Lesson #290: Too Many Meetings Suffocate Morale & Productivity

Early stage companies have many demands on an employee’s time.  From getting the product built to marketing for new customers to getting the capital lined up, it is a never ending battle to fit in all that work in a limited amount of time.  But, what I often see is productivity gets squeezed by early-stage entrepreneurs scheduling way too many meetings, which gets in the way of employees having enough time to do their actual jobs.  And, when productivity slows, the company’s bottom line suffers and employees start looking for the door in frustration.  Let me explain further.

Why So Many Meetings Get Scheduled

There are many reasons to schedule a meeting.  Some are recurring meetings between bosses and their direct-reporting employees, for weekly check-ins and collaborative needs of the team.  Some are one-off meetings for non-recurring items, like annual strategic planning, putting out a client fire or team building events.  But, most get set because entrepreneurs are inexperienced and don’t know any better.  That is largely related to their not trusting the team to do their jobs or their needing to control every single decision that is made.  It is this last category that is the killer.

The Negative Impact on Employees

Employees get frustrated when a couple things happen around meetings.  First, they think it is a waste of time, and they are not even sure why they are needed in the room (so don’t invite everyone to every single meeting, only invite the ones that actually need to be there).  Second, they get frustrated they are sitting in a meeting, and not sitting at their desk getting their actual work done in a more timely fashion (so maximize their time at their desks, not yours).  Or, third, they get offended that they are not trusted to do their job, by a boss that feels they need to keep tight oversight on all of the decisions (so empower your people to make decisions without you).  All of this is a recipe for a disaster, often having employees looking for the exit, where the resulting employee turnover can be crippling to a young company needing to race full steam ahead, as quickly as possible.

Case Study

I was once getting started as an interim executive at a new client and was given a team of people to manage.  On my first day I was handed a calendar of all the weekly meetings that I needed to participate in with my team.  I looked at the long list and realized that about 40% of my time was in meetings, many of which that I deemed as unnecessary, a legacy process from a prior manager.  I didn’t have two days a week to lose in getting my job done.

So, I pulled the team together and asked what each of the meetings were trying to accomplish, and we agreed we didn’t need as many, merging many of the meetings into one.  And, I asked each of the employees to look at their own personal schedules, and to cut out any unnecessary meetings.  One of those persons said they were being included in meetings that were eating up a whopping 80% of his time each week.  I asked how he got any work done at all?  He said he didn’t!!

He said, it was mandatory that he be in those meetings, and he didn’t have a choice.  To which I replied he need to cut his meeting time down to a cap of 20% of time, shedding 75% of his meetings.  He turned white as a ghost saying that was impossible.  I dug in and said it was not only possible, but required by the end of the week.  After a bunch of rethinking his time, he prioritized only the most important meetings, cut his meeting load down to the target, and actually started getting his own work done, reversing years of complaints that he was the bottleneck to others in getting their work done.

How Many Meetings Should Be Scheduled

To me, I try to cap my recurring weekly meetings at 20% of my time.  One one-on-one meeting with each of my direct reports, one meeting with the person managing me and one meeting with my peers to collaborate on needs between departments.  That leaves plenty of other time for the one-off meetings that come up during the normal course of business, again which should be capped within this 20% framework.  This keeps me efficiently working on the most important work that needs to get done, and keeps my team efficiently working on their most important work.  And, when people start checking projects off their to-do list, they feel a sense of accomplishment, the business moves forward and a healthy vibe is maintained in the office.

Flat Organizations Thrive Best

So, my appeal to all you entrepreneurs, don’t suffocate the life out of your companies with too many meetings.  Hire smart people, trust them to do their jobs, and get the heck out of their way, so they can do the jobs they were hired to do.  You don’t have to micro manage every single decision.  Empower your team to make their own decisions in a flat organizational structure.  Even if they make mistakes, that is fine, they will learn from them.  But, the team will be moving twice as fast at getting things done, than if they were burdened with a bunch of meetings.  And, as we know, speed matters with startups.

Concluding Recommendations

Challenge yourself and every employee in your company to cap their recurring weekly meetings at 20% of their time.  That is one day a week, or 8 hours in a normal working day.  That is up to 16 thirty-minute meetings they can schedule, so plenty of slots to work with.  Yes, I said thirty minutes, efficient meetings don’t need to be longer than that.  So, that means come to the meetings organized with a set expectation on how they are going to be run each week.  And, if there is nothing new to update on this week, there is nothing wrong with cancelling meetings.  Give your team the flexibility to only do meetings that they feel are absolutely needed.

As you can probably tell, I am not a fan of scheduling too many meetings.  It often leads to combatting issues like analysis paralysis, management by committee, micromanagement, disgruntled employees and an overall loss of business productivity.  So, instead, take more of a hands-off role in managing your team, kick your business into the next gear and start getting all those unnecessary meetings off of everyone’s calendars.  You will be shocked how much more work will actually get done!!


For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #267: Score One for Brick and Mortar Retail--An EZContacts.com Disaster Case Study

It is no surprise that the internet has been killing offline retail.  Gone are chains like Blockbuster, Borders, and Sports Authority, to name a few. And, the blodshed is far from over, with chains like Sears, Macy's and JC Penney hanging on for dear life.  They just can't compete with the internet prices, that don't have to cover the huge investment in brick and mortar real estate, inventory and employees.  Is there any retail category that is safe from the internet's death grip . . . I may have found one!!

THE BACKGROUND

I recently needed a new pair of eyeglasses.  I went to my local LensCrafters store for my eye exam and to browse new frames.  But, I did something I had never done before at an optical store, which I always had done in other stores . . . I wrote down the SKU of the frames and started searching for them online when I got home.

And, for good reason.  The same Polo brand frames I has seen at LensCrafters for $250, were available online for half the price of $125 from several vendors I had never heard of.  After doing a little online research, I felt EZContacts.com was worth giving a shot (despite their brand name, as I assumed they started in contacts and evolved into glasses too).  Online they made it pretty simple.  I could easily enter my prescription, they showed me how to measure my pupil distance and gave me a wide range of lenses to choose from.

I picked their most expensive lenses, at $199, assuming they were going to be the best, with all the bells and whistles needed, like anti-reflective coatings, thin construction and crystal clear definition.  I paid for the transaction on March 23, sat back and waited for my new glasses to arrive.

WHAT HAPPENED AFTERWARDS

I got a call the next day from an optometrist that said he worked for EZContacts.com saying that he had my prescription and all looked good, and asked if I had any questions.  I thought that was a nice touch, and I felt that I was in good hands.  Although, I did find it strange that the caller ID came in as a different company name called Sharper Image.  I assumed EZContacts.com had subcontracted the fulfillment to a local optometrist, which was fine given the price savings I was getting.

But, after the 5 business days of advertised delivery time, nothing showed up.  I gave them another week, and called them on April 6th asking why they were more than a week late; as I needed these glasses to see!!  They apologized, said there were abnormally busy, and shipped them out on April 9th, which I received the next day.

Excited to finally get my new glasses, I opened the box and tried them on.  And, I couldn't see clearly through them at all.  The prescription didn't feel accurate.  There was no anti-reflective coating, which distracted my vision.  And, they felt like a crappy lens--with a cloudy haze.  Anything but what I was expecting.

CUSTOMER SERVICE BREAKS

I called to complain, and was greeted by a message that their office was closed on April 11th and 12th for the Passover holiday break (even though every major retail optical chain were open those days).  And, when I called back on April 13th, there was such a back log of customer service calls that I ended up on hold for over two hours behind around 100 other callers.  Probably people like me, disappointed with their purchases??

When I finally spoke to the company, they said to ship them back and gave me a link to their returns page, which was not easily found on their website (forcing me to lose two hours on the phone hunting it down).  It was like they were intentionally hiding it, so people couldn't send back their purchases.  About a week or two after shipping back my glasses, I got a call from their support team saying my lenses were missing the anti-reflective coating by mistake, and that they would send a new pair.  To which I said, I don't really trust you guys anymore with my eyesight, and asked for a full refund, given how bad my customer experience was with them.

But, they told me they could only refund 50% of the $199 lens cost, since they were already cut.  So, I was going to have to eat around $100 for giving this online retailer a chance: an amount that was elevated by the fact I thought I was buying the best lenses possible to avoid exactly this situation.

THE OUTCOME

Given the bad experience I had online, I marched right back into LensCrafters, where I could physically see the quality of the lenses before buying them, and have them professionally measured (as I wasn't exactly sure I was doing it right on my own, from home).  I didn't end up buying new frames, I re-used my old frames to save on the costs, given the above out-of-pocket costs I incurred.  So, instead of getting new glasses and frames for around $300, saving $100 versus retail.  I ended up paying $300 for lenses only, including the $100 I lost from EZContacts.com.  Not the outcome I had in mind by going to the internet to save money.

CONCLUDING THOUGHTS

I may or may not buy frames only online, depending on how high the lenses costs are alone.  The offline retailers are smart--they deeply discount lenses by 50% if you buy frames from them, but you have to pay full price for the lenses if you don't.  So, whatever savings you are getting from buying frames online, you are most likely giving it back in the form of higher lenses prices offline.  So, until an online optical store can more seemlessly replicate the offline buying experience, I think the brick and mortar optical stores will survive to live another day.  Score one for brick and mortar retail, in the sea of otherwise carnage.

WHAT THIS MEANS FOR YOU

If you are in the brick and mortar retail business, you are most likely going to lose on price to the internet retailers every time.  And, price is a huge driver of a consumer's purchase decision.  You are going to have to figure out how to offer something unique and different, that the online guys don't have to compete.  In this case study, that included things like the onsite doctors, physical lenses to look through before you buy (privately branded and unique to them, so you couldn't hunt them down online) and pricing models that make the consumers feel indifference whether they buy online or offline.

And, as for EZContacts.com . . . buyer beware!!  I should have know better to buy eyeglasses from a company branded as a contacts seller.


For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #254: Managing For Meteoric Growth--A Home Chef Case Study

I am in investor in the FireStarter Fund, and when I received my investor update from one of our portfolio companies, I nearly fell out of my chair.  The company featured was Chicago-based Home Chef, and the company's revenue run rate had increased from $20MM in 2015 to over $200MM in 2016, a whopping 10x increase in one year.  It took me about ten seconds to pick up the phone and call their founder and CEO, Pat Vihtelic, to ask him to share his story with all of our Red Rocket readers, which he was kind enough to do in this post.

ABOUT HOME CHEF

Founded in 2013, Home Chef is one of the leading players in the growing home meal delivery kit business.  Consumers sign up for a weekly subscription of meal kits to be delivered to their home, and the buyers have all of the ingredients and recipes they need to prepare that meal at home, in less than 30 minutes.  They basically have removed the time-consuming need to go shopping for ingredients, and have made it incredibly simple to prepare with pre-portioned ingredients and step-by-step directions.  A great solution for time-started families that want a home-cooked meal, but may not otherwise have had the time to pull it all together.

Home Chef is one of many venture capital backed startups that are racing to dominate this space, including industry leading Blue Apron (estimated at over $1 billion dollars in sales) and Hello Fresh (a division of the publicly-traded Rocket Internet, estimated at over $400 million run rate at their U.S. operations).  But, what Home Chef has had, from the very beginning, perhaps to a greater extent than their competitors, was a data-driven approach to building their business to ensure their business economics were sound and scalable, before they began to hit the gas with their growth.  And, now they are reaping the benefits, as their competitors are still struggling to get their expensive marketing economics to pay back in a timely fashion.

THE CHALLENGES OF METEORIC GROWTH

My first question of Pat was, "how can you reasonably handle 10x revenues in one year, without the wheels of the business falling off?"  And, he detailed three areas of his business, to better educate me on how he was able to grow this fast in the first place, and more importantly, how he avoided growing faster than the business could "digest" (pun intended).  Those areas were: (i) marketing; (ii) fulfillment; and (iii) staff and culture, which I will detail in the paragraphs below.

MARKETING YOUR WAY TO 10X GROWTH

2013.  The company's website launched in September 2013, bootstrap financed by Pat. So, with cash in short supply, it started by getting the product and customer experience right. Where competitors were focused on other gimmicks, like promoting fancy chefs' recipes, for Pat, it all started with what does the customer really want to eat and truly learning their behavior.  With a lot of research and testing with his initial customers, he ironed out a winning customer solution to their day-to-day needs   And, the research paid off; the company's business started to take off with zero paid marketing spend.  In 2013 they were growing 30% month-over-month, driven simply by word-of-mouth referrals from their early adopters who really loved the product.

2014:  With that all-important proof-of-concept behind the business, it didn't take long for the venture capitalists to take notice, and Home Chef completed its first rounds of seed capital, closing $500,000 in July 2014 and a $500,000 in November 2014.  They used the proceeds from these rounds to prove out their paid marketing plan and economics, testing media buys in the search engines and in social media.  It was here they learned their cost of customer acquisition, their best promotional offers (e.g., get $30 of meals for free, if you refer us a friend, who will also be given $30 of free meals), their customer retention rates which drive lifetime customer revenues, which media sites performed better than others and how fast they could grow without hurting their business economics (e.g., no more than 10% new customers a month, relying on 90% returned customers each month).  And, they learned they would need to take the "long view" here, as three years of customer revenues would get them a 3x return on their marketing investment, which needed to be paid back in the first 6-9 months.  The company ended the year with a $1MM revenue run rate.

2015:  Marketing success in 2014 lead to more venture capital attention and monies coming in, raising $10MM in August 2015.  This is where they began to pour the gasoline on their marketing fire, accelerating both their customer referral program and their paid marketing efforts, still focused on the search engines and social media (primarily Facebook).  They learned social media was the key paid channel to focus on, as the industry was still new and people really weren't looking for "meal kit delivery" keywords yet in the search engines.  But, lets not forget, the great product was still driving a ton of free word-of-mouth business, which comprised over 50% of their new customers acquired.  The big increase in marketing spend, resulting in the business ending the year with a $20MM revenue run rate (up 20x in one year).

2016:  The huge lift in revenues had the venture capitalists frothy with excitement about Home Chef, and the company raised a whopping $40MM in August 2016.  Now, the marketing spend was increased to millions of dollars each year and their marketing team grew to 10 people.  The company tested new marketing channels to diversify their media mix and learned that customer acquisition costs per user rise by spending more in the same channels without diversifying the media mix, so they needed to turn the screws in terms of adding even more data-driven discipline to their efforts.  And, it paid off, as the company ended the year with a $200MM revenue run rate with only a modest impact to their marketing economic efficiency.

SCALING YOUR BACK-END FULFILLMENT TO HANDLE 10X GROWTH

Marketing was only part of the success story here, because what good is bringing in millions of new customers, if your back-end cannot support the growth.  The back-end for Home Chef primary means adding new kitchen and warehouse space to process the meal kits being ordered.  What started out as a 2,000 square foot test kitchen in Chicago from inception through September 2014, turned into an 8,000 square foot food processing facility in October 2014 and further expanded to a 50,000 square foot facility in July 2015.  Yes, that was two moves in just over a year, and all the distraction that comes with that.

The company considered adding new locations in the beginning of their growth, but again, to better control the business, they wanted to fine tune everything in one place first, to get their processes fine-tuned at scale.  Then, once they were comfortable they had the right fulfillment model, they began to export that model to new locations, adding a 70,000 square foot facility in California in March 2016 and a 120,000 square foot facility in Georgia in September 2016 (which is currently being expanded to 180,000 square feet).

This growth presented tons of challenges.  To preserve their desired process, they relocated key staff members from Chicago to get those new locations off the ground.  They needed to convince large landlords that Home Chef was worth backing for the long run, a startup that wasn't going to ultimately flame out.  And, in Pat's conservative approach, he would not open up new production facilities until he was 100% sure the sales volume was there to support it, so it had the old facilities running on overdrive, until the new facility could be opened to take the pressure off. Again, all of this expansion--growing to 300,000 square feet processing over 10 million meals a year across three locations--in only three years!!

MAKING SURE 10X GROWTH DOESN'T IMPACT YOUR CULTURE

If you thought growing your production capabilities was hard, imagine having to grow your workforce from zero to over 700 workers during this time, 150 of which in your headquarters.  All, in a way that doesn't negatively impact your desired "scrappy startup, customer centric" company culture.  Pat attributes his success here to a few things.  It was critical to get your initial hires (and subsquent hires) right.  Executives that weren't afraid to roll up their sleeves and lead by example.  Secondly, deal with growing pains as quickly as you can, so they don't last long.  And, thirdly, keep a relatively flat organization, without a lot of layers of middle-management.

IN CLOSING

It sort of takes your breath away, that you could build a business of this scale in just over three years.  And, with the company planning to at least triple revenues in 2017, this train is still just getting started.  A tip of my hat to Pat and the entire Home Chef team.  Yet another rising star in Chicago's exploding digital tech ecosystem.  So, now that we have the blueprint for scalable 10x growth that would have crippled most other businesses, let's do this thing for your businesses!!  Thanks again, Pat, for sharing your incredible story. Deep respect for what you have accomplished here, as I truly understand how hard it was to pull off.

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #240: Document Your Processes, Before They Walk Out the Door!!

Let’s face it, most entrepreneurs are really busy people. They are focused on launching their new products, raising capital or a multitude of other things.  And, with the limited number of hours in a day, who could fault them if they let documenting their business processes slip down their priority list.  That is, until one of their key employees quits with all that institutional knowledge undocumented in their head, and you are screwed, scrambling to pick up the pieces with no roadmap to help you.

This is a common problem that most entrepreneurs simply don’t think about until they have been burned by a departing key employee.  So, before you fall into this camp, be warned: documenting your business processes as you go is mission critical from day one.  You never know when someone is going to be hit by a bus, and all your systems’ login information and passwords are lost forever, as an example. 

WHAT NEEDS TO BE DOCUMENTED?

Take a pause and think about all the areas of your business that needs to be documented.  Where do all my customer contacts reside?  What was the last conversation my sales team had with my contacts?  What is our desired layout for all marketing pieces and brand messaging?  What techniques or phone scripts do we use to convert leads into sales?  What should we be upselling to clients?  What is our handoff procedure from sales to operations?  What is your policy for handling customer complaints?  Who has access to our bank accounts and accounting systems?  How should we be collecting unpaid accounts receivables?  What rules do we follow in building our technology code?  And, the list goes on and on.

THE TRAINING BENEFITS FROM DOCUMENTATION

Yes, it is a daunting task . . . the first time.  But, once it is done, it can be easily maintained and updated from there.  And, most importantly, it serves as a really good tool to train new employees with.  So, not only is it a way to protect yourself from losing institutional learnings locked away only in the heads of your employees, it is a great way to come across as professional to new employees, to help them better understand the processes needed for their jobs.  And, the faster a new employee is onboarded, the faster they are producing valuable results for your company.

HOW THE DOCUMENTATION SHOULD BE STORED

Make sure these processes are centrally stored on your internal drives and are accessible to all employees that need to have access to such files.  Perhaps segmenting your procedures by key department (e.g, sales vs. operations), and by level of role with your organization (e.g., Vice Presidents have access to more than Managers).  You don’t want 100% of employees having access to 100% of your sensitive files for security reasons.  So, make sure only the people that need to have access to those files, get access to those files.

EMPHASIZING THE IMPORTANCE WITH YOUR TEAM . . .

Make sure the importance of having these processes documented is ingrained into the DNA of your company.  Let them know it is part of their job, to make sure these processes are documented, learned and followed by their teams.  And, most importantly, updated as they may be changed over time.  Most processes are typically not set in stone, they are fluid with the needs of the business or its customers.  So, keeping the processes updated is critical to make sure new employees are learning the most current procedures.

. . . WITHOUT OVER-PROCESSING YOUR COMPANY

That said, you don’t want to suffocate the life out of your business by having too many procedures.  You want your organization to remain as flexible and nimble as the market demands require.  So, it is much less about have a “process tsar” enforcing all your processes and making a militant environment for your staff (where they will most likely quit), and much more about letting your employees know the importance here, and having them tackle it in digestible pieces as they have time.  But, they do have to make time.

So, I know it is a pain in the butt, but get your processes written down while you can, before you actually need it.  You certainly don’t want your chief engineer leaving for another company before he clearly has documented all the “patches” only he knows exist in the millions of lines of code in your technology.  And, for those of you that ignore this warning, prepare for a rude awakening when you need it most.

For future posts, please follow me on Twitter at: @georgedeeb

Customer Service Case Study: My Wacky Website Weekend!!

What a stressful weekend I had.  The Red Rocket website went down on Friday morning.  I didn't know if it was a temporary server outage from my hosting provider, or not.  I tried emailing and calling the emergency support team, with no response.  I said I would give it a day or two, before panicking.  But, with the site still down on Sunday morning, I assumed the worse, that my vendor Site2You may have gone out of business (which apparently they didn't), and I scrambled to get a new site up and running, which proved a daunting challenge on a last minute basis, to say the least.  I wanted to share some customer experience and customer service learnings with you, so you don't make the same mistakes with your business.

Site2You:  Grade F

I had been working with Site2You since I first launched our website in 2010.  Back then, they actually had a good selection of website templates, a good user experience with their content management system and a support team on call in case anything ever went wrong.  But, over time, it was clear they were not maintaining their systems (e.g., it only could be accessed through an outdated Firefox browser), and they even tried to get me to switch over to WordPress.  But, I was busy, the site was functioning fine for my needs, and I stuck with them.

But, when the site went down this weekend, with no warning or response from Site2You after three days of outage, that was the straw that broke the camel's back.  It didn't matter that I had been happily working with them for over six years.  What mattered was my site was down, despite their 99.9% uptime guarantee, and there was no way for inbound visitors to find my site, including the lost advertising spend with Google Adwords landing on a dead website.

So, the key lesson here: it is only the most recent experience that matters most with your customers, as you can lose them at any time with unexpected slip-ups.  And, it is important to keep your product improving over time, with open communications with your customers when stuff is going wrong. They actually got their service back up and running on Monday, but by then, the damage was already done.

Google:  Grade A

I never really felt the need to have to backup my website content, in case the site ever went down. That was Site2You's job, which they had been successfully backing up the site data every 24 hours, over time.  That was until Site2You itself goes down, and there is no way to track them down.  That's when the panic sets in.

The good news was, I knew Google indexes all websites.  And, even if the Red Rocket site is down, Google will have a cached copy of the indexed web pages on their servers.  So, I searched for Red Rocket in Google, found my links, and pulled up the cached copy from their search results.  Thank goodness, as it saved me a ton of time of having to rewrite all the website copy from scratch.  Thank you, Google!

GoDaddy:  Grade C

I use GoDaddy for my domain name registration service.  So, I figured I would go there to see what website development options they had.  They actually had two options: I could license WordPress through them, or they had their own competing system they wanted to sell you.  I was able to review sample templates of their system, which weren't all that great, but at least it was supported by a human support team in case I ran into any problems.  But, there was a reason 25% of the websites on the internet are powered by WordPress, which is where I was leaning.  And, GoDaddy couldn't show me any of the premium WordPress templates, and the GoDaddy support team wouldn't support the WordPress platform if I had any customization needs.

So, the key lesson here:  make sure your product is competitive with other perceived leaders in the market, and if you are going to sell a product, you should support it, even if it is a competitor's product.  I got scared aware by no technical support on the system I really wanted.

WordPress:  Grade C

Well, if GoDaddy can't meet my WordPress needs, surely WordPress can.  WRONG!  WordPress only supports their couple hundred website templates they have built, which weren't all that fresh for this generation of web design.  And, if I wanted to purchase a custom template elsewhere, they would not host it on their servers, they pointed me in the direction of a third party website hosting company they had partnered with.  And, worse yet, there was zero human support offered for their templates, if I had any minor customization needed.  Which means, I would have to engage expensive WordPress developers to make the customization changes for me.

I am sort of scratching my head to how WordPress has built up a dominant market share position with this type of strategy.  They must be biasing web development agencies as their primary customers, as their consumer direct solutions were not all that great.  To me, it doesn't feel like allowing third party templates to be hosted on the WordPress servers and providing access to a support team for minor changes needed would be that hard of a thing to offer, even if I had to pay more for that solution.

Word Press Developer Agency:  Grade C

I had a WordPress development agency do good work for one of my clients in the past.  So, I outreached to them, to see if they could help.  He said it would cost a minimum of $2,500 to do the work, assuming I could find an off-the-shelf template I liked.  My website is so basic and simple with a few pages, that I thought there was only a few hours of work needed, and the quoted price felt too expensive, so I moved on.  So, make sure your prices are in line with what is reasonably to be expected for the work being provided.

Wix:  Grade A

Which brings me to Wix, the vendor I chose to build the new website platform.  They "had me at hello".  Their website just lured you right into the template creation process, without having to charge my credit card ahead of time (as both GoDaddy and WordPress required).  And, once I started working with their system, it was so unbelievably simple and easy to use.  It was closer to working with Word or Powerpoint, than it was a complicated web development platform, like WordPress.  So, any non-technical person can easily make the changes needed, without the need of expensive developer time, including a fool-proof step-by-step tutorial to revise my DNS settings with GoDaddy.  Which explains why over 80MM customers have chosen Wix as their website solution.  And, to top it off, the new website looks materially fresher and better than the old website did, so my stressful weekend turned out to be a blessing in disguise.  All for the price of $12.99 a month, plus a few hours of my personal time setting up the site.

So, the key lesson here is:  don't create friction between your customers and the sale.  Give them free access to your tools, so they can play with it first, and then ask for the sale after they are hooked.  And, user experience is everything, so the easier and better you make it, the higher your sales will go.

Hope you found this post useful, both for your customer service and experience strategies, and for your website development needs.

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #236: E-commerce Fulfillment Strategies

E-commerce is one of the digital tech spaces I follow more closely than others, given my natural love of B2C startups.  In the past, I have written about how to grow your e-commerce company and the best e-commerce platforms for small businesses.  This post dives into the various fulfillment strategies to consider for early-stage e-commerce companies.  To help me here, I solicited the help of Connor Gillivan, an expert in the e-commerce space.  Connor authors an e-commerce blog and is the CEO at eCommetize, which helps e-commerce companies build and manage their online stores.

Defining the Types of Fulfillment

At the end of the day, your goal is to get your product to the customers that are interested in buying it. In certain scenarios, you will be the manufacturer of the product, while in others, you will be the retailer selling other people’s products. There are three main strategies that you can take to move the product to the end customer:

Strategy #1: Self Fulfillment

In this first strategy, you take full responsibility for the shipping and fulfillment process. A customer places an order on your website, you process the order, find the product in your warehouse, attach the shipping label, and give it to the shipping company for delivery. In this case, you either stock your products in your own warehouse or you have enough space in your office where you can run your fulfillment. This strategy also requires that you have a team of individuals solely focused on order fulfillment and physical inventory management. There are many pieces of software that can make the system simpler, but you will still need someone on your team to specialize in the work.

Pros

• Complete control over fulfillment process
• Access to larger brands that only offer wholesale purchasing

Cons

• Extra costs to purchase products, warehouse, and labor up front
• Can only sell what you have in your warehouse

Strategy #2: Third Party Fulfillment

In this second strategy, you team up with a third party fulfillment company (e.g., Amazon FBA, Shipwire, or Shipstation), so that you are not fully responsible for shipping the product to the end customer once you have received orders through your site. If you are the manufacturer of the product, you make the product and have it shipped directly to the third party fulfillment warehouse. If you are sourcing the product from a variety of manufacturers or distributors, you purchase the products from them in bulk and ship it directly to the third party fulfillment center.

Once the products have arrived at the third party fulfillment center, they become responsible for shipping each product to the end consumer as you communicate orders to them from your website. You are responsible for processing orders through your website and communicating the customer/shipping information to the third party fulfillment company, so that they can ship it to the correct customer.

In this case, you lose the need for someone on your team that will specialize in fulfillment and shipping operations. However, you will need someone who is solely responsible for communicating with the fulfillment company so that everything runs smoothly. Most third party fulfillment companies now have software that can link directly to your online store making the order fulfillment process simple and efficient.

Pros

• Having fulfillment experts handling your order fulfillment
• Discounted shipping rates because of third party fulfillment shipping volumes
• Access to larger brands that only offer wholesale purchasing

Cons

• Additional costs of storage, fulfillment, etc. dependent upon the third party fulfillment company that you decide to work with
• Can only sell what is at your fulfillment center

Strategy #3: Drop Shipping

In this third strategy, you work directly with manufacturers that have the ability to ship their products directly to the end customer. This particular strategy makes it so that you never have to touch the product as the online retailer. You are responsible for obtaining the correct product data to list the manufacturer’s products on your online store and they are responsible for shipping the product to the end customer. As you receive orders from your website, you communicate them to the correct manufacturer.

Although it may seem like the simplest option for running your online store, the drop ship fulfillment strategy calls for a greater deal of data management. If you are working with a large number of manufacturers through drop shipping, your team will be tasked with keeping your product’s inventory status updated, communicating with a large network of manufacturer reps, and creating a system to efficiently communicate orders.

Pros

• Ability to sell products without touching them
• Ability to have larger inventories or test products until you find the best selling ones

Cons

• Lower product wholesale discounts and drop ship fees
• Need to manage inventory feeds from manufacturers you are working with
• Can only work with brands that have drop ship capabilities

Making a Fulfillment Strategy Decision

All three options for fulfillment can and are utilized by profitable retail companies around the world. Before Amazon had its own fulfillment warehouses sprinkled strategically around the world, they were drop shipping products to the customers. The strategy of fulfillment that you choose to grow your business will very much depend on your short and long term goals.

By weighing all of the factors above, you should be able to make an informed decision on which fulfillment strategy best meets your needs as a growing company. Are you making your own product and interested in distributing it through your website and online marketplaces? If you can afford it, working with a third party fulfillment company may be the best option so that you can focus on continuing to produce new iterations of the product.

Do you have a strong following online already that is interested in a specific niche of products? If you know the products that your customers already want, it may be best to stick to self fulfillment or third party fulfillment, so that you can get access to the larger brands. You can hand pick an inventory you want for your online store, purchase the products, then decide on the best method to fulfill.

Finally, are you a growing online store looking to expand your inventory into new product niches without the initial investment of buying products in bulk? If so, the drop ship fulfillment strategy is a great option to test the waters and move forward with which products sell best.

Thanks again to Connor Gillivan for helping me with this post.  Be sure to follow him on Twitter at @ConnorGillivan for future learnings.

For future posts, please follow me on Twitter at: @georgedeeb.

Customer Service Case Study: A Nightmare at Disneyland!!

The plaque at the entrance of Disneyland in California reads: "Here you leave today, and enter the world of yesterday, tomorrow and fantasy".  The very core of the Disneyland brand has been to take you to that fun and magical place.  Our recent family trip to Disneyland was anything but fun and magical.  It was more a page out of a Freddie Krueger horror story.  And, if Walt Disney could see all the corporate greed for maximizing money making, at the expense of a fun user experience, he would surely be turning in his grave.  Below is a summary of our experience, and lessons for us all to learn for delivering a world-class customer experience (or not!!).

PARKING FAIL

You know you are not off to a good start, when despite arriving an hour before opening, you still have to wait an hour just to park your car.  The flow from the highway exit to the lot was bumper to bumper for about a mile, and when you finally arrived at the pay booth, six lanes merged down to one lane in a chaotic mess.  It was like Disneyland had never had to deal with parking flow issues in their sixty year history before.

FOOT TRAFFIC FLOW FAIL

The average person can walk at around three miles an hour; we were lucky if we were walking one mile an hour.  It was so overcrowded in the park, you felt like you were part of a herd of cattle being lead to the slaughter.  You should never feel like waiting in lines for the rides, was actually a reprieve from the chaos of walking through the park itself.

PARK DESIGN FAIL

Disneyland prides itself on how well-designed its park is, with "invisible" operations behind the scenes.  But, to me, the "visible" part of the park, was very poorly designed to handle large volumes of crowds.  There were so many "pinch points", where a wide walkways narrowed down to a thin walkway, creating crazy bottlenecks.  And, there were many "dead ends", where you needed to reverse direction back through crazy crowds, to get where you thought you were originally heading (based on very poor signage).

WAIT TIMES FAIL

There are around eight main sections of Disneyland, each with a main ride therein.  In a good user experience, in a 9-5 day, you should be able to ride each of the eight main rides in an eight hour day, with no more than an hour wait for any one ride.  Wait times were approaching two hours on many of the rides, which means the visitors were only able to experience around half of the rides offered.  Fun is enjoying the rides, not waiting in lines for the rides.

FAST PASS FAIL

I like the concept of a Fast Pass, to get a set reservation time to avoid a busy line.  But, the fails were many here: (1) you can't set reservations anywhere but the ride area, which means you need to battle crowds and wait in lines just to get your Fast Pass; (2) you are limited to one Fast Pass reservation every two hours, which reasonably means you only get a couple chances to use it per day; and (3) if you don't return in your slotted time, you lose your reservation (and many people were missing their one hour reservation time window because the crowds were so bad to get back to that part of the park in time).

MARCHING BANDS FAIL

I love marching bands as much as anyone, but there is a time and place.  You should not close down the main foot traffic walkways of the park, to accommodate marching bands on the busiest days of the park.  That takes a slow user experience, down to a crawl.  If you want bands, put them on the main stage at the entrance of the park, where they won't impede foot traffic flow during your peak times.

RESTAURANTS FAIL

When it is lunch time, around noon, and you can't get food for your kids until after an hour or two of waiting in long lines, there is a major problem.  And, when you finally get your food, and there are no empty tables for you to sit down and enjoy your meal, that just compounds the problem.  And, when you find the one open restaurant in the park with 20-30 open tables, and you are are turned away because you didn't have a pre-booked reservation (which many people missed due to crowds impeding foot traffic) is just plain stupid.

I understand the Disneyland amusement park experience has been in our country's core DNA since 1955, or over 60 years now.  That is around three generations worth of families that have taken their families to the Magic Kingdom for that break away from reality and to fantasy.  But, when that experience has become more of a nightmare, at the rapidly growing entry cost of $100 per person (and easily double that with parking, food and souvenirs), maybe it is time for the country to have a new family tradition.

Perhaps that is visiting any one of our 59 national parks, where the experience is equally spectacular, the land is plentiful and you won't be cattle-herded up against 65,000 other travelers.  Or, if amusement parks is a must, there are scores of them across the country--take your hard earned money to other parks that better respect your user experience.  For example, we visited Universal Studios in Hollywood, Legoland and the San Diego Zoo that same week we visited Disneyland, and they were delightful in comparison.

Anyway, take these business lessons to heart: (1) don't mis-serve your customers in delivering a poor user experience (regardless of how much money you can make); and (2) don't take your history and customer loyalty for granted (you never know when they will hit their breaking point and take their family and money elsewhere).  Disneyland should have capped their user maximum at a much lower level to preserve a better user experience (even if they needed to raise prices to enable that).

I know I will never go back to Disneyland after this recent experience, and I recommend you don't make the same mistake I made: trusting our once-in-a-lifetime family experience to Disney (did I really just say that??!!).  I am sure Walt and the brand team at Disney are cringing as those very words are leaving my mouth, as it is 100% counter to the brand positioning they are aspiring towards. But, it has become the stark reality, based on the current generation of Disney executives who have forgotten how to put their customers first (not their bottom line).  They may not feel the financial impact in this generation, but they surely will in the next.

__________________

ADDENDUM ADDED 1/13/16:  I have to give credit where credit is due.  I got an unexpected call from Disneyland this week after they read this blog post.  They said I raised a lot of fair points, apologized for the poor experience, acknowledged it was one of their busiest days of the year and told me their team is brainstorming the overcrowding issues to remedy it in the future.  Then, they offered my family five free Park Hopper tickets (a $750 value) to use on our next visit, anytime in the next two years.  That was an unexpected and appreciated offer, and a professional and honest way to treat an upset customer.  Problem is: with my family in Chicago, the odds of flying my family out to Los Angeles a second time in two years is pretty low.  So, I won't be able to take advantage of it.

For future posts, please follow me on Twitter at: @georgedeeb

Lesson #205: Setting Up Your Back-Office Functions

Often times, startups are so focused on building their products, that they forget they are also building their businesses.  And, for high-growth startups, that typically means rapid growth in revenues and employees, and the back-office functions that comes with that.  Today's lesson talks about how best to set up these key functions during your early stages of development.  To assist me with this lesson, I reached out to my colleague, Matt Norman at Accretive Solutions, a leading back-office outsourcing firm.  Thanks, Matt, for your help here.

WHAT ARE BACK-OFFICE FUNCTIONS?

When I say back-office functions, we are talking about things likes accounting, finance and human resources.  Here are some more-specific examples of back-office functions in each of these departments:

ACCOUNTING	FINANCE	HUMAN RESOURCES
·          Monthly close	·          Cash Management	·          Employee files
·          Payables / Receivables	·          Treasury /Banking	·          Employee handbook
·          Forecasting / budgeting	·          Audit	·          Benefits Admin.
·          Credit / collections	·          409A valuation	·          401K plans
·          Policies / procedures	·          Compliance	·          Document filing
·          Monthly close	·          Equity accounting	·          Insurance
·          Payroll administration	·          Reporting	·          Stock plan admin.
·          Board presentations

The faster your business grows, the faster your back-office team will need to expand to keep up with that growth.

KEY FACTORS TO CONSIDER FOR YOUR BACK-OFFICE

Scalability/Focus.  A back-office solution, whether for a 10 employee company or a 100 employee company, must be scalable enough to keep pace with the forecasted growth of the company.  Too often, startups try to hire full-time staff in these departments, who just can't keep up with the growing amount of work seen in a high-growth startup environment.  By outsourcing some of these more "mundane" business functions, you will get a solution that can easily "resize" itself for your then-current needs (without having to continually be playing "catch up" by continually hiring additional in-house staff).  While at the same time, outsourcing will allow your CFO to better focus on more important issues, like raising your next round of venture capital or other strategic initiatives. 

Experience.  At this stage in your development, you need an experienced finance, accounting and HR team that is not trying to "reinvent the wheel" in what is often a chaotic startup environment.  An outsourced solution immediately brings you a high quality, reliable and dedicated team of professionals, already using best practices in the industry, a proven enterprise technology platform, tight data security standards and expertise in producing measurable results.

Flexibility/Real-Time Accessibility.  A back-office solution needs to be flexible for the startup executive team that is often "on-the-go". This could include a cloud-based solution that provides numerous advantages, such as the ability to approve and make payments, and immediate access to financial reports and corporate documents from any device, from any location and at any time.  All from a single-source, secure location for accessibility, convenience and flexibility in a paperless environment.  

Cost Effectiveness.  Back-office solutions need to be cost effective to work for the small budgets of a startup.  Outsourced solutions are typically the most cost-effective way to go, as you only pay for what you use, both in time and level of desired skill set, allowing you to conserve capital for re-investment into the core business.  Most outsourced pricing models are a subscription service for the platform (including a cloud-based accounting software, expense program, document storage, electronic signature and other functionality) and then a time-and-materials cost based on the hourly rate required for the specific service required.  Typically, there are up to 30-40% cost savings when outsourcing the back-office functions, as opposed to hiring full-time employees in these areas. 

WHEN TO OUTSOURCE VS. INSOURCE?

An outsourced solution usually commences when a startup is around 5-10 employees in size.   When the company reaches 100 employees, or there is a significant transaction pending, like an acquisition or IPO, these functions are usually internalized and transitioned over a period that makes sense for the business.  The good news is, there are plenty of reputable services for you to consider when outsourcing your solution.


If you have any other questions here, or are interested in learning more, Matt has made himself available to the Red Rocket readers.  Feel free to reach out to him at mnorman@accretivesolutions.com or 312-994-4629.

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #194: Operations & Sales Must Be Tied at the Hip (Break Down Silos Part 1)

A common mistake I see with clients is with their organizational structure, often running their businesses with separated departmental silos.  As an example, which I will focus on this post, they think it is the sales department's job to sell accounts, and the operations department's job to service accounts, with a clear hand-off once the sale is closed, and very little collaboration between the two.  That is a big mistake which I will address below.

HOW SALES FEEDS OPERATIONS

A.  Obviously, without sales, there are no operations!

B.  What is less obvious is sales can actually help operations resolve issues.  Your salesperson typically has a very tight relationship with the client, and can help operations in delivering bad news or guiding a client in operations' desired direction.

C.  Sales typically has their finger on the pulse on what is going right, and more importantly, what is going wrong with a client execution, from the client's perspective.  Operations needs to leverage those learnings to nip potential issues in the bud.

HOW OPERATIONS FEEDS SALES

A.  The operating team typically has a "closer ear to the ground", at what is going on internally at a company.  They pick up on interesting client learnings, that can lead into new "land and expand" opportunities for the sales team.  Things like learning about new budgets, new related projects, new needs of clients, etc.  That information needs to be shared with the sales team.

B.  Operations' expertise often helps the sales team to close sales.  So, bringing those real life past-client learnings and experiences of the operations team, into a sales call with clients, is often just the thing a prospective client is looking for, to prove your company has the credible team and experience for what they need.

WHAT NOT TO DO

A.  Operations should never try to make financial decisions or implement renewals, change orders or upsells in a vacuum.  Make sure the sales team is always kept abreast of the client needs, so they can help you best price it and get the most of the opportunity.  From this perspective, salespeople are trained to sell, and operating people are trained to fulfill, so don't step on each other's toes.

B.  Operations should never give valuable services away for free.  Clients are notorious for trying to ask for "more and more" out of a current agreed upon contract, so they don't have to pay for more.  But, your sales team should be the "gatekeeper" to make sure any services that are being asked for by the client, beyond the original contract, is being properly paid for.

C.  Departments should never point fingers at each other, when things go wrong.  Whether a sales person screws up adding the right details in a contract, or the operations teams screws up a deliverable, always remember:  you are both on the same team, trying to resolve the situation together.

DOUBLE ACCOUNT COVERAGE

So, given all of the above, it is hopefully clear you need double account coverage on all clients, one person from sales and one person from operations, that are tied to the hip, and in constant discussions with each other, sharing learnings both ways.  The additional benefit of this structure is the company is protected with at least one client relationship manager in place, in the event either of the client team members leaves the employment of the company.

So, take out a sledgehammer, break down internal walls, and make sure your departments are collaborating with each other for optimal success.

Be sure to read the companion piece Lesson #197: R&D and Sales Must Be Tied at the Hip (Break Down Silos Part 2).

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #183: The Top 12 Reasons to Protect Your Trademarks

A trademark is that word, phrase, symbol, logo or design that sets your goods or services apart and distinguishes you from all the rest.  The “loud and proud” protection of goodwill being built in a mark serves many valuable purposes.  To help me detail these reasons, I reached out to Tim Engling, an intellectual property attorney at the lawfirm  Michael Best.

Below, Tim helps us to detail the Top 12 Reasons to Protect Your Trademarks:

1. A registration is an asset that delineates rights in a trademark by recording and securing exclusive rights to the registrant.  A federal registration can be licensed or sold as property, and assignments, liens, and security interests can be federally recorded.

2. The registration process reduces risk for use-based or intent-to-use applications in two stages: first with USPTO examination at about three months after filing and second after allowance with publication for public opposition.  There is less risk in using a registered mark than one with untested and limited common law rights.

3. Only federal registration permits use of the circled “R” symbol, ®, adding a professional appearance and showing that a mark is important enough to protect, enhancing your brand.  Without federal registration, only “TM” may be used, which is merely an assertion that the user believes it has trademark rights.

4. Constructive notice, whereby the public is deemed notified and aware that the trademark is in use, begins the date the mark is federally registered.  Constructive notice may hinder parties from challenging your registered mark by limiting excuses.

5. With actual knowledge, competitors may avoid adopting conflicting marks. When adopting their own marks, competitors should search federal records to avoid selecting confusingly similar marks or would adopt new marks at their peril with inferior rights.

6. A registration will block registration of confusingly similar marks.  The Trademark Office should reject confusingly similar marks from later registration, protecting your image.

7. Federal law allows for incontestability – the highest status of trademark protection.  After five years of registration with proper conditions, no one can assert prior use, nor can the registration be challenged on numerous other grounds.

8. Registration permits jurisdiction in U.S. federal court, where a judge may grant injunctions, award damages for infringement and – in some cases – recovery of legal fees and defendant’s profits.

9. A federal registration is presumed valid in legal proceedings with other evidentiary benefits.  It provides evidence of ownership and the owner’s exclusive right to use the mark on registered goods and services. It helps prevail in trademark disputes.

10. Beyond federal court, a registration recorded with U.S. Customs may protect you by preventing the importation of infringing or counterfeit goods.  Customs can seize counterfeit goods, impose fines and detain imported goods that infringe.

11. A federal trademark registration can also serve as a basis for obtaining priority and registrations in foreign countries.

12. Lastly, the cost is reasonable for these benefits.  Typically, the cost for preparing and filing a federal trademark application in one class is about $1,200, and trouble-free prosecution through registration is about half that amount.

Federal trademark registration is a value-added proposition for companies, and an area where investors evaluate risk, value, and prudent company procedures.  So, it is both a benefit for the company, and protection for its investors. 

For more information on how to select, protect, register or enforce your trademarks, feel free to reach out to Tim at  tjengling@michaelbest.com or 312-596-5839.

For future posts, please follow me on Twitter at: @georgedeeb.

Customer Service Case Study: Had Your Identity Stolen? Hope Thief Didn't Buy Verizon!!

We had an identity theft issue in our family back in September 2013.  We were obviously upset by the situation.  But, how we learned about it, and how it was resolved, was worthy of a blog post on how important customer service is in setting your brand image, especially around resolving problematic situations.  This is a story of how three different wireless phone services (T-Mobile, AT&T and Verizon) handled this situation, when they learned about a fraudulent account being set up on their service.

T-MOBILE (Customer Service Score:  A+)

We had no idea there had been an identity theft issue until we got a random phone call from a representative at T-Mobile, asking if we had recently set up new service with them.  The call came in one day after the account was set up.  We said, no, we had not set up new service.  They said that was what they thought, and immediately closed the new account at no financial cost to us.  They also said they beleived we were a victim of identity theft and to pull a credit report and check our credit cards to see if any other erroneously activity had been identified.

Thank goodness T-Mobile called!!  Had they not called the next day, we would have never known there was a problem, and the fraudulent billings could have been going on for a month, until we got our monthly credit card statement.  Kudos to T-Mobile for setting up internal controls and procedures to know that something was wrong.  I am guessing the fact someone walked into an Akron, OH store to set up a new account with a Chicago, IL address was be the trigger?

AT&T (Customer Service Score:  B)

Once we pulled our credit reports, we learned that new accounts were set up on AT&T and Verizon, as well as T-Mobile.  We immediately called AT&T to let them know.  Once they learned it was a fraudelent account, they immediately closed it with no hassle and no financial cost to us.

You would think that was great service, unless I told you we were long time customers of AT&T.  If anyone should have called us to warn us about potential fraud, it should have been AT&T, not T-Mobile.  There should have been triggers in their system that told them new lines were being set up out-of-state at the exact same address of existing account holders.  So, I am grateful they resolved it quickly, but wished they had learned about it on their own.

VERIZON (Customer Service Score:  F)

And, now for Verizon--the Darth Vader of fraud resolution!!  When we called Verizon to let them know about the situation, instead of getting the nice, pleasant representatives that immediately resolved our problem, no questions asked.  We got a more combative position that almost made us feel like we were being treated like the criminal.  They would not close our account or stop billing, until we filed a police report and shared it with them within one week.  So, we already felt bad from the identify theft to start with, to now have to be kicked in the head by Verizon.

So, we follow their instruction, go thru the cumbersome process of dealing with the local police department, to learn their process takes weeks, not days to get police reports, which I am sure Verizon knows (so why create the sense of urgency).  But, the police detective says he'll call Verizon and let them know about the fraud to resolve issue, which he does.  Verizon doesn't close the account until over two weeks after we first called them, but the fraud department forgets to make the required updates in their billing system.

The Verizon bills kept coming in each of October, November and December.  We keep calling them in each month, wasting our time on hold for 30 minutes each time, saying you agreed that is fraudelent issue has been resolved and that billing would stop.  Each time, their agents agreed and said don't expect to see any more bills.  And, then in January, we get a letter from their collection agency, now starting to impact our credit with their mistakes.  After today's call, I am hoping we are finally done with this mess:  after four months of being jerked around, wasting time, and being reminded of this bad identify theft situation.  Only time will tell.

IN CLOSING

Take learnings from this case study for each of your businesses.  What processes and procedures do you have in place for consumer dispute resolution?  How customer friendly are they?  How do they compare to your competitors?  What controls do you have in place to identify potential consumer problems as they happen, to nip them in the bud?  Because the last thing you want to be dealing with, is an irate customer blogging about your poor actions on their widely read blog and sharing it with their large base of social followers!!

For future posts, please follow me at:  www.twitter.com/georgedeeb.