HBR Article - Don't send that email, pick up the phone instead

Around this time last year, I wrote about how we need to get back to allowing conversation to occur without texting, emailing, browsing, Tweeting, Facebooking, or doing whatever else zeros and ones can do these days on smart phones, iPads, notebooks, etc. I am as guilty as the next person of falling for the perception that any response latency is unacceptable. As 2012 fast approaches, this needs to go on top of my New Year's resolution list: focus on the live conversations at hand, rather than parallel conversations on the Blackberry screen.

But the bigger need is just for more live conversations to occur, period. This is especially true when people are trying to resolve a conflict or communicate an important business decision. There is a rising and unproductive trend towards people trying to do digital conflict resolution. The de facto path for issue resolution seems to be increasingly via email. More accurately, email has become a convenient mechanism for issue-avoidance. It is easier, quicker, less stressful, and less confrontational to have critical or challenging issues sent over email versus a live one-on-one with a counterpart.

Like many readers, I have experienced too many unproductive strings of back-and-forth emails or texts that should have stopped in round two, but continue. The problems with trying to resolve sensitive matters over email or text are quite obvious:

1. It is hard to get the EQ (emotional intelligence) right in email. The biggest drawback and danger with email is that the tone and context are easy to misread. In a live conversation, how one says something, with modulations and intonations, is as important as what they are saying. With email it is hard to get the feelings behind the words.

2. Email and text often promote reactive responses, as opposed to progress and action to move forward. Going back to the zero latency expectation in digital communications, it is hard for people to pause and think about what they should say. One of my colleagues suggests not reacting to any incendiary message until you have at least had a night to sleep on it, and always trying to take the higher ground over email. While by definition reactive responses occur in live discourse, they are usually more productive. The irony is that while email, as an asynchronous channel, has the potential to be more thoughtful, it often promotes the opposite tendency to be immediately reactive. Why? Because the bark is almost always bigger than the bite behind remote digital shields.

3. Email prolongs debate. Because of the two reasons above, I have seen too many debates continue well beyond the point of usefulness. Worse, I have experienced situations which start relatively benignly over email, only to escalate because intentions and interests are easily misunderstood online. When I ask people if they have called or asked to meet the counterpart to try and reach a resolution, there is usually a pause, then a sad answer of "no."

Email is one of the greatest productivity contributors of the past two decades, and social communication platforms such as Twitter and Facebook have fundamentally changed and positively enriched the means and reach with which we are able to interact. Yet we have to recognize when such digital channels cannot substitute for a live conversation. Email and social networking modes of communications have created a generation of casually convenient new connections, and even helped us deepen existing relationships, but they can rarely replace the real world. As digital communication accelerates the pace at which people form and broaden relationships, it is also decreasing the rate at which people are willing to resolve issues professionally and directly in-person. The next time you experience an issue over email, ask yourself if it is something that would be better served by a real conversation. Then have the courage to stop emailing and pick up the phone. Or even better: have a meeting.

ANTHONY K. TJAN

Anthony Tjan is CEO, Managing Partner and Founder of the venture capital firm Cue Balland vice chairman of the advisory firm Parthenon.

HBR salutes Taj employees - The Ordinary Heroes of the Taj

Click on link to access article from December 2011 issue of HBR

On November 26, 2008, Harish Manwani, chairman, and Nitin Paranjpe, CEO, of Hindustan Unilever hosted a dinner at the Taj Mahal Palace hotel in Mumbai (Taj Mumbai, for short). Unilever’s directors, senior executives, and their spouses were bidding farewell to Patrick Cescau, the CEO, and welcoming Paul Polman, the CEO-elect. About 35 Taj Mumbai employees, led by a 24-year-old banquet manager, Mallika Jagad, were assigned to manage the event in a second-floor banquet room. Around 9:30, as they served the main course, they heard what they thought were fireworks at a nearby wedding. In reality, these were the first gunshots from terrorists who were storming the Taj.

The staff quickly realized something was wrong. Jagad had the doors locked and the lights turned off. She asked everyone to lie down quietly under tables and refrain from using cell phones. She insisted that husbands and wives separate to reduce the risk to families. The group stayed there all night, listening to the terrorists rampaging through the hotel, hurling grenades, firing automatic weapons, and tearing the place apart. The Taj staff kept calm, according to the guests, and constantly went around offering water and asking people if they needed anything else. Early the next morning, a fire started in the hallway outside, forcing the group to try to climb out the windows. A fire crew spotted them and, with its ladders, helped the trapped people escape quickly. The staff evacuated the guests first, and no casualties resulted. “It was my responsibility....I may have been the youngest person in the room, but I was still doing my job,” Jagad later told one of us.

Elsewhere in the hotel, the upscale Japanese restaurant Wasabi by Morimoto was busy at 9:30 PM. A warning call from a hotel operator alerted the staff that terrorists had entered the building and were heading toward the restaurant. Forty-eight-year-old Thomas Varghese, the senior waiter at Wasabi, immediately instructed his 50-odd guests to crouch under tables, and he directed employees to form a human cordon around them. Four hours later, security men asked Varghese if he could get the guests out of the hotel. He decided to use a spiral staircase near the restaurant to evacuate the customers first and then the hotel staff. The 30-year Taj veteran insisted that he would be the last man to leave, but he never did get out. The terrorists gunned him down as he reached the bottom of the staircase.
When Karambir Singh Kang, the Taj Mumbai’s general manager, heard about the attacks, he immediately left the conference he was attending at another Taj property. He took charge at the Taj Mumbai the moment he arrived, supervising the evacuation of guests and coordinating the efforts of firefighters amid the chaos. His wife and two young children were in a sixth-floor suite, where the general manager traditionally lives. Kang thought they would be safe, but when he realized that the terrorists were on the upper floors, he tried to get to his family. It was impossible. By midnight the sixth floor was in flames, and there was no hope of anyone’s surviving. Kang led the rescue efforts until noon the next day. Only then did he call his parents to tell them that the terrorists had killed his wife and children. His father, a retired general, told him, “Son, do your duty. Do not desert your post.” Kang replied, “If it [the hotel] goes down, I will be the last man out.”

Three years ago, when armed terrorists attacked a dozen locations in Mumbai—including two luxury hotels, a hospital, the railway station, a restaurant, and a Jewish center—they killed as many as 159 people, both Indians and foreigners, and gravely wounded more than 200. The assault, known as 26/11, scarred the nation’s psyche by exposing the country’s vulnerability to terrorism, although India is no stranger to it. The Taj Mumbai’s burning domes and spires, which stayed ablaze for two days and three nights, will forever symbolize the tragic events of 26/11.

During the onslaught on the Taj Mumbai, 31 people died and 28 were hurt, but the hotel received only praise the day after. Its guests were overwhelmed by employees’ dedication to duty, their desire to protect guests without regard to personal safety, and their quick thinking. Restaurant and banquet staff rushed people to safe locations such as kitchens and basements. Telephone operators stayed at their posts, alerting guests to lock doors and not step out. Kitchen staff formed human shields to protect guests during evacuation attempts. As many as 11 Taj Mumbai employees—a third of the hotel’s casualties—laid down their lives while helping between 1,200 and 1,500 guests escape.

At some level, that isn’t surprising. One of the world’s top hotels, the Taj Mumbai is ranked number 20 by Condé Nast Traveler in the overseas business hotel category. The hotel is known for the highest levels of quality, its ability to go many extra miles to delight customers, and its staff of highly trained employees, some of whom have worked there for decades. It is a well-oiled machine, where every employee knows his or her job, has encyclopedic knowledge about regular guests, and is comfortable taking orders.

Even so, the Taj Mumbai’s employees gave customer service a whole new meaning during the terrorist strike. What created that extreme customer-centric culture of employee after employee staying back to rescue guests when they could have saved themselves? What can other organizations do to emulate that level of service, both in times of crisis and in periods of normalcy? Can companies scale up and perpetuate extreme customer centricity?

Our studies show that the Taj employees’ actions weren’t prescribed in manuals; no official policies or procedures existed for an event such as 26/11. Some contextual factors could have had a bearing, such as India’s ancient culture of hospitality; the values of the House of Tata, which owns the Taj Group; and the Taj Mumbai’s historical roots in the patriotic movement for a free India. The story, probably apocryphal, goes that in the 1890s, when security men denied J.N. Tata entry into the Royal Navy Yacht Club, pointing to a board that apparently said “No Entry for Indians and Dogs,” he vowed to set up a hotel the likes of which the British had never seen. The Taj opened its doors in 1903.

Still, something unique happened on 26/11. We believe that the unusual hiring, training, and incentive systems of the Taj Group—which operates 108 hotels in 12 countries—have combined to create an organizational culture in which employees are willing to do almost anything for guests. This extraordinary customer centricity helped, in a moment of crisis, to turn its employees into a band of ordinary heroes. To be sure, no single factor can explain the employees’ valor. Designing an organization for extreme customer centricity requires several dimensions, the most critical of which we describe in this article.

The Taj Approach to HR

Seek fresh recruits rather than lateral hires.

Hire from small towns and semiurban areas, not metros.

Recruit from high schools and second-tier business schools rather than colleges and premier B-schools.

Induct managers who seek a single-company career and will be hands-on.

Focus more on hiring people with integrity and devotion to duty than on acquiring those with talent and skills.

Train workers for 18 months, not just 12.

Ensure that employees can deal with guests without consulting a supervisor.

Teach people to improvise rather than do things by the book.

Insist that employees place guests’ interests over the company’s.

Have incumbent managers, not consultants, conduct training.

Use timely recognition, not money, as reward.

Ensure that recognition comes from immediate supervisors, not top management.

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HBR Put your best people on your most boring challenges - Building processes -

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At a recent not-for-attribution dinner with several (exceptionally) successful internet entrepreneurs, the conversation quickly turned to talent. How do you get the best value from your best people over time? The majority insisted that top talent's time should focus on the highest value-added problems and opportunities. Align the best people against the biggest challenges that only they can surmount. Let them create new game-changing algorithms; let them transform user experience. Above all, your top talent should amplify, extend and consolidate what makes your business model work.

But that's where the contrarian minority view kicked in — and I agree with it. Of course your best people should focus on your biggest issues. But one of your biggest issues is also — and will always be — the boring and horrendously inefficient scut work that all organizations accrue. NextJump's Charlie Kim(yes, I got his permission to attribute), the founder of one of the internet's most successful loyalty and rewards programs, argued that as organizations scale, they often slip, slide and default into less than mediocre processes that get the job done. Unfortunately, the job gets done in manual, jury-rigged or improvised ways that are deadly dull to manage and excruciatingly boring to fix.

What talent-loving entrepreneurial CEO would assign his best people to such awful tasks? Charlie would. He hires world-class talent but his business rationale is impeccable. Sustainable innovation — and the resilient processes supporting it — require creative ways of getting rid of the computational crap and digital detritus that inevitably occur when organizations try to keep going and growing fast. They get a little too far ahead of their ability to reliably and cost-effectively deliver.

This seems counterintuitive. But savvy leaders understand that, as their operations scale, the real barriers to growth aren't around the ingenuity of value-added implementations; they're in the lag-behind, necessary evil support systems and three-quarter baked infrastructures desperately attempting to support them. Typically, talent-rich organizations assign their mediocre people to solve these seemingly mediocre problems. But that, says Charlie, is short-sighted.

Put your most talented people on these most boring and stultifying issues. They'll come up with approaches and solutions that annihilate the inefficiencies and enable new opportunities for value-added enhancement and growth. Charlie told a vignette about a first-rate programmer assigned to fix a bottleneck manual process that required time-intensive and error-prone manual entries into Excel. Her software not only automated the process, it invited greater innovation. Successfully confronting scut work can stimulate the best of both worlds: rickety, non-scalable and unreliable processes are eliminated and everyone in the organization now has more time and energy to add more value.

That's a big win. It's also great for morale. Of course, many firms have cultures where the best programmers and people write and share tools that make life simpler, faster and easier for everyone else. That was fairly common in Microsoft's and Google's early days. But this "best people/seemingly trivial scut work" sensibility is hardly confined to digital industries. Most people know the saying, "If you want something done, give it to a busy person" because they have the impetus, incentive — and capability — to do it. Intriguingly, having your most talented people invest time and effort in solving the stultifying sends an important cultural signal. Improving efficiency and effectiveness for the entire organization — for everybody — should be a top management and top talent priority, too. Bright leaders pick the "right" boring challenges to address.

Does that require a streak of humility from the firm's most talented and able? Yes, says Charlie. But that's what he increasingly hires for. It's a cultural value NextJump celebrates.

It may sound paradoxical but if your very best people aren't directly involved in fixing your organization's most persistently boring processes, then you are failing as a leader and value-added manager. Get your best people excited about transforming the dull, boring and essential.

MICHAEL SCHRAGE

Michael Schrage, a research fellow at MIT Sloan School’s Center for Digital Business, is the author of Serious Play and the forthcoming Getting Beyond Ideas.

9 responses to a price objection

You want to have fun with salespeople? Do this. Call the call center, ask for a representative to come over, listen to the full sales pitch and then say "Your price is too high"

And then sit back and watch the fun!!!

A price objection is the most commonly heard dialogue that salespeople struggle with. Am reproducing below an excerpt from the book "Young Leaders at Every Level" that details 9 dialogues that experienced sales people can give in response to a price objection from the customer:

Customer says "Your price is too high"

Respond with:

1. Good things are not cheap, cheap things are not good. Then explain the quality of your product. “Maybe I did not explain the value of my product well!” This assumes that a price objection is a “value” complaint, implying that the customer does not see value in the price being charged.

2. “Nobody gives discounts because their products are selling too well.” Explain in detail by giving examples from within the industry of products which are heavily discounted because they are not selling. This response creates doubts about why others are giving discounts.

3. “Are they so desperate?” This is in response to a specific statement by customer “Your competitor is 20% cheaper than you are”. This is similar to point 2 but is more specific towards a competitor.

4. What would be more important to you - price or cost? Then elaborate on cost. Price is what a customer pays upfront to acquire the product. Cost refers to the sum total of costs incurred in using the product also referred to total cost of ownership. For eg price of a car is the acquisition price. Cost of a car includes petrol and maintenance.

5. Give examples of other premium products where the customer has paid more – eg for men / women. Men show wealth by watches, mobiles, pens, cars, etc. Women show wealth through clothes, jewellery, bags etc. Sir, this watch that you are wearing is a Rolex. It is by no means a cheap watch. You have obviously invested a lot in it. Why? Because you look like someone who is prepared to pay provided he sees value. Madam, this diamond ring that you are wearing is a high value item…….”

6. Reduce the excess price over life of the product. Sir this car you are buying will be used by you for 5 years. You say it is Rs 10,000 more than the competitor. Rs 10,000 over 5 years is Rs 2000 per year. That’s Rs 6 more per day. Is that really so significant in the long term

7. Reduce the profile of product being offered. Sir These shirts are in the range of Rs 1500 to Rs 2300. You could also consider these shirts which start from Rs 1100 onwards.

8. “Actually our product is not meant for everybody….” This was the opening line of what is acknowledged to be one of the world’s most successful direct mail campaigns by a credit card company. Most direct mail campaigns get a 1% response rate; this one got 10%, that’s 10 times better. The message positioned the credit card as something meant for special people.

9. “xxxx” customers cannot be wrong (give national sales data). We have 2800 customers who are using our AMC services across the country. They are also at more or less similar prices across. We understand what you are thinking, others have also felt that prices were high, but after trying out these services, they agreed it was value.

How to say all these dialogues:

a. Politely but firmly. No rudeness please. Smile. Smile. Confident and assertive.

b. Say two or three to begin with. Practice them at all calls. Then add the others to your list.

Try it. Its effective

Maneesh Konkar

Author of eBook "Young Leaders at Every Level"

Click here to buy the book on Amazon now

Leadership Lessons from Nissan - Book Review - How Carlos Ghosn turned around Nissan.

Turn Around - How Carlos Ghosn rescued Nissan. When Carlos Ghosn took over as COO of Nissan in April 99, this was the state of Nissan. 25 years of declining market share, 22 bn $ of debt, 140,000 demotivated people, ordinary cars.

Carlos Ghosn within three months of taking over, announced a NRP - Nissan Revival Plan as follows: Within three years by April 2002, Nisan would achieve the following:

a. Net debt of $ 10bn or less (cuurrent figure $ 22bn)

b Operating margins 4.5 % or more (currently negative)

Guess what was the actual performance?

Net debt $ 10 bn. operating margin of 7.9%.

And this was achieved within two years against a target of three. He also laid off 21,000 people and shut down four plants. And he achieved all this in a Japanese company, that too.

Here is how it was done:

a. Forming CCTs - Cross cultural and cross functional teams. No culture is good or bad, there is something to be learnt from every culture. This is not the case of a French company Renault taking over a struggling Japanese company Nissan. The best way is to take the best of French culture (analytical skills and terrific focus on product) and marry it with the best of Japanese culture (superb manufacturing processes). Cross functional teams were formed across locations to address key issues facing the company. Initially the Frenchmen did not even speak the Japanese language and vice versa. They were given two months to come out with specific recommendations to look at issues facing the company. Later this deadline was extended by one more month. And these teams were formed even before the merger was announced.

b. Solutions comes from employees at all levels. Ideas do not just come from leaders at the top. They come from employees at all levels. Ghosn spend the first few weeks of his tenure at Nissan travelling all over the world meeting employees, dealers, visiting plants, etc. He heard his people and they told him what was wrong with the company and what was needed to fix it. The Nissan Revival Plan was based on the inputs he received from Young Leaders at all levels in the company.

c. Personal commitment - If Nissan does not achieve these numbers, then me and the entire Executive Committee will go fishing. Most leaders do not take accountability. Ghosn announced to the media - "if we do not achieve these targets, the entire leadership team will resign". This sent a strong message to the world and to senior leaders within the company - I am serious. Failure is not an option, you better achieve these numbers, else you got to go.

d. 5% planning and 95% execution. Shut up and execute. Most leaders talk too much, do too little. Nissan used to make lots of plans and keep discussing these plans over and over again. Eventually the market circumstances used to change, forcing the plans to be redone all over again. Ghosn came out with a rule. Spend 5% of your time planning, 95% of the time executing.

e. Change people with logic and data, not threats. It is no big deal to fire people. But when we fire people, we in a way admit to two things. a - that we did a lousy job of hiring them and b - we did a lousy job in training and growing them. Ghosn's assumption - people are intelligent and reasonable. Convince them with logic. Use data, use the power of argument, never threaten with rank. That is more challenging and satisfying.

g. Earn market share, sell products profitably or do not sell at all. This would be a radical idea for most salespeople out there. Ghosn used the concept of "earning market share" to indicate that the market has to give us the right to sell our products at a profitable price. If we are not able to do so, then we need to earn that right - by improving our products, by building better cars, by running our company better. He never used to ask the question "how many cars do you sell?". "His question was always "are we selling cars profitably?"

Carlos Ghosn next target - Nissan 180. Sell one million more cars at 8% operating profit and achieve zero net automotive debt in the next three years. Yo!!!

..................Ideas from the book Turnaround - How Carlos Ghosn transformed Nissan

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Do CEOs want to meet salespeople?

This is a story told in one of our trainings by the Location Head Rajasthan of a large tile company. "We had a service complaint from the account, it was a large construction company. The order value was over$100,000 and we did not know the Evaluator, nor had we bothered to meet the User Buyers. This account, through sheer lethargy, was being handled by the distributor only, no company sales person had bothered to map the account, research its needs, etc. We did not even know the King here.

After going through the sales training where the concept of "Capturing a High position" was discussed, we thought - instead of our traditional method of meeting the Evaluator (purchase department), why not we meet the King straightaway?

We did that. And you know what was the first comment by the King? "You guys always come too late"

Too late, he said. we thought - we don't come at all, do we.

"Sir, why are we late?", we asked. He said "we not only need to discuss this shipment but there is a large project that I am starting in the next month which is ten times larger than this one, that is what I wanted to discuss with you."

I almost had a heart attack!!!!. Ten times!!!

Here was living proof that CEOs want to meet salespeople. Not all salespeople of course. Only the knowledgeable, matured ones. The ones who research the customer, identify needs, are knowledgeable about their own products and practice consultative selling.

.............discussion contributed by Dinesh Vyas, Location head, (Rajasthan, Maharashtra, Gujarat and Chattisgarh) for a large tile, kitchen and bath manufacturer.

Office Depot's President on How "Mystery Shopping" Helped Spark a Turnaround

Peters (in the middle) with Office Depot employees

Photography: Courtesy of Office Depot

Click on teh headline to access the original article at HBR.org

The Idea:

The office products retailer was measuring customer service using metrics— such as the cleanliness of bathrooms—that didn’t drive sales. Its new president is trying to fix that by retraining the staff and transforming the company.

When I became the leader of Office Depot’s retail stores in the United States, in 2010, the first thing I tried to do was figure out the meaning of a puzzling set of facts. Our sales had been declining, and although that’s not unusual in a weak economy, they had declined faster than the sales of our competitors and of retailers in general. At the same time, the customer service scores our third-party mystery-shopper service was reporting were going through the roof. This didn’t make any sense. How could it be that we were delivering phenomenal service to our customers, yet they weren’t buying anything?

To understand these contradictory data points, I decided to do some mystery shopping myself. I didn’t wear a suit. I didn’t wear a blue Office Depot shirt like the ones employees wear in all our U.S. stores. Instead I wore a faded pair of jeans, a T-shirt, and a baseball cap. I didn’t tell anyone I was coming to visit, and in most cases I didn’t let anyone know afterward that I’d been in the store. What I wanted was to experience Office Depot in the same way our customers do. Over the next several weeks I visited 70 stores in 15 or more states.

At each location I followed the same routine. First I pulled into the parking lot and just watched customers go in and out for a few minutes. When I went into the store, I’d spend 20 to 30 minutes observing what was going on. I’d talk to customers, in the aisles and as they were leaving the store. Some of the most interesting conversations took place when I followed people out who weren’t carrying shopping bags and asked them why they hadn’t bought anything. Some of them gave me an earful.

I could tell you a lot of stories about the things I saw, but two scenes stand out in my mind. In one store I watched an employee argue with a customer about whether or not we carried a calculator that her son needed for first grade. An employee arguing with a customer—it was unbelievable.

At another store, I parked and saw an associate leaning up against the brick facade smoking a cigarette. Meanwhile, customers were walking out without any bags. This employee did nothing—he just watched them leave empty-handed. At that point I had a tough decision to make: Should I blow my cover and alert the store manager, or should I stay silent? I sat in the car a few minutes, thinking it over. Finally I decided, I just can’t let this go.

I went into the store and looked at the stanchion that stands at the front of every location, displaying the name of the manager and his or her picture. Guess who the store manager was? Yes—the guy smoking outside the store. So I went up to him and introduced myself, and we had a good long talk. He was ashamed of his behavior—and he was sweating during the conversation. He promised he’d do a better job of taking care of customers, and I promised to keep in touch. Even today we exchange e‑mails every month to discuss his performance.

Get In, Get Out

During most of my visits, though, I managed to stay incognito, and I came away having learned a big lesson: Our mystery-shopping scores were correct. You know what was flawed? Our scoring system. We were asking the wrong questions. We were asking, Are the floors clean? Are the shelves full of inventory? Are the store windows clean? Have the bathrooms been cleaned recently? Think about that for a moment: How often do you go to the bathroom while shopping for office supplies? It turns out that customers don’t really care about any of that. Those factors don’t drive purchases, and that’s why our sales were declining. It would be easy to blame our associates for ignoring shoppers, but under the system we’d built, they weren’t doing anything wrong. They were doing exactly what we’d asked them to do—working to keep stores clean and well stocked instead of building relationships with customers.

My conversations with customers gave me three insights into how we should transform our business to become more competitive: One, we had to reduce the size of our stores. They were too large and too difficult to shop in. Two, we had to dramatically improve the in-store experience for our customers. That meant retraining our associates to stop focusing on the things our existing system had incentivized them to do and focus on customers instead. Three, we had to look beyond office products to provide other services our customers wanted. They wanted copying, printing, and shipping. They wanted help installing software and fixing computers. We needed to expand our offerings if we were to remain relevant to our customers.

Talking directly with dozens of customers also reminded me of a cold, hard fact: They have many choices. Office products are a $300 billion industry, and the top three players—Staples, Office Depot, and OfficeMax—account for less than 10% of that. Approximately 65% of our customers are small and midsize businesses, and buying office supplies doesn’t add value to what they do. It’s a chore. They want to get in and get out—they care about convenience above all else.

What We Say Matters…

Less Stocking, More Selling

On the basis of that feedback, we began to transform our business. It’s probably one of the most challenging journeys I’ve taken in my life. We started by designating two test stores, one in Chicago and one in south Florida.

Many of the changes we made were done behind the scenes, in parts of the business that customers don’t see. We altered the way our supply chain operates so that we could accept deliveries from vendors even when no one was in the store to sign in the merchandise. We began separating stock onto U-boats (the narrow stocking carts we use in aisles) assigned to different parts of the store and delivering the U-boats to an optimal spot—marked with an X on the floor—to minimize the labor required by associates to stock shelves. We also divided the store into zones and began having the same associates stock the same sections repeatedly. Becoming expert in one area of the store allowed them to restock faster, reducing labor.

Many people think that in order to improve service, you need to hire more frontline workers. But in fact, by finding ways to reduce the time employees spend on functions such as stocking shelves, we’ve been able to repurpose their time for selling to customers. Each of our stores employs 18 people on average; by finding ways to work smarter, we’ve been able to save 80 hours a week—the equivalent of hiring two full-time salespeople but at no added cost.

Once our associates had more time to serve customers, we needed to ensure that they knew how. We simplified our sales process from five steps to three—it’s now called ARC, for “Ask, recommend, and close”—and trained them to implement it. We taught them to ask customers open-ended questions. Our research indicated that in certain departments—such as furniture—sales go up by more than 100% when associates with really good product knowledge are assigned to those zones. So in addition to sales training, we invested in product training.

A New Approach to Sales and Service

When a retailer delivers poor service, many people are quick to blame the employees. In my experience, it’s more complicated than that. We have 22,500 associates in our retail organization; one of the things we did as part of our change program was to have every one of them take a test built on the Myers-Briggs Type Indicator to help us understand their skills, behaviors, and attributes as they relate to serving customers. An interesting thing we found was that we’d been hiring people who were most comfortable with their backs, rather than their bellies, to the aisle. Roughly one in five associates preferred performing tasks on merchandise over interacting with customers. A challenge we faced in rolling out these initiatives was how to help those workers become comfortable with the ARC culture—or, frankly, to help them find other meaningful jobs within the company if they couldn’t acquire the right selling skills.

Smaller Is Better

You can’t drive changes like this overnight. Our business has been around since 1986, and that’s a long time for employees and customers to establish expectations and behaviors. These changes won’t be completed in the next month or the next quarter—maybe not even in the next year. In addition to the two “lab” stores in Chicago and Florida, we’ve rolled out 30 pilot stores, and we’re seeing encouraging evidence of an improvement in sales. We’re also hearing positive anecdotal feedback from customers and associates. (There has been a dramatic improvement at the store where I caught the manager smoking outside: Today it is one of the top performers in the company.) We hope that by the end of 2011, 325 of our stores will be utilizing the new system.

We’ve also made progress in shrinking the size of our stores. Today they average 24,000 square feet. We’ve already had success with new stores of 15,000 to 17,000 square feet. We are introducing a small-format store that’s about 5,000 square feet. It carries only 5,000 SKUs—compared with 8,500 SKUs in our traditional stores—but because they’re our most popular products, they represent 93% of what we sell in a traditional store. This format will allow us to be in downtown markets like New York City or in remote markets where we wouldn’t consider putting a large-format store.

As we work to make these changes, I still try to visit our stores as frequently as possible. It’s really the only way you can know how your business is doing. You have to see how customers are being treated, and you can’t rely on reports or scores or hearsay—you have to experience it yourself. If you think your company is doing well with customer service, ask yourself, Am I really sure? Do I know what the customer experiences?

What I pay attention to most of all is how many people are leaving the store without a shopping bag. I’d be glad if people came to our stores to browse, but this is not a browsing industry—people are shopping with a very specific purpose in mind. If they don’t make a purchase, something has gone wrong. If we can reduce this “balk rate” by just 10%, it will have a meaningful impact on both our top-line revenue and our margins.

You also have to make sure you’re measuring things that really matter to customers. I can tell you from firsthand experience what happens when you measure the wrong things. I always try to remember that we need our customers more than they need us—and we’d better act like it.

Three things to prepare when going into a negotiation.

Most of us go into a negotiation with no clear idea of what we want from the negotiation. Good negotiators go prepared with two positions - an ideal position and a starting position that is somewhat higher than the ideal position. eg a sales person working for a large IT services company may want to sell a laptop AMC package for ideally Rs 2000 but may start with Rs 2200 as a starting position.

There has got to be however a third position called a "walk away" position.

What is the walk away position? It is the position below which you will "walk away" from the negotiation, meaning below this point, you would not be interested in doing business. eg a "walk away" position in the laptop eg may be Rs 1700. Why is this important? Most salespeople are inexperienced, the buyers however are quite experienced. The buyer quotes a figure which is 50% lower than the first quote of the seller. Sellers in most cases are desperate to get the deal, they tend to have poor pipelines and are intimidated by the whole sales situation. They tend to get more and more emotionally involved in the negotiation process and ultimately end up giving away too much

Having three positions has the following benefits:

a. It ensures the organization protects its bottomline.

b. It ensures the sales team knows when to stop wasting time with the customer.

c. It ensures a logical discussion without the sales team losing control of their emotions and getting desperate.

............based on ideas discussed in our negotiations training programs