Random Thoughts – Randocity!

Rant Time: PlayStation Store Return Policy

Posted in botch, business, california by commorancy on September 29, 2018

Looking for that elusive PlayStation Store return policy? A lot of people have been asking, “Where and what is the PlayStation store’s return policy?” Let’s explore.

PlayStation Store Digital Goods vs Retailers

When you buy digital goods from an online store, you expect a similar return policy to what you find in a standard retail store. Retailers today mostly offer 15-30 days to return your purchase for a full refund. However, there are rules to boxed content such as video games and Blu-ray or DVD movies. If you crack open the shrink wrap, you own it. Once you crack that shrink wrap, you can only exchange the item for another like item. If the entertainment item remains wrapped (i.e., movie or video game), you can return it for a full refund so long as it’s still within the stated return window. Other physical items have usual refund windows of usually no less than 14 days and usually no more than 90 days. Still, these are reasonable return windows.

For digital goods, there is no such concept as a shrink wrap or even a plastic box. For these sales, you’re limited to whatever return policies the store offers. For Apple and Amazon, if you mistakenly make a digital purchase, they’ll happily refund you so long as you do so right away. For Sony’s PlayStation store, the waters here are much more murky.

Where is the PlayStation store refund policy?

That’s a really good question and, unfortunately, there’s not a good answer that covers the entire world. Sony has intentionally fractured the PlayStation store rules into world territories. This means that there is not a single return policy that covers the globe. Instead, return policies are by region.

In the US, Sony doesn’t actually publish an actual Return Policy. Instead, they rely on their “Terms of Service” agreement to cover their for their returns on digital good purchases.

Return Policy

I’m going to rant just a little bit on this topic before getting to the meat where to find the information you’re looking for. A Return Policy is just that. It’s a clear, concise, non-technical, non-legal statement that explains exactly what a store provides for after a sale. For example, Target’s return policy states:

Most unopened items sold by Target in new condition and returned within 90 days will receive a refund or exchange. Some items sold by Target have a modified return policy noted on the receipt, packing slip, Target policy board (refund exceptions), Target.com or in the item department. Items that are opened or damaged or do not have a receipt may be denied a refund or exchange.

Then, Target breaks this statement down into types of items and their specific return policy details such as…

Returns and exchanges without a receipt may be limited. Other restrictions may apply.

  • If you’re not satisfied with any Target Owned Brand item, return it within one year with a receipt for an exchange or a refund.
  • Target REDcard℠ debit and credit card holders will receive an extra 30 days to return nearly all items purchased with their REDcard at Target and Target.com. See Target.com/REDcard for full details and exclusions.
  • All electronics and entertainment items must be returned within 30 days for a refund or exchange. For these items purchased between 11/1 – 12/25, the 30-day refund period will start on 12/26.
  • All mobile phones must be returned or exchanged within 14 days. All items purchased with a carrier contract at a Target store must be returned or exchanged within 14 days and may be subject to early termination fees per carrier contract. Contract items and carrier plans must be sold and returned by a Target Tech Rep.
  • All Apple® products, excluding mobile phones, must be returned within 15 days.  For these items purchased between 11/1-12/25, the 15-day refund period will start on 12/26.
  • more

And so on… This is a short example of a Return Policy, this is not Target’s complete return policy. Please click the link if you’re really interested in reading that.

Anyway, this is to show exactly how a Return Policy should be written. It is written in clear, concise, everyday language. It is not written in legalese jargon that requires interpretation. Let’s compare this to what Sony considers a return policy for its digital goods.

Sony’s Return Policy which isn’t

The difficulty with Sony is that Sony US chooses not to create an actual store return policy and instead chooses to rely on its “Terms of Service” to cover for the lack of an actual return policy. When you ask someone on the chat service to give you a link to the PlayStation store’s U.S. return policy, they give you the following link.

Here’s the link to Sony’s “Terms of Service” agreement:

As you can see from this link, it is a legal document labeled “Terms of Service”. This is a legal agreement, not a Return Policy. Buried within this Terms of Service legal agreement, there is a section labeled Wallet. Here is where the return options are listed, but in fact, they aren’t really listed at all. Under the section Wallet, begins the information about purchases, which is about as clear a mud. But, let’s examine this mess they call a policy.

WALLET

Your Account has an associated wallet, and all purchases made on PSN Services, including purchases funded from an outside payment source (e.g., a credit card or PayPal account) at the time of the purchase, are made through the wallet. Your children’s Accounts that are associated with your Account do not have a separate wallet, and all purchases made by them will be made through your wallet. Wallet funds have no value outside PSN and can only be used to make purchases through PSN Services and certain Third Party Services. You can only hold a certain maximum amount of funds in your wallet as determined by us (“Limit”), using either (i) a credit or debit card; (ii) a prepaid card or promotional code with a specified value where available; or (iii) other payment methods approved by us and made available from time to time in each specific country. FUNDS ADDED TO THE WALLET ARE NON-REFUNDABLE AND NON-TRANSFERABLE EXCEPT WHERE THE LAW REQUIRES THAT WE TAKE THOSE ACTIONS. WE HAVE NO OBLIGATION TO REVERSE OR REFUND UNAUTHORIZED CHARGES MADE USING ANY PAYMENT METHOD TO FUND THE WALLET. WALLET FUNDS THAT ARE DEEMED ABANDONED OR UNUSED BY LAW WILL NOT BE RETURNED OR RESTORED.

blah blah blah… a bunch of legalese jargon that no one wants to read. But wait, there’s more to read….

TRANSACTIONS All transactions made through your Account or an associated Account of your child are solely between you and SIE LLC. By completing a transaction through your Account or allowing a transaction to take place through an associated Account of your child, you are (i) agreeing to pay for all transactions made by you or your children, , including recurring charges for subscriptions that are not cancelled; (ii) authorizing SIE LLC to deduct from the wallet and charge your credit card or other applicable payment instrument or payment mechanism all fees due and payable for all your transactions; and (iii) agreeing to any applicable Usage Terms and terms associated with use of the particular PSN Service. All transactions are final upon their completion and may be deemed to be governed by law and regulatory requirements applicable at the time the transaction was completed. PAYMENTS FOR ACCESS TO CONTENT OR SERVICES ARE NOT REFUNDABLE EXCEPT WHERE THE LAW REQUIRES THAT THEY ARE REFUNDABLE.

Pre-orders and Bundles. You may have the option to order a license for certain content in the form of bundles (such as seasons of television series) or a pre-order. We reserve the right to deduct funds from your wallet for any pre-order or bundle order at the time you order the content, but some or all of the content may not be available until it is released for license via the PSN Services.UNLESS OTHERWISE REQUIRED BY LAW, YOU MAY NOT CANCEL OR OBTAIN A REFUND FOR A PRE-ORDER OR AN ORDER FOR A CONTENT BUNDLE ONCE YOU PLACE YOUR ORDER, AND PRE-ORDERED CONTENT OR CONTENT INCLUDED IN A BUNDLE MAY BE CHANGED WITHOUT NOTICE.

Aha… here’s the meat of it!

Notice the ‘UNLESS OTHERWISE REQUIRED BY LAW’ provision. This is Sony’s legalese for telling you that they are leaving their return policy requirements in the hands of U.S. federal, state and local laws (if applicable). This means, it is your responsibility to understand and determine exactly what the laws govern returns in your jurisdiction. This is convoluted statement because most people aren’t knowledgeable or familiar with the laws that govern such returns in their jurisdiction. I have to assume Sony’s lawyers naively thought that no local jurisdictions legally covered this part of their “Terms of Service”.

Before I jump into what this statement means to you if you live in the U.S., let’s rant about why this is NOT a return policy. This document is a “Terms of Service” agreement. It is a legal document that governs your use of services. While it might cover some of what a return policy does, it in no way considered a comprehensive return policy. Compare this document to Target’s clearly written, concise, plain language readable policy above which clearly lays out classes of items and their respective return periods in explicit detail. A return policy is supposed to be written in plain language that anyone can understand. Sony’s “Terms of Service” document is anything but clear, concise and plainly readable. Sony’s document is designed to be read and interpreted by a lawyer, not a layman. Meaning, it is on you, the buyer, to understand all laws where you live.

Federal and State Laws

Before I begin here, I will state that I am not a lawyer and nothing in this article is intended to be construed as legal advice. If you have questions about laws in your jurisdiction, you should contact a lawyer where you live.

With that out of the way, because Sony has chosen to leave returns up to the laws in the buyer’s jurisdiction, thankfully it appears the US federal government has such a law that governs returns in these cases.

This federal rule that at first glance may be applicable to PlayStation store purchases seems to be the 3 day Cool-Down law. This is a contract law that states that you have the right to return anything within 3 days and receive your money back as long as you cancel the contract before midnight on the third day. However, it seems that this FTC rule doesn’t cover online sales, although in my opinion it should cover it. Regardless, it doesn’t mean you can’t make a complaint to the FTC regarding Sony’s refund policies.

State laws are a different matter. Because there are effectively 51 states (I’m including Puerto Rico as a state even though they haven’t yet gone through the statehood process), there are too many states to list each one’s return laws in this article. I will point you to this Findlaw article which has very concise information on the state by state laws regarding refunds and returns.

FTC Complaints and Consumer Protection

The primary methods that you have as a consumer for refund redress is 1) asking the company for a refund, 2) using the 3 day Cool-Down rule when applicable and 3) disputing the charge with your credit card company. Sony has control over all 3 of these. Because Sony has complete control over refunds, they can always deny them. Because the PlayStation’s stores sales are online, the 3 Day rule doesn’t apply. And finally, because a chargeback will lead Sony to terminate your PSN account in retaliation, you can’t perform chargebacks without losing all of your purchased content.

This is an unfair situation for the consumer. All of the possible consumer avenues to get a refund cannot be used against Sony. Sure, you can dispute with your credit card company if you’re willing to lose your PSN account. Most gamers are not willing to lose all of their digital content they’ve purchased over a single refund. This is really a scam that Sony has going here. Thankfully, state laws may apply.

California

I will cover California here simply because I have enough knowledge after reading California’s specific law regarding this issue. Keep in mind that all laws are open to interpretation such that a judge can interpret the subtleties and applicability of those laws to any circumstances and in any way that he or she deems appropriate. That means my interpretation isn’t necessarily the interpretation a court of law might rule for a given case. However, Sony does have a presence in California which strengthens California’s laws against Sony.

It seems that while physical presence retailers are bound by California law to post and maintain a comprehensive Return Policy within their place of business, this law appears to have not been updated to explicitly cover businesses performing online sales and which also have a presence in California. This means that online retailers may or may not have a loophole with regards to posting and maintaining a Return Policy. Though, if the law requires physical businesses to post a Return Policy, I don’t see any reason why it wouldn’t apply to online storefronts who also have a presence in California.

According to Findlaw, California law states that:

Retailers are required to clearly post their refund policy unless they offer a full cash refund, exchange, or store credit within seven days of the purchase date. Retailers failing this requirement are required to accept full refunds within 30 days of purchase.

Assuming that the word “Retailers” applies to online sellers who have a presence in California, this law may extend your refund rights to 30 days as Sony clearly doesn’t post an actual refund policy anywhere visible on either their storefront or on their main web site. If “Retailers” only applies to stores with a physical presence and this law does not apply to online retailers, then this provision wouldn’t apply. California seems a little behind on explicitly stating its laws also apply to online sellers doing business in California. This means that assuming California’s law applies to PlayStation store sales, it does so implicitly through interpretation of the law.

For this reason, you would have to talk to a lawyer and ask them to interpret California’s law and whether or not it applies to Sony’s online storefront. Personally, I’d interpret that this provision applies, but I am not a lawyer. I’d certainly argue that the law does apply when arguing for a refund with Sony when you also live in California. I also happen to know that Sony has a business presence within California in San Mateo which makes a difference when dealing with legal matters of business in California. If your state doesn’t have a Sony business presence, any laws governing “retailers” might not apply to Sony.

Not all states have consumer refund policy laws such as those in California. You’ll need to review that Findlaw article and look for your state to determine if such a law applies that might extend your refund rights.

Sony’s Cancellation Policy

You might be saying, “I just Googled and found this Cancellation Policy on Sony’s web site”. Remember when I said the return policies for Sony are fractured around the world? Well, here’s the example of this. While this web published Cancellation Policy is visible to the world (including U.S. residents), apparently it only applies the UK (even though it makes no mention of this in the article body itself).

Simply reviewing Sony’s Cancellation Policy, it states a refund policy of 14 days so long as the digital item has not been downloaded or streamed. It’s a reasonable policy if they enforced it in the U.S. However, they apparently do not offer this policy to U.S. buyers. Instead, if you talk to someone on Sony’s U.S. PlayStation Store chat service, they will point you to the above “Terms of Service” document for their return provisions. The U.S. PlayStation store reps claim the Cancellation Policy does not apply to U.S. store purchases.

By making this claim, it does two things, 1) it says Sony does not publish a comprehensive return policy anywhere on its web sites for U.S. buyers and 2) it states definitively that the published Cancellation Policy does not apply to U.S. buyers. This means that the “Terms of Service” provisions rule. This also means that if you live in a state with a law that states that failing to establish a visible return policy in a store front results in a 15-30 day return period. That also means Sony is obligated to uphold the legal requirements of that state. This is why the “UNLESS OTHERWISE REQUIRED BY LAW” statement is important to understand your return period for Sony PlayStation store digital goods.

This “Terms of Service” document squarely puts the burden on you the buyer to understand the laws in your jurisdiction governing Return Policies. Assuming your state extends your rights, you might have 15-30 days to return the item unopened.

Unopened Digital Items?

It’s best to follow the “Unopened” rule when asking for a refund of a digital item. What does “Unopened” mean on digital goods? It means you haven’t downloaded or streamed the product. Effectively, it is the same definition that’s in Sony’s UK-only Cancellation Policy. If you have downloaded or streamed the item, then the federal and state laws likely may not apply to the refund. To be safe and avoid arguments with Sony, stick to the unopened rule when attempting refunds. Pre-orders would automatically be considered unopened while still a pre-order.

Disputing Charges with your Card Issuer

Assuming you’ve bought your purchase directly with a credit card and not with wallet credit you bought via a gift card, you can always dispute this transaction with your card issuer. However, Sony has a provision in their “Terms of Service” for this:

Fees and Other Charges. We reserve the right to deduct from the wallet all bank fees related to any transactions or failed transactions (e.g, chargebacks from your bank or credit card provider) initiated by you or your children, including domestic and international transaction fees. We reserve the right to terminate your Account and any associated Accounts of your children for failure to complete transaction payments. In lieu of termination of your Account, we may elect to provide a mechanism by which you fund the wallet associated with your Account to prevent your Account (and any associated Accounts of your children) from being terminated.

What this says is Sony reserves the right to terminate your account over service fees or chargebacks. If you dispute a charge with your card issuer and your bank accepts your dispute, they will force a chargeback to Sony. This means Sony will likely retaliate against that chargeback and close your PlayStation Network account. If Sony does this, you will lose any wallet credit and any purchases that were linked to your account. If you had any significant amount of digital goods purchased, they’ll be gone. Weigh carefully the decision to dispute a charge through your bank. If you buy through PayPal, you do have PayPal’s buyer’s protection, but Sony may still retaliate against your PSN account if you dispute a charge via PayPal.

If you do choose to try a dispute, I’d suggest unlinking the card from your PSN account before you begin the dispute process with your bank. This may prevent Sony from easily tying the card back to your PSN account.

Buying Digital Goods

When you buy digital goods from stores like Apple, Amazon, Google, Microsoft and Sony, you need to carefully read and understand their rules. You’ll also need to understand the laws that govern where you live. Most digital sellers are reasonable for mistake purchases. However, Sony appears to be ruthless in not wanting to issue refunds at this point. In addition, they have the power to hold your PSN account hostage against your only means of consumer protection via credit card dispute. I’d complain to the FTC on this one alone. This is an entirely unethical business practice.

My point here is that you shouldn’t ever buy any digital goods from Sony. At least, not until they come to their senses and offer a reasonable return policy and publicly publish it on their PlayStation Store web site in a visible location.

If you get caught in a situation where you bought something you didn’t intend, try your best to get a refund. There are no guarantees Sony will honor any federal or state laws. If they choose to ignore these laws, report them to the FTC and to your state Attorney General’s office. If you don’t care if they close your PSN account, then by all means contact your credit card issuer and request a dispute against that charge. Good Luck.

Sony’s Corporate Legal Compliance and Responsibility

The “UNLESS OTHERWISE REQUIRED BY LAW” provision should be Sony’s legal responsibility. Legal compliance and maintaining compliance with all laws has always been and should remain a corporate burden. Since Sony has taken it upon themselves to state “UNLESS OTHERWISE REQUIRED BY LAW”, Sony should be required to keep a list of all laws in all jurisdictions and uphold those laws with regards to digital returns on PlayStation store purchases.

This means that when you call or chat into a Sony representative asking for a return, it should be the representative’s responsibility to ask you the city and state where you live, then pull up a reference document containing the laws for that jurisdiction. Then, determine if those local return window laws apply to your return before outright denying the return.

It should not be the buyer’s burden to inform the representative of local laws that apply in that jurisdiction. By forcing the buyer to inform the representative of applicable laws, it then forces the representative to make a decision regarding that return. If Sony has told their representatives to reject all such arguments as invalid, then Sony is in willful in violation of some state and federal laws. It also means that the burden of upholding laws has been left in the hands of phone or chat reps.

Sony, do you really want some of your lowest paid staff making corporate legal decisions for Sony and potentially putting Sony at legal risk?

As most corporations today are trying their best to mitigate legal risk, Sony seems to be willfully instigating legal risk at their own peril. Get with the program Sony and write a real Return Policy and post it on the checkout screen. It’s not hard! Otherwise, you need to take on the legal responsibility of informing your reps of which jurisdictions have laws that apply to digital returns.

To PlayStation Store Employees

If you work for the PlayStation Store as a chat or phone rep, you need to understand your own personal legal risks. Because you are being made to decide the fate of a return based on “UNLESS OTHERWISE REQUIRED BY LAW”, you could face personal legal penalties because Sony has placed you into this legally risky position. I’m pretty sure you didn’t sign any legal indemnity clauses when you hired onto the PlayStation Store. As an employee, it is not your responsibility to decide legal matters over the phone or via chat. If you make the wrong decision and that decision is illegal, you can be held personally liable for breaking that law in addition to Sony. Do you really need legal fines and jail time?

As a representative for Sony, you need to take this article to your management team and explain to them that you no longer wish to be legally responsible for Sony’s actions. Explain that you don’t want to be fined or jailed for making the wrong decision on the phone. That’s not part of your job. Your job is to answer the phone and perform returns. But, it is not your job to take on personal legal responsibility for Sony.

As a representative, you need to insist on corporate legal compliance. This means that you need to insist that it is Sony’s responsibility to provide you with all necessary legal information to ensure you always comply with federal, state and local laws for each and every return. Sony hires lawyers. Sony can get their lawyers to provide you with this legal compliance information. After all, those lawyers are getting paid a whole lot more than you as a representative. Let’s make those lawyers do some real work for a change. Better, ask your management team to publish an actual Return Policy on the checkout page of the PlayStation store, which fully describes return windows and avoids this entire legal problem.

I welcome comments regarding your personal experiences with Sony’s PlayStation U.S. store return policies. I’m also always interested in hearing any tricks you may have used that helped you get a refund.

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Unlimited Vacation: Blessing or Curse?

Posted in best practices, business, vacation by commorancy on July 23, 2018

I don’t usually get into discussing workplace stuff because it’s relatively boring. However, Unlimited Vacation is one perk that is really, really needs discussion. Let’s explore.

Perks and Jobs

I get it. I understand why companies offer perks. They have to offer perks for talent acquisition reasons such as:

  1. Companies must keep up with competition — If a company doesn’t keep up with what other companies are offering, they lose talent during recruiting
  2. Companies must offer perks that seem inviting — Again, this is a talent acquisition feather-in-the-cap sort of thing. It’s something the HR team can cross off the checklist of things to entice candidates
  3. Companies must offer perks that are inexpensive — Companies don’t want to give away the farm to offer a specific perk

What kinds of perks can you typically find in tech companies? You find perks like the following:

  1. A stocked kitchen — This includes soda, coffee, tea, milk / cream and then for food, this can include fruit, nuts, chips and cereal
  2. Bagel Friday — This perk includes donuts and bagels on Friday
  3. Lunches — Some companies offer subsidized and/or free lunches one or several days of the week

Those are all food related, however, other perks include:

  1. Day Care or reimbursement
  2. Commute expenses
  3. Free parking
  4. Tuition Reimbursement (job related)
  5. Training / certifications (job related)
  6. Paid sick days
  7. Paid vacation
  8. 401k
  9. ESPP (if public company)
  10. Company holidays

These are the HR type of benefits that many companies offer. Many of these have a real dollar based cost to the business. However, there’s a new perk that seems great, but really isn’t for several reasons. That perk is ….

Unlimited Vacation

This ‘perk’ (and I use this term loosely) is now becoming popular in businesses. Why? Because it doesn’t cost the business anything to implement and may actually save the company some money (or so companies think). On paper, the idea seems enticing, in reality it’s a pointless benefit to employees and actually encourages more employees to take vacation which may hinder productivity and deadlines.

Why is this benefit so bad? This benefit is pointless because there is no way any employee can actually use it in its unlimited capacity. If you were to try, you’d be fired and walked from the building. I don’t know of any business that doesn’t require approval for vacation from a manager. Even if you could request excessive amounts of vacation, it’s unlikely your manager would approve it. But, within reason, you can request time off and here’s where it begins to break down for employers.

The only people who can even use this benefit as unlimited are those who are in management positions, who don’t have to report their own vacation usage. In other words, subordinates won’t be able to use it, but managers will (and they will use it frequently).

This is one of those perks that will be abused by those in charge. Those not in charge will be penalized whenever they attempt to use it in any unlimited way.

Vacation Time

In general, asking for vacation time off is tricky. It must always be coordinated with ongoing projects, team commitments (i.e., on-call), other team member time off and holidays and requires manager approval. Even people who end up out sick can interrupt or force rescheduling of vacation time off.

Don’t be tricked by this perk, it doesn’t make vacation time off any more accessible and, in fact it is entirely designed entirely for …

Ripping off Employees

There are two fundamental problems with Unlimited Vacation. The first problem is that the benefit (ahem) is being implemented as a cost saving measure to rip off employees when they leave a company (and is designed to appear to save the company many thousands of dollars). This issue really only affects long term employees. You know, the ones who have devoted several years to your business. But now, you’re going to give them the finger on the way out the door? Smart.

With standard paid time off (PTO), you are allotted a certain amount of hours that accrue over time. Let’s say for every year of service that you complete, you will accrue up to 1 week off (with a maximum of 2 weeks that can be held in total). After 2 years of service, you’ll have those 2 weeks accrued, assuming you never take time off. If you leave the company after 2 years without taking any vacation, you’ll be paid out your accrued PTO balance for the 2 weeks that you didn’t take. That’s two weeks worth of salary you’ll receive upon exit, in addition to any other salary owed.

With Unlimited Vacation, that vacation payday goes away. Since it’s now unlimited, there’s no more time accrued and no more PTO to pay out for any employee. The only thing that payroll needs to keep track of is how much time you’ve used solely for timekeeping purposes. When you exit a company offering Unlimited Vacation, you won’t receive any vacation pay because they are no longer accruing any. This means that when you were formerly paid 2 weeks of PTO, with Unlimited Vacation you now get $0.

Unlimited Vacation is then an HR cost-cutting measure entirely designed to screw exiting long term employees over so companies no longer need to make any vacation payouts.

Here’s where the second problem begins. As employees realize this screw-over job and to make up for the lack of accrued time, this means employees will need to take as much vacation as is allowed without getting fired in the process. Since you can’t accrue, you now need to use.

Accrued PTO vs Unlimited Vacation

Businesses don’t seem to understand the ramifications of this perk on its workforce. The first ramification is that employees with accrued PTO no longer get the exit vacation payday. This is significant when exiting your employer and moving on. But, this only occurs on a termination event. Employees should remain cognizant of this event, but even more employers should remain cognizant of how this will change how vacation is used. As an employer, it means you need to understand how to retain your workforce better.

Here’s the second problem in a nutshell. PTO encourages employees to stockpile their vacation and rarely take it. Up to 50% of the workforce does this. However, Unlimited Vacation encourages employees to take as much vacation as they can legitimately get away with.

With PTO, employees might work and work and work with little time off. With UV, more employees will take more time off, thus working less. This is something that HR and management will need to understand about this benefit. If the point is to get people to take more time off, then UV is the answer. If you’re trying to encourage people to stay at their desks and work, PTO is the answer… but has the end payout.

It really all depends on how you want your staff to work. If you want people at their desks not taking time off, then PTO is your answer. If you want people constantly taking time off, then UV is your answer. Sure, UV saves you on the exit payments, but at the cost of people taking more time off throughout the year. It does one more thing.

The up to 50% of employees who rarely take time off will change their work ethic to include significantly more time off. Since they know can no longer stockpile and get that payday when leaving, they will now be encouraged to take time off to make up for that loss of money. This means that a workforce that you relied on to work excessive hours to make ends meet will no longer continue that trend in your business.

If you think that people will continue the same type of vacation behaviors they used with PTO when on UV, you’re mistaken. People will use what they are owed. If they are encouraged to take time off, they will whenever possible. This means that for the folks who rarely (if ever) took PTO days will now begin scheduling more time off throughout the year. That’s not because it’s unlimited, but because they understand that they no longer get the payout at the end. This compromise ensures they get the equivalent benefit and that means scheduling and taking time off. There’s entirely nothing the HR team can do about this change in vacation usage behavior when on the Unlimited Vacation plan.

It’s a use-it-or-lose it situation. If you never take vacation with PTO, you can justify it with the payout at the end. If you never take vacation with UV, not only do you get no time off, you get no payout at the end. It’s simple math. No payout at the end means using more vacation time to get the equivalent benefit. Employees aren’t stupid and they will realize this paradigm shift and compensate accordingly.

This outcome will happen. You can even watch your employees behaviors after you convert from a PTO to UV system. I guarantee, your employees will notice, understand and modify their vacation schedule accordingly. This may impact your business, so caveat emptor.

Good or Bad?

That’s for each company to decide. More employees taking more vacation is good for the employee and their morale. But, it may negatively impact the productivity of your business. With PTO, people not taking vacation means more productivity. With UV and more vacation time off, this likely means less productivity. It might mean a happier and less stressed workforce, but it likely also means less work getting done.

I’m not saying any individual will take excessive time off. No, I’m not saying that at all. That’s simply not possible. What I am saying is that if 40-50% of your workforce never takes time off under a PTO plan, you will likely find that number reduces to less than 10% of your workforce not taking time off with a UV system. That’s a significant amount more people taking time off throughout the year than on a PTO system.

If you delude yourself into thinking employees who don’t take vacation time off will continue a PTO trend on a UV plan, your HR team is very much mistaken. I can also guarantee that if managers deny vacation requests to keep employees at their desks, this too will backfire and your talent will leave. This will become a catch-22 problem in your business.

As an employer, you spend a lot of money hiring talent. You also spend a lot of money holding onto that talent. Why jeopardize all of that with a policy like UV that won’t really do what what you hoped it would? On paper, it seems like a great cost saving policy. In practicality, it will likely backfire on your company’s productivity efforts and cost you more money in the end, but not for the reasons you think.

Conversion Process

You may find that if you are converting from some other vacation system to unlimited that people do continue their traditional habits. However, that will change over time both as turnover happens and as people realize their loss of PTO payout. Once employees wake up to the realities of the new system, the amount of employees requesting and taking vacation will increase.

A UV policy will make it more difficult on the managers to juggle vacation timing, fairness and who can take what when. This will increase manager load by taking them away from managing projects and deadlines to managing the minutiae of juggling even more staff vacations.

Hourly Employees versus Salary Employees

This type of perk works best in salaried environments. With hourly employees, trying to offer a perk like Unlimited Vacation won’t really work well. This is particularly true of employees working in a call center or similar type environments. With salaried tech workers, this kind of benefit may work for you with the caveats that have been thus far described.

Startup or Established Company

If you run a startup, you should stay away from the Unlimited Vacation policy entirely. It won’t do your business any favors. Sure, it’s more cost effective, but only when long term employees leave. If you’re a startup, you won’t have long term employees to worry about for a while. Your duty is to entice your talent to stay, not leave. If you have a problem with a revolving door of staff, then you have a much bigger problem than a benefit like Unlimited Vacation. The problem for a startup is that a UV plan encourages more people to take vacation more often rather than stockpiling it for use later. Again, more workload for a manager to juggle vacation schedules rather than handling projects and deadlines.

In a startup, a UV policy means more people taking time off. This isn’t what you want when you need all hands on deck to keep the business afloat. You want most people at their desks and readily available at all times. When people take vacation, they expect to be cut off from their job including no email, no pager and no contact. And, rightly it should be. If you’re on vacation, you’re on vacation. PTO plans encourage staff to accrue now and take time off much, much later, perhaps years later. With a UV plan, this  encourages more people to take vacation regularly. Not exactly what you need in a startup. PTO works for a startup because employees stockpile and then once the business is off the ground years later, they will then take their vacations. This is why PTOs are actually better for a startup than a perk like UV.

If your business is established with 500 or more employees, then implementing an Unlimited Vacation policy might be worthwhile depending. With larger numbers of staff, there’s more opportunity for someone to cover an employee who’s out. This means if your 40%-50% staff who are stockpiling decide to start taking vacation in increasing numbers, you can withstand this change in your workforce behavior.

It’s up to you to decide how to operate your business, but PTO vs UV is one perk you should thoroughly investigate and then weigh all pros and cons before implementing it. Don’t do it simply because it might (or might not) save you some cash when employees exit. Do it because it’s the right plan for your business’s current operating goals.

 

Toys R Us: Say Goodbye to an Era

Posted in botch, business, tanking by commorancy on March 14, 2018

tru-logoFor many, we grew up with Toys Я Us as the go to place to find that cool new toy, game, doll, action figure, Teddy Ruxpin, train set, learning toy, crayons, movie or even video games. Times are a changin’ folks and Toys R Us is now finds itself way less than one Barbie away from permanent closure. Let’s explore.

Update from the News Desk — 2018-03-14

Toys R Us headquarters has apparently informed all US and UK employees on Wednesday, March 14th that all US and UK locations would be closed, a move that would lose 33,000 jobs. This would be one of the biggest retailer liquidations. CEO David Brandon intended to file paperwork to begin the liquidation proceedings on Wednesday.

From small to BIG to defunct

In the 70s, I remember toy stores primarily consisting of smaller retailers in malls, usually carrying Lincoln logs, wooden toys or learning toys. While I didn’t mind visiting these places, they felt more like a library than a toy store. They also didn’t carry much of the things that I liked. It wouldn’t be until sometime the mid-70s when a Toy R Us opened near my house. That’s when toy shopping all changed, at least for me.

I’m sure my parents hated taking me to Toys R Us,  just as so many parents do. For us kids, it was like a day at Disneyland: a gold mine, a treasure trove, a place of dreams. Unfortunately, the parents were having none of it… or at least, as little as they could walk out of the store carrying. Good on them, but that didn’t make Toys R Us any less magical to a 8-10 year old. We loved it, we loved going there and we especially loved it when we got to take something home with us.

Geoffrey

I was never a super big giraffe fan, but Geoffrey was a fun and charming mascot constantly pointing out cool new things in the store. I would come to see Geoffrey as cute mascot designed to help me find new stuff. Not always, but a good bit of the time. Sometimes he was just present, like Mickey Mouse. That Giraffe always made me smile because I knew that I was at that magical place, like Disneyland but local. Over the years, Geoffrey began being used less and less by TRU, but he’s still considered their mascot.

Every once in a while, Toys R Us would offer an enter-to-win a fill-your-cart shopping spree. I always wanted to win one of those as a child, but alas never did. To think what I would have filled my cart with. The mind boggles, if only because some of those toys are considered highly collectible today. Though, those toys most assuredly would not have remained closed in their packaging after making their way home.

Growing Up

As I grew into my 20s, got my own car and job, my relationship with Toys R Us changed. No longer was it that magical place, but it now had firmly become a store and I was a consumer. Still, it was a place to go to find that hot new toy that everyone’s talking about. It also became the place to find computers and video games. If I couldn’t find it at Target or Kmart or, later, Walmart, I could almost certainly find it at Toys R Us or Kaybee or Children’s Palace (competitors at the time) and to a much lesser degree FAO Schwarz. Toys R Us was always the first place to go, then the others as they were less reliable.

Dominoes

As the competitors fell over one at a time, first Children’s Palace in 90s, FAO Schwarz in early 00s, then in the middle 00’s, Kaybee Toys, Toys R Us was still standing and, in 2009 would acquire the FAO Schwarz brand, but would sell it off in 2014. It was (and currently is) the place to go to find all things toys. Unlike Target and Walmart that choose to stock limited toy items, Toys R Us (like the previous Children’s Palance and Kaybee) still carries aisle after aisle of wide ranging toys you can only find at Toys R Us. You simply can’t find this selection of toy items at a discount department store. This is why I always ended up at Toys R Us in search of fun, exciting new things.

The Mistakes

Throughout the later years, I’ve grown a love-hate relationship with the Toys R Us chain. Not only because I worked there for a short time while in my 20s, but also because the management does a lot of things that don’t make sense. For example, Babies R Us. For a time, Toys R Us stores devoted half of their space to baby goods. I don’t have a baby, so there’s no interest in that. Yet, Toys R Us decided to kill half of their store space to devote to these products. This meant, less space for toys, games and other items.

I understand that the management wanted to expand their selection into babyland, but it was a mistake to take away valuable Toys R Us aisle space to devote to all-things-baby. This, in my opinion, was one of the biggest mistakes the Toys R Us management foisted upon its stores. That was, until they finally spun Babies R Us into its own stores and gave it its own space.

Later, the management decided to do away with separate Babies R Us stores and chose to abut the two stores together for one seamless one-store experience. That was at least better than taking away shelf space from an already cramped toy store, but even that was unnecessary and, in my opinion, a mistake. They can be next to each other, but walled off and separate stores with separate stock and separate staff. I know why they did chose to hook them together. They did it so they could use one set of checkout lanes, one set of cashiers and one set of staff to stock both stores.

The X

At around the time that Babies R Us was coming into its own as a separate store chain, Toys R Us decided to change its shelving layout. Instead of the more logical long rows running from the front to the back of the store (with middle store aisle breaks) which made it easy to find everything, the store layout designer decided to change the aisles to be side to side and then create X shaped rows in the middle of the store. Not only were these rows much harder to navigate, the layout of the aisles were crippled as a result. This layout made finding things incredibly hard and it seemed like they had less shelf space.

Not only was everything now moved around haphazardly, it made finding what you’re looking for overly hard. Meaning, now you had to navigate the whole store looking at everything just to find that thing.

Maybe the designers thought this was a good idea? It wasn’t. This is the second mistake from Toys R Us management.

Overbuying and Stocking the Wrong Toys

I don’t know how many times I visited Toys R Us in the 90s only to find the same toys every time I visited, sometimes months apart. These we affectionately call peg warmers. This mistake continues to plague Toys R Us to this day. Not only did Toys R Us have incredible buying power way back when, they just didn’t use it to their advantage. Instead, they would continually overbuy on dud toys and not buy enough on the hot toys.

You can’t sell toys that you don’t have in stock. For example, Cabbage Patch kids. When that craze hit, they couldn’t keep them on the shelves. You’d think Toys R Us could have negotiated with the manufacturer and buy 10x the amount they originally bought… simply so they could fill the demand. Sure, there might be a drought while the manufacturer created more, but eventually they would have enough stock quickly to satisfy demand. Alas, they didn’t and the shelves remained bare until the toys were so cold you couldn’t even give them away. Too little, too late.

Further, Toys R Us needed to let the local managers order stock for their specific location to stock toys that are regionally hot. Not every toy sells the same in every store, yet Toys R Us felt the need to send cookie cutter stock out to every single store. If you walked into a Toys R Us in any state, you’d see identical stock. Each store manager needed to be given free reign to specifically order stock in sizes that made sense for amount of local demand they were seeing for a given toy item. If they couldn’t keep a specific skateboard stocked, then the manager should be able to order the proper amount to cover the local demand from their store. In fact, stores that couldn’t sell the item should have shuffled the stock over to stores where the demand was high. That’s smart inventory management. Nope.

Store managers should also be able to nix slow selling items from their shelves and replace it more hit items. Why continue to carry that obscure toy that you can’t even clearance out when you can sell 100x as many Tickle Me Elmos? Having great selection is fine as long as you’re not stocking 50 of an item you can’t even give away. Again, smart inventory management people. Stock them in small quantities, sure, but not in the quantities that each store was getting. Shuffle extra stock to other stores that have none. Remember, I worked there, I saw the stock amounts in the stock room.

Nope. Toys R Us continued to make this mistake year after year.

Over-expansion

Nearly every business thinks they should open as many stores as physically possible. But, you can’t do this when most of your stores are operating in the RED. Toys R Us was no exception. This chain continually felt the need to open new stores rather than trying to shore up their existing stores and get them each to an individually profitable status. If the management had stopped their expansion plans and, instead, focused their efforts on making each store profitable by the end of Q1 each year, Toys R Us would not be in this predicament.

Dated Store Displays

Not too long ago (perhaps early 00s), Toys R Us did away with the X aisle layout and converted them back into horizontal rows once again. However, the aisles now run left to right in-store rather than the original front to back design (which was arguably its best floor plan). Unfortunately, their fixtures are all incredibly dated pegboard and 70s style metal fixtures. They look like they’re straight out of a 70s store… even when the store is brand new. Maybe these are the cheapest fixtures they can buy? No idea, but they don’t look modern.

The store is also incredibly jam packed with stuff. The shelves are always full of stock yes, but it doesn’t help when the stock is old and is sitting on dated shelving units lit by 70s style fluorescent lighting fixtures.

The Business

Here’s Toys R Us’s primary operational problem and the problem that ultimately leads to where we are today. Toys R Us always relied on the holiday shopping season to pull its stores into the black. Meaning, Toys R Us always operated its stores in the RED through 80-90% of the year hoping for the holiday season to pull each store up and out and operate in the black for that year. This was the chain’s primary mistake. This operating model had been ongoing since the 80s. This was the way that TRU intentionally chose to operate its stores. This was also entirely their biggest operating failure and it’s the mistake that is now what’s threatening closure and costing TRU its business.

In addition to operating in the red, Toys R Us also didn’t wield its buying power to get the best possible credit terms, the best possible deals and the best possible return arrangements. If a toy doesn’t sell, package it up, send it to another store that can sell it or send it back to the manufacturer for full or partial credit. Let the manufacturer deal with that stock rather than trying to organically clearance out items on the shelves years later. No, get these old toys off of the shelves to make way for new toys. Fill the shelves with toys that can sell and that will pay the bills.

If you can’t pay your bills, you can’t stay in business. Business 101. Yet, Toys R Us management felt that they were above these rules. The management team felt they could continually run their stores in the red without ramifications. Well, fate has now caught up with you, Toys R Us.

Being Acquired by Private Equity Firms

Because of the way Toys R Us chose to operate its stores, it could not support being acquired in this way. This acquisition was entirely shortsighted on the part of the private equity companies involved and they (and us consumers) are the ones who are now paying the ultimate price.

In 2005, Toys R Us was acquired by a set of private equity firms. These firms included KKR & Co., Bain Capital and Vornado Realty Trust in a $7.5 billion buyout deal. These three companies (and their investors) sank $1.3 billion of their own funds into the purchase, leaving the rest of the purchase price of $6.2 billion to be made up in loans. These loans saddled Toys R Us with an over $6 billion debt burden. A debt that, because of the rather nonsensical business model that the stores had been following since the 80s, could never be recouped. All of this leads to…

Bankruptcy

In late September 2017, Toy R Us filed for bankruptcy protection against its creditors. This means that its creditors can no longer go after Toys R Us for not paying bills. It also meant that the loans left over from that terrible 2005 buyout deal could no longer collect on those loans. Of course, in return for this court issued bankruptcy protection, the company has chosen Chapter 11 to work through a plan to reorganize in a way to get themselves back to profitability and pay their creditors over time before time runs out. For the Toy R Us management, that meant finding a suitor to buy the business… because, of course, they couldn’t be bothered with actually trying to restructure the stores in a way to make them profitable. Oh, no no no.. that’s just too much work.

What? Are you kidding? Are you really expecting some well funded company to swoop into this ailing business holding onto a mountain of debt and offer to buy you? Really? The way that TRU operates is textbook operating procedure for failure. It cannot continue to operate in the way that it does. Even closing half of the stores may not be enough to solve this operating problem. It’s only surprising that it took this long for this toy chain to make it to this point. I expected this day to come a lot sooner.

Toy Collectors and Toys R Us

I full well expected to see Toys R Us fail in the 90s.  However, Star Wars saw to it to keep Toys R Us in business. The Star Wars collectors came out in wild abandon to snap up tons of revamped Star Wars merchandise for not only the previous trilogy (including the Orange and Green carded Power of the Force series). These toys still remained hot even after 1983’s Return of the Jedi cooled down. It all heated up again when the Prequels began in earnst in 1999 (toys beginning to appear in stores about a year earlier). Toys R Us got a reprieve from their red ledger problems due primarily to Star Wars collectors, Hasbro and a few other unrelated hot toys during the 90s (Tickle Me Elmo). Almost every year, there was some new fad that kept Toys R Us’s year end strategy in check. Though, this strategy would ultimately fail them when, in the last 10 years or so when there just haven’t been those must-have toys or collectible Star Wars toys. Even the Zhu-Zhu pets weren’t enough. Even the latest Star Wars trilogy from Disney has not had the merchandising power that the 90s saw. Though, Disney isn’t crying over what they have sold.

In fact, I’d venture to guess that the 90s collectors have all but stopped collecting and have moved on with their lives… which put a huge crimp in the Toys R Us budget. In fact, during the collector heyday of the 90s, Toys R Us did their very level best to chase away the collectors. Much to their own chagrin, they succeeded in doing so by the mid-2000s. It also doesn’t help that collectors can now buy full cases directly from places like Entertainment Earth, which no longer meant the need to scour the pegs at Toys R Us in the wee hours of the morning. You could order cases directly from the comfort of your own home, then see them delivered to your doorstep.

Amazon and Online Shopping

Because of the power of the Internet, Amazon and eBay, it’s pretty easy to find that hot toy at more reasonable prices. Yes, Toys R Us is still a staple in the current shopping landscape. When it closes, both Amazon and Entertainment Earth will simply pick up where Toy R Us left off without missing a beat. If anything, I’d suggest that Amazon pick up the Toys R Us branding at a fire sale during liquidation and rebrand the Amazon toy section to Toys R Us. Keep the TRU brand alive, but not with all of that bloated store baggage. Then, dump the Babies R Us brand entirely. You can still sell baby things, but branded as Toys R Us.

Toys R Us Closing

As I said, I have a love-hate relationship with Toys R Us. I do enjoy visiting and seeing what’s new, but every time I walk into a store, I’m confronted with the dated shelving and decoration, the continual nagging reminder of just how careless the management is and how much of a wasted opportunity that Toys R Us had to be the become the biggest profitable toy chain in the world. Yet, they’ve failed.

If Toys R Us can manage to pull a rabbit out of a hat at the last minute and keep the lights on, I’ll be fine with that. Sadly, I think this is likely where it will all end for Toys R Us.

Gift Cards or Rewards — Use em’ or lose ’em

toys-r-us-gift-cardIf you have any remaining unused gift cards from Toys R Us, be sure to visit a store now and use them immediately. Don’t wait until after Toys R Us begins closing its stores.

Likewise, if you have any rewards points left on your rewards card, log into Toys R Us Rewards, issue certificates and use them up now. Same for Babies R Us Cashback Endless Rewards program. Otherwise, forfeit your chance to convert those points into dollars. Representatives for Toys R Us have said that they will honor gift cards, rewards points and cashback programs for 30 days. The 30 day clock likely began on Wednesday March 14th, when they filed their liquidation paperwork with the court.

I guess in an odd way, I do kind of get that shopping spree after all, and many years later. I just found that I have over 2500 points in my rewards account. That equates to a $100 shopping spree.

For my $100 in rewards points, I got a Nintendo Monopoly set, a Care Bear Grumpy Bear, Two Schliech Geoffrey branded figurines, 5 different Halo Hot Wheels, a Pit Amiibo, a Pain-Yatta Skylander, a Playmation Vision figure and two Geoffrey branded reusable shopping bags. I ended up paying $9 to cover the tax. I also bought a $5 Geoffrey gift card and immediately used it to get dock protector straps for a Nintendo Switch. I wanted the Geoffrey branded gift card as a souvenir. I’d also previously purchased the day before, two Geoffrey 18″ plush and one Geoffrey plush gift card holder, which I’ll put that used Geoffrey gift card in.

Returns and Exchanges During Liquidation

Check any purchased merchandise thoroughly for defects the same day you buy it. If there are any problems, return it the same or next day and exchange it. Don’t wait even a few days to exchange as you may not be able to find the same item. According to Toys R Us representatives, all sales are final. This means, no refunds. However, they may continue to honor exchanges for a period of time. If you’re uncertain of any of this, ask for details at the service desk before you buy.

If you’re thinking of shopping for gift items, you might want to buy elsewhere. Buying a gift for someone could mean the gift recipient can’t return or exchange the item. You don’t want to force a gift onto someone when it’s not something they want only for them to find they cannot return it.

Be that Toys R Us Kid one last time

If you grew up visiting and are as fond of Toys R Us as I am, I’d suggest for you to take a few minutes out of your day and visit your local Toys R Us to reminisce about the good ole days. Once the liquidation sales start, they’re quickly going to look like half-filled shells of a store. Note that the deadline for Toys R Us to find a buyer is early April of 2018, so visit them quick. You have less than a month.

You might even want to pick up a souvenir, such as a plush Geoffrey, to remember what was Toys R Us and what it meant to us as kids. If you want a plush Geoffrey, ask at the Customer Service desk. It seems they keep them there for some reason.

How not to run a business (part 10): Undermining Your Business

Posted in botch, business by commorancy on May 31, 2015

There are lots of very subtle actions that can be taken where you can unknowingly undermine your business success. Let’s explore.

Don’t fire a position multiple times in a row

While this somewhat depends on the position, it’s still never a good sign when you must fire staff from the same position over and over. Even if you’re disenchanted with the people you’ve hired doing the specific work and after firing a position more than three times, this says more about your needs than the position. It’s clear, what you need in the position and the type of people you are hiring is mismatched. You need to rethink the job requirements for the position and hire the correct talent to fit that role. When you fire leaders in this way (i.e., VPs, SVPs or C-Level execs), this situation is even more detrimental to your business.

How will this undermine your business? Firing a position more than three times says several things. First, it says you don’t know what you’re looking for. Second, for all of those people whom you’ve hired and fired, the word will get around that anyone who’s a competent candidate won’t even consider the position. Once you realize that the most talented pools are relatively small and that they do talk to one another, firing a position multiple times means the word will get around to not hire on at that company. Once the word gets around about this situation, it is never a good thing for your business. The higher the profile of the position, the stronger the word gets around and this will severely undermine your ability to acquire top-end talent.

Additionally, the word will also get around in the recruiter community and they also choose not to place talent at your company.

Don’t choose an industry without researching its requirements

When you’re setting up your business plan, you need to thoroughly research the industry your business will be in. For example, selling a product or service to the medical industry is profoundly different than selling it to marketing teams, which is also profoundly different than selling your wares to the government or doctors or lawyers or farmers.

How will this undermine your business? If you fail to properly research the types of clients you are working to obtain, you won’t understand their demands and requirements. Every industry is bound by laws and regulation (some industries more than others). If you fail to realize that the industry you are targeting requires strict compliance to laws, you may also fail to understand how those laws apply to your business and that your company’s compliance may be unattainable and far too costly.  If you can’t comply with the laws, you may never be able to land the deals on which your business depends. Yes, for many companies, vendors must comply with certain laws, security requirements and industry standards before a company will agree to close your deal. Failing to research these requirements may undermine your ability to remain in business. Or, it may relegate your business to smaller companies needing much smaller deals.

Don’t fail to underestimate the power of word of mouth

Sites like Glassdoor exist for a reason. Before Glassdoor, there was no transparency except by word of mouth. Now, there is.

How will this undermine your business? Before Glassdoor, recruiters would make the determination of where to place candidates. Recruiters also won’t choose to place prospective employees in toxic environments. That is, environments where firings are common, where turnover is high and where employee morale is extremely low. They won’t place anyone for a very good reason… they know the new employee won’t stay long enough to allow the recruiter to collect their commission. Recruiters only get paid their commission if the placed employee stays for the specified duration of time (3-6 months depending on the placement contract). Recruiters, therefore, will not place would-be candidates into an environment they know will be a short lived role. It also likely means that when you do find recruiters who will work with your hiring needs, they likely are unaware of the problem. Though, once they place and realize they are making no money, don’t expect to hear from them again.

Additionally, with sites like Glassdoor, employees can remain anonymous and be brutally honest about their experiences at the business. This can also undermine your ability to hire. Sites like Twitter and Facebook just compound the problem. As work gets around and your business’s reputation becomes tainted, you’ll find that it can be nearly impossible to not only attract good talent, but also retain it. Word of mouth in an industry is as good as gold to a job candidate, but can be poison for a business. You need to make sure your word of mouth is always high quality praise. Never negative backlash. If you choose to ignore the word of mouth, it will be to the detriment of your company.

Don’t skimp on employee perks

Employees spend 8 or more hours of their day working for you (not to mention commute time). Morale is a big part of that work day. If morale sinks low, your employees will exodus. Perks help keep employee morale up. Choosing the right morale boosters is critically important to employee retention.

How will this undermine your business? The Shining said it best, “All work and no play makes Jack a dull boy”. I’m not recommending that you allow your employees to play. But, offering employees a place to relax when they are having a break is important. You also need to understand what other companies in your same vicinity are offering to their employees. While I understand that every company can’t offer all of the same perks, you need to offer at least some of them. Not offering perks to your employees is tantamount to telling would-be employees and recruiters, “Don’t place people here”. Word of mouth spreads, once again, and you’ll find it hard to hire strong candidates because the perks are better somewhere else.

Secondarily, this goes back to several of the previous Don’ts. Lack of perks in combination with more problematic industry and poor morale, leading to negative word of mouth, could lead your business into a tough hiring spot. You could find that it’s nearly impossible to hire staff across the board. What you’re left with hiring are people who are not the top end of the hiring pool and instead end up the middle to low end staff. Once your business is forced to hire lesser qualified staff, your business will tank.

Perks like free food, subsidized or free daycare, subsidized or free transportation to and from work. Other perks can include tuition reimbursement, travel discounts and store discounts. When you skimp on perks when other companies are not, you will find it difficult to hire and keep any talent, especially top end talent.

Don’t assume you can live without top end talent

Without top end talent, your business is doomed to mediocrity.

How will this undermine your business? Once you hit the mediocrity stage, your customers will, one by one, leave you. They will realize you aren’t providing the quality service that you promised. Oh, you’ll still get some new signups, until they also realize the mediocrity of your business. Competition is fierce and it’s guaranteed that your business will have competition. If your competitors are doing it better than you, then your product/service offering will end up behind all others. It’s important to understand that top end talent drives your business forward. Low to mid level talent, keeps status quo. Top end talent provides innovation, low to mid level talent doesn’t.

Once you understand this fundamental distinction between the levels of talent, you will understand why you pay top dollar to have top end talent. And note, I’m not necessarily talking about top-end talent in Director, VP, SVP or C-Level positions. While it helps to have top-end talent there, those positions do not typically get the work done day to day. It’s those doing the hands-on day-to-day work that are driving your business forward. You want motivated self-starters who are willing to own the work that they do. Low to mid-level talent won’t actually own their work. Ownership of work is critically important when looking for talented staff to hire.

Note that some industries are harder to hire for than others. If you choose, for example, to open a business that does email marketing, you’ll find it very difficult to hire into this industry no matter what the position. Most technical people understand spam and realize they don’t want their resume to contain anything to do with a ‘spam related’ business.

Don’t ignore the value of social media

Social media offers a brand new marketing approach. Social media now offers grass roots marketing team that you have at your disposal. For example, if you can get your business placed onto certain people’s Facebook or Twitter feeds, this can drive lots of people to your business.

How will this undermine your business? If you fail to understand the power of social media either by ignoring it or by assuming that it is pointless, you have deluded yourself and this immediately undermines your business. Every marketing technique is appropriate and should be exploited to its fullest. Interactive marketing is even better. If you hire people to actively scout Twitter and Facebook, they can write comments that counter any negative feedback. By hiring a team of people to manage all social media outlets, they can head off problems before they even start. By having an active team countering Twitter or Facebook posts, it shows your business is proactive and willing to counteract any negative postings by disgruntled customers.

Don’t ignore the power of mobile marketing

Smartphones are now ubiquitous. Yet, this technology as a marketing platform is still in its infancy. While in this infancy, you can latch onto this technology early and get an edge over your competition. Companies that choose to embrace mobile marketing now will have the upper hand when marketing on these devices becomes commonplace in the future (and when email is ultimately dead).

How will this undermine your business? If you fail to understand that mobile marketing is the future, you will also fail to understand how quickly you can reach out to your customers with the immediacy of a phone call. Email, for example, is a slow mechanism by nature. It can take anywhere between 5 minutes and several days for people to read your email. With push notifications, your marketing is given to the user instantaneously. They can then go find out what the hubbub is all about within seconds. Nearly every push notification is read immediately. Emails take far far longer and are prone to spam blockers, image blockers and link blockers. Mobile marketing, at least today, is under no such blocking constraints. If you take advantage early, you can add a significant advantage to marketing for your business.

To take maximum advantage, however, it must be with a solid and useful app. An app you can direct the push notification to and give critical information. If you’re a retail business, for example, offering coupon discounts for purchases can be the difference between a purchase and not, such as 20% off of a product. Discounts are always a good idea when done regularly, but infrequently.

Mobile marketing needs to be relevant, targeted and location based. You need to know exactly what this customer’s interests are and provide them with spot on marketing that gives them exactly what they need when they need it. For location based marketing, if they are close to one of your stores, you should immediately send a push notification to notify them of any special offers located with that store.

Don’t change upper management every year

Or.. even every other year. This is can be a hard one to actually accomplish depending on lots of factors and it can cause severe morale problems.

How will this undermine your business? Whether it’s through a firing, through so-called ‘voluntary’ severance (aka The Velvet Hammer), people quitting, demotions, promotions or lateral moves, frequent or regular departures in the upper management team creates more questions than answers for employees and, if a public company, stockholders. Stability in the upper management team (at least for 4-5 years at a time) says volumes about loyalty, stability and allows employees to recognize the upper management. Changing this team frequently says something is wrong internally. Not only do employees begin questioning what’s going on, these changes plant seeds that “maybe I need to seek employment elsewhere”. Operating a musical chair management team will undermine your ability to operate your business. It takes at least 6 months for any new hire to get his feet in a position. Changing critical management positions often means the person in the position never has time to get an understanding of what they need to get done. Worse, just about the time they are about to get something done, they’re being seen to the door.

You can’t operate your business with a constant stream of new people in critical management positions. If you aren’t absolutely sure the person is the right person, don’t hire them. It’s far better to leave the position vacant for just the right person than it is to fill it with a person you know won’t work out. Additionally, if you can’t ever find someone to fill the role to your satisfaction, perhaps you’re looking for answers in the wrong place. You might want to start by looking at yourself and your expectations of the role. If you can’t clearly define the expectations of that management role, don’t expect anyone you hire to magically gain this understanding and define it for you. That will never happen.

Part 9 | Chapter Index Page

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Rant Time: You gotta hate Lollipop

Posted in Android, botch, business by commorancy on May 27, 2015

You know, I can’t understand the predilection for glaring white background and garish bright colors on a tablet. In comes Lollipop trying to act all like iOS and failing miserably at it. OMG, Lollipop has to be one of the most garish and horrible UI interfaces that has come along in a very long time. Let’s explore.

Garish Colors on Blinding White

Skeumorphism had its place in the computer world. Yes, it was ‘old timey’ and needed to be updated, but to what exactly? One thing can be said, skeumorphism was at least easy on the eyes. But, Lollipop with its white backgrounds and horrible teals, pinks and oranges? Really? This is considered to be ‘better’? Sorry, but no. A thousand times, no. As a graphic designer and artist, this is one of the worst UI choices for handheld devices.

If, for example, the engineers actually used the light sensor on the damned things and then determined that when it’s dark in the room and then changed the UI to something easier in the dark, I’d be all over that. But, nooooooo. You’re stuck with these stupid blinding white screens even when the room is pitch black. So there you have your flashlight lighting up your face all while trying to use your tablet. I mean, how stupid are these UI designers? You put light sensors on it… use them.

Stupid UI Designers?

Seriously, I’ll take skeumorphism over these blazing white screens any day. I mean seriously? Who in their right mind thought that this in any way looked good? Why rip a page from Apple’s horrible design book when you don’t have to. I’ll be glad when Lollipop is a thing of the past and Google has decided to blaze their own UI way. No Google, you don’t need to follow after Apple.

Just because some asinine designer at Apple thinks this looks good doesn’t mean that it actually does. Get rid of the white screens. Let’s go back to themes so we can choose the way we want our systems to look. Blaze your own path and give users the choice of the look of their OS. Choice is the answer, not forced compliance.

Smaller and Smaller

What’s with the smaller and smaller panels and buttons all of a sudden? At first the pull down was large and fit nicely on the screen. The buttons were easy to touch and sliders easy to move. Now it’s half the size with the buttons and sliders nearly impossible to grab and press. Let’s go back to resizing buttons so they are finger friendly on a tablet, mkay? The notification pulldown has now been reduced in size for no apparent reason. Pop up questions are half the size. The buttons and sliders on there are twice has hard to hit with a finger.

Google, blaze your own path

Apple has now become the poster child of how not to design UI interfaces. You don’t want to rip pages from their book. Take your UI designers into a room and let them come up with ideas that are unique to Google and Android. Don’t force them to use a look and feel from an entirely different company using ideas that are outright horrible.

Note, I prefer dark or grey backgrounds. They are much easier on the eyes than blazing white backgrounds. White screens are great for only one thing, lighting up the room. They are extremely hard on the eyes and don’t necessarily make text easier to read.

Google, please go back to blazing your own trail separately from Apple. I’ll be entirely glad when this garish-colors-on-white-fad goes the way of the Pet Rock. And once this stupid trend is finally gone, I’ll be shouting good riddance from the top of the Los Altos hills. It also won’t be soon enough. For now, dayam Google, get it together will ya?

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Rant Time: No Survey For You

Posted in best practices, botch, business by commorancy on May 17, 2015

While I understand the need to ask for surveys or ratings or whatever after a purchase or talking to a sales or service rep, but give us a friggin’ break constant hounding. Flat out, I am not doing them any more.

Wasted Time

It seems that more and more places want to request surveys after having an interaction. Either they want vocal surveys over the phone after the call, place links on receipts or they want to send long and torturous Survey Monkey surveys. Worse, they are getting longer and longer and longer.. Worse, they’re getting to be so in-your-face with these requests now. These requests are way overreaching….and I’m not going to do any of them.

Yes, I’ll do them if I have a bad experience, but other than that, suck it up. I’m not doing it. So, don’t send me 2, 3 or 4 ‘reminder’ emails that I need to go and do it. Give it a rest. I’m not doing it. Worse, if you keep sending me these emails, I’m highly likely to mark them as spam, which isn’t going to help your email reputation. So, give that reminder thing a rest!

No intention of doing surveys

As the title says, not doin’ it. It’s a waste of my time to do these long survey forms that don’t really help me in any substantial way. If you want me to participate in your survey, why not give me an incentive? Like money off my next bill or a coupon for money off my next purchase? Seriously, how hard is it? If you really want me to do it, give me an incentive to do it. I’m not here to run your business for you. That’s your job. My feedback is likely to be tossed anyway. So, that 15-20 minutes I just spent on your behalf is a total waste of my time. If you want me to do them, then give me a substantial reason.

Bad service = bad review

On the flipside, if your service is awful, expect a bad review. So, you might not want to ask for them. Of course, if you actually intend to make your service better, then by all means ask. Not that I’m going to fill out a survey if the service is good. It just frustrates me when I fill out a survey and submit it to a company that has no intention of changing (Comcast, Verizon, AT&T, et al).

I get the reason for asking for these surveys, but let’s end this trend. Let’s figure out a way to get what you need in another way. Surveys don’t provide you with what you need anyway. You may think they do, but they don’t. In the end, they don’t work to improve things and, in many cases, fall on deaf ears. So, they’re pointless. For this reason and the lack of incentive, I’m not doing any future surveys and will decline them every chance. I also plan to start marking them as spam at every turn. So, I’d seriously suggest businesses start being much more careful when sending after-the-fact emails asking for completion of surveys.

Bottom line… no survey for you.

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Apple Watch: A commentary

Posted in Apple, business, california by commorancy on September 11, 2014

Apple WatchI had not planned to write anything about the newest Apple announcements, but I’ve decided there are few things that need to be said about the Apple Watch. Let’s explore.

Apple Watch

So, this is the one thing that’s on everyone’s mind. I mean, it basically stole the show, but not necessarily in a good way. Why is that? Let’s start by saying that phones are the new watches. Most people don’t need to wear watches any longer because the phone itself suffices for that purpose. I mean, why carry around two different devices each needing their own battery charges when you can carry around one? I think this is where Apple assumes their distortion field is enough to overcome people’s recent aversion to wearing watches.

It’s not like the Apple Watch has reinvented something new. It’s a bloomin’ watch for chrissake. Its most basic feature is to tell time. It’s not like that’s new or revolutionary. It’s all the extra bells and whistles that come along for the ride that make or break the deal. Are those extra bells and whistles worth it? For some maybe yes, for others likely no. I mean, if you don’t need the pulse monitor or step tracker and you don’t really plan to use it as an iPhone controller, then you’re cutting about 60% of its functionality right off the top. For the $349 price tag, that’s quite pricey for a bulky thick watch.

Yeah, it’ll have a music player, but how much storage? We’re not really sure yet. But, if I know Apple, it’ll go out on the cheap and we’ll get 8G or some piddly amount like that. Just enough to hold a tiny music collection, but not enough to really be useful nor is that storage in keeping with a $350 price tag. It might also play movies, but why? Who wants to watch a movie on that tiny watch screen? Not me. That’s why I bought an iPod touch, though I don’t really much like watching moves there either. So that’s why I also bought an iPad.

Watch Failure?

Adoption of this device will be tough for Apple primarily because it will be difficult to retrain so many people to embrace the need for the Apple Watch. I mean, people have done without watches for the last decade just fine. For those people who love to wear watches, though, the Apple Watch might appeal to them. But, at that price tag, it might not. I mean, you’re going to be wearing a $350 device on your wrist in addition to carrying around a $500 valued iPhone. After all, what’s the point in buying this watch unless you have an iPhone? The other problem Apple faces is name brand watches. There is no way Apple will push aside such luxury brands as Rolex, Cartier, Patek Philippe, Tag Heuer or others. For the person looking for a luxury brand, they won’t think twice about looking at their favorite luxury brand. The Apple Watch won’t even factor in other than just having it as a novelty item. I guarantee the red carpet crowd will still show off their Rolex watches and not the Apple Watch when showing off their newest duds waltzing down the red carpet.

However, there will be a core group of Apple early adopters who will invest in this technology from Apple just because it looks cool and is new. After those people are done shelling out the cash, what then? We may find that the Apple Watch fares no better than sales of any other watch brands, which are not doing all that well today (other than the super ritzy brands of which the celebs adore).

Battery Life?

Apple faces a whole new set of problems when introducing this new device. Obviously, the battery will be a big deal clincher for a lot of people. If the battery lasts 3-5 hours, that’s just not enough to be useful or you’ll be yanking that watch off your wrist to charge it up frequently. This would be the absolute kiss of death for this device. No one is going to put that much time and effort into keeping it charged constantly.

Knowing that this device has Bluetooth and possibly WiFi, both of these wireless protocols are absolute battery hogs. There is no way around it. If you have Bluetooth and WiFi enabled, you can say goodbye to any decent amount of battery life on a device.

For example, when I cut off WiFi and cellular data on my iPhone 4s, I can typically get at least 3 days worth of charge out of the battery. With cellular data on, you might get a day at best. With WiFi on, you’ll get a day at best. These wireless protocols are out and out battery killers. For this reason, that’s why it wasn’t on the original square iPod nano. And, the battery on the iPod nano (aka. first gen Apple watch) lasted amazingly long.

Overall

This new Apple Watch itself is bulky, and bulbous. Though, I like some of the features, like the less breakable crystal. But, there are things I don’t like, like the icon vomit on the main screen. It’s easily one of the most ugly eyesores I’ve seen on an Apple device yet. I’m also not sure that Apple can sufficiently overcome this last decade of training people to use mobile phones as watches. Apple even ironically ushered in this trend with the iPhone itself. Now they’re trying to undo this? Good luck. I’ll wait and see just how the sales do on this long term, but I’m not holding out much hope with this first version of the watch.

Perhaps Apple can fix a lot of these problems in the 2G version of the watch. Personally, I’d rather see them do a pocket watch edition. Now that would be more useful. The screen would be bigger, you can hold it in your hand like you do a pocket watch and it has that cool button at the top which could be used for so many things (including opening a flap covering the display like a normal pocket watch). Not to mention, there are many people who collect pocket watches over standard wrist watches. We’ll just have to wait and see how well this all turns out.

How not to run a business (Part 8): Stock and Incentive edition

Posted in best practices, business by commorancy on February 15, 2014

While it’s great that employers want to reward employees and give incentives to stay, there is the correct way and there is the wrong way. Let’s explore.

Don’t offer tiny stock grants with huge vesting schedules and cliffs

If you’re planning to offer a stock grants as ‘stay’ incentives, make it sizable. Stock programs with vesting schedules are a good thing, but not grants with tiny amounts of shares. First, it’s a waste of paperwork to give out less than $10k in equivalent shares (vested over 4 years) in company stock both for the HR team and for the receiving employee. You’ll have your team spending time on managing all of these tiny grants with no benefit to anyone. Second, most employees won’t hesitate to walk away from such grants before the vesting period ends which means even more paperwork to clean it up after the employee has left. Employees won’t wait 12 months just to get another $1-2k when they can likely pick up a 5-10% raise (and possibly even a sign-on bonus) by changing jobs.

If you want to give an incentive to employees so that they stay with your company, approve grant sizes that matter. More specifically, grant sizes that are higher than an equivalent raise. Make it worth your employee to want to worry about. For example, grant a size equivalent to 1 year of salary (at the then current stock price) with a 4 year vesting schedule. If an employee sees they’re going to get 1/4 of their salary each year for the next 4 years, that’s definitely an incentive to stay. If they don’t stay, you don’t pay. Assuming the employee is a high performer and highly valued, it is worth it when they do stay. That’s the entire point of the grant. However, issuing a grant that, at best, offers the employee $1-3k after taxes each year offers not even the best performer an incentive to stay. After all, you do want this employee to stay, right? Most great employees can easily make up such a tiny amount left behind by moving to a new job with a new company. Most people would have no problems walking away from a tiny dollar amount for a new job offer. Again, this leaves your existing employees to clean up the mess left over from the tiny little unvested grants. Note that it’s the same amount of paperwork whether you grant 1 share or thousands.

In other words, grant stock incentive sizes that make sense for all involved or choose a different incentive vehicle altogether. While you may think giving stock grants is a positive thing, employees generally don’t because of the downsides of vesting schedules and cliffs, the hassles of taxes (it will probably cost the employee more to hire a tax consultant than the bonus is worth) and when it’s too small it’s not worth the employee’s time. Be very careful when using this incentive vehicle.

Don’t send the wrong message to your employees by using the wrong incentives

In the case above with stock, you have to consider what such a small grant size says to the employee. If you give an employee a pittance grant, you’ve essentially just told them, “You’re worth $1-2k a year extra” (once they do the math). That, in many cases (especially in California), is less than the average raise. That doesn’t, in any way, impart confidence that the employee is valued… and that’s exactly what a pittance grant says. It’s definitely not the right message to send. Yes, extra money is always a good thing, but not when it’s wrapped (er.. trapped) in the wrong incentive vehicle or if it’s the wrong dollar amount.

Keep in mind that for the employee it’s all about when they actually see the money. Trapping the money behind vesting schedules and vesting cliffs is tantamount to dangling a carrot from a stick just out of reach (for a year) and then only giving them 1/4 of that carrot after chasing it for a year. If you expect the employee to wait a year to get 1/4 of a baby carrot, it better be a damned good tasting baby carrot (e.g., a substantial amount of money actually worth waiting for).

From a monetary perspective alone, $1-2k extra a year can be easily handed to the employee in many other ways. You can label the extra as a bonus, you can label it as a ‘great job’ thank you, you can hand them a live check with a personal thank you or you can buy them an iPad as a gift.

Each of these suggested alternative incentives sends the correct message. Handing someone an iPad is a whole lot more satisfying of a bonus than handing them the quagmire of pittance RSUs. In stock plans with long term vesting schedules, vesting cliffs, stock price uncertainties, waiting periods and tax disincentives, it’s a quagmire of a bonus system for the employee to navigate only to secure $1k. Don’t use stock grants to hand out $1-2k a year bonuses. Using this incentive vehicle sends the absolute wrong message to your employees, can damage employee self-worth and ultimately damage your reputation as a respectable company. Ultimately, if the employee is left with nothing for a year and then has to wait 4 years to ultimately get maybe $10k gross and suffer huge tax liabilities in the process, that’s the wrong message to send.

So, always use the correct incentive vehicles to send a positive message to your employees to keep them on board. Using the wrong vehicle in the wrong way not only plants the seed of dissatisfaction, it can lead to the employee walking away entirely.

Don’t flaunt your sales team’s wins to your non-sales employees

Your sales team is important to the success of your company. It’s also great that your sales team members, or at least some of them, are doing well to bring in those great deals. On the other hand, many companies make the mistake of continually rewarding the most outstanding sales team members with trips, gifts, dinners and other niceties. Keep this information firmly within your sales team. Do not share this information with non-sales departments.

It’s very easy for the other departments to see the sales team as being the team with all the special benefits. This can make the other teams seem as if they are being left out of the loop. Your operations team, for example, usually has staff working 24/7/365 to make sure things are working. Yet, your sales team is being flown around the globe on sales team kick-offs. This sends the wrong message to other teams. If you are going to give incentives to your sales teams, either keep it away from your other teams or figure out a way (i.e., via winning an internal lottery) to include other team members in these wins.

Again, it’s important to understand that the sales team, while important to new business and renewals, isn’t the only team keeping your business afloat. All teams need to be supported, given incentives and given the opportunity to participate in travel events when available.

Do allow employees to participate in company sponsored events

If your company is planning to do trade shows such as Dreamforce or possibly even creation of your own company annual event, allow and encourage employees from all departments to participate. Doing the same job day after day, month after month is hard to do year in and out. Breaking the monotony of the same ole same ole will help reinvigorate employees when they do get back to their job. Allowing employees to do something different for a couple of days does help re-energize people to do their best jobs. It also encourages employees to meet and work with other employees outside of their team that they otherwise would not. This allows for a much closer knit company, especially when the employee does end up working with that person they met earlier.

Don’t be ambiguous or vague about your incentive programs and make sure they are fair to all teams

If you plan to offer such incentives as RSUs, stock options, bonus plans, merit-based trips, etc, document them. Document exactly how they work, who is eligible and how each employee can become eligible. If your programs only include certain departments, make certain that when other departments become aware (and they will) that you offer compensating alternatives to those other departments.

For example, if your sales team members receive an end-of-year trip to the Bahamas for the best sales numbers, then your finance team should, likewise, be offered some kind of off-site vehicle for the finance team members who consecutively kept their DSOs down that year. Offering something to one team and not others clearly smacks of favoritism. When it is not documented clearly, this causes more friction between teams than it solves. Better, if teams are offered grand incentives, then use a lottery to allow other departments to participate in it. So, for each sales team member who wins a trip, they can bring a member from another team along and that person is determined via a lottery. Again, this should all be documented fully so there is no question about either individual or team incentive programs.

Part 7 | Part 7.1 | Part 9 | Chapter Index Page

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Shopping Frustration: When coupon codes don’t work

Posted in shopping by commorancy on September 4, 2012

Nothing is more frustrating during online shopping than when e-tailers send out a coupon code for a one day sale that doesn’t work.  I have to wonder, are these sites just stupid, clueless or technically inept?  Let’x explore.

Holiday Shopping Spree

If you’re like me, I tend to shop for things when people send me coupon codes.  Specifically, I shop when things are wearing out. I try to make sure these purchase times match up when coupon codes are available.  So, I like to wait for sale days like Memorial Day, President’s Day or, like today, Labor Day.  So, I’m happy when companies where I like to shop send me a 20% or 30% off coupon.  I generally like to take advantage of these deals because they don’t appear that frequently and I can shop for clothes that are wearing out.

Clickable Ad Banners in Email

Unfortunately, many of these e-tail sites are so inept or mismanaged that they email out the code but they forget to activate the code.  Sometimes they deactivate it too early.  Worse, they send an email with a big clickable banner ad describing this ‘Sale’ that, when you click, takes you to their home page and not to the sale items that apply to the code.  This action leaves you wondering what the heck is actually on sale?   One word comes to mind: inept.  Retailers, this is a seriously stupid practice.  If you send out an email that you’re having a 20% off sale, a click should immediately take you to the sales item(s).  Don’t make your customers guess what’s on sale.   In the case where I am taken to the front page, I close the browser, delete the email and move on.  Sorry, you’ve just lost a sale and I simply won’t shop there.  I know I’m not alone in this.  A lot of people fill their carts and either abandon the cart or clear it out because of stupid things like coupon codes that don’t work.

Coupon Codes that Don’t Work

I’ve had many times where some company sends me a coupon code that when you type it into the cart and click ‘Apply’, the message says ‘This coupon is not valid’ or ‘This coupon does not apply to the items in your cart’.  This goes back to the above issue.  If you’re planning to issue a coupon code and spend the time and effort to email your email list with this code, you damned well better test that code to make sure it works and you damned well better make sure the customers know to which items the code applies.  Don’t make your customers guess.  Additionally, for 24 hour sales, you should make also sure that code works until midnight.  And by this I mean, make sure it works until midnight of the customer’s timezone, not just your company’s timezone. That coupon should not expire at midnight your company’s timezone time as that could be midday in some locales. The code should expire at midnight wherever your shopper resides or better, expire it the following day sometime during the day to prevent expiration before the day is over for every customer and also lets late customers take advantage.  After all, isn’t the idea behind a coupon code to get people into your site to purchase?

Customers walking away

Making stupid moves like not activating coupons, deactivating them early or making your customers guess as to what merchandise the coupon applies is just a stupid practice.  You probably think I’m talking about small mom-and-pop shops here.  No, these are well known well respected companies that are making these most basic mistakes, like Jockey, Tommy Bahama and Zagg.

Nothing is more frustrating than filling up your cart with merchandise expecting to use a coupon code only to find that it doesn’t work.  Or, worse, not finding the merchandise to which the sale or coupon applies.  In these cases, I empty the cart, close the browser window and delete the email.  If these companies do this more than once,  I remove myself from their email list as it’s quite clear that these companies do not have their act together.  Which, if you think about it, is completely odd.  These are retailers in business to make money.  If you’re planning to offer a sale that uses a coupon code and that code doesn’t work, do you really think people are going to pay full price anyway?  No.  Selling your merchandise is your bread and butter and if you want people to buy your stuff, then you need to make sure your email ads reflect the reality of your site.  If it doesn’t work, then you have even more serious issues on your hands, not the least of which might be considered fraud.

Amazon Better?

I just don’t understand this practice.  This is why Amazon is kicking butt.  With Prime, you get 2 day shipping included and the best price without hassling with coupon codes.  Sure, you might be able to find it slightly cheaper at some mom-and-pop shop.  But, the hassle of setting up a new account and dealing with yet more email that can’t do it right outweighs the few pennies of savings you might get from that mom-and-pop shop.  So, I always find myself back at Amazon buying, at least for hassle-free purchasing.  I don’t want to deal with coupon codes that don’t work, sites that don’t specify what’s on sale or silly stupid problems like this.

For those sites that do this, fix your sites or lose the sale and be trampled by Amazon.  It’s quite simple.

How not to run a business (Part 1) — Don’ts

Posted in best practices, business by commorancy on April 4, 2012

While there are tons of articles out there describing exactly what you need to do to start and operate a business, here are tips on what not to do when operating your business.  I come from a background of years working in IT and, thus, this article is born from that perspective. Please view the index page to view all parts in this series.

Don’t treat your customers as burdens

So many businesses see only dollar signs next to a customer’s account.  They’re more than dollars, they are your livelihood.  Without them, you don’t have a business.  Always treat your customers with respect and never as a burden.  With that said, some people are difficult to manage in their mannerisms, manners, speech or phone etiquette. These types of people can be difficult.  If you know that you cannot work with a given customer or client based on their behaviors, you may have to let them go as a customer.  There is nothing that says you have to continue to do business with everyone that comes to you for services.  If the client cannot show your business and your staff the same level of courtesy, respect and professionalism that you show them, then they don’t deserve to use your products or services.

On the other hand, your staff should always remain professional, courteous and friendly at all times.  Word gets around quickly when your people are rude, improper or treat customers disrespectfully.  Don’t do it and make sure your employees don’t, also.

Don’t burn your employees out

It’s very easy to lose sight of what your employees are doing day to day.  If all you are seeing is the work being done, but you aren’t understanding how that work is getting done or by whom, you need to stop and smell the roses.  In other words, find out what they are doing.  Don’t assume that you have enough employees simply because the work is getting done.  What you may not see is that your employees could be working after hours and on weekends to get the work done that couldn’t be done on shift.  This is both unfair to your employees and causes burnout.  Eventually, the employee will leave and you’ll be forced to hire and train someone new.

Treating your employees fairly and understanding their workload is how you get better productivity.  Cracking the whip and expecting immediate results only pushes other work aside for your fire drill.  As more and more fire drills result, the less and less other work gets done.  This then means the employee is backlogged with some work that will never get done.  If getting all work done is important, make sure that you understand the ramifications of a fire drill before you start it.

Additionally, you may have spent a fair amount of time recruiting the talent to your business.  If you’ve got talented employees doing a bang-up job, but they are way over worked, they’re eventually going to leave.  You don’t want to have to replace that brain trust.  It’s expensive, time consuming and can leave your business vulnerable until you find someone and get them trained.  It’s cheaper to keep your existing talent by treating them right the first time out. Keeping track of and managing your employees’ burn level goes a long way towards employee retention.

Do not categorize every customer issue as a fire drill

This goes back to the point above. Every customer issue isn’t a fire drill.  Be professional, be courteous, but most of all, be realistic with your customers. Don’t promise immediate results when it’s not possible. Doing so throws employees into fire drill mode and other work gets pushed aside.  Fire drills result in much lost productivity. Learn to triage and manage these customer situations appropriately.

Don’t expect professional results from fire drill mode

When employees go into ‘fire drill’ mode all productivity stops.  That is, all productivity stops for each employee consumed by the fire drill.  The only thing that employee is focused on is in fixing what caused the fire drill whether or not they have the tools to do so.  Worse, as employees jump into fire drill mode, they also enter the get-it-done-as-fast-as-possible mode.  This mode is problematic on many levels.  It can leave the issue only partially resolved or temporarily resolved.  This means that someone will have to go back later and fix the problem properly and permanently. Moving too fast can cause mistakes or even bigger problems later.  Moving too fast can bypass rational and critical thinking.  Moving too fast can halt logic thought processes and prevent people from seeing the bigger picture.  These are all important aspects to realize.  For example, is the problem just for this customer or is it impacting all customers? Is the problem something that the product or service caused, is it caused by the customer interaction or is it something introduced by a third party vendor? Getting thrown into fire drill mode keeps some of these thought processes from materializing and, instead, employees tend to put blinders on instead of rationally thinking through the entire issue from top to bottom before starting.

Fire drills burn people out rapidly.  Eventually, employees get fed up with the fire drill mode and they leave the company. Don’t expect to keep employees for longer than a year or two if your entire business runs on fire drills daily.  Note, successful businesses do not operate in fire drill mode all of the time.  Yes, fire drills happen, but not all of the time.  Treating every issue as a fire drill leads employees to feel unproductive and eventually they burn out and leave.

Don’t expect perfection from employees

We are all human and we are all fallible.  Running a business, you have to expect occasional mishaps.  That’s not to say that you can’t strive for your employees to reduce mistakes.  But, it does mean that you need to set your expectations accordingly to avoid thinking that perfection is the way the company should run.

On the flip side, do treat your employees with proper and necessary fringe benefits. For your business to be considered on Forbes top 100 best places to work, you need to offer a whole lot of perks to your employees.  Perks can be costly, but happy employees keep the productivity flowing.  Unhappy and dissatisfied employees do the minimum and go home.  Employees that are happy to work for your company will turn in a lot more carefully completed work than employees who are dissatisfied or are getting burned out.

Don’t play games with your website

If you intend to do business on the Internet (and who doesn’t at this point?), your web site is the new storefront. It shows off your business and how it works. It is the single most important portal for both your customers and prospects.  Without a solid well designed web site, don’t expect high quality traffic or even the right traffic.  This means, let professional design firms design your site tuned to the correct keywords.  Don’t build the web site yourself from scratch (unless you happen to also be a well known web designer).  Let professionals do this work and provide your site with a fresh look.  Additionally, trust your web designer.  Don’t think you know better than your web designers (unless you happen to have a degree in commercial art).  Yes, flaws in the way something works on the site, these need to be corrected.  For the look and feel, trust that they know what they are doing.  If you are uncertain of a certain image, flow or feature on your web site, do an A/B test (your idea vs the designers’s idea) to find out which one your visitors like better.  Visitors always speak loader than you.  Treat your visitors with the respect they deserve.  Don’t assume that because it’s how you want it that it’s the correct move.  Note that that goes for everything in your business, not just websites.

Additionally, once you establish a web site with reasonbly high ranking in Google, don’t up and change it just because ‘it’s old’.  Don’t do this unless you are absolutely certain you know what you are doing. If you roll the site out incorrectly, you can easily lose all page rankings you have in Google.  If your intent is to target new keywords, then maybe that’s what you want.  But, if you had a page 1 or page 2 ranking, by changing key words and content incorrectly, you can expect to drop down to the 20-50 page area (or lower).  This is immediately damaging to any business.  Note, page rankings move down far faster than move up.  So, you’ll pretty much lose your rankings overnight, but your new keywords might take a year or longer to get even close to page 4.  So, you’ve lost a lot of ground and you’ve lost a lot of visitors because your new site is now ranked very low.  You can always pay for AdWords to help your business, but pay-per-click  is very costly and may not help your page rankings in any substantial way.

Don’t use content management systems for your web site

I know, I know.  A lot of people are using WordPress for their home pages.  This is way overkill for a home site. Why? First, your content doesn’t change that often on your home site. It’s mostly static. WordPress and other content management systems are designed for adding new content often and rapidly (just like this very blog article you are reading).  Corporate web sites don’t change frequently enough to justify all that’s necessary to run a CMS (i.e., Linux, Apache, MySQL and PHP for starters).  On top of that, WordPress requires you to build the graphics inside of a specially designed theme which requires specialized coding knowledge.  Additionally, for Linux, Apache, MySQL and PHP, someone will also need to understand all of these technologies for when things break and when redundancy is required.  This means hiring someone knowledgeable to manage the CMS site, not to mention someone who’s knowledgable with WordPress management.

Second, there’s page delivery speed. For each additional technology layer you add, there’s a performance hit to deliver that page to the browser. The slower the page load, the lower the Google page ranking.  Statically designed web sites are the fastest to load. Why? No databases to pull data from, no PHP to interpret and process commands, no extra layers of networks to pull data through, etc. The pages and content are immediately there to download rapidly. Ultimately, a CMS is simply delivering an HTML page to the browser. So does a static web site. The less layers involved, the faster a page can deliver. The faster the delivery, the higher the page ranking. Of course, you can also throw super fast hardware and caching mechanisms in front of your CMS to help speed up delivery, but that can cause other issues for some types of content and, at the same time, cost you more money. The only downside to static web sites is management and deployment. However, tools like Dreamweaver can solve some of these deployment issues. It’s also far easier to hire someone knowledgeable about HTML and Apache alone than it is to find someone who additionally understands PHP and MySQL databases and permissions, let alone WordPress.

Don’t send mixed messages to your customers and prospects

The worst thing you can do is have a muddy browsing and sales experience.  Customers want to know what things cost and what they will get in return for that money they spend with you.  If you don’t have a clear and concise list of your products or services, then define them before ever allowing a salesperson on the phone.  Mixed messages are the quickest way to lose prospects before getting to stage one in the sales process.  Clearly define what you offer before getting any prospect on the phone.  Additionally, mixed messages can come from different sales people also.  For example, based on commission rates, one sales person might offer once price while another offers another.  Keep your sales people consistent on pricing.  If a prospect calls and is given pricing, make sure that pricing is documented in a quote somewhere.  If the prospect calls back, even a different representative who answers the phone can find the pricing they were given.

Don’t overhire

This is a huge problem in Startups.  Startup companies tend to overhire in places like sales and under hire in critical technical positions needed to support those sales properly.  So, you might have 50 sales people all closing deals, but you have one or two operations people to enable and train those 50 (or more) new customers each month.  This goes back to, don’t burn your employees out.  Lopsided hiring is a phenomena that upper management rarely sees or chooses to ignore, but continues to be a problem in nearly every startup I’ve seen.

Don’t pay out commissions before receiving customer payment

We all know that closing a deal is great.  However, the trap that many startups fall into is paying out commissions on the close of the deal rather than after the customer’s check has cleared.  This is a problem for so many reasons. First, it allows your sales staff to game your commission system by finding any deal to close and closing it even if it never has hope of actual payment.  This means they will always get their commission, but new the customer never actually makes any payment.  Second, you’ve paid out commission to the salesperson, but you’ve never collected a dime from the customer.  Don’t do this.  Always pay out commissions only after the customer’s check has cleared the bank and only based on the length of the term only after the payment is received.  If it’s a 12 month deal paid monthly, pay the employee commissions after receipt of payment by the customer and only pay the sales person on what the customer has paid.  If it’s a 10% commission, they will get their 10% of that monthly check after the check has arrived and cleared.  Never pay any commissions before the check clears.  Never pay out the full commission payment on the deal until all customer monies on that contract have been collected.

Paying commissions in this way does several things at once.  It forces the salesperson to make sure the payment is properly received, it forces the salesperson to accurately document the contract to get the correct payment amount from the customer, it prevents paying out commissions without receiving payment by the customer first (which means you aren’t dipping into cash reserves to make payroll), it reduces the amount of work necessary by your receivables person, it prevents claw backs through salary reduction of future pay checks from sales persons if deals fall through after-the-fact, and it just plain makes good business sense. Running your sales department’s commission program based solely on when deal closes is just ripe for major cash flow problems.

You know, you’d think this specific Don’t would be a no-brainer in the business world.  In fact, it isn’t and I don’t know why that is.  I’ve worked for multiple startups that have chosen this money-burning commission approach.  I know, some people have said, “Other startups do it this way”.  This is a non-argument and offers no justification for this stupid practice. This rationalization also doesn’t make it sane for your business or the bottom line.  It just means the insanity runs deep in other companies. Because another business chooses a high cash burn approach to their sales operations doesn’t mean you need to follow that same cash burn approach.  Instead, save that money and invest it places that bring money in rather than lose it.  Your sales people don’t need to become millionaires off of bad commission practices. Sure, you can use claw backs to get the money back, but only if the sales person is still working for you.  It doesn’t work if the employee has quit and left with money in hand.

Don’t let your sales people promise things that cannot be delivered

Your sales people are primarily working for their commissions.  That’s why they are sales people.  Once you acknowledge this fact, you can do the things to protect your business from dire sales mistakes. Basically, your sales people are looking for 10% of that million dollar deal.  They are not concerned whether your product or service actually is capable of doing what they have sold.  Overselling is one of the biggest problems that any organization faces, especially growing startups that have little experience.  It takes work, training and proper management to keep this problem in check.  Don’t turn a blind eye to this part of your business.  Yes, your sales people do bring in the business, but they need to bring in the business based on what is currently offered, not what can be built.  This goes back to fire drills.  If your sales people are constantly selling vapor products, your business will always be in fire drill mode trying to build something a sales person has promised.  Don’t get into this mode or you’ll never get out of it.

When a sales person sells something that doesn’t exist, their commissions should be eliminated for that sale.  This immediately deters sales persons from selling non-existent features (even if it’s part of a larger deal).  If even part of the product doesn’t exist, neither does their commission on that sale.  Commissions are like rewards.  Don’t reward your sales people for promising things that are not possible and then rushing to try and fulfill that promise by building something really fast ‘to cover the promise’.  This is a bad bad business practice to fall into.

Don’t play games with the books

With Sarbanes-Oxley in play, it’s rather difficult to do… especially in public companies.  However, in private companies, all bets are off.  If you (or any of your staff) play games with the books, you may never be able to recover from this if you intend to IPO.  The quickest way to tank your company is by playing games with the books. It’s pretty simple, hire an accountant, a CPA or someone who’s honest and is willing to do the right thing.  At the same time, keep close tabs on your books (payments in, out and general ledger).  If you are a C-level exec, don’t use the company coffers as your own personal bank account.  While this is extremely tempting, unless you intend for the company to close its doors at some point, don’t do this.

Don’t hop around trying to find the next big idea

It’s great to explore new things, but don’t abandon your tried and true services thinking you have the next big thing. If you have something that’s selling well, keep it in play.  Don’t get rid of it simply because you think you have a new idea that is better.  Make sure you market test all new ideas before you dump services in replacement for that new idea.  You may have dumped your bread and butter for an idea that doesn’t work.  Your customers will tell you that really quick.

Don’t rely on self-service business models to sustain a large corporation

Self-service is an adjunct to your business and is not intended to be used to sustain the business itself.  If you plan to be in business and sell business-to-business services, don’t expect self-service pay-by-credit-card services to win over large corporations. First, most corporations don’t (and can’t) pay by credit cards and, instead, they prefer net 30, 45, 60 or 90 day terms. Credit cards are almost always intended for small transactions, usually under $1000.  Although, some consumer cards allow charges up to $3-4k.  Some business cards can go even higher. Yes, some cards like the government P-cards have high limits, but most cards don’t. For the most part, though, credit cards are intended primarily for small transactions.  If you are looking for $30k-$1mil contracts, cards are not really the place for this size of transaction.  You will need salespeople, you need to extend credit and set up payment terms and you need to hire a finance team to send invoices and collect and book payments.

Second, big corporations expect some level of spoon feeding with regards to the sales and support processes. Expect to assign salespeople to corporations as single points of contact.  Corporations expect to talk to the same salesperson each and every time they call.  If your sales people change constantly, be sure to do proper turnover and have your new sales people contact those corporations explaining the transition.  If you prefer not to assign salespeople to accounts, you may do more harm than good for your business, so don’t do this. Corporations want to feel like their accounts are being handled properly.  For the amount of money that a corporation is spending on their contract to your business, this is the least you can do to secure their peace of mind. This goes back to treating businesses and people with respect and courtesy.

Don’t think email invoices alone suffice as for notification of outstanding debt

Email invoices, while convenient, are not always admissible in court.  Always send a paper bill for second notices to pay.  Yes, this means printing and mailing paper invoices, but that’s just one cost of doing business.  Expect to incur this cost.

Don’t think your employees know how to act

Write an employee handbook.  Not only is this book a great reference for how to act, how to dress, how to conduct business and simple business etiquette information, it is also a good place to set expectations so when you do have to let someone go, you have a document that states unacceptable conduct.  You can also state things such as ‘at will’ terms so that employees know exactly where they stand with their employment with you.  Employee handbooks are good places to keep all kinds of information not otherwise easily documented.  Sure, you can use a Wiki or other digital media (PDF) for this information, but printing this document to paper and placing it on every employee’s desk with a page to ‘read and sign’ means that at least they cracked open the book enough to read and sign the signature page.  Digital documents are not always enough for this.  This is a way to protect your business from employee issues when you need to let someone go for inappropriate behavior or when performance issues are at work.

Don’t become fascist about the use of electronic devices

Employees carry iPhones, iPads and portable electronic devices.  They’re going to carry them whether you like it or not.  It’s a way of life today.  You’re not going to change that behavior by mandating a no-cellphone policy in the office.  People rely on cell phones for critical personal communications.  Don’t expect that you can take away cell phone privileges from them and they’ll be happy working for you.  This goes back to perks.  Let that be a perk for your employees.  You can mandate in the employee handbook (discussed just above) about over usage of devices. Basically, let employees exercise common sense on usage (for example, on breaks, at lunch time, etc).  But, if it consumes their day and they’re not productive, that’s a problem that needs to be discussed and addressed.

Some employees also like to listen to music while working, so allowing this is also a perk.  If an employee is more productive while listening to music, let them listen.  If it allows them to tune out other office noises such as other phone conversations, ringing phones, typing, printer noises and other distracting office sounds, all the better.  Of course, if the person happens to be the receptionist, use of headphones may not be an option.  Note that anything that calms an employee, let’s them remain happy at work and helps them to concentrate is never a bad thing.

Don’t expect people to give up their weekends for your business

This goes back to burning employees out.  If you have so much work that one person cannot get the job done or it requires weekend work to get things done, expect to offer extra salary or comp time.  Comp time costs you nothing additional.  It’s a straight trade.  One weekend day for one weekday off.  Don’t expect your employees to work 6-7 days on a 5 day a week salary.  Eventually, you may find yourself in a lawsuit for backpay.  Don’t do it.

Don’t expect technology to solve every problem

Technology is made by humans.  It is, therefore, fallible.  It has bugs, it crashes, it doesn’t always work as expected.  It doesn’t matter if the software is from your developers or from Apple.  Nothing is perfect, expect that it will become a problem at some point.  This goes back to fire drills above.  Take failure in stride and work through it.  Don’t pressure your employees for 5 minute fixes when things go wrong.  Let the employees work through the issue properly.  The question is, do you want it done right or do you want it done fast?  Fast may get you a fix, but it may not be a fix that you’ll ultimately like several days later.  Giving enough breathing room to let the technical employees work through a proper fix is critical to ensure proper resolution to problems.  Expecting fast fixes only leads to more problems later.  This even goes for writing code.  Pressing to get software releases out the door ‘fast’, especially if you are a software company, is the only real way to tank your business.  If you’re a software business, your brand is built on quality, not quantity.  You want your software to work as expected.  Rushing to get software out the door, more often than not, leads to failure somewhere along the way for someone.  It means your developers have missed critical edge cases that can make the difference between being known for mediocre software and being known for high quality software.

If you think that there’s a way to write speedy software that’s high quality, you’ve deluded yourself.  Quality software comes only from producing code that covers 98-99% of every edge case out there and that simply takes time to produce.  Basically, this requires bulletproofing the software so that no matter how a user may use the software that it always does what’s expected.  Increasing speed of software delivery reduces the ability to test edge cases leaving dangling code that doesn’t always do the correct thing under error conditions.  This means the code could run wild, do the wrong thing or, worst case, corrupt data irrevocably.  This situation puts technical staff in fire drill mode.  Again, you cannot run your business in constant fire drill mode.  You hired your technical staff to write high quality code, let them.  Yes, by all means set delivery dates, but if a feature is too complex for a release, pull it and release it later.  Don’t rush them to get that feature into any specific release.

Don’t let the sales team drive your business

Your sales department is your front end the public.  It’s how you sell and do business.  But, it is not what drives your business ahead.  Your products and services drive your business.  The solutions that you create are what become the face of what your business is and does.  As an entrepreneur, you may have forgotten that the reason you went into business is to solve a problem.  You wrote a piece of software or designed a product to solve a business problem, perhaps even for yourself. Then, you realized you could sell that solution to many different people.  It’s the solution that drives the business, not your sales team. Basically, your technical team’s ability to deliver a functioning solution is what matters.  The sales team is irrelevant in this equation other than the fact that they answer the phone, make the sale and take payment.  Far too many businesses rely on the sales department to drive their business forward. This is the wrong approach and uses wrong thinking.  Sure, the sales team is the one reaching out to prospects and locating interested new parties.  That’s the sales team’s job.  But, when sales begins selling a square peg to fit a round hole that’s where problems begin.  This goes back to overselling.  The solution is what sells, not the sales team.  The sales team is the mouthpiece for the solution, not the other way around.  So, the sales team must be trained to sell what is there, not what isn’t.  It is not the sales team’s job to make up new features or imply that a feature a customer may be looking for exists.  It’s the sales team’s job to understand the solution offered and find prospects where that solution fits their problem.

In this goal, always have a technical person who knows the limits of the solution on every sales call.  They are the voice of clarity to keep the sales team from overselling.  The technical person can step in and say, “That’s not exactly correct, our product doesn’t do X yet”.  This sets customer expectations.  However, if X feature is important, it should be added to the list of new features to be added into a future release.

Your business and you

As the owner and/or CEO of your business, you are the champion of your business.  Only you can do the right thing for your business. Stop, think and use common sense. Rushing employees to get things done fast is not the answer. Slow down the pace. Let the employees catch up and catch their breath.  Let them finish critical projects. If you’re consistently compressing time lines, some tasks will never get done.  Compressed time lines are usually driven by customers and this, in turn, is usually driven by a salesperson over promising. These are all practices that must be tempered.  Setting the correct pace for your business is the only way your business will succeed.  Too fast a pace and your business will never be known for quality.  Too slow and the competition will outdo you. Critical, of course, to your business is having creative thinkers on your team.  You need a constant flow of new ideas to keep the business fresh and keep your products and services new and innovative.  Without critical thinkers producing new fresh ideas, your business will keep wrapping pretty new bows on old ideas. Keep your old ideas the way they are.  Don’t wrap pretty new bows into them.  Your customers will appreciate that you respect them. Wrapping pretty new bows on old ideas can be insulting to old customers if you’re trying to play it off as a new service. This is the quickest way to lose customers. Keep your existing customers happy and don’t insult them by playing off something old as something new.

Next Up: Part 2 | Chapter Index Page

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