Every company makes mistakes. That’s one thing all businesses have in common.
That said, each mistake is an opportunity – especially if the error affects a customer.
Some companies blame anyone or anything but themselves. They may or may not correct it. They may or may not apologize. Some act like they’re doing you a favor if you ask them to correct their own goof-up.
A culture of blame exists in these firms. Their mantra is “It’s not my fault.”
Other companies immediately correct mistakes – especially for customers. They apologize. They might even offer the customer something extra to show they’re serious.
A culture of accountability exists in these firms. Their mantra is “Fix the problem to the complete satisfaction of the customer.”
Clearly, the second type of company is where you want to be. But, consider kicking it up a notch to turn costly mistakes into profitable occurrences.
Let’s say Bob’s Computer Service gets a call from their customer Big Company, Inc., telling them that Bob’s driver delivered their repaired monitor but they didn’t get their power cord back.
Bob’s has a culture of accountability, so the rep apologizes, arranges to have it delivered right away and offers a discount to make up for the aggravation. So far, so good. Even though the rep did everything right, most of Bob’s competitors would do the same, so it was good, but not extraordinary.
What if Bob’s takes the time to find and fix the root cause of the error? Now they begin to separate themselves from their competitors who, as soon as the customer’s problem is resolved, get back to their hectic routine. (Hey, if you’re busy putting out fires all day, every day, it’s tough to find time to install a sprinkler system.) This is the first way to profit – by driving repeat mistakes out of your business and enjoying the resultant productivity improvements.
And here’s one more step: bring the customer back into the loop. What if someone from Bob’s contacted Big Company, Inc. and it went something like this:
“Thank you for bringing your missing power cord to our attention. As a result of this situation, we reworked our procedures. Each product that arrives for service now gets a tag on which all accessories received are documented. Nobody – including you – should ever fail to get all your accessories back with repaired equipment.”
Almost nobody does this sort of thing. This level of dedication to quality, customer service and follow-through puts Bob’s Computer Service in rare company and helps create strong, life-long customer relationships. And, we all know the value of customers who are also raving fans.
We all make mistakes. You may as well profit from yours.
"The difference between something good and something great is attention to detail.” – Charles Swindoll
An alien spacecraft lands near a mobile home park (as alien spacecraft are prone to do) and abducts an earthling. As the extraterrestrials examine the human, they’re fascinated that one toe on each foot is much bigger than the other four.
Why aren’t we earthlings similarly surprised when we see another person’s foot for the first time? Because it’s the norm. Like water to a fish. Ho-hum.
And so it is with many of the line items on your financial statements. We take some things for granted, and look right past them. Sometimes, it’s familiarity. Maybe you’re used to glossing over training expense because you always spend less than you budgeted. Sometimes it’s your perceived lack of influence over certain numbers. No matter what you’ve tried, that one number “is what it is.”
One of the first steps to improving your financial results is to start looking at each line item as if you were seeing it for the first time. Letting them become ho-hum is a formula for decline.
Of course, every section of your income statement is an opportunity for improvement, but here we’ll focus on your Cost of Goods Sold, or COGS.
COGS is defined as the direct costs that go into creating the products or services that a company sells. For example, an automaker’s COGS would include the material costs that go into making the car plus the labor costs used to build it. The other costs that don’t directly go into producing cars, like office supplies, support staff and utilities, are considered Overhead Expenses … another topic for another day.
If you’re a service-only business and don’t sell goods, you probably call it Cost of Sales, or COS. Even if your P&L just shows revenue less expenses, and doesn’t include a COS section, you really do have COS … it’s the direct labor cost associated with your billable staff.
Some great reasons to mine your COGS for improvement opportunities:
Do a detailed analysis of every line item in your COGS, and you might be rewarded with an out-of-this-world profit improvement.
The best numbers to put on your dashboard are the specific numbers that define success for your company. Look at the things going on in your market and industry. What are your company’s trends for the last few years? What are your customers and employees saying? These answers will help determine your dashboard metrics.
Keep the amount of information to a handful of critical numbers so your attention isn’t diluted. Just because you CAN measure something doesn’t mean you SHOULD. Less is more.
Don’t focus only on financial measures. Operational numbers (web hits, turnaround time, customer satisfaction, etc.) can be especially helpful in analyzing progress toward your most important goals.
Finally, once you have a dashboard, use it. It’s not decor – it’s an accountability tool. Put a name next to each number – the person who “owns” that result. Go over the numbers regularly with your team and strive to achieve each target.
"It’s not my fault!”
How many times have you been a customer and heard that line?
It usually happens right after you bring a product or service defect to the attention of someone at an establishment where you’re spending your hard-earned money.
I was on the receiving end of this statement recently. It was tempting to give a customer service lecture to the person in front of me, faultless as he may have been.
This particular situation involved receiving the wrong fast food order. I had ordered the medium Unrecognizable Chicken McParts and instead received – and was charged for – the aptly named Super Sized version. For a moment, I thought perhaps they’d brought me the entire crate of McParts straight from the walk-in freezer but they assured me this was indeed packaged for individual sale and consumption. (Disclosure: While I may find it amusing to poke fun at the fast food industry, that’s where I had my first job. Accordingly, I’m somewhat sympathetic to fast food employees. Even so, until they start putting the right stuff in the bag, they will be the target of my “how-not-to-do-it” business lessons.)
As a small business owner, I pay lots of attention to the way service is delivered when I’m the customer. Most folks reading this are probably equally aware of nuances that might be missed by others: The words that are said and how they’re said, body language, the care with which transactions are handled, and so on.
It’s almost unfair to use fast food joints as examples of how to (or how not to) conduct business. After all, they make it awful easy to identify faults.
So, let’s raise the bar and discuss another industry. In fact, let’s discuss your own company.
Have you had the “it’s not my fault” talk with your people lately? Have you ever had it?
Chances are, if nobody has had a direct discussion with your employees they don’t intuitively know that the customer doesn’t care whose fault it is. Even if the customer does know who’s to blame, “blame” isn’t on the agenda. Getting the problem fixed quickly is.
Here’s a good discussion to have with your troops:
Banish “It’s not my fault!” from your workplace. Replace it with confident, competent service that keeps your customers coming back.
Virtually everyone recognizes the importance of having an office procedure manual, but actually creating one is a big job, so it doesn’t get done. Here’s a SIMPLE way to get it done:
1) Buy an ordinary three ring binder. Mark it “Procedure Manual.”
2) Put some blank lined notebook paper in it. Congratulations! Your company now has a procedure manual!
3) Have everyone in the company contribute to the creation and upkeep of this manual. Whenever a repetitive task arises, the most likely person (whoever does that task) takes a few minutes to hand-write a procedure on one of the blank pages. Give it a title so it’s obvious what it’s for.
4) Assign an administrative person the task of periodically taking these hand-written procedures and typing them into a computer using a word processor program like Word. Put a “Revision Date” on each one so you always know whether you’re looking at the most current version. Replace the hand-written procedures with those printed from your computer.
5) Add to it and tweak it over time. It’s never really “done.”
That’s it. The hard part may be getting your employees to stop “winging it” and to actually follow your new procedures.
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