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Entrepreneur's Journal: Fundamental business lessons from McDonald's Ray Kroc

Ray Kroc did not start McDonald's (NYSE: MCD). But he was the one that had the vision and energy to turn it into a global powerhouse.

Back in 1977, Kroc wrote a book about his story, called Grinding It Out: The Making of McDonald's. The title is appropriate. You see, he did not get involved in McDonald's until he was 52 (in 1954).

What I like about Kroc's book is that he has some simple advice for building a successful business. And, it's always a good idea to look at the fundamentals. So, here are some of the takeaways:

Continue reading Entrepreneur's Journal: Fundamental business lessons from McDonald's Ray Kroc

Cablevision is getting its business right, one customer at a time

It looks like Cablevision Systems Corporation (NYSE: CVC) is starting to get-it-in-gear. Hence, I'm reiterating my Buy rating for CVC, first recommended on May 29, 2009 at a price of $19.03. If you purchased CVC then, you're up about 30%.

Even ignoring the potential spin-off of sports arena Madison Square Garden, Cablevision's positives have always been compelling: fifth-largest cable t.v. operator (about 10.4 million revenue generating units), with a strong presence in a lucrative market (New York City area, 3.1 cable t.v. subscribers); included in that are about 2.8 million premium cable t.v. subscribers, called iO Digital; nearly 2.5 million high-speed internet subscribers; and 1.9 million internet voice (telephone) subscribers.

Continue reading Cablevision is getting its business right, one customer at a time

United's battle over its identity

United Airlines (NASDAQ: UAUA), US Airways (NYSE: LCC) and American Airlines (NYSE: AMR), according to an influential analyst, have run out of options. Jamie Baker of JPMorgan said in a July 20, 2009 report that these companies couldn't do anything to prevent a cash crisis. They only savior available to them would have to be an outside investor. To call the position grim would be optimistic. Unfortunately, it couldn't have come at a worse time.

As Baker was walking the bear into the airline industry, United was starting to celebrate its change in direction. The carrier has improved its on-time rate, according to a USA Today report, and its operations are coming around. Despite the fact that the airline industry has been brutalized by the global recession, the airline has made some progress. Through August, the company's share price doubled, and its ascent has continued in September. So, the company is locked in an ongoing struggle to manage its identity, cope with its past and shape how the world sees it today.

The operational "makeover" has resulted in a reduction of its fleet from 601 jets in 2000 to 386 as of the summer of 2009. In terms of passenger traffic, it's in the #4 spot in the United States – trailing Delta (NYSE: DAL), Southwest (NYSE: LUV) and American. With Q2 revenues off 25.2% year-over-year, however, drastic measures are still necessary.

Continue reading United's battle over its identity

Sprint Nextel's customer service improves, according to survey

Sprint Nextel Corp. (NYSE: S) has taken a huge amount of heat in recent years for having some of the most inefficient customer service in any industry. In fact, there are many who have concluded that Sprint Nextel has had trouble retaining customers because of its customer service levels -- not so much about its prices and product selections.

When CEO Dan Hesse took the reigns over a year ago, he quickly initiated a series of marketing campaigns and redid pricing on much of Sprint Nextel's calling plan lineup. Ever seen those black and white television commercials? Oddly, they seem to be effective. Almost anything in black and white garners attention from the television viewer. Back to customer service -- Hesse also made a few statements stating that customer service would be back on track. It seems to be just that.

Pali Capital, a customer service measurement firm, ranked the third-largest wireless carrier in the U.S. at the top of its list for customer care. Sprint Nextel was able to answer 89% of calls to its customer service line in an average of 30 seconds, according to the measurement survey. By comparison, the largest wireless carrier in the U.S. -- AT&T, Inc. (NYSE: T) -- answered its customer service lines within 30 seconds only 43% of the time.

Though this is not exactly a measurement of customer service quality, it seems the long waits to speak to a Sprint Nextel customer service rep are gone. Perhaps there are not too many customers needing help these days? From looking at all the customers Sprint Nextel has lost recently, there may be an inkling of truth there. Still, it's the third-largest wireless company in the U.S. with more than 50 million customers.

Is dealing with Apple always so difficult?

Riddle me this Applenauts, Mac Geeks, and other assorted nerds: Is dealing with Apple Inc. (NASDAQ: AAPL) always such a royal pain in the butt?

The reason I ask is that my wife and I joined the Mac cult yesterday. We became the owners of a new, aluminum MacBook. My dad -- an Apple fan since the 1970s -- could not be prouder. I, too, was ecstatic. Finally, I am going to be one of the cool kids. I would be part of the revenge of the nerds. My technological joy, however, may be short-lived.

Our problem was with Apple's customer service or lack thereof. For one thing, we weren't able to complete our order on Black Friday because of a technical snafu on the Apple Web site that made it impossible for us to use the company's zero-percent interest financing offer. The rare sale discount we were able to get for the machine evaporated. My wife tried to get a hold of customer service on Saturday, but got disgusted after being disconnected. We drove to Best Buy (NYSE: BBY) to look at laptops but nothing grabbed our fancy even though many of the machines offered comparable performance to the MacBook for much lower prices.

Continue reading Is dealing with Apple always so difficult?

Are retailers trying to boost sales by being nice to customers?

Funny thing happened during my family's recent visit to the mall yesterday: the sales help noticed that we were alive.

They said "hello," offered us a coupon and --- get this -- thanked us for stopping by. My wife and I were shocked to get this level of service from our local mall where like many shopping emporiums customer service was an after-thought. Truth be told, I wonder how many sales people working at malls can even spell "customer service."

I guess you can call it the upside of declining retail sales. Companies are scrambling for every customer they can get because holiday sales this year are expected to be godawful. Michael Nemira, chief economist of the International Council of Shopping Centers, recently lowered his forecast for holiday sales growth for November and December period to 1 percent growth from 1.7%, according to the Los Angeles Times.

Retailers ranging from Gap Inc. (NYSE: GPS) to Neiman Marcus have posted terrible sales. Even Wal-Mart Stores Inc. (NYSE: WMT), which has posted better-than-expected results, remains nervous about the consumer. Circuit City Stores Inc.'s (NYSE: CC) filing for bankruptcy protection today only heightened these fears.

That's why retailers need to pay even closer attention to the customer than ever before. Given the precarious state of many household budgets, shoppers will have less tolerance than ever for rude or incompetent retail staff. They are putting up with enough troubles in their own lives. Retailers who do not understand this reality will have an even less joyous holiday season.

Entrepreneur's Journal: Secrets of customer service

In 1997, Greg Gianforte started a new-fangled software company called Right Now (NASDAQ: RNOW) to help companies improve customer relationships. It proved to be great timing, since the internet was just beginning its surge.

Over the years, I've had a chance to talk to Greg, who always has great insights for entrepreneurs. Now he has a new book: Eight to Great: Eight Steps to Delivering an Exceptional Customer Experience.

It's a quick read, easy to understand and has lots of case studies focusing on companies like eHarmony, TomTom, Nikon, and so on.

The theme of the book is straightforward: "providing an excellent customer experience -- the sum total of a customer's interactions with an organization -- can be the single best way to set your company apart from the competitors."

OK, so what are some of the things you can do to help improve customer service?

Continue reading Entrepreneur's Journal: Secrets of customer service

Customer service the key inside consumer electronics stores

When Best Buy Inc. (NYSE: BBY), Circuit City Stores Inc. (NYSE: CC) and Wal-Mart Stores Inc. (NYSE: WMT) are all stacked up together, which one comes out on top? Well, it depends on how you phrase the question: Are we talking solely prices here, or customer service? The pricing angle can be debated all day long. When it comes to service though, my experience is very similar to the conclusion that this article states: Best Buy is king.

Target Corp. (NYSE: TGT), although a much cleaner and brighter location in which to shop, seems to have a weak schedule in the consumer electronics department. Most weeks, I roam into many retail chain locations just to walk around and observe. In many cases, Target seems well-stocked when it comes to checkout personnel, but not if you have questions about a flat-panel television. At Circuit City, its tarnished reputation is well-deserved: It's hard to just find anyone to help you.

And Wal-Mart? The world's largest retailer has made strides to really improve the consumer electronics sections in its stores. The customer service, however, is a completely separate story. If I step into a Best Buy, there's a 99% chance that I will be greeted by a security guard manning the front door, and will be asked at least four times within five minutes if I need help.

While Wal-Mart may have slightly better prices on many consumer electronics items, is that all that matters? Of course not. I give Wal-Mart props for making large strides in product presentation, though. Chris Denove of J.D. Power and Associates says that "Across many industries, we've seen that the retailers that grow customer-service ratings the fastest have greater sales growth." If Wal-Mart wants to try and really compete with Best Buy's winning combination of price and service, it best listen to that advice. Target -- it's also time to step it up on your end. What are you waiting for?

Sprint (S) wants its customers back

Sprint (NYSE:S) often shows up in customer services surveys as one of the least respected companies in America. That has caused a number of its cellular subscribers to drop service and take their business elsewhere.

To try to win back customers, Sprint's CEO is even going on TV. According to The New York Times, "In the commercials, Mr. Hesse asks customers to e-mail him with complaints and to give Sprint another chance." Daniel R. Hesse is Sprint's new top man.

Hitting the airwaves with a new message hardly seems worth the time, or money.

Sprint may be able to get some customers back with its new Samsung Instinct phone, which has gotten good reviews. But, there is no evidence in polls about how subscribers view the company to indicate that the firm has become a symbol of an American cellular provider with happy customers.

Fix the problem. Stay off the tube.

Douglas A. McIntyre is an editor at 247wallst.com.

Starbucks is taking consumer opinion to a whole new level

Starbucks customersThe idea of serving customer needs and desires is rooted in the age-old notion of listening to the customer. One company taking consumer input to a whole new level is our favorite specialty coffee vendor, Starbucks Corp. (NASDAQ: SBUX).

How about ice cubes made from Starbucks' own coffee, so you can cool that java without diluting the savory stuff? That's what one customer suggested. What do you think? Another thoughtful consumer thinks that Starbucks customers might like shelves in the restrooms to rest their coffee on while "taking care of business." A nice idea perhaps, but I believe that the practice of taking consumables into restrooms is discouraged in most instances.

At least one Starbucks customer request has already had a major effect. Reusable "splash sticks" have been introduced by the company to reduce coffee splash through the sipping lid of its sturdy cups.

The entire focus of this new Starbucks business model is summed up by CEO Howard Schultz, who was quoted in BusinessWeek as saying that he wanted "to open up a dialogue with customers and build up this muscle inside our company." Mr. Schultz would like to make response to the consumer a cornerstone of company tradition.

So, what do you think? Should Starbucks initiate valet parking? Should it have barristas on roller skates cruising its parking lots? Maybe it should offer complimentary mocha caramel biscuits for the dogs that accompany its customers? What about individual caffeine packets so coffee addicts could personally customize their morning buzz?

One thing's for sure, Starbucks' says it's listening. Now is your chance to prove that you're a marketing genius. Howard Schultz wants to return the company to its former glory. Give him a piece of your mind, would ya?

Gary Sattler is a freelance blogger. He does not knowingly hold interest in the companies mentioned in this blog post.

Adobe -- adventures in dealing with customer service

Since 2001, I've been a customer of Adobe's (NASDAQ: ADBE) great product, Dreamweaver. Basically, it allows for the development of sophisticated websites. The product has gone through a variety of iterations, with the latest being Creative Suite 3.

So on Friday, I purchased the upgrade for $199.00 and downloaded it. Things went well until the software asked for my serial number from one of the older products I purchased.

Unfortunately, I got rejected.

Yes, I had to call customer service (which is usually pretty dicey). All in all, the customer reps were pretty good, though, one of them said that my prior purchases were not eligible. I tried to get an explanation, but I really couldn't understand it. Keep in mind that I have paid a total of $1,579.84 on Dreamweaver products over the years (which does not include the $199 recent purchase).

Continue reading Adobe -- adventures in dealing with customer service

Synchronoss Tech automates the laborious

The market's choppy/consolidating pattern characterized much of the last 5 months of 2007. However, with the start of 2008 and the entrance of new-year money flows, it's prudent to add a growth play or two, to be well-positioned for improving economic conditions, should they occur, and a growth stock worth a review is Synchronoss Tech.

Synchronoss Technologies, Inc. Tech (Nasdaq: SNCR) provides software and services that communications service providers use to manage tasks such as service activation and customer transactions, including additions, subtractions, and changes to service plans.

Analysts see 2008 revenue advancing 40-50% following a likely 60-70% revenue gain in 2007. Subscriber growth should be strong, with solid margins.

Continue reading Synchronoss Tech automates the laborious

How small stores can beat Wal-Mart: Stay small and friendly

A piece in the New York Times reports on the main competitive advantage of small stores: They're small. According to the article, "Small retailers around the country are using a host of marketing tactics, from the usual extra emphasis on customer service to putting out free cider and cookies. But their most important step may be that they are trying to make the most of their inherent advantages over larger competitors."

A common criticism of low-cost behemoths like Wal-Mart (NYSE: WMT) is that they knock out mom-and-pop competitors. This complaint certainly isn't without merit, but small stores often can survive Wal-Mart if they can find a way to make themselves more attractive than big boxes -- in spite of their higher prices.

The stores mentioned in the Times piece are doing just that creativity and entrepreneurship. And everyone wins: Wal-Mart forces these stores to provide better customer service. In spite of all the bad press about Wal-Mart's bad service, the reality is that it actually improves customer service at its competitors, who have to find a way to compete other than price.

So if you're one of the anti-Wal Mart brigade who does your holiday shopping at small local businesses, think of it this way: The fine service you enjoy may actually be part of the Wal-Mart effect.

Apple's (AAPL) Leopard OS released too early?

Apple Inc.'s (NASDAQ: AAPL) much-anticipated release of its new operating system, Leopard, is being met with some lukewarm reviews. Said Tom's Guide, a review site of both software and hardware and typically an Apple fan, "[this] Apple operating system, Mac OSX Leopard, was released before it was ready."

Cited as one of the most troublesome bugs is a glitch with the Finder program, the Apple equivalent to Windows Explorer. Again, Tom's Guide put it succinctly: "In Leopard, when Finder moves a file from one drive to another, it deletes the file from the originating hard drive, without first checking to see if the file arrived safely on the destination hard drive. If anything goes wrong during the file transfer, such as a momentary power glitch on the destination hard drive, the file would then be destroyed on both hard drives."

Apple has already issued an update on its website to fix some of the problems. There are a lot of bug fixes there: everything from email to iCal to Finder.

Continue reading Apple's (AAPL) Leopard OS released too early?

Disney (DIS) in the customer service training business

Walt Disney Co. (NYSE: DIS) has a unit called the Disney Institute. It trains workers and management from other companies and government agencies. Recent customers include Miami International Airport, General Motors Corp. (NYSE: GM), IBM (NYSE: IBM), and the IRS.

The corporate culture at Disney of emphasizing customer service and attention to detail "are transferable across industries, across cultures, and across different sizes and shapes of organizations," the head of the Institute told The New York Times. A typical trainer at the organization has averaged 10 years with Disney.

But, operating the training company may be be in Disney's best interests.

Disney's revenue in the June quarter was over $9 billion. The parks and resorts segment brought in $2.9 billion. Most of the company's "trainers" for consumer services undoubtedly come from this unit. Does it really benefit the company to move managers from such an important business so that they can train people at other companies.

The revenue from Disney Institute is not material enough to show up in the Disney 10-Q.

Why is Disney training management at other companies? There probably is not a good answer for that. And, it is a bad idea. It takes resources away from a critically important part of the company.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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Last updated: November 27, 2009: 03:52 AM

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