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The Daily Battle Sales Versus Operations



In the world of business there are many components that make up a successful venture.  All must work as a team with the one vision in mind, which is the health and prosperity of the company.  But business is also a daily battle.

The procurement/purchasing department is obliviously involved in getting the necessary goods in house that are needed to manufacture a product.  But they are bound with the task of not getting more than is needed or have available capital tied up in inventory.  That makes sense.  But what if they are tightening their belt a little too much and under-order based on business needs?  This will of course affect the customer in some way.

The marketing department is responsible for spreading the word about the product(s) or service a business offers.  Regardless of their methods; through print, television or internet advertisements, through social media and direct mailings, they promote the benefits of the business.  Much is dependant of the successful marketing efforts.  If they fail, any potential new customers, as well as existing customers, will not learn of the benefits of the business.

Let’s now focus on the two departments that are the front-line of the most businesses; Sales and Operations.

This is where the predictable differences lay when it comes to which is more important.

No industry is better represented with this challenge than that of hospitality, hotels in fact.  There is always the friction between those responsible for “bringing the business in” versus those that “make it happen”.  Each has a distinct, and conflicting, view on how it should be done.

Sales


Most hotel sales people are broken down into two categories; room sales and meeting space.  Room sales will focus on “getting heads-in-beds” and booking as many rooms as possible, whether through individual guest bookings or group business.  Those in charge of booking meeting space are further segmented into corporate business, social bookings (birthday parties, anniversary parties, etc.), weddings and maybe even golf events if applicable.  There is even a SMERF category, which stands for Sports, Military, Entertainment, Religious and Fraternal.

The sales staff all have one thing in mind, to book as much business as possible.  And why not, their compensation is based on a percentage of revenue generated from the events booked.  If they don’t book, the hotel will not have any business and the sales person will not get paid.  Seems cut and dry to most.

The restaurant manager usually doesn’t need to worry if sales don’t book because their job performance is not based on that.  The housekeepers pay is not affected when sales are down.  The front desk agent still gets paid even with a poor performing sales staff.  Or do they?

When hotel sales are down this puts enormous pressure on all departments to cut hours and do more with less.  If it gets too bad staff will be cut, laid–off or terminated based on the lack of business.  Then the sales staff themselves may be let go if they can’t produce.  So the sales staff is under the constant demands of producing revenue.  This revenue is not only actual but projected.

Projected revenue is used to make budgets, to plan the next marketing campaign and for the large investment of capital improvements in the coming year.  This gives the sales staff power, power to chart a course for the future of the company.  But many times it gives them the power to sell events with no consideration of the cost of doing business.  This is where the problems start.  Now on to:

Operations


This is the backbone of any hotel.  No matter what is booked, and at what price, the operational departments are responsible for making the guest’s experience as special as they hope for, and even to go above and beyond their expectations.  But this comes at a cost, the highest in the business; labor.

Labor costs, or “payroll” is usually the largest of the “non-fixed” costs of a hotel.  When an event is booked at a low rate it still must be serviced, and done so within the hotel standards and the same business costs, regardless of the revenue generated from that event.

For this example I will focus on the areas of the Food and Beverage Departments and how they respond to the demands of a corporate meeting event.  This department is divided into two sides; the “front-of-the-house” and the “back-of-the-house”.

The Culinary Department and all their support staff are the back of the house.  They usually do not have any direct interaction with the guests, hence the term back of the house.  The Banquet Department consists of the wait staff, bartenders, housemen (who setup the rooms) as well as the managers, and is called the front of the house since they are in direct contact with the guest.

When a sales manager sells or ‘books” an event they are not responsible for what it takes to make the event happen.  Whether it is a small event of 10 people or a large multiple day event, their primary focus is to book the event, get the information needed for the operational departments to make it happen.  But is that really their only responsibility?

What good is booking a small event when the cost of servicing the event is more than the revenue generated from it?  Yes, this small group can be the start of a long-term relationship with the customer and may lead to multiple future events as well, but what if it doesn’t?

The chef is still held accountable to the food cost and what it is as a percentage of revenue.  He is tasked with keeping his labor costs down as well.  But just because there may be a small event to service his quality, presentation and freshness of the food prepared must still be first-rate.  Too many of these small-profit events do not allow the chef to efficiently run his department in the manner expected of him.
The banquet department then must get into the act.  Setup staff as well as waiters/bartenders are next in line.

Are we to think that the sales manager that booked this group realize that the waiter may be paid based on the revenue of the event?  Low revenue = low pay.  Does the sales manager know that the revenue generated from the bar for ten people during dinner is not enough to cover the cost of the bartender’s hourly rate or the cost of setting up the bar?  Probably not.  So they don’t worry about it.

Then there are the situations where “sales” will discount the price of the event in order to make the sale.

“If I didn’t discount the price they would have booked somewhere else” is a common phrase from the sales staff.  But “operations” can’t get a discount on the cost of food or lower the hourly rate of the staff needed to service the event.  But we gave a discount to the event anyway.

When month’s end rolls around it is the chef and banquet manager that must sit in the boss’s office and justify why their costs are too high and not in line with budget.  They are the ones that must explain to the customer why something was not done “as promised from the sales manager” when they may not have been provided with the information.   And what if the compensation or yearly bonus for these positions is dependent upon them staying within their budget?

It is very easy for operations to downplay the value of these small groups because of the reasons already mentioned.  “We’re not making any money on this group” someone may say, so their best staff is not scheduled to service it.  “Just get the food out” is said in the kitchen, so the food presentation is not up to par.  What is the ultimate outcome?  A poor experience for the customer.

I will never fault a customer for asking for, or receiving, a low price.  But we still must treat this as one of the bust customers we have in order to continue the relationships we value in the hopes of more business in the future.

This is where the battle begins.  It takes a concerted effort for “sales” to understand what it takes in order to produce the expected results, and top customer service, for the events they book.  And the “operations” must realize that if no business is booked and revenue doesn’t walk in the door then positions may need to be eliminated and the business will suffer.

The challenge is for all parties involved to work as a team, understand the expectations and responsibilities of each, and find the best solutions for the health of the business.  Until that happens the battles will continue.

IHOP Restaurant and the Almost Hidden Text Message



Last week I stopped into the local IHOP Restaurant with my wife to get a quick lunch.  Nothing fancy just a burger or two.  The food was fine, service quick and waiter mostly attentive.  But then a funny thing happened…

We were seated towards the rear of the restaurant and off to the side nearest the kitchen.  Not necessary an optimum seat for a window view but adequate enough to see my server standing behind the etched glass partition that separated two sections of the restaurant.

I wondered why she was just standing there when she obviously has a full section of tables to tend to.  Was she looking over the orders for her tables?  Was she speaking with her manager that was out of my line of sight?  Was she with a guest at another table?  What was she doing?  Texting on her phone – that is what she was doing!

What has happened to the work ethic, and frankly the common sense, of today’s young workers that they think it is acceptable to stand “out on the floor” of a restaurant and send text messages during their shift?  What has happened is that the work ethic is quickly crumbling.

Customer service is not what it used to be.  Customers have become a bother to many in the service industry.  We just want to work our 8 hours and go home.  And hope that no one complains.

Management has become too afraid, or lazy, to uphold company standards.  In many corporate quick serve restaurants (QSR), the management is bogged-down with completing corporate-mandated reports and following staffing guidelines, as their primary means of judging performance, that they are not focusing on the performance that really counts…the performance of their staff in addressing the needs of their customers.

This is not an attack on the waitress but more of an acknowledgement that we still have a long way to go in our industry in order to provide the mindset of customer service and attentiveness in our staff.

At least go in the back room and out of view of the guests if you have to send that text!  
Only kidding.

Then The Waitress Says…”Are We Bagging Today”?



Every server in the restaurant business has their own style, their own manner, and their own way of interacting with their customers.  Some are formal and professional, some are relaxed and carefree, and some are “by-the-book”, not showing much emotion.  But most are friendly and really try to make your dining experience enjoyable.  To be a little more personal, many of today’s servers will also use their local slang and familiar terms when speaking to you.  This is where some problems arise.  Here’s my story…

It was a brisk afternoon, sunny with a few puffs of clouds, as my group of six walked into the diner looking for a quick lunch.  The diner, which sat on the eastern flank of a busy road, was unexpectedly full and I thought there would be a wait for a table but thankfully I was wrong.  We were quickly escorted to a large booth in the corner and greeted by our waitress.

She was pleasant and knowledgeable of all the side dishes offered for the meals we ordered.  Our beverage orders were taken and delivered, bread and butter placed in the table’s center and extra paper napkins as well.  Then the first strange comment was made; “I’m gonna have you be my helper and pass these plates to the end”, said the waitress.  The customer, me, is “gonna be the helper”?  That was not what I expected.  Of course I would be glad to assist the waitress in passing the B&B plates around the table but would have appreciated being asked in a different tone.  OK, no big deal, we moved on.

The conversation kept to a steady pace as our waitress left the table after indoctrinating her newest recruit, me, into her fold.  I have always been critical of the service provided by most servers but also realize that we weren’t eating in a multiple-star restaurant, just a local diner with quick food and pleasant surroundings; nothing more.  I shouldn’t expect much.

Before we knew it, our meals came, prepared as ordered and piping hot.  Another good sign.  But these were the largest portions I’ve seen in a long time.  I’d hate to see their food cost, they must be losing their shirt on our table.  Anyway, our waitress asked if there was anything else we needed then left to attend to the other tables in her section.  We picked up our utensils and attacked our plates; the food was not too bad.

Since our portions were so large, none of us were able to finish, though we sure tried.  With our forks given a rest and placed plate side again we continued our conversations.  Just then our waitress came over to our table and with a big smile and hand on her hip said, “Are we bagging today”?  
Are we bagging today?  I’ve never heard that expression before.  We all sat there in silence while we tried to process her comment.  Oh, I guess she wanted to know if we wanted to “bag” the remaining food from our plates to take home.  But this was a little too cutesy for me.
“I’m glad to see you enjoyed your meal; would you like to take the rest home with you?”  “I know we offer large portions here, I’d be happy to wrap-up the rest for you to take home”.  These are appropriate statements for a server to make.  I’d even be ok with “Do you want a doggie-bag” but “Are we bagging today”?  That one has to go.

Today’s quick serve and family restaurants are more concerned with moving their customers in and out as fast as possible. The “2 for $20” type of offerings don’t leave much as profit, if any at all, so the focus is on quantity not quality.  The food quality offered is usually sufficient for most but how about some quality customer service training to teach appropriate ways to speak with the customers you are herding through the doors?  

We don’t expect much, we don’t need a linguist or someone fluent in five languages.  We don’t need a playwright, a motivational speaker or a server that can sell us the Brooklyn Bridge either.  We, as customers, just want to be treated in the same professional manner as anyone else, regardless if we are taking a doggie-bag home or not.
I hope Fido likes his snack.   

The Five Best Ways to Deal With An Upset Customer


Regardless of your business there will be the inevitable situation where a customer is dissatisfied with your product or service.  It is a situation we never want to deal with but know we must.  “There is a lady out front that is unhappy with her ____________” is a term that no manager wants to hear from their employee but it does happen.  So as any good manager we rush out to greet the upset guest and find out what the problem is. 
But do you know the simplest and most effective way to address the situation?  Are you prepared on the spot to make the situation “right” for the customer?  Are you able to alleviate all their fears and concerns and to do so quickly?  

Here are the 5 keys needed to make this happen:


  • Learn the facts from all parties involved
Before we can make a decision as to what steps are needed in order to resolve the issue, we must seek out all the facts of the case.  In an impartial way, speak with the customer to determine what happened and their impressions of why they believe they were wronged.  Then do the same with your employee(s).  
Find out what steps may not have been taken behind the scenes that would have resulted in the customers’ dissatisfaction.

Were all standard procedures followed; are these procedures even appropriate, or must they be adjusted, in order for this situation to not happen again?
  • Know your abilities and limitations in the steps available that you can take to fix the issue

You need to enter the conversation knowing what you can do right now to fix almost any issue.  If you don’t then you will look ineffective and low-ranking in the eyes of the customer.  They want to deal with someone that can make things right for them.

There must be a system in place for a company’s hourly employees, as well as mid-level managers, to be empowered to quickly offer a refund, an upgrade, to “WOW” the customer by going above and beyond, or any other appropriate resolution without needing to first get approval from a senior manager.  This only delays the process and may make the customer feel as if they are being shuffled from employee to employee just to fix what they may believe is a small and easily addressed problem.
  • Inform the customer that YOU are the person that will assist them
Do not hand-off the customer to someone else, take care of it yourself.  Peace of mind comes easy to a customer when they know that the person to whom they addressed their concern will see the resolution to the end.

But this may not always be possible so this is where the next key comes in.
  • Get direct assistance from others in your organization; if you are not able to resolve the issue yourself
  
There may be times when a resolution cannot be achieved at the moment the issue is brought to your attention by the customer.  Computer systems may “be down” so a refund cannot be given.  Another branch office or location may be closed so you are not able to contact the person(s) able to fix the issue.  
But most times this will not be the case.

There will usually be someone else that is reachable and in a position to make the final decision regarding the customer, if you can’t.  Explain your situation, and that you are with the customer, either in person or by telephone, and that you need assistance.  This person may be able to give you the final authorization or recommendation to take care of the customer’s needs.


The ultimate goal is to quickly resolve the issue at the moment it happens.
  • Follow-up with the customer (after action contact)
As part of the initial conversation with the customer you should be able to get their name, phone number, email address, etc. or will be able to do so later on in the resolution process.  This gives you the information needed to finally put the issue at rest.

Once the issue is satisfactorily resolved, personally contact the customer again for an after action report.  Depending of the method used the length of time between resolution and contact will vary to take into account different scenarios:


*A refund check was mailed

*A new food item cooked and presented
*A room upgrade was given
Each of these has a different length of time needed between resolution and follow-up.

Contact the customer.  Confirm that the issue has been resolved to their satisfaction, or preferably above their expectations.  Let the customer know that you value their business and look forward to seeing them again in the future.


One method I like to use is to tell the customer that next time they planned to visit our business, call ahead and I will personally make arrangements to book their reservation, take care of them at the check-out counter or personally make any other preparations for them. Then when they arrive finish off the experience with a “gift” of some kind.


This has been the best way I found to turn a dissatisfied customer into a loyal repeat customer.  And one that is appreciative of your efforts and actions.

How The Tire Shop Lost a Customer, Me!


It was a busy day, yes it was, but isn’t this what every business longs for?
If not for the busy days, the doors would shut, windows would be boarded-up and the suppliers clamoring for payment.  So how can we complain for days like this?  We’ll see.
I had a flat tire on my snow blower that needed to be repaired.  The storm was coming, at least that’s what the television weather people said, so I made a few calls to see which of the local tire sales & repair shops would fix a small tire on my blower.  Yes, it’s not a big job but one that must be done.
One of the first shops I called at 9:30am told me “Sure, we can fix that, bring it right over”.  Great news to start my day, I rejoiced.
By 10:15am I was already in the shop with my machine.  Well, not actually IN the shop, more like waiting outside the door at the back of the line.  It was a busy day and it seemed like everyone in the neighborhood was looking to get new tires for their car.  Remember, the storm was coming?
But the line moved fast and I neared the counter.  “How can I help you?” said one counter man.  “I called a little while ago about repairing the flat tire on my snow blower”, I said.  “Sure we can fix that but it’s a busy day today” was his reply.  “That’s fine”, I said, I can leave it here and you can get to it whenever you want, as long as it’s done by the end of today”.  “Ok, we close at 6pm” he finished.  I parked the blower right outside the shop window, left my name and cell phone number and was on my way.
As the day wore on and doing my daily chores I lost track of time.  I glanced at my watch saw it was a little after 5pm and no phone call from the tire shop.  I guess they just forgot to call me; it must be fixed by now, so I headed over to the shop.
The snow blower was still in the same spot as when I left it over 6 hours ago.  This is not a good sign.
As I entered the now quiet shop, only a few customers took up the waiting room chairs, I said “I’m here to pick up my snow blower”.  “I don’t think we got to it yet”, said the counterman.  After looking around he said “You’re next”.  “I’m next”, I said, “You have had the machine for over 6 hours and never fixed it, but NOW I’m next”?  “We’ve been very busy today” was his reply.
Not wanting to make a bigger deal of this I patiently waited 25 minutes for the mechanic to repair the tire on my machine, paid my bill, and was on my way home.
Why do some businesses lose sight of the big picture when it comes to their customers? 
We all want the big sale and prioritize the customers as they come in our doors but shouldn’t they realize that a small customer, this time in my case, can lead to a larger customer, increased business and more customers down the road?
We all have a circle of family and friends and are more than willing to recommend the goods and services of a business we like and one that has taken care of our needs.  My sale was not a large one, especially compared to the replacement of 4 tires for many of the other customers, and I understand the shop not getting to the repair right away.  But to forget about it and not make the repair at all?  This is why I left the machine and gave them over 6 hours for the repair.  I am still a new customer for them with potential business for the future.  Apparently that was not important for them.
Some studies have shown that almost 80% of small business customers make their choice on trusted referrals from friends and family.
Do you think that I would refer this business to others based on my experience?  Probably not.  I would have more respect for the business and its management, if I was told earlier that they expected to be very busy and would not be able to fix my machine today.  That would have been fine since I would just go somewhere else for the repair.  But their short-sightedness came into play and they now lost the opportunity for my future business.
By the way, the snow storm never came…

The Dreaded Wedding Breakfast and How to Nickel and Dime a Customer


The wonderful world of weddings. You book the event and promise the “perfect wedding”. The birds will sing, the flowers will bloom and the rainbow will shine in all its glorious colors. Well at least that’s the plan.
So the wedding night finally comes and guess what? It does indeed turn out to be the perfect wedding; rave reviews from all the guests and a packed dance floor all night. The staff does a great job; service is attentive and top notch. The kitchen cooks and presents the food so well that it should be on a magazine cover and everyone leaves at midnight as happy as a lark. A great end to the day.
All you have left to worry about is their wedding breakfast the following morning. I won’t get much sleep tonight because I need to be back the next morning at 6am but I’ve done it hundreds of times.
It’s the next morning and my sleepy staff and I are setting up the buffet breakfast for the 120 planned guests. Doors open, guests arrive and food is eaten…along with lots of coffee. As we get towards the end of the breakfast we realize that we have about 15 additional guests that were not planned for. All of them did attend the wedding but we had not anticipated them joining us for breakfast, nor I believe did the hosts of the event.
Now we have two options:
  • Charge the host for the 15 additional guests; after all its “business” right?
  • Allow these extra people to eat for free as a gesture of good will.
Let’s delve into these two options a little more:
Option #1
As a “for profit business” we are not here to provide a product or service for free. We have fixed costs such as insurance, building expenses (rent/mortgage, repair & maintenance, etc.). We also have all the variable costs like payroll, food, gas & electric, etc. We must pay the staff for working the event and if we don’t charge for these additional guests we will lose money. We can’t give food away and not charge.
Another line of thought is that each event, the wedding then the breakfast, are two separate entities and one should not be influenced by the other. Just because the group had their wedding here last night doesn’t mean that this event should be discounted or we should under charge for the guests served. “It’s business”!
Option #2
Let’s look at this from the “big picture” perspective. When we go to a store like Costco, aren’t there many stand-alone kiosks inside the store offering free samples of the food items they sell? Why do you think this is done? Is it just because they want to be nice and give you a little snack as you shop in their store? I doubt it.
When you go to the local deli or bakery, have you ever been offered free samples of their product to taste? The intent of the business is to entice you to purchase one of the items you have just tasted. Ever hear of a “loss-leader”?
Supermarkets all across this country have used this practice for decades where they offer a product at a very low price, maybe even at a monetary loss, just to get you into the store. Once inside there is a more-than-reasonable expectation that you will purchase additional items at regular full price to make up for that small loss on the one item.
This is “big picture” thinking.
Now back to the wedding breakfast…
Why would a business work so hard to “WOW” a customer and earn their trust just to have the final touch point be one that leaves an impression that we “nickel and dime” them right after they spend $30,000 on a wedding? This is not smart business.
How much potential business and favorable recommendations can we receive from this customer if we let them know that we have fed these additional guests at no charge to them? They will be extremely appreciative of our gesture. This is another way of doing the unexpected for the guest and letting them leave on a high note. They can’t help but remember our actions.
It has been a long standing practice for businesses to accept competitors discount coupons. Many stores will offer a “price match” if the customer sees the same product offered at another company.
We spend untold millions of dollars on advertizing, marketing, offering discount coupons, package deals, etc., all in the hopes of generating more business and more revenue from these methods. Doesn’t this amount to giving away future revenue in the hopes of making a happy customer today? And one that will come back tomorrow? Of course it does.
So think of the BIG picture and don’t nickel and dime your customer!