CEOConfidential
Sunday, October 19, 2014
getting ahead
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Secrets They Won’t Teach You At Business School Richard Branson, one of world’s most-respected entrepreneurs
The weakest link DiFFeRenTiATe oR Die
...great customer service is a chain
I have always liked Sam Cooke’s old hit sang ‘Chain Gang’. It really comes in handy when I’m talking about customer service. That’s because delivering good customer service requires that a front-line worker receives supportive assistance from an entire network of co-workers - in effect a chain reaction of teamwork, one that is consistent from beginning to end. And when it comes to helping a customer, the chain of assistance
Business icons
is only as strong as its weakest link. I love hearing reports of good care, especially when they’re shared by a Virgin customer. But no. matter what the source there’s usually a lesson to be learned. Just to prove that I’m not always bashing our favourite competitor. British Airways, I’ll tell a (true) consummate customer story that involves that other British airline. An Executive Club passenger sitting aboard a jumbo jet about to leave London for New York suddenly realised he’d left his beloved leather coat in the airport lounge. He rushed to the front of the plane and asked if he had time to get it. . ‘Sorry sir, too late,’ replied a member of the cabin crew. ‘But don’t worry. I’ll tell the ground crew and they’ll have it sent to you.’ He returned to his seat, convinced he’d never see his favourite coat again. Seven and a half hours later, when the flight arrived at JFK International Airport, the passenger was amazed when an agent met him at the door of the aircraft and handed him his Coat. They’d put it on a Concorde flight that had beaten his slower 747 across the Atlantic! (Of course, I am obliged to point
out that British Airways can no longer pull off that particular trick as, sadly, the speedy Concorde is now a museum piece. However, there is hope that Virgin Galactic may fill that void one day.) It’s true that the airline could have put the coat on a later flight and the customer would have been just as grateful when it arrived. But going the extra mile builds massive customer loyalty and brand-enhancing benefits. You can be sure that passenger talked up the airline far years, and now even the founder of a rival company is telling the tale. Haw great is that? Let’s look at another story that clearly demonstrates the importance of every link in the service chain - this time involving Virgin Atlantic. An Upper Class customer’s free limo failed to connect with him at his New York City hotel, (It turned out the customer had been waiting at the wrong door.) He jumped in a cab to Newark Airport, a fair distance from the city. Rush-hour traffic was bad; by the time he got to the airport he was very angry, running late, and panicking that he’d miss his flight.
Beware of the CEO’s hobby Magna International is a specialist that is a major supplier of parts to the world’s top automakers. They have clients the likes of Chrysler, Ford, Jeep, Dodge, Chevrolet, Mercedes, and Cadillac. Their sales are around $6bn per annum. They are at the forefront of a trend in the automotive industry that has suppliers delivering increasingly larger and more complex parts, such as entire seating systems. But their chairman, Frank Stronach, is also an avid horse-racing fan who owns hundreds of horses. So it’s not totally surprising that the company suddenly picks up some decidedly noncore assets such as California’s Santa Anita racetrack. (That’s a horse of a different specialty.) Other tracks are under discussion. Now he wants to move from auto parts to racetracks and sports- gambling operations. Well, it’s also not surprising that a lot of shareholders aren’t very happy. Our bet: nothing but trouble.
Leadership lessons continues From last week
Even before he was a true discounter, he made sure his shelves were consistently stocked with a wide range of items at low prices. He bought his goods wholesale, when he could, which allowed him to buy goods at lower prices, which he passed on to his customers. This then drove up his sales volume, which allowed him to negotiate even lower purchase prices with the wholesalers. Sam Walton Founder, Wal-Mart
Once committed to discounting, Walton began a crusade that lasted the rest of his life: to drive costs
out of the merchandising system wherever they lay-in the stores, in the manufacturers’ profit margins, and with the middleman-all in the service of driving prices down. Using that formula, which cut his margins to the bone, it was imperative at Wal-Mart grow sales at a relentless pace. Managerial expenses were kept to a minimum, even when on buying trips. His equation for merchandise sourcing trips to New York City in the beginning was that the trip’s expense should be less than one per cent of
purchases made. This meant that at times eight people would sleep in one hotel room. Walton found that customers would shop anywhere if the prices were lower. David Glass recounts an amusing episode at the time of the opening of the second Wal-Mart store confirmed the wisdom of Wait on’s new approach. The store was opening in Harrison, Arkansas, not far from the local (and relatively upscale) Sterling store. continues next week