Raving Fans - Ken Blanchard

"Raving fans - a revolutionary approach to customer service" was written in the early 90s and it's principles resonate today. Satisfied customers just are not enough. What an organization should aim to do is knock the socks off their customers, to create “Raving Fans.” These Raving Fans become some of your best marketing tools. They go out and tell others how great you are. Satisfied fans, on the other hand, will jump ship as soon as a competitor provides them with better service. According to the authors, there are three secrets to creating Raving Fans.

1.  "Decide on what you want" - When you decide what you want for your business, you must create a vision of perfection centered on the customer & promote that vision throughout your organization.

2. "Discover what the customer wants" - Ask your customers what they want, then re-align your vision. A customers vision will likely only focus on one or two areas - you need to fill in the gaps. A customer who says the service you provide them is "fine" is relaying a concerning message. Essentially, it means they aren't ecstatic about your business. On the other hand, you can't look after every need or every whim of your customer, so  sometimes it is best to be frank and send your customer elsewhere (to another competitor). Service leaders perform in a well-defined window – they do what they choose – what is in their vision – and they do it very well. Finally, a business should tie its' employees raises and promotions to customer service. If you don't look after your people they won't look after your customers.

3.  "Deliver plus 1%" - Once you've discovered what the customer wants then - deliver plus one percent.  In order to not get overwhelmed at creating a fantastic customer service from scratch you aim to improve by one percent per week. Over time this will compound. Delivering consistently is crucial because it takes time to build a relationship with a customer and establish credibility.  Don't offer too much service initially, first be consistent at what you offer. To be consistent you have to have systems and training programs to implement your systems.  A system is a predetermined way to achieve a result.  

Margin of Safety – Seth Klarman

Chapter 1 – “Where most investors stumble”

There is nothing esoteric about value investing. It is simply the process of determining the value underlying a security and then buying it at a considerable discount from that value. It is really that simple. The greatest challenge is maintaining the req­uisite patience and discipline to buy only when prices are attractive and to sell when they are not, avoiding the short-term performance frenzy that engulfs most market participants.

To be continued…. stay tuned!

Reasons to avoid mutual funds

The saying “80% of fund managers can’t beat the index” has some merit. Here are a few reasons why you should be prudent when considering mutual funds:

1) “Migrating Managers“: when a fund manager seems to have the Midas touch, every fund company wants to poach him/her.
2) “Asset Elephantiasis“: when a fund earns high returns, investors take notice and pour hundreds of millions in in a matter of weeks. That leaves the manager with few choices – all of them bad: a) keep the money safe, but investors will complain b) buy already owned stocks, but they have prob already made their gains and will become dangerously undervalued c) buy new stocks that he didn't like well enough to own already.

3) Expenses: it costs more to trade stocks in very large blocks than in small ones. With fewer buyers and sellers, it’s hard to make a match.
4) Fees: once a fund becomes successful, the managers don’t want to rock the boat. This is contrary to how how they made the fund successful, and now they just want to enjoy the lucrative fees.
5) Fees: Mgmt fees and loads.

If you do really want a managed fund, these are the things to look for: their managers are the biggest shareholders, they are cheap, they dare to be different, they usually close the door to new investors, they don’t advertise. Consider Index funds & ETFs.