Graziadio Business Report Blog

Read the latest issue of the GBR online at http://gbr.pepperdine.edu/091/

In this issue:

Recognizing Organizational Culture in Managing Change

Structural changes can serve as the initial intervention for shifting culture.

Mark Mallinger, PhD, Don Goodwin, MBA, and Tetsuya O’Hara, MBA

The Successful Expatriate Leader in China

Expatriate managers must consider the cultural dimensions of leadership.

Matthew Earnhardt

Private vs. Public Real Estate Markets

How are these markets related in terms of risk and return?

Abraham U. Park, PhD

Continue reading ‘Winter 2009 GBR Issue Now Live’

This is a guest post by Michael Williams, PhD, Assistant Professor of Information Systems

Michael Williams, PhD

If you spend much time on the road away from your office you realize what a challenge it can be to find a reliable Internet connection for your critical tasks. Sporadic and unpredictable availability at hotels, airports, and public areas is a frustrating experience for even an occasional business traveler.

For the past few years the hope for business travelers has rested on Muni Wi-Fi. Muni Wi-Fi is a concept of creating a wireless hot-spot across an entire city. Prominent pioneers in this effort include Philadelphia, Toronto and Paris. (See here for a comprehensive list of municipal wireless networks)

Unfortunately, however, due to technical difficulties, the credit crisis, legal challenges, and a lack of will several cities have stopped adding capacity, or even cancelled these programs entirely (e.g., San Francisco and Philadelphia).

The good news is that several retail outlets have stepped up their Wi-Fi programs and begun to offer free, or nearly free, service to paying customers.

As of this fall, there are still three main types of Wi-Fi offerings from retailers: Continue reading ‘The Future of Free Wi-Fi’

This is the last of a series of four blogs devoted to the topic of customer retention. Read Part 1, Part 2 and Part 3.

The key to competing for retention is to quantify and understand the connections between loyalty and profits.

How to use measurements as tools to ensure integrity, accountability and decision-making relative to the development and implementation of your customer retention program is one of the most important considerations to retain customers.

Keep your tracking systems relevant and flexible so they function as assets to building and refining your retention strategy.
Finally, close the customer partnership loop with effective communication activities.

Critical measurements and Calculations

1. Know your customers.
   • Determine the true cost of each type of customer, from loyal to transient.
   • Compile a customer baseline and data base.
   • Employees are customers: Measure their service performance. Continue reading ‘Retaining Customers Part IV: Parting Comments’

This is the third of a series of four blogs devoted to the topic of customer retention. Read Part 1 and Part 2.

Every customer that you keep represents at least three that you don’t have to attract. Numerous research studies indicate that the cost of acquiring a new customer usually runs from two to four times the annual cost of keeping an existing customer. Obviously, an effective customer retention strategy translates into profits.

It has been estimated that most companies spend about 98 percent of their time reacting to problems and less than 2 percent preventing them. The first, most important, way to prevent customer defections is to identify and define each problem from the customer’s vantage point. This blog suggests several ways to retain customers once you understand the problems and their ramifications.

Superior service and database management provide your best defense against customer defections. Service provides the opportunity to solve customer problems and build partnerships; the database serves as a vehicle to personalize customer communication and enhance your relationships.

Establish a Customer Baseline

In order to develop a successful retention program, you must have accurate and complete information about your customers. In my experience, at least 5 percent of the information in a typical customer database is inaccurate. Errors translate into wasted money, customer aggravation and loss of credibility.

You should know the following basic information about your customer base: Continue reading ‘Retaining Customers Part III: Invest to Prevent Customer Defections’

This is the second of a series of four blogs devoted to the topic of customer retention. To read Part 1, click here.

Employees get excited when management demonstrates a serious commitment to listening to customers and staff’s suggestions for serving them. Building customer loyalty is everyone’s responsibility and everyone’s input is critical. Sharing information is as critical as collecting it: Empowered employees delight in delivering superior personalized service.

Author Peter Drucker points out that, “When people are held responsible, they act responsibly.”

How can you hire terrific, responsible employees?

• Articulate clearly your company values.
• Identify the aspects of a customer service attitude you desire.
• Interview and screen to elicit information about alignment of the person’s philosophical attitudes, principles, values and behaviors with your priorities. Look for employees who like to deal with people.
• Train employees about your corporate philosophy, product knowledge and productivity skills. Continue reading ‘Retaining Customers Part II: The Flight of the “Service Zombies”’

This is the first of a four-piece series devoted to the topic of customer retention. Here, I will talk about retention, what it is, and why it drives successful business operations. The three subsequent blogs will present a conceptual framework for issues, rationale, cost models, and examples for use in developing and maintaining a loyal and profitable customer-base.

Never, never, never take a customer for granted — I mean it!

Throughout the past year, I have written about customer satisfaction and its permutations (customer loyalty, customer partnerships, customer bonding, tracking and measurements and employee loyalty). Now I want to talk about customer retention: the key to profitability and longevity.

The importance of retention becomes evident once you understand clearly the relationship between customer loyalty and profits. Some large companies estimate that as much as 95 percent of their profits derive from long-term customers. Many other companies know that a mere 5 percent decrease in customer defections can boost profits any where from 25 percent to 95 percent.

The decision to cultivate a highly loyal customer base must be integral to all aspects of a company’s business strategy. You must know who your best customers are and what it takes to keep them. Then, you must meet, exceed and anticipate their needs better than the competition and give them reasons to buy more.

Retention depends on what customers actually do, not necessarily on what they say they will do. Continue reading ‘Retaining Customers (Part 1 of 4)’

This is a guest post by Tim Berry, GBR Editorial Review Board member and President of Palo Alto Software

What? You say, reading my title here. Why would I want to? Here’s a question I received in the www.bplans.com Ask the Experts forum today:

My business sells window coverings and recently got taken by a client who decided to forgo paying for the balance due for product that was installed in his home. We often deal in large-value custom orders and need to protect ourselves in the future. What kind of agreement or contract can we use, and were can we find an example of something that will hold up in court? Should we use a lien agreement?

Ok wait. Let’s talk about this. Have you considered the impact on your business of asking all your customers to sign something like that? You’re selling window coverings. You have competition.

You just reminded me of my post last month The Heat, the Kitchen, and Credit Cards. I was mad at a customer who stole from us, and customer service for the credit card helped me out.

The active point in that was about the heat and the kitchen. You’re in business. You’re dealing with customers.

You have to decide whether the occasional bad apple is worth baking all of the apples as they come in.

Here’s a good exercise:

Continue reading ‘How to Protect Your Business From Customers’

Nancy Dodd, MPW, MFA, is editor of the Graziadio Business Report and an adjunct professor of screenwriting.

Customer service has been on my mind lately, or I should say a lack thereof. Business executives budget fortunes to figure out how to attract customers while the customers they lose out the front door go unnoticed. It seems that one of the best budget expenditures a company could make would be to train their employees on how to treat customers.

For example, I moved to a new neighborhood and on the way home was fortuitously placed a grocery store from a large chain that I thought would be ideal for me to stop at to buy a few groceries. Now even though this wasn’t a prime area, it was on a busy street and it is a major grocery chain. I made my way through the panhandlers and into the store, did my shopping and went to the checkout stand. The lady in front of me was buying a fifth of some sort of liquor that she thought was on sale. The lady and the cashier got into an argument over the price of the bottle—I distracted myself with magazines on the newsstand. The lady moved on—I didn’t notice whether she left with or without her purchase—and my transaction began. Another employee, who I took to be a supervisor, walked up to the cashier and told her, “That lady called you a ‘b—-’” [I didn't hear the word clearly]. The cashier was incensed. The supervisor nodded, sighed as though her job was such a burden, and said, “Go ahead.” The cashier left in the middle of my transaction and went after the lady to do who knows what, leaving me standing there with my mouth open, while the supervisor took over the transaction. It just seemed wrong on so many levels. No, I didn’t continue to shop there. I drive way out of my way to another store from another chain. Granted this is an extreme case of bad customer service.

Continue reading ‘Businesses Pay for Lack of Customer Service’