Policies, and Gift Registries

In an upcoming case study we will be diving into many different subjects.  Among the most important is relationship building and the many opportunities businesses have to build positive relationships with customers.  Our case study is going to highlight the way that one company fails to take advantage of relationship building opportunities and other companies that excel at building long-term, positive customer relationships.  Let’s take a brief look at ways to not only build your company but also foster strong relationships with customers.  Three things that come to mind immediately are Gift Registries, Return Policies, and Rewards Programs.  Does your company use any of these?

Let’s look at the first item in our list of three customer relationship building tools.  Gift Registries…There are a few times in a person’s life when their life permanently changes such as getting married or having a child.  I have gone through both of these changes in the last few years and in each case my wife and I used gift registries at various stores to allow our friends and family to purchase gifts that we wanted or needed.  Doing our registries was a great way for us to spend a long time in the store, see virtually all of the merchandise, and even request things we knew we would never purchase on our own for one reason or another.  Because of our families and friends all of our registry items were purchased for each life changing event creating thousands of dollars of revenue for the stores.  By giving your customers the opportunity to register for items they want either through a traditional registry or a wish list you are increasing the chances of sales for your business.  The simple idea of gift registries fostered our relationship with the company that did it right and made us question the company that didn’t.  For more on this see our case study coming out soon.  We will also be doing an in depth post on gift registries, how to set the up and why in the near future.

As couples get married, have babies, and receive gifts (either from their registry or not) they may receive things that are duplicates, not needed, or not appropriate.  For this reason it is necessary for a store to have an attractive return policy to foster relationship building.  In the case study we are going to highlight how one store will even give cash back without a receipt while the other store won’t even take back an item that is in stock.  Check back soon for more information on return policies and how to set them up.

One of the primary goals for every business should be to keep customers coming back again and again.  One way to accomplish this is through effective rewards programs.  Our case study is going to highlight several examples of great rewards programs while showing an example of one company that doesn’t get it right at all.  Your business should consider using a rewards program to foster relationships and create long term raving fans.  A post on setting up a rewards program and 5 things to be cautious about in your rewards program will be posted soon.

There are several ways to build long term successful relationships with customers.  It is very interesting to see the companies that get it right and amazingly curious as to how some companies get it so completely wrong.  Let your business be one of the one’s that get’s it right the first time and builds relationships the right way, the Gladiator Marketing way.  Check back soon for more on these three topics and other issues.

If you’re a business owner that deals with customers and clients on a daily basis there is no doubt that at least once a day someone will ask one of these questions.  If you’re anything like me in my retail store you want to say “It’d be a whole lot better if you’d shop rather than yap about the economy.”  But, of course…we can’t say everything we think.  With trillions of dollars in deficits, unemployement at a high point, and the constant drumbeat of the media and various politicians “talking down” the economy it is no wonder that people wonder how the average business is performing.

I have found that people are using the economy to not make purchases.  I know its obvious right; but think about this for a minute.  The more bad news people here the more unlikely they are to make a purchase.  Look at the insanely simple graph showing the relationship between bad economic news and the customers liklihood to purchase. It is painfully obvious but the more negativity people hear about the economy the more unlikely they are going to spend their money, especially with those of us in the “non-essentials” businesses.  I have found that when someone asks “How’s business?”,  ”Keeping busy?”, or my personal favorite “Where’s Wal-Mart?” they are more than likely not going to be making a purchase.  Now their apparrent care for our well being as business owners, although nice, is really about them creating an excuse for not buying.

As business owners we can reframe the thoughts of the people that ask these questions.  Normally we would say something like “Yes business is down but not too bad” or maybe even poor mouth it a little more and say “My goodness it’s terrible.  I don’t know if we’re going to make it.”  Even if the person feels sorry for you or would like to be compassionate and help they still may not make a purchase because we have affirmed their thought that “nobody else is buying so why should I?”  We can change the entire outlook on the issue by reframing our answer to these questions with positivity and an encouragement to purchase.

In my store for example I was telling people that “Yes, indeed we are slow and just like everyone else we are hurt by the bad economy.”  In the last week or so I decided to try something different and it worked.  People’s general tendency is to follow the crowd and we can help create a positive purchase thought by answering their “How’s business?” question in a way that makes them realize that they should purchase.  Here are some examples that I’ve used with some success:

Customer:  So, How’s business?

Me:  Well it’s been slow but we’ve found that over 90% of the people that come into our store purchase something so we’re doing better than a lot of people.

Why this works:  You’ve told the person that  a great majority of people entering the store at any given time are making a purchase.  This alerts the customer that if they do not make a purchase they are in the minority, someplace most people don’t want to be.  This also reframes the bad information that they’ve heard and seen into a positive light thereby lessening the impact of the bad economic news.

Customer:  So, Have you heard of a lot of people losing their jobs?

Me:  Well I’ve heard of some folks being in unfortunate situations but if you look at it we have 90% employment which is pretty good when you think about it.

Why this works:  The people are so used to hearing the negatives that they sometimes lose perspective on the positives.  Sure 10% unemployment is terrible but 90% employment means that most people are doing okay.  This also shows that by reframing the image of negativity into a “glass is half full” mentality can help reduce the affects of bad economic news and increase the liklihood of someone making a purchase.  One more example.

Customer:  So have you noticed a drop in sales?

Me:  Well it seems like people are taking advantage of some great opportunities.  We’ve noticed people buying more of “x” and “y” because they know that the prices will never be this good again and they don’t want to miss out on a great opportunity.

Why this works:  Again, reframing the issue.  This one creates a timeframe of action for a customer.  By hearing that other people are taking advantage of sales, overstocks, etc. they believe that they may be left out if they don’t act immediately to make a purchase.

Of course the economy is affecting every business and until our “leaders” in Washington realize that in order for small business to create the jobs, wealth, and standard of living to which this country has grown accustomed  they are going to have to get out of the way, lower taxes and leave the market to operate as it should.  Without interference.  But now we know that by reframing people’s perceptions we can increase the liklihood of them making a purchase.  Emphasize the positives, I know it’s hard some days but that is what is going to keep some businesses alive for the recovery that will come.

and the Bottom Wage Earner at Your Business?

The difference in wages from the top wage earner to the bottom wager earner is important for two reasons.  The main reason a small business should evaluate this portion of their compensation package is to make sure that the lower wage earners can perceive the difference in workload, responsibilities, and experience of their higher wage earning counterparts.  If the higher wage earners aren’t perceived as having more responsibility, longer hours, or more experience than the lower wage earners hostility may arise. 

 If the lower wage earners in a business can see that they have an opportunity to achieve higher wages through more work, responsibility and experience they will be more likely to stay with the company.  This will in turn save the company hiring costs and the associated training expenses.  In general there will be several levels of wages in most small businesses and most employees understand this.  Just make sure that the wages and perceived workload are balanced for all wage levels.  Your business may decide to use a formula or diagram to determine wages such as the one below:

 Sample Wage Formula: 

 Base + Experience Component + Responsibility Component=Wage

 In the above formula you would start with a base pay, whether it be the federal minimum wage or some other figure and then add the other components.  For example you may want to at say $1 per hour for each year of experience that the prospect or employee has in the field for the experience component.  The responsibility component may be determined by either direct employee reports which may be worth $.25 each per hour or by specific responsibilities which may be worth $.50 an hour, it can also be a combination of both direct reports and responsibilities.

Wage Pyramid showing relationship between experience, responsibility and growth opportunities.

From the above diagram you can see, and more importantly your employees can see, that as responsibility and experience grow so too do wages.  But as the wages, experience and responsibility grow the opportunities for growth and advancement become fewer because there are fewer management and leadership positions available as one “climbs the ladder” and therefore, fewer opportunities to achieve a new level of responsibility. 

 In order to keep peace within the business between the upper and lower wage earners it is always a good idea to keep salary and wage information confidential.  Another important thing to consider when comparing the difference between the upper and lower wage earners is to make sure that the business is receiving everything it should be receiving from all employees.  Using different levels of wages in a business is a good way to reward good employees and to show all employees that the business is willing to invest in their success.  

Death To All Sacred Cows

It is always refreshing to read a business book by an author, or in this case authors, that have a good sense of humor.  Bernstein, Fraser, and Schwab use a perfect combination of wit, sarcasm, and humor to make an impact on the reader.  The authors hail from a very large advertising agency, The Gate Worldwide, where they kill sacred cows on a daily basis.  Now before calling PETA and complaining about an advertising agency killing cows please continue reading…

The notion of a sacred cow is more than a blissful bovine grazing in a field.  The authors have coined the term sacred cow to mean a “saying, motto, or aphorism about how business should be conducted that is widely assumed to be unassailably true.”  So the cows in the pasture are safe but what we thought were our business norms are sent to the slaughterhouse in this sometimes hilarious but always insightful read.  The authors have cleverly created chapters for each sacred cow and have included tidbits of case studies, horror stories, and anectdotes to prove their point that business norms as we know them are not always true.

For example, the sacred cow “Don’t Screw Up” is something that we think about just about every day.  By all means don’t screw up the sales presentation…don’t reply all to an email, etc. etc.  But the authors of this book tell the tale about Pfizer’s screwup in the 1980s that failed to treat hypertension yet created an enormous blue pill that created the hit single “Viva Viagra”.  So screwups are okay and these authors present other great tales about how this sacred cow should be killed.

Other sacred cows that the authors recommend killing are “The Customer is Always Right” (my retail experience will pull the trigger on that one), “Follow the Leader”, and “The Goal of Marketing is to Sell a Product.” By sending these and other sacred cows to the slaughterhouse Bernstein, Fraser, and Schwab have left the pasture for the competition and will give the reader’s business an surge of innovation, energy, and efficency.  Even without the business insight and information in this book the humor and wit by themselves are well worth the read.  Bernstein, Fraser, and Schwab deserve a fine cut of steak for writing this book.

Work?  Who Works the Most?  The Least?

The amount of time that employees spend at work can be indicative of several things.  For example if some employees are able to leave work early while others are working late there may be an issue in workload or employee efficiency.  If lower wage earners are consistently working more hours than their upper wage earning colleagues issues may arise out of a fear of inequity.  On the other hand, if the managers of the business are working extended hours on a regular basis it might be time to divide their workload or determine if there are any efficiency problems. 

 In many instances the amount of time spent physically at work isn’t the only work an employee may be doing.  There may be several times a week or even every day where some employees may take work home with them to complete.  If this is occurring and employees are working on their own time business owners might want to consider workload changes or wage changes to compensate the employee for the extra work.  It will be well worth the company’s money to keep good employees that work beyond what is required. 

 On the flipside are employees that consistently leave work early.  If this is happening in your business two things may be the cause.  Either the employee is very efficient at getting his or her responsibilities accomplished or they are leaving work to be accomplished on the next day or by a different employee.  In either situation action needs to be taken by managers.  For the efficient employee that gets work accomplished it might be helpful to challenge that employee with new tasks and responsibilities (and an increase in wage or benefits).  For the employees that leave work incomplete they might benefit from a frank discussion of what they are responsible for on a daily basis and what is required from them. 

 Effectively managing the time that employees spend at work and the work that they get accomplished will help your business achieve the most work in the most efficient manner possible.  It is also important for all employees to see their counterparts working efficiently and receiving equitable compensation for work.  The perception that all employees are pulling their own weight helps with office morale and eliminates shirking of responsibilities.  

Most people would rather be doing any number of activities than working for someone else. Yet most people go through the day, do their job and go home to their family.  Sometimes people are so put upon at work that they become toxic to the rest of the workforce.  Some people make it painfully obvious that they do not want to be at work, deal with customers, or cooperate with fellow employees.

Toxic employees can ruin a company.  We’ve all had co-workers that just didn’t want to be at work.  They would complain about everything from their commute to the temperature of the office to their workload, and on and on and on…Not only do these employees not perform their day to day tasks well but they also infect the rest of the employees with their grievances. Nobody wants to work with a downer for eight hours a day.  It’s unfair to your good employees to have to share space with someone that either doesn’t care about the work or doesn’t want to work.

Toxic employees can also be seen, heard, and felt by customers and vendors.  The mere presence of an employee like this can turn customers away or make vendors think twice about dealing with your company.    We have all been to a business that has one or more toxic employees.  The experience is uncomfortable and unpleasant and the desire to return to the business is non-existent.  If you think you have a toxic employee make sure to document the issues that arise from the employee and deal with them as soon as possible.  Your business is too important to let one employee ruin the morale, focus, and trust of all of the employees and your customers.

Every aspect of the company is affected by these bad apples.  A Harvard Business Review article presented these very interesting statistics that back up this fact.

Christine Porath’s and Christine Pearson’s study showed the following results of employee reactions to toxic employees:

48% Decreased their work effort.

47% Decreased their time at work.

38% Decreased their work activity.

66% Said that their performance declined.

80% Lost work time worrying abut an encounter with a toxic employee

63% Lose time avoiding the toxic employee

78% Stated that their committment to the organization declined.

With these stunning statistics it is very important for business owners to deal with toxic employees quickly and effeciently.  The problem can become so serious as to impact all aspects of the company and just imagine if this employee comes into contact with customers!  Those statistics would be frightening.

Do you trust your employees?

There are many good reasons to empower employees to make decisions. First of all it shows confidence in their abilities and is a symbol of trust. Empowering employees to make minor day to day decisions will lift the burden of those decisions from management so that managers can focus more on strategic issues with broader implications. Also, the front line employees are quite possibly more capable to make some decisions since their day to day responsibilities may directly relate to the decision being made. This is especially true for decisions dealing with processes and procedures. When employees are empowered to make decisions they may be able to increase the efficiency of the business because of their specific and unique knowledge of their job.

It is impossible to empower employees if management doesn’t trust them. Trust is a very important factor for all businesses, managers, and employees. When a business hires an employee they are entrusting that person to not only act in accordance with the company’s policies, but they are entrusting that person with the company’s intellectual property, physical property, and potential for success. If the company cannot trust the employees there are serious issues somewhere. The issue could be that the company doesn’t treat the employee fairly and therefore the employee wants to seek “justice” through distrustful activities. The issue could also be that the employee is just a bad seed and has done something to violate the trust or has yet to earn trust.

All issues of distrust in a work environment need to be investigated and explored. If criminal activity is the culprit the decision is obvious but if other minor issues cause the distrust then a plan needs to be developed so that the employee and the employer can both regain the trust of one another. Trust is also one of the most critical issues in allowing employees to be empowered to make decisions. Empowering employees to make decisions is a good way to show management’s trust in the employees and the employees should respond by making good decisions for the business.

Given Raises?

 It is very important as a business owner and manager to reward the people that help you succeed.  Employees that receive promotions, benefits, or even raises for good work will continue to be productive.  These employees will also provide an example to the rest of the workforce that management is committed to the success of employees that are committed to the business. 

 The benefits that good employees receive need not be through promotions or raises.  In many circumstances it would be entirely appropriate for management to provide certain perks to employees who have contributed heavily to the success of a project, have show commitment to the company, or improved their performance during a certain time period.  Perks that you might consider providing to your employees may be movie tickets, tickets to a show or sporting event, gift certificates, or spa packages. 

Depending on your employees it might be beneficial to create in-house competitions for sales, attendance, or other metric that will reward the most successful employee for whatever the competition may be.  If your company is organized into teams or different locations it might be possible to use perks and rewards to promote friendly competition between the different groups.  This is beneficial so long as the competition remains friendly and the environment is positive.  If you are going to use this type of reward for employees it makes good sense to keep a written record of the reward, the tasks to be completed, and the calculations for obtaining the reward. These perk based rewards for good employees are relatively inexpensive while still providing your employees with the recognition and rewards they deserve. 

 Promoting good employees to more responsibility and more compensation is another great way to reward your top performers.  As you hand out promotions make sure to let the other employees know your reasons for promotion the individual and that there are other opportunities for growth within your company.  It is important to let all of your employees know what you are looking for when the time comes to promote someone.  Promotions and raises shouldn’t necessarily be provided to the employees with the longest tenure.  Awkward moments may arise during the promotion of good employees but deep down most employees know whether or not they deserve a raise or promotion.  This is especially true if a good employee with less tenure is rewarded over a long-time but possibly less productive worker. 

 Good communication from the start combined with keeping records of each employees’ successes, failures, rewards, and reprimands will help you in determining who to promote and when.  It will also provide you with backup in case an unruly employee disagrees with your decision.  

Do you utilize the services of an accountant 

or bookkeeper?

Many small business owners are so involved with the day to day operations of their business that they really don’t have the time or special skills necessary to handle the bookkeeping and accounting for their business.  Granted, with today’s technology such as Peachtree Accounting and Quickbooks it is easier than ever for non-accountants and non-financial minded business owners to manage their own day-to-day accounting activities.  Even with this software many companies hire an in house employee to perform the bookkeeping and accounting activities for the business.

Hiring someone to work on the bookkeeping for your company is a good idea because it lets the business’ owners and managers focus on growing the customer and product base.  Everyone knows that hiring employees is an expensive activity. Bookkeeping and accounting are the first area to consider outsourcing.  Many times it is more cost-effective to hire an outside firm that specializes in accounting and bookkeeping than to hire an in-house employee to do the work.  The main reason it is cost-effective is that your business doesn’t have to pay payroll taxes, benefits, and vacation time, not to mention the office space, software, and computer equipment costs associated with an in-house accountant.  One other thing to consider is most accounting firms are bonded and insured. In the rare event that a mistake happens you are more secure by having a third party do your accounting and bookkeeping than by doing the work in-house.    

On paper, most managers and executives know and understand what each employee is responsible for accomplishing during a given time period.  Employees, on the other hand, may have different views entirely.  A good exercise is to have all of your business’ managers specifically write down each employee’s responsibilities.  Then have the employees write down what they do on a day to day basis.  Next have some of the employees write down other employee’s responsibilities.  Having done this look everything over and see how closely each responsibility sheet matches the others.  During this exercise it might be beneficial to work with a third party to ensure that the true nature of each position is being expressed and an anonymous assessment may be provided.  

The above exercise will also let you know where responsibilities overlap which may in turn lead to finding some efficiency in the organization.  For example you might realize that a particular task is being performed more than one time and resources within the company aren’t being fully utilized.  You might also find that changing the location of certain stations within the company might make for a more efficient use of time and resources by your employees.  It is always helpful to ask employees what can be improved upon because they know their job better than anyone else and more than likely have official or even unofficial ways of handling things that could be shared across the company.

 Your employee’s functions are very important to your business, vendors, and customers.  Understanding what each employee does on a given day will help business owners and managers improve processes and gain insights and appreciation for the day to day goings on within the company.  Cost savings and process improvements may greatly impact relationships with vendors and customers.  Employees may also feel more empowered if they are provided an opportunity to explain their functions and ways for possible improvement.