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More than 90 percent of firms will make some change to their compensation plans this year, says an article on the website of Sales & Marketing Management magazine citing a study by The Alexander Group. Hitting financial and sales goals is of paramount importance. But once the numbers are met, four subtle elements determine whether a plan is positioned for the best results. First, it must be flexible enough to offer sales reps several choices in how they are compensated; second, it must drive the corporate culture by rewarding both routinely good performance and particularly high-quality performance; third, it should foster enthusiasm for the job in addition to good performance; and fourth, it must be easy to understand and focus on only a few key goals.
Five-page article at
Taking care of customer service reps
Two years ago, fewer than 40 percent of Direct TV's customer service calls were being picked up in the first 30 seconds. Even in an industry known for poor customer service, the average was 80 percent. On top of this, only 80 percent of the company's customers said they were satisfied after their calls. Today, Direct TV has the highest customer satisfaction ratings and new sales growth in the industry. According to an article in the June Business 2.0, the company did this by making the reps love its product, proving management was hearing them, giving them the tools to help customers and the authority to use them, and helping them through tuition assistance.
Finding the right price
Businesses might not want to share any of the airline industry's traits, particularly the complexity of their pricing system. The fact that customers and competitors know instantly every fare available at any time puts the industry under tremendous price pressures. Now firms are turning to new companies that can help them analyze sales and pricing data and pursue "scientific pricing." This approach takes advantage of the fact that even small increases in price can have a dramatic effect on profitability. Scientific pricing posits that companies should change prices in a controlled manner and then watch what happens closely. DHL took this approach two years ago, randomly offering experimental shipping prices to customers, measuring the responses and making adjustments to prices. Prior to the test, the company's quote-to-ship ratio was 17%. After the test, the ratio rose to 25% and profits also increased.
Eight-page article at
Third wave of business process management
Process, organization and technology are the three aspects of business change. Chaos and waste result when the balance among them is altered, as it was in the 1990s by the huge amounts companies spent trying to solve problems through technology alone. Overspending for technology from 1998 to 2000 has been estimated at $65 million in the U.S. alone. But today's more flexible BPM efforts can allow companies to more easily deal with technology and process management concerns, leaving organizational issues as the focus of change efforts. Rather than approaching BPM as a "big bang" event, firms need to manage "process portfolios" on a return-on-equity basis where it can do the most good, researching, implementing and reviewing change on a smaller-scale, incremental basis.
Three-page column at
Asset-based lending an alternative?
In today's economy, companies with mediocre income statements may have difficulties borrowing through traditional financing techniques based on cash flow. One alternative is asset-based lending, which involves loans secured by items of "determinable value," such as equipment or inventory, rather on receivables.