Tag: customer

  • 5 Top Video Marketing Tips You Cannot Afford To Ignore

    5 Top Video Marketing Tips You Cannot Afford To Ignore

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    Are you deploying online video for marketing purposes? If not, then you should know that visual clips trump all other forms of online communication. Let us explore 5 top tips that you need to follow in order to succeed in this ever-growing online marketing segment.

    1 – Visuals and Animated Clips Are Simply More Effective

    If you have heard that the use of video clips for SEO and promotional purposes is the latest trend, than you have heard correctly! Streaming and general animated content is the most effective marketing strategy when it comes to reaching your potential customers and creating an unforgettable impression.

    A question might arise as to how a video marketing strategy can really increase organisational visibility and draw in more customers. If you are already in business, you most likely have the initial tools right at your fingertips.

    2 – Video Is Far More Effective Than Pictures

    We have all heard the expression, “a picture speaks a thousand words”. So why use a photograph when we can now use video? Creating an online video clip for advertising purposes will always be a more dramatic marketing strategy when compared to articles and pictures.

    The likelihood is that your video will leave a memorable image in your potential customer’s mind. At the same time it also sets yourself apart from your competition. Research has shown that short clips that are created for marketing purposes are more likely to be retained in one’s memory. In addition, they are remembered far longer than descriptive writing or audio segments.

    3 – They Convey More Information Than Articles

    As opposed to merely reading about the benefits of your products or services, your visuals will be able to dramatically communicate this information. Customers will also be able to hear the enthusiasm in your commentary. To make this point, you probably have heard the following expression associated with this particular advertisement even though it was ten years ago.

    This refers to the phrase “set it and forget it”. It was used in a marketing clip created a good few years ago, but still relevant in modern-day marketing. The commentator continuously repeated the expression at various points during the presentation. This is an excellent example of how effective video marketing can be.

    4 – Video Engages Your Site Visitors

    As indicated, if you are already in business, no doubt you have an email contact list. Therefore, one of your daily functions revolves around emailing various individuals. With regards to your customers, you are most likely providing them with information pertaining to special deals, new products or services. What this means is that you now have the ability to send video emails as opposed to written ones.

    Traditional platforms such as Outlook Express do not have the ability to fully accommodate online video. However, there are other relatively new business and advertising platforms that can and offers a phenomenal capability to interact with your customers and prospects.

    5 – It Can Directly Increase Your Sales

    Using active online imagery as part of your overall marketing strategy dramatically enhances the possibility of increased sales and your general success. Your product brand and promotional communication is far more likely to remain in your potential customer’s mind’s eye through clips or video streaming.

    In addition, using visual imagery on your website and sending out video emails will prove to be the most direct and cost efficient method to reach your market when compared to other marketing strategies.

    Video marketing as a promotional platform is rapidly gaining momentum in the business arena and you now have the opportunity to implement your very own effective online campaign.

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    Source by Gerard Mohamed

    Views: 0

  • How To Find A Good MLM Opportunity!

    How To Find A Good MLM Opportunity!

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    How to find a good honest MLM Company after investing precious time and money with maxed out credit card debt, multiple failures, and not knowing what to do next is the reality many people experience.

    After working on-line for years, with more failures than successes; I learned how to create a financial freedom lifestyle by research, careful thought, planning and being comfortable with a business

    Jane wanted something to help supplement her retirement income. A friend introduced her to an online marketing opportunity that could accumulate wealth and Jane didn’t need to do anything but set it and forget it. The company did the work and she just received a weekly check.

    She signed up with no money for this business convinced that the first year she could earn ten thousand dollars a month passive income. But then her free sign-up came with an up sell including admin fee, a twenty-nine dollar monthly website fee to use the back office, and the company offered a marketing system for twenty-nine dollars a month.

    Two months later Jane quit, but immediately signed up with another company and continued joining business after business. Nothing worked. Jane learned the hard way after losing thousands of dollars that getting involved an MLM Company needed serious consideration.

    If you’re like Jane and are spending more money than you’re earning; chances are you’ve made a mistake. Are you working in a field that you’re interested in, enjoy and won’t stress you to the breaking point? Are you comfortable using the product and selling it? Are you willing to recruit other people and help train them? If you answered no to any of these questions; it’s time for a new start.

    A few tips to help you get starting in the right direction.

    1. Decide how much time you want or need to work a business.
    2. Look for a company that sells products that you would use.
    3. Read the product labels. If you’re comfortable then buy the product.
    4. Research the company, look at the Better Business Bureau Rating.
    5. Check to see if this company is in good standing with the Direct Selling Association.
    6. Learn about the Founders/Management of the company (and research those people.) Are they trustworthy?

    When you finally chose a company, read carefully the policies/rules/disclaimers and privacy statement.

    MLM marketing is a business that requires planning, setting goals, action, and time. Marketing strategies are critical and can become marketing tragedies; market with caution.

    Remember this; Everyone is not your customer. And everyone is not interested in joining an MLM Opportunity.

    I’ve only touched the surface about how to find business that you could be successful at working and also have fun doing it.

    People buy from people; not companies. Brand yourself not the company. That company may not always work out or stay in business. By branding yourself you can move on and keep your followers.

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    Source by Patricia A Gaines

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  • 6 New Best Practices For Exceptional Customer Service

    6 New Best Practices For Exceptional Customer Service

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    Providing excellent customer service may be one of the most important things you will do in your business. After all, if you do this part poorly, you’ll lose current customers and perhaps future customers too when they find out.

    1. Create Standard Policies and Procedures

    Setting up standards of service that your customers will read before and after buying and that you can use as your basis for how you provide a solution to their problem will help tremendously. Ensure your return policy, terms of service, and expectations are very clear to your customers.

    2. Let The Customer Speak First

    When a customer contacts you due to a problem, let them talk first. You want to listen to what they have to say and let them know you’re listening by making the right sounds, giving the right looks (if in person) and parroting back to them what you think they meant by what they said in your own words. Most customers tell you what they want in the first minute.

    3. Don’t Take It Personally

    If you are the product creator or direct service provider, it can be hard to provide customer service for yourself because it’s so personal. If you can’t separate things and see them as not personal and only business, you may want to outsource to someone who can do a better job at providing customer service to your customers.

    4. Don’t Be Negative

    Even if you have to say no to someone, it’s imperative that you maintain your composure and don’t be negative. Don’t attack. Don’t defend. State policies that you plan to stick to in a matter-of-fact way. Repeat if necessary, always using a calm voice.

    5. Be Easy to Find

    Don’t make it hard for your customers to contact you. The emails you send to your audience should allow for replying and not be a no-reply email address. Big corporations do use these but as a smaller business, you’ll turn away too many people if you do it too.

    6. Get a Mirror

    If you’re talking to people on the phone, get a mirror that you can look at while talking. If you smile and talk to the mirror, you’ll come off as friendlier and more approachable, and this will help keep the person calmer.

    The thing is, while you want to say that the customer is always right, sometimes they’re not. Sometimes customer service feels like harassment. Even so, you need to put it in perspective and try to listen to what they have to say and what their complaint is first. Try to listen through the anger and find the solution. Create policies that make sense but be willing to bend them. If someone is extra angry, you may be better off giving them a refund.

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    Source by Jon Allo

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  • Direct Sales Team Vs Distributor – Which is Better For an International Market?

    Direct Sales Team Vs Distributor – Which is Better For an International Market?

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    If you’re looking to expand your sales to new markets, then there’s one big question you must ask: do I build a direct sales presence or use a distributor? Each method has its benefits and drawbacks, but we’re going to make a strong case to use one method over the other in almost every instance.

    What’s the difference between direct sales and distributors?

    A direct sales presence means that your company establishes, manages, and pays a sales team of one or more people in the target market.

    An outside agent is any entity that will sell your product in exchange for a service fee. One example is a sales rep, who sells your product in exchange for a percent of the sale. A distributor is similar to a rep, except they would buy product from your company and sell it directly to the end customer.

    Is Direct Sales Better?

    For most businesses expanding into new markets, especially international markets, hiring a distributor is a better decision-at least until there is enough return from the market to justify building a direct sales presence.

    Sure, there is one major advantage to having a direct sales presence-control. Control over the day to day activities of your sales personnel is appealing to most business owners. But this control comes at a heavy price. To start, you’ll need to spend the time to hire someone in that market, then train them, then equip them with sales material and management, if not office space and equipment. These costs are prohibitive for most small businesses looking to expand internationally.

    And there are even more costs that we haven’t mentioned yet. Each market has it’s own unique laws, cultures and customs that are essential to master if your company wants to establish a successful sales presence. Japan is a classic example of a marketplace with unique legal structures and business customs that, if not followed, guarantee the failure of any sales efforts. It’s hard to pin down an exact monetary value to this learning, but ask yourself this: Can you afford to establish, manage, and pay a sales force in a foreign country for at least a year while they learn the ropes and generate no revenue?

    What about a Distributor? Is a Distributor better for new markets?

    Distributors are a cost effective means to enter a new marketplace successfully. Here are just a few of the reasons:

    • No Overhead:
      Unlike running your own sales team, a distributor will take care of the hiring, managing, payment, and optimization of its channel. You’re just borrowing their distribution, while they handle the maintenance.
    • Established Channel with Local Knowledge:
      A good distributor will already know all the laws and customs of the market you’re entering. You don’t need to reinvent the wheel-you can use someone who already has valuable local knowledge.
    • Understand Pricing and Purchasing Power of Market:
      Along with knowledge of the laws and customs comes knowledge about the most successful ways to price and market your product locally.
    • Cost Effective:
      Since you won’t be paying for the above items, distributor relationships are much more within reach of a small business trying to enter a new market.

    Using a distributor has some downsides as well, but they can be minimized by building a good relationship with a distributor.

    • Not your own people:
      You won’t be able to directly manage every step of the process. While it may make you nervous to lose some control over the sales process, you can manage the risk by building a transparent relationship with your distributor with constant updates and feedback from both ends.
    • Distributor has many products to represent:
      You may not be the distributor’s top priority at any given time, and you want to be sure your product is not getting shuffled to the back of the line. Once again, a well-established relationship with constant contact will ensure that your product is getting the attention it deserves.
    • Not a “turn key” solution:
      You can’t just give the distributor your products and expect success. You’ll have to manage the relationship. This takes time, but it’s still less costly than trying to install a direct sales team from scratch.

    So what do I do next?

    If you aren’t convinced that a distributor would be better for your organization than establishing a direct sales team, seek help from a consultant who has experience establishing a presence in new markets. A consultant can use his or her experience to analyze your opportunity and recommend the best course of action.

    Before you choose a distributor, you need to know….

    Choosing the wrong distributor will set you up for failure. The wrong distributor simply won’t generate sales, and you’ll have wasted at least a year finding and setting up an unprofitable relationship.

    There are certain things to look for in a distributor, and they are different for every market. The best thing to do is to find a professional, one with experience in distributor relationships, and hire that professional to help you search for and identify the right distributor.

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    Source by J. P. Williams

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  • The Importance of Business Systems

    The Importance of Business Systems

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    “If you can’t describe what you are doing as a process, you don’t know what you’re doing” – W. Edwards Deming (1900-1993)

    What are business systems?

    Business systems are documented procedures setting out how your organisation operates. They are processes, usually combining actions taken by people and some form of automated application, organised in such a way so as to meet a given set of business objectives. Such systems can generally take place without the business founder / owner’s direct action, over and over again, as efficiently as possible.

    Examples of processes may include how your staff should answer the telephone, how they take and pass on messages; the procedure for raising, approving, placing and receiving orders; the process for generating, checking and sending out client invoices, as well as receiving payments and following up on outstanding bills etc.

    Regardless of the size or type of your business, it is likely that you already have set procedures in place covering many functions within your organisation, which employees follow out of habit or as directed by their supervisor / manager.

    Business systems are the manual for your business; the “know-how” of any business that many business founders / owners usually hold in their head, and have not got round to putting onto paper.

    Why implement business systems?

    There are many reasons and just as many benefits for having established and documented systems in your business, some of which include the following:

    1. They provide a framework for your operations and an effective structure to support your business.

    2. They improve consistency: production, delivery, customer service, after-sales care etc.

    3. They improve results and/or productivity, because you and your employees don’t have to re-invent the wheel every time.

    4. They provide a better work environment for your employees, as an effective system will contribute to clarifying roles and responsibilities as well as providing staff with some guidelines to refer to.

    5. They ensure compliance with legislation, safety regulations or any other legal requirement specific to your type of business operations.

    6. They give your business the ability to expand and they facilitate business growth, as they will make your business more attractive to any potential investor or buyer.

    What system works best?

    Although there are similarities across many functions, such as Accounts, Human Resources, Sales, Stores, Logistics etc., unfortunately there is no one perfect, one size fits all system that works for all companies. Any system will need to integrate the company’s business objectives, its people and the way it provides its products or services.

    It is important to have a well-designed system, customised to your type of operation, and thought out by people at all levels within the organisation.

    Such a system will be more likely to be followed by all employees, because they have been involved in its design, and they understand the value that having a system in place brings to the quality of their work and the service they provide to customers.

    One point to keep in mind is that having great people working with poorly designed systems – or no systems – is likely to lead to an under-performing business. On the other hand, great systems without good people won’t work either, hence the additional benefit of involving employees in designing a system, or simply in documenting the processes they are following.

    Equally so, employees who have been trained in your business systems should also feel empowered enough so that they don’t feel they just have to follow a given script without using their head.

    For this reason, it is important to encourage feedback not just from your customers, but also from your employees and to use such comments to review and to continuously improve and develop your business systems.

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    Source by Cecile Scaros

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  • The 2 Fatal Mistakes Online Business Owners Make With Customer Service

    The 2 Fatal Mistakes Online Business Owners Make With Customer Service

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    Customer service can make or break your business, and that couldn’t be more true when it comes to an eCommerce business in particular. When someone comes to your website to make a purchase, you have to realize that they are choosing you over thousands of other stores on the web.

    What are you going to do to not only close the deal, but make sure they are satisfied after the delivery?

    Having excellent customer service will be key, but you have to avoid these two common mistakes to make sure you can keep your new customer coming back time and time again.

    1. Not Being Accessible

    People have issues trusting stores on the internet these days. With so many scams out there, you have to show that your company is a trustworthy source for whatever it is you happen to be selling. One of the ways you can do that is by making your customer service department very accessible.

    This doesn’t just mean listing a phone number in the header, which instantly adds credibility, it also means having other options that you can be reached through, like live chat, email, and even social media. By making yourself accessible, you give people reassurance that you’ll be there should any problems arise with their order.

    And, in today’s world where a lot of people don’t have the time to speak on the phone, live chat is definitely the way to go in most situations. Have a chat box automatically pop up on the website so people can get in touch with you without searching for a hidden “Contact Us” link.

    2. Not Following Up

    The second biggest mistake an online business can make when it comes to customer service is not following up with buyers after they have made a purchase. You should invest in an email list and autoresponder to make sure that every customer is emailed a “thank you” for their purchase email, a delivery confirmation, and then a follow-up email a few days later to see if they like what they are getting.

    This follow-up email is also the ideal time to ask for a review, which can help boost your reputation even more. If they happen to be unsatisfied with the product, you greatly reduce the risk of chargebacks or returns just by offering to make it right for them up-front. Instead, you might be able to settle with store credit or an exchange.

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    Source by Jon Allo

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  • How to Think Like a Marketer

    How to Think Like a Marketer

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    Many people say they hate marketing. That’s usually because they think marketing is all about advertising and sales.

    Marketing is a process, not an event. It involves research, promotion, and distribution along with advertising and sales.

    Maybe the most important and most overlooked aspect of marketing is having the right marketing attitude or marketing mindset. Think like a marketer.

    When you have a marketing mindset, you ask how you can build brand awareness to help your target audience become familiar with your products and services, and you as well. Developing that know, like, and trust factor with your audience is key.

    As you develop a marketing mindset, ideas of how to meet marketing goals on a daily basis will come easily, but here are a few ways to get started:

    • Know Your Product & Service Inside Out: This may sound obvious but think about how many times we, as customers, have walked away from buying something because the person helping us couldn’t answer a few basic questions about their product or service.
    • Find Ways to Leverage Mistakes of Competitors: It’s easy to see what the competition is doing well but just as much (and sometimes even more) can be learned by observing what your competition is doing not so well. The Internet is saturated with career service companies, but what makes your career service better than your competitors? Do your homework. Where are they weak? What client needs are not being met and what can you do to step in and meet those needs?
    • Point Clients In Your Direction: Solve client problems. Point them to one of your services or products and emphasize the benefits, value, and results they can gain from it-being a solution to their problem.
    • The “Bottom Line” Isn’t Just About Money Coming In: Looking for ways to save is just as important as finding new revenue streams. Instead of just recording where the money is going, watch for places to save. When looking at those numbers is there a way that sales can be made more efficiently?
    • Every Client Interaction Is a Networking Opportunity: The word “networking” makes some people uncomfortable. But it doesn’t have to be about schmoozing or closing a sale. It’s simply having a conversation in an effort to build new relationships or strengthen current ones.

    “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.”-Peter F. Drucker

    In business, everything ties into marketing in one way or form-what you wear, how you communicate (verbally and non-verbally), and what you do to attract, retain, and maintain client relationships. All of it affects or contributes to the profitability and success of your business.

    Thinking like a marketer is a way of ensuring your company’s longevity.

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    Source by Maria Hebda

    Views: 0

  • Creating Your Affiliate Strategy To Produce Year-Round Results

    Creating Your Affiliate Strategy To Produce Year-Round Results

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    People generate millions from affiliate marketing and you can too if you decide to create a real business strategy to produce year-round results.

    Niche Down More

    Don’t try to spread yourself too thin regarding the products you’ll promote. Choose a handful of products to promote, throw in some surprises throughout the year, and you’ll do a lot better with your marketing. Choose the best products for your audience that solve problems for them and that you’ll work hard on promoting all year long.

    Create Unparalleled Content

    When you write content, take the extra time to ensure that it’s right. Choose the right images. Choose the right problems and solutions to focus on for your audience and speak directly to your audience of one. Instead of writing about the product directly, you can also write about how to buy the best whatever it is that you’re selling.

    Add Value to Your Ideal Customer’s Life

    Just because you’re selling someone else’s product doesn’t mean that you can’t and should not develop your own brand. Your brand is how your audience feels about you. What feelings do you bring to your audience when they think of you? Find ways to add value to everything you promote to them so that they want to come to you first.

    Choose Memberships to Promote

    Promoting affiliate products that have recurring income is a good way to ensure income all year long too. Memberships, subscriptions and the like are wonderful ways to build your residual income. Some companies don’t pay on repeat orders, so check with the products you want to promote. If they aren’t offering it, ask for it. Once you’re a known super affiliate, they’ll come around.

    Determine Your Multiple Traffic Sources

    In advance of marketing, you need to know all your traffic sources so that you can push traffic to your products. You may want to use social media, paid ads, and more to promote the affiliate products and build traffic to your page in which everything should first be promoted. So, don’t just share a link to the product. Share a link to your review instead.

    Pay Attention to Technology

    It’s imperative to pay attention to technology because there are always “killer technologies” that can come in and change everything. Imagine if you had built your entire business based on one platform and boom, it’s gone. It happens. Do not take for granted that any program you use right now will always be here. Be prepared with something like it to move to as soon as you realize you need to. If you are paying attention, you’ll know.

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    Source by Jon Allo

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  • Emotional Labour – Organisational Behaviour

    Emotional Labour – Organisational Behaviour

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    Abstract:

    Putting on a good show, keeping face, professionalism in customer treatment can all be examples of emotional labour. When in the workplace dealing with others whether they be colleagues or customers we tend to give a positive emotional response despite the negativity of the other person (customer complaint) or our own current mood state (sadness, irritability) known as emotional dissonance. In this paper we will explore the phenomenon of emotional labour and its effect on workers productivity and social relations. The general outcome being that the strain of that dissonance creates mental health problems in the workplace.

    Introduction:

    Emotional labour can be seen as the affect of the current mood of a worker whilst engaging in interactions with others – putting on a good face for example despite feeling emotionally uncomfortable. (1. Robins/Judge 2013) These emotions can be driven by organisational expectations of an employees behaviour towards customers, clients and co-workers in support of the business goals to profit. For example in the service industry, customer complaints should be handled with a polite professional smiling attitude so that the customer perceives that their complaints are receiving serious attention. Despite the fact the service provider (customer relations officer) maybe be in a personal bad mood, have life problems or employment concerns – all this is swept aside to provide the company’s public positive image to the customer. For the employee engaged in such activities the strain of appearing positive and enthusiastic may cause both physical and emotional strain often leading to further deterioration in mood after work and in between assignments. You could argue that a good deal of the time we are in fact faking our emotions (feelings) in front of and towards others to support social conventions for example being polite. If a customer’s complaint is unreasonable, they are showing anger, accusing the company or misleading them and selling shoddy products – the company service support worker must maintain control over their own emotions despite feeling that the customer is wrong and the complaint is unwarranted or even ridiculous they still have to maintain the company driven reaction to the customer with calm professionalism. (2. Myler – Case Studies 2018) Some companies make being happy at work almost mandatory – where staff entertain, create an atmosphere or encourage excitement over the product and its associated feelings of happiness. For example, theme park staff forced to smile all day – try it yourself – it is very stressful to keep a happy demeanor in the face of disgruntled visitors waiting hours in a queue for a five minute ride or the phone shop worker being asked to entertain the queue of waiting customers with hi-fives and silly games. (3. Grandey et.al. 2010) Many customers in fact reporting discomfort at being targeted for unwanted attention and interaction). Therefore there is a difference between felt emotions (what I am actually thinking and feeling) than with displayed emotions (what is expected of me). After an interaction the employee can feel both exhausted by the forced situation and emotionally angry at faking their feelings for the benefit of others. Many people who suffer from depression report that faking happiness is the biggest strain of the day.

    Culture and Emotional Labour

    Culture may impact on how someone sees emotional labour as the expectations of others in the light of social comparison. (4. Matsumoto etal. 2009) For example many American service jobs, such as retail staff, service providers and customer interaction workers all feel that a positive upbeat smiling enthusiastic person is a definite requirement for the companies image management. The monocor – have a nice day – often rings false in the ears of those who understand this is not a genuine sentiment but a practiced social grace. In other cultures such as Japan or Asia in general – forced politeness or deference to not displaying emotions may in fact cause particular strain on everyday life where displaced emotion can be seen in acts of violence and sexual deviance. The French tend to not display openness in dealing with customers but in fact a non-smiling or even impolite attitudes towards their clients. This can cause companies dealing in global markets problems with staff in having to adapt and understand policy in line with the cultural underlying expectations of behaviour.

    Mental Health

    Many psychologists, counsellors and others such as nurses encounter patients (clients) who maybe presenting mental health problems such as anxiety (worry about future events) or depression (living with the past) that report difficulties in the work place in faking their emotions towards both colleagues and customers – that they feel the strain of the day at home later through irritability, sexual indifference a lack of appetite and sleep. Keeping up appearances at work therefore effects the very quality of our lives both in and out of the work place. (5. Myler Case Studies 2018) Dealing with difficult people whether customers or colleagues leaves us feeling exhausted physically and mentally. In therapy the psychologist maybe searching for psycho-dynamic reasons for the negative feelings from past patterns of behaviour and often miss the power of the here and now effect of faking your feelings at work simply due to enforced company policies that require us to present an image of well- being and happiness that actually is not there. Treatment therefore should focus on workplace stress rather than personal history.

    Role Play & Emotional Labour:

    Of course we are schooled from an early age in how to act given certain social situations, for example being happy at a birthday party ( don’t spoil it for everyone) to look sad at the funeral (even when we did not even like the deceased). We have learned behavior for situational displays of affect. Have you ever been told off – criticised – looked at the person with a smile on your face – and they say, “what are you smiling at?” they think you are not taking them seriously enough, acknowledging their concerns – the truth maybe that we think their remarks are unwarranted and silly – however our learned correct response is to – look serious and be intently listening – while all the time inside feeling what an idiot this person is! In other words we are often asked to fake it – for the sake of the other persons feelings – this is often seen as high empathy when in fact it is more often just a learned reaction to a situational event. Emotional intelligence is seen a as a panacea for management effectiveness but maybe little more than learned responses to situations, rather than a genuine cognitive response to some event. In other words emotional intelligence maybe more pop psychology than a fact. Measurement for emotional understanding may reflect no more about the learned response to given situations we have come to understand through cultural, generational and traditional customs of our community or group behaviour. Psychometric tests for emotional intelligence may in fact be invalid and not robust enough to provide any useful measure of a persons feelings towards others but in fact reflect that learned behaviour – what should be the response not what I actually feel inside.

    Attributions Theory – Misunderstanding Others:

    Attribution theory ( 6. Heider – 1958) suggests that we attend to what we see more than what we know. In other words – we do in fact judge a book by its cover. So if we are busy faking our emotions so must everyone else? So how do we know that the mood being displayed to us is genuine or faked. We pride ourselves on being able to know others feeling by their facial expressions, there seemingly genuineness and authentic sounding responses. In fact much of the time we maybe reacting to the faked emotion rather than the real one. We are often surprised to hear someone committed suicide – we may say – they always seemed so positive and happy looking – but that is exactly what a mis-attribution is – the lack of skills to identify a real emotion from a faked one – we are actually quite good at emotional labour at work and so do we really know what anyone is actually feeling, as opposed to what they are displaying to us. So the helpful shop assistant may in fact be bored rigid at having to seem enthusiastic about a product she has already spoken about ten times that day already.

    In Summery:

    Emotional labour is a situation where the employee expresses the companies desired response to a given situation. Emotional dissonance are our feeling of confusion between our internal feelings and the face we put upon the situation given company policy towards others. Felt emotions therefore being what we actually feel as opposed to displayed emotion being the faked response to another person. Finally emotional intelligence being no more than learned responses to events as we behave given the situation we find ourselves in. The consequences of faked emotions can be strain leading to emotional exhaustion that has both physical and emotional outcomes for mental health and general well-being. Judging others may in fact lead to mis-attributions where we think the faked emotion is in fact the real feelings of the other party.

    To be honest, open and authentic would be real intimacy in our relationships but carries the high risk of rejection and misunderstandings.

    References:

    1. Robins S.P. Judge T.A. 2013 – Organizational Behavior 15Ed Pearson Publishing

    2. Myler S.F. 2018 – Myler Case Studies 2018/19 Unpublished

    3. Grandey A. et.al. 2010 – Work in the Global Services Economy – Journal of Service Management.

    4. Matsumoto D. 2009 – Culture & Emotional Expression – New York, Taylor & Francis publishing.

    5. Myler S. F. 2019 – Myler Case Studies 2019 Unpublished

    6. Heider F 1958 – Attribution Theory – Oxford Dictionary of Psychology 2001

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    Source by Stephen F. Myler

    Views: 0

  • Why Customer Concentration Impacts a Business Sale Transaction

    Why Customer Concentration Impacts a Business Sale Transaction

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    Few owners recognize the major impact that customer concentration has on the sale of their business. Customer concentration represents a significant obstacle and will affect the salability, valuation, and deal structure of a business-for-sale transaction. Not only will it create problems in qualifying buyers but it will impact the ability for any prospective purchaser to obtain third party financing to complete the acquisition. Determining if customer concentration is present in an enterprise is a critical element of the succession planning process.

    Customer concentration is a situation when one customer represents a significant portion of revenues or when the business has a very small customer base. Based upon the expert one consults, the exact percentage for a concentration to exist varies. In most cases it is recognized when one customer represents more than 10% of sales or when the top five customers comprise greater than 25% of a company’s revenue. In either situation, a huge risk is created from the lack of diversification and steps to mitigate it should be taken years in advance of a planned business exit.

    When evaluating a business sale it is important for an owner to recognize that their client base has a significant impact on the enterprise value of the company. A broad and diverse base of customers where there are a large number of clients contributing to the business’ revenue will achieve a higher transaction value as it reduces the risk that a sizable decrease in earnings will occur if any one customer is lost or a particular industry segment that the business serves encounters economic distress.

    In addition to a lower sales price, businesses with customer concentration issues are more difficult to market for sale. For main street business transactions (those with adjusted earnings of less than $2mm) third party financing is used in the majority of cases. Businesses with high levels of customer concentration are very difficult to get financed. Lenders may provide only partial financing, offer sub-optimal terms, or decline the loan altogether. In situations where third party financing is not available, the pool of available buyers is significantly restricted and the terms of a deal could be heavily weighted on a contingent earn-out based on retaining the revenues derived by the largest customers. “Typically we want no customer concentration over a 10% level when considering financing an acquisition. Higher levels are possible with much more explanation and supporting documentation but remain a major concern” states Steve Mariani, President of Diamond Financial Services.

    Lastly, customer concentration will have a direct impact on the deal structure for the business sale transaction. Buyers will strive to bridge the customer concentration risk through a variety of delayed ‘performance based’ financing methods. For example: Assume both parties agree on a transaction price of $900,000 based upon $300,000 of adjusted earnings (a 3x multiple). If the key account in question represents $75,000 of the $300,000 this would represent $225,000 of the transaction price. A buyer will strive to isolate the $225,000 component to ensure that revenue is maintained post sale. After a period of 12 months, if the customer and income are still in place the seller would receive the funds. If the identified client and corresponding revenue was lost during this period, a pricing adjustment would be made.

    In situations where the buyer is unable to obtain transaction financing due to customer concentration issues, the seller might have to accept a “contingent earn-out” for the revenues derived from the largest customers, or worse, they may also have to finance a major portion of the “non-contingent purchase price” negotiated with buyers.

    Contingent payouts could be structured in a variety of methods:

    Earn-Out:

    Earmark part of the purchase price with payments made over a period of time contingent upon the retention of specific customers or achieving specific revenue targets.

    Escrow:

    A percentage of the acquisition price will be held in an escrow account for a specified time.

    Seller-Financing:

    The seller would be responsible for financing a major portion of the purchase price through a seller note. The seller note could be structured with contingencies for revenues derived from the largest customers.

    With any of these deal structuring techniques, the seller cannot be expected to guarantee the revenue in perpetuity and if the transaction price is based upon retaining one or more key customers, the seller may require more active involvement in maintaining the client relationship during the term of the agreement. Obviously, this brings an additional complexity to the transaction.

    In most cases, buyers will look to discount the amount they are willing to pay for a business (with high customer concentration) unless they receive assurances that the risk is low. While the obvious strategy to reduce customer concentration risk is to diversify and increase the business customer base, there are a number of situations where customer concentration either does not pose a significant risk or could be mitigated.

    Customer Contracts:

    Having a contract in place will not eliminate all of the risk of losing a key customer, but it will provide the buyer with security that the revenue and profits will continue after a change in ownership takes place. When customer contracts are involved, the ability to assign or transfer will be important to understand. In many cases, a stock sale vs. asset sale is elected to preserve these contracts.

    Barriers to Entry or Exit:

    Businesses could have intellectual property, product expertise, or patents that create competitive advantages barring competition. Others are located in geographically remote areas where the supply benefits discourage customers from changing the relationship. Lastly, there could be significant capital requirements for manufacturing and tooling or agency approvals (pharmaceutical or government contracting industry) that creates a barrier to entry from potential competitors.

    Providing a Variety of Products and/or Services:

    Having a broad relationship with a key customer where the relationship is not based solely on one product, one location, and one individual decreases the risk that a singular change will fundamentally impact the future revenue stream and continuity of the account.

    Economies of Scale or Synergies:

    The acquisition may be pursued by a strategic buyer where they are bringing new products/services to the enterprise, a broader geographic distribution footprint, or economies of scale in production. Any of these elements would assist in reducing the concentration of revenue risk that an identified key client would represent to the future organization.

    Summary

    Businesses which have high levels of customer concentration are inherently risky and it is important for the owner to appreciate this concern from the perspective of a potential acquirer. Ultimately, the buyer seeks only to retain the customers which have contributed to the success of the business and are factored in the valuation and transaction price. From the position of a buyer a few logical questions and concerns would be:

    1. How does the value of the company change if a customer representing 10% or more of revenue and/or profits is lost in the first year?
    2. How easy would it be for the client representing the customer concentration concern to leave the business?
    3. What unique situations exist within the business to preserve the customer relationship in the years ahead?
    4. What are the logical steps and corresponding costs to mitigate the customer concentration risk?
    5. How do I achieve a win-win transaction? Protecting me, the buyer, against the risk of a near term revenue loss while providing the seller with the proper remuneration for the fair market value of their business?

    While the risk may not be able to be totally eliminated, there are a number of situations where customer concentration is more palatable and a proper explanation should be provided to the buyer at the earliest opportunity. Getting out in front of this potential challenge is critical to achieve a win-win deal. When good communication exists, and two fair and reasonable parties are at the table, there are a number of structuring options available, when necessary, to mitigate the risk and negotiate a fair and reasonable transaction price. Obviously, the best approach for a prospective business seller would be to develop and implement plans to reduce any customer concentration elements years in advance of a business exit. Eliminating this type of risk is just sound advice for any small business owner regardless of whether a sale is contemplated.

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    Source by Michael Fekkes

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