Monday, September 19, 2011

Customer Loyalty Chronicles, Vol. I – Roland

Hugely successful companies often boast about their "secret sauce."  They will cite particular ways they manage or recruit their people, their unique methods of quality control or their brilliant Super Bowl advertisements. Successful companies surely have a secret sauce and the greatest companies rise above with long term customer loyalty.  

When customers love the product so much that they are passionate about the company, that is an irreplaceable asset.  Apple sets the bar for its ability to generate long term customer loyalty.  But, there are other companies that have secured long term customer loyalty.

Roland Corporation is a company that I feel doesn't get near the attention it deserves for its success in this realm.   The Japanese manufacturer of electronic musical instruments has been a market leader for over 35 years, supplies major artists as well as amateurs worldwide and has developed the most devoted following in the industry.  In studying Roland, I have observed three elements that have driven its long term customer loyalty.

Innovation.  Roland is obsessively innovative, in ways that might even lead some to at first question it.  Apple is widely revered for being able to create demand with supply.  When the iPod came out, many said, "Why do we need this exactly?"  Today, everyone has one.  Same for Roland's electronic drums. An oddity at first, today they are common because of their flexibility and reliability.

Passion.  An extraordinarily driven and passionate founder seems to make a world of difference when it comes to customer focus.  Roland's was Ikutaro Kakehashi, who was orphaned at age two, spent four years of his early life in a hospital with a protracted illness and started his career as a watch repairman.  The love Mr. Kakehashi has for music and the desire he has to build the best musical instruments in the world is clear in his products and in his moving personal memoir.  If you're interested in an off the beaten path business book, I highly recommend it.  It's as if Mr. Kakehashi is still obsessed with making sure each and every customer who comes by his little store is delighted with his work. 

Freshness.  Roland is able to stay fresh with long time customers and gain new ones by keeping up with emerging trends in music recording and performance.  Among the ways it does this is through promotion of its relationships with young stars, such as Lady Gaga.  Decades after starting his company, Mr. Kakehashi remains a dreamer, writing in his book that Roland is looking at "turning imagination into sounds, images, and even shapes, then combining them to produce new solutions."

Long term customer loyalty is a key element of corporate success. Companies that are able to get there, like Roland Corporation, are great guides to achieving it.

Thursday, September 1, 2011

America’s Trickiest Laws, Vol. II – Contractor-Employee Classification

The use of contingent workers has become a key component of many companies' human capital management.  Independent contractors minimize headcount, maximize flexibility and often allow a company to use more specialists than its size would ordinarily permit.

But, the era of contingent staffing has created a tricky challenge.  Federal and state governments have taken a strong interest in the classification of workers as contractors versus employees.  In a nutshell, a contractor classification costs the government revenue.  And the misclassification of employees as contractors has reportedly cost the government billions of dollars.

Unfortunately for business, getting the classification right is no easy task. The 11 factor test of the IRS is helpful but it is neither clear cut nor weighted.  On top of this, the states have different, fluid standards of their own.  The costs of getting it wrong are significant, from fines to the possibility of personal criminal liability for company officers.

The good news is that as attention to classification issues increases, so have the resources for helping to address the challenges.  Experienced commentators have taken a renewed interest in the topic, publishing useful guides to dealing with contractor management.  Third party vendors have emerged that will provide objective contractor testing and employer of record services to insulate companies from many of the risks of using contractors.  One that I have personally used with great satisfaction is MBO Enterprise Solutions, which recently published a case study on its success at Levi Strauss.

Contingent staff have become a critical tool in achieving big goals in corporate America.  Being aware of the challenges that come with contractor classification is important to running a successful workforce solution.