December 17, 2008 - What Are Your Default Systems?

Main Idea

Why does your new computer come with software preloaded?  And why do they have a duplicate of the software on the hard drive?  Why does Southwest Airlines fly only one kind of airplane?  Why does the food selection decrease when you go into a higher priced restaurant?

Expansion of Idea

Last week I heard about a loan officer in Pennsylvania, who, when standing on a hill, can honestly say that he finances every farm within sight.  He also has zero loan delinquencies.  Not only that, he has only had one late payment in 20 years.  Is this unbelievable?  Not really if you consider that he finances farms in an Amish community and it is against their culture to borrow very much and on top of that it is extremely humiliating if you do not pay your bills.  This loan officer picked his customers very well.  The only thing different about his servicing of the customers is that he had to create a default system.  He had to go to his customers every month to collect their monthly payments.  This is very unusual for a loan officer but it did two things.  First, it kept him close to his customers and second, it collected the monthly payments.  I am sure he serviced these customers very well.  I would also bet that these loans are not as sensitive to rate changes as normal loans.  (These loans are a little different because they could not be sold on the secondary markets because the houses do not have electricity.) 

In hindsight this default system is obvious.  So are many other genius ideas. Do you have default systems in place?  Are they working for you?  One of the main changes I have made in the last 4 to 5 years is that I will not take a new client that will not allow us to look at his interim financial data for his business.  If clients are not that proactive, then I do not want them.  Some of these potential clients keep good books and it would normally not be a problem.  But if, in a given year, they do not have good records, then my office has to make up the difference during tax season and that creates problems for me and for other clients.  This is a default system that is good for clients and for me. 

Action Items

  1. Where are you having problems in your customer service delivery?

  2. Are there adjustments in how you approach the sale and service delivery that would benefit you?  (Remember these are probably small adjustments.)

  3. Are you trying to be all things to all people just to make the sale?

  4. Have you set up systems to protect against the 1% of customers who create problems?