Inc Small Business
If you have lots of low-wage workers, here's a new health insurance policy to consider.
This article is part of an eight-part series on how to cope with the implementation of Obamacare. Check back tomorrow for part seven.
It’s no surprise that a law as complex as the ACA would come with some unintended consequences and perverse incentives. The so-called skinny plan strategy is one of those consequences. It’s hard to understand, regulators hate it, and you might find it a tad unsavory. But a good number of employers are considering it nonetheless, so it’s not a bad idea to understand how it works.
Say you own a large business--a restaurant, retailer, or manufacturer--with lots of low-wage workers. Starting in 2015, if you don’t offer them “minimum essential” health coverage and any employee gets a subsidy on a public exchange, you’ll be hit with a penalty: $2,000 times your number of full-time equivalent employees, minus 30. If the coverage you provide is unaffordable or doesn’t meet the ACA’s minimum-value test, the penalty seems higher: $3,000 times the number of employees who get subsidized coverage through a public exchange.
The skinny plan strategy works like this: An employer offers employees health coverage, but in a really watered-down, really cheap version that flunks the ACA’s minimum-value test. As a result, the employer faces the $3,000 per-employee penalty. But here’s the catch: The total penalty depends on the number of employees who actually claim subsidies and purchase coverage on an exchange. Those using the skinny strategy, essentially, are betting that offering lousy coverage will result in a lower total penalty than not offering coverage at all. “It’s an unintended consequence of the law,” says Blumling. “Regulators really don’t like it. But they don’t seem to have a way to stop it.”
A skinny strategy will not earn you any PR points. And, Blumling warns, “you’ve got to make sure it’s executed properly to weave through competing regulatory guidance.” But some employees, especially those who are not currently insured through work, may actually appreciate skinny plans.
That’s because low-wage workers are highly likely to forgo health care coverage altogether--just 37 percent of single employees earning $15,000 to $20,000 per year participate in employer-sponsored health plans, according to a 2013 survey by benefits consulting firm ADP.
And even with federal subsidies, a single person making $20,000 a year would still have to pay an average of at least $587 a year in premiums for an exchange-based plan. A more limited, even lower-cost option might be attractive to that worker; it also would let him avoid the individual mandate penalty--$95, or 1 percent of taxable income, in 2014. And if this employee decides he wants more robust coverage, he can get it through an exchange--and qualify for subsidies, to boot.
The Small Business Guide to Obamacare
Part One: How to Notify Your Employees
Part Two: Get an Accurate Head Count
Part Three: Determine Whether You Should Offer Coverage At All
Part Four: Decide Where to Shop for a Plan
Part Five: Explore a Self-Funded Plan
Part Six: Ponder a Skinny Strategy
Jim Koch, legendary founder and CEO of the Boston Beer Co., recently steered a potential customer to a rival.
You've heard of trash-talking the competition in sports? It can happen, very publicly, with competition in business. Take, for example, Microsoft's line of anti-Google promotional products, including a mug that reads, "Keep calm while we steal your data." Zing! It's certainly not what you'd call sportsmanship.
Especially when you compare it to what Jim Koch--legendary founder and CEO of the Boston Beer Co. (makers of Sam Adams)--recently said about his competition on a sports radio station in Boston.
Respecting Your Competitors
Koch was a guest on the Planet Mikey show on 93.7 FM. A caller to the show identified himself as diabetic. He then asked Koch if the Boston Beer Co. could make a beer that wouldn't spike his sugar levels. A beer, in other words, that a diabetic could savor.
Koch said he couldn’t.
And what he said next was more remarkable. He suggested, with total earnestness, that the caller try Michelob Ultra (which is low in carbs). He suggested this, even though Sam Adams produces a light beer of its own. He suggested this, even though he probably could've gotten away with saying something like, "We're looking into that."
It was hard not to respect Koch after this response. On a highly-rated big-market radio program--on a segment I'm guessing his company pays for--he steered a potential customer to a competitor. Two takeaways:
1. Know your values. Sam Adams's mission, plainly stated, is delicious beer. That's more "core" to their raison d'etre than making a beer for every dietary need. In Koch’s view (as he explained on the radio after answering the caller), it's simply hard to skimp on carbs and create a delicious beer.
2. Honor your competition. With superb spontaneous speaking skills, Koch somehow managed to convey this point without insulting the taste or quality of Michelob Ultra. In fact, his tone and verbiage signaled immense respect for Michelob Ultra as a product for beer drinkers with different needs and priorities. Not worse, different.
"We'll Miss You."
It reminded me of a story The Table Group likes to tell about Southwest Airlines. A flight attendant, speaking to the seated passengers before takeoff, joked: "And for those of you traveling with small children--first of all, what were you thinking?" Most passengers laughed. But as it turned out, the joke prompted one passenger to write an angry complaint letter to Southwest. Southwest replied with a letter of its own. The letter contained one sentence: "We'll miss you."
The point? Rather than placating an angry customer with some bonus miles, Southwest recognized that this particular customer would never be happy flying Southwest--for she could not appreciate the humor and irreverence that define their culture. So Southwest said goodbye. Or, put another way, Southwest said: We know who we are. And we know we're not the best airline for someone like you. Which is essentially what Koch was saying--in a much friendlier way--to the caller. It was the honest admission of a mismatch between customer need and company mission.
Insofar as personal branding is important to CEOs--and insofar as projecting an image of being a reasonable and fair competitor is important--Koch must have earned many points in the Boston area (where he's already quite popular) by saying what he did on the radio. He demonstrated not only his knowledge of a competitor's ingredients but also his earnest-sounding desire to help a person find a beer that he could drink and enjoy--even if it wasn't the beer that Koch was selling.
The rollout of the SHOP exchanges, the Obamacare offering for businesses with 49 or fewer employees, has been pushed back as the federal government continue to struggle fixing its consumer site.
The Obama administration on Wednesday announced yet another major delay in the implementation of its problem-plagued health insurance website, this time postponing for a year a sign-up feature for small businesses. This comes just days before the White House's self-imposed Nov. 30 deadline for eliminating many of the technical problems that have paralyzed HealthCare.gov.
The website's Small Business Health Options Program (SHOP) enrollment application, which was created to make it easier for small businesses with fewer than 50 employees to sign up for health coverage through the federal exchange, will not be ready until next November, the White House said Wednesday.
In the meantime, administration officials are instructing small businesses to bypass the website and apply to the SHOP marketplace (and thus still possibly qualify for an enhanced Obamacare tax credit) using paper applications or enrolling through brokers or directly through insurers. Other alternatives that might work better for some businesses include self-funding and the so-called "skinny" option.
"We've concluded that we can best serve small employers by continuing this offline process while we concentrate on both creating a smoothly functioning online experience in the SHOP Marketplace, and adding key new features, including an employee choice option and premium aggregation services, by November 2014," administration officials said in a statement..
The SHOP application had previously been delayed just days before the website's launch on Oct. 1 so the administration could focus on getting the individual insurance marketplace ready to go live. At the time, the administration officials assured small businesses that their marketplace would be ready by November. But now they will have to wait another year.
And that's not all. The White House also announced that the Spanish-language component of HealthCare.gov, which has already been delayed several times, will also not be ready to meet its deadline of Nov. 30, despite assurances from the administration.
The latest delays are yet another public relations headache for the White House -; which has spent the last two months defending the president's signature health care law amid low early enrollment numbers, millions of cancelled insurance policies and persistent technological problems with the website.
Unsurprisingly, Republicans were quick to jump on the latest announcement. "With each passing day, it's clear how much worse Obamacare is than a website full of glitches," Republican National Committee chair Reince Preibus said in a statement.
Because of the website problems, some Democrats have even joined Republicans in urging the administration to delay the individual mandate requiring uninsured Americans to enroll in the exchanges or pay a penalty.
Just last week, amid growing political pressure, the administration extended the enrollment deadline by eight days. Now, uninsured Americans have until Dec. 23 to sign up for coverage through the exchanges in order to have health insurance on Jan 1. Unless the website truly starts working for the "vast majority of users" after Nov. 30, as the White House has promised, those Americans may have problems signing up.
Administration officials are already ramping down expectations, just days before the deadline, emphasizing that the website "still won't be perfect."
"Nov. 30 is not a magical date," CMS communications director Julie Bataille told reporters on a Wednesday press call. "There are times when the site, like any website, will not perform optimally."
In the process of screening for cultural fit, you might be unwittingly shutting out experienced job candidates.
"Ageism in the startup world is real," Jason Henrichs declared recently.
Henrichs would know: He is the managing director of Startup Institute and a veteran of several startups. He has seen the ageism go both ways. In biotech and clean energy, investors favor decades of experience. But at consumer Internet startups, older entrepreneuers, he says, "will find it nearly impossible" to get funding.
The Hiring Process
Then there's the hiring process. Experienced employees--for all the smarts and connections they bring--typically are pricier (salary-wise) and have more outside demands (families), Henrichs notes in the Wall Street Journal. It's no stretch, then, to surmise that experienced employees might not be the best cultural fits in startup settings where the founders take no pay and get no sleep.
Here's the problem: No two startup cultures are alike. Perhaps the only norm is the lack of norms.
Which means that--at some startups--the founders actually do sleep and actually do get paid. Likewise, you can bet there are experienced job candidates who'd be all too happy to live the stereotypcial startup life (no sleep, no pay) for the right endeavor.
The bottom line? Startups need to screen prospective employees for cultural fit. The question is, How do you do this without defaulting to a process that potentially weeds out employees--older or younger--who might be more than happy to adapt to the prevailing culture? Inc.com recently discussed this with Henrichs.
Inc.: What lessons can you share about screening for cultural fit?
Henrichs: Cultural fit is both hardest to screen for and it has a latent issue: What is the health of the underlying organization? Companies that have a culture built on the fact that there is a kegerator or rocking out until the early hours of the morning are going to have a harder time finding older [employees] who fit, but this is just a symptom of a much bigger issue they will face as they scale.
Organizations that have clear values that they can articulate will have an easier time screening candidates of any age.
For the older candidate, the question will be one of malleability: Are you going to acculturate to us or are you set in your ways?
Inc.: Can you provide an example from your career of a cultural mismatch at a startup?
Henrichs: I worked with one very seasoned executive who had worked with a number of startups but never one as rabid about breaking down hierarchy and promoting self-management as our company. As a by-product, we were also very transparent, so everyone had all the information they needed to make decisions and the authority to go make [things] happen. It was clear after two weeks that while he wanted to act that way, it stretched every fiber of how he operated. This didn’t make him a bad person-- e're still friends in fact--but it made us the wrong place for him and started pushing our culture in directions we didn’t want to go.
We quickly made the mutual decision that he was better off as an advisor. He landed a great role in a company that matched his style and we found someone [else] to fill the role who thrived in our soil.
Inc.: What interview questions can you ask to screen for cultural fit?
Henrichs: Two of the most common concerns with older hires are:
1. Do you think you are always right because you have more experience?
2. Are you going to tell me what to do because you are older? Those are valid questions. The concerns exist for a reason. Addressing the issue head on, both in interviews and then the early interactions, is critical.
Self-funding has long been used by large companies. Under Obamacare, it makes sense for small firms to consider self-funded healthcare insurance plans, as well.
This article is part of an eight-part series on how to cope with the implementation of Obamacare. Check back tomorrow for part six.
Starting in January 2014, insurers will be required to use “adjusted community rating” when setting premiums for individual and small-group plans sold on the exchanges and the private market. This means that insurers can’t consider health history (or factors such as occupation or gender) in determining premiums; instead, carriers must offer all small employers (generally, those with 49 or fewer employees) in a given geographic region essentially the same deal. Limited adjustments are allowed only for age, family size (i.e., individual or family), and tobacco use.
This is great for small companies with a history of large health claims that have driven up premiums. But community rating will fall hard on younger, healthy companies. “Small groups could see premiums doubling, depending on their age and other factors,” says Blumling. As a result, healthy companies that meet their state’s small-group definition and want to offer coverage “almost have no other choice than looking at self-funding or partial self-funding for their first renewal in 2014,” says Ashley, of FirstPerson.
In self-funded plans, an employer sets aside funds to cover employee health claims, rather than paying per-employee premiums to an insurance company. These plans are not subject to the ACA’s community-rating requirements. Companies with fewer than 250 employees typically combine self-funded health plans with stop-loss insurance, which protects them against losses from higher-than-expected claims in a given plan year. If actual claims are less than the amount that has been funded, you’re refunded the difference.
Once limited mainly to large companies, self-funding is now becoming accessible to ever-smaller groups. Says Ashley: “More and more carriers are offering modified self-funding products specifically designed for groups as small as 10 employees.”
The Small Business Guide to Obamacare
Part One: How to Notify Your Employees
Part Two: Get an Accurate Head Count
Part Three: Determine Whether You Should Offer Coverage At All
Part Four: Decide Where to Shop for a Plan
Part Five: Explore a Self-Funded Plan
Marketing executives from the world's largest brands weigh in on marketing mix modeling (MMM).
Marketing mix modeling (MMM) is a relatively new concept that combines a variety of marketing channels with large data sets of historical performance data. This combination helps channel marketers find the most efficient "mix" of channels and budgets to drive the biggest impact in sales.
If performed effectively, MMM can provide marketers with insights into where and how to assign marketing dollars. These data-based insights have driven an entire industry of measurement software applications, new tools and instruments to help marketers make better decisions.
However, marketing executives are quick to remind us that at the end of the day, it's a human--not the model--who's making the decisions.Is This Right For You?
Marketing experts from the biggest brands in the world weighed in on MMM strategies at a recent Advertising Research Foundation Industry Leader Forum. Based on discussion and reaction from attendees, the majority of the executives at the forum feel that measurement keeps advertisers up at night.
While MMM might not help you sleep at night, it can help you develop decision-making intuition. Charles McLeish, Marketing Director at Lego, echoed this sentiment by saying that when dealing with models, marketers should "use mixed models to build intuition and make marketers stronger."
Building intuition was a central theme among experts at the forum. Most executives felt that modeling exists to allow marketers to make more informed decisions, rather than to allow the models make the decisions. "Trust your intuition and feel free to ignore the results," McLeish added. Patrick McGraw, director of consumer and market knowledge at Procter & Gamble, took a hard stance with making decisions on models: "If you ever say "well, the model said..." then, you're fired!"
This sentiment among the marketing leaders at the forum made it clear that executives want their staff to use these models and measurement instruments as references rather than a guiding light. Decision-making from MMM is a delicate balance, relying on people-driven actions.
After attending the Advertising Research Foundation Industry Leader Forum, it was clear that marketers must make sure that data modeling and intuition are both considered when making decisions. And while MMM can give your brand direction, relying solely on intuition or a marketing model can strip you of the critical information you need when explaining your decision-making process to executives.
If you're looking to bring on a CEO, you might want to think twice before hiring somebody who already has that title.
When it comes time to bring on a CEO, the temptation to hire somebody who's already served as a chief executive is understandable. After all, you're tasking this person to take responsibility for the long-term health of your company.
But new research suggests otherwise. A team led by NEOMA School of Business professor Burak Koyuncu found that first-timers are about as good a bet as former CEOs who had stepped away from the big chair. And the inexperienced CEO tends to work out much better than somebody who is already serving as a CEO at the time you hire him or her.
Green Is Good
The research was based on the career histories of the CEOs at S&P 500 companies since 2005.
The study showed that executives who had previously served as CEOs, but had served in different positions or otherwise taken time off before assuming the new gig, saw returns on assets that were about even with first-time leaders.
But those hired into the role directly from a previous CEO position were eye-poppingly less effective than newbies: The companies that hired them saw 48 percent lower returns after three years than those who were new to the position.
The researchers said the reason for this can be summed up simply: Old habits die hard.
"The job-specific experience these CEOs gained in their prior CEO job interferes with their performance in their new job,” Koyuncu said.
Companies that do bring on an experienced CEO, the researchers said, should make sure they provide the new leader with the support and time they need to get acclimated to the new culture.
"The greater the chance the company can avoid falling into the CEO experience trap,” Koyuncu said.
The study jives with an MIT Sloan Management Review article from last year, detailing a study showing there is virtually no difference in performance when companies bring in outsider CEOs compared to internally promoted leaders. And that study did show that sometimes, an outsider CEO works best -- especially as it pertains to cutting costs and resetting strategy. But in those circumstances, the Sloan article advises, you should have an onboarding strategy in place for the new leader.
Koyuncu told Inc.com his research also meshes with previous findings that show founders who see success early in a product cycle sometimes struggle as their products, companies, and industries changed. When you reach that stage, of course, it might be time to start thinking about bringing on a CEO anyway -- and Koyuncu's research indicates that when that time comes, experience might not be tantamount.
When Daniel Lubetsky founded Kind Healthy Snacks, he knew he wanted healthy, tasty, convenient, and profitable products. Here's how he made it happen.
Even for entrepreneurs with plenty of resources, tradeoffs are usually a way of life: What’s great for the bottom line isn’t good for the environment. Aim for ultrahealthful and you’ll rarely get delicious, too. At some point, you must make compromises--this or that, because rarely can you do both. Daniel Lubetzky founded Kind Healthy Snacks using a different approach: He replaced the word or with the word and.
Like many an entrepreneur, Daniel Lubetzky saw a problem and decided to fix it. Most snack and energy bars, he thought, looked (and tasted) like heavily processed slabs of unrecognizable ingredients. It didn’t have to be that way.
Instead of letting assumptions steer him into making compromises (“or” decisions), he set out to accomplish a number of “and” goals with his products: healthful, tasty, convenient, profitable, and purpose driven. Following Lubetzky’s “and” philosophy, sales of Kind’s fruit and nut bars have gone from $1 million in 2004 to more than $125 million in 2012. He says the bars’ tag line (“Do the kind thing”) has inspired customers to log more than 340,000 acts of unexpected “kindness” on the company’s website. Lubetzky calls it a product line without compromises.
Well, good for him, you say. It doesn’t work so conveniently for entrepreneurs in the real world, right? Well, sticking to his principles wasn’t so easy for Lubetzky in the beginning, either.
Or rather than and is an easy trap to fall into because of the way the brain relies on mental shortcuts to make quick decisions--what psychologists call heuristics. Sometimes the assumptions built into those shortcuts are valid, and sometimes they’re not. (When they’re not, they can create opportunities for entrepreneurs.)
When Lubetzky decided to create low-sugar bars, he assumed he would have to make compromises--either use sugar alcohols, which can cause digestive discomfort, or artificial sweeteners.
“Our goal had always been to make all-natural foods with ingredients you can see and pronounce,” Lubetzky says, “and I realized months into the project that we simply weren’t doing the right thing.”
So Kind experimented with spices such as ginger, cinnamon, and chili, and finally found its low-sugar flavor combinations. “It took us an extra year,” he says, “but it was definitely worth it: Dark Chocolate Nuts & Sea Salt bar is the fastest-turning SKU in the category.” That bar has only 5 grams of sugar.
A year ago, Lubetzky’s team had a different challenge: how to make chewy and crunchy granola bars, a seemingly contradictory goal. They solved the problem with better and more expensive packaging to seal in the precise texture.
Every founder at some point believes he or she faces an impossible balancing act--a choice between quality and profit, or business goals and social impact. But if you focus on the long-term impact of a decision, you may find it doesn’t have to be an either/or choice. “When a social objective and a business objective are built into your business model,” Lubetzky says, “those goals don’t conflict; they strengthen each other.”
Here are Lubetzky’s rules for no-compromise products:
1. Bake your goals into your business model. Even if some of your aims are in tension, a goal you don’t set is a goal you cannot achieve.
2. Identify every assumption. The innovation process starts with recognizing the usual thinking and methodologies so that you can then find ways to challenge them.
3. Ask the right questions. Repeatedly asking, “Why?” and “Why not?” is the antidote to incorrect assumptions, especially if an assumption that was once valid is no longer today.
4. Focus on the future. Shortcuts are tempting when you manage for short-term results. Instead, let long-term goals guide you.
View compromise as the last resort. “Or” decisions are the easy way out. Challenge your employees to find a way--they will be better for it.
You make too many decisions to keep making decisions.
You know that feeling at the end of a long day, the one where answering yet another question and making yet another decision feels like rolling a boulder up a hill.
There's a term for this. It's called "decision fatigue," and it became part of the vernacular in 2011 with the release of a study that showed judges in Israel were more likely to rule favorably at parole hearings at the beginning of each court session. Beyond the harrowing implications for prisoners, the study offers a global business takeaway: An executive's decision-making ability weakens with each successive decision he or she makes.
One way to keep your mind sharp: Keep mundane and inconsequential decisions to a minimum. "You may be surprised just how much small daily decisions impact the willpower you have for important choices," writes blogger and entrepreneur James Clear.
In the New York Times Magazine, science columnist John Tierney suggests that those who avoid decision fatigue turn small decisions into obligations. "Instead of deciding every morning whether or not to force themselves to exercise, they set up regular appointments to work out with a friend," he writes. "Instead of counting on willpower to remain robust all day, they conserve it so that it's available for emergencies and important decisions."
Clear advises putting off any small decisions that can't be turned into obligations until the end of the day.
"There will always be decisions that pop up each day that you can't plan for. That's fine. It's just part of life," Clear writes. "But for most of us, the decisions that drain us are the ones that we make over and over and over again. Wasting precious willpower these decisions--which could be automated or planned in advance--is one reason why many people feel so drained at the end of the day. For example, decisions like. . . . What am I going to wear to work? What should I eat for breakfast? Should I go to the dry cleaner before or after work? And so on.
"All of those examples above, can be decided in three minutes or less the night before, which means you won't be wasting your willpower on those choices the next day. Taking time to plan out, simplify, and design the repeated daily decisions will give you more mental space to make the important choices each day."
Don't get psyched out by what you think might happen.
Stop psyching yourself out over what might happen. That's one of many useful pieces of advice that Mary C. Schaefer, an author, trainer and consultant specializing in employee-manager communication, provides in a post on the Lead Change Group's blog. "In one class a few weeks ago I heard the same phrase over and over, and realized it holds the key to a breakthrough," she writes.
When it comes to thinking about initiating a discussion about a touchy subject, inevitably I hear some version of, "What I don't want to happen is ________."
- For the other person to shut down
- To not have the answers
- For them to get emotional
- For them to get mad
- For me to get mad
Just by articulating this phrase, Schaefer is already providing a useful--and succinct--tool for mental preparation. Better still, she provides three possible responses:
- The Obvious #1: Maneuver to minimize the likelihood your worst fear will be realized.
- The Obvious #2: Focus on what you do want to happen.
- And a less obvious, but powerful choice: Be open to whatever happens.
"I've been a manager and coached many managers," she explains. (She's a former HR manager at a Fortune 100 company.) "Over time we get to the point where we are wary of particular behavior, like the other person becoming emotional, throwing accusations, expressing anger. We get psyched out by what we think will happen. Doing this, we give the other person all the power."
"Instead empower yourself to face what you don't want to happen beforehand and do what it takes to handle it if it does happen," she continues. She then supplies three questions to help with the process:
"I find when I do this self-examination I end up in a much better place to initiate a conversation or realize this is not the time to have it," writes Schaefer. "This is part of growing as a character-based leader, growing in how you are leading yourself. When you find a place where you don't feel empowered, there is an opportunity for you."
John Warrillow, founder of The Sellability Score, explains why you need to begin planning a sale several years earlier than you'd think.
It was originally intended for software programmers but the handbook "Extreme Programming Explained" is gaining a cult status for its simple leadership ideas.
"Extreme Programming Explained: Embrace Change, Second Edition," lacks the alliterative punch of "Good to Great" or "The Effective Executive." But the book--written for coders--has become a kind of management bible.
Kent Beck, who created extreme programming, or XP, as a team-based methodology for producing high-quality software, was surprised to find his ideas embraced by nontechnical managers as well. “People would tell me that their salespeople started to pair up,” says Beck, referring to the XP practice of two coders sharing a single computer.
The book’s profile among nonprogrammers began to surge after a 2005 New Yorker article featured a food company’s attempt to develop a healthful, delicious cookie using XP principles. Want to try it? Here are three XP ideas any start-up can steal.
1. No-Tech Communication. XP prizes simple communication, which in practice means “the least technology possible,” says Beck. At Menlo Innovations, a custom software firm in Ann Arbor, Michigan, every employee in every department communicates with paper, pushpins, yarn, and sticky dots, which they plaster across walls to chart the course of their work.
“In companies, there is so much pain between the business side and the technical side or the front office and production, or management and the line staff,” says Richard Sheridan, Menlo’s co-founder and CEO. “Beck showed us how to break down barriers by creating a common language with the simplest possible tools. Yes, there are technology-based ways to do all this. But this way works better for the humans.”
2. Informative Eavesdropping. Beck writes that an observer should be able to walk into an XP workplace and suss out what’s going on in 15 seconds. Luxr, a San Francisco-based company that makes coaching products for start-ups, has an open office where almost everything happens in public.
“Eavesdropping and overhearing are encouraged and how we keep informed about things,” says founder Janice Fraser. Employees make decisions among themselves and pin relevant notes to the wall. Everyone is expected to absorb what’s going on and to ask questions if he or she misses something. As a result, meetings are virtually nonexistent. “Anytime you have to pull 30 people into a room to get them up to speed, that is profoundly wasteful,” says Fraser.
3. Personal Feedback On Demand. Continuous improvement is impossible unless you know what works and what doesn’t. That requires feedback. XP stipulates regular feedback on code quality, but of course the practice also benefits processes and employee performance. At Menlo Innovations, for example, any employee at any time can convene a lunch meeting at which colleagues offer input on her strengths and weaknesses.
At Luxr, Fraser solicits team feedback after every 60-day planning session. She has winnowed by 75 percent the time those sessions take and improved the accuracy of the company’s estimates. “By building in feedback,” she says, “we’ve been able to take this big hairball and reduce it to something manageable.”
This entrepreneur's company recently looked at their email marketing campaigns to learn the relationship between segmentation and engagement.
Marketo’s email marketing research team recently looked at hundreds of email sends to examine the relationship between the amount of segmentation used and the level of engagement.
In the chart below, the horizontal axis shows the size of the send, measured by the number of emails delivered as part of a single batch. The vertical axis shows the Engagement Score, a proprietary algorithm our Data Science Team created to determine exactly how engaging each message is. It combines multiple data points -- Clicks, Opens, Conversions, Unsubscribes, Program Successes, etc. -- and then applies a statistical algorithm to create a single measure of engagement.
What we found is quite clear: small, segmented sends are more engaging than large, untargeted sends.
More quantitatively inclined readers will notice that the R-squared on this analysis is 0.2363. That essentially means that when looking at how engaging an email send is, 23% can be explained solely by the size of the list! That is pretty amazing (at least to me), especially when I think about all the things that go into an email’s engagement: from name, subject line, copy, design, call to action, and so on.
On the other hand, it makes sense. The more focused your segmentation, the more relevant you can be with all those other factors (subject line, etc.). This means you can’t make your emails more engaging simply by chopping up your list into homogenous groups and sending the same email to each. It’s basically impossible to be relevant with a “least common denominator” message sent to a large group - so use targeting to define the natural segments in your list and send uniquely compelling emails to each.
This is why Marketo’s Benchmark on Email Marketing found segmentation to be the highest ROI tactic used by email marketers -- higher even than drip marketing or dynamic content. It’s also why Monetate’s Intelligent Email Marketing that Drives Conversions (2012) found that segmented email campaigns produce 30% more opens than undifferentiated messages, and why the DMA National Client Email Report (2013) found that email marketers estimate 30% of email revenue derives from targeting to specific segments.
The data is conclusive: the better you segment your email marketing list, the better your engagement and ROI. To learn all about ways to improve your email segmentation, download our free book, The Definitive Guide to Engaging Email Marketing.
How are you segmenting your lists? Please let me know in the comments, or on Twitter using the hashtag #DG2EEM.
The founder of satellite imaging company DigitalGlobe recalls three things that helped his company stay alive.
Anytime you see a satellite image it probably was produced by Longmont, Colorado-based DigitalGlobe, a 1,300-person company that last year netted $421.1 million in revenue. Founder and CTO Walter Scott says Google, Apple, and Bing all use its imagery as does do NASA and even the Russian government.
But the company didn't start out as a behemoth, obviously. In 1992 Scott left the Lawrence Livermore National Laboratory where he had been working on the Strategic Defense Initiative, a.k.a. the "Star Wars" program. After founding what was then called WorldView Imaging Corporation and getting funding from Silicon Valley investors as well as corporate backing, 17 years later DigitalGlobe went public.
Here are three things Scott says a start-up needs to stay alive long enough to get big.
All start-ups deal with setbacks of some sort, but when you're dealing with satellites that cost hundreds of millions of dollars it's beyond devastating when they blow up. Both the first and second ones the company tried to launch shared this fate.
"So that sucked, but each time we were able to take a step back and say 'Do we have the ability to continue? Yes. What's it going to take? And is it worth continuing?' Scott says. "And each time we picked ourselves up and continued on forward. Stick with it long enough and either you've won or you haven't won yet."
A Ruthlessly Honest Business Plan
Don't think of your business plan as something you'll use to sell to investors. Instead, it's an instrument for testing whether or not your idea truly makes sense.
"View your business plan as a tool for determining whether or not you're wasting your own time. And be absolutely ruthless. Try to anticipate every possible objection and figure out does it really make sense or not because at the end of the day you're not doing yourself a favor if you drink your own Kool-Aid not realizing that the Kool-Aid is actually not really nutritious," Scott says.
Lots of Funding
When DigitalGlobe was still a start-up it had the opportunity to take money from one source that wanted equity and another that would put the company in debt. While DigitalGlobe only really needed funding from one of the two it took it from both as a measure of protection against risk.
"We repaid the debt completely and we didn't need it but we didn't know that at the time and it was a good thing that we had it because stuff happens," Scott says. "Generally having money is better than not having it and it gives you options. You can choose not to spend it but if you don't have it that choice is gone."
He says two things kill companies, the management team self-destructs or they run out of money.
"So how do you protect against a management team self-destructing? Make sure that you get along with the people who you're in it with. How do you prevent against running out of money? Don't spend it and make sure that you have it," Scott says.
What's Next for DigitalGlobe
DigitalGlobe currently has five satellites in space with another called WorldView-3 expected to launch next year. WorldView-3 will be the first to offer multiple shortwave infrared bands that allow for accurate imaging through haze, fog, dust, smoke, and other air-born particulates. Scott told me it can detect colors people can't see and can identify minerals on the ground from space.
"So there are things that we can do with the new satellite that open up applications that have never before been possible from space," Scott says.
Time to choose between a public or private health insurance exchange
This article is part of an eight-part series on how to cope with the implementation of Obamacare. Check back tomorrow for part five.
For small companies that want to offer insurance, one of the biggest changes in 2014 is that there are a lot more ways to shop for it. If you have 49 or fewer employees, you can use the new Small Business Health Options Program, or SHOP, exchanges run by states or the federal government. These exchanges were designed to give employees of small businesses an easy way to choose from an array of plans, from different carriers, at a given metal level (bronze, silver, gold, platinum) chosen by their employer.
Just before Thanksgiving, the Obama Administration announced that you can't get access to a SHOP exchange through Healthcare.gov website until November 2014. As the feds struggle to get the troubled Website working for individuals, upgrading the small business portion of the site has had to take a back seat, a spokesperson explained. However, you can still access SHOP plans through an insurance broker or directly through insurance providers. And in most of the 14 states that administer their own healthcare Websites, you should be able to apply for insurance online. (One exception is Maryland, which is having its own technological problems with small business access.)
But under transitional rules meant to ease administrative burdens, in 2014 the 36 exchanges administered by the federal government will ask employers to pick a single health plan to offer employees. (The multiple-choice functionality should be available in 2015.) State-run SHOPs can use either approach, but the reality is that in many states, there are just one or two providers of small-business coverage anyway. What’s more, employers and benefits experts around the country are finding that many plans offered through exchanges offer narrower networks of doctors and hospitals. Insurers say these narrower networks help them control costs and thus keep premiums down. But it can mean that employees lose access to favorite doctors and other specialists.
Private health-insurance exchanges, if they’re available in your state, are another option. In private exchanges, the employer selects a menu of plan options from one or more insurance carriers and decides on a dollar amount it will contribute toward employee health benefits. Employees then use the funds, plus any additional amount they want to contribute, to buy a plan as rich or stingy as they choose. Some private exchanges offer as many as 20 coverage options.
Private exchanges offer employees more choices than the SHOPs--not to mention being easier to use than many state exchanges--and may also offer one-stop shopping for ancillary benefits such as vision, dental, life, and disability insurance, which are not available in the public exchanges.
For large employers, human resources consultancies such as Aon Hewitt, Towers Watson, and Mercer have established private exchanges. Small businesses and sole proprietors can look to exchanges such as Minnesota-based Bloom Health (which has plans in multiple states) and HealthPass in New York State, as well as single-carrier private exchanges run by regional insurers.
This article was updated Nov. 29 to reflect the latest delays in online access to SHOP plans.
The Small Business Guide to Obamacare
Part One: How to Notify Your Employees
Part Two: Get an Accurate Head Count
Part Three: Determine Whether You Should Offer Coverage At All
Part Four: Decide Where to Shop
It is estimated that online shoppers will abandon $1.79 trillion worth of goods in their online shopping carts. Here are 5 easy ways to ensure your customers make it through the checkout process to complete their sale.
Don’t you hate it when your online customers abandon their shopping carts before checkout? Well, you and everyone else: Only a third of online shoppers make it through checkout without abandoning items. That stats are truly staggering: This year, online shoppers will abandon $1.79 trillion worth of goods. 67 percent of all online shoppers will abandon items in their shopping cart and that number jumps to 97 percent if those shoppers are using a mobile device. The problem may lie in how you move people through checkout. The good news is, that’s easier to fix than you think.
Here’s where things go wrong (and how to fix them)
1. Your Checkout button is hard to find.
The Fix: Don’t be subtle with your call-to-action buttons-;that is, the Add to Cart and Start Checkout buttons. Boost their size, and make their color stand out. Shopping-cart abandonment drops 33 percent with large and direct call-to-action buttons.
2. Shoppers question the safety of their personal info.
The Fix: Make sure the info about your site’s security is easily visible--if possible, include the icons of your security suppliers. The value of a shopper’s cart increases 16 percent when shoppers know their personal information is secure.
3. Getting through the checkout process takes multiple clicks.
The Fix: Streamline the checkout process by eliminating links and exit points during the final steps of the sale. There is a 12 percent increase in conversion rate with reduced navigation on checkout pages.
4. Shoppers are required to create an account before checking out.
The Fix: Allow users to check out as a guest at the beginning of the process. You can always ask them to create an account after the sale. Conversion rates increase 45 percent when guest checkout is available.
5. Your return policy is buried in the fine print.
The Fix: Set up an affixed or pop-up window with a rundown of your return information. Sixty-three percent of customers view the return policy before making a purchase.
Don’t Give Up on the Ones Who Got Away
An abandoned cart doesn’t necessarily mean your customer is no longer interested. Here are two ways to lure shoppers back to complete their purchases:
1. Send a reminder email: When done right, personalized, retargeted email reminders can generate an average of $17.90 per email sent.
2. Offer free shipping: 77% of consumers say they would come back if offered free shipping.
Source: Data compiled by Ripen eCommerce of Princeton, New Jersey
Five pitching lessons from a PR professional.
"You only have one chance to make a great first impression."
Tired cliche? Yes. But some cliches are cliches for a reason, and that holds true with this one.
That's why it's so important to know what you're doing when you're reaching out to somebody for the first time. A cold pitch, indeed, is going to require a strong first impression.
A strong first impression is what Lindsay Bell, who blogs for communications consultancy Spin Sucks, got from Audrey Walker, a writer who was interested in contributing a guest post.
With Walker's permission, Bell posted her pitch email on the Spin Sucks blog and explained what made it so great. While Bell's notes mostly pertain to communications, they also reflect business and sales truths, too. Below, see Walker's pitch email. The annotations reflect Bell's notes, adjusted to pertain to a broader business context. You can see Bell's blogging-specific points here.
Hi Lindsay! 
I’m a big fan of the Spin Sucks blog, and I’d like to start doing some guest blogging of my own.
I would like to create a piece on ways to stay sane while working remote/in a virtual office. I read a post Gini [another Spin Sucks blogger] did awhile back on the benefits she experienced when moving to a virtual office, so I’m sure you’re all aware of the flipside and some of the pain points of working remote as well. As more and more people are moving to jobs that allow them to work from anywhere, I would bet a lot of your readers are experiencing similar issues that I hope I can help address. 
I’m the director of marketing for a software company that makes web-based communication and scheduling tools primarily for the restaurant/hospitality industry. However we actually use our own software to communicate because we all work remote. I’ve been in digital marketing for 10 years now, and am an active member in the Detroit tech community. I also run a blog/website/community DrinkMichigan.org that promotes Michigan wine, beer, and spirits. 
Twitter - @techsocialite @drinkmichigan @shiftnote
Please let me know what else you need from me. Thanks and have a great rest of your day! 
1. Be personal.
This speaks for itself. But find out who you're writing to and say hi to them, not "sir or madam" or "whom it may conern."
2. Do your homework.
By referencing one of Bell's colleague's work, Walker shows she has a good sense for what Spin Sucks stands for.
3. Introduce yourself (and your company), without sounding like a salesperson.
Try to anticipate what sorts of questions the recipient is going to have, and knock them out pre-emptively. Don't use this as an opportunity to say how great you are.
4. Provide a "see also."
Of course you should be on social media, but that's not really the point here. Walker offers more opportunities for Bell to better get to see what she does and who she is, and how to get touch.
5. Close gently.
Remember, you're not selling yet. You're reaching out. Don't establish any expectations and, of course, be pleasant.
Jewelry designer Alexis Bittar is in a place he never thought he'd be: at the helm of his own fast-expanding company. And he's happy. Here's how it happened.
As a kid, Brooklyn-born Alexis Bittar was a creative schemer, always trying to make a buck: He would buy up vintage clothing and antique jewelry and sell it on the street on New York City's then-bustling St. Mark's Place. He framed and sold images cut from dusty old books. But it was years into creating his jewelry business before he ever considered himself an entrepreneur.
"When I was starting out I was just a little punk kid, you know. I was basically a high-school dropout." Bittar says. "It wasn't even a word I would have known."
But Bittar did consider himself an artist. That fact--in the past 20 years of building his business--has never changed. His unorthodox, right-brained approach to managing has bred a particular set of challenges, which Bittar, now 46, speaks about frankly.
Alexis Bittar--the business--began in the early 1990s. It got almost immediate validations in its efforts creating beautiful punk-rock-inspired metal and Lucite pieces. A buyer at Bergdorf Goodman put in an early order in 1992 and Bittar--the man--hired two people to help him fill an initial stream of small orders. They carved the first pieces working out of his Brooklyn bedroom.
"I very slowly built the business. It grew organically for the first 10 years, out of this mission of straddling the line between art and fashion," Bittar says. "But after 10 years, I became incredibly focused and finally gained a clear vision of what I wanted to do."
Today, Alexis Bittar the jewelry company employs 450 people. Its product--three lines of jewelry retailing at $65 to $1000 a piece--sells at every major high-end department store, museum shops, online, and in 10 new Alexis Bittar boutiques. It's the go-to for Lady Gaga when her stylist wants an edgy new headpiece for a music video, or when Miley Cyrus wants an armful of clear bangles for, say, last weekend's American Music Awards. His pieces have been worn by First Lady Michelle Obama, and last month the company launched a fine jewelry collection. From a retail perspective, that's a difficult move to pull off--one that few brands, only Ralph Lauren comes to mind--have been able to execute successfully.
The new upward reach and the recent expansion in stores--the company hopes to have 25 locations globally by 2016--are helped by a private-equity investment by TSG Consumer Partners, a firm that's helped consumer brands, including Smashbox and Vitamin Water, grow.
It didn't come naturally for the designer to be a manager or executive. Nor did writing a business plan for a company without an existing model to mimic. But after 20 years, he's found solid footing on both fronts. Bittar, who is CEO and Creative Designer of his Brooklyn-based company, explained to Inc. the lessons he's learned along the way. They have been slightly condensed and edited for clarity.
Expect a steep learning curve.
When I first started the business I didn't really understand management. I hadn't been around it, and I just wanted everyone to be happy, and that was a disaster. The whole thing wasn't natural for the first 10 to 12 years. I was a slow learner, I think because I have both the left and the right brain. There was a big learning curve for me.
Be clear about your expectations.
I've learned that people want clear deliverables and clear communication. Almost the less emotional you are, the better. I think people do mostly want to do a good job, and want to be pushed, even when they voice that they don't. People want to succeed, and feel like they've accomplished more than they thought possible. But that took me years to get to.
It took a lot of trial and error. A lot. I mean, 15 years of it. I feel like I just got there in the past few years. One of the great things about getting busier, and the speed of work, is I don't have the luxury of overthinking. I've learned to just trust myself.
Embrace your mistakes.
Back when I was young in my business, and everyone told me "you are the designer, you need to hire someone who can really build up your business." I listened. I hired this guy who had worked at a large company and turned into a complete disaster. He was a combination COO and CFO. He almost singlehandedly sunk the business. It was honestly the best lesson I could have ever had. It taught me that I needed to understand all the aspects of the business--I couldn't just be the designer. It wasn't going to work for me. I immersed myself in a way I never had. They say pain is your best teacher. It's what pushed me through to where I am now. When you hit that point where you're about to lose something, you realize what you need to do--and what you were afraid of doing comes easier. There's also something when a business contracts that's super freeing: you see where the dead weight is.
Put your plans in writing.
I was in Paris during a trade show and it occurred to me that I always had one foot in the business and one foot out. Part of it was I intuitively knew that if I put both feet in and I failed, I would feel like I failed. But if I kept one foot out, I could always say, I wasn't totally committed. It was juvenile. Then I thought, 'if I was to drop dead, what would make me feel like I succeeded?' In half an hour I wrote out what I needed to do with the business.
Find your niche.
In terms of stores, I wanted to have a chain that was only about jewelry and accessories, that felt curated, and it felt more thoughtful. When you think of chains of jewelry, there's Claires Accessories, there Swarovski, and then you jump up to Yurman. There's nothing in between. As a business model, it's great. And it was the first on the market. When I went to bring in private equity, everyone wanted to jump on it.
Play to your strengths.
I think I'm pretty logical. My brain moves very fast, sometimes too fast for the people I work with. I've trained myself to find solutions quickly, and not get involved in the drama. I think that comes from design: I can look at a design and put it together like a puzzle in my head very quickly. And the same goes for business strategy.
Word-of-mouth is your best friend.
We are the most used jewelry line in the past three years editorially--out of everyone. We beat Cartier, Van Cleef [and Arpels], and this is before we started advertising. We just started in the U.S. literally a few months ago. During Fashion Week we'd do wild postings, but we never really advertised. We're working with Lady Gaga. We just worked with Miley Cyrus for the AMAs. We're working with everyone every day. We would get a call from the stylist, and we'll talk about the concept. Then I'll do a sketch and send it over. There will be a little bit of a back-and-forth, but it's generally easy--I think I'm super easy to work with, as long as you're definitive and concise. If you're too wishy-washy I'll lose my patience a little bit.
A whopping 26 percent of employees have left a job because of impolite or abrasive coworkers. In other words, you mother was right -- manners are important.
What does bad office behavior look like? There's the guy who doesn't say "thank you," and the woman who won't even say "hi." Others bark commands, fail to make eye contact, and occasionally tell belittling jokes. The uncivil--dare we say hostile?--workplace that these habits create can do a pretty rough number on your team.
How rough? Rachel Feintzeig of the Wall Street Journal reports that 96 percent of employees have been treated rudely at the office and 50 percent say it happens at least once a week, according to a continuing study by Georgetown University and the Thunderbird School of Global Management. Those numbers alone should raise management's eyebrows. But if they don't, consider this: 26 percent of employees say they have quit a job because of "a lack of civility."
Beyond losing talent, that kind of turnover generates additional costs for businesses. Cisco Systems estimates that incivility costs the company more than $8.3 million a year. "That figure takes into account turnover, employees' weakened commitment to the company, and work time that was lost to worrying about future bad behavior," Feintzeig writes.
Thankfully, Feintzeig doesn't just deliver bad news. She also offers two possible ways to improve bad manners in the workplace, holding up Ochsner Health System as an example. For starters, Ochsner instituted what it calls a 10/5 rule: Employees are expected to make eye contact with anybody who comes within 10 feet of them, and greet anybody who's standing within five. Secondly, Ochsner also has a no-venting policy. Frustrated employees must go to designated "safe zones" to vent when frustrated, such as a private office, Feintzeig reports. Adherence to this policy factors into employee evaluations.
Requiring your employees to "be nice" may seem a little like babysitting or playing Big Brother. In an ideal world, you're hiring people who don't need to be reminded how to be polite. But given how ubiquitous rudeness appears to have become--and the devastating effects it can have on your talent pool--these kinds of policies may be a smart move.
Enough with the marketing jargon about authenticity.
When the folk band Mumford & Sons recently announced it would go on indefinite hiatus, I couldn't help but think about the marketing buzzword I love to hate: authenticity.
Few bands see the kind of meteoric rise that Mumford & Sons saw in the early part of this decade. Formed in late 2007, the pop-folk band sold put out two studio records--one in 2009, one in 2012--and sold more than 6 million of them between the U.S. and the U.K. They won two major Grammy Awards earlier this year for the more recent effort. And they did it despite an omnipresent criticism--namely, that their music wasn't authentic.
What did this mean, exactly? Critics' lists basically read like this:
- Mumford is a British band playing Americana.
- None of the bandmates were actually sons of lead singer Marcus Mumford.
- The music seemed written to capitalize on a trend--namely, the resurgence of folk music in the 21st century.
The Authenticity Police
The band's hiatus came as a surprise to many, given the band's massive success.
For its critics, the break hardly came as a surprise. It was vindication. It confirmed, for them, that Mumford was in it for the money.
But Mumford & Sons never claimed authenticity. In fact, here's what Mumford told The Guardian when asked directly about this criticism:
"The authenticity thing has never been an issue for me. Not since I came to the realisation that Dylan, who's probably my favourite artist ever, the richest artist for me, didn't give a shit about authenticity. He changed his name. And modelled himself on Woody Guthrie. And lied to everyone about who he was."
For me, someone who could take or leave the music, Mumford's breakup, as well as their pish-poshing the concept of authenticity, comes as a breath of fresh air. That's because, in the business world, the word has become so overused and so edificed that it's high time it just get put to bed.
The Rise of a Buzzword
"Authenticity" has taken on massive weight in business. Marketers seem to hold it as something of a holy grail. Except it's unclear what it actually means.
This gets at the heart of the problem with the term. Authenticity and marketing are inherently at odds. When we're talking about authentic--meaning real, genuine, of verifiable origin--marketing pretty much means creating a message that helps you sell stuff (hopefully cool or useful stuff) to the right people. And you know that using that truth as your message probably isn't going to work.
Still, businesses--including some very successful ones--have taken the term to heart. Huge businesses like Starbucks and Anthropologie were among the first to be attributed the term. Warby Parker places "authenticity" at the heart of its brand. This is coming from a company that puts a monocle in its showroom even though it knows it will never sell.
Most recently, I saw a report on how to market to Latino consumers. The report went so far as to identify the overuse of the term authenticity in justifying its use of it.
Authenticity may be one of the most over-used words in the marketing lexicon, but one cannot explore Hispanic marketing trends without addressing it head on. It goes without saying that creating a meaningful connection with the Latino audience requires an authentic voice.
The report did offer useful tips for reaching Latinos, which is exactly what marketing is meant to do. But at no point in the report was the term "authenticity" defined. The company that sent the report--a PR firm--declined to comment for this article about how it defines the term.
This is a common problem in marketing circles. Hot new buzzwords tend to be beaten down and used so much by marketers that they eventually lose their meaning altogether. This wouldn't be such a problem, except marketers market pretty well. That means they're writing pieces (because it's good inbound marketing) that use these words however they see fit, then sending them around to other marketers. Marketers love content about marketing, just like people of all professions love content about theirs, so they excitedly share each other's content, which is filled with these flattened terms. Suddenly, anything that's selling is authentic.
So, authenticity? Shenanigans! Here's the rule of thumb: If you need to try to seem authentic, you aren't. You might be clever, you might send a powerful message, but you aren't authentic. That's just not what the word means.
Then again, maybe this is all much ado about nothing. Definitions of "authenticity" in the marketing realm are hard to come by, as I mentioned above. But those that are out there hardly differentiate themselves from any traditional marketing literature. Here's how content marketing thought leader Newt Barrett defined authenticity in an interview on Forbes.com:
- Define an ideal set of customers.
- Determine exactly what is most important for them to know.
- Deliver that information in a relevant and compelling way.
- Engender a level of trust that makes it easy for them to buy from you.
What a concept.