departing team members know that if they change their mind and decide to stay, they will be welcomed to recommit.

By having this conversation, we gain an understanding of what’s going on with our team members. It is a failure when a supervisor is surprised by a couple weeks’ notice from a team member. It means that the supervisor hasn’t communicated very well, and it creates a fire drill for the other team members and a risk for the clients they serve.

The goals of the commitment conversation are to protect the organization and to acknowledge the fluidity of individual career paths. It imbues our relationships with more understanding, support, and respect. It is not intended in any way to make people do anything that they otherwise wouldn’t do, to change their minds, or to try to make them be more committed. We are only attempting to obtain and maintain transparency about each team member’s dedication to the organization, and in return, we will provide an opportunity to thrive within a transparent environment and resolve any concerns.

The commitment conversation helps us to be honest and open about the state of our relationships so that we can make them as workable as possible and have integrity from beginning to end.

What it Looks Like
We structure the commitment conversation so that each side knows what to expect from the other. In order for the commitment conversation to work, we have to be willing to ask both sides to do something uncomfortable, something that rises above the usual bar. In order to set the bar higher, it can’t be one-sided, which is the norm for most organizations.

Once we ascertain that team members are committed, they are expected to make the organization’s goals their own. The second thing we expect is for them to let us know if they are ever no longer committed. The goal is not to make team members committed if they aren’t; it’s to provide clarity by having them tell us when they’re feeling less so. They are asked to inform the supervisor if they are decommitted before taking any action, such as calling back a recruiter or logging onto a job search website. Then we have the opportunity to encourage them to recommit by resolving their concerns. At the least, they will have the chance to exit with dignity, while we ensure continuity for the sake of our clients and other team members. We also ask that team members give us four weeks’ notice and supervisors, six weeks’. Rarely is it all needed, but it gives us the time to ensure that everything is running smoothly before the actual transition occurs. With advance notice, we can usually get coverage for a position quickly enough to reduce the amount of time we need before team members start a new job. In this way, the team members have done the right thing by committing to us every day of their employment before recommitting to another company who will surely be as happy as we were to have team members with such integrity.

Supervisors, for their part, promise to provide confidentiality, no repercussions, and a good reference upon learning that a team member is moving on. Further, the supervisor and the team member will agree about with whom the information will be shared in order to appropriately plan and/or work to resolve the team member’s concerns.

Another promise of the supervisors is transparency, in that they will provide clear and constant feedback about how team members are doing, and give them the chance to fix any problems. It will certainly be uncomfortable for supervisors sometimes, but with this conversation, they are agreeing to inform team members right away if something needs to be improved—Team members aren’t going to have to guess about how their performance is being perceived.

Perhaps the biggest challenge on the supervisor’s part is handling the team member’s concerns—not just listening to them placatingly, but actually taking care of them.

It is the supervisor’s job, with this commitment, to work every concern that troubles the team member about the organization, coworkers, clients, and anything else job-related.

If the team member has an issue working with a particular department, it’s the supervisor’s job to get that fixed, rather than ask the team member to just deal with it. If the team member is worried about career advancement, it’s the supervisor’s job to make sure the team member has a career plan. If the team member feels underpaid, it’s the supervisor’s job to make sure that the team member is being paid fairly and to lay out opportunities for growth and increased earnings. This commitment comes with the full realization that the supervisor may be put in some uncomfortable situations but will still go to bat for subordinates. This is a lot different from the traditional way of doing things wherein the supervisor says, “Let me know if you have any problems.” That’s not committing to anything. With the commitment conversation, supervisors are promising to be the trusted resource who will resolve any on-the-job concerns; Supervisors aren’t doing their job if they’re not aware of their team members’ concerns, don’t actively seek out those concerns, or don’t expeditiously handle those concerns. That’s the commitment.

The supervisor is agreeing to all of this responsibility in recognition of the extra commitment we are asking of team members. In exchange for their honesty about their commitment, supervisors will take team members’ success into their own hands and make sure that this is the place where they want to be. This extends to the final promise, which is that supervisors will include team members in any decisions that will impact them, whenever possible.

The conversation only works if we make each team member important to the organization, team members, and clients. When that is understood as the goal, it becomes obvious: “Of course, we need to have this conversation. Of course, we want clarity, because I’m important to all these people. It doesn’t mean I can’t leave; it just means that I must be clear so that I don’t hurt anybody.”

It is crucial to the process that this be an authentic, intimate conversation, one-on-one, between the supervisor and the subordinate.

The supervisor can’t be reading cue cards or a print-out. It must be the supervisor’s own conversation and own words, an authentic communication between two people who need to be able to count on each other.

Putting it to Work
When people decommit, we can either address their issues and let them recommit, or help them leave with dignity. I had a team member who loved our organization but wanted to work in an area that we didn’t need. The commitment conversation worked really well because she told me that she wasn’t happy with her position and said she thought I needed to hire someone else to do her job passionately. Though I truly valued her as a team member and liked her personally, we simply had no need to create a position that would fulfill her career goals. She agreed that she would look for another job and help me find her replacement, which she did. I agreed to give her a good reference, which I did, and she found a job doing what she wanted with a great company. She got the position; I got continuity. Because we were transparent and treated each other with respect, we still have a relationship today. It didn’t have to get terminated because she left. She can come visit with us at any time, hold her head up high, and still enjoy the camaraderie that she had with all of ITX’s team members.

One of the keys to implementing this tool successfully is to not take decommitment personally. That’s precisely why most people won’t be transparent about their feelings. They’re afraid that they’ll look bad and that their supervisor will take it to heart. We have to convince people that we’re not going to take it personally. We don’t expect them to work at ITX until they die. People’s desires, needs, and goals change in life, and that might mean that someone will be with us for 3, 5, 10, or 30 years, but it could change at any time. The commitment conversation is not about making people commit for longer periods of time or keeping them from leaving; it’s about making relationships more workable. A commitment conversation simply apprises us of each other’s expectations.

I don’t expect team members to stay any longer than they want to at ITX, and I don’t expect them to promise me anything that they don’t want to promise. I would just like for each person to be honest about commitment or the lack of it. If you’re mad at your supervisor and want to leave, what’s wrong with saying that? Make it clear that you’re mad and that you don’t like it here anymore. Make it clear that you’re going to look for a new job this weekend, if that’s the truth. Why be afraid to do that? By being honest, by putting your chips down on the table, it may force us to fix the problem so that you don’t want to leave. Or you’ll find another job, but we’ll get more time to straighten things out on our end.

Caveat Emptor
Hopefully, it seems as strange to you as it does to me that someone would be dishonest about commitment. I believe it is much better to be honest about our feelings and hold our team members in high enough regard not to be secretive about a lack of commitment. It never looks good when someone gets caught or makes a hasty departure. Unfortunately, most subordinate/supervisor relationships are not handled with integrity. People will say that they’re committed when they’re not, and they will justify it because they don’t take responsibility for the expectations of others. Being out of integrity is the norm in a business situation, so it’s hard to convince people to do it a different way.

To put it plainly, people will lie. They’ll lie like crazy because they’re uncomfortable or just because they can get away with it. You’ll have the commitment conversation with someone who will lie to your face. You’ll have the conversation with someone who will be honest and say that they are committed, but then they’ll decommit, choose not to keep their word, and give you one week’s notice. We’ve even had people just not show up one day. But just because some people will lie to you doesn’t mean that you shouldn’t have the commitment conversation. Don’t take it personally. It’s not about you; it’s about their discomfort with themselves. There will be plenty of other individuals who will be completely honest about their level of dedication at all times, and those are the ones we want to retain and nurture in our organization.

Since implementing the commitment conversation, we’ve seen it go both ways. If we set the bar low enough so that everyone can jump over it, we’re not playing a big game. We’ve got to keep raising the bar, and it’s up to each organization to figure out how much to raise it for the particular environment. Organizations that don’t have the commitment conversation aren’t raising the bar at all. The examples above are how we raise the bar at ITX, but they may not be how you want to raise the bar at your company. Once you set your bar, accept that not everyone is going to make the jump. Experiment a little, like we did, and figure out where the right place is to raise the bar. Of course, you don’t want everybody failing because it’s too hard and unreasonable, but you do want to raise it to a level that brings an incredible amount of workability to the organization. It’s about smooth transitions, and smooth transitions come from workability. So, we realize that where the bar is currently set is not workable, such as people just coming in and announcing that they’re leaving in a week, nor is it reasonable to ask team members to sign commitments with penalty clauses if they leave before 10 years of employment. We can’t go overboard. But we can raise the bar to the right level where most of our team members are going to be able to rise to the challenge. This creates a level of workability in the organization that didn’t exist before, and people will enjoy being a part of the organization more because their concerns are being met. If we don’t raise the bar for fear that some people won’t rise to meet it, then none will.

With the same spirit of reciprocity that imbues the commitment conversation, I want to address where some supervisors have failed in implementing it. Just because some supervisors are good at having the commitment conversation with their supervisors doesn’t mean that they are going to be good at having it with their own people. In our experience, supervisors had varying degrees of success. Some did a fantastic job. Others watered down the commitment on their part. They simply didn’t take it seriously that it is their job to work their team members’ concerns. We had to address that by installing a way of verifying the conversation’s success, so now we have human resources perform interviews with supervisors and their people as a way of coaching. They ask, “How was it done? What’s the feedback about it? Was it done well? Is there the level of understanding that we want? Does the conversation exist, if you will? Now that we’ve covered the minor pitfalls we’ve encountered and the remedies for them, I hope you will raise the bar at your own organization by implementing the commitment conversation. Follow it with the values conversation, then with the ongoing performance conversations to achieve a high level of adherence to your organization’s missions, visions, and values.

Revised September 12, 2012
© 2011 Ralph Dandrea. All rights reserved.

Anatomy of a Commitment Conversation

Why We Need It
• Provides clarity, which eliminates anxiety and surprise
• Makes it clear what is expected from each team member
• Lets team members understand their importance and how their leaving impacts the organization

ITX Promises
• Monthly performance conversation
• Opportunity to cure performance issues
• Great place to work
o Benefits
o Participation
o Being surrounded by high performers

Team Member Promises
• Behave consistently with mission, vision and values by making them their own
• Be honest (authentic) when no longer committed
• Be clear and honest about where they stand with organization
o Don’t say “fine” when it isn’t.
o Make sure supervisor knows what is going right so they can do more of it.
o Understand that the supervisor’s job is to deal with the subordinate’s concerns, even little ones.
• Before taking any positive step (contacting a recruiter, meeting a potential employer), tell us.
o Will be kept confidential; information will only be shared by mutual consent
o Organization will give good reference even before departure
• Minimum four weeks’ notice; six weeks’ notice for supervisors
o Work together to minimize time if given advance notice

 

© 2012 Ralph Dandrea. All rights reserved.

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Finding the Equilibrium Between Perceived Quality and Effective Price

Posted on September 10, 2010 by Ralph Dandrea — No Comments ↓

Quality of service and pricing are inexorably joined at the hip. If one of them is off balance, the entire company’s equilibrium is destroyed. Getting clients to stick around is a tricky balancing act and it all centers around finding the equilibrium between quality and price.

Balancing High Effective Price and High Perceived Quality

What are “effective price” and “perceived quality”?

The effective price is the bottom line amount left over after removing any discounts or freebies. For instance, if your company sells widgets for $100 apiece but has an introductory offer of $25 off, the effective price is $75.

Perceived quality is never the actual quality – it’s what your client imagines the quality of the good or service to be. If you have high perceived quality, you’ll be able to charge a higher price. Consequently, if your perceived quality is low and you’re effective pricing is also low, you’ll be out of business quickly, especially if you are a small to mid sized company.

You’ve experienced this yourself: you’re willing to spend a bit more money for a product or service that’s top drawer with high caliber client service. Our brand is bound to the perceived quality of the good or service as well as the effective price.

Many companies work long and hard to stay in their version of a sweet spot –with high effective price and high perceived quality. But that isn’t for everyone or every company.

The most important piece of this puzzle is consistency – if you’re consistent about where you want to be, whatever the quadrant, you’ll be successful. Equilibrium between effective price and perceived quality can be reached in any quadrant of the graph we’re about to review. As long as you’re acting the way you want to be and you’re delivering, you’ll have that balance and your own sweet spot.

That sweet spot, regardless of which quadrant in which you desire to be, is called the line of sustainability and it’s only found in a line that cuts across a quadrant at a 45 degree angle. This is the only place where you can have any hope of sustaining a long term position with any quantifiable results.

And where you are on this graph is temporal. As the market and our competition change, so must we if we’re to hang on to the line of sustainability.

The Big Four

Let’s look at a graph and apply it to the following scenario:

Kathy is a busy working Mom with three teenagers and a husband who is constantly on the road. She has trouble keeping up with her daily email let alone keeping a house clean for a family of 5. She decides to hire Happy Hands, a new cleaning service in town, to help with the housework.

The chart below illustrates the four quadrants of pricing and quality and shows how effective pricing and perceived quality fall into one of four areas:

Scenario #1: Low Perceived Quality/Low Effective Price – Bottom Left
Quadrant

With this quadrant, Kathy might experience something like this:

After calling Happy Hands, she learns that, since they’re a relatively new company in town and anxious to build their client base, they have a great deal on house cleaning: 4 weeks of cleaning for $100 – which includes 2 weeks of special “deep” cleaning!

Kathy knows her house is a wreck, especially after last weekend’s slumber party with 8 teenaged girls. One of the things Kathy found most attractive was the “deep cleaning” that would happen every other week because she knew her dust bunnies had not only had children but were onto grandkids.

And the price couldn’t be beat … Kathy had done her homework. Other cleaning businesses in her town charged $100 for one week of cleaning so she was happy to save money and get the extra services.

The first week she comes home from work to see the results of the “deep” clean. She’s upset for two reasons: nothing special has happened for the deep clean and no one from Happy Hands bothered to ask if there were specific places she’d like to have extra work done.

Kathy had hoped to see that, after 6 hours at her house, it would sparkle and smell fresh. In reality, the dust bunnies hadn’t moved out and it smelled like cigarettes – something Kathy was allergic to.

Kathy started to believe that she’d gotten what she’d paid for: marginal cleaning at best and that, even at the rock bottom price, it just wasn’t worth it.

In this scenario, Happy Hands is in commodity hell because they’re competing strictly on price. Combining the poor service with the cheap price will ensure that Happy Hands is out of business in about a month. Surely, Kathy wouldn’t recommend them to anyone and now had to spend even more money to get the cigarette smell out of her home.

Commodity hell is unsustainable in both quality of product and a low price. You just can’t make much money in this situation unless you find a way to drastically — and quickly — improve service which would enable you to charge a higher price.

The best strategy to improve this relationship is to raise the price but there’s a caveat with this – you can only raise the price if the quality is also raised as well.

Scenario #2: High Perceived Quality/Low Effective Price – Bottom Right Quadrant

Here’s how this would unfold for Kathy:

Kathy hires Happy Hands and is excited about the prospect of her first deep clean. Instead of hearing nothing from the company prior to this experience, Kathy gets a phone call the day before the crew was to arrive.

“Hi, Kathy, this is Anna from Happy Hands. We wanted to know if there were any places in your house that need some extra attention in our deep clean tomorrow.”

“Anna, hi! Yes, my teenage girls just had a huge sleepover in the basement and it’s a mess. They spilled soda all over the floor and it needs to be scrubbed. Also, we have dust bunnies under some of the furniture that have set up warrens. Could you help with that?”

“We’ll do our best to get everything cleaned up this time around. If it doesn’t all get done this time, we’ll finish it on the second deep clean. And, although we usually don’t do the deep cleaning two weeks in a row, if we miss anything this time around we’ll make sure to do the second deep cleaning next week.”

While Kathy may not get all of the specific places she mentioned deep cleaned, she’s happy that she knows the reason why instead of being left to wonder when she gets home from work. And Anna has now given her a solution for catching what needs to be finished next time.

Anna has just deepened the initial relationship – and gained Kathy’s trust — by telling her about catching remaining items on the second deep clean. The problem Anna has, though, is that her pricing is so rock bottom that it will be hard for her to climb out of that hole.

In this case, we would need to get our effective price up or find another strategy to achieve the same result or we’ll quickly go broke. The best way to avoid that is by raising the price while maintaining high quality.

Scenario #3: High Effective Price/Low Perceived Quality

Here’s what happens for Kathy and Anna in this scenario:

Start with the same dialogue as Scenario #2 with the exception of Anna letting Kathy know she would complete the deep clean projects the following week. In addition, the price of $100 doesn’t include the deep cleaning – that’s another $200 each time with a 2-hour time limit.

Kathy comes home from work expecting to see that the basement floor has been scrubbed and when she goes to check it, she can see that it’s still sticky and dirt has been tracked onto it making it look even worse. And the dust bunnies have put on additions to their homes. Furious, Kathy calls Anna. “What’s the problem?” Anna asks. “We talked about the specific things I needed to have accomplished with the first deep clean but your crew didn’t do any of them.”

“Oh. Well, we’ll catch it another time.”

Kathy ends up cleaning her own basement floor and feels short changed because she’d paid extra for the deep cleaning and has now missed her son’s baseball game. She plans to contact the Better Business Bureau in town to complain and then will try to get her deep cleaning money back.

In this scenario, Anna’s effective price is too high for her perceived value. When we find ourselves in this quadrant with our clients, we need to increase the quality or we run the risk of losing the client.

If we don’t remedy this situation fast, we’ll start to bleed clients because the attrition rate will be out of our control. The best strategy here would be to raise the perceived quality by improving service but only if we maintain the price at the same time.

This scenario helps us make money in the short term but, eventually, it will turn into a loss as we drive more and more clients away.

Scenario #4: High Effective Price/High Perceived Value – Upper Right Quadrant

This is the sweet spot for businesses and here’s how it went down between Anna and Kathy:

Same dialog as Scenario #2 between Kathy and Anna and same price structure for deep cleaning as Scenario #3.

When Kathy returns home from work not only have the dust bunnies left the building, the basement floor is clean and has been waxed as well.

Kathy finds a note from the cleaning crew saying that they had found a leg broken on one of her chairs and had taken it back to the shop to be fixed because they also have a handyman on call. They will return it the following week when they come to clean.

Kathy calls Anna right away. “Oh, Anna, thanks so much for getting to the items I needed to be cleaned. It’s great!”

“Well, when the girl who was scheduled to clean saw the broken chair leg, she called me and we told her to bring it in and have our handyman can fix it.”

“I didn’t expect the floor to be waxed and the chair to be repaired but I
really appreciate it.”

Anna’s company has not only done what she said she would do but went above and beyond the call. The extra money charged for deep cleaning was well worth it because it freed Kathy up to go to her son’s baseball game instead of scrubbing the basement floor and she appreciated having the broken chair leg fixed without having to ask about it first.

High effective price and high perceived quality is the quadrant we want all clients to be in. This is a win-win situation for our business as we not only make enough money on the pricing end but we provide a high perceived quality for that pricing. Clients are happy and recommend us to their friends and family.

An effective strategy for this quadrant is to continue building on client loyalty — which helps us maintain high perceived quality as well as high effective price.

Conclusion

In order to find a sustainable balance between quality and price, you must:

  • Stick to the line of sustainability. If you aren’t there yet, get there as quickly as possible.
  • Be consistent with both the price and quality you’ve chosen. You don’t get the value unless the client consistently perceives you to be at the place you want to be.
  • Re-evaluate your position every quarter, considering how the market and your competition may have changed.

Doing this will make your long-term future brighter in terms of both client satisfaction and profitability.

 

© 2012 Ralph Dandrea. All rights reserved.

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Distinction: Workable Availability

Posted on August 10, 2010 by Ralph Dandrea — No Comments ↓

Imagine this; you need to be out of the office for an appointment at two. One- thirty rolls around and you check your email once more before leaving, making sure everything is taken care of. You go to your appointment, which finishes up about three. You’re back at the office around three-fifteen. When you walk in the door everyone is waiting for you, wondering where you were, questioning your reason for being out. Your boss isn’t very happy. It seems that one of your clients called with an emergency and you were not available. Now you’re thinking, “Do I have to be at my desk every minute of the day? Why can’t someone else pick up the ball for once? I can never do anything. Jeez, what gives?”

The real problem in the preceding scenario is the loss of workability. Your client had a problem and you were unavailable to help. Your absence was noted and an alert went out. People looked for you, emailed you, called you, talked about you. This resulted in a loss of time, both in terms of productivity for your colleagues and in solving the client’s problem. Because you did not assign appropriate cover, the problem had to be taken care of by someone who did not know the client or understand the project. The person that covered for you may have been able to solve the problem, but without the same efficacy and efficiency as you, or someone you briefed, would have. This often results in merely satisfied clients, not very satisfied clients–simply because you failed to set an expectation.

Now imagine this alternative scenario; you need to be out of the office for an appointment at two. With some notice before your appointment you let your supervisor and your team know you will be out and that you won’t be available by phone. You also let them know that Kevin, the nice guy that he is, will be covering for you in your absence. You’ve briefed Kevin on the project you are working on, bringing him up to speed. One-thirty rolls around and you check your email once more before leaving. You drive to your appointment, which finishes up about three. You’re back at the office by about three-fifteen. You walk in the door, slide into your chair, and call Kevin to see if anything came in while you were gone. No one was feeling anxious. Nobody wasted any time. The clients were well cared for. This is workable availability.

You can create workability in the following ways:

• Recognize that you are expected to be at your workstation during business hours.
• If you are not going to be available, you must let people know in advance, and they deserve to know why. You don’t need to provide specific details, but if you’re not working, your team will be more supportive if they know a little about why you’re out.
• Declare when you will return, whether or not you can be reached, and how they can reach you.
• Ensure that someone else is prepared to triage on your behalf anything that arises.

Workable availability is about setting expectations and being professional. Workable availability promotes productivity, makes an organization more effective, and creates happier peers and supervisors and loyal clients.

 

© 2012 Ralph Dandrea. All rights reserved.

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The Bluebird Strategy

Posted on June 16, 2010 by Ralph Dandrea — No Comments ↓

In both our personal and professional lives, we yearn for golden opportunities to present themselves. Small opportunities are nice enough, but it’s the really big ones that are the stuff of daydreams. The Bluebird Strategy is an approach to being open to those truly great opportunities, which I call “bluebirds,” while at the same time, reducing our risks and the effects that catastrophes may have on us. In this way, we keep catastrophes from distracting us from these great opportunities.

Positive and negative things happen to us every day. To be successful, we can’t shy away from the positive for fear of the negative. If our risk aversion is too high, we will miss a lot of opportunities. Nothing really bad is likely to happen, but nothing really good is, either. We always have to give up something in exchange for opportunity, whether it’s security, time, or money.

This is where I get the term “bluebird.” If we leave the window open for opportunities, there’s the chance that something wonderfully improbable will fly in. But being open also means being vulnerable – something awful can also fly in. That’s why mitigating our risks is so important. If we insure ourselves as best as we can against catastrophes, we’re more prepared to pursue outstanding prospects whenever they happen to flutter by.

These are the two parts of the Bluebird Strategy:

1) Actively opening ourselves up to bluebirds

PLUS

2) Controlling the possibility and/or impact of negative outcomes

“Keep on going and the chances are you will stumble on something, perhaps when you are least expecting it. I have never heard of anyone stumbling on something sitting down.” Charles F. Kettering

You may have heard of the book “The Black Swan” by Nassim Nicholas Taleb. In his book, he defines black swans as either positive or negative, improbable events with enormous impact. I define bluebirds as only highly improbable but highly positive events. Winning the lottery is an example. You know those commercials: “You’ve gotta be in it to win it.” Buying a Mega Millions ticket does come with a chance (about 1 in 175,711,536) of winning the jackpot, but it’s highly improbable. However, so were the odds of a startup company like Google becoming what it is today. The thing is, even if something is improbable, it’s still predictable: we just don’t know when and where it will hit. At some point, someone is going to win big in the lottery, and another unlikely little enterprise will change the way the world does things and net a fortune in the process. It’s fine to invest in some long shots – just don’t buy too many lottery tickets, whether they come in the form of Powerball tickets, startups, or anything else that holds the possibility of a dream.

I’ve placed some events on the chart below based on a scale of impact (the X axis) and probability (the Y Axis). The events on the right side of the chart are positive outcomes and the ones on the left are negative outcomes, or catastrophes.

  • High probability, highly positive: Living another day
  • Low probability, highly positive: Winning the lottery
  • High probability, highly negative: Experiencing health problems
  • Low probability, highly negative: Perishing in a plane crash

Every day when we wake up, there are some positive things that are going to happen. For one thing, we’ve got a pretty good chance of living another day, and it may even be a sunny one. Unfortunately, it’s also reasonable to expect that we might experience a computer crash, or that there will be some kind of family crisis. There’s no getting around it: some negative and some positive things are going to occur that are entirely out of our control.

One way to seal ourselves off from risk is to never go out of the house and keep our windows closed. We’ll probably be safe there. But no bluebirds will ever come into our lives. We’ll never meet anybody special, never get that dream job… Nothing at all will happen, because we’ll be stuck inside, safe. Luckily, though, most of us willingly trade some security for the opportunity to live fulfilling, successful lives.

The diagonal “risk frontier” on the chart delineates tolerance to catastrophes and potential problems. Everyone’s risk tradeoff line is going to be different, and so is each company’s. A highly negative event, such as a plane crash, is something we all want to avoid. Yet, some of us will rule out the possibility entirely by refusing to ever fly, and others, like pilots, will mitigate the impact it would have on his family by making insurance arrangements in the unlikely event it happened. For all the events to the left of our risk frontier, we either want to arrange our lives so they won’t occur, or else invest the time and money necessary to lessen their blows.

To the right of the risk frontier are events where we will choose to simply accept the risks. Whenever you invest in reducing or eliminating a negative, you also give up a positive, such as time and/or money. That’s the nature of any insurance arrangement, and as an individual or a company, we want to invest our resources toward the highly probable, highly negative outcomes instead of the low-­‐probability, low-­‐impact ones.

For instance, we know that eventually our personal computer will crash. We just don’t know when. It doesn’t make sense for most of us to invest in redundant super-­‐reliable hardware fit for running a spacecraft because the cost is so high. So instead, we accept the risk that our hardware will fail. Our resources are better spent enjoying life or preparing for highly negative or highly probably catastrophes. (Note: It does make sense, however, for most people to back up their data, and to avoid the negative impact that data loss would have on their lives.)

We insure ourselves against risks and catastrophes, we are more able to accept them when they do occur. The yin-­‐yang effect that this has is that as we move that risk frontier to the left, increasing the amount of risk that we accept, it also preserves our resources and our ability to prepare for bluebirds.

Let’s take the example of cars to tie all the elements of the Bluebird Strategy together. You’ve got a really cool customized vintage car, and it’s running fine. You not only love driving it, but you also enter it into car shows, where it often wins the People’s Choice awards and earns you some cash and trophies to show off. You know that if you ever decide to sell it, and many

people have offered to take it off your hands, you’d make a nice return on your investment. Plus, it’s been pretty helpful in meeting pretty women at stoplights. In other words, that shiny automobile opens the window to a lot of prime opportunities. But you know a few things could start to go wrong… or that some character yakking on a cell phone could veer into your lane and mess up your nice paint job. You could, of course, never drive it and ensure that nothing happens to your four-­‐wheeled beauty, but then you’d get nothing out of it. So instead, you give up a positive, money, and invest on an extended warranty and good insurance to mitigate anything negative that might happen, and just enjoy the ride. Taking those actions immediately heightens your ability to accept the inherent risks. The warranty and insurance don’t stop anything at all from happening, but they negate some of the impact on your life (and your wallet), and even add an element of positive by compensating you if something does.

Let’s apply the Bluebird Strategy to our working life. Looking back at the risk tradeoff line, we definitely want to rule out anything ruinous, such as going out of business, losing our jobs, being seen as incompetent, or having our skill sets become redundant or obsolete. Wherever possible, we’ll do anything we can to make sure that those things don’t happen to us. We can’t get an insurance policy against these things, but we can make insurance arrangements such as protecting ourselves by investing in quality personnel, continually learning, and putting our best foot forward in terms of usefulness and appearance to customers. If we take care of those things, we’ll be able to accept the remaining risks enough to allow us to be very open to bluebirds that come to us in our professional lives. At the same time, we’ll spend comparatively little energy on less negative or unlikely risks, such as constantly changing our passwords, and just accept that the slim possibility that the guy in the next cubicle might unexpectedly develop a mean streak, peer over our shoulders and get our password, then maliciously delete all our hard-­‐won data. We don’t want to give up so much productivity ensuring ourselves to the hilt against everything under the sun when we could instead get out there and put ourselves where there may be bluebirds.

Another example is if we try to go into a new market where there is an opportunity for us to make money. The negative that comes along with that is the possibility for insolvency if we spend too much and don’t earn any revenue. We handle that by investing time in preparation, research, and budgeting. But we don’t want to invest unnecessarily in countless tests and reports because we’re scared that we’re going to miss some little thing, or spend hours worrying about every nickel when it’s the hundred-­‐dollar bills we’re after. We understand that we’ll learn some things along the way as we grow, and just accept that we may have to deal with some problems as they occur. That leaves us free to welcome all the things on the right side of the Y Axis in our new venture, and of course we’re open to as many as those as we can get.

Some companies are so risk averse that their risk frontier is very steep, allowing little possibility for anything at all to go wrong. They really like to be in control of the minutiae. Since they’re going to put up with a heck of a lot less risk, fewer negative things are going to happen to them. But they’ll also have fewer opportunities.

Then there are the risk takers. They take that risk frontier and run its lower bound far out to the left. True, that allows a lot more wiggle room for those surprising little negatives and obstacles, but it also means there’s a whole lot more possibility for truly exciting events to take place. They accept that there may be unforeseen problems and are willing to take on those risks. They’re not insuring themselves or investing in limiting the downside risks so much that they prevent fresh ideas from taking wing.

A company that’s a startup may have a risk frontier where they don’t rule out anything. If they go bankrupt, they go bankrupt. They’re going to spend the money and take their shot, and they’re going to make it or they’re going to fail. When you first start up, you don’t worry about failing. You worry about eating. So you just go out there and get whatever clients you can. Then, if your business starts earning millions, that line may begin to creep in from the left because you’ve got a great deal more to lose. The negative impact of insolvency is much greater when you have something than when you have nothing.

Just like with many people as they get older, as companies get bigger, they’re less eager to take risks. I’ve heard of an 85-­‐year-­‐old woman who rides cross-­‐country on a Harley-­‐Davidson, but a lot of people her age have decided that things like riding motorcycles or jumping out of airplanes aren’t worth the risk anymore. Similarly, a new company may be willing to go out on a tall limb with amazing new product ideas, while a large company might stick to the tried and true. Big companies are often so invested in ruling out risks to the size of their company and to their business that their opportunity curve is very narrow. That’s why blue chip companies are good investments, because they’ve eliminated the risks. But they’ve also eliminated the opportunities, so there’s no chance you’re going to make tons of money off of them, either.

A company like Google, on the other hand, started off with nothing. They took huge risks, and venture capitalists got involved. Those investors expected 90+% of the time to lose their money, but they also had a big opportunity, and when that kind of opportunity hits, it hits big.

The key to a successful company is to take on as much risk as you reasonably can without raising too much the likelihood of financial catastrophe. We want to keep the risk tradeoff line in a place where we are comfortable with the risks we accept, and where the risks we accept won’t overwhelm us. It’s a balancing act. We want to identify the possible bluebirds and the possible catastrophes, and then plan for them. We have to be thoughtful, but we also have to understand that every time we do something, we need to create a strategy to eliminate the negative. On the other hand, becoming fanatical imposes too high a cost and reduces the likelihood of something positive happening.

The Bluebird Strategy was developed from my observations that most businesses are successful not because they did something spectacular, but because they didn’t do anything foolish. If you can stay in business long enough and keep yourself from going out of business because of a catastrophe, the bluebirds will fall in the window every once in a while. That’s the most reliable strategy I know.

“Watch the downside; the upside will take care of itself.”
-­‐ Marty Gruss, a remarkably successful investor

© 2012 Ralph Dandrea. All rights reserved.

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Emotional Cost

Posted on June 15, 2010 by Ralph Dandrea — No Comments ↓

“It’s not all about you.”

How many times have we heard this said by someone who needed us to focus on them? And how many times have we superficially agreed … but didn’t really do it?

Emotional cost is the side-effect of an act or omission, and, often times it is the result of being out of integrity. The result of emotional cost is measured in the damage to a relationship and the hit your reputation takes, turning from asset to casualty. Trust is lowered and anxiety increases ten-fold because you’ve not done what you’ve said you’d do.

What begins as a small pebble tripping downhill explodes into an avalanche if we don’t control it and mitigate the consequences.

Here’s a great story illustrating emotional cost:

There was once a little boy with a bad temper. His father gave him a bag of nails and told him to hammer a nail in the back fence every time he lost control. The first day the boy drove 37 nails into the fence. Then it gradually dwindled down. He discovered that it was easier to hold his temper than to drive those nails into the fence. Finally the day came when the boy didn’t lose his temper at all. His father suggested that the boy now pull out one nail for each day that he was able to hold his temper. The days passed and the boy was finally able to tell his father that the nails were all gone. The father led his son to the fence. “You have done well, but look at the holes in the fence,” he said. “When you say things in anger, they leave a scar just like the nail holes. You can put a knife in a person and draw it out. It won’t matter how many times you say ‘I’m sorry,’ the wound is still there. A verbal wound is just
as bad as a physical one.”

–Author Unknown

The nail holes in the fence represent the damage emotional cost causes that never entirely goes away in the eyes of our customers.

We are, ultimately, in control of our own reputations. If you are often late, are a poor communicator, or seen as irresponsible you have carved that reputation out for yourself. You have cast yourself in the role of the “default antagonist,” someone customers will automatically see as their adversary or opponent. Once you become the default antagonist, your clients will begin to see you as the

cause of every problem they encounter and, from then on, every problem will be a crisis due to the anxiety created by the previous encounter.

Imagine that you have a report due for your boss and she really needs it on Wednesday by 9 AM. You’ve promised to get it to her by then but you’ve just been chosen to attend an important company event, leaving you no time to deliver the report by the agreed upon deadline. You figure you’ll get it to her when you can and happily go off to the event.

Delivering the report late resolves the original request but does nothing to deal with the emotional cost. There is still a hole — an incompleteness — in your relationship with your boss that must be dealt with because the report was late.

The problem is that your apathy about your boss’s needs has imposed an emotional cost on her. Not only have you failed to let her know about the delay, your failure has put her in a bad position with the customer needing the information.

If you want to have a healthy relationship with the person upon whom you’ve imposed an emotional cost, you MUST own the emotional cost and get in touch with the customer waiting for the data in order to make it right for all of you.

Here are three ways to control emotional cost:

  • Awareness – Think about how emotional cost can happen whether it’s out of anger, delay or apathy and take steps to circumvent or minimize it.
  • Strategic avoidance – Choose to disengage. That means if you find yourself in a grumpy mood and about to pass it on to someone else, tell that person you’re not in the best frame of mind and ask if you may talk with them another time. Never use an excuse – that makes the person about to receive the emotional cost have to understand. It’s not their job to understand; it is your job to acknowledge and apologize.
  • Clean it up – Make it right for everyone involved whether they’re coworkers or customers.

Eliminating emotional cost isn’t just controlling a chain of events nor is it lip service about understanding another’s predicament. We must acknowledge the impact and clean it up. Apologize? Sure, but an apology is useless if you haven’t first acknowledged the impact and offered to make it right.

 

© 2012 Ralph Dandrea. All rights reserved.

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That’s Horrible!: A Recipe For Excellent Customer Service

Posted on April 22, 2010 by Ralph Dandrea — No Comments ↓

When customers complain, our first instinct is to try to solve their problem. But customer complaints are multi-faceted, and solving the problem only rids the customer of the technical aspect of the issue. Customers who call in to complain are emotionally invested as well. In order to maintain strong customer relationships, we must focus first on the impact the problem has had on the client’s emotions. Ignoring this impact can be detrimental to your relationship, even if the technical side of the problem can be solved quickly and painlessly. Acknowledge, recommit and plan for action (ARP) is a recipe for dealing with customer complaints in an efficient and effective manner, both technically and emotionally.

Step 1: Acknowledge

The first step of ARP is to Acknowledge the customer’s pain. You don’t necessarily have to agree with them or shoulder all the blame. Acknowledging the customer’s feelings can be as simple as saying, “That’s horrible!” Regardless of the reason, your client is dealing with a negative impact that they associate with you. They want you to acknowledge that their emotions are valid. If you skip ahead and address the problem technically without first acknowledging it emotionally, they will most likely become closed off to you. They won’t be open to hearing the technical solution because they’ll be completely focused on getting you to understand and acknowledge the trouble you’ve caused them.

Step 2: Recommit

The second step of ARP is to Recommit to the client. It’s tempting to make excuses or place blame on other members of the team in an effort to maintain your personal reputation with the client. But in the grand scheme of things, the customer does not care about your personal reputation. They view companies as teams, not as sets of individuals. Blaming the problem on your coworkers doesn’t make you look better; in fact, all it does is show the client our weakness as a team. In order to strengthen the customer’s view of the company, be sure to recommit on behalf of the whole team. Recommitting can be as simple as saying, “This is not the standard we live up to here. We need to fix this, and I am committed to getting it fixed for you.”

Even if we see the problem as relatively minor or easily fixed, the negative impact it has on a client always feels significant to them. Clients sometimes overreact in the initial exchange because they’ve become so emotionally invested in the problem. But if you take the time to step back, acknowledge their pain, and

recommit, their attitude may soften considerably. They’ll realize that they underestimated your dedication. They may even apologize for being harsh. Now a stronger connection can be established, one based on trust and integrity.

Step 3: Plan for Action

Once you’ve Acknowledged and Recommitted to the client, you must complete the last step of ARP and create a workable Plan for Action. You’ve listened to the complaint, recognized the impact your client has incurred, and recommitted on behalf of your team. At this point, ARP is no longer about fixing the problem; it’s about eliminating the impact. In order to truly resolve the customer complaint, you must draw up a workable plan for action. Eliminating the impact may involve several steps that require a lot of time and effort, and your plan for action will help get you there. Remember to keep your client in the loop and provide them with dates for completion in order to prevent them from feeling any further anxiety.

Utilizing ARP is especially beneficial in terms of customer perception. Acknowledging the customer helps to prevent them from making a direct correlation between complaining and getting results. By trying to solve the problem without first acknowledging or recommitting, you are essentially training your customer to complain. They will quickly realize that when they complain, the work gets done. Applying the steps of ARP helps to break up the causal relationship between complaining and getting satisfaction. With ARP, when the customer complains, they are first acknowledged and then recommitted to. Only after these two things occurs does the work get done. It doesn’t get done as a direct result of the complaint, it gets done as a consequence of your recommittal.

ARP lets us view customer complaints in a whole new light: rather than dreading them as awkward conversations or extra work, we can now view them as opportunities. ARP gives us the chance to prove our dedication to clients in a way that wouldn’t have presented itself without the complaint. Think about the last time you had an issue with a product or service. Let’s say when you called in to complain, you experienced excellent customer service. When was your opinion of the company highest – back when hadn’t had any issues with them at all? Or after you called in and were treated with excellent care? Chances are, it’s the latter. When used effectively, ARP leads to stronger bonds with clients. A company that takes care of their clients both technically and emotionally is a company with an superior reputation and an excellent chance for long-term success.

 

© 2012 Ralph Dandrea. All rights reserved.

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Principles of Integrity

Posted on April 22, 2010 by Ralph Dandrea — No Comments ↓

The ITX Principles of Integrity provide examples of how we make, change, and keep promises. They do not cover every situation, so it is up to the you to use common sense about how to stay in integrity.

Integrity: Honoring our word by doing what we say we will do and taking responsibility for cleaning up the mess when we don’t.

Making Promises

  • ITX makes promises, not individual employees – we are all responsible to clients for our team’s promises.
  • Promises must be clear and specific and include: a deliverable, a due date/time, and a promisee (the person who will receive the deliverable).
  • Understand and communicate the impacts of fulfilling / not fulfilling the promise.
  • Expectations, on both sides, need to be part of the promise (understand them when making a promise or a request for a promise)
  • Repeat the promise to confirm it.
  • Promises must be recorded (as a scheduled event, work order, or project task)
  • Communicate priority in person; communicate detail in writing
  • Do not make a promise that you do not intend to keep

Changing Promises

  • If there is a change in priority or schedule, you must reconfirm the promise to stakeholders.
  • If there is a change in responsibility, the person who is now responsible for the promise must reconfirm the promise to stakeholders.
  • If we become unable to keep a promise, we must renegotiate with the promisee immediately or at least let them know that we are broken down.

Fulfilling Promises

  • Reconfirm with status updates as needed to control stakeholder anxiety
  • Confirm the completion of the promise from the stakeholder’s perspective. Don’t count on someone else to tell you when you’ve not fulfilled a promise. Determine for yourself if you are

Escalate To Your Supervisor When…

  • You are pressured to make a promise that you cannot reasonably keep.
  • You are unable to negotiate or renegotiate with a stakeholder.
  • A team member is in danger of breaking, or has already broken, a promise. Of course, first talk to that team member and encourage them to resolve the situation.
  • A team member creates a mess and doesn’t clean it up, or is consistently out of integrity.

 

© 2012 Ralph Dandrea. All rights reserved.

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Hunters, Farmers & Self-Deceivers

Posted on March 10, 2010 by Ralph Dandrea — No Comments ↓

In the business world, there are two main types of salespeople: Hunters and Farmers. Hunters go out and find new customers, and Farmers maintain existing customer accounts. However, there is a third type of salesperson, one that no one ever claims to be, and this is the Self-Deceiver. These Self-Deceivers claim to be Hunters, but don’t take the necessary steps to get there. Their intentions may be good, but they lack the commitment and follow-through needed to deliver
the results they promise. Hunters and Farmers are an integral part of the success of every company, but Self-Deceivers end up wasting the company’s time and money, as well as their own.

Hunters

Hunters go out and find new customers. They don’t need anything to help them hunt; they survive merely on their own drive and initiative. Hunters find customers any way they can. What sets a hunter apart from a self-deceiver is that, when released into the wild, a self-deceiver will wonder how he’s supposed to hunt without a spear. The hunter will set out immediately to find his own spear.

The Hunter is an attractive role to most salespeople, because although it takes more effort to find new customers than it does to maintain relationships with existing customers, the payoff is much higher. If they can become a top
percentile Hunter, the potential is there to generate the highest revenue and earn the highest commissions.

Example

Imagine your average car dealership. The manager, Tom, calls Meg into his office and asks her to describe her annual plans. “Meg,” he says, “tell me your plans for the upcoming year. Do you see yourself being a Hunter, or a Farmer?”

“I am a Hunter” Meg says. She knows bringing in new customers is not only beneficial to the company, but will also result in higher commissions. She is willing to do whatever it takes to hunt and kill to prove her commitment.

Meg leaves the meeting and spends the rest of the day devising a plan that will lead her along the path to success.
She maps out the necessary steps towards reaching her goals. She brainstorms and lists all the possible ways she could hunt.

She can call her friends and family and ask if they know anybody in the market for a new car. She can call fleet companies and try to build a relationship with them. She can go to networking events and meet new people, thereby creating new opportunities for potential sales.

Meg spends the rest of the year following her plan, even when it becomes difficult. She is rejected time and time again, but each time she feels the urge to give up, she reminds herself that if she veers off the path she will not be successful. Meg understands that she needs to fully commit to her plan or else
it will crumble. Her promise to Tom is important to her, and she plans on keeping her word.

At the end of the year, Meg has added several new clients to the company. Her hard work is rewarded in the form of higher commissions. She has been rejected more often than not, but never let that distract her from staying on the path to success. At the end of the year, Meg is looking forward to her annual review with Tom.

Farmers

Farmers maintain existing customer relationships. Rather than going out and finding new customers, farmers focus on the customers that matter most to the company in the long term — key accounts. These are the customers that come back time and time again, and generate the most revenue for the company. For that reason, they require the most time and effort.

While Hunters are out looking for new customers, Farmers are building stronger relationships within their existing customer base. Farmers might use research to help them make repeat sales. For example, perhaps they find out that a customer who bought a sports car last year recently had twins. A Farmer could use that information as an opportunity to contact that family and see if they might be interested in buying a minivan. Farmers might send Thank You cards to their recent customers. They make it a habit to call customers to inform them of sales events. They call customers six months after a transaction, just to see how
they’re liking their new car. Farmers don’t just sit and wait for old customers to
come back or for key accounts to call in and order more cars. They take the initiative to create their own opportunities for success.

Example

Back at the car dealership, Tom pulls Shannon into a meeting

similar to the one he just had with Meg. Shannon tells Tom that she feels most effective as a Farmer. Her best work is in forming close relationships with key accounts. If Shannon were to spend her time trying to find new customers, her relationships with the company’s most important clients would suffer. Key accounts need a salesperson they can trust, and Shannon feels she is the best person to fill that role.

She leaves the meeting and makes a list of all the company’s top accounts. She’ll have to invest a lot of time and energy into these accounts, but she realizes that both her and the
company will benefit tenfold. She makes a list of average accounts that she sees as having the potential to grow into key accounts. She hopes to encourage this growth by focusing
more of her time and energy into building stronger relationships with them. She devises a plan that will ensure these clients feel a stronger bond with the company by the end of the year.

Shannon also plots a strategy for non-key accounts. She does her research on them. She makes a list of past customers who she can send Thank You notes to with her contact information included. She makes a list of recent clients, and plans to call them to see if everything is working out well with their new car.

She sends out brochures advertising the latest sales event. When the plan is finalized, Shannon begins taking the necessary steps to stay on track and achieve her goals. At the end of the year, she hasn’t brought in any new customers at all
— but she never said she would. What she did do is bring in many past customers again, building their loyalty to the company. She’s brought some of those “average” accounts into key account status by paying them special attention and building a stronger bond with them. When it comes time for Shannon’s annual review, she is confident she has achieved everything she promised to Tom and more.

Self-Deceivers

A Self-Deceiver is someone who has the intention of becoming a hunter but doesn’t put in the effort necessary to actually hunt. The Hunter is an attractive role to most salespeople, because of the potential for a higher payoff. However, the possibility of rejection is higher when “hunting” for new customers; it’s easier to call an existing client and discuss last night’s football game than it is to call a potential client and run the risk of being rejected.

Self-Deceivers hate the rejection that comes with being a Hunter. Even with money as the incentive, it is human nature to put off any situation that might end in rejection. The problem isn’t the incentive; the problem is the willingness to commit. Rather than deal with the rejection and move on, Self-Deceivers will complain. They will complain that they can’t make sales because the company doesn’t place enough ads, or do enough marketing, or provide enough leads — any reason they can use to avoid having to explain why they’re not producing. But if you’re relying on your company to drag the deer over to you, you’re not really a Hunter.

Eventually, Self-Deceivers drift back to spending their time maintaining relationships with existing clients — in other words, being Farmers. There’s nothing inherently wrong with being a Farmer. The conflict comes into play when people proclaim themselves to be Hunters, then act like Farmers. This leads to a loss of integrity and an increase in stress. They have fallen into the trap of self- deception. They have betrayed themselves by choosing not to follow through on something they promised to do. The more this weighs on them, the more justifications they will create in their own defense. They become so vested in explaining their excuses and defending their intentions that it actually becomes who they are.

A common justification is, “It just worked out that way,” or “It just happened.” In other words, they didn’t choose not to sell to new customers, it just didn’t “happen.” But not making a choice is a choice! They chose not to take the necessary steps towards gaining new clients. This is like the smoker who always says he wants to quit but never does – he has made the choice to keep smoking. He has chosen not to quit. It’s easier to stay addicted than it is to take the difficult steps towards quitting. And it’s easier to talk to existing customers than it is to go out and actively hunt for new ones.

Example

Tom decides to have his last meeting of the day with Michael. Michael is convinced he knows the answer Tom is looking for – he wants a Hunter, so Michael declares himself as one. He promises Tom he’ll spend his time hunting and killing, tracking down new clients for the company. Whatever it will take to
bring in more revenue and boost his status in the company.

Michael goes back to his desk and calls a new customer. He is rejected firmly and swiftly. He picks up the phone again, calling another new customer… with the same result. Frustrated, Michael calls Ben, his contact at an existing account, to see if he needs anything. “No, we’re all set right now,” Ben says, “But

how are the kids doing?” The next half hour is spent chatting with Ben. Michael wants to call more new clients, but doesn’t have the heart for more rejection today. He vows to get back on track tomorrow.

By the end of the year, Michael is dreading his annual review with Tom. He hasn’t been able to “kill” much this year. He did some hunting, but it was hard on him and wasn’t very successful, so he eventually gave up. He always had the best intentions of getting around to it “tomorrow,” but tomorrow never came.

Michael spent a lot of time thinking up reasons why he didn’t achieve his goals. How could he get new accounts when no one provided him with any leads? The company needs to do more advertising to bring more people into the show room. He called some new people, but they never called him back — was he supposed to just keep calling and calling? Michael thinks the company is expecting too much from him. Regardless of how many reasons he can find for his failure to deliver, Michael knows Tom will not be impressed.

Conclusion

In the above examples, each salesperson was presented with a choice. It was up to them how they would attain the goals they set for themselves. Both Meg and Shannon, though choosing opposite paths, committed to those paths and
followed through. Michael’s intentions were good, but he never made a full commitment to his goal or even devised a plan to help guide him along the way.

It is clear in Shannon’s experience that it’s okay to be a Farmer. The problem arises when someone says they’ll do one thing but does another. Michael is out of integrity because he promised to be a Hunter and instead became a Self- Deceiver. Once Michael realized what had happened, he got so anxious he began spending all his time thinking of excuses and justifications as to why he couldn’t complete the task he set out to achieve. In truth, he betrayed himself by not following through on a task he promised to complete. This led to a path of self-deception that brought unnecessary stress to his life.

Many salespeople, like Michael, seem to prefer to fall into the rut of being a lazy Self-Deceiver rather than just admit they’re Farmers. They’re under the impression that managers don’t like Farmers, that farming is the easy way out.
What they don’t realize is that while Farmers may not get the glory of landing new clients, they do something even more important to the company — they generate far more revenue overall than hunters. This is because, while the top few Hunters generate a huge amount of revenue, the rest (the Self-Deceivers) generate almost nothing. The difference is demonstrated on the graphs below:

Don’t be a Self-Deceiver; make a good choice for yourself. If you think you might have trouble sticking to the rigorous path of a Hunter, you’re probably right. If you think you’d be better off as a Farmer, then that is the right path for you. There is nothing wrong with that. But you still have to devote yourself to it; being a Farmer doesn’t mean you just sit and wait for leads to fall in your lap. It’s about taking the initiative to cultivate and maintain relationships within your existing customer base. In the end, you’ll be a far more valuable asset to your company as a
Farmer than you would be trying to fake it as a Hunter.

Saying you’ve made a choice means nothing in and of itself – in order to give your words meaning, you must make a choice, commit to it, and take the necessary steps towards fulfilling your goal. Be in integrity with your choice. If you’ve declared yourself a hunter, the only way to prove you’ve made the commitment is to hunt and kill. In order to achieve goals, you must have a plan, and you must be willing to commit to the plan until your goal is reached.

 

© 2012 Ralph Dandrea. All rights reserved.

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How Completeness Drives Efficiency

Posted on March 10, 2010 by Ralph Dandrea — No Comments ↓

Useful = fit for its intended purpose and a joy to use

Value = the return that is generated when something is whole and complete, and no longer requires our attention.

When we create useful products, they are in integrity; they are whole and complete; they work and create workability. When we create a product that is not useful, that is, not fit for its intended purpose and/or not a joy to use, it is incomplete.

Often we create “workarounds” to deal with the problems that are created by incomplete products. However, workarounds donʼt address the incompletion itself, and often create new incompletions. We must avoid creating workarounds whenever possible, and eliminate the need for workarounds by resolving the incompletions weʼve left behind.

Complete products donʼt need to be fixed, whereas products that are incomplete constantly call for our attention. We are faced with a seemingly constant stream of new tasks consisting of resolving the defects and dealing with the consequences that an incomplete product creates. Incompletion is extremely expensive!

When we make a product complete, we get the benefit of not having to fight fires that incompletion invariably ignites as well as the consequences of those fires. Therefore, the return on investment associated with getting to completion is very high. The future effort saved by getting to completion can be invested in other efforts that generate a greater return than firefighting.

Every time we touch a product but donʼt do what it takes to make it complete, we spend resources without getting the enormous return that comes with completion. That is, the return on investment of firefighting is low as we have a continuing expense with little or no benefit to show for it.

Our focus as a team should be on making our products whole and complete. Whenever we touch a product, we must strive to leave it in a state of completion, or at the very least, closer to a state of completion than it was previously.

 

© 2012 Ralph Dandrea. All rights reserved.

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