Updated: Oct 19, 2020
In the portion of the system of the Business Lessons Series, we teach HWC employees and Franchise partners how the business manager interacts with feedback loops to optimize productivity. The earliest literature on the topic seems to be from a Bells Systems Technical manual dated April 24 about High-Frequency Amplifiers. But whether you are scaling a monopoly or a single unit enterprise you are dealing with systems. Every business system whether it be a service like HWC, a retailer, manufacturing, an association selling memberships, an aggregate audience marketing, or some other value proposition, there must be an effective method of measuring the response of functional components.
Although the Business Lesson Serious covers all four functions of the Window Cleaning Business, here will discuss a few elements of the marketing component applying systems theory to practice situational leadership practice. To understand the given parameters, we must first outline some of the substantial variables. The two main sets are controllable vs uncontrollable variables that are inherent in every system. Since a complete rendition of the set would be voluminous. We will endeavor to cover only a few and leave it to our reader’s inductive prowess to infer other variables from the Franchise Literature. The Manger's knowledge, understanding, and execution of consistent variables in the HWC marketing system will be the difference of rightly responding, correctly abstaining from the action, and accurately prioritizing. It is the difference between a system that runs you or a system that you direct.
Uncontrollable variables fall into two very important categories. Both known and unknown variables cannot be controlled. There is always appropriate mitigation to an uncontrollable variable, but that is not the same as gaining control. A wise steward knows the difference. As a simple example of this dynamic, it behooves us to know who are competitors are, and to understand as much as possible about them. However, we can never know enough about them to have even the slightest effect on their performance. The competitor’s performance is utterly independent of our efforts. It exists in the marketplace and there is nothing we do that will change a competitor’s ability to meet the expectations of its customers in delivering window cleaning. They have their own set of customers, that at some points may overlap with ours, but even that intersection does not enable us to control their slice of the marketplace. This is true no matter how well we do with our customers. Where there is earned customer loyalty we cannot infringe on the relationship. The best we can do about the competition is to accept that. We underestimate our competition at our peril.
Say that an individual prospect responds to our offer that was extended by way of an email campaign, in the following manner:
“Please remove me from your list as I am completely satisfied with my long term relationship with my window cleaner”. Here we have an example of a negative feedback loop. The loop is complete. The function that is marketing has been reduced by that singular instance whereby a would-be prospect has declined our offer. Case closed.
By contrast, one controllable variable within the same marketing system is the number of prospects that we include in the above offering. Hence, we set sales quotas understanding that every affirmative prospect is the exception in a long chain of negative reactions and or lack of action. By increasing the number of potential prospects in our offering we increase our probability of successful interaction. We can quantitate this by measuring our efficiency. A function of Inputs-Outputs/Inputs. Then by simple multiplication by 100, we turn the product into a percentage. This is our percent efficiency.
If we send 80 emails and receive three viable prospects who are interested in an estimate from us, then we measure our result like so;
= .9625 x 100
= 96% removed prospects
= 3.75% remaining prospects
Whilst 96% of our arrows missed their target, we have three chances to convert prospects to paying customers. The two greatest financial mistakes that failing businesses can make are insufficient sales and or insufficient profits. In a scenario where we only have three prospects, we risk financial insufficiency on both counts. So how might we increase our prospects, pun deliberate? If you said increase the number of solicitations you’d be right! With 240 solicitations we can expect a larger number of viable contacts than we had with 80 emails. Of course, the law of probability favors large numbers. Other factors can be the quality of the contact list, demographics, disposable incomes, whether yours is the first or the third similar offer in a short period, name recognition, reputation, and on and on. If everything major is accounted for there still will be some standard deviation of plus or minus some small percentage from offering to offering that is scientifically and mathematically attributed to “noise”. However, this will be a minor sum that lessons as you scale marketing campaigns. It is the law of averages.
A second controllable variable is how we handle a risk-averse marketplace. Coming from a place of gratitude is the right way to think about this. No one likes to be taken advantage of and every one of us has had a negative experience with some company at one time or enough. Customer service where the one supposed to be helping us was less than attentive to our needs and desires. So every prospect is presumed to have risk aversion from the outset. There are several risk aversion devices that we use in our marketing copy, operations methodology, and in the administration of our company. But for the sake of keeping this essay brief, we will consider only a few of them.
Prominently on our website, in our offers and even on each business card you will see the words “meticulous Workmanship Guarantee”. If we are believable, meaning that our reputation is good in proceeding our offer, those words assure our prospects that Happy Window Cleaning will stand behind our work and our word, no matter what. WE know that the device works because we have had many years of experience delivering value to diverse populations and we have received volumes of feedback from converted prospects who liked what we offered. Many times we have received feedback from our customers concerning the experience that they had with our teams. So when that happens, that a customer communicates his or her experience we have confirmation that our risk aversion device has had its desired effect. Some people at least are comfortable telling us how they really feel about us. Our marketing literature then is messaging that we are approachable and that we stand behind our guarantee. When an irate customer calls to complain that Joe didn’t replace to two screens taken out earlier and that there are smudges on some of the widows and we listen and are attentive scheduling a redo we are further validating that we are responsive, even if our window cleaning technicians sometimes are not as attentive to detail and inspecting their work, as we would like.
Moreover, when a customer communicates this is positive feedback even when the news is not what we would like to hear. Obviously, callbacks destroy our profitability, since time is lost and wear and tear on our equipment is increased. Still, in a sense, the activation of our aversion device is inferred by that feedback. Our promise to provide the expected level of workmanship fell short, and the customer has been upset but has found recourse in essence by addressing our meticulous workmanship guarantee and holding the administration accountable, yelling in our ear, holding us to our agreement and that is the good outcome.
The meticulous workmanship guarantee is a cornerstone providing several points of reference that reflect controllable variables which in turn affect everyone on the team and ultimately the success or failure of our entire outfit. A single callback from a customer that has been disappointed by one or more subpar performance factors might reveal several items existing that need to be addressed. The feedback loop often reveals whether something is an isolated incident or a recurring problem that is causing a serious constraint on the company.
Systemic phenomena like incessant tardiness, that is not arriving on time and leaving a client hanging in stressful suspense, for five minutes ten minutes and hour or more wondering, if the company is even going to show, while the opportunity to do other things with her day is already lost, is a serious dereliction of our duty of care. Over time poor habits magnify the wounds that we inflict on our customers and stretch the limits of even a Saints grace.
A complaint we have seen repeatedly is carelessness in allowing dirty water to splatter onto walls and flooring. Recently we had to pay to have a customer’s carpet cleaned because the wastewater (water containing dissolved and suspended soils from window cleaning) was allowed to splatter all over walls and flooring. Whereas one customer made us aware of the problem, this might be the tip of an iceberg, happening repeatedly. Indeed, some customers do not come forward with their negative experiences. When workmanship is shoddy, they simply will not call us again. Some people are quite offended by the idea that they should need to tell a professional company how to do their tasks. They figure that we’re supposed to be the professionals and we ought to know better than them how to perform our duties in a careful and considerate manner. That is actually a good point. So not everyone will provide useful feedback directly.
Indirectly the lifetime value of the customer is reduced to whatever revenue received to date. They won’t be spending another dime with our company and that is a metric that has a latent effect in the years to come. The factor is evident in another kind of feedback loop, reports. When we compare the repository of customers from previous years and find scores of customers no longer booking but yet our system indicated that they are alive and still at their current address we know that they were not satisfied with their previous service. We can then go back and see who performed the service and compare that to the people on the crew and whatever changes have occurred since.
In sum, the theory of constraints says that every business system regardless of the industry has at least one constraint that is at least one limiting factor affecting optimal performance.HWC has many feedback loops to help us identify and eliminate significant bottlenecks. Some of the ways we affect change in our systems are by restructuring workflow, staffing, processes, and procedures.