August 2013 Archives

In the old days, Accountants could help you understand what happened during the past months and years but they could also help you understand your productive capacity--which is really about your future ability to continue to operate and produce revenues and profits.

This was possible because of an elegant solution to capital expenditures with a benefit beyond the current operating year. Instead of being expensed, these investments are capitalized on a balance sheet.

Over time the net effect of these tangible capital expenditures (adding new investment and subtracting depreciation) showed whether the company was continuing to invest in building and maintaining its factories, equipment and infrastructure.

With the shift that we so often talk about from the tangible to the intangible economy, this changed.

Intangible capital expenditure is largely treated as a current year expense even when it will have a benefit beyond the current operating year. No big deal, you may be saying.

But cumulatively, it's been a huge deal.

It's how the balance sheets of most American companies have gotten completely out of whack. Given the steady investment in intangibles over decades, today the average balance sheet explains just 20% of the company's corporate value.  

This is true for public franchisors, also.

We've gotten used to this issue and, as a consequence, the balance sheet is useful only for understanding current assets, current liabilities and equity. But there are no numbers for the intangible infrastructure, the intangible assets.

This means that it's nearly impossible to get a sense of the productive capacity of a company by looking at its balance sheet.

(And that there are few norms for talking about these assets outside the balance sheet short of, well, talking about them.

But as the Coloplast experiment shows (and our own experience tells us), talking about something and measuring it systematically are very different activities.

And, guess what? Narrative isn't nearly as effective as measurements.)

Why is this a problem? Because the future of your business depends on it.

You are like businesspeople in the industrial era who needed to know how much they could produce at what cost and what investment would be to add productive capacity and--here's the big one: how well the factory is working.

You need to answer the same questions for your intangible infrastructure. So what's a businessperson to do?

Learn to measure your intangibles.

Start with an inventory, build a working model of how they fit together and then measure them.


Are you a businessperson who wants to looks forward? We have open source tools to help you do much of this and we also offer a platform for easy measurement, all at

OK! OK! Yes, there are certainly more than 21 ways to gain the Customer Experience, but rather than overwhelm you, we wanted to start out with a palatable number.

And 21 sounded like a good number to me. Any one of these tips will produce better relations in your customer service.

The idea is to bring UNEXPECTED GREAT customer service. Things that most other folks don't do!   

1.      Smile! All the time. Right. Don't kid yourself. Just as it can be seen in person, it can be heard on the phone. So as NIKE says...Just Do It!  

2.      Say something nice at least once a day to someone. I was at the St. Louis airport a while back and the skycap came up to me and said, "Are you going first class or does it just look that way?" That was over 10 years ago and it still seems like yesterday. People remember nice things, just as they remember the not so nice things. 

3.      Don't ever argue with a customer. You'll lose every single time. Don't even get into the ring with them. "Maybe you're right" is a great saying.  

4.      If you're sending something to a customer via any method, consider add a short personal note. Items received without any note or mention of transaction is perceived as cold and rude. A simple "Thank you" on company notepaper will do the trick. It says you stopped to do something special. 

5.      Use "WE" statements when possible rather than YOU. We is consultative and feels friendlier. And it's far less confrontational. 

6.       See someone walking into your store/branch/location/office? Say "HELLO" loud and clear. Ignoring people, even fellow employees, isn't good customer service. 

7.       Keep the fences in your organization low. We all know there needs to be rules, guidelines and policies. However, when there are so many of them, they can make doing business difficult. It's not worth it.  

8.        Be a double checker. Often, we can miss something or not know all the details. Most people appreciate hearing, "The last time I checked, we were out of stock on that; however, let me DOUBLE CHECK for you." That particular statement is so comforting. Everyone loves a double checker. 

9.        We cannot do 2 things well at once. If you're working with a customer, on the phone or in person, then focus on that person. Trying to type, or file, or do some paperwork while you're communicating with a customer is dangerous and rude. 

10.      If your attitude stinks, change it. No one - absolutely no one - wants to be connected with someone with a bad or negative attitude.  

11.      Respond rapidly. When you receive information from a client, it's a good thing to let them know you did receive it and will be working on it. That's good communication. 

12.      Extend a firm handshake when being introduced to a customer. And FIRM is the key word. That loose, fish like handshake is not a sign of confidence. FIRM is key. 

13.      Thank you notes are still thought of as GREAT. Take the time to jot several off a day to new, or better yet, older clients. Email thank you's are just OK. Unexpected is a personal note.  

14.      Use your name when you answer the phone. Everyone likes to know who they're talking with.  

15.      Use your listening skills more often. We all like to talk, mainly to show off how much we know. But listening to what the customer knows is much better. Let others have the stage. 

16.      It shouldn't take 2 people to give good customer service. Learn how to handle the situation yourself rather than trying to get rid of it by shipping it off to a co-worker or supervisor.  

17.      Show some empathy or sympathy when a customer complains. Doing or saying nothing when they feel they have a problem will put you in the doghouse fast. 

18.      Learn to say, "I apologize for what happened." Do something that will allow the customer to feel that you are apologizing. That quick, "Sorry 'bout that" statement sounds as though you're throwing the statement away.  

19.      Be prepared. If you're in customer service, or any front line position, expect things to happen. Be prepared is not just for the Boy Scouts. It's for anyone who works with customers. Prepare for the unexpected. 

20.     When in doubt, leave it out. Writing a letter to a client or calling them? If you're in doubt of using a certain word, leave it out or use something else. 

21.    Monogram the experience. Know their name; use their name.  Everyone likes to hear their name pronounced correctly.  Make sure you get it right. 

PS - Thanks for taking time to read and share this article.

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Reprinted with permission of Telephone Doctor Customer Service Training. Nancy Friedman is a featured speaker at franchise, association & corporate meetings. She has appeared on OPRAH, Today Show, CNN, FOX News, Good Morning America, CBS This Morning & many others. For more information, call 314-291-1012 or visit

Has this happened to you: after a few years into a lease, your successful store ends up with much higher than expected occupancy costs?

The costs (rents and NNN provisions) were hard fought in negotiations, and the tenant ended up with a good solid lease. The sales are great.

Everyone should be happy, but the store is netting less than expected.

It appears that the problem is the occupancy expenses which are significantly higher than expected. The center was not reassessed and the landlord's CAM, and insurance costs have not unreasonably increased.  We know this because the LOI included a request for the center's prior 2 years NNN reconciliations.

No one on the tenant's side has an explanation. The proforma just didn't get it right. Or is there another explanation?

In my experience, there are several potential explanations. With the higher sales, the tenant hit the breakpoint early and began paying percentage rent. Unfortunately, the breakpoint was not calculated correctly, nor did the tenant taking advantage of properly reporting sales.

All those exempt sales, the credit card processing and bank fees, uncollectable debt, gift card sales, employee sales, were included in the reported sales. The incorrect sales represent a potential increase in %rent expense of near 10%, not to mention the wrong calculation of the breakpoint. Although the landlord's expenses were within reason, the Tenant never verified the NNN reconciliation against the lease.

The square footage was checked, but that's it. Upon audit it was discovered that the landlord had included several expenses which were not supported by the lease.

The landlord broke several expenses into "pools," also not supported by the lease, which increased tenant's share of the expense. The landlord adjusted the center's GLA based on vacancies, again, not supported by the lease and increasing the tenant's share.

The landlord had types of insurance coverage that the tenant had negotiated out of the lease. Lastly, the admin fee was 15%, rather than the agreed upon 10%, was charged on insurance, which along with tax was exempt.

None of these mistakes were caught in house, and they were symptomatic of the tenant's other locations as well. The only person for whom this hypothetical story had a happy ending was the auditor. His contingency was the industry standard of 40%.These mistakes, resulting in way too much wasted money and time, were completely avoidable.

When I start working with a new client, in order to assess their needs, I ask, "What does you lease say about your CAM bill?" The response is almost always the same. "It says I have to pay it."

Sometimes they add "it comes in April," or "within 30 days," but there is rarely any depth to the answer. It doesn't matter if it's a corporation with multiple locations, or franchisee with one store, the right answer is that your lease tells you EVERYTHING you need to know about your CAM bill, and how to protect yourself or your company from paying too much.

The lease is a word problem--the answer is how much of your money you get to keep. 

"If you can't reach out and touch it, it is not insured."

That was the gist of a court's ruling in a lawsuit brought by a company that lost a large amount of electronically stored data when an employee inadvertently pressed the "delete" key on a keyboard.

The company looked to its insurer to cover the expenses for restoring the data and to recover lost income caused by the disruption. The insurer denied coverage on the basis of policy language that limited coverage to a "direct physical loss of or damage to" covered property.

The language from the policy was meant to be interpreted in its ordinary and popular sense.

Thus, "physical" means "tangible" or capable of being touched. The information in a computerized database, in and of itself, has no material or tangible existence, unlike a storage medium for information, such as a disk, tape, or even papers in a file cabinet.

The court concluded that when the employee sent the data into thin air with an unintended keystroke, there was no direct physical loss within the meaning of the insurance policy.

The court distinguished this case from another case in which the loss of a computer tape and the data on it were covered under a policy covering "physical injury or destruction of tangible property.")

Recognizing that the dictionary was not on its side, the company that lost its data also argued that public policy should weigh heavily in favor of insurance coverage.

After all, loss of information in the same manner as occurred in this case is common, and our economy unquestionably is highly dependent on computers and the intangible information that they contain. However, the court declined to use public policy as an "interpretive aid."

There are plenty of useful legal principles for construing insurance contracts, but using public policy to redefine the scope of coverage agreed to by parties to a contract is not one of them.

The lesson: Questions of insurance coverage are to be answered solely in the language of the policies and, therefore, careful drafting of policy language is critical.


There are really more, we know that.

But what we have found after a fun survey from our clients is these five killer words always seem to rise to the top. 

They are conversation diverters. Just as ALWAYS and NEVER are conversation diverters, these five killer words will make your customers and your potential customers veer away from the real point of your conversation.  

So best we eliminate them from our routine and vocabulary. It's not easy to do. If it were easy to do, everyone would be doing it...and we know everyone isn't doing it.  

Remove these 5 Killer Words from your sales and presentations and watch the scene go smoother. 

1.      "It's not our policy." - Ouch! Okay, okay, most every company has policies and it's something we need to deal with on a daily basis I'm sure. What we realized was it's not necessarily the policy that's frustrating, it's blurting out first and foremost, "It's not our policy" or in some cases it's "their" policy. 

      The policy needs to be rephrased so that it starts off in a more positive way. We like to say "rejecting gently." And rephrasing policies are a good way to explain what's not gonna happen.  

      Next time you find yourself saying, "That's not our (their) policy." Stop. Regroup and reword. Buffer it with, "Let me see what we can do. Normally the policy of that company doesn't allow last minute changes. (The request MUST be stated so the customer hears that you're going to go to bat for them.) However, we can sure tackle this." 

      What happens here is sometimes when we go back on behalf of the client, it works. And then sometimes it doesn't. But at least we double checked. And we didn't just slough it off with, "I'm sorry. It's not our/their policy." 

2.   "Our computers are so slow." - Big excuse. Everyone's computer runs slow every once in a while. When you complain about your computer it's as though, you're complaining about your company. That's how it's perceived. And perception is reality. Take the time to say, "This might take a bit longer than I'd like it to. Tell me about..." and then ask a benign question that will take time and let the customer talk.  

      While most people do understand slow computers, they don't like it. It kills the conversation.  

3.   "Calm Down." - Oh man does that make the hair on the back of their neck stand up. In any movie or TV show I've watched lately when someone is told to "calm down," the next words are, "Don't you tell me to calm down."  

      Bill O'Reilly said that to a guest the other night. And the guest slammed back at him "don't you tell me to calm down."  

      There are times when the client may need to vent. Your job is to listen and come in at the appropriate time with sympathetic and empathetic wording. Instructions on how to handle something is one of the last things they need. Get rid of "calm down."  

4.   "No Problem." - And they're thinking, "When was I a problem?" Believe we can thank the 'islands' for this one. When we take a cruise and ask for anything, what's the first thing the waiter says? Right, "no problem."  

      Well on the cruise it may be ok; however, back home it should be "you're welcome," "my pleasure," "happy to help," and a host of other ways to let the customer know you're glad to do that.  

      No problem appears to be a big problem with your customers. Lose it. It kills the conversation. 

5.   "Yes, but..." - Hmm what's wrong with that? We all say it. Well, what's wrong with that is the minute we say "yes, but," the client knows something negative is coming.  

      If you have ever said, "I love you so much, but..." There's a condition coming, isn't there? Here's one way to change that: "Yes, we can do that. There is, however, a $50 additional fee." Doesn't that sound better than, "Yes but..."?  

Most people have phrases and sayings they don't like or that aggravate them. Keep a list of your killer words (along with ours) and avoid them. 

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Reprinted with permission of Telephone Doctor Customer Service Training. Nancy Friedman is a featured speaker at franchise, association & corporate meetings. She has appeared on OPRAH, Today Show, CNN, FOX News, Good Morning America, CBS This Morning & many others. For more information, call 314-291-1012 or visit

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