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    Published on: June 27, 2012

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    KC's View:

    Published on: June 27, 2012

    by Michael Sansolo

    In the dictionary of customer satisfaction I have a suggestion for what ranks above “wow.” How about: Zappos! Because when it comes to amazing the customer, the dot com shoe giant may make everyone else look up.

    My wife loves Zappos as a source of athletic shoes that meet all her requirements for style, fit, size and price. A few years back I wrote about her first “WOW” moment from Zappos, when an order she placed at 10 p.m. arrived on our doorstep the following morning. We came to learn that such blinding speed is one of elements Zappos uses to build customer satisfaction.

    That was nothing!

    Two days ago my wife noticed a rip in the seam of a pair of workout shoes she really loves. The shoes were just a few months old. and she was convinced that she was stuck with having to buy a new pair. So she wrote an e-mail to Zappos (where she got the shoes, of course) to complain about the flaw.

    The next day a replacement pair arrived. There was no note, no request for the damaged product, receipt or anything. Instead, there was a UPS box with new shoes in the exact style, size and color of the previous pair.

    Trust me, WOW! doesn’t begin to describe her response.

    I can’t possibly know what was behind this at Zappos. Maybe they’ve had repeated problems with this specific shoe and are on the lookout for customer concerns. Maybe they examined my wife’s profile and determined she was a customer they needed to care for. Maybe they knew that she would instantly start blasting this news throughout her social networks (which she did) giving Zappos tons a huge dose of viral raves. The bottom line is they took customer service to a level she has never seen before.

    Suddenly, “WOW" seems like the understatement of the year.
    KC's View:

    Published on: June 27, 2012

    An MNB user passed along to me a Wall Street Journal op-ed piece by L. Gordon Crovitz, in which he writes about something called the International Telecommunications Union (ITU), a United Nations agency that plans to hold "a World Conference on International Telecommunications in December, when the 193 U.N. member countries, each of which has a single vote, could use the International Telecommunications Regulations to take control of the Internet."

    It's complicated, but essentially the column reports that countries like Russia, China and Iran are hoping to use the conference to gain backing for a series of proposals that would "regulate the Internet by crowding out bottom-up institutions, imposing charges for international communication, and controlling the content that consumers can access online."

    The broadest proposal, according to the report, would give nations the right to regulate all the internet content available to their citizens, which means that they would essentially be able to set up virtual roadblocks to people and companies from other countries, and even take legal action against anyone penetrating or circumventing those roadblocks.

    According to Crovitz - and this is where the piece gets political - while it is easy to understand why countries like Russia, China and Iran would think that such regulation is in their best interests, it is harder to understand why the US response to the proposals has been modest and polite to this point, as opposed to being outraged.

    "It may be hard for the billions of Web users or the optimists of Silicon Valley to believe that an obscure agency of the U.N. can threaten their Internet," Crovitz writes, "but authoritarian regimes are busy lobbying a majority of the U.N. members to vote their way." The way it looks now, they could get their way.

    The Hill, by the way, notes that "the Internet is currently governed under a 'multi-stakeholder' approach that gives power to a host of nonprofits, rather than governments," and that Congress has scheduled hearings on the matter.

    The entire WSJ piece can be read here.
    KC's View:
    Fascinating story, and obviously one that we all have to be concerned about. The eruption of Internet-enabled rebellion in the Middle East, the so-called "Arab Spring," no doubt has a lot of regimes worried about what could happen to them.

    What some nations call cyber-security is what a lot of us would call a totalitarian crackdown.

    This is an issue that we'll continue to track.

    Published on: June 27, 2012

    Sir Terry Leahy, the former CEO of Tesco, has an essay in the Wall Street Journal that is based on his new book, "Management in 10 Words." In the piece, Leahy says that in these rough economic times, many businesses "face an existential threat, a threat that challenges the intangible qualities of their managers: judgment, integrity, values." Dealing with such threats, he writes, requires some "principles that are basic and simple yet often overlooked."

    Among them:

    • "First, confront the truth. Our instinct is to avoid the uncomfortable reality, as it may mean having to make difficult decisions. Tesco in the early 1990s was floundering: we were ignoring the truth about our business—that we had lost touch with our customers. Painful though it was, only by listening to them, and then implementing difficult change, did we win back their loyalty."

    • Loyalty is critical. "In difficult times, the value of loyal customers soars. Much better to reward loyal customers than try to lure in new ones with special offers: do that, and you quickly descend the spiral of rewarding promiscuous customers. Likewise, reward loyal employees: their experience equips them to train others, and makes them the best at retaining customers."

    • "Managers face difficult decisions, in which doing the right thing is not always the same as doing what is in the company's financial interest. Hence the importance of values—the beliefs and principles that are a sheet anchor for all businesses. A sense of right and wrong, a wish to treat employees and customers fairly: these things cannot be quantified, but they determine whether a business is trusted, whether its customers will remain loyal and its team committed."

    • Embrace competition. "When we confronted the German discounters, Aldi and Lidl, and later Wal-Mart, I realized how much one learns—for free—by simply walking around their stores and looking how they did business: big lessons (how to source goods more effectively) and little things (like wheeling goods into stores on pallets, saving time and money). So if your business is slipping, visit your competitors' websites or stores, look at their products, and see what you can learn."
    KC's View:
    Leahy keeps describing these as management principles, but I think this is a kind of self-effacement. The ability to do the things he describes is the difference between being a leader and a manager ... and there is no question that Leahy was a leader.

    Published on: June 27, 2012

    • The Washington Post has an interview with Andrew Sussman, president of MinuteClinic, a division of CVS Caremark that operates in-store health clinics. Among his comments about the business:

    Patient demographics... "Eighty-five percent of our patients are insured. Almost all insurers accept MinuteClinic as an in-network visit. Often patients pay a primary-care co-pay. . . . For the uninsured, we have transparent, low pricing: The average visit is $79." In addition, he says, "About half of our patients don’t have a primary-care physician. If they don’t, we have a list of physicians in the area that are accepting new patients that we give them. We do that to make sure they get hooked up with a primary-care medical home..."

    Continuity of care... "At the end of every visit, we give a copy of the medical record to the patient. And we send a copy to the [patient’s] physician if the patient gives permission. And as we integrate with health systems, we can do that very promptly in the electronic medical record. We send medical records of patient visits to physicians every night, usually by fax, since lots of them don’t have electronic medical records."

    Profitability... "By the end of 2011, we reached break-even on an all-in basis, with all costs and benefits to the company accounted for."

    • At the same time, the Wall Street Journal has a piece about how Walmart has fallen behind in the in-store health clinic race. While former CEO Lee Scott pledged to open 2000 of them by this year, the company only has 149 such clinics, and closed 33 of them this year.

    Experts say that Walmart "has fallen behind in the clinic push because its initial strategy to outsource the facilities hasn't worked. While Wal-Mart has leased space to dozens of third-party care providers, other retailers have purchased clinic operators and taken control of their pricing and service standards."

    And here's what John Agwunobi, Walmart's president of health and wellness, has to say about the state of the business: "By any account, clinics are still a pilot ... We continue to watch and tweak, and we're candidly evolving and innovating to see where to go."
    KC's View:
    Well, maybe not everybody thinks that the in-store health clinic business is in the pilot stage...Minute Clinic currently has 565 drugstore clinics in 25 states, and plans to reach a total of 1,000 by 2016. I'm guessing that unlike Walmart, they'll hit that goal.

    I'm actually surprised that Walmart hasn't gotten this right. I wrote years ago that if they wanted to make it work, they needed to take ownership of the concept, maybe buy an existing clinic business, and really make a commitment and investment. They've done none of that.

    But as the whole health care process remains expensive, uncertain and challenging to many consumers - and is likely to get more so later this week, depending on what the Supreme Court rules - I still think that there's gold in them thar' hills.

    Published on: June 27, 2012

    • The Los Angeles Times reports that "Wal-Mart celebrated the start of construction on its controversial new store in Chinatown on Tuesday, days before a planned march that labor organizers are touting as the largest anti-Wal-Mart demonstration in U.S. history.

    "At a news conference inside a cavernous storefront that is being converted into a 33,000-square-foot grocery store, Wal-Mart officials and local business leaders exchanged traditional Chinese good-luck offerings as local performers did a dragon dance. Kim Sentovich, a Wal-Mart senior vice president, told the crowd that her company was proud 'to improve access to fresh and affordable healthy foods'."

    Local organized labor factions are fighting to stop construction of the store, which already has received the necessary permits. According to the story, "The Asian Pacific American Labor Alliance has filed an appeal with the city, which is under review. In the meantime, activists are organizing a weekend of anti-Wal-Mart actions, including a protest concert Friday night and a big march Saturday."
    KC's View:

    Published on: June 27, 2012

    MarketWatch reports that "alleging unlawful retaliation against union members in an attempt to intimidate them into accepting a contract that would drive down their living standards and their health and retirement security, members of United Food & Commercial Workers (UFCW) Local 400 working at Shoppers Food & Pharmacy have filed unfair labor practice charges with the National Labor Relations Board (NLRB)."

    Supervalu-owned, Maryland-based Shoppers Food & Pharmacy operates more than 60 stores in the Baltimore-Washington-northern Virginia region. Its labor contract is due to expire on July 7.
    KC's View:

    Published on: June 27, 2012

    • Dole Fresh Vegetables reportedly has recalled more than a thousand cases of pre-bagged salad mix sold at Walmart and Kroger stores in six states because of concerns about a possible listeria contamination.

    • The Minneapolis / St. Paul Business Journal reports that "General Mills will start shipping 40 new yogurt products next month as it tries to play catchup against Greek-style yogurt in the U.S. market."

    Reuters reports that U.S. drugstore chain Walgreen Co and several other pharmacies are offering free, rapid HIV tests in a small number of stores under a two-year pilot program to make diagnosing the AIDS virus more convenient and accessible to Americans.

    "The pilot program announced on Tuesday by the U.S. Centers for Disease Control and Prevention (CDC) will use information gleaned from the testing to develop a nationwide model for pharmacists and nurse practitioners to detect the virus."
    KC's View:

    Published on: June 27, 2012

    Nora Ephron, the journalist, essayist, novelist, screenwriter and film director, died yesterday at age 71 after a battle with leukemia.

    While Ephron was raised in Californian she seemed like the quintessential New Yorker - smart, funny, ironic, food-obsessed, and from all accounts, an incredibly charming person. She was married three times - the second marriage, to journalist Carl Bernstein, was such a disaster that she turned it into the scathing novel "Heartburn," which was then turned into a movie.

    But for Baby Boomers, Ephron will forever be known as the guiding intelligence behind some of the romantic comedies that we took our partners to on Saturday nights, that we could remember dialogue from because it was so pitch-perfect, and that we still stay up and watch to the end when we come upon them while surfing the tube. Touchstone movies that were, in their own way, classics. Movies like When Harry Met Sally, which she wrote, and Sleepless in Seattle, You've Got Mail, and Julie & Julia which she wrote and directed.

    She is, of course, responsible for one of the funniest lines in the history of the movies, when an elderly woman (Estelle Reiner, Rob Reiner's mom and Carl Reiner's wife) follows up on Meg Ryan's fake orgasm in the middle of a New York deli by telling he waiter, "I'll have what she's having."

    And You've Got Mail has some strong and cogent points to make about the nature of retailing and the importance of quick response to new competition.

    One obit this morning notes that at the end of one of her recent books, Ephron speculated about the things she'll miss when she dies. Among them: My kids. Nick (Pileggi, her husband). Spring." And, "Coming over the bridge to Manhattan. Pie."

    My kind of woman.
    KC's View:

    Published on: June 27, 2012

    No email this morning, and it's my own damn fault. I took my Brown-Eyed Girl to a Jimmy Buffett concert last night at Mohegan Sun, and proved yet again that I'm growing older but not up...
    KC's View: