tn business retention & expansion course 2013 day 1 presentation
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The Tennessee Business Retention and Expansion Course is a one and a half day course which focuses on how to develop, implement and evaluate an effective retention and expansion program. Presentation from Laith Wardi, CEcD, President of ExecutivePulse,Inc.TRANSCRIPT
Business Retention and Expansion
PractitionersTrainers
Management ConsultantsTechnology Vendors
6,500 Users in North America
Over 250,000 BR&E Visits Conducted
“ Today, unlearning outmoded and
ineffective ideas and ways of doing things is
just as important as learning new ones.”
Source: Leslie Parks
Where We’ve Been
Government
The American Recovery and Reinvestment Act was passed into law in 2009.
The Act provides $840 billion in funds.
Tax benefits account for $300 billion.
Contracts, grants and loans for $222 billion.
Entitlements for $218 billion. Source: Recovery.gov
Globalization
Foxconn (the Chinese factory where most iPhones are made) employs 230,000 workers. Over 60,000 of these workers live in company dorms.
The same company employs roughly 8,700 industrial engineers.
Average wage for production workers is $17 per day and they work 6 days a week/12 hours a day.
Green Movement
“Cleantech” segments of the economy produced explosive growth during the recession.
The clean economy is both manufacturing (26% vs. 10%) and export ($20K vs. $10K) intensive.
Green and clean is largely urban. Clusters are the norm cleantech.
Wages are 13% higher than median US wages.
Source: Brookings Institute
Where We Are
The Earth Shifted Over Five Years
Ago…
2013 Recovery!
“Our economy is bigger than it was before the start of the Great Recession. Corporate profits are back. Business investment in hardware and software is back--higher than it's ever been. What's not back is the jobs.”
Andrew McAfee, MITSource: CBS 60 Minutes Interview 1-13-13
The percentage of Americans with jobs is at a 20-year low. Just a few years ago if you traveled by air you would have interacted with a human ticket agent. Today, those jobs are being replaced by robotic kiosks. Bank tellers have given way to ATMs, sales clerks are surrendering to e-commerce and switchboard operators and secretaries to voice recognition technology. Source: CBS 60 Minutes 1-13-13
Circa 1950-1970 Circa 1960-1980
Circa 1970-1990 Circa 1980-Present
Music Yesterday
Music Today
Retail Yesterday
Retail Today
Travel YesterdayCirca 1850-2005
Travel Today
Movies YesterdayCirca 1900-Present
Circa 1975-2008
Movies Today
Common Denominators
Rapidly changing markets
Assimilation of new technologies
Change in workforce composition
New delivery methods
Fundamental change in customer behavior
“We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come – namely, technological unemployment. This means unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor.”
John Maynard KeynesEconomic Possibilities for Our Grandchildren 1930
“…this is not unique to this recession, it’s actually been a trend we’ve been seeing over the last several business cycles—it’s businesses, once they lay off, they’re actually learning to be so efficient and increase their productivity so much that they can make the same number of goods without as many people.” Source: USA Today Interview with President Obama
US Change in Employment
1950s 1960s 1970s 1980s 1990s 2000s
24%
31%
27%
20% 20%
0.8%
Source: US Commerce Department: Labor Department
Source: Amerisclerosis-The Puzzle of Rising US Unemployment Persistence 9-9-2013
A Jobless RecoveryThe persistence of U.S. unemployment has risen with each of the last three recessions, raising the specter that future U.S. recessions might look more like the Eurosclerosis experience of the 1980s than traditional V-shaped recoveries of the past.
Sobering Facts
Sobering Facts
Where We’re Going
Creating New Jobs…
Source: Economic Policy Institute
These companies created millions of new jobs in the past
few of years.
In Growing Markets
China’s Explosive Growth
Source: National Bureau of Statistics-China
Dateline: Detroit, Michigan
GM said Monday that it sold 2.35 million vehicles in fast-growing China, about 136,000 more than it sold in the U.S., with China sales surging 29% as an expanding middle class gained wealth. Sales in the U.S., including
heavy-duty vehicles, rose 6.3% as GM continued to rebound from its 2009 stay in bankruptcy protection.
Source: USA Today , 1-25-2011
This is a very exciting development, because China is growing tremendously. It's the largest automobile market in the world. If you look at the projections this last year, in 2010, we had 74 million vehicles sold. Our projection is in 2020, that'll move to 112 million vehicles. In China alone, it'll go from 18 million, which is about 25% of the entire market in 2010, to 32 million in 2020, which would be 28% of the market. Solid markets in the Americas, very solid markets in Europe, and then tremendous growth in Brazil, in Russia, in China. Ford's strategy is to serve all these markets and also to utilize our resources worldwide so we have more global platforms.
Source: USA Today-7-18-2011Interview with Ford CEO, Alan Mulally
Source: Visual-ly 2012 Global Car Stats
Senior General Motors officials forecast that sales in China could top 35 million annually by 2022. That’s more than double the peak of the American market nearly a decade ago.
“No market is more critical than the China market for us,” Tim Lee, president of General Motors’ International Operations, told reporters. You may hear the same thing from other manufacturers, whether Volkswagen, Toyota or Ford.
Source: The Detroit Bureau April 2013 Car Sales Defy Weak Economy
What is important about this debate is that if most of what's holding back a faster improvement in the unemployment rate is structural in nature — i.e., a skills mismatch that will only be corrected via retraining of the workforce and/or the gradual improvement in the housing market—then the Fed is ill-equipped to deal with this problem," RBC Capital Markets said. "No amount of quantitative easing will make the gargantuan amount of unskilled labor supply more employable."
US Hiring Dilemma
Source: NBC News 3-14-13
US Growth Trends2002 to 2012 - Growth in Employment
12,566,352
Stage 1 (2-9)
Source: YourEconomy
825,290
Stage 2 (10-99)
2,246,741
Stage 3 (100-499)
-4,666,501
Stage 4 (100-499)
US Skills Gap
“The problem of the looming retirement of highly experienced workers has been aggravated by the fact that new recruits tend to be far less technically skilled than entry-level workers were decades ago. ”
Source: Rick Stevens, Senior VP of Boeing
Bigger Is Not Better
“It get you bragging rights…but that’s about it. Being biggest in the world is not necessarily an advantage to anyone. GM was number one for something like 75 years and then went into bankruptcy. What’s far more important is sustainable profitability.”
Source: Aaron Bragman, IHS Automotive
30%
25%
33%
12%
Baby Boomers
Youth
Other Age Groups
Retired
Population Realities
In the Driver’s Seat
Labor demand greatly outpaces supp
Skilled, educated workers dictate term
Bigger firms ‘win’ over smaller ones
Urban metros ‘win’ over rural areas
Entrepreneurial DevelopmentBusiness Recruitment
Business Retention/Expansion
Three Ways to Grow Your Economy
“When it comes to generating new jobs, it's existing companies - not new
startups - that have the leading role. New startups are often billed as the stars of economic growth. Yet it's
actually existing, expanding companies that contribute most to U.S. job
creation. In fact, from 1990 to 2008, existing companies generated 71
percent more new jobs than startups.” Source: 2012 Donald W. Walls, PhD. Walls & Associates
Over 15,000 ED organizations chase fewer than 200 major business
relocations or expansions annually. This causes ED Inflation…
Mark O’Connell—OCO Global
He (Bill Taylor) said the recruitment of new industry is going to be more targeted based on those industries the state needs. He said a key part of the work needs to focus on helping existing companies expand because 75 percent of job growth in Alabama comes from those companies and, in some counties, the figure is 100 percent.
Source: AL.com Rotary Club of Birmingham Speech 2-22-12
Business Retention Yesterday
Business Retention Today
Three Parties
Three Perspectives
Old CompanyPerspective
New Company Perspective
Old CommunityPerspective
New Community Perspective
Old SponsorPerspective
New SponsorPerspective
“...Very simply, two things: communication and action. If a community takes the time to talk with a business, to understand its concerns, risks, opportunities and challenges, it will understand exactly what it takes to improve business. Then it needs to act on what is has heard. The company also has the responsibility and opportunity to engage stakeholders in a proactive dialogue.”
Source: Area Development-Aug 2012Interview with David Trebing,GM-State/Local Relations, Daimler AG
“...The best economic development tool is very simple: volume. That happens when all stakeholders focus on building a globally competitive product in a globally competitive location by a globally competitive workforce.”
Source: Area Development-Aug 2012Interview with David Trebing,GM-State/Local Relations, Daimler AG
VALUE
The “S” Word
Survey-based BR&E is not agile enough for globally competitive markets and
companies today.
A Static Approach…
TrendsToday…
Retention in 2013…
Everyone is “rediscovering” BR&E.
Bigger is Better…
Regional, State and Provincial programs are now the norm.
Branding is In…
The best programs use a common brand name.
Retention is now being viewed as a team sport.
Collaboration is Key…
Most programs are being driven by
workforce development needs.
It’s About Workforce…
BR&E is now the “X-Factor” in business
recruitment and entrepreneurial work.
Leveraging Retention…
WhyRetention?
It generates 70-85% of all jobs and investment impact in your trading area—regardless of your success
with recruitment and entrepreneurial development
It allows you to interact with, and get feedback from, your actualcustomers—those businesses
with an intimate understanding of your market area
It is up to 10 times cheaper to keep and grow resident firms
than to attract or start new ones
It provides leverage—facilitating smart recruitment and
entrepreneurial development
It is a “team sport” that facilitates a cohesive and collaborative
approach to economic development
It drives creation of relevant policies, strategies and
programs—all with impact beyond existing industry
It takes the focus away from highly publicized recruitment activities that hurt local business in any
trading area
It raises the bar for a market area by helping companies become
globally competitive.
250 Jobs @ $62,000 each$15.5 million annual payroll$825,000 state /provincial tax revenues$725,000 city/county tax revenues
Jonathan Sangster—CBRE—Area Development/Feb-Mar 2010
ROI—From a Single Company
Jonathan Sangster—CBRE—Area Development/Feb-Mar 2010
ROI—The Multiplier EffectSubjectCompany
Total Impact
Jobs 250 893Payroll $15.5M $40MState Tax $825,000 $2.3MLocal Taxes $725,000 $2.6M
Indirect Jobs
Induced Jobs
Direct Jobs
“A job retained is just as good as a job gained.”
Jonathan Sangster—CBRE—Area Development
“Communities and states that recognize the value of retention
incentives during challenging times may have an advantage in the
competitive to retain their operations.
Objective, Outcomes &
Benefits
Objective
Strategically assist high valuecompanies to become agile,
adaptive and globally competitive
OutcomesThank the CEO (show the love)
Learn about the company and match needs to available
programsUse CEO views and opinions to create a better business
climate
BenefitsDirects ED resources to your ‘best’ firms
Assists firms in becoming globally competitive
Creates a more accountable ED ‘system’
Galvanizes the ED Community
Stretches limited ED resources
Elements
Sales/Marketing
Social MediaBusiness WalksFocus GroupsHigh Value Content Traditional Outreach
1
100+
A Dynamic Approach…
Customer Service
The dynamic network of local, regional and provincial/state
resources who provide cohesive and seamless
service to the BR&E program.
Management
The convener, point of control and driver of the
entire process.
Client Data Repository
The customer relationship management (CRM) systemthat holds data, provides for
client care and analytics.
One-To-One
101
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Customer RelationshipManagement (CRM)
Not a technologyor set of technologies
Source: Peppers and Rogers
Customer RelationshipManagement (CRM)
A continually evolving process which requires a
shift away from the traditional business model of
focusing internally. Source: Peppers and Rogers
Customer RelationshipManagement (CRM)An approach that takes you
toward customers--backed up by a thoughtful investment in
people, technology and business processes.
Source: Peppers and Rogers
"If the only tool you have is a hammer, you will see every problem
as a nail."
Source: Abraham Maslow, Motivational Theorist
“The only true competitive advantage comes from the
understanding you have of your customer that your competitors don’t…this information has to
come from the customer.”
Competitive Advantage
Source: Peppers and Rogers
“The more effort the customer invests, the greater their stake in the
product or service. Now the customer finds it more convenient to remain loyal, rather than re-teach a
competitor.”
Source: Peppers and Rogers
Customer Equity Equation
The Learning RelationshipIdentify Differentiate
InteractCustomize
MVC MGC
Source: Peppers and Rogers
DETROIT - General Motors Corp.’s auditors have raised “substantial
doubt” about the troubled automaker’s ability to continue
operations, and the company said it may have to seek bankruptcy
protection if it can’t execute a huge restructuring plan.
Source: MSNBC.com News Services/ March 5, 2009
Managing Expectations
$20K $60K
Malibu CTS
“A car for every purse and purpose.”
Source: Alfred P. Sloan
Sloan’s Mantra
Ladder of SuccessCadillac
Buick
Oldsmobile
Pontiac
Chevrolet
Making it Easy
A3, A4, A5, A6, A8
Making it Difficult
Aveo, Cobalt, Malibu, Impala, Vibe, G6, Grand Prix, G8, LeCrosse, Lucerne, CTS,
DTS, STS…
Effort = Reward (ROI)
“Old” Marketing Model
The “old model” treats all customers the same.
The endgame is increased market share.
“New” Marketing Model
The “new model” treats all customers differently.
The endgame is increased share of the
customer.
“We want to keep the good, grow the badand the ugly we want nothing to do with.”
The Good, The Badand The Ugly
Source: Business Week
Reward Zone customers account for only 30% of transactions at Best Buy but
spend more than twice as much as regular customers.
($850 versus $400 per year)
“It is controversial to redline customers. But done correctly, it really is saying I
have a limited pool of money and I need as a business person to spend that
money where I can get the most return.” Kelly Hlavinka--Marketing Consultant for Best Buy
The Learning Relationship
The customer tells you what they want and when they want it.
You tailor a solution for them that is seamless.
The Learning Relationship
Operate on a “need to know” basis.
KNOW EVERYTHINGABOUT YOUR CUSTOMERS.
All Firms
59% have a formal customerretention program in place.
Grizzard Performance Group
58% have a formal customerretention program in place.
B-2-BGrizzard Performance Group
71% have a formal customerretention program in place.
B-2-CGrizzard Performance Group
90% surveyed track, analyzeand report defection levels.
BanksBank Marketing International
Who’s the Customer?
Drucker onCustomers and
Resources“In an economic cause, one asks: Is this the best application of ourscarce resources? There is so much work to be done. Let’s put our resources where the results are.”
Peter DruckerManaging the Non-Profit (1992)
“Good” Money
Money that flows into a local economy from
competitive companies that sell outside the local economy.
David Morgenthaler-Morgenthaler Ventures
“Neutral” Money
Money that circulates within the local economy.
(Sometimes referred to as the multiplier effect.)
David Morgenthaler-Morgenthaler Ventures
“Bad” Money
Money that leaks out of the local economy in the form of people or
purchases.
David Morgenthaler-Morgenthaler Ventures
Tennessee Trends2002 to 2012 - Growth in Establishments
148,76855.6%
3,025-1.4%
Resident Firms Non-Resident FirmsSource: YourEconomy
Tennessee Trends2002 to 2012 - Growth in Employment
163,9171%
-90,445-1%
Resident Firms Non-Resident Firms Source:
YourEconomy
Tennessee Trends2002 to 2012 - Growth in Establishments
106,1366.0%
Stage 1 (2-9)
Source: YourEconomy
332.1%
Stage 2 (10-99)
-130.3%
Stage 3 (100-499)
-104-1.8%
Stage 4 (100-499)
Tennessee Trends2002 to 2012 - Growth in Employment
234,9573.8%
Stage 1 (2-9)
Source: YourEconomy
21,916.2%
Stage 2 (10-99)
4,562.1%
Stage 3 (100-499)
-134,708-1.9%
Stage 4 (100-499)
Think Vertically
Technology/Innovation Quotient
Job
Quo
tient
??
“Best” Customers
Façade/Building Improvement Quotient
Sale
s Q
uotie
nt
??
“Best” Customers
Public Investment Quotient
“Gre
en”
Quo
tient
??
“Best” Customers
Cluster/Sector Quotient
Expo
rt Q
uotie
nt
??
“Best” Customers
Your Best Bet CustomersCreate wealth by exporting goods/services (good money)
Provide quality jobs and high wages
Generate capital investment in the community
Incorporate technology into products and processes
Want our help to stay and grow
Grown locally
Are eligible for ED programs and resources
Avoid the “comfort level syndrome”
Seek out firms that have “fallen through the
cracks”
“If you can’t measure it, you can’t manage it.”
Peter Drucker
What You Can Measure
Number of customer visits (wk/mo/yr)
Number of referrals madeNumber of referrals (closed vs.
open)Percent of repeat businessPercent of market coverage
Number of program partnersAverage response time by partners
Recognition rating of program nameBuy-in among key stakeholders
Number of tangible success storiesLongevity of program
What You Can Measure
Quality job creation/retentionInvestment in technology/innovation
Market diversificationCost mitigation
Increased profitabilityIncreased productivity
More Measurements
Measuring Results
See all of your customers at least once
ee all of your good customers regularUncover and meet/exceed their needs,
wants and expectationsPut into place policies and programs th
anticipate their needs