GLOBAL PROVINCE - Home - About This Site - Agile Companies - Annual Reports - Best of Class - Best of the
- Big Ideas - Brain Stem - Dunk's Dictums - Global Wit & Worldly Wisdom - Gods, Heroes, & Legends -
Infinite Bookstore  - Investor Digest - Other Global Sites - Poetry & BusinessScenes from the Global Province
A Stitch in Time - Two Rivers


Return to the Index of Letters from the Global Province

GP1July:  Ruth & Paradise Lost

The Story of Ruth.  Years ago we hired Ruth, then a housekeeper, to man the phones in the New York office of the last business we ran.  All our staff bellyached for 3 months, because she made mistakes aplenty at first.  It was hard to deal with the primadonnas amongst our 50 people and with the raft of very demanding callers from America’s largest companies. 

Then the gripes disappeared.  Everybody began to love Ruth.  She got into the telephone, immersed herself in all the details of making the phones work supremely.  Somebody might call in who had not talked to us for a year, let’s say Henry Lindstrom, and she would say, “How are you, Mr. Lindstrom?  We haven’t talked to you lately.”  It was as if he just called us yesterday.  And she called him, “Mr.,” not “Henry,” avoiding the unwarranted familiarity phone sales personnel display these days.  And she did a 1,000 other politenesses to put our clients at ease. 

Ruth’s no longer there.  And the business has never been as good.  Paradise Lost. 

The Numbers Don’t Work.  If you are an investor, you are slowly learning from today’s headlines not to rely on audited financial statements.  Even when accurate, may we add, they don’t tell you much about the company.  At the beginning of the 20th century, we stopped using our financial statements to manage the company and began to use them for the entertainment of publics outside the company.  They have never been the same.  Even in the best of companies, they don’t tell you what’s happening inside.  Paradise Lost. 

Give Them a Jingle.  So what do you do when you no longer have a friend named Ruth at a company you are calling and you can’t trust the numbers.  Investors, we’d suggest you give any company that interests you a ring on the telephone.  See how you are treated.  Can you reach someone fairly soon?  Are the people you talk with forthcoming and polite?  Can you get your business done?  In the last month, we have been undone by United, put in the slow lane at American Express, sorely tested by Southwest Airlines, and put on hold by AT&T.  They’re not stocks we would recommend. 

United (NYSE:UAL; www.united.com).  On 4 separate occasions, seat reservations for a party of 7 were lost by United’s reservation system, despite our frantic phone attempts to set things right.  And that was just one of our problems.  In fact, a gate agent later assured us that the reservation people always fib to get people off the line. 

American Express (NYSE:AXP; www.americanexpress.com).  It took 3 departments to settle Amex’s billing mistakes and to get back some frequent flyer points its chintzy systems denies ostensible late payers. 

Southwest (NYSE:LUC; www.southwest.com).  Reputedly, this is America’s best run major airline, as shown by its continuing profitability.  But recently a reservations clerk could not open a reservations record in order to ensure that proper ticketing occurred.  The hapless customer resorted to prayer.   

AT&T (NYSE:T; www.att.com).  It took 10 minutes and several other complications to pay a simple bill over the telephone.  Obviously AT&T doesn’t need the money.  We stuck with the call just to see how bad things could get.  Pretty bad. 

L.L. Bean (www.llbean.com).  They’re polite and they’re fast. 

Talking to the Customer.  In this era, when most products are about the same, businesses can only make a difference by offering superior service.  By and large, that means making it very easy for a customer to do things with the company over the telephone.  But, increasingly, companies are making it very, very agonizing for a customer to reach out and touch someone.  The gremlins that run call centers have been taught by shortsighted operations people to squeeze out the conversation.   

Telephone excellence is just the thing we now focus on with clients in several industries.  We are amazed at how little time customer service people actually spend with paying customers on the telephone.  We are amazed that training does not install politeness, transaction speed, product knowledge, and one-stop shopping in the lexicon of the “phone associates.”  We are amazed because successful retail phone operations will be one of the defining characteristics of great, high-return companies in the 21st century. 

JetBlue.  We have not tried JetBlue (NASDAQ:JBLU; www.jetblue.com) yet, but we hear that it’s a good airline experience at the right price.  A highflying stock, JetBlue sports a very low 6.98 cents cost per seat mile versus an average of 10.14 cents for the industry.  Lo and behold, its operating margins for 2001 was 8.4% versus a negative 8.7% for the industry as a whole.   

On Global Province this week (see Agile Companies) we talk further about JetBlue, recapping CIO’s July 1, 2002 article on JetBlue’s paperless, information-intensive operations, much of which supposedly makes life very much easier for the weary traveler.  We hope the system is all it is cracked up to be, but it wouldn’t be hard to better our major trunk airlines all of whom abuse the customer from the moment he tries to buy a ticket to the point where he finally gets on the airplane. 

Vorwerk.  Our favorite annual report just arrived in the mail, straight from Vorwerk (www.vorwerk.com) in Wuppertal, Germany.  Its theme is Paradise—Lost , Regained, etc. Shocked by September 11, management nonetheless believes this will be a century of peace and freedom, and that we will stumble somewhat closer to Paradise. 

Importantly for Vorwerk, direct sales continues to be its central strategic theme, even if it at first seems to be a manufacturer and mostly industrial company.  Vorwerk says, “The direct sale of high-quality household appliances is the company’s core competence.” 

Direct selling will be a key competence for more and more industries, a natural outcome of the relentless disintermediation that is setting in with the growth of the Internet.  New technology provides the means for us to be talking, one on one, with all our real customers, instead of middlemen.  But it ain’t Paradise if ya just talk to an answering machine. 

Speechworks (NSDAQ:SPWK; www.speechworks.com).  Part of the problem in getting to Paradise is that companies have made absolutely lousy conversions to computer telephony, almost without exception.  This makes it an agony for you to call them.  This doesn’t have to be.  For instance, when you call Speechworks, a voice-recognition company, you just tell the phone whom you want to reach and you are quickly switched to him or her.  Calling a company does not have to be an ordeal:  it just calls for a little management on the part of management.

Back to Top of Page

Return to the Index of Letters from the Global Province

Home - About This Site - Contact Us

Copyright 2004 GlobalProvince.com