Saturday, May 24, 2008

The business value of a promise

In 2004, Blockbuster announced that it would no longer charge late fees for movie and game rentals. Good news, right? Well, not exactly. As droves of customers turned in rentals late, they found that they were assessed a new fee—a restocking fee. As customers became angry at how the company marketed its new policy, its reputation took a serious hit, damaging the Blockbuster brand for years to come.

While Blockbuster was busy alienating customers, Netflix was building loyalty due to its added convenience and its ability to deliver on its brand promise. There were no restocking fees, no hidden charges, and no deviations from its promise. The company simply delivered what it promised—and its brand value began to soar. At same the time, Wall Street began to take notice. In August 2003, the stock price for Netflix was on the rise $16.67 while Blockbuster was still holding strong at $20.49.(1) In May 2008, the stock prices for Netflix and Blockbuster were $31.21 and $3.32, respectively—demonstrating the connection between brand loyalty and financial performance.(1)

Why did Blockbuster heavily promote a no-fees approach while charging customers with hidden stocking fees? CNN reported that Blockbuster might lose up to $300 million without the late fees.(2) As a result, the company attempted to recoup some of the losses with hidden fees—and this type of short-term thinking ended up costing the company more in the long-run with unhappy customers, decreased brand value, and lower stock prices.

Companies looking to succeed in an increasingly competitive marketplace must take a long-term that focuses on building customer loyalty and brand equity. It starts with creating a brand that is believable. It continues with building a brand that is defendable. Netflix simply made a promise and kept it. Blockbuster, on the other hand, failed to deliver on its promise—and its brand continues to suffer. As both companies jostle for market share, which company will you find more believable in future marketing ads? If you’re not sure, you might want to check with Wall Street first.

1. http://news.moneycentral.msn.com
2. http://money.cnn.com/2004/12/14/news/midcaps/blockbuster_latefees

Thursday, May 22, 2008

A BRAND new definition

The brand value for companies like Apple, Google, and Coca-Cola continue to soar. For these companies, brands are billion dollar assets. According to a 2008 report by Millard Brown Optimor, a leading research organization, the financial value of the top five brands in the world is estimated at a combined $343 billion dollars!(1) The ability to take an intangible asset and turn it into tangible value is certainly impressive; the ability to turn it into a billion dollar asset, however, makes it necessary to take a closer look on how we define branding.

Merriam-Webster defines a brand “a class of goods identified by name as the product of a single firm or manufacturer.” It also goes further to define a brand name by saying it relates to “having a well-known and usually highly regarded or marketable name.”(2) The problem with these definitions is that they’re short-sighted, outdated, and incorrect.

I define a brand as “an intangible asset defined by customer and marketplace perceptions, which are shaped by the amalgamation of an organization’s symbols, colors, collateral, products, services, and human interactions.” In other words, a brand encompasses everything. Every person, every action, and every symbol is part of a company’s brand. The power of branding is well known. In fact, most know that a strong brand can give a company a significant competitive advantage—but in today’s global marketplace, it can also be worth billions.

1. Millard Brown Optimor, Top 100 Most Powerful Brands, April 2008.
2. http://www.merriam-webster.com

Tuesday, May 20, 2008

Healthy strategies for increasing productivity

The bottom line on employee health
Changes in the health care industry are making businesses rethink traditional cost saving strategies. Medical and prescription drug costs are now taking a back seat to a more significant cost driver—presenteeism. According to a report published by the Harvard Business Review, presenteeism is costing companies more than $150 billion per year in lost productivity.(1) As health care costs continue to rise, businesses must look to reduce costs through forward-thinking strategies that focus on overall health management and controlling the impact of presenteesim. After all, presenteeism might be putting a significant strain on your bottom line.

What exactly is presenteeism and how does it impact your business? In short, presenteeism is the term used for employees who show up for work and perform below capacity due to illnesses. Chronic conditions like pain and depression are among the leading drivers of presenteeism—and they’re costing companies money in the form of lost productivity. Productivity losses due to employee health are giving researchers and businesses a broader view of the current health care landscape. As the impact of presenteeism becomes clearer, forward-thinking businesses are taking action quickly—and they’re starting to invest in employee health. The reason is clear and simple: a healthy workforce leads to a healthy bottom line.

Keeping costs under control
According to a report funded by the National Pharmaceutical Council, a Texas-based employer saved an estimated $105 million over a three-year span by reducing presenteeism and absenteeism through specific initiatives.(2) This report does more than illustrate the connection between employee health and financial performance—it demonstrates the enormous power businesses yield at controlling health care costs. As health care providers continue to provide more tools for managing chronic conditions, it’s up to you to give your employees the resources they need to stay healthy. In today’s changing health care landscape, it’s all about health management and healthy living. In short, it’s about preventing the onslaught of serious conditions and keeping chronic illnesses under control in order to save your business money over the long run. With real solutions starting emerge over the horizon, what can your business do to control health care costs?

Solutions for your business
Businesses of all sizes can benefit by adapting to the changing health care paradigm. The keys are to (1) create a culture around total health management, (2) focus on reducing long-term health care costs, (3) reduce the impact presenteeism, and (4) select the right health care partner.

Creating a culture around total health management
Creating a culture that drives employee health forward ultimately drives your business forward. Often, employees are fearful of making a call to the doctor’s office or checking prescription information while at work. Removing these fears by encouraging your employees to take care of their health is in your best interest—even if it’s on your watch. By giving your employees the flexibility to manage their health, you’ll not only reduce stress on the job, but you’ll also save your business money in the long run.

Focusing on long-term health care costs
Managing health care costs over the long run translates into long-term cost savings. As a result, it’s important to invest in a healthy workforce today. By focusing on preventive care and health management now, you’ll be able to keep your employees healthier longer. With healthier employees, you’ll find that they’ll spend less time—and less money—responding to neglected (or even preventable) illnesses.

Reducing the impact presenteeism
As health care costs continue to rise, businesses must begin looking at how to reduce long-term costs by controlling presenteeism. The first step in controlling costs associated with presentessim is to understand the link between employee health and productivity. Once you make this connection, it’s important to provide your employees with the tools and resources to help them stay healthy and on top of their existing conditions.

Select the right health care partner
Today, health care providers are focusing on total health management. Providers that understand the changing health care paradigm are providing members with a wide range of health management and healthy living tools online through a sophisticated system of care. The goal for your business is to find the provider that suits the needs of your workforce—and helps your business build a culture of healthy living.

The advantage of a healthy bottom line
A healthy workforce does more than create a happy workplace—it provides your businesses with a competitive advantage. By focusing on total employee health, you’ll not only get a healthier workforce, but you’ll also benefit from increased worker productivity. With increased productivity, you’ll get greater efficiency and long-term cost savings—and that’s good business.

1. Hemp, Paul, Presenteeism: At Work--But Out of It, Harvard Business Review, Oct 1, 2004
2.Ronald Loeppke, MD, MPH, Et Al Health and Productivity as a Business Strategy, American College of Occupational and Environmental Medicine, 2007.


Tuesday, May 13, 2008

Finding value in statistical anomalies

The ability to collect and categorize data with greater ease is helping companies around the word become data-driven entities. Customer service surveys and web-based tracking tools are allowing companies in a wide range of industries accumulate high volumes of data for making informed business decisions. In short, collecting data allow executives to draw meaningful conclusions that can lead to increased business value. When collecting data from customers, prospects, partners, or vendors, it's important for executives to develop an accurate picture of its business situation. To do this, executives must not only look at general themes derived from the data, but also look for hidden gems found in statistical anomalies. While the abundance of information with which executives are inundated makes it impossible to examine all data points, it's important for them to take into consideration statistical outliers that deviate from general trends. While many statistical outliers might provide a skewed view of the business situation, it's important for business leaders to understand that certain statistical outliers might provide key insights that are not reflected elsewhere.

Imagine that you’re an executive at a Fortune 500 company that's recognized for outstanding customer service. In fact, your company is considered the best in the business when it comes to customer service. Now imagine that a recent web-based survey that was sent to 10,000 customers revealed that 98.5% of all respondents confirmed that they're “extremely satisfied” with the company’s customer service—the highest designation in the survey. With such a large sample size acknowledging satisfaction in customer service, it appears that the executive team can assure itself the company is delivering solid customer service. The question becomes: do the statistical anomalies that deviate from the overwhelming majority even matter? More importantly, should the executive team consider feedback from a single disgruntled customer that appears to be providing a biased responses? If the goal is industry leadership, the answer is yes.

While the executive team might not be evaluating the core data, it's important for them to become aware of statistical anomalies. This is important because skewed data that might paradoxically conceal a flaw in the organization’s customer service paradigm (regardless of how impressive the service might appear). The reason for going to this level of analysis is simple. Companies looking to establish (or maintain) a leadership position must relentlessly pursue a level of excellence because they're not only competing for business today, they’re competing for business tomorrow. As a result, it’s important to accumulate as much data as possible to (1) construct an accurate picture of the entire situation and (2) determine if statistical outliers provide clues for gaps in the business model. Remember, the dismal of a single statistical outlier due to its size represents an exercise in flawed logic. As the global economy expands, executives must look at all information with an open mind—and adapt before the competition even has a chance.