November 4, 2013 · 11:29 am

Will Rogers

Let’s start our week with a business point from the great American humorist Will Rogers.

Will Rogers

Will Rogers

For those of you unfamiliar with him, he’s best known for saying (in reference to Leon Trotsky) “I never met a man I didn’t like.”  I’ve always considered him the successor to Mark Twain in many ways in that he often made very pointed remarks in a gentle, funny manner.  That didn’t make his humor any less barbed, however.

You might think that I want to use that to make a point about business behavior.  That’s not a bad notion but not where we’re heading today.  Instead, let’s think about something he said that was brought to my attention via a fortune cookie.  A reader sent me the contents of the cookie (and I do hope that you will feel free to send in ideas, questions, or even rants) and when I read it I just knew it had to be a topic.  It said:

Even if you’re on the right track, you’ll get run over if you just sit there.

For a man who died even before commercial television began, Will certainly gets business today.  No business can afford to rest on its laurels.  Market conditions change, consumer preferences change and of course technology has changed everything.  Take, for example, a huge company like Microsoft.  They built up large, profitable markets for their operating system and their Office products and those were cash cows.  Sure, there were constant upgrades but mostly they just “sat there” enjoying the stream of profits.  Suddenly, Google and Apple are cleaning their clock and those cash cows are in danger.

I take the statement on a personal level as well.  We all need to keep learning.  Much of what I do today is built upon the base of 35 years of business experience but it also requires me to have kept up with changes in the media and tech worlds.  I submit that none of us can be effective at our jobs or personal lives if we don’t make a constant effort to keep growing, no matter how successful we’ve been to that point.

Any thoughts?

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November 1, 2013 · 10:35 am

Ssshhhhh…

Foodie Friday, and this week I want to talk – very quietly – about secrets. You might be familiar with the fact that some restaurants have secret menus. They range from the unofficial like Starbucks (you pretty much have to describe to the barista exactly what you mean by a Red Candy Apple Frappucino) to the official but hidden menus at In-N-Out Burger which puts the hidden menu on its website.  McDonald’s, Chipotle, and pretty much every other chain has off-menu items, as do many top restaurants.

What I find strange isn’t that some customers are “in” while others are left wondering what that was the other table was eating.  No, what I think is really odd are those establishments that are themselves hidden.  These are restaurants – and many of them are very good – that go out of their way to hide.  No sign,  and often an unmarked door so you can’t be sure of the address.  In fact, The Times just reviewed one of these places (so much for keeping THAT secret)  and pointed out the restaurant is in a basement. It is closed four nights out of seven. Its sole offering is a $100 tasting menu that is not posted in advance. Substitutions are not allowed.  Not exactly a prescription for embracing the customer and yet the place got two stars (that’s damn good here in NY, folks) and you know it will be mobbed.

There are hidden places in other cities as well so it’s not just a NY phenomenon.  But it got me wondering why a business would do this.  I get the whole “the first rule of Fight Club is don’t talk about Fight club” mentality.  I know many people like to be in on the secret and know something that someone else doesn’t.  But given that Yelp, Urbanspoon, and other review sites are out there, the odds of keeping the menu and the business itself secret are pretty slim.  I mean there are even websites dedicated to outing these places. Why bother trying?

Maybe it’s the sense of belonging to something even if they’re not really “secret.”  Maybe it’s an incredibly clever form of marketing.  In a time when it seems as if every business is trying to get louder, these are standing out by making no noise at all.  Interesting, right?

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October 31, 2013 · 8:34 am

Churn

We have a statistic in the television business called churn.

English: Butter churn, Dunserverick Museum One...

(Photo credit: Wikipedia)

Actually, it’s more about the cable TV business and it’s short for churn rate.  As is sometimes the case, Wikipedia defines it nicely:

Churn rate, when applied to a customer base, refers to the proportion of contractual customers or subscribers who leave a supplier during a given time period. It is a possible indicator of customer dissatisfaction, cheaper and/or better offers from the competition, more successful sales and/or marketing by the competition, or reasons having to do with the customer life cycle.

Obviously, if a company is to grow, that growth needs to exceed its churn rate – you need to gain more customers that you lose.  Simple, right?  It points out pretty clearly that keeping customers is at least as important as adding new ones.  That simple thought is what popped into my head as I read the results of some research from the Accenture Global Consumer Pulse Survey.  You can look for yourself here.

What they found was that companies are not working hard enough to stop consumers from switching. In fact, among people who changed service providers – banks, phone companies, retailers – 81% said that the company could have done something differently to prevent them from switching.  Maybe it’s not as simple a thought as it might appear?  As MediaPost reported:

The report says that while service providers… have more data and insights into consumer desires and preferences than ever before, providers have failed to meaningfully improve customer satisfaction or reverse rising switching rates among their customers.

Ouch.  So what does that mean specifically?

  • 91% of respondents are frustrated that they have to contact a company multiple times for the same reason
  • 90% by being put on hold for a long time
  • 89% by having to repeat their issue to multiple representatives
  • 85% of customers are frustrated by dealing with a company that does not make it easy to do business with them
  • 84% by companies promising one thing, but delivering another
  • 58% are frustrated with inconsistent experiences from channel to channel

Marketing is often focused on growth.  However, as any financial person will tell you, improved profitability can come from cutting expenses as it does from growing revenues (and I’m a strong advocate for the latter since those cuts often kill growth and revenues but that’s another screed!).  Churn is the cutting of losses and helps reduce costs – I think it’s cheaper to keep a customer than to acquire one.  It’s also something that businesses can fix if they focus on it.  None of the study’s findings are difficult to address IF there is an awareness and a commitment to do so.  Is your business ready to do that?

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