Jim Harrer's CEO Blogstream

Customer Loyalty Begins With A Smile

It was a cold, dark January morning. The clock on my truck read 5:32am as I pulled out of my garage for a business meeting over to Portland. Two tons of steel was protecting me from the outside elements and I still shivered as the ice mist hit my windshield.

My brain needed a jolt so I headed over to Dutch Brothers Coffee, pulled up to the window, and was greeted with a big smile - “Good morning, what can I make for you this beautiful morning?” I’m charmed by her positive, friendly outlook. The combination of the friendly service and fresh roasted coffee resulted in a great way to start my day.

Can a smile change where you do business? As I drove to Portland I reflected on my own experiences and thought about the businesses I visit often.

Magazines like Entrepreneur, Fast Company and Small Business have been writing articles covering great customer service for years. I love the legendary story of the Nordstrom clerk who accepted a return of automobile tires from a customer, even though Nordstrom doesn’t sell tires. However, most businesses simply can’t relate to that tale, and never focus on what they can do to improve repeat business. Can it be as simple as a smile?

I used to be a fanatic Starbucks fan. There was a time it was the only coffee cup I would hold in my hand, even if the line was out the door. Then one day I was in a hurry and decided to try Dutch Bros. Coffee. When I drove up to the window I was greeted by a cheerful employee, glowing with a smile - “Good morning, how are you today?” She loved her job and it showed through her bright white smile and bubbly approach. We had a nice chat while she fixed my coffee. In short, we connected.

A simple smile can be a powerful ingredient to creating your customer loyalty program. I tested all five Dutch Bros. Coffee locations near my home and each visit started and ended with a smile. Each was engaging, as if it was an old friend making my coffee. While making your drink they make an effort to connect with you on a personal level by asking how your day is going or to comment on the weather. It’s an enjoyable experience that leads to you looking forward to your next visit.

A smile is just good business. Businessweek’s Carmine Gallo writes about Del Taco, “Walk into almost any Del Taco restaurant and you'll find a counter card promoting the chain's new menu items. On the back of the card, visible to employees, is a reminder to smile and make eye contact with customers.”

Del Taco studied their customers and figured out they do respond differently based on how they’re greeted. Taking the time to make eye contact, greet them and thank them for their business builds customer loyalty. Customers will travel out of their way to do business with people they connection with.

Seventh grade student Mackenzie Westphal from a little town in Missouri tagged along on her mom’s weekly trips to Wal-Mart. On each visit she was greeted to the store by seventy-seven year old Clyde Smith, who prefers to be called “Grandpa” or “Smitty” by the kids and teenagers as they walk into the store. Smitty always took the time to ask Mackenzie how school was going and listened as she caught him up on everything going on in her life. Smitty and Mackenzie connected and as a result Mackenzie never missed the opportunity to go to Wal-Mart, just to see Smitty.

One day, Mackenzie decided to build a Facebook Fan page for Smitty so she could meet other people who also adored Smitty. The fan page quickly took off as word spread through the area. 500, 1,000, 2,500 people signed up and shared stories on how Smitty brightened their day with his contagious smile. So many people told Smitty about his Facebook fan page he had to go out and purchase a personal computer so he could read the messages and see the photos they posted. Today, Smitty’s Facebook Fan page has over 14,500 people.

Successful customer loyalty programs are often built on a solid foundation of good citizenship. Smitty is a great example of this. He takes the time to make his community a better place. He participates in the community he serves and he treats other people, including teenagers, with respect and dignity.

The smile and greeting also has another purpose. It makes you feel welcome to be in their store. For example, I like to shop at Home Depot and always take my dog, Morgan, with me.

As my dusty truck approaches Home Depot she starts barking in excitement and can’t wait to get in the store.

As we walk into the store we’re greeted with a smile and “Can I help you find anything today?”, followed by a “Can I give your dog a biscuit?” Almost every Home Depot employee has dog biscuits in their orange aprons. I know this because Morgan seeks out each employee as we walk around the store. It’s amazing to watch her and to see her expression change when she sees an orange apron. Do not ignore the power of positive reinforcement!

Consumers want to connect with business owners and staff. This shouldn’t come as a surprise to anyone, just look at the popularity of social networking sites like Facebook. Marketing staff need to pay attention to this social trend and give their staff the tools and training to create a more “human” business environment.

Businesses are finding unique ways to connect more deeply with their customers. My wife works at a local bank and they’ll bake cookies and other treats for a monthly “customer appreciation day”. They’ll tell their customers about it for the preceding two weeks and remind them to stop by, even if they don’t have any banking business. All the goodies are made by the employees: cookies, brownies, cakes, apple pie, etc. which reinforces their social connection with their customers. For example, an apple pie will have a card next to it saying, “Debbie’s Apple Pie”. Customers know the employees made a true effort to appreciate them.

As each customer walks into the bank they are greeted by name and a smile. These are not just their customers, but also their neighbors and friends. These monthly customer appreciation days have become a community event. Customers connect with each other and with bank employees. For many of these seniors, it’s the one event they never miss. It’s a small local bank with a big heart. Many of their customers stop by the bank a couple times a week just to say “hello” and exchange a smile.

For the bank, this program is not that expensive. They allow the employees to accrue “comp time” equal to the time they spent creating the “goodies” for the event. It makes the bank a fun place to work and it gives customers and employees a chance to connect on a deeper level.

As a business owner you probably spend a lot of time thinking about “Customer Service” and how to make the experience great. I want to challenge you to take it to the next level by focusing on “Customer Loyalty” and how to really connect with your customers. Ask yourself these questions:

• How are your customers greeted? (Smile, eye contact & verbal greeting)
• Does your staff connect with them on a personal level?
• Do your customers get excited by the prospect of visiting your business?

Don’t make it harder than it needs to be. Start with a smile and go from there. It worked for Smitty, Home Depot and Dutch Bros. Coffee. Remember, customer loyalty begins with a smile.

I normally wouldn’t touch a subject like this, because as a rule I think we need less government, not more.

However, the Gulf Oil Spill has become a national crisis with BP completely dropping the ball. Listening to BP’s CEO and marketing machine, it reminds me of speeches from George W. Bush where he would say, over and over again, “we’re working really, really hard…. this is a really hard problem”.  Clearly, BP just wasn’t prepared for this type of accident.  That is their biggest failure, they didn’t spend any of their $7 billion in net cash flow, each 90 days, on making sure they have back-ups, on back-ups.  They should of hired NASA to review their disaster plan.

How is this national disaster different than 911? With 911, Mayor  Rudy Giuliani TOOK charge and coordinated all the efforts on the ground. Was he perfect? No. Did he lead, hell yes. Mayor Giuliani didn’t focus on his speeches, he focused on his action plan, what assets he had on the ground, what he needed and then went to work. There was no question Mayor Giuliani was the leader on the ground. Obama, has once again failed to lead. I, like many of you, give him an “F” in his handling of this national environmental disaster. I keep waiting to see an action plan from the white house and all I see is political finger pointing.  Obama can use his LOUD VOICE all he wants, it isn’t going to help solve the problem.  So I’m going to give him one suggestion, which would really help…

Put Vice President Joe Biden in charge of the recovery.

Even though he lacks any experience or leadership, he does have the ability to cut through the red tape. He should be acting as the full time Spill Recovery Chief.  His office should be moved to ground zero and he should bring the full weight of the white house with him.  What can he do? He can cut through all of the red tape. If you listen to the five state governors, house and senate representatives of the gulf, they all share a common message – they can’t coordinate all of the federal and state agencies to get on the same page. BP comes up with a plan, then must get it approved by the  U.S. Coast Guard,U.S. Environmental Protection Agency, Fish & Wildlife, FEMA and 20 other state and federal agencies. Each has veto authority.  As Alabama’s Governor Bob Riley has said, “We have no idea who is in control…there is absolutely no point where we ever have a resolution to any problem.” It’s truly a mess since any agency can say, “no you can’t do that” forcing them start the entire process over. That is why nothing is getting done. That is why they are not trying solutions like using hay to soak the oil, or testing the 32 centrifuge machines manufactured by Ocean Therapy Solutions (the company Kevin Costner funded). He could clear the way to get more booms, skimmers, create more barriers and try other solutions.

If VP Joe Biden just solved this problem and created a proper chain of command to bring focus and leadership to an action plan, it would be a step in the right direction. Give the Governors the air support they need and get all the agencies working together. Nothing could be more important for VP Joe Biden, or the white house for that matter.

…Jim

It’s 2010, I going to officially announce the time for wireless home networking is now. 

So, to cable companies, stop selling cable modems that don’t combine 802.11n.  Sure, the wireless spec will continue to improve as all technology products do, so quit being scared to help your customers go wireless.  With great devices like the Apple iPAD and the new XBOX 360 slim, the home has gone wireless.  Add the Apple AirPort Express next to your home theater receiver and you can seamlessly play your iTunes music through your home entertainment equipment.  In order for your customers to improve their lives with these products, they need WiFi in their home.  They shouldn’t have to go out and purchase a wireless router to get it – that is so yesterday!

Microsoft’s move to add 802.11n to the new XBOX is exactly the right move. Critics will say it should have been there from the beginning, I say, “better late than never”. As an example, look at DirecTV, they have been working on video on demand (over the internet) and whole house media strategies for the past two years, yet their latest DVR, the HR24-500 lacks 802.11n.  Whoever is running their Product Management should be fired.  All of the DirecTV DVR’s and Receivers should be networked in the home.  You should be able to watch any program, on any TV with a DirecTV receiver. You should be able to watch your programs on your iPad, iTouch or PC.  Frankly, you should be able to also watch it in your hotel room while you travel.  You should be able to do ALL of this without a single wire connecting the DirecTV receivers and you shouldn’t need a SlingBox. Slingbox allows you to watch your TV on PC/Laptop, mobile phone, iTouch and iPad – from anywhere via the web.

DirecTV product development is a mess and from reading the comments on the DirecTV Message Forums it’s clear the HR24-500 is a buggy device that lacks any imagination. Come on DirectTV, join the wireless world, add 802.11n to your DVR and Receiver lineup.

Moving on the Hewlett Packard, I have to hand it to them. Most of their printers now have 802.11n built right in. I recently purchased an HP Photosmart Plus All-in-One Printer with WiFi built right in. It joined my wireless home network in less than 5 minutes out of the box. We can print documents and photos from any computer in the home. With their iPhone/iTouch app I can send photos directly to my printer. What is very, very cool is the fact their software supports wireless scanning, meaning I can scan photos or documents from any wireless PC in the house.  This means I don’t have to do all the scanning in the house anymore, the printer is TRULY a device for all members in the home.  What’s next for HP? Soon these wireless printers will be accessible via the internet.  This means, you’ll be able to send your favorite photo directly to Grandma’s printer, if that printer is connected to her home network and configured for remote printing.  You can read the release here, as there is a lot more to the release, especially as more and more applications move to the cloud.

So, I want Samsung and LG to add 802.11n to their TV’s. I also think Sony and Marantz should be adding 802.11n to their audio receivers – then I should be able to send any auto file directly to these devices using DNLA – The spec for the Digital Living Network Alliance.

What other devices in the home should also have built in WiFi? The list could be endless, how about:

- Washers and Dryers so you could get updates when the cycles are done.

- Honeywell Thermostats so you can control the upstairs from your iTouch.

- Comcast, Charter, Cox Cable – all of your receivers should have WiFi built in.

Those are some of my thoughts, do you agree?  What device do you want WiFi enabled?  Add your feedback below.

…Jim

I’m from the camp: If your company is not growing, it ** by definition ** is dead. You just haven’t been pronounced dead yet!

Change management is a critical skill every CEO must have in there tool kit. Inviting change in an organization you founded is different than walking in the door as a new CEO, with a turnaround plan in your briefcase.  The later was the case at Web Associates and Starbase where I was recruited by the BOD with a mandate to get the companies on a road to profitability, immediately. Failure would mean bankruptcy for the company, loss of jobs for all the employees and a zero return on investment for the people who invested real money to get these companies going.

Now, I want to step back a second and say that the process of change is constantly going on within any good company and the processes I am going to talk about should be a part of any good manager’s regular routine.  During times of major change, such as a major company turnaround, these skills are even more critical.  You can use MBWA as a tool after you have announced a major change to walk around and find out how the employees perceive the announced change.  Are they supportive and excited about it or are they reluctant and feel that it is going to cause them more work and thus fight the change that was just announced.

You must realize that change can and should happen from both the top down and from the bottom up.  Here I will discuss some ideas for soliciting change from the bottoms up.

You’ll never know exactly what is going on in the company if you spend your days in meetings, on the phone or in your office staring at your computer. In addition, change won’t happen simply because you ask for it. If change is not embraced by the employees of the company, it will fail, meaning you will fail. I see it time and time again, a turnaround CEO comes in and 2 years later is shown the door with little evidence he/she was ever there but maybe a new marketing plan. Change was not embraced by those within the comany and the most common reason for failure was that the employees were never engaged in the change process or asked to take part in the company's turnaround.

Here is the strategy I used:

Change Management By Walking Around (MBWA)

I scheduled time in the morning and afternoon where I would get out of my office and go walk around and talk to my employees, mixing up when I would wonder around. I planned my walk around time so I would hit each department before I started over making sure I didn't just hang out in one or two departments. I would introduce myself as if they didn’t know me and I would take some time to find something out about them. Things like how long they had been with the company and why they picked this company to work. I thought of it as fishing. Random questions with no right/wrong answers just to get a feel for what people were thinking and hopefully to allow them a little time to relax and be him or herself. I would always finish the conversation with, “Tell me about what programs or processes are going well and why?” and then “What changes can we make that would improve the way we do things?”  I always asked both questions to better understand what was going well in the organization from their perspective as well as what they felt needed to be fixed.

Now I must admit, I had a lot of people respond with, “Huh?” They thought it was a trick question or couldn’t believe that their CEO was asking them their opinion. 99% of the time they just said, “Nothing.” and I moved on to the next department. I had a lot of people tell me they never met the CEO before. When my allotted time was up for the morning or afternoon I would go back to my office and write down all of my notes from walking around. I would check people off the organization chart and think about any comments made to me. The first couple of weeks people were in shock or scared when I came around because this was a new process and they had a lot of apprehension about what was happening and can they trust me if they were truly honest. I knew trust was a two-way street and that I had to earn their trust as well. I was committed to giving this process some time to work.

I got feedback from my management team that people we’re talking. “I was different.” That is a big first step with introducing change; people need to know “something is different.” As people would tell me about problems they had doing their job, it gave me a chance to work with my management team to engage them to solve these problems.  I got to assess my direct reports, figure out their strengths and weaknesses and also coach them to be better leaders. By teaching them, I was changing them and the organization was changing. 

Asking employees about what is working and what is not is a double edged sword.  If they tell you something that is not working and you do nothing, how likely are they to tell you something the next time you are in the area, not very.  This is why it is important that you follow up with employees on what you heard and what changes you are willing to support or not support and why.  This at least tells the employees that you heard them and are willing to change, or that you heard them but for a specific reason this problem will not be addressed now because…….

People started talking about the changes and now when I walked the halls people would get out of their chairs to say hello to me. Employees stopped hiding the truth and started telling me what was really going on. Now I had the information I need to work on improving processes, communication and identify where more training was needed.

Eat Your Lunch In The Break Room.

All Hands Meetings.

Use of Social Media Technology

Forward: As a Change Management Executive I’m always interested in businesses that break away from traditional business methods. I applaud businesses that don’t get caught up in “it’s always done this way” and “you can’t do this and that”. I find it takes a lot of courage for management to ask “why not” and say “lets give it a try”. Tetherow Golf Club Management Martin Chuck and Teaching Pro Bob Duncan are examples of men who are working to change the way people learn the game of golf while building a business where people choose them over others in a highly competitive business.

This is my third season playing golf. I, like most of my friends in the technology business, didn’t play golf while we were building our high tech businesses. I simply couldn’t fit in the 4-5 hours to play a round of golf, let alone find time to practice to improve our game. Sixty hour work weeks were not uncommon for me and I always set aside Sunday for my family. Golf wasn’t an option. When I moved to Bend, Oregon three years ago, Debbie and I decided to join a  local private golf club as a way to meet new people and find something we could do together.

I  must admit, I was a bit put off by golf at the get go. You have to dress a certain way, they hand you a pocket book on the “rules of golf”, its expensive and it seemed like every round of golf I played with other members, people were telling me what I couldn’t do. I found it to be a very stressful and frustrating game. Here I was new at the game and fellow members were telling me I couldn’t move my ball, I had to keep hitting balls from the T-box until I got one inbounds (even though I just hit 3 balls into the woods and I wanted to go drop a ball somewhere). As a new golfer, I enjoyed the difficult challenge of improving my game, but I didn’t enjoy the game all that much.

The first two years I singed up for every clinic and took private lessons from each of our three pros. It seemed each pro changed something the previous pro taught me which often made my results worse, not better. The joke around the club was, never take a golf lesson before the weekly Men’s game because it will screw you up. In each case, all of my private lessons were taught from the driving range and lasted about 35 minutes. We have a 5 hole, par 3 loop course at our club touted as a “Learning Center” but none of my private lessons were taught there. None of my pros ever asked if I wanted to play a few holes on the course, let alone nine holes. It wasn’t how they taught golf, therefore they don’t offer it as an option.

Then, late last year I was playing (or should I say struggling) in the Wednesday’s Men’s game when a fellow member asked why I was using a nine degree driver from each tee box, since I wasn’t having any success with it. I think he was getting tired helping me look for my ball all the time. I started each and every hole in trouble. He suggested I use my 3 wood instead and leave the driver in my bag in order to reduce some of my risk from the tee box. That little adjustment helped and we didn’t spend the rest of the afternoon searching for balls. He asked if I was taking lessons and from who. I told him I tried to take a private lesson each week from one of our pros and then he suggested it might be time to try a different pro.

Bob Duncan is a Teaching Professional at Tetherow Golf Club in Bend, Oregon.  You may have heard of Tetherow, designed by acclaimed Scotsman David McLay Kidd, who also designed Bandon Dunes on the Oregon Coast. When I called Bob to set-up an appointment he told me to plan on an hour and spent every bit of it writing notes about my swing, game and talking about my short and long term goals. Our first lesson went a little long and for the first time, I felt like I had a Golf Pro who was truly investing in making me a better golfer. He had me hitting the ball better than I’d ever hit it in the previous two years. Bob has an easy teaching style and made small adjustments to my golf swing to accommodate my body type, abilities and hand grip that was comfortable for me. The next week we had another lesson, not rushed which was a refreshing change from previous private lessons I had taken.

When I arrived for my next lesson Bob said, “hit 20 or so balls and warm up”. I did, he responded with “great, how much time do you have today?” I told him I had an hour or so and he responded with “great, jump in this cart”. We drove out to the course and found a gap between groups. We walked over to a green and he had me toss a couple of balls toward the pin from every direction, watching how the ball broke. Then we drove out on the fairway to about 130 yards out and dropped a few balls on the ground. He explained why balls go left, right, up, down, shorter, farther based on the ball’s lie. He then had me hit a few balls and we talked about each shot, collected our balls and headed back to the club house. For me it was a fresh teaching style. It wasn’t just about the golf swing. Bob talked about club selection, lies, the target and if I was going to miss, analyzing the best and worse places for your ball to end up.

I’ve taken 15 or so private lessons from Bob. We often use the driving range to warm up, then we head out on the course and play a hole or two. We pick days and late afternoon’s when he can find an open slot and not disrupt any players. If the course is busy, we practice on their loop course. Bob finds the driving range limiting and would rather be on the cut grass with real target and goals. I couldn’t agree with him more. He has changed my attitude about golf. When I approach each shot I have a better idea of what the ball is going to want to do, based on the lie. When I hit a bad shot I have a better idea of what my correction should be. Bob Duncan’s business card says “Teaching Professional” but for me, he’s my coach.

Most of our lessons finish with playing a hole of golf on the course if we can. He truly enjoys “playing lessons” because it gives him a chance to see how I play and what corrections I need to make. The golf course offers an unlimited amount of variables for him to show me. The Driving Range just can’t compete with that. I have to give the management at Tetherow kudos for supporting Bob’s teach style. Most golf courses are just too uptight to allow their teaching pro's on the course to teach.  As I stated earlier, I think golf as a sport is pretty uptight already, which is why so many people don’t play it. Tetherow’s attitude seems to be: Enjoy our beautiful course, thank you for spending time here, have fun, and come back.

I realize this approach isn’t for everyone. However, golf as a recreational sport is suffering, especially in the younger, working class. In order to reach a wider demographic, private golf clubs need to offer different products. Before loop courses, driving ranges and learning centers, teaching pros would teach on the course. Most of the pros I have met only want to play a round (or even 9 holes) with the good golfers, people with low handicaps. That is ok, as long as private clubs have their own Bob Duncan who has the skills and patience to work with us newbie, high handicap golfers. Bob has actually added himself to my tee time twice which speaks volumes to his interest in helping me become a better golfer.

I know I spend more on lessons then the better golfers, so it makes good business sense to have services for golfers like me. If I give up on the game, then I give up on paying for lessons, buying equipment and paying dues so it’s in the private club’s best interest to recruit new members like me and then have a program to keep me engaged.

Yes my game is getting better, my handicap is improving, I’m in more control of my game. More importantly, I’m spending less time looking for my ball and more time helping others find theirs.

If you’ve given up on golf lessons or find them boring and a waste of time and money as I did, I encourage you to reach out to Bob Duncan. He can be reached at 541.388.2582 or via email at bduncan@tetherow.com wij9mr2hk5

Twitter is everywhere, as I write this blog entry Ashton Kutcher (@aplusk) is approaching 2 million followers. @TheEllenShow has moved into 2nd place with 1.6mil and @cnnbrk is in 3rd with 1.5mil followers. According to TweetRush, about 8-9 million Tweets are sent each day.

When I explain Twitter to my family and friends, the question always leads to: “How does Twitter make money?” Currently Twitter is working on managing the user experience, keeping the site up and running and learning how people and companies are using Twitter as it evolves before they announce their revenue model.  I must admit, each week I see a new revenue model for Twitter, its overwhelming, so I kind of understand their reasons to not jump to soon.

It doesn’t mean I can’t stick my neck out and write what I would do. So here I go.

#1 – Ask your Followers.

Evan Williams @ev is the CEO of Twitter. My advice is, use Twitter to get advice from your followers. Engage your followers to give you a top ten list on what they would be willing to pay for. You might be surprised by some of answers you get. Sure, you’re going to get a ton of messages from people that want it all FREE. You’ll have to weed out all those responses to get to the really good ideas. If you engage your future customers in developing premium features, they will embrace the change as their own.

#2 – Allow people to opt-in, for an ad a day.

Create categories (Technology, Fashion, Travel, etc…) and allow people to opt-in to get an ad delivered to their Twitter account each day. Label the category, Please support Twitter by opting in to get one ad, per category, each day. If you really want to dial it in, allow people to also opt-in and provide their gender and age. Don’t make this information available via your API. With an estimated 32 million users (CNBC), they could easily become the king of permission based direct mail.

#3 – Advanced Search Options.

Currently, Twitter Search returns results for about 3-4 weeks, then the content disappears. I’m not sure if the content is purged by Twitter or simply not returned in the search results any longer. Businesses would like access to this content to find new customers, see what people are saying about their brands and for market research. You could create a premium service for people who want access to this content. Another premium service could be to allow people to search for content based on a specific date/time range. Search for Obama while he was giving a keynote address is an example of returning relevant results based on a specific event.

#4 – Create a Premium Twitter Platform.

As you come up with new features to add to Twitter, consider adding them to a Premium Account type. Some of the ideas that I’ve kicked around are: Auto Introductions, give me a digest of tweets based on keywords or phrases and allow me to check a box on the people I want to introduce myself to. Allow me to introduce myself to hundreds of people a day and keep track of the people I have already introduced myself to and don’t repeat. Hide @replies and other ideas you’ve come up with. My point is, put all of the new features in the Twitter Premium or Pro version. Give people an upgrade path and let them decide if they need the new features.

#5 – License the API.

License the API and the API key. Twitter has a lot of software companies making apps for Twitter and embedding ads in these apps. Twitter should consider making money from these apps. They should be paid by the cell phone companies to have Twitter added to their phones. Its like Bluetooth. It’s a selling feature and Twitter should benefit.

Those are my top five ideas. Let me know what you think via the feedback link.

…Jim

Last Tuesday, May 19th I wrote about a bad experience I had with American Express customer service that resulted in having my card cancelled after 27 years. If you missed it you can read it here.

Last Friday, May 22th, 3 days after my post, I got a call from Ms. McGovern from the Executive Offices of American Express.  She explained to me that members of American Express’s Marketing Department monitor Blogs and other social media products for mentions of the “American Express” brand.  My blog entry caught their eye, so they forwarded my blog posting to the American Express Executive Offices where they review their customer service processes on a case-by-case basis. Ms. McGovern said (I’m going to paraphrase), “After reading your blog entry and looking at the facts, I must agree with your assessment.” She restored my American Express card and removed the negative comments on my credit report.

We had a nice chat, late Friday night, 2 hours after their offices were closed. She was working late and made an effort to call me when she could have just gone home to start enjoying her Memorial day weekend. She was pleasant, professional and candid about the situation. In short, she restored my faith in American Express and more importantly, she demonstrated superb customer service skills by simply being honest with me. It wasn’t their best and they should have been more flexible, in my specific case.

To be fair, we should have never used any American Express card (cancelled or otherwise) to test our merchant gateway. That was our bad and we should also take responsibility for causing this situation in the first place. We’ve learned and changed our testing processes to always make sure we get the test credit card numbers from our merchant partners.

Lets take a closer look at how American Express is working to maintain their brand.

As a turnaround CEO, I can’t miss an opportunity to learn from American Express. Their Marketing Department moved quickly to alert their Executive Offices to pull my account up and look at it more closely. I think we have to give American Express a lot of credit for: #1 Having a department to review complaints about customer service and, #2 Giving the responsibility to the Marketing Department to protect their brand image.

I should point out that my blog is new. The American Express post was my 2nd posting. It has only been visited 88 times. It isn’t as if my post was going to cause a huge backlash to them.

Looking at my web log stats a little closer reveal something even more impressive. My blog was posted on May 19th at 12:22pm Pacific. With the blog post was also a Tweet on my Twitter account a few minutes later. American Express, Phoenix, AZ visited my blog at 2:26pm. 2 hours and 4 minutes after I published my blog entry someone from American Express spent 3 minutes reading my blog post. Over the next 24 hours, American Express visited my blog 4 more times. One hit was from American Express – United Kingdom.

How did they do it? There are several tools that companies can use to monitor their brand. Twitter Search allows you to perform a manual search. Applications like TweakDeck allow you to monitor search phrases is real time. Twitter also allows you to use the TRACK command from your phone if you have it configured.

My blog entry did make it into Google’s index very quickly. I suspect it’s because:

1. I blogged, then posted a comment in Twitter with a link to the blog.
2. Tagged my Facebook wall with my blog post.
3. 6 people ReTweet my message and link

Googlebot moved quickly. Still, my guess is AmEx is monitoring the phrase “American Express” in either Twitter and/or Facebook.

Next, American Express had processes in place to have my blog entry reviewed and empowered employees like Ms. McGovern to overturn a decision. They understand the importance of moving quickly and had a sense of urgency to act. Finally, management isn’t afraid to tackle this challenge. It’s so easy to just say we can’t possibly look at every Tweet with the word “American Express” considering Twitter is averaging 8 – 9 million Tweets a day. They built strong processes to protect their brand and I’m proof they’re executing flawlessly.

This all resulted in American Express being nimble, with the ability to provide exceptional customer service. Anyone who has invested in building a brand should learn from American Express.

Does GM or Ford monitor what people are saying about their brand? Do Senators and Congressmen? Does the IRS, FBI, DEA, SEC? Does your company?

This kind of initiative needs to be championed from the top. CEO, CIO, CCO (Chief Customer Officers) must lead from the front when it comes to communicating the vision. In this case, I tip my hat to Mr. Kenneth Chenault, Chairman and CEO of American Express. I would also like to congratulate Mr. John D. Hayes, Executive Vice President Global Advertising and Brand Management and Chief Marketing Officer for setting the example on how companies should monitor social media outlets to protect their brand.

I’m looking forward to another 27 years with American Express.

…Jim

American Express, once known for offering exceptional customer support, gets a failing grade in handling a simple, human mistake. Here are the details:

I own several small online businesses. Our VeriSign online merchant gateway was purchased by PayPal, so PayPal recently informed us that we needed to switch over using their API on our web sites. Last week our programmers finished rewriting EventMingle to use the new PayPal Gateway API. Credit card companies give us test credit card numbers to use when testing the gateway to make sure it works correctly. They test to make sure it rejects invalid credit cards, expired exp dates, incorrect CCV codes (the 3-4 digit code on the card) and zip code checks.

During our testing, one of our programmers used my expired American Express card to make sure it would be declined. Last October I had switched from an American Express Gold card to an American Express Open card with a cash rebate and no annual fee. I had thought the American Express Gold card was closed when I transferred over to the Amex Business Open card. I have not paid the annual fee on the gold card since 2007 and the last time I used the American Express Gold card was in April 2007.

So, when my programmer used my old, expired American Express Gold card to test our gateway and to ensure it came back with a declined, I was immediately flagged at American Express. I had, in fact, violated a very serious section of my Cardmember Agreement. This action resulted in American Express cancelling my expired American Express Gold Card (that I thought was closed in 2007). In addition, they cancelled my current American Express Business Open Card. In addition, they went on to say:

Our cancellation of your account(s) under these circumstances may result in negative reporting of this account to the consumer reporting agencies.

Now, I’ve had an American Express card since 1982. It was in fact, my first credit card. I was 24 years old. I decided to call American Express to talk to them about this decision. I was sure once I explained how it was a simple human error, they would fix it. It isn’t like the charge went through and the cash was placed it my merchant account. It wasn’t.

(I should point out, they don’t want merchants using their own credit cards on their merchant accounts because its like getting a cash advance. It is called factoring and is frowned on.)

I was on hold with American Express for 47 minutes and went through 4 people before I was finally told to call the American Express Financial Review Team. Today when I called I was forwarded to Vickie P. who, didn’t want to hear about how it happen, or the fact it was a test against an expired card, or it was a human mistake. She told me my card was cancelled and that was it. She was the final decision maker and there was no one I could appeal to. 27 Years as a customer didn’t account for anything. The “Member Since” date has no value. They did not want me as a customer any longer.

I have to admit, I was set back by her tone, by her frankness and by the fact what I had to say was of no value. She talked to me as if I was a criminal. You would think I just held up a bank and was tossed in jail.

So as of today I no longer have an American Express card. My “Member Since 1982” has been officially retired. There is no one at American Express that I can complain to. I have been kicked to the curb.

It was interesting when we were finishing the call I said, “Well I guess 27 years of perfect credit with American Express doesn’t really get you consideration.” she responded with, “I don’t have access to your credit history, so I can’t comment on it.”

So, she is the final decision maker, she isn’t interested in the details and doesn’t have access to my loyal 27 years of being a customer. That is amazing to me. To add insult to it all, they’re going to report that they CANCELLED these credit cards on me to the credit reporting agencies. There goes my 800 FICO score.

I’m no longer a RAVING FAN of American Express. I’ll go back to using my Wells Fargo Business Visa Card for all of my purchases. I think I’m more broken up over it then they’ll be. It isn’t surprising why so many consumers hate their credit card companies. Clearly, with American Express’s poor customer support, it’s clear they have joined the “us versus the customer” mentality.

What can we learn from this? How could American Express handled this differently? I would love to hear your comments.

I think customer service departments must have trained, knowledgeable people who understand what you’re talking about. I don’t think Vickie understood this was a digital test, or cared. She assumed I took my expired Gold Card out of my wallet and walked up to a terminal and swiped it, trying to get cash off the card.  That is why she was so matter of fact.

Next, I think you should always have an appeal process for your customers. Even if it must be a form or email. Telling a customer there is no appeal process is a dead end. Plus, if you don’t have a process to review appeals from loyal customers you have no way of improving your customer service processes.

So American Express gets an “F” in customer service. They will no longer make an average of 3.3% on each of my purchases and I will repeat this story to anyone who will listen. You can help by ReTweeting it to all of your friends.

I must admit, I've avoided starting this blog for years. I'm not sure why, I suspect I just invested my time doing other things, like discovering Bend, Oregon which we moved to in 2006. Or maybe it's been trying to learn the game of golf, a game I had not played a lot prior to moving to Bend.  In any event, here I am.

I've been wanting to get some of my thoughts down about my career and to share some of my stories and thoughts about being a founder of two startups: Mustang Software, Inc and Specialty Match Network, being a CEO and head janitor, and my experiences performing three corporate turnarounds (Web Associates, Starbase Corp and Mustang).

I guess I should start with a little background. I’m a self-taught businessman, basically that means I like many in the 1970s got bored with college and decided to quit after two years. That is pretty amazing in itself because until then, I pretty much finished whatever I started. It’s in my DNA, something I got from by Mom and Dad and being the youngest of 5 kids. My three brothers (Tom, John & Bill) as well as my sis (Catie) are all driven, achievers. We all understand the importance of having a good work ethic, probably from all those Saturday chores my mom had us do. :)

I started Mustang Software in 1986 with $5k to my name. I was 28 years old and wanted to be in the PC business. I decided to buy a couple of books and learn how to program in Turbo Pascal and created the Wildcat! BBS system. It took nine years to grow the business from scratch, no VC money, just persistence. I took the company public in 1995 with a $25 million valuation, reinvented it in 1997 (which I’ll explain later), and sold it to Quintus Corporation in May 2000 for $290 Million. Quintus later became part of Avaya. It was, as they say, a nice ride. I made a lot of great friends and am proud of the fact we built a great company.  Mustang Software, Inc. I can truly say, is how businesses should be done. It was a great team of people: they were the assets of the company. If you were part of the Mustang experience, you know what I’m talking about.

Since 2000 I have assisted in two turnarounds. In 2001 as CEO of Web Associates, an Internet professional services company, I led the reorganization, which resulted in a return to profitability. I was recruited by Michael Klein (who passed away recently in an aircraft accident), the creator of Yahoo! Groups. Michael had invested in WA and it was in trouble. Comerica came calling to collect their line of credit and I walked into a shit storm at every turn. Again, great people, just needed direction and focus. With their help we got the company turned around and profitable. Comerica got their line paid off (including interest). Today, Web Associates (rebranded to Level Studios) is an amazing agency still creating awesome strategy, creative media and technology for HP, Apple and others. Tom Adamski and Alex Mahernia are super talented and even though they were pissed when I decided to leave WA after a year and turn the CEO job over to Tom, I knew it was his time. If I’ve learned anything over the years it is to trust my gut. Level Studios is an awesome company with a great culture and yes, I’ll take a bit of credit for getting them on the right track.

In 2002 I became President & CEO of Starbase Corporation (NASDAQ:SBAS), an enterprise software company specializing in software configuration and requirements management. Here again, another shit storm but on a much bigger scale. The company had 300 employees, multiple locations (including the UK), great products… and 6 weeks of cash. It had gone through 25 private placements and burned through all of its cash. There was finger pointing, serious political problems and a Board of Directors as split as I had ever seen. Somewhere a long the way, the Starbase leadership forgot it wasn’t their money in the checkbook and that it belonged to the Shareholders. I had success and failures at Starbase. I saved more jobs then we lost. We made it a whole year without raising any money and made payroll and payables each month. In the end, we sold the company to Borland Software Corporation in January 2003. It was the best move.

I left Borland in March of 2003, Dale Fuller Borland’s CEO is a good guy, a strong leader, I would have just been in his way. I later got sued by some Starbase shareholders who felt I sold the company too cheap and Borland stepped up and honored by indemnification agreement and hired Wilson Sonsini to defend me. In the end, the court found no fault in how I managed the sale and stated if I hadn’t done the sale the company would have likely gone bankrupt and shareholders would have gotten zip. I can’t thank Dale Fuller and Keith Gottfried enough for standing beside me.

Since 2003 I have been working on social media projects with my long time friend Scott Hunter. Our most promising project is EventMingle – event based social networks for the tradeshow industry. We have two versions: Tradeshow Edition which are 16 week custom communities that operate around the tradeshow date allowing speakers, attendees and exhibitors to connect online, network, build their calendar and custom walking maps. EventMingle Communities is our new year around communities for clients who operate multiple tradeshows within a specific industry. This version is getting ready to enter beta.  We have some great people working at EventMingle and I’m happy I can help out as a visionary, director and mentor.

Today (May 2009) I’ve been interviewing with companies seeking a turnaround CEO, interim CEO or senior executive skilled in change management. I’m looking for my next challenge. I guess I have decided that I enjoy the challenges of start-ups (Mustang and EventMingle), however it’s the turnaround that really drives me.

I’m using the blog to help me get some of my thoughts organized, gathering ideas and concepts I have learned by leading change in both organizations I have founded and created, as well as those I have walked into as an outsider. I don’t think you can appreciate the challenge of a corporate turnaround until you’ve done a public company which included full disclosures every 90 days for all to see and grade. I have done two (MSTG & SBAS) so I speak from experience. In this blog I’m going to share some of my ideas on how I would fix some of the broken business models I see on a daily basis.  I hope you’ll enjoy reading it and will comment often, even if you disagree with my points of view.

Cheers,

…Jim