Tuesday, March 23, 2010

The "Right" Customer

Lets assume that you have the perfect product. One that everyone needs. You've priced it right and everyone in the world can afford it. It works without errors and flaws and doesn't break and is extremely simple to use (while a smartphone is simple to use - its not necessarily cheap so finding that magic "widget" is probably a dream that will never come true!).

How much would you like to bet that you would still have customers complaining about it? Hard is it might be to believe the phrase -
"you can please most of the people some of the time and some of the people most of the time, but you can NEVER please all of the people all of the time!"
- is unfortunately way too accurate.

What you will see and notice however is that the 80/20 rule (remember that? I mentioned it earlier here) applies in this like it does in most things. If you haven't read my post, allow me to paraphrase - the 80/20 rule (also known as the Pareto Principle) states that 80% of "x" comes from 20% of "y". You could state it like 80% of your customer interactions come from 20% of your issues. Or perhaps another way - 80% of your sales come from 20% of your clients.

Now obviously the percentages might not always line up to exactly 80/20 but you will find that this is accurate and close more often than not.

So how does this apply to you and the miracle product? Well it might not , to be honest - not if you have one single price point across the board. However if you've priced it based on income, you might potentially be charging more for this product in some regions than in others. The 80/20 rule would tell you to concentrate on the 20 sectors that are actually generating the most revenue for you - if you do the math, you'll see that the other sectors don't amount to the same value and your efforts are best spent where they are most fruitful.

So if we take our example of the miracle product you might find that the following applies -

  • Region 1 (Affluent and Developed Economies) - product priced at $100/unit 
  • Region 2 (Developing and Growing Economies) - product priced at $50/unit 
  • Region 3 (Growing and Restructuring Economies) - product priced at $10/unit 
Region 1 will probably account for the highest percentage of your sales and also the lowest cost with regards to support as they have the infrastructure in place to utilize the product fully and also to understand what it can and cannot do.

Region 2 & 3 will together account for a significant portion of your revenue but will also have the largest volume of support issues as they do not have the understanding of the products limitations and while this is a "miracle" product unfortunately it cannot in itself do miracles!

The unfortunate fact of human nature is that generally the lower paying clients have a much higher level of demand to those at a higher price point.

From a real world perspective I previously had a job at a large Internet company that was experiencing severe growing pains (to put it mildly!) and as the Manager I was frequently on the short end of the stick. More often than not, during the course of an outage I would be speaking to businesses with 5-10 impacted users on a conference call and have to explain what we were doing to everyone in the company ... by contrast I would have an hourly update call with the Senior Network Analyst at a business that was on a similar service but that had thousands of customers impacted!

I'm sure you've all heard the story about the contractor charging $100/day for a job and not getting any business but that same contractor choosing to charge $200/day getting inundated with work. The perception in the market place is that the person charging more is also WORTH MORE. Be careful with this though as if you cannot "back up" your requested salary with a corresponding skill-set, you are not going to get far at all!

Now please do not take this post to imply in any way that the customer isn't right. That Region 3 customer buying your $10/unit product could eventually turn into your monster customer that IS your business. If you are able to "upsell" your customers from one product to another, based on value and worth it is easily done. 

It is always worth the effort to nurture your customers as the hardest part of growing any business is getting new customers in the door. However you do need to do some careful analysis and tracking to ensure that the revenue you are earning from your customers is not actually COSTING you more in the long run - and remember - if you do not have that miracle product, you can only imagine that your complaints are going to be higher!

Tuesday, March 16, 2010

Dealing with Low Performers & Performance Issues

Why do we measure organizational performance? The first answers that pop into your head might be:
  • You can’t manage what you don’t measure
  • What you measure gets done
  • We have to be accountable
  • They have to be held accountable
  • They told us to (I always like that one!)   
Now what do you do if/when you have someone that is not meeting or achieving these standards while everyone else in your team is?

The first thing that must be realized is that as a manager the buck stops with you.  Its up to you transform these people and lead them in the right direction.  You cannot let low performers dictate the outcome of the team as a whole and as such the bar must remain at the level you have set.

It would be a big mistake to lower the bar in the interests of morale while sacrificing the requirements of the company.  By lowering the bar, you are only appealing to the elements of your team that are hopefully a minority.  Remember - you should always be aiming to reinforce positive behavior v.s. penalizing the negative.

You are the leader, whether you are a good one or not doesn't really matter at this point.  You are the one that success hinges around and are in the position of leadership for a specific reason. Your team needs you to communicate a vision. You need to ensure that you are communicating with all of them (not just the weaker ones) on a frequent basis and directing them appropriately and your team as a whole needs to know that you are committed to them and their success.

Ensure that you are communicating the goals and objectives frequently and that the targets are achievable.  You will always have a bell curve with people on the low end and people on the high end with the majority in the middle - your focus should be to shift the bell so that it is skewed towards the higher end at all times.

It is key to remember that these people are all there to do a job and to do it well.  You've hired for their skills and expertise and you need to ensure that non-performance is something that will be addressed swiftly and conclusively.  Not doing so is something that will definitely impact the morale of your team.  If you need some suggestions on how to go about this - read my post on PIPs (Personal Improvement Plans) - for an idea.  Remember, that you are doing the job you are doing to serve the business and its customers - friendships in the workplace are nice but there should ALWAYS be a line in the sand between Management and Staff.

One final point - I've mentioned that you are a leader already?  So LEAD!  You need to ensure that the example you are setting to your team is the right one and you should always be aiming for the stars!   

Your team will follow where you go.

Friday, March 12, 2010

Getting the job

Guerrilla Tactics for Getting the Legal Job of Your Dreams, 2d (Employment Law)

OK, alot of my previous posts have stressed the importance of networking and CV reviews with regards to getting that next role.  What lots of candidates fail to account for is the actual importance of the interview itself assuming that their CV will "sell them" to the prospective employer.  It cannot be stressed enough that while your CV will get you into the door, it is only through an exceptional job interview that you will get hired!

You may find these related posts of interest:




With the current ratio of interviews to hires during this recession time, Employers can afford to be picky with the candidates that are walking through the door.  There are always more people looking for a job and most employers want to ensure that they are getting the best value for their money.  Generally in recessions, the ratio of job interviews to job offers is as high as 17-to-1 (this drops to 6-to-1 during the "good times") so nailing that first impression is paramount.

Sell Yourself!: Master the Job Interview ProcessSome common assumptions that candidates make about the interview process are:

    The Job Interview Manual: Interviewee Perspective
  • I am good communicator - while this is obviously important (confidence at the interview stage is key) you need to remember that communicating in the workplace is different to an interview.  Quite often you are going to be interviewed by people that are not skilled in the role that you are trying to fill and they will not understand the jargon that someone who does the job you do would.  Also there is the potential that you will have group interviews where you will be cross examined by multiple parties simultaneously - remember that focus your attention on the person asking the question, but you need to be cognizant of the body language of the rest of the panel also.
  • I can do the job - while this might be absolutely true, it really has no bearing on the interview itself!  As I've already mentioned, if you're being interviewed by someone who doesn't understand Routers, talking about the TCP/IP stack is not going to get you anywhere!!
  • I am (was) a Manager and have interviewed people before - there is a big difference between interviewing and being the interviewee.  Once you're on the other side of that table you need to ensure that the answers you are providing are relevant to the questions being asked.  You need to show enthusiasm for the role and do not be afraid to show some ambition when asked the question - "What are your plans for the future?"  If you're able to answer truthfully that you want to get back into Management and would like to eventually be sitting on the other side of the chair again yourself that would probably not be misconstrued - however do NOT be arrogant and assume that you can do the job of the person that you are speaking to tomorrow.  Just as in your previous role, this one is no different - its not just the technology that you need to learn but also the people and he has that knowledge whereas you will need to learn it again.
  • I know all about the business/sector - while you might have worked in this sector before, you actually DO NOT know it all.  Eat a little humble pie here.  The key thing that you should do though is ensure that you know EXACTLY what the company is looking for and also as much information about the company as possible.  It is more than frustrating for an interviewer to ask the candidate what do they know about the company they are interviewing with and then have the candidate waffle on.  In today's world, there is really no excuse not to know as much as possible about the role and the company - BE PREPARED!

Think Confident, Be Confident: A Four-Step Program to Eliminate Doubt and Achieve LifelongSelf-EsteemNow while this is by no means an exhaustive list, it definitely covers the main things that I've had experience with from both sides of the chair.  Practice doing interviews in front of a mirror, make notes about how your strengths line up with what the company is looking for, BE CONFIDENT and ensure that you project that image of yourself.

Practice, Practice, PRACTICE!!!!

Remember that that the job search is a job itself and should be treated as such. Your resume and CV opens doors, your personality will get you the job!  Best of luck.

Monday, March 8, 2010

The 80/20 Rule

If you've been in Tech Support or Help Desks for any length of time - especially from a management perspective you'll be extremely familiar with something called the 80/20 rule.  

Put simply it implies that 80% of your calls/contacts are generated from 20% of your issues.  If you are able to focus efforts on clearing up some of those 20%'ers you would have a significant impact on the overall volume that is coming in to your center (note, once you've fixed the 1st 20% - then you can do a similar analysis on the next batch and so on!).  

Now, while this is true from an "on the floor" perspective there has actually been a study done on this and this "rule" is actually known as the Pareto principle (sometimes also called the "law of the vital few" or the "principle of factor sparsity ).  While these names all sound really fancy - I think the 80/20 Rule is most descriptive of what it is.

The principle was actually suggested by Italian economist Vilfredo Pareto.  Vilfredo observed that in 1906 80% of the land in Italy was owned by 20% of the population.  Surprisingly for Vilfredo Pareto he observed a similar distribution among other countries and as such developed this guideline.
  • More recently, this was seen in a 1992 UN Report that showed that 20% of the world's population actually controlled 82.7% of the world's income!
  • Microsoft also noted that by fixing the top 20% of the most reported bugs, 80% of the errors and crashes would be eliminated.
  • The Pareto principle was a prominent part of the 2007 bestseller The 4 Hour Workweek by Tim Ferriss which I have mentioned in a previous post As Tim Ferriss recommended, by focusing your attention on those (20%) factors that have the greatest impact to your income (80%) you will obtain and receive a greater "bang for your buck!"

So as you can see, some significant analysis has gone into determining whether or not this "rule of thumb" actually applies and while its not always 80% on the dot, it is close enough for you to use in determining what you should be looking at from a management perspective.

You can really think about the 80/20 rule from two different directions. 
  1. What are the negative impacts that you need to address.  As I've mentioned earlier, 20% of your issues are probably causing close to 80% of your interactions with your customers.
  2. 20% of your customers are also probably spending the most (80%) with you!  
  3. 20% of your employees are also probably the most (80%) productive! etc...
Dealing with the first option is reasonably easy - hopefully you can categorize your interactions with your clients utilizing any half way decent CRM system.  Once you know why you are being contacted, sort it out to see how many of each type (you should be doing this anyways!) and start with the top 20 types of problems.  
  • Are there any of them that you can address by providing better documentation to your customer so that they do not need to contact you in the first place?  
  • Is there something that you can and should do to fix your product so that they do not need to contact you?  
  • How about updating your FAQs and other setup information?  These are all simple and easy fixes and by doing them you'll make an immense impact on your bottom line.
Measuring & Dealing with the second should be even easier ... if you do not know who you top 20 biggest customers are ... SHAME ON YOU! ... they are your bread and butter and you should ensure that you are on extremely good terms with them.  

The same applies for your #3 of course - your staff themselves.  Reward your high performers with raises/bonuses and other perks.  These are the people that keep the ball rolling and I've mentioned previously the impact of losing highly trained staff have on a business.

Best of luck using the 80/20 rule in your business ... its a good one - keep it close to heart!

Cancellation - the final step in a long and drawn out process

Dealing with customers that want to cancel is hard. I know - I'm personally in the midst of trying to cancel my Television/Internet serv...