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The NEWORK Centre Level 2 Willbank House 57 Willis Street Wellington Phone 499 1048 e-mail nework@xtra.co.nz

No 27                                                                                    July 2004

Magpies

As a magpie landed on a fence rail, he saw a turtle sitting on top of a nearby post.

Not having ever seen behaviour like that out of a turtle before, Mr. Maggie asked, "Mr. Turtle, how did you get up here?"

To which the turtle provided the obvious answer, "Well, one thing's for sure - not by myself."

If you're the owner, employer, and/or manager of a team of people, or as a portfolio worker your task has that role, the next time you find yourself "on top of a fence post," make sure that you recognise the others who helped you to reach your lofty perch.

Not only is it the right thing to do, but remember, Newton's law of gravity is especially active around fence posts. It's handy to have people around who will want to break your fall in case you find yourself experiencing Mr. Newton's law in an untimely descent from on high.

And while we're on the subject of being grateful beneficiaries of someone else's efforts, remember those that are closest. The members of humanity who not only put up with us this world, but who usually are our most abiding source of support as we try to reach the top of our respective fence posts - our families.

They are all part of our community of Portfolio workers.

Empty your mind and the right answer will come.. Try too hard to think of an answer it will not come - just focus on nothing

Opportunity and Danger in Plastic

"Satisfaction guaranteed or your money back!"

For generations, these words were inscribed on the forehead of every business apprentice in just about any shop or business that operated. This was more than rhetoric; it was a way of life that was exacted by the customer and the boss.

There is the story of a junior once, needing direction as to the next step to take with an unhappy customer, received the instruction from the store manager : "Try to make the customer happy at your level, because when they get to me, I'm going to give them whatever they want."

Life was indeed simple in those days. For example, most businesses, large and small, could count their competitors on the fingers of a single hand.

It wasn't a free ride for managers, however; you still had to run a tight ship. But that was when flour was a commodity, not computers. And if a business could get customers to buy its products there was typically enough pricing power to make a profit, which meant that you could afford to hire enough employees to serve customers properly, as well as to train them to deliver good service.

The successful model was based on high volume at price levels that afforded good profit margins, which funded excellent customer service.

In the 21st century, due in large part to the Internet, businesses have an almost infinite number of competitors. Even if you don't think globally, most of your competitors do. And due to the commoditisation of almost everything we consume, those competitors are tough to beat when price is the prime consideration.

All of this market pressure creates good news and bad news for consumers.

It's good news because when prices are adjusted for inflation, many things cost less today than they did 30 years ago. It's bad news because when companies, especially big ones, have to operate on such tight profit margins, the first operating element to suffer is both quantity of the personnel who touch customers, as well as the quality of their training, which almost always manifests in diminished customer care.

The pre-1975 era is what is sometimes called The Golden Age of Customer Service. Alas, based on some recent research, it looks like we're currently in the Plastic Age of Customer Service.

In a recent American Customer Satisfaction Index covering 40 industries, the average score for successful complaint handling was 57 out of 100. That's a pretty good average - if you're a softball player. But during The Golden Age of Customer Service, any business that struck out four out of 10 times at bat created a lot of unhappy customers, and was on a fast track to failure.

So why has such a level of unservice become a 21st century norm? Because for the past quarter century, consumers have become sensitised to getting poor service, especially when it's packaged with a low price.

For small businesses, The Plastic Age of Customer Service has created both opportunity and danger. But seizing the opportunity and avoiding the danger requires an understanding of the following points:

1. Rarely do the high volume-low price siblings appear without bringing along their triplet, poor service.

   Don't get me wrong; there's nothing inherently wrong with high volume. But it becomes bad for small businesses that get seduced into joining a price war. And low price is also not inherently bad - for consumers. But it's bad for any small business that turns down that dark and dangerous road. Never forget that the price war has already been decided, and small business lost. So don't go there.

2. Nothing that has happened in the past 30 years has changed how humans want to be treated, only how they expect to be treated. Armed with this knowledge, all a small business has to do to be outrageously successful is avoid the triplets.

So how do you do that? Reverse their order and rename them.

Focus first on excellent service. Deliver your goods and services in a way that is not only excellent, but also creative and innovative. The first thing you'll notice is that many of your customers will probably be astonished. Remember, humans still want to be treated well, they're just not used to it. When you overwhelm them with excellent service, you'll stand out against competitors large and small.

Next, with excellent service established, comes the mother's milk of a small business, premium prices that deliver high margins. If you're not charging a premium, that means you may be in a price war with someone, and you know what we've said about the price war.

As a small business, you not only don't want to do business with everyone, you can't. Target only those customers who want more than just a product or service. The customers you're after want customisation, dependability, technical assistance, and one more thing: They want you to save them time.

This may be the most important 21st century marketplace truth on which small businesses must focus: More and more, people are valuing their time more than their money.

Once excellent service and premium prices are established, whatever volume you choose to have is profitable volume. So if you can scale this model we've been building in a way that doesn't diminish service, you're in for outrageous profits.

But remember this: The bigger any business gets, the harder it is to stay out of price wars, earn outrageous profits, and deliver excellent service.

It has been said that the way to a man's heart is through his stomach. The way to a small business customer's heart is through excellent service, not volume, and - disregard this at your own peril - not price.

The NEWORKer can be viewed online at the Work & Age Website http://www.nework.co.nz

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