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Using referrals to grow businesses
Monday, January 30th, 2006

As businesses try to do more with less, many are tempted to implement referral programs. Referral programs can attract business, in the right context.

Characteristics of a good referral program

It seems to me that good referral programs:

  1. Include clear messages for potential customers
  2. Help the people making referrals identify the potential customers
  3. Are accompanied by “talking points” for the person making the referral
  4. Are aligned with the organization’s goals and objectives for the program
  5. Contain clear explanations of the benefits for the person making referrals
  6. Connect with the issues and opportunities faced by the potential customer
  7. Provide a tracking mechanism so that one can measure the impact of the program

Case Study

In the last 24 hours, two referrals have been made suggesting that I rejoin an online networking group. (I had myself deleted last weekend.) In one case, the offer contained a list of generic reasons to use the services and offered a free 30-day trial. The list looked like one that I had created. It wasn’t applied to my facts, or it would have been modified. In the other case, the person suggested that I watch a video and offered a free 2-week trial.

As a practical matter, when one is in a “win-back” situation, one has to make sure that the questions raised by the person to be won-back have been answered. If the person one is trying to win-back has extensive experience with the offering, starting from one’s own perspective is unlikely to work. One has to start from the other person’s experiences and explain what has changed.

Posted in Customers, Marketing | No Comments »



What price are we willing to pay to prevent terrorism?
Monday, January 30th, 2006

The debate surrounding terrorism prevention often focuses on the safety component, and overlooks the cost. One element of the cost is inconvenience for us as individual. Beyond that though, what costs are businesses incurring? How is this impacting our economy?

Yesterday, I was speaking to a small business owner who had to leave his small business and drive 15 hours round-trip to renew a federal license. Why? One of the consequences of our concern over safety is that US Coast Guard licenses have to be done in person so that photographs and fingerprints can be taken. Prior to 9/11, the licenses could be renewed by mail.

The small business owner told me that the cost was one that he was willing to incur, if necessary, in order to be a good corporate citizen. That said, we laughed about the odds that this self-described “70 year old male chauvinist conservative” was going to be a terrorist threat to anyone when he operates a small boat (about 22′ long and 5′ wide), up and down a Wild and Scenic River in a sparsely inhabited area…

At the end of the day, this cost will be passed on to customers.

Posted in Business Trends, Current Events, Customers | No Comments »



Entertainment Passbook
Sunday, January 29th, 2006

If you are trying to think of a gift that will keep giving all year, the Entertainment Passbook may be of interest to you. Is there anyone who wouldn’t like to get up to a 50% discount on things they are purchasing already?

Posted in Gifts & Recognition | No Comments »



If you don’t want the world to know…
Sunday, January 29th, 2006

This morning, the world was told that the DISD contract with Kinkos has an interesting provision. The provision is that Kinkos will give select district employees free entry into celebrity golf tournaments. One of the tournaments was the Kinko’s/Unicare Pro-Am in Austin. Entry into the tournament cost $10,000. The package included airfare, a banquet, two nights at a posh resort, and $500 gift package of clothes and equipment. No one can explain when or how the provision found its way into the contract. Read more about this little challenge here.

More common than one might hope

Some may be surprised by the provision. Quite frankly, a lot of suppliers offer such perks. This is one of the reasons that many organizations have policies that spell out exactly what employees can accept. There is no such thing as a free lunch. Suppliers set aside a certain amount of money to sweeten the deal and they don’t necessarily care how the money is used.

Rules for accepting gifts

Here are a four rules that have served me well. Perhaps you will find them helpful too…

  1. As my friend and former client, Ron, used to say “only accept perks that can eaten and excreted within 24 hours and without requiring medical attention.”
  2. If you wouldn’t go there with your family and be able to comfortably pay for it, don’t go there on your company’s dime… Not even if the supplier is cutting the check.
  3. What is good for the goose is good for the gander. If you wouldn’t let every firm under consideration do something, don’t let any of them do it.
  4. If you would be embarrassed to admit doing something in a courtroom filled with your best friends, your worst enemies, and all of your friends, neighbors, family, and colleagues, don’t do it at all.
Posted in Negotiations, Sourcing | No Comments »



Application of negotiating styles: avoidance
Sunday, January 29th, 2006

Continuing the discussion of negotiating styles that started here, the second negotiating style is avoidance.

Just as the name suggests, one tries not to negotiate. When using avoidance, one may be perceived as sitting back and doing nothing. Why? Because, as it relates to negotiation, that can be exactly what one is doing.

Pros and Cons of Avoidance

Avoidance allows one to avoid emotional engagement or loss of control. That said, avoidance can increase the emotions because there may not be any outlet through which they can be be expressed. Think about the pressure cooker and what would happen if one put a stopper in the pressure valve…

The party using avoidance is taking control of the negotiation. This can increase the pressure, if the other party does not use an end around or decide to walk away.

Parties who rely heavily on avoidance often miss out on opportunities. Opportunities can be lost because the other party walks away, or reciprocates.

Relationships that are likely to yield the most value for both parties are those in which the parties have open and honest dialogue. Imagine a situation where you know that a friend does not want to talk about a topic. In that situation, you might avoid raising the issue, right? Well, the same thing can happen in a negotiation. When it happens in negotiations, the parties’ interests may be overlooked. A second issue is that minor issues can be turned into lose-lose situation.

Tactics associated with avoidance

Delaying, giving in, and procrastinating are three common tactics associated with this style.

Delaying is a good tactic to use if one does not have all the necessary information or approvals. Sometimes, one decides to delay the discussion of a topic until other issues are resolved.

Giving in if something does not matter, should we spend time and effort negotiating the issue? Of course not. If the provision is not going to matter, the time and effort spent negotiating the provision are a waste.

Procrastinating can be used effectively if the other party is under time pressure. However, if one procrastinates, the other party may explore other options. When this occurs, the deal that was originally contemplated may no longer be available at the time the party resumes the discussions.

Posted in Business Tips, Negotiations | No Comments »



Outsourcing deals often look good on paper, but increase costs in practice
Sunday, January 29th, 2006

Over the years, I’ve heard a lot of companies make a case for outsourcing. When push comes to shove and one is actually cutting the check, in many cases, the costs go up and the service goes down. Who is at fault? Well, it doesn’t really matter who is at fault. What is often at fault is over-selling and failure to gather appropriate information to adequately assess the proposal. Now, I can’t talk about my specific experiences or those that have come to light for me. Here is one that I can talk about though…

DISD Experience

In today’s Dallas Morning News, increased costs associated with outsourcing are front and center. Above the fold, front section of the paper, one finds an article about Dallas Independent School District outsourcing copying and printing to Kinkos. According to the article, Kinko’s told the principle at W.T. White High School that she could cut printing expenses by 21%. Instead the expenses quadrupled from $42,000 in 2003 to $158,000 in 2005. Across the entire (Click here to read the story.)

Purchasing/Procurement Involvement

The purchasing director for DISD is now arguing about the cost. This one puzzles me… Where was he when the deal was being negotiated? Purchasing and procurement should be leading the charge on this, not sitting back and letting someone else take the lead. It doesn’t always work this way.

Experience indicates that if the purchasing group is unable or unwilling to fight for the internal clients, the group is not seen as a value add. If the group does not add value, it is not involved from the “get go.”

Outsourcing

The challenge and the opportunity with outsourcing is the use of due diligence and aligning the parties interests. Beyond that though, everyone has to do their homework. Here are a few questions that need to be asked, and answered in any outsourcing situation…

  1. What have other organizations found through outsourcing the product or service involved?
  2. How is the organization involved the same and different from the other organizations?
  3. Will the outsourcing allow us to reallocate resources so that we cut our total cost?
  4. What assumptions are we making about our usage? If these assumptions are incorrect, what are our options as far as reopening the negotiations? Better still, if the assumptions are incorrect, what adjustment provisions kick in automatically?
  5. Who bears the risk if assumptions are incorrect? How can we ensure that the risks are manageable for both parties?
  6. What is the worst possible outcome, from our perspective? How can we ensure that this exceeds our bottom line requirements for such a project?
  7. Are there any sweetheart components in the deal that should set off warning signs?
  8. How long is the deal and what are the “out” provisions?

Risk

Business is risky. Due diligence is simply a way to identify and manage risk. Risk can take many forms. It seems to me that the smallest risks are the ones that insurance covers. The biggest risks are that we will make a bad business decision.

What can we do to minimize the risk of bad decisions? There are many possibilities. One technique that works very well is to use worst case modeling. Here are the steps:

  1. Identify the worst possible outcome from one’s own perspective
  2. Assume the worst case outcome occurs
  3. Ensure that the results meet or exceed the bottom line business requirements

Of course, one has to define objectives and decide how to measure success in order to use worst case modeling.

Posted in Current Events, Solving Problems, Sourcing | No Comments »



Raze money for revitalization…
Saturday, January 28th, 2006

Tomorrow morning, a building in North Dallas is going to be imploded. For $20, you can watch the implosion from the eight floor of a nearby building, get breakfast, and be entered in a raffle to be the one who gets to actually press the button to start the implosion. The proceeds will be used to help revitalize the area. Click here to read more.

Posted in Corporate Citizenship, New Ideas | 1 Comment »



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