Posted by: Chris | July 17, 2006

Gotta Million?

Have you read Branding Ad Vice’s Walter Koschnitzke’s blog today? I was very excited to see that someone else out there has a beef with the service industry. In his post, “Who Manages the Manager”, “Walt” (sorry, but I’m not going to attempt that last name again) launches into a near diatribe about the poor service he recently received from both waitress and manager at a Blytheville, Arkansas Perkins restaurant. Now, I should mention that Walt does begin his post with a nod to Perkins for having “quite favorable” service in the past. However, on this particular visit, Walt says that he actually got up and left the restaurant after having waited 50 minutes, and his food still had not arrived.

After reading this blog, I was prompted to take a quick trip to hoovers.com to look at some company financials. I grabbed 2 retailers and 2 restaurants at random. I specifically wanted to see how much this sample of companies was pumping into marketing. The number on Hoover’s that most closely approximates this figure is SG&A; however, I must say from the start that SG&A is not entirely marketing, and marketing is not entirely SG&A. But, it serves my purpose in this post. Lowe’s spends about 21% of its revenue on SG&A. Limited Brands spends about 26% of its revenue on it. The Cheesecake Factory spends about 37%, and Jim Cramer’s beloved Texas Roadhouse spends only a paltry 7%. (Incidentally, all figures are taken from the January ’06 report on hoovers.com except for Texas Roadhouse’s figures which are taken from Dec. ’05). However, even at the low end of the 4 companies, TXRH spent 33.3 million dollars on SG&A in 2005. In other words, if you gave me the money TXRH spent in a year on SG&A, I could spend one-million dollars a day for the entire month of February and still have some left over to buy a cool Pontiac Solstice and a small house in Beverly Hills. Many of us would say, “With that kind of money, they should be able to develop an invincible brand!” And in most cases, we are, for the most part, correct. However, it seems that when some companies (not necessarily the 4 mentioned above) dip their wonder brands into the river Styx, they must be hanging on to them by the service workers. What business owner or CEO in his or her right mind would invest so much into SG&A knowing that when his or her brand was sent to battle, it would have such a vulnerable spot? However, this is exactly what happens on a daily basis when businesspeople fortify the front lines of their multi-million dollar businesses with indifferent, lazy, bitter, preoccupied soldiers. I have said to my wife many times, “I would love it if the owner would come in and see the service offered at this place!” (Perhaps this is why QuikTrip is so successful-its execs are also regular patrons.) But it’s not just the service workers. As Walt points out, it’s also the managers who consistently permit this type of service. (I nearly went back and changed the title of this post to “Bad Service Workers and the Lazy Bastards who Enable Them,” but I thought better of it. My mother might read this someday.)

I am aghast (yes, I said aghast) at the millions and millions of dollars that are squandered by companies that permit managers and service workers to slough off. These people are quite literally the ambassadors of your brand! They are the ones who direct public sentiment. Mr. CEO, do you think that you are the one in charge of how people perceive your brand? Wrong! It is the individual human beings world-wide who come into contact with other human beings on behalf of your investment.

We have financial auditors in place to monitor the financial aspects of a company, to make sure nothing goes awry. Why do we not implement “customer service auditors” to do the same with the company’s most influential aspect: the workers who come into contact with the clientele? Give me just one-million dollars and I’ll do it for you-I’ll even pay my own expenses!

Indignantly,

Chris Posey
Intern

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