January 2014 Archives

Kuwait is an amazing place for so many reasons, but it is also still stuck in the 1950s.

Legit businesses here are licensed by the government , partly to control how many businesses there are in any given niche.

And the process is extremely challenging.

Also, every business is owned by a Kuwaiti, at least 51% (but profits are not necessarily split the same).

Kuwait does a marvelous job of protecting its own, unlike the USA!

There are no specific franchise laws here and there's no one government agency in charge of overseeing franchising.

Since most everything is in Arabic, I have managed to stay clear of most government offices.

Franchising is booming in Kuwait, but it occurs in one of two ways:

1. The best way is to get Mr. Alshaya to buy your franchise -- he is probably the world's largest holder of franchise licenses (70 some say).

But Mr. Alshaya is very private and operates only within his close circle of Wharton friends .

For example, I have been pleading for an interview for 4 years-- no luck.

2. The second way is that a Kuwaiti, or a group of Kuwaitis (often a family), decides they want a certain type of franchise and they find the largest brand in the USA and bring it to Kuwait.

It's extremely difficult to market franchises any other way in Kuwait.

Most of the franchises here are controlled by the same families or groups.

And very few concepts are sub-franchised within Kuwait -- Mr. Alshaya owns it all no matter where he goes, it appears. Other families will sub-franchise outside of Kuwait, but even then it's to a "cousin".

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Food trucks: it's the latest trend in the restaurant franchise business. From Manhattan to Venice Beach, these highly mobile, highly efficient restaurants are cropping up all over the United States, attracting investment bankers and surfers alike.

Most major US cities have seen a dramatic increase in food trucks over the course of last few years and roughly one quarter of Americans have reported eating food truck cuisine.

All in all, this presents an incredibly lucrative business model; the trucks boast low overhead costs and the ability to serve many customers, very quickly, which means big profit margins.

Even large established chains such as Taco Bell, Dairy Queen, Jack-in-the-Box, In and Out, and FatBurger are experimenting with food trucks, mainly as marketing or promotional assets. So, if you are considering taking a plunge into the food truck franchise business, here are the things to consider.

Food trucks are serving much more than hot dogs.

If you're imagining food trucks serving up cheap, fast food eats, think again.

Take Farhad Assari, for example.

This former investment banker has taken his love of food to the streets, literally. His Sâuçá brand is committed to delivering high quality, gourmet food. In 2010, Sâuçá won the Great Emerging Franchise Challenge. And Assari's commitment to high-end food isn't unique.

From NYC's Red Hook Lobster Truck to Los Angeles's Kogi BBQ to Austin's East Side King, food trucks are serving up premium, gourmet cuisine.

Restaurants are working hard to boost their mobile presence.

The food truck trend is simply a reflection of this shift towards more mobile food. More than ever, people are crunched for time. Workers don't have time to battle traffic or fight restaurant crowds on their lunch breaks and hungry people in general simply aren't keen on waiting in lines. Enter the mobile food truck, which can deliver food fresh, onsite, and on time. And in spite of the many predictions that the market bubble would pop, it hasn't. In the past several years, the food truck market has seen sustained levels of growth, from New York City to St. Louis to Orlando. Some estimates contend that there are now over 50,000 food trucks roaming US streets.

Food trucks are a bargain.

In comparison to other kinds of start-ups, food trucks are much less expensive; startup costs are low, as are maintenance costs. Furthermore, food trucks can also easily relocate. With a little market research, it's easy to see where the demand is high. Food trucks can easily go to where the customers are, from college campuses to military bases to fairs and carnivals. With mobility comes flexibility. And when it comes to expanding your franchise to multiple locations, it's much easier to have multiple trucks than stores.

But Wait...

It's not quite as easy as it sounds. Although food trucks may entice foodies on the go, food trucks can sometimes find themselves on the receiving end of complaints and ill-will from local restaurants. Some local restaurant owners argue that food trucks steal customers and undercut prices due to low overhead. Then there is the stringent food service permit process, parking permit fees, long permit issue wait times, and health inspection requirements which can be tricky to navigate inside the tight confines of a food truck. Then comes the social media and marketing challenges. Since many food trucks are not in the same area everyday, there is a critical need need for communication channels that alert customers to food truck locale.

The Future

All in all, the jury is still out on the true viability of food truck franchising, but the trend is on the upswing and food trucks are definitely on the move.

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This is another interesting article...


I've been selling franchises for quite awhile. It might surprise you to learn that I had never held a Discovery Day until years after I began selling franchises.

Yes, that's right I sold franchises without a Discovery Day with tremendous success. And I'm confident having a Discovery Day would have sold less franchises!

When I started selling franchises at a capital intensive quick service restaurant - QSR- franchisor I went through my franchise development process training to learn how they sold franchises.

Here's some of what I learned about their franchise sales process.

About three years earlier the QSR franchisor had hired a franchise consultant to come in and redesign their franchise sales process.

And they didn't have a Discovery Day in the new franchise sales process.

Although they ended up with one of longest franchise sales processes in franchising. However it did include inviting our qualified prospective franchisees to a Corporate Interview at headquarters.

But, I discovered our process was simply not as effective as it could be and was costing us time and money.

It lacked grace & worse it didn't describe what actually happened.

My opinion is that you need a process for simple sales transactions as well as complex ones.

Of course franchise sales is a complex sale, but it doesn't have to be painful for the participants. It seems to me that if it's graceful for the franchise-buyers & the franchise sellers you will likely get better compliance and faithfulness to it? People just do better with things they like and understand. I know I do, and you probably do too.

Now I was working with sophisticated high net worth prospects.They were already successful and they were smart. They also didn't love the idea of having to go to a "Corporate Interview". It was a tough sell, a brick wall, and it didn't need to be that way. Our team agreed. So we decided to change it.

We began looking around at what similar franchisors were doing. We found that many if not most franchisors had a Discovery Day.

And, we thought Discovery Day didn't fit exactly with what we wanted in the architecture of our new franchise sales process.

We had already designed the process to be give & take in the exchanges of information through out the sales & decision steps.

So, we looked at: Decision Day, Confirmation Day, Meet the Franchisee Day and many others, some better some worse.

We decided on Development Strategy Meeting. Here's what we liked about that name and why we chose it over Discovery Day.

Discovery Day seems to always get shortened to D-Day in everyday corporate-speak which is fine for WWII buffs, but not for building a franchise relationship. And "Development Strategy Meeting" didn't roll of the tongue shortened to DSM in the same way or regularity.

With Development Strategy Meeting we could keep the description of the content focused how the candidate was going to develop, what schedule & where, who was going to be the operating principal and who would go into training.

You see we already had successful content and schedule for the Corporate Interview, we just had a poor name. Probably just as poor as some of your names.

The result was the sales scripts to get franchise prospects to the Development Strategy Meeting worked better after the change to that name and we sold more franchises.

So if you have a Corporate Interview or an unforgivingly named equivalent step in you franchise sales process you should get rid of that name. And find something that works because it describes what you really do.

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Voice mail (business or cell) remains a large frustration in this busy business world.

And it's not just voice mail.

The automated attendant is also on the list. In an effort to help reduce voice mail frustration, here are the five most frustrating phrases that your callers don't want to hear.

(I'll discuss the auto attendant in another blog.)

Here are the big 5 Most Frustrating Voice Mail phrases. 

1. I'm not at my desk right now 

DUH? That's a hot lot of news. What a boring, semi useless statement. Live a little. Let your callers know where you ARE - not where you're not. Tell them, "I AM in the office all this week" OR "I'm in a sales meeting till 3 pm." Let them know if you do or don't check messages. Let them know when you will be back. 

2. Your call is very important to me 

OMG. Really? A big time waster. The caller is thinking, "Well, if I'm so darn important, where the heck are you?" And then again, think about it. Maybe the call isn't so important to you. You just don't need this phrase. Semi useless 

3. I'm sorry I missed your call 

How dull. Of course you are. (Although, there are probably some that you're not sorry to have missed.) OK to leave this phrase out! It's a given. Use the time and space for something more valuable. Like where you are and when you will return!! Or, who they can call for more information. 

4. I'll call you back as soon as possible 

Not interesting and not fun. Mainly because your as soon as possible and my as soon as possible may not and probably are not the same. And based on our Telephone Doctor surveys, probably not true. The truth is most people aren't returning their phone calls in a timely fashion. (if at all) If you're telling your callers you'll call them back, make sure you do. If you think you may not return the call...then try this: "Go ahead and leave your phone number and I'll DECIDE if I'll call you back or not." (Just kidding!) Unreturned phone calls rank high on the frustration list. "As soon as possible" is not an effective phrase. All you need is to say, "I will call you back." (Then do it! Or have it returned on your behalf.) Not returning a phone call is like not using your turn signal. Just rude. 

5. No escape 

Remember to tell callers to hit ZERO for the operator (or whoever) if they need more information. Or better yet, give them another name and extension. Although for the most part, that voice mail may come on also. (Then you're into what is called Voice Mail Jail!!!) Main point here is to offer an alternative if you're not there. Plus, you've bought back some time to say something more interesting or helpful to the caller.

# # #

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 www.nancyfriedman.com.

"Do you want fries with that?"

Easily the most recognizable & classic upsell. But do you who invented the upsell?

Do you recognize these lines: "Shall I fill it up?"Or, "Would you like red or white wine with your dinner?"

I know you have heard "Sell the sizzle, not the steak."

Elmer Wheeler, whom I am pretty sure you haven't heard of, wrote these. He was one of the first to seriously study what happened in the gap between delivering an effective advertisement and getting the sale.

It is a great story- still relevant today.

Wheeler was working as newspaper man in the mid 30's. He knew that his clients, the advertisers, were only interested in increased sales. Any other measure or metric of "success" was irrelevant to this group.

And Wheeler was vexed. How could his advertising campaigns deliver traffic to a well stocked store, yet there be a failure to buy? How could people who started with an interest in buying be changed into tire kickers by the time they reached the store.

Wheeler was so vexed, he proposed a startling course of action to the publisher. They would experiment.

And, according Tom Sant, in The Giants of Sales: What Dale Carnegie, John Patterson, Elmer Wheeler, and Joe Girard Can Teach You About Real Sales Success , pages 125-126, what happened next was this:

"Wheeler gave 20 of the Baltimore News-Post reporters five dollars each, telling them to go to the May Company and buy as many men's shirts as the five dollars would purchase and the clerks would sell them. (Remember, this was back in the 1930's and five bucks went a long way, then. You could buy a quality men's shirt for less than a dollar.)"

The result?

These motivated buyers who had $100 to spend - could have bought 100 shirts.

How many shirts were sold to them? 90? 75? or only 60? (Remember, it wasn't their money. They didn't have to save any money.)

Nope, the customer service staff at the May Department Store extracted a whopping 5% of the total surplus value - 5 shirts. Yes, only 5 shirts were sold.

Sant writes:

"Wilbur May, [owner] instantly realized that although he may have a million-dollar establishment, with a million dollars worth of merchandise on the shelves, the real control of his business was in the hands of his minimum wage sales clerks."

And right then and there, Elmer Wheeler switched professions from advertising into customer service and sales!

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The Fair Labor Standards Act (FLSA) came about in 1938. That's 78 years ago!

While there have been some tweaks and additions over the years, the overhaul needed to eliminate confusion and align requirements with a more flexible, modern workplace just hasn't happened.

A 2004 effort to revise the duties tests and make other aspects of the law more understandable was not as effective as many employers had hoped.

So the FLSA continues to be complicated and violations, willful or otherwise, abound.

Here are ten steps to help you get into compliance and avoid an expensive FLSA investigation of your entire franchise system.

  • Start with clear job descriptions that outline the duties and responsibilities for every position in your organization.

  • Compare each job description with the exemptions described by the U.S. Department of Labor (DOL.) Unless you can justify a specific exemption, a job should be classified as non-exempt. Never base a classification on the job's title, on the incumbent's wishes, nor solely on the fact that it is salaried. In addition to minimum salary requirements, the job duties and responsibilities must be the basis for an exempt classification. Document which exemption applies.

  • Create clear policies around attendance, work hours, break and meal times, working through lunch, timekeeping, getting overtime authorized in advance, etc. Make sure your policies are communicated to and understood by employees.

  • Maintain excellent records and make sure all non-exempt employees submit and verify all hours worked. Never tell employees to "fudge" the work hours they report.

  • Ensure that you pay at least the federal minimum wage of $7.25 per hour or the state minimum wage, whichever is higher. (Note: there is a special youth minimum for youth workers under age 20 for the first 90 consecutive calendar days from the date of hire and a special minimum wage of $2.13 per hour for tipped employees if the employer can claim and document a tip credit that makes up the difference between that amount and the federal minimum wage.)

  • Be sure to pay an overtime rate of time and one half based on a non-exempt employee's regular rate of pay for all time worked beyond 40 hours in a work week. Note: the threshold is 40 hours actually worked; sick, vacation, or other leave time does not have to be counted toward hours worked (even if such time off is paid.)

  • If employees work overtime that has not been properly authorized, you must still pay them for it. You may discipline employees for violating company policy but you cannot avoid paying for overtime that has been worked. This is another reason to have clear policies and communicate them effectively.

  • Understand the term "regular rate of pay" upon which overtime pay is based. For some organizations it may be the same as an employee's hourly rate. Depending upon compensation policies, however, it must include all non-discretionary pay; in other words, pay which is promised by the employer. This would include: non-discretionary bonuses, incentive pay, commissions, on-call pay, shift differentials, and any housing allowance that is part of employee compensation. It does not include expense reimbursements, gifts or bonuses that are completely up to the company as to whether they are paid or not, such as Christmas bonuses.

  • Review DOL fact sheets for topics that apply to your organization such as: tipped employees, volunteers, police and firefighters, seasonal and recreational employers, interns, child labor, breaks for nursing mothers and more.

  • Know your state laws and follow union contracts, if any. Where there is a difference, follow the law that is more favorable to the employee. For instance, state minimum wage, state rules around hours worked per day, additional child labor restrictions, state mandated break times, etc. must be followed when they place a higher standard on employers.

Complying with the many facets of the FLSA will continue to challenge franchise owners.

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What are the key terms that a prospective tenant of a commercial lease should consider prior to signing a commercial lease?

A prospective tenant should consider negotiating the following key terms in their commercial lease:

1. What are the Common Area Maintenance charges in the commercial lease that will be passed through to you, as a commercial tenant? Are they going to be capped?  Do you have a right to review the books and records of the landlord to ensure that the calculations are correct?

2. When does rent commence in the commercial lease?  It is not unusual, even in this day and age, to negotiate a period of free rent and/or tenant improvement allowance to be used towards the build-out of the premises. Clear definitions of when the commercial lease commences and when rent commences should be identified.

3. What is the original term and rent and renewal terms and rent? Is rent increased as a percentage each year or by a specified dollar amount each year?

4. What warranties will the landlord provide? Will the landlord warrant that both the premises and the shopping center are compliant with the Americans With Disability Act?  Will the landlord warrant that the premises and shopping center are compliant with all hazardous substances laws, federal, state and local?

5. Will the landlord provide a reduction in rent for various contingencies such as the anchor store of the shopping center remaining empty for a specified period of time or a certain number of the other stores in the shopping center remaining empty for a specified period of time?

These are just 5 of the many types of lease clauses that should be negotiated prior to signing a commercial lease.

When you're in a sales call or presentation do you do most of the talking?

Unfortunately, most sales people talk way to much and as a result, fail to interact and engage the prospect in a more compelling way. And compelling is how you build trust and a relationship!

As the saying goes, you can't be listening if you're talking and that's the first indicator that you're a push through salesperson. You know, waiting for the first objection so you can handle it and close!

Or, creating a question to which you can follow up with a close.

Speaking of closing, ask yourself this question...

Do you liked to be Closed or would your prefer Connecting with someone?

I hope its Connecting and the way to connect is by following some simple points:

  • Apply active listening to your interactions
  • Understand your prospects needs and wants on an emotional level.
  • Challenge them in a kind way on their assumptions and pending actions
  • Have candid dialog about your solutions, is there a real fit to their needs?
  • Conduct your interactions with mutual respect.

In Ultimate Selling, it's all about Connecting. And in the 21st Century of sales, buyers want to connect; not be closed. And when you connect, it's a seamless and comfortable transition to formalizing the sale. It's time for a paradigm shift from the "Always be Closing" days of Glengarry Glen Ross to the Ultimate Selling, ABC's "Always be Connecting

Change it and you will begin to experience more connections and quality sales vs. closings and less than satisfied buyers. Listening will ensure you engage in meaningful interactions, followed by great insight as to how to provide great value to your prospect, and in doing so you'll make great connections.

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In the franchise finance world, the most discussed number is the EBITDA--EBBADABADOO as some call it.

EBITDA is earnings before interest, taxes, depreciation and amortization. It is really a sub-total to the income statement. It is earnings without any charges for cost of funds, taxes or capital spending.

EBITDA's use began popularized as a credit metric, used in the 1980s M&A and credit analysis world--to test for adequacy of debt coverage.

EBITDA is often the common denominator to track and report company buyout values:  the acquisition enterprise value to EBITDA ratio is a very commonly reported metric. So much so that that's where the focus goes.

And its use as a simple business valuation tool: the company is worth some multiple of EBITDA; the higher the multiple, the higher the price, and vice versa.

In the franchising space, where franchisors might report a simple EBITDA payback for an investment, or report EBITDA value in their franchise disclosure document item 19 section.

The special problem there is this EBITDA is stated in terms of the restaurant level profit only--before overhead.

Really, the problem is this: EBITDA doesn't show the whole picture. It is a sub-total. It doesn't show full costing.

EBITDA alone as the metric misses at least eight costs and expenses, that are vital to know, calculate and consider in operating and valuing the business as a cash and value producer.  

Using a business segment such as a store, restaurant or hotel as an example, here are the eight required reductions to EBITDA that must be subtracted, listed in order of magnitude of the cash outlay, to really get to operating economic profit.

  1. Interest expense:  the cost of the debt must be calculated. Interest is amount borrowed times the interest rate times the number of years. One can have rising EBITDA but still go broke.

  2. Principal repayment:  the business cash flow itself should contribute to the ability to pay back the principal debt. That often is in a 5 or 7 year maturity note and is another very large cost that must be considered.

  3. Future year's major renovation/remodeling: once the storefront is built, it has to be renewed and refreshed in a regular cycle, often every 5-10 years, via capital expenditures (CAPEX). That often is 10-30% of the total initial investment, or more, over time.

  4. Taxes, both state and federal: Financial analysis often is done on a pre-tax basis as there are so many complicating factors. But the reality is the marginal tax rate is about 40%.

  5. New technology and business mandates: aside from the existing storefront that must be maintained, new technology, and new business innovation CAPEX must be funded to remain competitive. Example: new POS systems for restaurants, new technology for hotels.

  6. Overhead: if the EBITDA value is stated in terms of a business sub-component, like a store, or restaurant or hotel, some level of overhead contribution must be covered by the EBITDA actually generated. Generally, there are no cash registers in the back office, and it is a cost center.

  7. Maintenance CAPEX: for customer facing businesses (retailers, restaurants, hotels, especially) some renovation of the customer and storefronts must occur every year and does not appear in the EBITDA calculations.  New carpets, broken windows, you get the idea. In the restaurant space, a good number might be 2% of sales.

  8. And finally, new expansion must be covered by the EBITDA generation, to some level. New store development is often a requirement in franchise agreements, and new market development necessary. While new funds can be borrowed or inserted, the existing business must generate some new money for the expansion.

You might say...these other costs and expenses are common sense, they should show up in the detailed cash flow models that should be constructed. Or they can be pro-rata allocated.

But how times does this really happen? The EBITDA metric becomes like the book title....or the bumper sticker that gets placed on the car. You really do have to read further or look under the hood.

And the saying is true...whatever you think you see in EBITDA...you need more.

In an ideal world, your marketing department has figured out a way to source a predictable number of leads required to maximize your selling time and sales outcomes. But what if they don't? Are you willing to assume some personal accountability? Or, will you accept that your sales goals will be compromised?

I'm always amazed at how often salespeople talk about calling this list or using that list or making cold calls. Rarely do I hear them talk about using their greatest asset, their existing customers or centers of influence.

The fact that you are reading this blog tells me that you are accountable and prepared to do the work it takes to maximize your outcomes. Congratulations!

If you then follow the 4 Steps below, you'll quickly get that pipeline back in operation with some warm leads.

Step 1. Refer to your master list of customers

Step 2. Block calendar time to call your list. (Break into manageable blocks)

Tuesday, 9 - 9:30 AM

Thursday, 8 - 9 AM

Step 3. Start calling. Start alphabetically and work from A-Z or Z-A

       Step 4. When you connect, ask for their help in one of three ways:

a. Referral

b. Introductions (He will advise of your call and to tell them to take it)

    1. Personal Introductions (Joint phone or face to face call)

Whatever works best for them!

Before you know it you will be busy again and off to making more sales. And next time, start calling where you left off from this call effort as you rarely can get thru your list before you're too busy to finish making the calls.

Most importantly, don't forget to thank them via a call, email or personal note/postcard for the referral. Better yet, let them know the outcome. They will be pleased to know they helped you and the referred person.

Ultimately, they will look forward to the next opportunity to help.

Telephone Doctor Customer Service training has focused an entire career developing ways to help companies communicate better with their customers.  Telephone Doctors Customer Service is a training company, with over 25 dedicated employees.

We've helped thousands. How? With our simple, logical techniques that most folks already know and we bring them to the forefront.  

Most businesses go out of their way to attempt to give good customer service. Some make it; some don't.  

Customers go out of their way looking for companies that give great customer service. Some find it; some don't.  

We have tried so very hard to explain to both sides. It's not rocket science; it's not brain surgery. It's plain old common sense. But you and I know common sense is not out there. There is a mass of grey average out there. You don't wanna be in it. Rise above that mass of gray and come along with Telephone Doctor.  

Customers love to vent. They love to report on how badly they've been handled. And today with the internet, it's sad how stuff goes viral so quickly.  

I cannot count the number of articles out there on customer service. Some are good, some not; some have new ideas; some speak the old tried and true.

And that's where Telephone Doctor Customer Service Training comes into play - plain old customer service. We call it 'Back to Basics.' You can imagine we have hundreds, if not thousands, of ideas, tips, skills and techniques to share.

To start the New Year out right, here are fifteen customer service tips that are good old common sense thoughts that bring you back to the basics. 

Here we go:  

1. "Please" and "thank you" always have been, and always will be, powerful words. Seldom overused.  

2. "You're welcome" is the best replacement for "no problem."  

3. "Sorry 'bout that" is not an apology. It's a cliché. "My apologies" is much better.  

4. A frown is a smile upside down. Stand on your head if you must; but SMILE, darn it!  

5. You cannot do two things well at once. Pay attention to the call or the customer.  

6. One word answers on email or in person are considered cold and rude. Three words make a sentence.  

7. Learn what phrases frustrate your customers. They're probably the same ones that bother you.  

8. When was the last time you sent flowers to someone just because?  

9. Drop a personal handwritten note to a client and just say "thanks for being a good client."  

10. "Hey how 'ya doing?" is not a great way to start up a conversation.  

11. Out with friends or family? Put the cell phone away. Talk for 30 minutes. (If you remember how.)  

12. Email manners? The same as phone and in person.  

13. The old "don't tell 'em what you can't do; tell 'em what you can do" applies to most, if not all, customer interactions.  

14. Get excited! 

15. Oh, and smile. That needed to be said twice.  

Have a great year and we'll be bringing you more articles, tips, skills and techniques for your reading pleasure and customer service improvement. 

~ ~ ~ ~ ~  

Nancy Friedman is a frequent speaker at association, corporate and franchise meetings. The author of 8 books on her service expertise, she has appeared on Fox News, CNN, Today Show, and Oprah, as well as many other shows.

She has been published in the Wall Street Journal and USA Today along with many major dailies. President of Telephone Doctor Customer Service Training, she can be reached at 314-291-1012 or www.nancyfriedman.com. Call her when you are serious about customer training & need a speaker to inspire your staff.

The need for health care reform is widely acknowledged, but current proposals are too costly and ignore common sense changes that can yield real benefits.

While our health care system needs to change so all Americans are insured, there are four points worth consideration to do this wisely:

Routine health care expenses should be paid by patients.

Insurance companies should band together to share the cost of covering individuals with pre-existing conditions.

Our current Medicare public plan is not as generous as commonly perceived.

More people will be able to afford health insurance if premiums are tax deductible.

Some of us remember when plans did not include $5, $10 or $20 co-pays. Although convenient, co-pays mask the true cost of health care and too often prompt excessive use of coverage. Well-intentioned federal legislation in the 1970s legalizing health maintenance organizations, or HMOs, has had the unintended consequence of entrusting insurance companies with too many insurance premium dollars. Although convenient, it is expensive to pay a small portion of the cost of care when needed and adds to frustration when the insurance company disagrees with a recommended treatment, challenging our doctors or refusing to pay.

Insurance companies charge employers 15 percent to 25 percent in overhead expenses for every prepaid health care dollar. The patient's $20 co-pay for a $100 service requires $115 to $125 in premiums even though the doctor receives only $100. So why not pay the $100 directly using pretax dollars? Flexible spending accounts, health reimbursement arrangements and health savings accounts are growing in popularity since they allow pretax payment of personal medical bills.

While many are not adequately insured, too many Americans are over-insured. For all but 100 percent covered preventive care, Americans should expect to pay 3 percent to 5 percent of annual income, equal to $2,000 to $5,000, before unlimited insurance protection starts. This way patients become better informed about the cost and value of recommended services. Duplicate testing and excessive use goes away, saving up to 15 percent. Paying routine medical costs with tax deductible flexible spending account dollars has been a legal option since 1978.

It is often a surprise to learn that Medicare is not generous insurance. The 2012 Part A deductible is $1,156. Part B requires seniors to pay 20 percent of physician costs after a $140 deductible. A $25,000 hospitalization and surgery can mean $2,000 to $3,000 in out-of-pocket costs. Seniors generally buy supplemental coverage to pay these costs. These "Medigap" premiums are $2,500 to $3,000 per year. Another $350 to $1,000 is needed for prescription coverage, and $1,156 to $3,700 for Part B premiums, depending upon income. While some Medicare Advantage HMO plans require no premiums, that would change with health care reform because existing government subsidies are redirected to help pay for the new public plan. Health care reform is projected to cost $100 billion per year for each of the next 10 years, including higher taxes and the restriction or elimination of FSAs, HRAs and HSAs in 2011, even though the public plan is scheduled to start in 2013. Twenty million Americans still will remain uninsured even after the public plan is in place.

A critical reform need is guaranteed insurance access for people under age 65. Currently, individuals can be turned down for coverage if a medical condition exists. The insurers' concern is that these individuals can drop coverage at the end of any month, increasing the likelihood the insurance company will payout more in claims than collected in premiums. Well-meaning government leaders have concluded that the best way to fix this problem is a public plan option. But public plan proposals are costly and may result in Medicare for all and possible rationing of care that is common in other countries.

If insurance companies band together to share the risk of guaranteeing coverage for all individual buyers -- even those with pre-existing conditions -- a public plan is unnecessary. Of course, these individuals must be required to maintain health insurance coverage. Health care providers must also do their part and add only a reasonable markup to the cost of services instead of the 35 percent to 85 percent that exists today.

For too many years, American workers have paid rising health insurance premiums by accepting reduced wages. Many of us also have thousands of dollars deducted from our paychecks for insurance, especially for family coverage. If we reduce current use by 15 percent, there should be enough money to pay for the 15 percent of our population who currently lack insurance. With proper regulation, adequate deductibles and tax incentives, we can avoid a government takeover of our health care system.

For more information Jonathan can be reached at:

Blog: http://thehealthcaremind.com/

Twitter: @healthcaremind


If you want to win big in 2014, you need to make sure you do two things consistently and do them well!

1st. Have activity goals on a daily/weekly basis that you can control and ones that will take you where you want to go.

How many calls, dials, face to face appointments, proposals, etc.  do you need to succeed?

As in football, the field goal that wins the game with 2 seconds left is the result of much preparation and practice. Are your practicing for sales or are you sitting on the bench? Standing on the sidelines? If so, getin the game and mix it up so you have a chance to win. I guarantee you can't do any worse then losing while on the bench!

2nd. pursue real sales opportunities, like in qualified prospect! Not suspects and prospects. How can you differentiate between qualified prospects and suspects?

The game has to be real, not imaginary- in your head. Is the opportunity real or are you kidding yourself, not to mention others?

And for the game to be real, you must know 4 critical things:

  1. that they have a need and want for your product or service
  2. have the money or means to acquire it
  3. have a decision making process in place with a timeline
  4. a date that your product or service is required

And if they don't have #4, they really don't have a real timeline to buy, and that means no need to make a decision!

So, set some behavior goals and then make sure you do a deep dive on qualifying. That means they and you have identified compelling reasons they should buy, you're positioned as the preferred provider and their reasons have greater value than the investment you'll ask then to make. Will they:

  • benefit financially?
  • Increase market share?
  • solveexisting problem?
  • mitigate customer satisfaction issues?
  • What else?

Do these things and2014 will be your best year ever!

I recently had an interesting experience with a large scale retailer, that is yet unresolved, at least in my opinion. I'm waiting to see how it plays out, but thought it was a good example of how asking for feedback can find the issues that are falling through the cracks within your company.

I received an email saying my online account with the company had been compromised, and as a precaution, they locked my account and cleared my saved payment options. They provided a link to reopen my account and change the password. While it looked authentic, I am always hesitant to take the emails as legitimate.

I went to the company's website (not through the link in the email) and found that not only could I access my account easily, but my settings were not changed at all. Out of an abundance of caution, I changed the password and removed anything that could potentially get in the wrong hands.

I called the toll free number, which led me through a long, drawn out, unclear path to be transferred to someone who might be able to help me. Once I found the right combination of numbers to press, the call was transferred. All I heard was some silence and the call disconnected. I did this two more times with the same result. Okay, I guess they don't want to talk to me.

So I went to the website to fill out a contact form on the website. This went unanswered for two days. On the third day, I received an email from the company asking for my feedback. They wanted to be sure that my issue was resolved and the customer service I received was satisfactory.

I was happy to provide feedback, including all of the information on my journey to have a simple question answered, and explained that as of the time of the survey, I have not received any information from their company.

Now, I'm waiting to see how long it takes the feedback to filter through and someone reaches out to try to help me - or not.

At first I was frustrated getting the feedback request when I have yet to receive another response. I felt like one hand (the feedback team) didn't know what the other hand (customer service) was doing. Then I realized this may very well be an automated system that sends out feedback requests within x number of days from the request, assuming that the issue would be resolved, or at least on its way, by that point.

If customers share feedback like I have, this is useful to companies.

First, it ensures that all issues are being addressed with customers. By receiving the type of feedback I provided, the company can look for trends to identify why issues may be falling through the cracks, where requests are being routed and which are being resolved vs not resolved, and do better.

Second, it gives the company a second chance to do good by the customer. I am hoping for a response from the company within 24 hours after leaving feedback; trying to stay positive, though if my issue wasn't addressed quickly, I'm not sure why I think someone will respond promptly to the feedback I've left.

It's a good experience to serve as a reminder to pay attention to feedback surveys. Reviewing them in as real time as possible is the best way to manage customer complaints while maintaining quality control over the customer service provided.

I will return to this story once it has time to play out. I am hoping to return with positive results... ... ...

Unfortunately, as of today a week later, I have not gotten any type of response, and my issue remains unresolved.

However, I have received several emails from the company, alerting me to specials, new products, and other promotional material!!

I guess this is one issue that will go unresolved. I'm left to wonder if there are people on the other side reading the responses to the feedback surveys, or if this is just too busy of a time for them to properly staff that department. Perhaps they only look at the quantitative data without reading the comments?

At any rate, it's been an interesting experience, and one that drives home my point about using follow up with feedback/inquiries/complaints to make sure there are no issues going unresolved.

This is a good example of what can happen if there is no quality control in place within a customer feedback department, and a good reminder for companies to continually review their processes in this area.

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This page is an archive of entries from January 2014 listed from newest to oldest.

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