Month: September 2012

follow the money

Detective shows sometimes say that they need to “follow the money” to see who is behind the crimes they are investigating. The phrase makes sense in the leadership/HR world too. Whenever people are consistently doing something different than intended, it makes sense to follow the money to see why. Chances are, somewhere along the line, they are being rewarded for the behavior.

I mentioned this a couple of months ago when a co-worker bought a car and was pestered, hounded, and bullied to give the salesperson top scores on the follow-up customer service survey. The company’s emphasis on measuring customer service and ultimate reward/punishment for the salesperson was creating behavior exactly opposite of what the survey was supposed to create. How do you explain an emphasis on customer service creating really poor customer service? Follow the money.

On a lighter example, my son participates in Tae Kwon Do. One day while they were doing light sparing, the instructor kept complementing my son’s punches and then telling him to work on his kicks more. However, the instructor was so complimentary towards my son’s punches, that it was little surprise he kept using them, even when he was supposed to be working on kicks. Why do people do something other than what we ask them to? Sometimes it’s because we ask for one behavior and reward another. Follow the money.

As a third and final example, I recently purchased a new car and ended up buying an extended warranty. I think extended warranties are generally unnecessary and a waste of money, so why did I buy it? The sales and finance managers were so insistent on selling it to me and I resisted for so long that they finally dropped the price to where it was silly to say no. What started out as being $2500 for an extended warranty to 100,000 miles, ended up being $216 for an extended warranty to 75,000 miles. I find this example interesting because: 1) the purchasing experience was pretty mellow and friendly and low-pressure except for the warranty; and 2) the price dropped by a factor of 10. How is this possible? Follow the money.

I nixed the extended warranty early on and then the sales and finance managers brought it up again near the end: “If you could get it for $X, would you do it?” No, no, and no. They tried the prudent / concerned approach: “These cars don’t break much, but when they do it’s expensive and I want you to be taken care of.” The you owe me approach: “I’ve come down on all these other things, why won’t you get the warranty?” The subtle emasculation: “It’s only $10 more dollars a month, but if it’s a matter of money, I understand…” Every “no” brought them back with a different approach and a lower price until it became almost comical.

Why? How? I’m guessing at this point, but the warranty is through a third party. I suspect the sales and finance managers get a bonus for each warranty they sell (and I suspect it’s a flat bonus, unadjusted for the price the warranty sells for). I also suspect that there is a lot of margin built into the price of the warranty so there’s room to negotiate. Finally, I suspect that the dealer ended up subsidizing the warranty. That is, I’d bet that on paper the price of the car was reduced to account for the warranty and keep the monthly payment almost the same. Again, I’m completely guessing, but if all my guesses are correct then two managers worked together to increase their income at the expense of the dealer’s profit. Counterproductive behavior, so why do it? Follow the money.

It makes me wonder how often poor behavior and performance is a nearly direct result of how we choose to praise, reward, and compensate our employees. People do what you reward them for. Are we rewarding them to do the right things?

Follow the money…

nerves of steel or just nervous?

I recently did a post on public speaking called the one skill to develop. Yesterday I was asked, “How do you not get nervous when doing a presentation?” It’s a great question that got me to thinking and I realized the answer is not what one might expect. I don’t have any tips to not be nervous because, for me, it’s all part of the process. The trick is living with it and using it to your advantage:

Nervous is normal: you are going to get nervous when doing a presentation. This is the big one. Everyone gets nervous and excited when doing something significant. Trying to not be nervous is only going to draw your attention to how nervous you are and make you even more nervous. It’s like trying to fall asleep by thinking about how much you need to fall asleep. Accept your feelings as normal and go do a great job.

Never compare yourself to how you think others are.The problem is, we look at people who are good at speaking and presenting and think that not being nervous is the way we should be. But we don’t see the practice, and fretting, and worrying. We don’t know that they felt like they were going to puke adrenalin right up until they started. We didn’t see them all jittery. We don’t even know what nervous looks like for them.

There is a very fine line between nervous and excited. Very fine. For me, the physiological response is the same – shaking hands, butterflys in the stomach, my attention span shortens, sometimes I start to sweat. I suspect that we often confuse being excited for being nervous.

Nervous does not equal failure. You’re nervous – so what? Don’t judge your presentation on how you felt. Judge it on the end results and the impact that it had on the audience.

Use your nerves to your advantage. I get nervous/excited when I’m looking forward to something, when I want to do a really good job, when there’s some consequence. There’s a ton of energy coursing through your body. Channel it and use it to put life and passion into your presentation.

Look forward to your nervousness. We’re all different. I used to race motorcycles and bicycles and developed a habit that’s served me well when speaking. No matter how nervous I was before a race, sitting on the starting line always created intense calm, focus, and confidence for me. All the internal chatter gets quiet and my whole being was laserbeamed on the first corner. I find speaking is the same for me. No matter how nervous/excited I am, experience has taught me that once I get started it all comes together. I look forward to those first moments when I stop being scattered and my brain quiets down and I get focused. Over the years, I’ve simply trained myself to look forward to those opening moments.

Experience helps. No lie. The more you do anything, the less awkward you’ll feel. You’ll never get better if you stay on the sidelines kicking yourself for getting nervous. Get out and do it.

Have fun. In a weird way, the audience will reflect your state of mind. If you relax and have fun, they will too.

 

Anyone else have some favorite tips to help deal with nervousness when giving presentations?

an open letter to the salesman who didn’t sell

Sir,

I got the sense when we were test driving a car that you felt like I was wasting your time. Admittedly, it wasn’t a car I had originally mentioned I was interested in and I was vague about my intentions to buy. Quite honestly, I didn’t intend to purchase a car that day. But I was trying to determine which car I would buy soon.

You had some choices to make:

  • Build a relationship that might pay off or only worry about making a sale in the next 15 minutes
  • Find out more about what I was looking for and why or take my initial thoughts as set in stone
  • Treat me as though you want me to refer others to you or treat me as though I’m only important if I can benefit you this second
  • Give me reason to buy from you or ammunition not to.

All these choices were yours.

I didn’t start the day thinking I was going to buy a car. Heck, I was just going to go mountain biking and maybe see what I could get for my truck if I decided to sell or trade it. That was my plan. I didn’t know I wanted to buy a car that day, but it didn’t take long for you to convince me that I wasn’t going to buy a car from you.

Here’s what you know: I was vague and non-committal. I was only there to get my truck appraised. I didn’t really want to buy a car that day. I wanted to test drive a car or two.

Here’s what you don’t know (and what you don’t know will blindside you). I had been seriously considering getting a car within a couple of weeks. After you gave me several reasons not to ever buy from you I went across town to a salesman I had talked to a month earlier about a used car. By the end of the day I ended up buying a brand new car from him that was 25% higher than the price range I had mentally set. I didn’t intend to buy, but I’m excited I did. That sale could have been yours.

It’s a shame I wasted your time. Sorry about that.

Signed,

Tirekicker

good profit // bad profit

“Do you want me to mount the spare for you?” the voice over the phone asked. He had just told me that my tire was unrepairable and the others were nearly worn out. He seemed hurt I didn’t take him up on the implied offer to buy a new set of tires. The flat tire actually just had a slow leak so it didn’t matter if we swapped out the spare or not so I said, “Sure, why not.”

I recently wrote about a used tire shop with a unique business model. Four days after buying a set of tires, I picked up a slow leak in one. Rather than driving all the way across town to the used tire place, I took it to a national chain tire store less than a block from my office. The contrast between the two businesses really highlights what some have termed “good profits” and “bad profits.”

Bad profits are profits made at the expense of the customer in a way that hurts good will, the overall customer experience, and prevents generating long-term profits from the customer. From my experience, the mobile phone industry follows a bad profits model. All the effort is made to acquire new customers with little effort being made to retain customers. Any business that focuses on fees or charging the customer more with little in return is a business focused on bad profits.

Good profits, in contrast, are profits made in a way that add value for the customer, creates good will, improves the customer experience, and increases the likelihood of long-term profits from the customer. Rather than seeking ways to charge the customer more fees, etc., a business focused on good profits is trying to find ways to serve the customer that makes them want to spend more. Apple and Zappos are regularly used as examples of businesses seeking good profits.

This national chain tire store told me my tire was unrepairable and the rest were getting thin and needed replacing. Then charged me $20 for installing the spare in place of the leaky tire – after they offered to; I did not ask. Lies, fees, and scare tactics to upsell the customer from a cheap repair to $800 worth of tires. They relented on the fee after I protested, but not ripping off the customer when they call you on it is not the same as treating the customer well.

I immediately drove over to the used tire shop where: they told me “no problem” on repairing the tire, hustled my tire through even though they were crazy busy, offered to install it on my truck for me, oh, and didn’t charge me anything for the repair because I bought the tires from them. No written agreements, no need to hassle them, no arguments, just a focus on doing right by their customers.

It’s cheaper and easier to retain customers than to find new ones. Why is this so hard to understand? Which business will I return to in the future? Which business do I refer to others? Which business do I want to support and see thrive? Which am I happy to give money to?