Staffing for Growth: Focus on Human Resources

While heading up two businesses in the late 1990s, Mike Faith had difficulty finding quality telephone headsets at reasonable prices. Even more frustrating was the substandard customer service he said he found among the companies in that field. He realized he could fill a void in the industry.

“My entrepreneurial opportunity radar went berserk,” he recalls. “I saw too big an opportunity and had to capitalize on it. … That’s very much my style.”

Six weeks later (in 1998), with $40,000 in startup capital, Faith established San Francisco-based Headsets.com where he now serves as president. The company, which primarily sells headsets and related merchandise to businesses nationwide, expects this year’s sales to reach $16 to $18 million, up $7 million from 2003 — and a long way from its $3 million revenue just three years ago.

“We seem to break a revenue record every year,” says Faith. “Our goal is to become the No. 1 headset retailer by 2006.”

A Catalog is Born

Besides a few postcard mailings, Headsets.com had little experience with direct marketing — that is, until 2001 when an employee inquired about starting a catalog. “We had no idea what that question would start,” says Faith.

Two months later, Headsets.com printed and mailed a 48-page, full-color digest catalog to 90,000 prospects. “We built the catalog from the ground up and took lots of advice along the way,” says Faith. Rather than tap consultants’ catalog knowledge, Faith contacted others in the direct marketing industry who had hands-on experience with catalogs. “We were taught the ropes,” he continues. “It was a bit of a risk for us at the time, and we haven’t looked back.”

The company now mails about 1.5 million catalogs every five weeks. And its total housefile is more than 90,000, up from 50,000 in 2001.

Faith views the catalog as the company’s main advertising tool. From a consumer perspective, he believes people prefer to leaf through a catalog rather than browse online. From a business standpoint, he views the print catalog as “push marketing.” Says Faith: “You can promote the solutions you have to people who might not be thinking that they need them.”

And the employee who originally suggested a catalog launch? He now serves as customer service manager.

Select the Players

During the company’s first few years, Faith remained focused on refining and improving the business. After comparing it to others in the industry, he saw that his competition wasn’t meeting one key demand: exceptional customer service. “By our shame, it wasn’t being met by us, either,” he admits. “Once I began to understand the market, I became absolutely passionate about building [our customer service model] to something other companies would envy.”

Faith carries out this mission through a comprehensive hiring process for customer service representatives (CSRs). “Customer service is just as important a position [as a manager], and that’s what many people fail to realize,” he says. “We have a long process to find the right person — someone who is emotionally equipped to deal with different calls every five minutes, who can use tools such as empathy and sympathy, who can maintain positive customer relationships under various circumstances. ... It’s quite a lot to expect.”

How does Faith go about finding the right person for the job? “You can’t always check a resume or references, but what you can do is keep testing and prodding someone’s personality,” he explains.

To start, candidates must complete an application that requires more information than a normal resume. If a candidate shows potential, the customer service manager invites him or her to the office for a 45-minute site tour and interview.

Next, the candidates interview with Faith. During this time, he prods them to gauge their level of interest in the position. “I see if they’re on board or bored,” he explains. Faith also takes this opportunity to educate candidates on the company’s mission, goals and expectations.

After the interviews, the candidate completes various forms and tests — including an IQ test — to help the management team understand the applicant’s thought processes.

Next, candidates spend half a day in the office listening to live calls and meeting other CSRs. To help managers determine applicants’ listening skills and level of patience, candidates complete forms regarding their evaluation of each call. Says Faith: “We train them to listen, which is more important to us than how they talk.”

Faith believes most companies don’t pay enough attention to hiring quality CSRs. He says his methods have given Headsets.com an extremely effective team. Moreover, there’s very little CSR turnover. (An interesting side note: Once every nine to 12 months, performers who are deemed only average actually are let go.)

Plans for Pre-hire Retreats

Faith is thinking about instituting a pre-hire weekend retreat for top CSR candidates. While the company already hosts employee retreats — some company-wide and others reserved for managers or certain departments — Faith plans on spending time with job candidates and doing various exercises with them such as transactional analysis. During this exercise, Faith would discern an applicant’s ability to understand and gauge transactions. This, he says, would be a very good indicator of the candidate’s ability to support customers on the phone. “[Candidates] will get to understand emotional listening skills, not just the factual listening skills,” says Faith.

Through such a retreat, Faith hopes to find candidates who would be the best fit for Headsets.com. “If you get a whole weekend with someone and they’re bluffing, their personality starts to crack a little bit. ... So we could flush out any of [those candidates].”

Team-building Tactics

In addition to the pre-hiring processes already in place, Headsets.com has developed an ongoing — and non-traditional — CSR training program. It involves using outside professionals.

When Faith first talked to a business psychologist a few years ago, he found the feedback invaluable. “I try to surround myself with others who can help me see the big picture,” he recounts. He decided to make this service available to his entire staff.

About half of Faith’s employees now speak to the business psychologist on a regular basis via telephone, often to flush out negative feelings or resolve communication problems they’re having with other employees. Faith claims this telephone-consulting process results in better corporate-wide communication and accountability, and it helps to eliminate harmful office politics.

Faith also employs a Sydney, Australia-based voice coach, as well as a U.K.-based managerial and organizational specialist to help employees develop skills such as time management. Participation in these services is solely at employees’ discretion, although most take advantage of the resources. Faith also requires job candidates to speak to each of these coaches.

Headsets.com has seen concrete results from the programs: seven out of eight customers now rate their experience as excellent, an increase over previous surveys. Faith admits he has huge expectations for himself and his employees. “I want the office to run like a nearly perfectly efficient team.”

Close to Home

Such thorough applicant screening and extensive employee training and retention programs may explain why Faith keeps most corporate functions in-house. Although consultants are used to provide insight in various departments, employees are responsible for most creative, and they even write their own software.

Additionally, the staff designs and operates the Headsets.com Web site, which receives 3,000 unique visitors per day, as well as records 35 to 40 percent of overall sales. Currently in the works is a plan to develop better online customer account management tools.

In addition to employees’ work, Faith credits a portion of the Web site’s success to the company’s search engine marketing efforts, namely through Google, Overture and FindWhat.com.

Another element that has worked to the company’s advantage is its live Web chat feature, which was launched in 1998 and remains popular among customers. “We couldn’t be without it nowadays,” says Faith. “A bold invite to get questions answered live is the best way to go.” The company receives several hundred requests per day — with a high conversion to sales.

Faith says the real behind-the-scenes work was finding the right person to answer online customers’ rapid-fire questions. The wizard behind the live chat curtain, Daniel Nelson, never gets flustered and can hold 10 to 15 simultaneous conversations with customers while providing intelligent responses and solutions, says Faith.

Future Plans and Challenges

While Headsets.com has experienced rapid growth since its launch, many process-improvement plans are in the works. For one, a move to a new facility may be in the near future. “Although we’ve outgrown our premises, there may be an opportunity for employees to defocus while we move,” Faith worries. “As we grow, my intuition, culture and discipline will become increasingly harder, but [focus] is such a critical part of success and will need to be absolutely maintained.” Other plans include a possible expansion into international markets, notably the United Kingdom and Canada.

All of that said, Faith notes that his biggest challenge is learning to deal with himself. “The more successful [people] are, the more they are their own biggest challenge … and their own biggest opportunity,” he says. “Transitioning from an entrepreneur to the CEO of a larger and expanding company has been the biggest opportunity I’ve had,” says Faith.

The Headsets.com List
12-month housefile: 106,000
Rental cost: $95/M
List manager: Mike Soltis at MeritDirect, (914) 368-1025

Faith’s Success Factors

Skyrocketing revenues, a growing housefile and increased catalog circulation all are evidence of Headsets.com’s rapid growth. President Mike Faith credits the following for his company’s steady success:

Customer service. “Customer service isn’t commission-driven, so there’s no pressure or expectation to maximize revenue each call,” explains Faith. “All we want to force on our customers is satisfaction.”

Strong focus. By selling a specialized product line, Faith and his employees have been able to develop a thorough knowledge of merchandise — knowledge that helps them serve customers better.

Accessibility. “We make it easy for people to reach us,” says Faith. The company’s URL address and toll free number are listed on all literature. Additionally, some equipment features manufacturers’ telephone numbers in case troubleshooting is required.

Takeaway Tips

Mike Faith offers the following advice for successful business leadership:

1. Hire people better than yourself. This way, you don’t have to worry about them doing a good job.
2. Have high expectations of your employees. Hold them accountable for their responsibilities.
3. There are no experts. Remember there’s always a better way to do a task.
4. Read industry publications and business books. There’s a wealth of information out there to be used profitably.
5. Always test (e.g., merchandise, offers, splits, lists).
6. Keep asking questions, even if you know the answers.
7. Distinguish expert opinion from tested fact. “The two are very different. ... Tested facts will trump expert opinions every time,” says Faith.
8. Learn from your peers by joining business groups such as the Young Entrepreneurs’ Organization (www.yeo.org), World Entrepreneurs’ Organization (www.weo.org) and Young Presidents’ Organization (www.ypo.org). “It’s been really useful to me to learn from people in different industries who go through the same challenges.”

About Headsets.com
Headquarters: San Francisco
Established: 1998
Products: telephone headsets and related merchandise
Customer demographics: 95-percent business-to-business
Average order value: $250
SKUs: 40 to 50 in catalog; 200 to 300 online
Annual circulation: about 12 million
Printer: Times Printing, Random Lake, Wis.