Value Creation and Keeping Customers

Getting and keeping customers is an expensive endeavor and keeping the doors open in a time of local crisis makes it even tougher. The average U. S. business loses half its customers in five years. Generating a new customer costs five times as much as keeping a current one and firms pay a steep price when customers stray to other brands, or stray to other communities to make their purchase. In a slow economy, creating unsurpassed value for a customer so that they stay with you is even more important. So how do we create value?




Value creation in a firm takes a minute to think about. Ask yourself this question: Why does an individual make a purchase? The short answer is to fill a need. But the real answer is found in what motivates a person to do something to fulfill that need.



Psychologist A. H. Maslow developed a theory that characterized needs and arranged them in a hierarchy to reflect their importance called Maslow’s Hierarchy of Needs. Maslow identified five levels of needs, beginning with physiological needs and progressing to the need for self-actualization.



Physiological needs are the most basic. They fulfill the needs for survival like food, water, shelter and clothing. Pepperidge Farm French Toast Swirl Bread appeals to this need by stating “It doesn’t go with breakfast. It is breakfast.” Campbell’s Soup hits the mark with “Mm, Mm, good!” as does, “Got Milk?” Food is the most basic of need and as we like to say here, “Full Stomach, Open Mind.”



Next up the ladder you find safety needs which include security, protection, and avoidance of the unexpected. State Farm Insurance appeals to this need by saying, “Like a good neighbor State Farm is there.” In the wake of our damage recovery, maintaining a sense of security in our communities is a key element of recovery. The presence of the National Guard as well as the local elevated sense of social responsibility has been a critical element of pulling us up by pulling us together.



Third are social and belongingness needs which include the need to be accepted by an individual or group. Think about Olive Garden and their tagline, “When you’re here, you’re family.” We also see this come alive with the wonderful belongingness and leadership given by our Churches to support our tornado relief efforts. Many of them continue to request anonymity in their efforts, but rest assured, we know who you are and we thank you!



Fourth is the esteem need such as a need for a sense of accomplishment, the need for respect from others and the need to perform better than others. This is a universal human trait that emerges after lower order needs are satisfied. This may present in the purchase made to upgrade an airline seat, to have premium concert tickets, or as Sony touts, “Like no other.” I have found myself reassessing how I view this for myself in the events of the past few weeks and those in our community. Even in tragedy, this need is still obvious all around. I am reminded of Shakespeare and Twelfth Night where we read that “some are born great, some achieve greatness, and some have greatness thrust upon them.” If you are a leader in your community, please remember that the best help may come from the least obvious place.



Lastly, and also the very top need, is self-actualization. This is the desire for a person to reach their full potential. Many educational tours appeal to this need with an appeal to a person’s talent or capabilities. It may include a trip that includes a course of study such as language, history or cooking. Nike’s famous “just do it” is right on the mark for reaching potential. Self-actualization appeals to the desire to experience and learn something new such as at GE where “we bring good things to life.” Or, it may appear as the nice neighbor that you really don’t know who shows up with his chainsaw to help clear some trees from your driveway. And he also offers to get you some water and a sandwich. How cool and inspiring is that!



Understanding how your product fills one of these needs, and fits into the experience desired by your customer will help you to understand how to motivate that customer to act on a purchase. In light of the damage to our communities and continued recovery, I am reminded that this is not just about products, but it is in fact also about US. It is about our elected officials, our churches, and all the elements of our community. It determines who we are and how we react when the chips are down.

Business Disaster Preparation

We all know that “Hind Sight” is indeed “20/20”. We know it now more than ever here in the North Jefferson Business Community. As many in our area of digging out and moving on after this weeks devastating weather, it is never really too late to look at your emergency business disaster plan. In fact, now may be a great time to look at not only your business disaster preparation, but also the readiness of your church, your civic organization and of course your local municipality. Your employees and co-workers are your business's most important and valuable asset. Here are some procedures you can put in place before a disaster, but you should also learn about what people need to recover after a disaster.


It is possible that your staff will need time to ensure the well-being of their family members, but getting back to work is important to the personal recovery of people who have experienced disasters. It is important to re-establish routines, when possible.

Here are some tips to get you started or to improve your plan that may already be in place.

Two-way communication is critical before, during and after a disaster. You should include emergency preparedness information in newsletters, on company intranet, periodic employee emails and other internal communications tools. Consider setting up a telephone calling tree, a password-protected page on the company website, an email alert or a call-in voice recording to communicate with employees in an emergency. Designate an out-of-town phone number where employees can leave an "I'm Okay" message in a catastrophic disaster. It is good to provide all co-workers with wallet cards detailing instructions on how to get company information in an emergency situation. Include telephone numbers or Internet passwords for easy reference. Maintain open communications where co-workers are free to bring questions and concerns to company leadership. Also, talk to co-workers with disabilities. If you have employees with disabilities ask about what assistance is needed. People with disabilities typically know what assistance they will need in an emergency. Understand how to alert people who cannot hear an alarm or instructions.

It is recommended that you have both a battery-powered commercial radio and a weather radio with an alert function. The weather radio can alert you to weather emergencies or announcements from the Department of Homeland Security. The commercial radio is a good source for news and information from local authorities.

Keep copies of important records such as site maps, building plans, insurance policies, employee contact and identification information, bank account records, supplier and shipping contact lists, computer backups, emergency or law enforcement contact information and other priority documents in a waterproof, fireproof portable container. Store a second set of records at an off-site location.

Talk to your co-workers about what emergency supplies the company can feasibly provide, if any, and which ones individuals should consider keeping on hand. Some suggested emergency supplies include but are not limited to water, a three day supply of non-perishable food, battery powered radios and extra batteries, flashlights and of course, extra batteries for them. A First Aid kit, with a signal whistles along with some dust or filter masks are good to have on hand. Moist towelettes for sanitation, a wrench or pliers to turn off utilities, a can opener for food, and some good plastic sheeting and duct tape to seal off a room if required. Lastly, some garbage bags and plastic ties for personal sanitation.

There are several sites with clear instruction on creating your emergency plan. You can begin at Ready.gov and expand your search from there.

Birmingham Business Alliance on Blue Print Birmingham and our North Jefferson Opportunity

Another busy week for us here in the North Jefferson area, and it was certainly good to see the strong representation from North Jeff as we worked to welcome a visit from Mr. Barry Copeland, Senior Vice President of the Birmingham Business Alliance. Several city council leaders from Gardendale and Fultondale were in attendance as was Mayor Doug Brewer of Graysville and Mayor Jim Lowery of Fultondale.

Copeland reviewed the impact of Blue Print Birmingham and drilled down to the specific role that we can play in the implementation of the Plan. Blue Print Birmingham was born in a survey to the community asking the question: What should be our development and strategic plan for Birmingham? The answer came back with over 2300 responses, and an idea has evolved into an implemented strategy. This strategy has evolved into tactics which include an outreach to surrounding areas such as ours for support, participation and collaboration.

Seven pillars were identified as drivers of economic growth and ultimate job creation for the Plan. One of these key pillars in Blue Print Birmingham is in the area of Trade and Distribution. We become a key participant in this pillar with the continued construction of I22 and I422. Supporters of Blue Print Birmingham create allies and strategic alliances for our area that recognize the impact of the 52 mile Beltline stretch. The Beltline will impact not just us of course, but will overlay 30 cities, and 3 counties. The area described overlays 5 segments of which we are segment 4. Development of the project is funded by the Appalachian Development Highway Commission (ADHC) whereby money has been set aside by the Federal Government to run this project. Both I22 and I422 are ADHC projects. An anticipated 7 Billion will be spent for construction over 20 years while creating 70,000 jobs. According to Renee Carter, Executive Director for the Coalition for Regional Transportation, it is important to note that this is created during the construction phase alone.

Now is the time to cultivate an awareness of our business neighbors and to understand the need to educate ourselves and create community awareness. This is our time to connect to the massive transportation arm of this growth and understand the role of not just the interstate but the full spectrum of rail, highway and air travel. You may find it interesting as I did to appreciate that our 2 mile Birmingham Airport Runway is a very significant critical requirement for international travel. Norfolk Southern is anticipated to spend over 100 million dollars in McCalla on the development of the rail system. The cargo potential here for importing and exporting of goods is again very significant.

Mr. Copeland made the not small point of underscoring the need in all of this growth and opportunity for excellence in education. This is not a suggestion, a “nice to do”, or “maybe we can make it work” suggestion. This is a key requirement and an imperative to true measured success. The desire for “economic development” has become all too cliché of a term. Until the demand is met for creation of an educated workforce, the legs will be weak on the table. Mr. Copeland made the challenge to really drill down on our education rate as a Region, and not to view it by independent communities. A fractured view of any of the elements, and especially education, will hinder our success.

The impact of this project will parallel what we have seen in Shelby County, and we can certainly learn from their processes. In fact, we should connect to I22 within the next three years, and that is just around the corner.

State Ethics Law Overview: Oh you mean ME?

Attending a State Ethics Reform Update recently which was sponsored by Bradley, Arant, Boult, and Cummings, I received an opportunity to hear first-hand the details and nuances of the changes in ethics reform and work to understand what the new Alabama Ethics Law holds for the business community. Always on point to help bring the issues to the business leadership, this forum was supported by the Birmingham Business Alliance. Myla Calhoun Choy, Legal Council for BBA, served as the moderator. David Stewart, partner with Bradley, Arant, Boult and Cummings, along with Jim Sumner, Director of the Alabama Ethics Commission, led the discussion of the impact on business and I assure you it is not “business as usual” anymore.




You may re call that in late 2010, the Alabama Legislature was called in to special session by then outgoing Governor Bob Riley for the purpose to increase transparency and accountability in government at the State, County and local levels. More specifically was the express purpose of limiting the amount of influence that lobbyists, and those who pay lobbyists can have on the political process. Senate Bill 14 by Senator Bryan Taylor, and House Bill 11 by Representative Paul DeMarco, makes extensive changes to the definition of lobbying, lobbyists, and items and hospitality that may be provided to officials.



DeMarco also fought for mandatory training. Given the changes, this seems not only logical, but clearly necessary. Many private industry representatives are required to read, train and sign corporate compliance and ethical standard agreements. Clearly we should look for the same minimum standard from our elected officials and effective January 1, 2011 it is now required of lobbyists and their principals. These bills truly transformed the law, and Ethics Commissioner Jim Sumner declared, “Life as we have known it in the past no longer exists.”



Hospitality and entertainment are the big changes here. Anything that is purely social is no longer allowed. Previously a lobbyist could spend just about whatever her or she wanted per day and did not need to report until a $250.00 threshold had been reached. Now, such gatherings must involve an educational function, may pertain to economic development, and must meet the criteria for a widely attended event. Therefore an Industrial Development Board working session is okay, but golf is not. The food and beverage limit is now limited to $25 or less per occurrence and not more than $150 per year per public official or public employee.



Are you a public official or public employee? You may just be. If you were elected, appointed or employed at the state, county, or municipal level of government or government instrumentalities these changes are now in affect. That is a lot of folks, and it may include you.



New rules, and new day, so make certain you understand how it affects you.

Alabama State Legislative Changes and the North Jefferson Area

Now is not the time to blink. You will certainly miss something in the realm of politics and business. The tax code that was created in the 1930’s and adopted by states like Alabama is a key element in the papers of late. Over the past 70 years, the income tax has grown and is now the mainstay of the Education Trust Fund here in our state. Today, according to Steve Flowers (NJN 3/2/11) the state income tax and state sales tax are the primary sources of revenue for education here in Alabama. With our current economic climate that includes an unemployment rate of 9%, and some areas with much more, weak sales and income tax collections trigger short falls in funding at many levels to include education.




Our new Governor Bentley has his hands full for sure, but there are many in Montgomery who are working hard to balance and sustain a reasonable budget. One of Bentley’s key items under the education budget is to keep any state-funded teachers from losing their jobs. He does maintain and ask that they pay more for their health care and pension retirement costs. To quote Governor Bentley, “We are only asking our teachers to do what virtually everyone else has been forced to do in these tough economic times.” (BHM News, 3/2/11). Also on the table is a proposal to end the state’s deferred retirement program, known as DROP. This program allows eligible public employees to delay retirement for up to five years and then get their retirement benefits from those years in a lump sum. Very Interesting. In the private sector where we find a cessation of 401K matching and a reduction of pensions in an effort to save jobs, this does seem mirrored and reasonable. Bentley’s plan does not dispense with this benefit as many companies have had to do, it simply reduces it. Most state employees contribute 5% of their checks to pension funding. In the private sector contributions are as high as 16% to a 401K WITHOUT a pension option. This would go up under this plan to 6 % in 2012 and to 7.5% by 2013. Opponents see this as a pay cut. Proponents see it as a necessary budgetary measure.



An educated work force is critical for sustained growth and development and thus supporting education is important. Perhaps it will be timely to add this metric to the mix. The measure of output of the school system as a measure of workforce contribution is not a far-fetched notion, and a bottom line concept certainly from a business perspective. Also important, let us measure the ability to retain our educated in this state with viable career options and employment.



House Bill 57 and the Education Trust Fund isn’t the only glass ball that our legislators are juggling. Alabama Republicans list several items in their “Handshake with Alabama” and they do impact business big and small. Look for House Bill 60 which would write in to the state constitution the ability to challenge in federal court the participation of Alabama in the Healthcare Overhaul Law. Among other things, the law will require most Americans to have health care coverage or face penalties.



House Bill 64 will be working on a rewrite of the state constitution as well. This Bill supports the view that workers would be guaranteed secret ballot when voting whether to unionize.



Clear support for workforce development and its importance as a key pillar to economic development can be found in the 5 year plan of Blue Print Birmingham. Driven by the Birmingham Business Alliance, and continued by the newly appointed Director of BBA, Brian Hilson, we look forward to measured and sustained growth for our region. We can look forward to learning more about how Hilson, through his leadership with the Huntsville Chamber of Commerce, participated in the success and growth of the Huntsville/Madison area. We look forward to learning also how he will bring that experience to Birmingham and the surrounding areas to include our North Jefferson Area.



Watching these developments will be key to driving the development of the North Jefferson area. The recent 2010 US Census reports that three cities in the North Jefferson County area had significant increases in population. Kimberly grew by 50%, Fultondale by 27% and Gardendale by 19.5%. To put that in context, the population of the North Jefferson area is approximately that of the Homewood area. Think about that. Growth is fine, but managed growth with the ability to support and serve is better. Do we have the infrastructure to sustain this growth? Will we have good roads? Will we have strong schools? What will our law enforcement and fire support requirements support require? Pay attention, don’t blink, and keep in the conversation.

Sales Rep Wanted: Government Experience Required, AHRQ and Health Reform Legislation

We are going to place this week’s blog entry in the “Did not know, and had no idea, how did I miss that one” file. Health care reform legislation and how it affects business has been a common topic over the past few months. Much of the conversation has been a one way street it seems with Washington calling the shots, our legislators arguing for or against the changes, and then the changes coming down anyway. The business population has worked to impact and influence with calls, letters and emails to Washington, and I would submit that now is the time to trust and verify that the needs of business with regard to health care costs are truly being addressed.


Robert Goldberg writing for The American Spectator relates that the House Republicans plan to cut $360 million in health reform funding in this year's budget as part of the retooling of the health care legislation. What was a light bulb moment in reading the article is that Goldberg writes that the current Obama Administration will be spending $100 million to run an ad campaign and hire a sales team to push the health reform legislation to thousands of doctors. Very interesting. It is one thing when private industry hires a sales force to market, PR, and sell a product, but now we have the US Government using a sales force (with cars and expense accounts) to convince doctors that government health guidelines are the way to go. Time will tell, but I am certain this will not be a simple “Buy War Bonds” message as was seen in World War II.

The most expensive part of the roll out of a product as you know is the sales and marketing component. I find this idea very compelling, as I work in the detail representative world and I know firsthand how challenging it can be to develop a credible support relationship with busy physicians. Access in many groups is not only limited but closed due to regulations with industry and research. Will the government sales representative adhere to those same guidelines? Even more telling will be the understanding of the monitoring of the Government Health care representatives. Will Government sales reps be tied to the same messaging, regulation and liability that private industry subscribes too? Will these healthcare representatives receive the same high level of technical training, sensitivity and diversity training, training on product and disease state management, and will they be required to sign detailed codes of conduct? What will the customer service and quality management goals look like? If recommendations are adhered to, and the patient suffers some adverse effect, will the company behind the message, in this case the US Government, be held accountable? After all, it is the US Government, not a publicly traded company, so what is the planned process for checks and balance?

According to the article, the home of this marketing machine is the Agency for Healthcare Research and Quality (AHRQ). It has a planned budget of nearly $1 billion. AHRQ is mentioned in the health reform legislation frequently, is responsible for determining what preventive services we get, what health care "quality" is, what should be cut from Medicare and what new technologies should be paid for. According to Dr. Carolyn Clancy, AHRQ’s director, consideration will be given to directives, guidelines, and placement of reminders into electronic health records. An additional 50 million will be spent on comparative effectiveness research (CER). Dr. Clancy has been the director of AHRQ since 2003, almost as long as AHRQ has been in existence.

CER is promoted as information about what are the most medically and cost-effective treatments, drugs, and medical devices. Pharmacoeconomics research is not new to the healthcare industry, but again, time will tell if the government research is held to the same standards as that in the public sector. And how do you manage the FDA in this conversation? Should another government agency validate the work of another government agency, or should there be some element of input from private business?

If healthcare is a component of the bottom line of your business, or if you receive healthcare coverage support from your employer, I would suggest that you keep a sharpened eye on these developing conversations.

Board and Committee Appointments through the Prism of Customer Service

Board appointments and development committees for communities such as ours provide wonderful opportunities for leadership and civic growth. These roles are not only important, but critical to how a community moves forward, and appointments need to be taken very seriously. This is not the time for a Cinderella appointment, or a full blown exhibition of the Peter Principle. Real Leadership is needed, and strong opinions are welcome. But to quote an anonymous thought, “Action without study is fatal. Study without action is futile.” Once a person has been tapped, volunteered or pushed into a position of leadership, serious reflection tempered with a strong dose of humility is suggested.




These considerations are important as a brief read of the business headlines can leave you feeling overwhelmed with the challenges of managing an organization, team, or running a business. It can seem that sometimes all there is to be found is a bleak and dire view. Take the personal challenge to look at the things that you can control, and one by one, make those changes.



For example, a big “item of control” is Customer Service, whether it is your customer service or the customer service of your employees or team. Challenge yourself to take great customer service to heart, lead by example, and coach those around you to raise their level of expectation of what great customer service should look like.



But do you know what great customer service looks like? Here are a few steps to ponder to get you on your way.



The first step is to develop what you define as great customer service. Develop your own specific vision of what great looks like working with the customer’s perspective in mind. Creating a vision of customer service taps into your heart and spirit of excellence, and will allow you to uncover embedded concerns and needs that you may have overlooked. For example, what would happen if you really take the time to make your customer feel like he or she is your most important priority of the day?



It is very important to appreciate the difference between customer satisfaction and customer loyalty. Satisfied customers are not necessarily loyal customers. According to a Gallup Survey (2002) of 36 companies in 21 industries, the difference between customer satisfaction and customer loyalty lies in creating an emotional bond with your customer. How do you do this? Pay attention to your customer contact people. Train them as to how you want them to interact with your customers. According to this same Gallup Survey, customer contact people are 4 times more important in generating customer loyalty than the product or service itself.



How do you measure customer loyalty? Ask your customers. Were you satisfied? Will you come again? Will you RECOMMEND me to someone else? Simple, direct questions will reveal much about how you conduct your business. Be prepared to change how you connect with your customers. Learn what your customers want, and don’t expect that what you did last year will still hold up. Develop a deep understanding of the customer’s needs and expectations. This close connection with your customers will foster an environment where your customer will come to depend on you. And for goodness sake, learn what your competition is offering!



Lastly be thoughtful and systematic about any change the you create. Decide if your change will hold up to your Vision, your environment, and your strategy.



In today’s competitive environment, you often don’t get a second chance. Make the first one count, and give it your best customer service first. For those assuming leadership roles, for goodness sake, remember who brought you to the dance, AND who will take you home. In the spirit of transparency and required ethics, it is important to recognize that the two are not always the same, but both deserve your integrity.