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Archive for the ‘Bidness, and Other Current Economic Realities’ Category

Customer satisfaction can be determined in any number of ways, from personal visits and other direct encounters with customers to surveys and data analytics.  Two key metrics include overall customer satisfaction rating, and a tactic used by many companies today called the net promoter score.  It measures strength of loyalty and a willingness to recommend you.

Net promoters scores are typically built on the offering of a single question: “On a scale of 0 to 10, how likely are you to recommend [our company, our product, our service] to a friend or colleague?”

Based on this simple 11 point scale, scores are divided into detractors (those giving a score of 6 or less); Passives, who score you at 7 or 8; or net Promoters, who answered with a 9 or 10.

The detractors have the potential for further reputational damage, and when recognized provide an important opportunity to learn more, understand, correct a problem (and thus ‘save’ a customer) or engage them in meaningful dialogue aimed at solving the problem and improving your score.

The passives are somewhat satisfied, but are vulnerable to switching to another provider or product.  They’re not likely to say anything bad about your product or firm, but they’re also not enthusiastic enough about your products (or you) to actively promote either.

Promoters, those who scored a 9 or 10, are your sweet spot.  They love your company’s products, services or people, and will often recommend them enthusiastically to others.  They’re worth their weight in gold, of course.

In addition to ‘top-level’ metrics that you can find inside your ERP system, you can consider determining metrics for each stage of a customer’s journey throughout your life with them.  Metrics that include sales trends, buying history, preferences, results of cust-sat surveys and overall breadth of product support for your products and services can be combined and investigated at various timelines along the way, at least for a random sampling of clients.  Just as an investigative exercise alone, the results can be enlightening, and most every client is capable of surprising us (for better and for worse) with their responses, once engaged.

It takes a bit of courage sometimes to work up to asking the net promoter question, or to survey your customers on their more specific levels of trust and satisfaction.  But the knowledge gained and insights provided actually make it easier for you to improve your offerings and increase customer retention almost immediately.  Viewed in that light, why wouldn’t  you do it?

 

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The Internet of Things promises to transform the way humans, through their machines, interact with the Internet, and when you think about it, it’s already here.  Manufacturing is a case in point.

Today, sensors attached to shop floor equipment are capable of sending reams of production and equipment data back to the ERP systems, which hold that data in a repository for future use or analysis.

Handheld scanners are used to track the movement of parts, pieces and production.  Beyond that, they also aid warehouse workers in the movement — the picking, packing and shipping – of countless SKUs.  Everyone from the folks walking the floor to the folks in the front and back offices can have access to the same production and inventory information, in real time, at the same time.

Smartphones in the customer service and CRM arenas have made possible up-to-date information on all manner of data, from customer sales and orders to inventory quantities on-hand to sales reports across the territory or across the globe.  From checking into hotels to allowing physicians to check in on patient records from their phones and tablets, the interconnectedness of machines, ERP and the web has reached critical mass.

It’s the full-flowering of Bill Gates’ long-ago promise of IAYF: Information At Your Fingertips.

By 2020 according to one industry analyst, fully 95% of products are expected to be IoT enabled.  (We think that’s a bit optimistic, but their point is well taken nonetheless.)

All these advances have their advantages of course.  They save time – lots of it.  They save money – again, lots of it.  They speed up delivery, improve customer responsiveness, enable customers to become self-serving, and generally raise the level of satisfaction among a wide range of customers and their supporting companies.

For companies today frankly, there is little choice any more: adopt and adapt, or be left behind.  Sometimes the toughest question becomes: where do we start?  Luckily, there’s no shortage of consultants and solution providers willing and capable of providing the necessary guidance to get started.  About the only thing you can’t do any more is… wait.

 

 

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Our cohorts at Panorama Consulting often write good pieces about the importance of business process change management, especially when it relates to firms in growth mode who also happen to be implementing success strategies and software systems aimed at supporting that growth.

Recently they penned a piece on the topic of what you can learn from your business process management mistakes.  Because we also spend our days reviewing firms’ business processes, we thought their words worth sharing with our audience.  You’ll find their original piece here.

 

Just as researchers search furiously for the cause of disasters involving ships and planes, they suggest we too search for causes behind operational disruptions, which often cause morale problems among employees, inadequate software implementations and customizations, frustration all around, and low benefit realization.

To learn from our failures, the authors suggest we

  • Forgive – “Take a deep breath, forgive ourselves and others” to gain a clear head.
  • Analyze – Conduct a “lessons learned meeting to review project deliverables. Quantifying the direct and indirect costs in terms of time and money will give you an idea of the benefits you’ll need to realize to achieve a positive ROI on failure.”
  • Disseminate – Share lessons learned across the organization.

Panorama notes that “operational disruptions can be avoided by developing an effective business process management plan.”  They suggest including…

  • Business Process Mapping. We wholeheartedly concur, because any successful implementation always starts here.  At a high level, we map current processes and future-state processes, looking for technology touch points, redundancies (and ways to eliminate them), and how to do away with multiple and sometimes proprietary silos of information.  You reengineer your processes in order to optimize your workflows, both human and machine, to best capture the talents of your organization and the areas where you lend the most value to your customers.
  • Organization Change Management. Implementing new business solutions can often result in a decrease in productivity initially.  As the authors note: “Business process management cannot succeed without customized training and targeted employee communication, both of which should begin before software selection.”
  • Continuous Improvement. It’s a mentality.  And it will help ensure that you maintain optimized processes consistently into the future.  Set KPIs and other benchmarks which allow you to record progress and build toward improved performance.  Measure regularly.  If you can’t measure it, you can’t improve it.

Good advice all to anyone implementing process change, organizational change, or structural changes from software to process management.

 

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A tip of our hat to our friends (and accountants) at Insight Accounting Group for providing business owners and financial managers with a little clarity on the new tax law changes as they apply to capital expense rules and the Section 179 deduction.  You can read the full text from their May newsletter for yourself, along with past newsletters, at their site.

 

To briefly recap here though… Sec. 179 deductions are important investment tools for most business owners, allowing them to quickly recapture the benefits of their investments in capital equipment, including business hardware and software.  Following are some changes Insight Accounting wants everyone to know about going forward.

  • The new law increases the amount of business property purchases that can be expensed, from the former $500,000 to $1,000,000. Section 179 allows you to get the tax break immediately in the year the property is placed into service, rather than spreading that depreciation over several years.
  • An eligibility phase-out for Section 179 ensures it’s only used by small businesses, and that phase-out has been raised from $2 million to $2.5 million. If you spend over $2.5 million on business property in the year, your ability to use the $1 million Sec. 179 deduction is reduced dollar-for-dollar above that amount.  The deduction, by the way, applies to new and used equipment.  And, you can now use Sec. 179 on property used to furnish lodging (rental and real estate) and for improvements to nonresidential real estate like roofs, HVAC, etc.
  • Bonus depreciations limits have been improved under the new law, but for a limited time. Now, first-year bonus depreciations increases to 100% of the qualified asset purchase price for the next five tax years.  This is particularly useful for assets with a 20-year or less useful life, and thus includes equipment and software.  Bonus depreciation formerly applied only to new equipment, but can now be applied to used equipment as well.  The depreciation starts to decline in 2022, declining by 20% per year thereafter.
  • Remember finally that while the new tax law gives you expanded tools to accelerate depreciations, they’re not always your best bet; sometimes the standard tax treatments are more advantageous. The benefits have more to do with the timing of the expense, and not the amounts, so always be sure to check with your tax adviser or accountant first.

Again, our thanks to Insight Accounting Group for their guidance.

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Recently The Wall Street Journal ran an article we thought worth sharing about “what research tells us about effectively taming your inbox, when to use all caps, whether to use emoticons, how quickly to respond to message – and much more.”

(Well, we guess, that should cover it.)  Here’s what they found…

  • Replying to email promptly? Not always a good thing.  In companies whose cultures “emphasize speed of response, workers are more stressed, less productive, more reactive and less likely to think strategically.”
  • Handling email after hours? Also detrimental, the Journal report opines.  While some may feel more pressure to respond, those who do aren’t necessarily more efficient – they simply generate a higher volume of mail without actually getting more work done.
  • On the other hand… findings from a study of extroverts suggest that when they are working on routine tasks, “being interrupted by an email notification might be good for them – the social stimulation… may help avoid boredom and complete tasks more efficiently.”
  • When’s the best time to send an email? Studies show that when faced with a screen packed with information, people focus on what’s on top, so you want your email to correspond to when people are checking.  Based on a study of 16 billion emails, it was found that people “replied more quickly early in the week, and those replies were also longer. “ The same applied to time of day – between 8:00 AM and noon was best.  Apparently then, your best bet is to fire off your most important missives on a Monday morning.
  • What about email as a negotiation tool? Here, take advantage of email’s strengths, as most would agree that as a negotiating tool it pales in comparison to the face-to-face meeting, right?  Email’s strengths include ”the ability to rehearse what to say and convey a lot of information in a clear specific form that people can refer back to later on.”  As one researcher said, “if you understand how to use email effectively, it can be very helpful for your negotiations.”
  • SOME all caps is fine. It’s a long held tenet of email that using ALL CAPS is shouting!  But research says that’s not always right.  When used judiciously a word or two in caps can provide emphasis, communicate urgency or inject humor.  Just don’t do your whole email that way.
  • What about emoticons? Turns out, those little faces and pictures have been shown to help with comprehension, they shave a bit of negativity out of a message (or add a note of positivity), and are fine to use with people you know.  The caveat is to avoid using them in the wrong circumstances, such as in an introductory business email that sets the wrong first impression in a business context.  People may view you as ‘less competent’ and will thus be less likely to share information with you.
  • Take the time to view messages from the other person’s perspective. Research found that people are “consistently overconfident in their ability both to understand emotion in email and to convey it.”  Instead of skimming emails and firing off quick responses, they say you should take the extra time to view those exchanges from the other person’s perspective.

Good email communication, the Journal concludes, “is not about our intentions, but about the meaning that other people assign to what we write.”  In other words, the way people read your email might be different from how you thought you wrote it.  It happens… all the time.  They suggest asking yourself, “This is what I meant, but is this what the other person will get?”

 

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We noted in our prior post that underlying the cryptocurrency called “bitcoin” is what, in the long run, may be the more important element at play here: the blockchain.  Our prior post quotes The Wall Street Journal’s Christopher Mims’ fine explanation of the concept.  Now we’ll look at some important applications of blockchain technology.

In logistics, Walmart already uses a blockchain to list for sale over a million items, including chicken and almond milk, that provides its supply chain with traceability all the way forward and backward from source to sale.

Global shipper Maersk uses IBM’s blockchain technology to track shipping containers and move them through customs faster.

Both efforts are expanding rapidly, and other companies cited by Mims include Kroger, Nestle,Tyson Foods and Unilever.

A company called Everledger was started in 2014 with the intent of creating a blockchain that traces every certified diamond in the world.  It already has over 2 million diamonds in its registry, and adds another million or so per year.  Everledger records 40 measures of each stone, lending it traceability “from when it’s pulled from the earth to the day it’s purchased by a consumer.”  Every participant in that chain from miner to retailer maintains a node with a copy of the database in the blockchain.

A company in Israel puts internet-connected sensors on pallets and uses business intelligence analytics to determine when and where items could be damaged.  Blockchain participants can record every stage of the package’s journey via package, pallet and shipping container.

Even whole countries are adopting blockchain.  Dubai intends to be “the first blockchain powered government in the world by 2020.”  By moving its central record of all real estate transactions onto a blockchain, it will be faster and easier to transfer property titles, for example.

As blockchain technology becomes more widely accepted and integrated into supply chains, it has the potential, as Mims notes, to be a “fundamental enabling technology,” similar to how new data transmission standards across networks made the internet we know today possible.  It could one day underlie everything from “how we vote to whom we connect with online to what we buy.”

That being said, it’s wise to recognize that the current bitcoin craze is merely one application of the blockchain technology.  Clearly, much more will be, and is, possible through blockchain.  Bitcoin may — or may not — be here to stay; but blockchain seems to have all the merits and rapid adoption of a technological foundation that could change the way businesses run.

 

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With all the hype surrounding bitcoin these days making it sound more and more like a modern-day equivalent of the 17th century tulip bulb mania, it’s important to remember that there actually is something important going on here.  And it’s not about the bitcoin.  It’s about the underlying technology for bitcoin – the blockchain.

Investment manias may come and go, and bitcoin will likely make some folks rich (it already has for those who bought bitcoin at the start of 2017 at $963 and watched its price soar to nearly $20,000 by year-end; it’s since fallen back to around $8,300 as of this writing), and likely leave some ‘greater fools’ broke a little further down the line.  After all, bitcoin has no intrinsic value, it’s not based economically on anything, and its essential value is merely the result of what some other person is willing to pay for it.  As a currency proxy, it has a ways to go.

But the blockchain that bitcoin is built upon – that’s another thing.  And a recent article by Christopher Mims in The Wall Street Journal provides some of the best explanation we’ve seen for why it matters.

What is a blockchain?  As Mims explains:

“It’s essentially a secure database, or ledger, spread across multiple computers.  Everyone has the same record of all transactions, so tampering with one instance of it is pointless.”

He goes on to explain that the underlying cryptography…

“…allows agents to securely interact – transfer assets, for example – while guaranteeing that once a transaction has been made the blockchain remains at immutable record of it.”

Blockchain has the power to transform industries for three reasons, notes Mims.

First, it’s well-suited to transactions that require trust and a permanent record.

Second, blockchain requires the cooperation of many different third parties.

And third is… the hype.  “The excitement around cryptocurrency gives blockchain the visibility to attract developers and encourage adoption.”  In this way, blockchain resembles the cloud, which also gave many industries “new business processes, disruptive startups and new divisions within existing companies, an ecosystem of supporting technologies, and new ways to charge for services.”

We’ll take a look at some of that disruption in our concluding post, so stay tuned.

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