On Internet Business

Two Recessions, Customer Service and Social Media

Posted by Michael under customer service, Entrepreneur Resources, Social Media

Seth Godin claims there are two recessions going on.

According to him the first is the cyclical recession that he thinks is currently ending (no sign of the double dip in his forecast) and the other is a permanent recession. He calls it a ‘receding wave of bounty that workers and businesses got as a result of rising productivity but imperfect market communication’. And he says that there are serious consequences to the changes in market communication – the market for ordinary things is now more perfect which means it’s difficult to charge extra.

That’s the easy part.

The difficult part, for much of the population, is that employment is evolving to meet the demands of market improvement too.

Vanishing jobs and new opportunities

The first slice of employment to vanish is the middle-class, mid-level jobs that were created because companies had to be local to other companies or raw materials or to buyers. Godin says that protectionism won’t solve the problem, and that  ‘every revolution destroys the last thing before it turns a profit on a new thing’.

It’s an interesting view and one worth exploring, but there are other things happening too. As job security recedes, people tend to have more than one income-stream: they become ‘entrepreneurs of the self’ and they view employment opportunities not just as income streams but as portfolio activities to enhance, or detract from, the overall project of ‘self’ employment. It means that brand ‘me’ is a big focus for individuals who understand the networked revolution.

Brand ‘me’ under attack from social media

Which casts a new light on the recent backlash against TripAdvisor reviews which has resulted in a proposed defamation suit. MyCustomer.com sees it as a wrongly-thought-out attempt by business to corral customer opinion, but if we’re all entrepreneurs now, then there’s very little difference between the individuals providing the service and the individuals commenting on it. It’s notable that several of the companies taking part in the proposed case are in fact individuals offering bed and breakfast accommodation in their own homes.

In other words, these are portfolio people who don’t view themselves as businesses: they see a review they think is unfair and it’s personal, it attacks them and their competences rather than those of a business entity from which they can separate themselves – they are their business and they feel they have the right to challenge views that may damage their income.

It’s probably still wrong-headed to engage in lawsuits to limit free speech, but the recession of big employment is likely to mean that small employment is much more personal and more intense. Reviews – when seen as attacks on small employers, whether they are businesses or brand ‘me’ service providers - are likely to cause heartache as well as lost sales, and that’s something new forms of employment have not yet come to terms with and social media hasn’t learned to negotiate. It’s a market irregularity that time and experience will iron out, but lawsuits probably won’t.

Abandoned factory courtesy of george.schon at flickr

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Low tech cyber-crime targets retailers

Posted by Michael under customer service, Online Retail

Consumers, already tending to reduce spending where they can, are under attack from a new generation of cyberhackers who are combining a basic knowledge of retail data collection with a sophisticated understanding of human behaviour.

This blunt combination of rudimentary criminality and predatory people skills is causing retailers to lose both income and credibility at a time when any threat to customer loyalty is seriously damaging to business viability.

Point of sale has become the new weak point in the bandit chain, with some American companies actually being sold POS systems that have been inadequately, possibly deliberately inadequately, designed. These POS storage devices may be holding credit card information from swipes in unencrypted forms, allowing a skilled hacker to remotely access the vending point data and ‘empty’ it onto a memory drive, giving the thieves the card verification and PIN data from every transaction.

Many IT suppliers are preferring to settle such complaints out of court, rather than risk public exposure because they may have identical software systems in numerous physical or online retail venues. In the USA, it’s claimed that three times as many eating outlets were subject to credit card data theft last year as they were in 2008.

Data privacy and security have often been seen as the territory of the IT supplier and their support systems, but laws being implemented in some American states, and under discussion in the EU, are looking at an explicit liability for the retailer too, based on:
• Conducting due diligence on IT suppliers
• Ensuring security is as high for retail transactions as for personal data protection used in hospitals and government databases
• Training of employees to operate systems, recognise risk and inform the retailer of potential threats to data security.

Protecting the Customer

Most people use the same pin and password for every situation. ‘Grabbing’ passwords and usernames is an established behaviour of hackers, who don’t just use the individual information they obtain: they analyse the username/password combinations to allow them to predict future popular pairings that can then be tried on accounts and retail systems.

The easiest way to get cyberjacked is to continue to use the username/password combo that your IT support person set up, because a certain personality type is much easier to predict than a random individual, and hackers have become adept at predicting what the geek population may choose to use when creating passwords. Using a ‘crib’ of common usernames and passwords allows a simple piece of software to cycle through stored account details, usually finding at least a few that open to the popular words.

Linked to this kind of guesstimation has been a more sophisticated physical data grab, such as accessing the rotas and work schedules in IT companies, that then allows the hacker to see which systems each installer/trainer or support person has been working on … because if they used a username/password on one system, they may have used it on all the others too.

Staying Safe

Protect the information you hold about your customers by resetting supplied usernames and passwords and not allowing your customers or employees to choose passwords that they find convenient. Offer guidance about choosing a good password by installing a password strength checker as part of online registration systems and in the staff manual for physical locations.

CAPTCHA inputs can slow down a human hacker and stop an automated one in its tracks – savvy staff will also be able to recognise a number of failed attempts to access a system and flag that as a potential threat which can then be investigated.

More than 35% of passwords are dates of birth – men use their own, women use the birthdates of their children. This is data that is available in the public domain such as on Facebook, so if a hacker has a name and an account they can often find all the information they need without even bothering to run software!

70% of people use the same passwords for their business banking as they do for their online shopping, meaning that their bank accounts are open to anybody who can obtain data from the POS input. Educating people about strong passwords could be as simple as suggesting they take a favourite saying anything from ‘Seize The Day’ to ‘Beer: Breakfast of Champions’ and make their password out of the first two letters of each word. Guessing Sethda or Bebrofch is almost impossible for a hacker, but very easy for the customer to remember.

Remaining safe

While it’s impossible to force the consumer to be sensible, the retailer can do a great deal to ensure security.

1. Auditing current systems is important.
2. Driving a random ‘reset’ day in your organisation can make a hacker’s life hell. Random reset simply asks all your staff to change their passwords and usernames for every work system – done a couple of times a year it reminds everybody how to set a good password and can be used as part of your health and safety audit or CPD. It doesn’t just keep your business safe, it gives your staff the skills to ensure they maintain the integrity of their personal data outside the workplace, which means a ripple effect can run through cultures, making data-consciousness as natural as fastening a seatbelt.
3. Ensure future IT contracts have a requirement for the vendor/installer to inform you of known security risks reported to them. This allows you to revise your own systems to avoid the problems found by others.

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How to reclaim VAT on Royal Mail postal charges

Posted by Michael under customer service, Uncategorized

The recent budget slipped a little sting into its tail with the small print announcement that from 31 January 2011, standard rate VAT will be applied to postal services and goods that Royal Mail is not under a statutory duty to provide.

Competition causes costs to rise

The VAT application has become necessary because of a European Court of Justice ruling on the VAT liability of Royal Mail’s postal services. Traditionally the Royal Mail services have been VAT exempt, with other postal service providers required to charge VAT on similar services.
Now the court has decided that this historic tax break – allowable by the Revenue because Royal Mail was a taxpayer owned operator – damages competition. In a case brought by TNT, it was found that the tax exemption should not apply to items of post that are subject to competition: in other words – business post.
So while standard stamped and franked post delivered by Royal Mail will remain exempt from VAT, other items will bear the Value Added Tax cost.

Silver lining in VAT cloud

But there’s a chance to reclaim that cost. HMRC are prepared to consider any reclaim of VAT involving parcel delivery services from Royal Mail (including Parcel Force) for the previous four years on the basis of the contractual arrangements entered into with the Royal Mail while there was no VAT to pay.

One understanding of this ruling is that delivery contracts that were ‘free of VAT’ will be deemed to have an element of VAT included in the price even if no VAT was included on the invoice. So for a company that spent £1000 on deliveries by Royal Mail or Parcel Force, without being charged VAT, will deemed to have paid £175 to Royal Mail as VAT as part of that overall charge, which can then be reclaimed from HM Revenue and Customs, depending on the invoicing process and contractual arrangements agreed with Royal Mail.

Further information on the ruling and the circumstances that allow a claim can be found here.

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Net promoter score: The questions you must ask your customers

Posted by Michael under Business Growth, customer service

Despite my initial scepticism, we have adopted Net Promoter Scores (NPS) within the business and it has been a become a key number that we look at weekly to judge customer satisfaction.  

There are nuggets of gold in learning how other businesses implement their NPS questioning and use the results–perhaps one of the best is knowing how often to contact your clients to establish how you’re doing. Quarterly calls work because anything more often can annoy a customer, anything less doesn’t give recent and relevant enough feedback to judge customer satisfaction.

Detail counts with NPS

Eliciting comments as a response to telephone calls seems important because it reveals exactly what people think, not what the nearest box is to what they think on a tick-box survey. For us, the idea that it’s also an intensely personal experience (there’s no anonymity as there is with a survey) makes sense because being able to relate the response to the client is vital to knowing if there’s a perception gap between how you see a client relationship and how a client sees it.

Speed, integrity and follow-ups to NPS calls

Having races where a good caller can get three calls done in ten minutes sounds like fun and that’s what some established NPS phone callers do, although ensuring it’s done with integrity is important. You don’t want to rush your customers, especially if they are scoring you a 0-6 because you should be asking them to accept a follow-up call from one of your managers to establish why they aren’t able to promote you enthusiastically to their contacts, and if they feel rushed or brushed off, that follow-up isn’t going to give you what you need to improve your business.

Rewarding promoters

With promoters (those who rate a business 9-10) offering coupons to the promoter so they get a 10% discount and the person they give the coupon to gets a 10% discount sounds interesting, because doing that allows the business to track who is actually doing in practice what they say they will do in theory.  It’s also interesting to see that there are a range of ways of rewarding a promoter, such as putting on an event that thanks them for their loyalty.

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Green appointed Trade Minister

Posted by Michael under Business Growth, Leadership

David Cameron has chosen the current chairman of HSBC as Britain’s new trade minister. The unpaid role carries a seat in the House of Lords and a heavy responsibility – driving forward UK exports and British businesses in a period of uncertainty and recession.

The appointment is a doubly satisfying one for the coalition government because as well as settling a successful business leader into the trade role, Stephen Green is a ‘good banker’ in media terms, having managed to navigate HSBC through the credit crisis without needing a government bail-out. The City has been watching the appointment with some cynicism as several leading financial figures have turned down the post in the period since the election, but Green’s appointment is likely to prove popular with traders and bankers.

Trade relations key to future

It’s also likely to quiet some of the Tory ranks, who’ve been muttering about the fact that no Tory grandee has been seen as suitable for the role, but the Prime Minister has made it clear that strengthening trade relations with emerging powers like India and China required a complex balance of diplomatic and entrepreneurial skills.

Another area in which Stephen Green’s appointment calms political jitters is that he is likely to work well with those to whom he reports: Business Secretary Vince Cable and Foreign Secretary William Hague.

Big moves in banking signal change of focus

Vince Cable has already commented on Green’s ‘powerful philosophy for ethical business’ which might cause mild consternation in areas of business that are not as proactively ethically focused as the former HSBC’s chairman, himself a lay preacher who has donated a vast amount of his personal wealth to charity and good causes. Green is a stark contrast to the new Barclays CE Bob Diamond, who has caused some friction in the press, if very little in banking circles.

If Green’s appointment papers some cracks, Diamond’s move to the top job marks another fissure between government (where Peter Mandelson, Vince Cable’s predecessor, once described Diamond as ‘the unacceptable face of banking’) and business. The City increasingly views rewarding big hitters who kept their nerve through the banking crisis as a potential contribution to kick-starting the UK’s slow-moving economy, despite the way those rewards are reported in the media.

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FundingCircle.com

Posted by Michael under Business Growth

There’s a new source of funding available to small businesses in the UK. With the backing of some high profile private investors, who include the present and former heads of private equity firms, insurers, banks, IT companies and leading professional services providers. FundingCircle.com aims to help entrepreneurial businesses sidestep the high charges and slow response of major banks.

HM Treasury says that 92% of small business lending is concentrated in the hands of the ‘big four’ banks, which means that many businesses have limited options for finance because they can’t make themselves attractive either to the banks or to bond markets which focus on larger organisations.

Small businesses employ more than half the workforce

Yet those smaller firms employ 60% of those who work in the private sector and create 50% of the UK’s gross domestic product, so anything that strangles their growth also causes the economy to stagnate. 

At the same time, smaller investors and savers are struggling to find ways to make a reasonable return on their long-term investments. Funding Circle aims to unite the two needs in a mutually profitable marketplace where individuals can lend directly to small businesses, cutting out the cost and complexity of bank loans and allowing investors to support businesses that appeal to them ethically, profitably or for other reasons such as personal interest.

Limited risk and social leverage opportunities

Like Zopa.com, the concept behind Funding Circle is one of limited risk for each individual who can select the division of their funds between businesses so their exposure to individual companies could be as low as £20 or up to around £2,000. The advantage for businesses is that the loan rates will undercut the bank rates by up to 25%.

Bright businesses will shine

It could be a lifeline for businesses that have a quirky service or offering that has strong niche appeal but might not ever become mainstream, or those can make a grassroots appeal to a particular sector of society. For such socially appealing enterprises, the lower rates are only part of the appeal – being able to engage directly with funders can allow entrepreneurial businesses to communicate in fresh ways and to share their journey with supporters using loyalty-building messages that turn funders into advocates and salespeople, widening the company reach without adding a costly PR layer.

There’s a caveat for potential funders: any money invested through the scheme won’t be covered under the Financial Services Compensation Scheme and while there are risk-spreading methodologies in place to keep any potential problems to a minimum, if complete investment security is important to a funder, then this isn’t the right route for them.

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Support for Social Entrepreneurs

Posted by Michael under Entrepreneur Resources, Leadership

Social entrepreneurs are those rare people who aim to start a business that changes the world. In the past, these visionary individuals were largely mavericks unsupported by any formal structure or even by anybody outside their friends and family. Today they are recognised as leaders in commerce and leaders in social change.

What is UnLtd?

UnLtd was created in 2002 by seven major non-profit organisations to manage a £100 million investment in UK social entrepreneurs.

The organisation offers cash awards and practical support to develop community projects. It has established the largest network of social entrepreneurs in the world and invested around £40 million of financial and non-financial support in more than 16,000 individuals or informal groups.

Success stories

A major success for Unltd has been Pants to Poverty – fair-trade, organic underwear that is sustainably and fairly produced, but also designed to be fabulous to wear.

Similarly Wideaware is a social capital rich organisation, 100% disabled led, that helps businesses relate better to customers with disabilities. It was funded with an award that gave it time to establish itself and find the right people to create the organisational profile.

How can you get Unltd support?

The Unltd endowment supports people from diverse backgrounds, ethnicities and locations, but they all share the same characteristics:

• Vision
• Determination
• Passion
• Self motivation and self belief
• Flexibility
• Resourcefulness

There are two award levels:

Level 1: Awards of between £500 and £5,000
Level 2: Awards of up to £15,000

Level 1 Awards help make new ideas become reality by funding the  running costs of the project.

Level 2 Awards support people whose ideas are already developed or pay for the living expenses of Award Winners to help them devote more time to their projects. These Awards are given out twice yearly.

UnLtd only offers support to individuals, not organisations, but informal organisations, such as several people working together to create a new project, can be funded. There’s an online ‘quiz’ on the UnLtd site to find out if you’re eligible, and suitable.

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Epitaph for an Entrepreneur

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

Steve Blank has posted an amazingly honest and powerful statement, perhaps even a testament, on the difficulties he faced being a husband, father and entrepreneur. Like all personal stories, it will resonate with different people in different ways, but what I took from his life story of being a serial startup entrepreneur and a father of two daughters was three things.

The first was confirmation of what I already knew: it’s tough to balance work and family as an entrepreneur.

The second was his take on an epitaph. Thinking about what you want people to say about you when you die is a great way to establish your own priorities. Blank talks about how he found that visualising the kind of epitaph he wanted was one way of putting his work/life balance into a perspective that ensure he made the right decisions in both areas. The step beyond that is to turn your life priorities into your personal mission statement and to work on that with the same dedication and integrity as you do with your business plan.

The third thing I took from his statement is the value of personal support. I’ve found it essential to have peer support, to share learning and to bounce ideas and situations off a selection of people who know what the world of entrepreneurship is like. I get my peer support at the Entrepreneurs Organization and believe it’s invaluable to have an organisation that works with, for and in line with entrepreneurs and recognises their needs and what drives them.

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