This from Steve Hershberger.
Reicheld correctly segments 'good profits' and 'bad profits'. Good profits are generated when a brand is in alignment with its best customers. If a brand stays in synch with what its best customers are seeking, constantly improving...in real time...incrementally based on their feedback, the brand can essentially draft of the inertia created by these customers in the marketplace and amazing things happen. Southwest, Apple, Enterprise, Jet Blue, BMW and a number of other brands that get it. News Flash: Most brands don't and some, believe it or not, don't really care. Why don't they? Because they see Wall Street as their customer, not you and me. Because they don't care, they suffer and the cost of doing business actually rises. They can suffer like WorldCom, Enron, etc. or they can struggle mightily to keep customers from leaving daily and for every customer's dollar like GM, AOL and United Air Lines.
Here's an example of what I mean. A good friend of mine in the town in which I live runs a very successful small business. We were having a drink and this entrepreneur was tearing apart his bank...loudly. Here's the situation. The business employs about 35 people around the state, has well over a million dollars sitting in a retained earnings account at the bank, in addition this executive runs about 200k a month through the bank, uses their bonding service, has a six figure line of credit, etc. My friend also has the family's accounts at the bank. This executive is very financially minded and requires essentially zero of the bank's attention and this person has referred at least half a dozen like executives to the bank unprompted.
Never mind the fact that this executive has never received a thank you for the business or referrals, the executive asked the bank for a couple hundred dollar contribution to a local charity. The bank said no. Furthermore, the executive had run a check from a seldom used account reserved for certain 1099 temp worker vendors. A dozen and a half checks, each for about $300 each were written totaling about $5,400.00. The executive had $10,000.00 transferred into that account at about 1pm by an assistant. The temp workers cashed their checks the same day as the transfer. The next day he got a notice from the bank for $900 in overdraft fees. Needless to say the executive was enraged. During our time together, he told his story and influenced maybe a dozen people at the place we met. Most well-heeled people who simply shook their heads and said, "What rotten service". Others said, "Hey that happened to me once."
A couple of day's later; I called my friend and asked him how things were going. He told me that he had called everyone he had recommended to the bank and indicated that if they were also unhappy to move. He had found a new bank that 'got' service. For those that did move, he'd take everyone out to dinner so that they could collectively celebrate better service.
I asked how much that might cost the bank. Pausing, the response was "North of 50 million if everybody moves." That is a big hit for a bank. All because of a short sighted desire to reap $900 bucks.
Somebody in this bank's corporate suite is going to see a spreadsheet with a big blip on it and ask what the hell happened and a junior executive will have a nice answer that has little to nothing to do with the truth. Know what? This will happen again and this bank will always have to work harder than it has to to make an acceptable profit.
Advocates can also be detractors. Economies big and small ARE impacted by what these people can and will do.
Source: http://evangelisteffect.typepad.com/womu/2006/05/post_script_wom.html
About Me
- Jeffrey Summers
- I am the expert you call when you need to learn how to increase top line sales, lower your operating costs, increase your profit margin, hire and train better managers and staff, evolve your operation into more and better ways of doing business, buy or sell a restaurant, improve your service, engineer (or re-engineer!) your menu, market your business better and less expensively, keep yourself from going nuts because you have no life anymore, open more and better restaurants, don't want to have to give up your first born child to pay a consultant and have more fun! My mission is to enhance the quality of life for my clients by providing the best products and services to help them achieve their personal and professional goals. I take great pride in my clients, my company, my commitment to service and the products I sell. I am a recognized expert in the hospitality industry with over 24 years of success at planning and executing strategies for delivering dramatic results, a former "GM of the Year" for 2 major, full-service, franchises, an Award winning Multi-Unit Executive with 2 of the largest restaurant chains in the U.S., published author, husband and father of two.