June 2014 Archives

Brands are increasingly realizing the value of multi-unit franchising, and the practice is on the on the rise. Economically, the practice makes sense.

During the recession, multi-unit franchisees fared much better than single-unit franchisees in part because these multi-unit franchisees had more infrastructure and better access to capital, which enabled them to better weather the economic storm.

Furthermore, brands are increasingly recognizing that it is much more advantageous to support a handful of very large, well-capitalized franchisees than to have a very large cadre of individual franchisees who may run into trouble when sales are volatile. The bottom line? Across the board, brands are interested in soliciting multi-unit franchisees.

Nevertheless, it is crucial to note that while multi-unit franchising can be advantageous, it also presents a unique set of challenges. Perhaps most notable is that the shift from single-unit ownership to multi-unit ownership requires a franchisee to shift focus from operations to development. He or she needs to be prepared to take a step back from day-to-day operations to focus on the bigger picture of growth and development.

Basically, you need to work on your business instead of in your business. So before you decide to venture into the world of multi-unit franchising, you should have an idea of what you are getting into. So, what are the pros and cons of multi-unit franchising? Let's have a look.

CON: Increased risk.Let's face it: Growth means risk. If you're considering making the move from single-unit franchisee to multi-unit franchisee, you need to be prepared to assume more risk, particularly more financial risk. You're likely going to need to take on more debt and have a larger operation to manage. The bottom line? You need to invest in infrastructure if you want to grow, even if you don't necessarily have the revenue to do so. If you decide you're going to invest in infrastructure only once you have revenue, you may never have the revenue. This, of course, means making personal sacrifices. Remember, growth might be rewarding, but it isn't always easy.

CON: More time dedicated to human resources. A significant portion of a multi-unit franchisee's time has to be dedicated to HR. It's one of the few things that cannot be delegated completely. You as the franchisee understand your company culture and you understand who would fit in what role. The franchisee also needs to be involved in the hiring and recruitment process to make sure that the right kind of leadership is brought on board.

CON: More operational headaches. With more locations, come significantly more operational issues to control and manage. Managing multi-unit operations can be one of the biggest management challenges out there. So before you jump in, make sure you have best practices and technology in place to help you grow, scale, and effectively manage operations.

PRO: Increased profit. Of course, as with anything in life, the greater the risk the greater the reward. Multi-unit franchising certainly comes with a unique set of risks. However, when done successfully, multi-unit franchising can be tremendously financially rewarding. Growth means profit in many cases.

PRO: Multi-unit franchise growth is good for your entire team. Growth is an excellent human resource strategy. You might have extremely talented, skilled people working for you. But if these valuable employees don't see growth on the horizon, they are unlikely to stick around. It's much more likely that they will seek growth opportunities elsewhere. Multi-unit franchising is not just about developing for your own personal gain. It is also about developing new opportunities for your team. Remember, the better the team that surrounds you, the better you will do in the world of franchising.

PRO: Economies of scale. The more locations you have can often times provide economies of scale that allow you to actually save money. For example, you can quality for discounts on large order purchases which reduce your costs overall and provide competitive price advantages. Further, with more locations, you can share personnel resources between teams for things like Maintenance and Repair as well as Marketing resources.

PRO: Great freedom and flexibility. The rewards of multi-unit franchising aren't just monetary. They are also personal. The larger your organization, the more freedom you, the boss, ultimately has. Multi-unit franchising is about building infrastructure. The more infrastructure you have in place, the more freedom you have. Think of it this way: If you have a solid network of franchises in place and the appropriate staff and resources to properly run them if you miss a day off work, business will continue as usual. This differs dramatically from the role of a single-unit franchisee who often has a critical role in the day-to-day operations of the business.

The bottom line? Multi-unit franchisees may just have more freedom and flexibility, giving them a better quality of life. So, if you are a seasoned single-unit operator, now might just be the time to expand.



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Fred; I have been pitched over the past 25 years in franchising all manner of snake oil for "profiling" and many have said that they can measure top performers and we could use the model to recruit high caliber and similar franchisees and employees. 

What do you say to a franchisor who wants a reliable predictive performance tool, other than buy yours? 

How should they approach it practical manner?  What should they expect from using such a tool?

fred berni1.jpgJoe - Let's start with the 5 basics of all good design.

1. Predict Performance:

Make sure that whatever system you're considering was actually designed to predict performance for the job, in this case, owning a franchise.

2. Designed for Selection or Recruitment

Make sure the system under consideration was designed for selection. Several of the most common personality profiles specifically state on their websites that they were not designed for selection.

One even goes so far as to say it's unethical to use it for selection. Even so, people are out selling these profiles for selection purposes.

3. Don't Discriminate in an unreasonable manner.

Third, make sure that the system you're considering does not discriminate. Even unintentionally. See Griggs v. Duke Power Co. A good summary is at http://www.answers.com/topic/griggs-v-duke-power-co#ixzz32NTJOd4J

4.  Verify Performance Carefully, using an Independent 3rd Party.

Unfortunately, there's no simple way to run an analysis between performance and "profile scores". No matter what you're told.

There's a fair amount of complexity involved in comparing scores and actual performance.

And by performance, I don't mean simply a gut feeling of they're good or bad.

That's subjective criteria because the ratings can change depending on who's doing the rating and their relationship to the franchisee. That's not to say you can't use subjective data, just that if it's available, use objective data with subjective thrown in.

Objective data is something to which you can relate to hard numbers.

Things like actual $ sales per location, % increase one year over the next etc. I've even had clients in auto repair use $ sales per bay.

It all works as long as you can put a hard number on it. Then you have to use rigorous scientific methods to analyse the relationships between "profile" scores and performance. Hopefully this analysis is done by a 3rd party with no stake in how the results turn out.

5.  Include Everyone and Increase Sample Size.

You'll need to include good, bad and average performers.

Here's an example of what I mean: Let's assume you've just made a movie and want to project what your ticket sales will likely be.

If you only include good reviews you could say that 100% of the people that saw the movie like it.

True, but not accurate. Only by adding the bad and average do you get an accurate idea.

In the same scenario, how many people would you need to ask before you are comfortable with a projection? Five? Ten? Twenty-five? One hundred?

Generally accepted sample sizes are a minimum of 100 before you can accurately predict performance. Anything less than that and the best you could do would be to assume you've identified a possible trend.

As far a reliability is concerned, my definition is to be able to say with 95+% confidence that the there's a definite causal relationship between performance and profile scores.

With larger sample sizes, our confidence level could be 99.5% or even higher.

Having said that, it really boils down to what you're willing to accept as being reliable. Being able to predict accurately 50% of the time? 75%? 95%? What's your comfort level?

The bottom line is that it's simply not appropriate, accurate or legally defensible to just pick your  1. or 20 franchisees and base your decisions on that small a sample. Even if you include poor performers in the mix.

Having said that, if the system you're considering was developed to predict performance of franchisees in similar type of franchises, and can provide you with documentation of such, in all likelihood you'd be safe just going with the "template" already designed by the developer of the system.

Hope that answers your question Joe. Did I miss anything?

If you are Ready-2-Eat, then there is a very good chance you are looking for Grocerant meal components.  Heat-N-eat and Ready-2-Eat fresh prepared food with portability is driving retail food success in 2012.

As long as multi-generational family's gather for meals together, the demand for a more divergent flavors continues to permeate.

Grocerant mix and match bundled meal component offerings allow for increased family integration, understanding and acceptance in less time without a required cook from scratch skill set.

In the 1940's cooking from scratch was the normal.  The average home cooked meal took 150 minutes to prepare. Everyone sat down at the table and enjoyed it or not but they all ate the same thing.  Today's "home cooked meal" takes on average less than 30 minutes to prepared. But, in most cases at least two different entrées are served.

The average time spent inside a McDonalds in the 2,000 was 11 minutes. Today 65+ percent of all McDonald's food is sold via the drive-thru. U.S. fast-food chains are increasingly remodeling restaurants in an effort to garner additional drive-thru customers inside and increase sales because the drive-thru can't hold all the cars.

According to an article in the New York Times magazine, McDonald's Corp. saw a 50% increase in sales during the first quarter after opening a remodeled restaurant in Riverside, California, that features a new décor, solar panels on the carport, and ceiling panels that contain L.E.D. lights. During the first 12 months, sales at this restaurant increased 20% overall.

Walgreens is creating and bundling distinctive differentiated food consumable's as an entity with identity by day part in a mix and match meal component format in select urban setting targeted at both the office worker for lunch and meal components for them to take home for the family dinner. It is a successful program.

The grocerant niche continues to grow with companies like Central Market, Whole Foods, Wegmans and 7 Eleven entering the fresh prepared better for you space.   

Meal time is now becoming a time of convenient meal participation, with differentiation and individualization for the entire family.

More often than not the multi-generational family today is multi-ethnic as well.  Creating a demand for more varied flavors and additional cooking skill set that is simply not there.  Grocery stores, Convenience Stores, Restaurants and Chain Drug Stores are all selling ready-2-eat and heat-N-eat fresh prepared food. Is your focus family dining? 

Are you selling meals or meal components for Take-Out, delivery or Take-Away?

Capital Area Franchise Association founder and well known franchise attorney Warren Lewis led the important panel discussion:

How to Improve On Your Franchisees' Unit Economics, on July 16th, 2013.

Joining Warren on the panel were Gregory Plotts, CPA of Yount, Hyde & Barbour an expert in franchisor/franchisee audit, accounting and consulting services and John A. Gordon of Pacific Management Consulting Group an analysis, advisory, expert witness and business intelligence aggregator focused on the franchise restaurant sector.


1.  The Problem - Lack of Timely Reporting

There is great opportunity for better franchisee unit level performance reporting and corresponding franchisor support.

However, the audience concluded that less than 40% of franchisors get meaningful and timely reporting from franchisees.  

Warren also pointed out that in 35 years of franchising, he has never terminated a franchise agreement solely because the franchisee wasn't reporting on a timely basis.


2.  Why it Matters Even More

John Gordon pointed out that the U.S. restaurant marketplace is overbuilt, yet  still growing.

So, the competition for sites is intense pushing rents up for prime locations and requiring franchisee and franchisor operators to be focused on unit level performance like never before.

Those franchise systems that are better at getting their data have a competitive advantage. Popeyes is out muscling KFC, for example.

Greg Plotts emphasized that creating dashboards with Key Performance Indicators - KPI- in as close to real-time as possible enables both franchisees and franchisors to be nimble and act on what the KPI reporting is telling them.


3.  The Opportunity for Franchise Systems

The audience asked how do you get to a point where a franchise system can get the reporting and KPI platforms built and adopted?

Every franchise systems need a Standard Chart of Accounts.  (Restaurants can start with the National Restaurant Association's uniform chart of accounts.)


Here are the 6 takeaways from the experts and CAFA audience: 

A. Franchisors should:

1. Produce reports that are valuable to both the franchisor and franchisee.  Franchisors need to find out what reports their franchisees need.

2. Get the franchise field consultants focused on the franchisee's unit level P&Ls. To have onsite in the field meetings without good numbers with franchisees is not the best use of franchisee and franchisor time.


B. Franchisees should:

1. Understand that some of them will want to know how they rank, and that group should be the first to work on a standard chart of accounts together with the franchisor and service providers.

2.  Understand that money spent on accounting platform now will pay off in future growth.


C.  Service Providers/Suppliers Should:

1.  Not push the franchise system to a cloud based platform or even dashboards until there is sufficient buy in by the franchisees.

2.   Understand the different needs for reports, by franchisee and franchisor and tailor the product accordingly.


CAFA's next Lunch and Learn on Unit Economics will be Tuesday, July 15th, 2014


Of the many experiences we all have each day involving customer service, only a few may be memorably pleasant. Some may be okay. Some may even be abrasive. Shouldn't they all be great? 

Don't you think customers would be delighted in being treated one way, to have uniformly excellent service in each encounter? Wouldn't it be great to always receive "Business Friendly" customer service? Well, why isn't it that way? 

Bottom Line: The biggest mistake customer service professionals make is not treating customer's friendly enough. Somehow the cold, aloof, reserved, overly formal method of handling people has come to be considered "businesslike." But that's not true. It comes across like frostbite. To the customer it can sound curt, bored, and uncaring. It's costing companies billions of dollars in lost opportunities! 

"Business Friendly," simply put, is the middle ground between being too cold, impersonal, or uncaring, and the other extreme of being too familiar too fast. 

Want to deliver GREAT Business Friendly Customer Service? It involves the following: 

1. Treat every customer as unique; don't become desensitized. During a typical day you probably handle repetitive questions; the same thing over and over. Toward the end of the day the "lots of calls fatigue" syndrome sets in and your energy level begins to sag. This is when you need to avoid becoming desensitized, to avoid sounding bored and uncaring and unpleasant to customers. Every customer deserves the same uniform excellence, no matter what time of the day they call.

2. Solve the problem; don't argue! When a customer is wrong, and sometimes they are, it's not a good idea to tell them that they are wrong. Don't argue. Good "Business Friendly" customer service focuses on solving the problem, not identifying and placing the blame!

3. Show empathy; don't ignore what they say! Empathy is defined as the ability to share in another's emotions, thoughts, or feelings. When someone describes a problem or a situation, don't ignore it! Say something that shows you heard, understand, and share in the matter. Be empathetic. Reach out to involve yourself in the caller's experience. This indicates that you're being "Business Friendly."

4. Smile; don't be cold! A smile in your voice makes all the difference in the world. Yes, you can hear it! Without the smile in your voice, the listener's perception is that you aren't very friendly. It's like having a friendly expression on your face when you meet someone. Your smile is your friendly facial expression on the telephone. 

Simple as it sounds, these four steps will get you started on delivering great Business Friendly customer service. 

As a customer service professional, make it your goal to reach out and treat every customer with the same warm and caring manner. Your goal is uniform excellence. Make every contact memorably pleasant. To do that, make Telephone Doctor "Business Friendly" your goal. 

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Nancy Friedman, president of Telephone Doctor, is a keynote speaker at association, franchise and corporate meetings. She is the author of eight books on customer service and sales, has appeared on Fox News, CNN, Oprah, and dozens of other radio and TV shows. You can talk with Nancy at 314-291-1012, email her at [email protected] or visit www.nancyfriedman.com

Two weeks ago, McDonald's (MCD) announced it planned to refranchise up to 1500 units out of Europe and Asia Pacific, and announced a series of increased dividends and share buy back plans.  In 2013, Wendy's (WEN) announced refranchising of 450 units in its non core markets.

In 2012, Burger King (BKW) and Jack in the Box (JACK) kicked into serious refranchising, so much so that Burger King (BKW) now only owns and operates the 52 units in Miami out of a 13,667 worldwide unit total. 

Even Starbucks (SBUX) is finally franchising its flagship Starbucks brand, refranchising units in the UK and Ireland.  YUM has been furiously refranchising since the mid 2000s but intends to keep China Company operated.

Franchising has a high percentage margin--McDonald's has an 83% worldwide franchisee operations margin, and is among the highest. YUM's David Novak seems to confirm that when he says "we love franchising--it's the highest possible margin business we can be in. "

The debate in restaurant circles about the proper mix of company and franchised units has been legendary.  In the 1970s and 1980s, the trend was towards company owned locations.  In the 1990s, as return on invested capital (ROIC) and awareness of  free cash flow--profit less capital expenditures-- expanded, refranchising picked up.

See GE Capital's presentation slide below, from a presentation Managing Director Todd Jones gave last week, which has some telling comments on this topic:  

GE Capital.png


Refranchsing means the company thinks it can make more on the royalties, and on rent surcharges (if it owns the real estate) and by reducing G&A and capital expenditures (CAPEX), versus operating the unit.

In my view, most times, refranchising involves weaker profit stores, lower than a magic profitability toggle point and typically involves weaker brands or weaker geographies in a brand.

Therefore, investors may like it, especially in the short term. But who is it good for?   

Benefits of refranchising

  • Refranchising can be a stock catalyst, that is, it is some corporate new news, particularly if it funds increased dividends or buybacks, or if it is associated with more debt that can fund dividends or buybacks, that juices the stock. That what McDonalds is doing.
  • Optical improvement of the numbers:  refranchising takes the lower units out of the base, and optically makes restaurant sales and margins improve, as both Wendy's and Jack in the Box have noted.
  • Refranchising should lower debt, to allow for special dividends or to improve credit ratings, to ultimately lower interest expense.
  • Wall Street hopes refranchising will smooth out earnings variability and will shelter the franchisor from food cost and labor inflationary forces.
  • Boost Return on Invested Capital (ROIC) metric: with unit sale proceeds and capital investment falling lower or to near zero, it provides a bump to ROIC, at least in the short term.
  • It can help out franchisees, as large franchisees have a need to get larger. This was the case in the 2013 Wendy's refranchising.
  • And, in some cases, if the company can't operate stores well, refranchising is a type of outsourcing  of the problems, to others.  Both YUM (KFC) and Burger King (BKW) have admitted franchisees operate more efficiently.

Limitations with refranchising

  • Over time, the ultimate risk is the company becomes an outsourced restaurant provider--no expertise in running restaurants.
  • Adaptability/flexibility hampered: franchised concepts take longer to get new products to market and keep the physical plant remodeled and renewed. In the US, Starbucks will always have an advantage over McDonalds as it can make decisions and implement market change quickly, while in McDonalds case it takes years to attain buy in and effect market change. 
  • Franchisees live a narrower existence. They do have to pay a royalty and are generally territory constrained. In addition, the availability of funds and cost of debt for franchisees typically are unfavorable versus that of the franchisor. This implies higher cost of debt and missed opportunities. Franchisees have higher debt to EBITDA ratios. For example, the McDonalds 2013 US franchisees debt /EBITDA ratio is app. 5.4 times, versus about 1.4 times at MCD corporate.  Higher debt=higher risk=higher cost.
  • As the franchised ratio increases, investors get less visibility. Restaurant franchisors universally avoid talking franchisee performance. Currently, Popeye's (PLKI)   is the only publicly traded chain restaurant franchisor reporting its franchisee's profits quarterly--a EBITDAR number, which isn't perfect, but that  is something.
  • Decreased company structure. Good franchisors run their company units as a training and development ground for franchisees. If the company store base is deteriorated or nonexistent, quality development staffing comes at risk.
  • Once the refranchising is done, that arrow is no longer in the quiver. What next?  

The Bottom Line

Business is business. Every number and signal needs to be scrutinized. Refranchising is both a bullish and bearish indicator at the same time. It is not a panacea.  

Ironically, in reaction to the McDonald's plans last week, Wall Street was not happy. They hoped for more catalysts to juice the stock higher.  

"Variety made people less happy, not more" Daniel Gilbert

When I worked in a downtown law firm, there were many choices available for lunch. And groups of lawyers wasted much valuable time making these decisions.

But, for me, there were only two decision -left or right, once I got to the lobby doors.

298px-Stella_Artois_logo.svg.pngLeft at the lobby door meant going to Epicure, for a cheeseburger and a Stella.

Right, on the other hand, meant going to Tortilla Flats, for chili and a Creemore.

Monotony was the spice of my life.

Drove my partners crazy, who insisted on long & complex decision procedures for where to have lunch.

Our firm was located in the Fashion District of Toronto. So, there were many excellent restaurants in the area.

My partners insisted on full discovery rights before adopting a particular position about where to eat for lunch.

These "decisions" could take up to a better part of a 1/2 hour. Unremarkably, these searches produced no reliable decisions.

My Ph.D. in decision theory won me no respect. We "had" to engage in the search costs. Because everyone "knows" that variety is is the spice of life.

Turns out this is false & minimizing decision time also makes for a better lunch.

Daniel Gilbert, "Stumbling on Happiness", demonstrates that there is sound basis for my lunch simple rule.

No matter how lovely the view of lake, the quench of craft ale, the salty crunch of kosher chicken barbequed, all experiences fade to dull.

We become habituated.

There are two ways to beat habituation, or diminishing utility.

First, we can vary the experience. For example, we go to numerous craft beer tastings, or find different views of the lake, and so on.

The second way, however, is craftier: Simply increase the the time between the same pleasurable event.

"When episodes are sufficiently separated in time, variety is not unnecessary -- it can actually be costly".

Every other day, chili and Creemore is wonderful. As is a cheeseburger and Stella. You cannot do better if you searched high and low.

So, I told you this story just to make a bigger point - about customer loyalty programs.

If you are the franchise owner of Dunkins, Seattle's Best, or Krystal, then Daniel Gilbert has just designed your customer loyalty program.

Loyalty programs at QSR's are designed by the franchisor's staff who believe that only good things can come from offering loyal customers discounts, coupons, and other freebies. All of which come out of the franchise owner's pocket book.

But, Gilbert's scientific research offers a different loyalty program. It is simple. For the loyal customer, take away the menu choices. But spread out what they like over visits so they are habituated.

Sell subscriptions to a limited menu, available only to the loyal customers who had earned the privilege of beating 'the variety trap."

Help them make the only choices that count -left or right. They will have a better experience & make it to your location more often.

If you thought this was interesting and would like to read more in depth strategic stories, sign up here - you will be taken to a MailChimp signup page.

Child care marketing isn't easy whether you are an education center, kids gym, play space, or day care facility.  

Parents are extremely careful about which services they choose for their kids and do more research online than any other category.

Creating and executing child care marketing strategies are often the answer to low enrollment rates, even when operating on a small budget.

Below are 5 marketing tips a child care facility can implement to increase their enrollment.

1. Have a Modern and Mobile Website

The first step is to have a modern website that can be found by search engines and is mobile friendly. A website is crucial in order to grow a business and help develop the company brand. Without a quality website, parents may not even know services you provide. When somebody doesn't have a friend's referral they go to the Internet to find a local business, most of the time they will not click beyond the first page of search engine results page.

Abrakadoodle has done a great job with their website. The navigation bar is simple, yet effective. A parent unfamiliar with your offerings wants to learn more about your business and programs. If they like what they see, they will want to know your locations. All of this information is easily found within the navigation bar and also contains the same links within the footer.

2. Embrace Local SEO (local search engine optimization)

This means companies need to embrace how they appear on local search engines. Local SEO incorporates several strategies and tactics with the goal of positioning your website on Google's first or second page, your Google Place page on map searches, and your directory profiles on local and mobile searches. Very few people are going to open a phone book to find a child care facility, most people going to ask a friend or are going to perform a local search on their favorite search engine. If you aren't listed on the first or second page of Google and local directories, you won't hear your phone ring as often as you should. See 5 Steps to Local SEO Success.

3. Embrace Content Marketing As More Than Blogging

Content marketing should also be considered when marketing your business; it's a great way to build connection with parents. It allows parents to understand what actually goes on in your facility. If possible, try to include pictures within your articles; as you are much more likely to gain trust and visual elements make social media sharing more compelling.  Leverage your content everywhere you are online.  Use it to power newsletters, social media posts and use keywords throughout your copy, titles and URLs to help you win important local search keywords.   Remember, building a compelling content footprint online is critical to controlling your reputation. See Content Marketing - The Future of Local Brand Marketing.

4. Drive Your Social Reputation on Social Media Networks

Being active on the social networks that reach parents should also be a cornerstone to your marketing plan. Parents need to feel comfortable leaving their children in your care and will look online for reviews, what you put out there and what people put out there about you. By embracing content and social media marketing, you are able to develop trust, control the conversation with your topics, and show them how your run your business while you care for their child.   Your values can shine through and by communicating regularly with your loyal customers, you are more likely to solicit positive reviews (see 8 Simple Tips to Get Positive Yelp and Google+ Reviews).

Below are great tweets from Citibabes (a family membership club offering educational and fun family activities). The tweets are great for a couple of reasons. First, they include pictures and link to their Instagram account. Second, they are using popular hashtags such as #graduationday and also incorporate geographic hashtags, i.e. #NYC and #SoHo.

5. Remember Email Marketing Still Has the Highest ROI 

Child care facilities need to embrace email marketing to retain their current parents and upsell them to new services. Your parents want to know what is going on at your facility, as well as being informed about your new activities and events. Not only will existing parents find more reasons to come back, they will also take your emails and forward them to their friends who have children.  Email marketing returns $38 for every $1 spent and is still the most underutilized marketing channel in the child care marketing space in our opinion. See 6 Steps to Better Email Marketing.

If you utilize these 5 modern marketing channels, you will stop losing potential clients, increase repeat customers and start to see your child care enrollment increase.

Name? Account number? Zip code? Mother's maiden name? Sort of sounds like a prison movie, doesn't it? 

Well, it's not. It's the start of a pretty average call in many a call center. Why? In most cases, the call center agent hasn't been shown another way to answer a call. 

his next story illustrates why it's important for agents to gather information from callers without sounding like Wanda the Witch or Warren the Warden! 

My wallet was stolen a few months ago. Fortunately, I remembered the names of the credit cards I was carrying. Unfortunately, my wallet with all the credit cards also had my checkbook. 

My first response was to list the cards that I knew were in my wallet. I then began the daunting task of calling each of the major credit card companies to report the loss. Perhaps because of the type of work I do every day and because of the horror stories I've heard, I have become "Mrs. Perfect Customer." I don't yell, I don't belittle, and I don't get angry. I smile and try to help the call along. I'm really a good customer. 

With this in mind, I picked up the phone and made my first call to one of the credit card companies. "Hi, my name is Nancy Friedman," I said. "I'm in Orlando,Florida, and my wallet with all my credit cards has just been stolen and I wanted to report it right away." 

"NAME?" said the agent with the voice of a warden. 

I always give my name up front, as I had this time. Obviously, the agent who answered the phone didn't hear it, didn't write it down or didn't remember it. So I repeated my name and spelled it for her. (I don't like to get mail to Nancy Freeman.) 


I thought one of us had better have a sense of humor, and I could tell it wasn't coming from the other end, so I said, "Well, I have my phone number, address and birthday memorized. I never got around to memorizing all my credit card numbers, and if you recall, my wallet with that information was stolen." 

Dead silence. Then I heard, "PHONE NUMBER?" 

Well, it went downward from there. I won't burden you with the rest of the conversation. Suffice to say, I was disappointed. There wasn't one word of sympathy or empathy from this agent. She sure didn't have what I refer to as the 'care gene.' She had a job to do and by gosh, she was going to do it and in record time, too. 

I had six credit cards in my wallet. When I called to report the loss of each one of them, none of the credit card companies acknowledged my problem. It was hard for me to believe, too. Probably the worst experience I had was when I called the bank concerning my checks. When I told my saga to the bank, the woman I spoke with asked the questions as though I had been the one who stole the wallet.

What does the behavior of the agents at the bank and the credit card companies say to me, the customer? It says that maybe I should take my business somewhere else. 

To keep customers satisfied and loyal to your company, it is crucial that an agent build rapport with every customer at the beginning of each call, whether the customer is calling to discuss a problem, a concern or an inconvenience. 

The agent who answers the call should acknowledge what the customer is saying and use the same words that the customer says, as in the following example: 

Caller: "I just lost my wallet." Agent: "Your wallet? I'm so sorry. Let me get your name and we'll see how we can help." 

Learning how to build rapport is an art, not a science.

You may recall Yul Brynner, the great actor, who appeared in the musical "The King and I" in more than 2,000 performances. He said the same words, night after night. Yet each performance was award winning. Why? Because each performance he gave was to a different audience.

I imagine he got tired of the script sometimes. Yet because he knew the audience was new each night, he made his lines sound fresh every time. 

For call center agents, the telephone is the stage and the mouthpiece is the curtain. One of the best ways agents can be sure to convey empathy is to practice the lines they say most often so that they sound different every time. 

I sympathize with agents who work in centers that receive enormous numbers of calls. But I also hear all sorts of excuses. One of the most common is: "Gee,Nancy, we have to say the same thing over and over. It gets so boring." Or "Nancy, we're limited for time for each call." Or "Our policy is to get on and off the phone as quickly as possible." 

These are excuses. Not reasons. Although an agent may say the same thing over and over again, it's probably the caller's first time asking the question. And it isn't enough for agents to know the answers. They also have to reassure customers that they're ready to help them. When customers reach call center agents, they don't care how much they know - until they know how much they care. 

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Nancy Friedman, president of Telephone Doctor, is a keynote speaker at association, franchise and corporate meetings. She is the author of eight books on customer service and sales, has appeared on Fox News, CNN, Oprah, and dozens of other radio and TV shows. You can talk with Nancy at 314-291-1012, email her at [email protected] or visit www.nancyfriedman.com.

I was recently interviewed by Canadian HR Reporter.

The article, entitled "Employee Activists Represent 'Huge Opportunity' for Employers," was written by Sarah Dobson and explores the potential impact (both positive and negative) of employers engaging employees proactively in social media conversations.

It's a huge opportunity if it's handled appropriately, said Frances Leary, president of online communications company Wired Flare in Halifax. 

"Organizations have to have their policies in place and make sure they're well-communicated to employees, so that employees understand what the guidelines are, what they can and can't do," she said. "If all of those things are well-defined in advance, it's a fantastic way to promote and increase the company profile.

Further in the article it reports:

The employers that are successful [in establishing effective employee engagement on social media] are the ones that really value employees as part of the team, said Leary. "They're a very close-knit group, they've got consistent communication from the top down all the way through the ranks of the company so that everyone feels like they're a part of it," she said. "

On the flipside of this, the risk for a company to implement this type of program in an environment that's not like that -- they can really be opening themselves up for potentially harmful situations."

And the relationship goes both ways, said Leary. "Companies have to realize that in entering into this relationship with an employee, not only is the company trusting the employee but the employee is also trusting the company to be part of their social network, which in a lot of ways is very personal, so the trust goes both ways."

To read the entire article, click here.

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