Archive for September, 2010
Wednesday, September 29th, 2010
According to Jeffrey Gitomer author of Customer Satisfaction is Worthless: Customer Loyalty is Priceless, the answer is very clear. “Satisfaction is no longer an acceptable measurement of customer service success.
The standard and measure of success in this millennium are loyal customers.” The Gallop Organization’s research also concludes that no matter how satisfied an organization thinks its customers are, if they haven’t made an emotional connection with their customers to develop a long-term relationship, satisfaction will ultimately be worthless. Satisfaction alone does not build a strong loyal customer relationship.
It is difficult to focus on loyalty when, as standard practice, most organizations seem to settle for satisfied customers. Satisfaction is a measurement of mediocrity. When a customer indicates, “I am satisfied”, it can usually be translated to mean the service experience wasn’t bad, however, it also was not exceptional. Satisfied customers are certainly better than disgruntled customers, but, building a loyal relationship is a must for long-term success. The key difference between loyalty and satisfaction is that customer satisfaction scores fail to predict how customers will actually behave relative to future purchases of your product or service. They may or may not return. On the other hand, loyal customers will consistently buy from you. By definition, loyal customers always come back to purchase repeatedly, which in turn produces a much longer and stronger income stream. The larger the loyal customer base, the greater your organization’s long- term success.
Economically, the best strategy for your organization is to pursue the creation and retention of loyal customers. This strategic initiative can and will separate your organization from the competition. Let’s face it, service today is mediocre in most organizations. Your organization can achieve a competitive distinction by developing a strategy of creating loyal customers. It has been proven that organizations with high levels of loyal customers typically grow revenues at twice the rate of their competition. However, the strategy of developing loyal customers must become a part of the organization’s culture and ingrained throughout. Since the culture of an organization will always drive the behavior of the people who work within the organization, people will behave differently if the culture is entirely profit driven. In this culture, people will do whatever they have to in order to produce profit, often times at the expense of the customer. This short-term thinking is an organizational disaster waiting to happen.
If the culture and strategy of the organization is to develop and retain loyal customers, then the contributors within the organization will focus on what they need to do to create loyal customers. Needless to say, in a culture that promotes customer loyalty, the entire organization must be devoted to valuing both customers and fellow employees who are often referred to as internal customers. Bill Marriott Sr. was noted for saying, “The way you treat your employees is the way they will treat the guest.”
When implementing a competitive strategy that deals with loyalty also take note that the customer experience needs to be aligned with organizational promises. When the customer’s experience is not reflective of what has been advertised, promised, or expected, the customer’s trust in the organization is undermined resulting in many lost revenue opportunities. Therefore, there is an urgent need to create strong relationships through frequent points of connection, and deliver unique service experiences as expected and promised by the organization’s marketing and advertising. The immediate impact of delivering an exceptional experience based on what is promised is a winning combination and a powerful weapon against your competition.
Tammy A.S. Kohl is President of Resource Associates Corporation. For over 30 years, RAC has specialized in helping businesses achieve high levels of excellence and success by adopting customer loyalty strategies as a critical success factor of organizational success. Learn how at www.resourceassociatescorp.com or contact RAC directly at 800.799.6227.
Tags: Customer Loyalty, Customer Satisfaction, gallop, gitomer, Marriott, RAC, Resource Associates Corporation, strategic
Posted in Customer Loyalty | No Comments »
Wednesday, September 15th, 2010
Innovation has become a popular topic in business over the last several years. However many companies confuse improvement with innovation and they are not one in the same.
Improvement is evolutionary where innovation is revolutionary. “Innovation is about creating breakaway differentiation, it’s about creating superior economic returns and it’s about creating what author Geoffrey Moore describes, as ‘an outcome competitors are either unable or unwilling to match’.” (Peter Lefler founder of The Spruance Group)
In order for a company to achieve innovative ideas the company needs to foster a culture of personal innovation. Every employee, team member, or contributor within your organization can enable innovation. They are living every process, talking with every customer, working on every production line, so they know very clearly what works well and what does not work. And, if asked they can tell the organization how it can be done better! The question becomes what process does your management team have in place to ask your employees what they believe the organization can do better?
Innovative opportunities are constantly squelched by poor organizational goal definition, poor alignment of actions to goals, poor participation in teams, poor monitoring of results, and poor communication as well as access to information. Help your people be part of the solution and contribute to a higher level of organizational success.
In a recent project with an insurance company, a cross functional team was brought together to evaluate, rework and present a low cost, no cost solution to shorten their policy approval process which was currently 13 days. They knew the industry average was 12 days. The team worked together for five days. By Friday afternoon the team was presenting to management a no-cost, reworked process taking the existing process of 13 days down to three days. Once the team was given the objectives they went to work and as a team saved the organization 10 days and a significant amount of money. They did not just present improvement … they innovated the process.
Allowing your employees to contribute means they are participating and taking responsibility for accomplishing goals. It’s important for each team member to have a clear understanding of his/her part in helping the team accomplish its goals. Utilizing employees with different strengths creates high performing and innovative teams. The key to employee contribution and innovation is in creating a culture in which people are encouraged to challenge, question, and try new things.
Creating an innovative culture is not a switch that can be flipped overnight. There may be resistance at first because changing a culture is never easy. However, in this case the change and the results are worth it. Communicate the organization’s goal and objectives and communicate the details of those goals frequently. Put a process in place that offers a safe way for employees to share ideas for improvement and innovation and always provide feedback. Establish cross-functional teams to evaluate important business processes and listen intently to what they have to say. If management stays committed to the cultural change, you will see the insecurity and resistance dissipate fostering some of the best innovate and revolutionary ideas your company may ever have seen.
Tammy A.S. Kohl is President of Resource Associates Corporation. For over 30 years, RAC has specialized in helping businesses achieve sustainable results through management consulting, strategic planning, leadership development, executive coaching and youth leadership. For information on creating a leadership succession plan visit www.resourceassociatescorp.com or contact RAC directly at 800.799.6227.
Tags: communication, contribution, improvement, innovation, RAC, Resource Associates Corporation, revolutionary, Success
Posted in Business Management, Communications | No Comments »
Wednesday, September 8th, 2010
Depending upon what research study you read, companies in the United States are spending upwards of 134 Billion dollars a year on employee training and development.
However, according to a study on retention in The Journal of Economic Education, the annual rate of retention loss for employee training and development averages between 13 to 23%. In other words, American employers are throwing away between 17 and 30 Billion dollars a year on unused or lost training and development.
In any business environment wasted dollars is bad, and in today’s business environment, eliminating wasted dollars is mission critical. The situation at hand is really a double-edged sword. Companies need to continue to invest in the development of their people (even now) in order to manage brain drain, to engage and motivate younger employees, and to create future leadership and growth initiatives for the organization all the while maximizing every dollar invested. So how can an organization accomplish both objectives simultaneously?
The good news is it can be done, but it does require examining and implementing employee training and development in a different way. It starts with understanding it is not just about the degree to which participants acquire the new knowledge, skill, or attitude, and it is not just about whether the participant attended the actual event. It is more about how the new knowledge, skill, or attitude is applied and how the application can positively impact a business through quantifiable results.
Donald Kirkpatrick is Professor Emeritus of the University of Wisconsin in North America and a past president of the American Society for Training and Development (ASTD). He is best known for creating a highly influential model for training and development evaluation. It is defined by four levels of participant learning.
His first two levels of learning are typically how companies measure the success of their training and development investment. Kirkpatrick defines the first level of learning as reaction. Reaction measures whether participants liked the event and the measurement tool is usually the session critique often referred to as a “smile sheet”—did the participants enjoy and find some value in the time they spent? Kirkpatrick’s second level focuses on participant learning. Did the participants acquire the new and intended knowledge, skill, or attitude? Often at this level pre and post testing is used as a measurement tool. What was the participants’ level of knowledge going into the training or development event, and how much did the level of knowledge increase as a result of completing the event?
Level one and two are important because you cannot move to Kirkpatrick’s level three and four without starting at the beginning. Kirkpatrick’s levels of learning are interconnected, as it is a learning process. However, many companies don’t pursue measurements beyond Level one and two because three and four require detailed goals and actions steps and take time to measure as well as manage.
Kirkpatrick’s Level three is focused on improved behavior. To what degree did participants take the new knowledge, skill, or attitude and apply it to the real world setting of their job, their role, and the goals of their department/company? Changing behaviors takes time, but by allowing time to pass participants have the opportunity to implement the new knowledge, skills, and attitude therefore learning retention and job transferability can indeed be measured—did behaviors change as a result of the new learning? Ideally this measurement is conducted three to six months after the learning event with commitment from not only the participant but their manager, team leader, boss, etc., to follow-up and measure individual application.
Level four focuses on measurable business results. Level three sets the stage and creates the ability to measure results long-term. By allowing time for the participants to actually apply the new knowledge, skill, or attitude and by measuring the improved behavior through individual goals and action steps, looking at improved results through an entire team or department is the next logical step. Here are some examples of achieving level four successes within a team or a department:
- Creating a development/training process focused on improving the knowledge, skill, and attitude of members of a sales team could lead to level four measurements such as increased sales volume, increased customer retention, shortening the sales cycle, and increased profitability—all meaningful results to the success and profitability of an organization.
- Working with any department or company in the area of process improvement could lead to level four improvement such as reduction of defects, errors, rework, time, and improvement of efficiencies. If a company could take their typical three-week order processing system down to 24 hours, the saving of company resources and the financial impact is huge.
In today’s world, positive business results and taking full advantage of every investment is crucial. For future training and development events take the time, make the commitment, and follow through to Kirkpatrick’s level three and four. The business results will be unparalleled to what your organization has experienced in the past.
Tammy A.S. Kohl is President of Resource Associates Corporation. For over 30 years, RAC has specialized in helping businesses and individuals achieve high levels of excellence and success. Learn how at www.resourceassociatescorp.com or contact RAC directly at 800.799.6227.
Tags: development, journal economic education, Kirkpatrick, RAC, Resource Associates Corporation, results, Retention, training, wasted dollars
Posted in Business Management, Management, Retention | 1 Comment »
Wednesday, September 1st, 2010
Often times when companies have to squeeze the financial belt, developing employees and creating future leaders gets pushed aside. However building a sustainable company requires having a leadership growth and succession plan in place at all times.
In a recent study conducted by OI Partners, the data indicated that 54% of the companies surveyed do not have enough leadership successors in place and 14% of the companies are not sure if they have enough leadership successors in place. These findings confirm that many organizations are not prepared for the future, which means their organizations are not as sustainable as current management may believe. Closing the knowledge and talent gap needs to be a management strategy during good or interesting times in business.
The benefit of investing and growing employees for the future provides staggering long-term results for the entire organization. Some of the outcomes of employee development management should never lose sight of include:
- Maintaining or growing competiveness in the market
- Sustaining or increasing overall employee and organizational performance
- Building capabilities required to win when business circumstances change
- Sustaining the organization’s culture
- Shortening the time needed for an employee to make an important role transition
- Building strong leaders breeds sustainability
- Creating strategic alignment between the strategy, the employees, and the internal processes
- Innovation
- Creating loyal employees which in turn helps create a loyal customer base
The last point listed is particularly important. Revenue and profitability, albeit critical, are predictors of past decisions. Creating and growing a loyal customer base is a predictor of future success and sustainability. A key to creating and growing a loyal customer base is creating loyal employees. An employee’s loyalty to the organization is enhanced by working with each individual to create a personal development plan. Tim Shoonover, Chairman of OI Partners, said in a recent article “To sustain growth in your company, there must be a path to leadership. If an employee doesn’t have a leadership development plan in place and isn’t able to see her career progression she is less likely to be engaged or to expend discretionary effort.”
Right now organizations have a bit of an advantage, as employees are not as quick to pursue new career opportunities. But as economic conditions improve, disengaged employees will begin comparing and perhaps looking for new career opportunities. Therefore, creating and committing to an employee leadership and development plan is not only critical to organizational success it also plays a significant role limiting employee turnover to a minimum.
Employees who see a commitment to their growth and development are employees who give the organization 110%. That extra 10% is where innovative ideas come from that could propel your organization to new heights. What is creating an employee development process worth to your company?
Here are some questions that may be useful as you review your company’s employee development strategy.
- If you had to fill a key leadership position in your company tomorrow, is there someone ready and able to fill the position? Are you confident he/she has the right skills, knowledge, and attitude or are you guessing?
- Does your organization have a published employee development plan?
- Do you or your team of managers have a documented development plan for each employee they manage?
If any of your answers to the questions listed above cause you concern or you just do not know the answer, then perhaps it is time to make employee development a priority. The sustainability and success of your organization depend, on it!
Tammy A.S. Kohl is President of Resource Associates Corporation. For over 30 years, RAC has specialized in helping businesses achieve sustainable results through leadership development and executive coaching. For information on creating a leadership succession plan visit www.resourceassociatescorp.com or contact RAC directly at 800.799.6227.
Tags: Customer Loyalty, employee loyalty, future leaders, Leadership, leadership succession, OI partners, Succession, Sustainability
Posted in Customer Loyalty, Leadership, Succession | No Comments »
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