April 18, 2014

Business Tip – February 2014

 

mapei_sponsorLeadership and Management:
working together for your good

By Wally Adamchik, president, FireStarter Speaking and Consulting

wally_adamchikYou remember the commercial, “Tastes great, less filling?” The one about the beer that tasted great and didn’t fill you up – combining two fine qualities into one beer.

In your business, you also need to demonstrate multiple abilities. Whether you are just getting started or have been in business for decades, to be successful in business today, a combination of both leadership and management skills is required.

That sounds easy, but there is one problem: leadership and management are two separate skills. I once had a speaker before me at a convention assert that they are arch enemies. I took the stage after him and totally disagreed. I contend that they are intimate allies.

To understand the difference, we first need to change them. Leadership is about change for better results; it challenges the status quo and looks at the long term. It is about people. Management is about consistency for better results; it maintains the status quo, focusing on short-term results; it maintains the status quo, focusing on short-term results. It is about structures and procedures. Leadership and management seem to contradict each other but they don’t.

Skills can be learned

Usually, when we think of leaders, we consider larger-than-life historical figures and we don’t include ourselves. Give yourself some credit. You can lead too. Take a look at the things leaders do. Ultimately, these things revolve around “soft skills.” These intangibles do not come naturally to many people in construction. It is not how you are wired. The critical few things that leaders do are set direction, align resources, and motivate and inspire people. These are skills that can be learned.

Management, on the other hand, is about “hard skills.” Management focuses on the business of the business, the black and white, not the gray. It involves planning and budgeting, organizing and staffing, and controlling and measuring. There are far more managers than leaders. Even though these skills are essential to the success of any business, they are not instinctive either.

One of the best tools at your disposal for leading and managing in the field is the daily huddle. Done well, this short but important investment of time insures high production for the day. Done poorly, it is a waste of time that simply puts the crew farther behind. Ideally, the huddle is a conversation about production targets and techniques, safety issues and overall opportunities for improvement from the day before. The huddle sets the direction for the day, gets the crew working together and gives a goal to shoot for.

Research shows, and experience confirms, that the higher you go in the organization the more you must lead. In fact, depending on the size of the firm you might be leading 50% of the time if you are the president. Very large firms will see that number move to 80%. Conversely, at the crew level we expect to see 80% management and 20% leadership. The sad fact is that we don’t see much leading at the crew level. We see orders being given and plenty of controlling and problem-solving but precious little motivating and aligning.

Rather than being mutually exclusive, these two skills are, in fact, interdependent. The successful tile business person of the future must respond to the new reality. The labor situation is not getting any better. Just because you were good once doesn’t mean you will continue to be successful today. Customers are more demanding, there is no labor waiting on the bench, and margins are thin. However, the person who can blend the seemingly contradictory skills of management and leadership is poised to bring their company into a more competitive and profitable position.

NTCA has partnered with Wally Adamchik to bring his interactive virtual training system at www.firestartervt.com to NTCA members. Contact him at [email protected] to learn more about how the NTCA/FirestarterVT partnership can save you training dollars while improving your leaders at all levels.

Business Tip – January 2014

Financial Operations

mapei_sponsorIn this issue of TileLetter, we continue with the Financial Operations section of the NTCA Business Reference Manual, as found on page 31 of this document. In the November 2013 issue of TileLetter, we examined overhead analysis, accounts payable and receivable and invoicing. We continue now with a look at contracts, depreciation and job costing. Check upcoming TileLetter issues for more tips and recommendations on running your business efficiently and profitably. To download the entire NTCA Business Reference Manual, visit www.tile-assn.com.

f. Contracts

It is important to have a contract for any work provided by your company. This is for your protection and your clients. A contract clearly spells out what services you are going to provide, where and how much. This document can be as short as one page to many pages. It needs to be worded very carefully. You can see what other contractors are using and adopt a similar document. Make sure an attorney reviews it.

Good contracts also have well-defined pay schedules on them. This takes all the guessing out of when you will be paid and how much. You should also include a “Notice of Right to Cancel” form ( commonly called Right of Rescission) with your contract. Each state is different, so check out what your state requires. A state form must be provided in addition to a federal one.

BT_0114_graphicChange orders should be developed and given to the client as the change is taking place. Clients will pay you more easily and faster when they know there is a legitimate change to their job and scope of work. You cannot wait till the end of the job to provide this! Too much information is forgotten and the urgency from the client to pay you is lost. Take care of each change as it occurs.  It will only help your cash flow.

g. Depreciation

When you depreciate, you allocate the cost of an asset over the useful life of the item. Large ticket items are often depreciated over several years.

h. Job costing 

Job costing is a comparison of what you charged for a job versus what it cost to get the job done – labor cost, material cost, overhead. When evaluated over several months, your job costing reports can give you a good indication of what types of jobs are most profitable for your company. “Work in Progress” reports use similar information to give you an indication of the job’s profitability as the work proceeds.

NTCA reaches new milestones in 2013

By Bart Bettiga, NTCA executive directormapei_sponsor

I am sure all of us have experienced the challenges and strains that our economy has put on our individual companies, but I am pleased to report that the National Tile Contractors Association (NTCA) continues to thrive and expand its influence every year as a leading association in the tile industry.

In August, the NTCA Executive Committee traveled to Grand Rapids, Mich., for three days of strategic-planning discussions. This resulted in what we think is a great direction for the association mov- ing into 2014 and beyond. The NTCA Board of Directors then met at Total Solutions Plus in October, expanding the program direction generated by the Executive Committee, resulting in a clear vision for the staff moving forward.

The cash position of the NTCA is healthy as we head into 2014. As we develop our following Strategic Plan, we expect the association to continue to grow in influence and to increase its value to our members.

Membership

One of the main contributors to our financial success has been the steady increase in our membership. This year was the fi fth year in a row we have increased our totals – in a year when our member investment increased from $500 to $600. In fact, we have now exceeded our goal of 800 members, established three years ago. We are now focusing on reaching 1,000 members in 2014.

Strategic Planning

For the past several years, the Executive Committee has been involved in the process of strategic planning. When we talk about strategic planning, we try to look into our future longer than just one year. An example of this is thin tile panels, which have exploded onto the tile industry scene and have raised a lot of interest and challenges to our members. We have been involved in discussions on developing standards for these products, and also trying to position our association’s members to benefit from these efforts. This is part of a strategic planning process. Following are our objectives for 2014:

#1 Objective: Saving members money and getting them work

We have identified saving our members money and getting them work as our most important association objective. It is not an easy task. Getting NTCA members specified on projects also includes promoting and further developing our Five Star Contractor Program. Our staff will use their many means of communication to promote Five Star and the advantages of contracting with NTCA members, as well as promoting member benefits that can save you money.

#2 Objective: 1,000 members

By the end of December, we expect our membership to exceed 900 companies. We have a healthy ratio of 85% contractor members, and 15% associate supporters. We are setting the bar high for next year, and our staff is working extremely hard to reach 1,000 members for the first time in our history.

#3 Objective: Tradeshows

NTCA is an owner in Coverings, and also receives income from Total Solutions Plus. Although we want to continue our support of these shows, we don’t want to depend on their profi t for the success of our association. Several years ago, we were concerned about what would happen to NTCA if tradeshow revenue were to disappear. So we have established this goal of evaluating tradeshows, and our staff has worked hard to find alternative sources of revenue that our association can more easily control. We have had excellent success in this effort.

#4 Objective: Board of Directors

Our fourth goal is to focus on getting our members to become more active. By developing our State Director Program, and by actively recruiting more member involvement, our Executive Committee and staff now discuss all of our potential new leaders, and work closely together to recruit these people to our committees, Board of Directors, etc. We think having more people involved in the NTCA will only grow our association and expand our influence in the industry.

Training programs

At the Executive Committee meeting, we identified that key staff direction would be to focus on training for our members. I am pleased to report that the NTCA Workshop Program is being revised to provide more technical training to our members and their installers, and we are also ready now to offer on-line business training as a member benefit. To do this, the NTCA is partnering with Wally Adamchik, of Firestarter Training and Speaking. Wally is a well- known business trainer and speaker and has a proven track record of success. We will report more on both of these programs in the first quarter of 2014.

Thank you to our volunteer members

At Total Solutions Plus, we voted in our new board members in their respective regions. Last year, our Executive Officers were voted in, and will remain in this position for the next year. This is a hard- working Executive Committee, and I would like to personally thank them for their dedicated support of the association.

  • Dan Welch: President – Welch Tile & Marble; Kent City, Mich.
  • James Woelfel: First Vice President- Artcraft Granite Marble &Tile Co.; Mesa, Ariz.
  • Martin Howard: Second Vice President – David Allen Company; Raleigh, N.C.
  • Nyle Wadford: Chairman of the Board – Neuse Tile Services; Youngsville, N.C.
  • John Cox: Board Advisor – Cox Tile Inc.; San Antonio, Texas
NTCA president Dan Welch will guide the association through the end of 2014.

NTCA president Dan Welch will guide the association through the end of 2014.

Four new Regional Directors were recently elected to the NTCA Board of Directors. Our four outgoing directors in these regions have all served two terms, which are the maximum years allowed by our association by-laws.

  • In Region 1, Dennis Wigglesworth of Filling Marble and Tile in New Jersey has fulfilled his term, and is being replaced by Jon Donmoyer of JD Tile in Anville, Pennsylvania.

wigglesworth crop                 john donmoyer crop
Region 1 director Dennis Wigglesworth of Filling Marble and Tile in New Jersey (l.).
Wigglesworth has fulfilled his term and is being replaced by Jon Donmoyer of JD Tile in Anville, Pa.

  • In Region 6 we have had the good fortune of the support of Ricky Cox from Memphis Tile and Marble these past four years.  Ricky has been extremely supportive of all of our programs in his region. We have elected Mike Sanders of Sanders Hyland in Mobile, Ala., to join our Board of Directors.
  • In Region 7 we have been blessed with the support from two great contractors in the Twin Cities of Minnesota. Jan Hohn of St. Paul, Minn., is leaving the Board, but will stay on our Technical and Methods and Standards Committees. JoeKerber of Shakopee, Minn., has been on both of these commit- tees for several years, and will now join the Board of Directors as a Regional Director.
  • We filled our final directorship  in Region 8. Anthony Jung of Victoria, Texas, will remain on the NTCA Finance Committee, but is leaving the Board of Directors. We voted in Tave Baker of Holmes Tile and Marble in Jonesboro, Arkansas, to fill this important position.
Greg Michael  (l.), of Michael’s Custom Tile in Jacksonville, Fla., Region 4 director, with Anthony Jung  of Victoria, Texas, who has filled his directorship in Region 8. Tave Baker of Holmes Tile and Marble in Jonesboro, Ar., will replace Jung on the Board.

Greg Michael (l.), of Michael’s Custom Tile in Jacksonville, Fla., Region 4 director, with Anthony Jung of Victoria, Texas, who has filled his directorship in Region 8. Tave Baker of Holmes Tile and Marble in Jonesboro, Ar., will replace Jung on the Board.

 

  • In Region 11, which covers Northern California, we have experienced outstanding membership growth the past two years, and we have Martin Brookes of Heritage Tile and Marble to thank for that, along with our staff. He has really supported our programs in the area, and we approved him for a second two- year term.

I want to personally thank all of our volunteer members who support the association. The NTCA has more active support than ever before, and this is the main reason for the explosive growth in our membership. It is becoming evident at every conference and tradeshow we participate in. The overwhelming support we get from volunteer contractors and associate supporters is humbling to our entire staff.

Speaking of the NTCA staff, I am incredibly proud of their efforts over the years to make us the vibrant and effective association that we are. To illustrate this point, the following quote was excerpted from our Board Minutes at the meeting held recently from Total Solutions Plus. It came from Chris Walker, vice-president of David Allen Company in the Washington D.C. area, and chairman of the NTCA Methods and Standards Committee and the ANSI A108 Committee.

“I want to personally congratulate the NTCA staff for its management of revenue to get its programs accomplished and maintain a good financial position. The ability to fund and execute the programs it does and maintain a creditable financial position is remarkable. There is no comparison between NTCA and other associations.”

As we approach the end of a successful year, I would like to personally thank all of our members, volunteers, staff and subscribers to TileLetter, and wish you all a wonderful holiday season.

Business Tip – November 2013

mapei_sponsorFinancial Operations: overhead analysis, accounts receivable and payable and invoicing

In this issue of TileLetter, we continue with the Financial Operations section of the NTCA Business Reference Manual, as found on page 31 in that document. Last month we examined common accounting terms and the labor burden rate. This month, we review overhead analysis, accounts receivable and payable and invoicing. Check upcoming TileLetter issues for more tips and recommendations on running your business efficiently and profitably. To download the entire NTCA Business Reference Manual, visit www.tile-assn.com.

c. Overhead analysis
An overhead expense chart will show items like advertising, sales, office expenses, staff, rent, office equipment, telephone, computer, office supplies, job expenses, vehicles, job supervision, tools and equipment, service and warranty, mobile phone, general expenses, owner’s salary, general insurance, interest, taxes, bad debts, licenses and fees, legal fees, education and training, entertainment, association fees. Make sure all these overhead costs are factored into your job estimates.

d. Accounts receivable and payable
Accounts payable are people or companies  you do business with and whom you need to make payments to. Accounts receivable are people from whom you will be receiving money. Set up a system to track payments due to your vendors and subcontractors, as well as weekly accounts receivable reports so your customer accounts don’t get too far in arrears.

e. Invoicing
Typically, residential jobs are billed upon completion, with a “draw” requested to cover the cost of any materials purchased up front.

Commercial jobs are usually billed in stages. For large jobs, you may need to bill a “materials draw” to cover the cash outlay for materials to be used on the job. Commercial jobs are generally paid more slowly (45-60 days), so you need to plan your expenses accordingly. Most commercial contractors will hold a portion of your payment as retainage and require you to submit notarized applications for payment. Each contractor has specific forms for you to complete, and you need to make sure you read them thoroughly.

Many contracts state that you won’t get paid unless the contractor does (pay-if-paid), but this is not legal in some states. Know the laws of your state, and don’t be afraid to edit a contract accordingly.

You should put a payment schedule in your contract to control when you will be paid and the amount. This is new to GCs but if you will start implementing this, it will help your cash flow to know exactly when you will be paid. Poor payment schedules on contracts cause cash flow problems. They should be well defined and followed. If you are unsure, contact your attorney for the proper wording and implementation.

Business Tip – October 2013

mapei_sponsorFinancial Operations: running your tile business the right way

In this issue of TileLetter, we move to the Financial Operations section of the NTCA Business Reference Manual, as found on page 31 in that document. Part A familiarizes you with common accounting terms related to your business, and part B explains the labor burden rate. Check upcoming TileLetter issues for more tips and recommendations on running your business efficiently and profitably. To download the entire NTCA Business Reference Manual, visit www.tile-assn.com.

Financial operations

The relationship with an accountant is vital to running your business smoothly and profitably. Your accountant can advise you on the complexities of federal and state taxes and benefit you with good and proper record keeping. Your accountant can help you decide what type of business classification is best for you, and can be a valuable resource for future decision making.

a. Common accounting terms

BOOKKEEPING – the recording of monetary transactions related to your business.

ACCOUNTING – the financial structure of a company. An accountant helps design financial systems, conduct audits, develop forecasts, prepare tax reports, and analyze and interpret financial data for business decisions. Your accounting should be set up on cost accounting, not tax accounting. Tile contracting is a cost-based business.

CHART OF ACCOUNTS – When you set up your accounting program, the chart of accounts shows a specific numbered category which will be associated with each expense and type of income. A basic bookkeeping program will have a sample chart of accounts, or your accounting professional will have an outline for you to use. Setting up the Chart of Accounts correctly will make all your accounting work run more smoothly.

INCOME STATEMENT – Also referred to as the Profit and Loss statement, the Income Statement indicates how a company’s sales and expenses tally for a specific period of time. The difference between revenue (goods and services sold) and expenses (cost of goods and services provided) for a particular time is net income.

BALANCE SHEET – a “snapshot of a company’s financial condition” – a balance sheet shows assets (what you own), liabilities (what you owe), and ownership equity. The net worth of your business equals assets minus liabilities.

CASH FLOW STATEMENT – The flow of cash into and out of the business is reflected in its cash flow statement. This report is useful in determining the short-term viability of a company, particularly its ability to pay bills. It is useful to managers, accountants, potential lenders and investors, as well as the business owners.

PROFIT AND LOSS (P&L) STATEMENT – A regularly-produced report that shows the overall financial health of an organization by documenting income versus expenses. A well set-up P& L allows you to make good daily business decisions. Note: make sure depreciation is not included in this statement. First, you cannot use it; second, you cannot spend it, and if it is under expenses it pushes up your markup.

b. Labor burden rate 

“Burden rate is the total indirect cost, calculated as a percentage of the construction company’s direct labor. In other words, for every dollar of direct labor allocated to a contract, burden is applied as a percentage of the direct labor. But before a contractor can accurately calculate burden rate, all contract costs assumed by the company must be fully accounted for and factored into the final burden rate equation.

“Contract costs are broken into two classifications-direct and indirect. Examples of direct costs include direct labor, materials and supplies, equipment rentals, etc. These costs are obvious inclusions for estimators preparing bids for a potential contract. What may not be as obvious are the indirect contract costs.

“Indirect contract costs that should be part of the final burden rate calculation include:

  • Workers’ compensation
  • General liability and automobile insurances
  • Vehicle and equipment repairs and maintenance
  • Depreciation
  • Field communications expenses
  • Employee benefits such as health, life, disability
  • Payroll taxes

“All costs associated with paying employees, including FICA, unemployment and Social Security, should be calculated as part of labor, as should vacation time, holidays, sick days, warehouse personnel, training, safety, hand tools, and clothing.

“Variable overhead should also be factored into the overall mix. This category includes all costs directly related to employees that cannot be divided accurately between jobs, such as fuel and cell phones.

“All too often, these overhead expenses are overlooked by contractors and therefore not included when calculating a project’s burden rate. Depending on the benefit package involved, employee-related costs will typically account for 24% to 33% for a non-union contractor. For a union contractor, the burden rate for employee-related costs will range from 60% to 70%.”

– From www.constructionbusinessowner.com.

Business Tip – September 2013

mapei_sponsorNeed business support and advice?

Join NTCA – it’s what wise contractors do. 

One of the great values of being a member in NTCA is the trusted camaraderie that exists between members. Need some help? Your fellow members – located throughout the country – are willing to lend a hand and answer a question.

Last month, one of our State Directors, Isaac Homza (Hawaii) reached out via email to his fellow directors for some guidance and advice in finding quality help. His question — and answers from other members, directors and NTCA staff — gave Homza some direction and may be helpful to you, dear reader, as well.

Subject: Re: Tips on finding Quality Help?

Aloha Regional and State Directors,

Hope everyone is doing well.

Looking for advice on the best way to find quality help.

We are a small company: myself, another setter and a helper/apprentice.

Both my guys are great but my helper just had an opportunity come up in another line of work.

I prefer a young person that has the potential to learn the trade. We are based on Maui, where there are plenty of distractions and at times a relaxed attitude towards work.

What sources have you used to find quality applicants and how do you handle the interview/application process to find the best?

Isaac Homza, Higher Standard Tile, Maui, Hawaii

Within hours, Homza had responses from several fellow directors:

Isaac,

We are a smaller company and don’t play in the big arena. I have had my key employees for over 10 years and one from almost the start. I pay them well, give them vacations, and make sure they are trained well and attend seminars on my dime.

I believe their confidence to do challenging installations has improved ten-fold since being CTEF Certified Installers. They are the backbone of my business. We have hired their family members and friends; some have worked out and some have not. We weed them out quickly.

We don’t want every job – just the rewarding ones, both financially and aesthetically. I would encourage you to pick out your key guy – paid accordingly – who is involved with choosing his workforce and fellow laborers. This will leave you more freedom to focus on your business.

I worked in Maui many years ago, so I fully understand the challenges you face with a transient workforce – and when surf’s up, no one shows.

Good luck, and make sure they attend the NTCA Workshops.

Martin Brookes, Heritage Marble & Tile Inc., Mill Valley, Calif. 

I will sometimes stop at construction sites when it is evident that tile work is going on. I have found several good tile setters that just do not like running a business.

This keeps my training investment down and lessens the risk of training my competition.

Scott Heron, Precision Tile, West Columbia, S.C.

I actually had some luck by paying attention at fast food restaurants that I frequented. I watched to see who was a hard worker and had a good attitude (this sometimes took a little time) and would ask if they might be interested in a different line of work with a future, and gave them a card to call me. This also worked in a grocery store for me once, though that is a better job than restaurant work.

Michael Whistler, NTCA trainer/presenter

Business Tip – August 2013

SponsoredbyMAPEIRevisions to retainage laws welcomed by tile contractors

By Bart Bettiga, NTCA and Greg Preves, Curran Group Inc.

 

All tile contractors have undoubtedly encountered a “retainage” clause in contracts for both private and public projects. This clause allows the project’s owner or general contractor (GC) to withhold a certain percentage of each progress payment until satisfactory completion of the entire project. Owners and GCs argue that retainage is necessary to assure completion of the project in a timely and workmanlike manner.

The most common retainage provision allows the owner or GC to withhold 10% from every progress payment made to the contractor. The sums retained are then released as part of the final payment made after the entire project has been completed and accepted by the owner. Occasionally, the contract provides for the reduction or elimination of retention after completion of a certain percentage of the work.

Tile contractors should carefully consider the impact of retainage provisions. At the very least, retention means that the contractor will have to complete all work before the release of withheld payments.  As a result, contractors may have to pay vendors for tile and installation materials long before all of the necessary funds to pay for such materials are released.  Additionally, where the release of final payment is contingent upon the owner’s acceptance of the entire project, retainage will be held until all contractors have satisfactorily completed their work.   This means that final payment could be held for long periods of time due to third-party performance issues over which the tile contractor has no control.

In an environment of dwindling profit margins, retainage often exceeds the amount of the contractor’s profit. Not only does this situation present liquidity challenges, but extends the contractor’s exposure to the risk of owner or GC insolvency. Tile contractors are also vulnerable to unscrupulous owners and GCs who may purposely delay payment to assist in financing the job or as leverage to resolve work issues or claims.

Although retainage is a contractual issue, tile contractors should be aware that many states have begun to impose limits on contractual retention requirements.  Thanks to hard work by groups like the American Subcontractors Association (www.asaonline.com) and the Associated General Contractors of America (www.agc.org), such legislation continues to move forward. Tennessee has enacted a law limiting retention in both private and public projects to 5% of the contract amount. The law requires that retention funds be released within 90 days of the contractor’s completion of the work. In North Carolina, new legislation limits retention to 5% on public projects over $100,000, and prohibits further retention after 50% of the project reaches “satisfactory” completion. In total, 40 states have enacted laws specifying a maximum retainage percentage for public and private work.

Some states have gone further to limit retention rights. In lieu of retainage, 21 states allow contractors on public projects to post security such as a bond, certificate of deposit, or letter of credit. Mississippi, Oregon, and Tennessee offer a similar alternative on private jobs. Meanwhile, some states require that retainage held on certain projects be placed in interest-bearing escrow accounts, such as California, Kansas, Ohio, Oregon, Tennessee, Virginia, and Washington for public projects and Connecticut and Ohio for private projects.

Many states have enacted prompt payment requirements that provide for substantial monetary and criminal penalties. New Mexico imposes the most restrictive limits, requiring that retainage funds be released separately as each individual scope of work item of the project is completed.

If you are a tile contractor who works on commercial projects, you should be aware of the retention obligations at the time of the bid, and negotiate these terms with the owner or GC prior to signing a contract.  If you are uncomfortable with the requirements, consider requesting a reduced retainage percentage or a specific deadline for retention release.

You also need to be aware of the retainage laws in the state where the project is located. Several contractor association websites provide summaries of the retention laws in all 50 states. Visit these resources for more information:

• American Subcontractor’s Association: http://www.keglerbrown.com/File%20Library/Unassigned/2008-asa-retainage-summary-publication.pdf

• This 2004 paper from the American Subcontractor’s Association is a bit older, but gives an excellent in-depth discussion of the topic and discusses the approaches of many different states: https://www.asaonline.com/eweb/upload/Retainage%20Report%20for%20CKD.pdf

• This survey was produced by the law firm of Holland & Knight: http://www.hklaw.com/files Uploads/Documents/Alerts/Construction/01-20-12.pdf

To the extent contractual retainage requirements violate state law, they are unenforceable and should be removed from the contract. The goal is to draft a retention provision that fairly balances the owner or GC’s need for timely project completion with the tile contractor’s need for timely payment. A little time spent addressing this issue at the beginning of the project may save a major problem down the road.

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Greg Preves is a staff attorney for Curran Group, Inc., parent company of Crossville, Inc. Founded in 1986, Crossville, Inc. is a U.S.-owned and operated manufacturer of award-winning porcelain stone tile collections for residential and contract applications.

Business Tip – September 2012

Delivering customer service

By Steve Rausch, USG Corporation

“Do what you do so well that they will want to see it again and bring their friends.” – Walt Disney

In my humble opinion, the quickest way to make or break your company is via your customer service system or lack thereof. One of the big problems of customer service is the definition of what customer service is! It’s so difficult because it is such a moving target. Once you discover what customer service means to your company, you quickly find that (a) it needs improvement, (b) your competitors have exceeded or redefined the limits required, or (c) you just continue on doing what you have been and discover you are losing market share rapidly and don’t know or understand why.

Customer service has been and continues to be the number one driver of growth at most major successful companies. Think about Amazon, BMW, FedEx, Ritz Carlton, UPS and Zappos – all are widely-known and respected for their customer service.

One story, told by Zappos CEO Tony Hsieh, is about a phone call to their 24-hour customer satisfaction center (customer service via phone center) asking where to get a pizza delivered late at night. Now Zappos isn’t in the pizza business, they’re best known for shoes, yet their rep took the initiative to go online and find the closest pizza place to the customer’s location and gave the caller the phone number. No sales transaction took place that night for Zappos; however, that is one customer who won’t go anywhere else for their shoes when they do want/need them.

And Ritz Carlton Hotels keep a list of returning customers’ likes and desires so they can have the room just right. For example, I use a CPAP machine at night and discovered my room at the Ritz had no outlet by the bed for my machine. After calling down to the desk they sent up a person with an extension cord with multiple outlets for my machine. Pretty standard for a hotel – BUT WAIT, the next visit, and every visit since, my room always has that same setup so that I don’t have to call and request it ever again! Now, can you imagine that I use Ritz Carlton whenever possible?  You bet I do!

What can YOU do in your business to take your customer service above and beyond the expectations of your customers? What needs can you anticipate and have already handled when your customers do business with you? The bottom line here is determining what UNEXPECTED PLEASURE you can provide to your customers so they provide you with a better bottom line. In the words of Jim Rohn, “One customer well taken care of could be more valuable than $10,000 worth of advertising.”

––––––––––

Steve Rausch represents the Substrates and Specialty Products Division of USG Corporation.

Business Tip – August 2012

Effective communication: it’s everybody’s responsibility

By Steve Rausch, USG Corporation

George Bernard Shaw once said, “The single biggest problem with communication is the illusion that it has taken place.”

Have you ever thought you’d heard exactly what someone else said only to discover later that you completely missed the whole point of the conversation? I have and it certainly isn’t pleasant. In the business world it makes for huge inefficiencies and wastes lots of valuable time. My question is: “Whose fault is it and how can we stop it from happening?”

The first part of the question is much easier to answer – it’s both parties’ fault.  The “SENDER” (person doing the talking) has a responsibility to clearly articulate all information that he or she wants to be heard. Senders need to use language that is clear and easily understood by all with whom they are trying to communicate. The “RECEIVER” (person doing the listening) has a responsibility to fully focus on what is being said and to ask qualifying questions to make sure he or she understands what is being communicated. A safeguard for both parties is for the speaker and the listener to either or both request that the other party restate in different words exactly what they heard. When the information is restated in different words you can usually tell if the listener clearly heard and understood what the speaker was attempting to communicate.

This skill is vital in both everyday life (think about some communications with your spouse) as well as in the business world. How many unhappy customers could you possibly have prevented (or prevented becoming) by taking a few extra seconds during the discussions to make sure everyone was clearly communicating what their wants/desires/needs were. In the words of Fyodor Dostoyevsky, “Much unhappiness has come into the world because of bewilderment and things left unsaid.”

The opposite of effective communication is “mutual mystification,” which is when both of you walk away believing you clearly understood what happened, only to discover later that neither of you clearly understood what the other party wanted. THE COURT SYSTEM IS FULL OF THESE CASES!

Try focusing on and practicing good speaking and listening skills this month to see if you can help yourself and your company obtain higher customer satisfaction ratings and lasting connections with your customers.

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Steve Rausch represents the Substrates and Specialty Products Division of USG Corporation out of Alpharetta, Ga. He’s also the author of the Rausch Ravings blog about business and non-business related topics. Contact him at [email protected] or visit the blog at http://rauschravings.blogspot.com/

Business Tip – July 2012

Go ahead, Tweet it: seven ways to capitalize on the social power of your satisfied (and not-so-satisfied) customers

Ron Kaufman, author of the New York Times bestseller Uplifting Service: The Proven Path to Delighting Your Customers, Colleagues, and Everyone Else You Meet (Evolve Publishing, 2012, ISBN: 978-09847625-5-2, www.UpliftingService.com) offers seven tips to take advantage of the rich network of fans, friends and followers on social media to spread your message and gather information to make you better at what you do. Read the highlights here and visit www.tileletter.com for the whole story. — Lesley Goddin 

We love telling people about our latest experiences, and we love hearing about what others have experienced. But author Ron Kaufman says many companies are missing out on tapping the social power of their satisfied customers.

“Companies should be saying to their customers, ‘If you did not enjoy our service, please tell us. If you did enjoy our service, please tell someone else,’” Kaufman said. “Tell happy customers to be social about their great experiences and encourage unhappy customers to come to you via social media so that you can make it right and improve your overall service.”

Kaufman notes that a lot of customer service is already being done online, customer to customer, through comments on articles, user forums and message boards.  Companies that embrace this behavior can improve their service and save on costs.

Kaufman said customers will “go out of their way to help a fellow customer find a solution, but for companies to do that back-end customer service there would be a cost. By engaging your customers to help each other, you can defray your costs, improve your customer satisfaction, and stimulate a loyal community by encouraging people in your online social space.”

How do you keep your customers spreading great things about your company while bringing their complaints only to you? Read on for Kaufman’s advice.

Make it easy for them to go social. Provide links in post-service surveys where people can share experiences and encourage them to do so. Kaufman’s website, www.UpYourService.com, offers a Spread the Word section that makes it easy for people to share their experiences.

Say thank you. Show a little love for the love your customers show you. Try a message of gratitude that says, “Thank you so much for spreading the word. As one of our happy customers, when you tell other people about us, it helps us grow and serve you better.” Don’t incentivize this behavior; it tarnishes the genuineness of the comment.

Invite them to reach out. Create a ‘Thanks for Being Social’ promotional piece that includes the company’s Twitter handles, Facebook pages, Yelp and TripAdvisor pages, helpful Twitter hashtags, etc., with a line that reads, ‘If you enjoy our service, please let the world know.’ Leave it with the customer after a job, or post it beside the cash register.

Ask how you can improve. Welcome good and bad instant feedback via social media. “Hear them out, provide them with great service, and then THANK them for sharing their experience with others via Twitter, Facebook…” Kaufman said.

Encourage them to recognize great one-on-one service. United Airlines’ “Outperform Recognition Program” encourages MileagePlus members to enter an exemplary employee’s name via a mobile app; both member and employee can win prizes in a random drawing. “Social programs like these boost employee morale, get customers focused on what employees are doing right, give employees another ‘measurable’ feedback for giving great service, and create a lot more ‘social input’ from customers to the company,” said Kaufman. Compliments received during this process can also be used in publicity campaigns.

Funnel customer questions through social media – then share the best answers. Ask customers to post questions on your Facebook wall, and answer them there for everyone to see. This shares useful information with other customers and enables your company to gather information.

Make talking about your brand irresistible. Provide service so great that customers simply can’t resist telling people about it. In a blog post on The Huffington Post, Chris Hurn, CEO of Mercantile Capital Corporation, shared how the Ritz-Carlton staff went above and beyond after his family accidentally left his young son’s favorite stuffed animal behind after a recent stay. The staff found and safely returned the stuffed animal and took pictures of its extended stay to show Mr. Hurn’s son what a great time his stuffed-animal friend had while staying a bit longer at the hotel.

“That blog post was seen by a portion of The Huffington Post’s 26 million monthly readers and was then tweeted, retweeted, and posted by many on Facebook,” Kaufman said. “Taking photos of a stuffed animal in funny situations didn’t cost Ritz-Carlton a penny, but it delivered social value in a huge way!”

“Your customers’ voices are vital to your organization,” Kaufman concluded. “Social media provides an incredible opportunity to engage those voices, to turn one customer’s great experience into an advertisement that attracts new customers and gets current customers thinking positively about you. It’s an incredibly advantageous way to address customer concerns and improve your company’s service culture in real time.”

Ron Kaufman is a premiere thought leader, educator, and motivator for uplifting customer service and building service cultures in many of the world’s largest and most respected organizations. Find out more about Ron at www.UpliftingService.com.