BY SHEP HYKEN DO YOU ASK? Being a customer-centric company means asking your customers what they want when it comes to tough decisions like raising prices or sacrificing quality. What does it mean to be a customercentric company? That seems to be the question of the week. It started off with one of our subscribers emailing in the question, followed by two reporters wanting my take on this now-popular phrase for their interviews. If you Google the words “customer centric” (or “customer centricity”), you will find many definitions from different sources that are all very similar. I actually prefer using the term “customer-focused” over “customer-centric.” A general definition of a customer-centric or customer- focused company or organization is one in which everything revolves around the customer. In other words, all decisions that are made – the good ones, bad ones and tough ones – always keep the customer in mind. Every new system being put into place, every new line of merchandise being developed, every new location being planned, every website change – in one word, everything – warrants a discussion about how it will impact the customer. In addition, all employees recognize their role in the customer’s experience, even those employees who never have direct contact with a customer. A couple of examples will make this point. After hearing multiple requests from customers, a manufacturer decides to add a new colour to a line of merchandise. Why? It’s a reasonable request and won’t cost much to set up for the new colour. As a result, the customers are happy because of the extra choice. The company’s decision was made because they knew their customers were asking for it. The company listened and responded. It was obvious that the decision of adding another colour would make a positive customer impact. This one was easy. But, what about a tough decision that a company knows will not be received well by the customer, such as a price increase? Raising prices may not make the customer happy, but what if the company doesn’t take this action? If the price doesn’t go up, in order to continue to sell the same product profitably, something else may have to give. Not raising the price might mean a compromise in quality or service. The choice to raise prices, even knowing the customer will not be happy, may have to be done. Or maybe it’s a decision about something behind the scenes that the customer won’t see, but that still may have a negative impact on the customer – maybe even worse than their concern over a price increase. These decisions are always made with the customer in mind, even if we know they are not going to be positively received by the customer. Customer centricity shouldn’t be a concept that is just bantered around. It should be woven into the very fibre of your company’s culture. Every employee must be a part of this culture that permeates the business. The best companies do this. So, if you haven’t already done so, make the decision for your company to be customerfocused. It will positively impact your customers, your employees and your bottom line. BY JEFF GRANDFIELD AND DALE WILLERTON – THE LEASE COACH CAM COSTS Don’t get stuck paying more than your fair share of a property’s operating costs Readers of our new book, Negotiating Commercial Leases & Renewals FOR DUMMIES, will learn that common area maintenance (CAM/operating cost) charges for tenants come in two flavours: honest mistakes or dishonest calculations. In a building where the property is fully or close to fully occupied, the landlord may have less reason to try to profit from CAM charges but might still try to enhance the property with the tenant’s money. When a commercial property has several vacancies, the landlord, typically, will be responsible for paying his proportionate share for the vacant units. Some landlords try to avoid paying for any of the CAM charges on the vacancies by adding language into the lease agreement that spreads out the obligations for the vacant spaces amongst the current tenants. In some situations, bakery tenants can be carrying a very heavy financial burden if the property is not fully leased. Ideally you are able or were able to negotiate concise and reasonable CAM language in your initial lease with your landlord. That said, even the most detailed lease may result in issues with CAM so communicating with your landlord (both verbally and in writing) about any CAM concerns you may have is imperative. Don’t wait too long to ask your questions because your lease may stipulate a statute of limitations on adjustments. Sometimes the problem comes from the property manager; however, at other times, it originates from the owner or landlord taking advantage of tenants. Bakery tenants should consider the following points. CLASSIFY COMMON AREA Common area is the area of a building used by all tenants and their customers. Examples of common area include lobbies, corridors and restrooms. Parking facilities, malls, sidewalks, landscaped areas, public toilets and truck and service facilities may be included as common areas when calculating the tenant’s share of a building’s operating expenses. NEGOTIATE THE OPERATING COSTS AS RENT You may well hear from most commercial real estate professionals that operating costs are not negotiable; there are, however, aspects of these costs that can indeed be changed to the bakery tenant’s favour. The landlord wants to make sure that the tenants pay for all the operating costs for the property. There’s nothing unusual about that. But when The Lease Coach analyzes operating costs for groups of tenants in a building, we frequently find that the tenants are subsidizing capital improvements that the landlord is using to enhance or increase the building’s value. Negotiating to cap increases to certain costs or excluding certain items from operating costs can help keep these in check. WHAT ARE YOU PAYING FOR? The majority of commercial lease agreements may stipulate the specific components of the operating costs that the tenants need to pay for. Typical examples include general maintenance, painting, lawn cutting, snow removal, property insurance and so on. Almost every lease agreement has an operating cost clause and typically defines these CAM charges in a short- or long-form manner. From a bakery tenant’s perspective, longer is better because it creates certainty. PROPORTIONATE SHARE COUNTS If a bakery tenant occupies seven per cent of a commercial property, they can typically be required to pay seven percent – their proportionate share – of the operating costs as additional rent. But not all tenants used operating costs proportionately. For example, would your bakery or a convenience store use more water? Have your proportionate share of the CAM costs (as a percentage number) actually stated in the lease agreement. And don’t be afraid to question or dispute the operating costs and your proportionate share. For a copy of our free CD, Leasing Do’s & Don’ts for Commercial Tenants, please email your request to JeffGrandfield@TheLeaseCoach.com. Dale Willerton and Jeff Grandfield - The Lease Coach are Commercial Lease Consultants who work exclusively for tenants. Dale and Jeff are professional speakers and co-authors of Negotiating Commercial Leases & Renewals FOR DUMMIES. Got a leasing question? Need help with your new lease or renewal? Call 1-800-738-9202, email DaleWillerton@TheLeaseCoach.com / JeffGrandfield@TheLeaseCoach.com or visit www.TheLeaseCoach.com.
Published by Annex Bakers Journal. View All Articles.
This page can be found at http://magazine.bakersjournal.com/article/Guest+Column/2824131/420317/article.html.