How to Win a Customer For Life

Every business in the world operates in an evolving marketplace. Evolution of these markets is driven by an infinite number of factors, not the least of which is the evolving tastes and needs of our customers. The ultimate goal for any business should be the establishment of a profitable customer base which is stable, predictable and can be relied upon to provide consistent revenue for years to come. Imagine knowing that your business can count on revenue of “X” for the next 5 years? How would that impact your business?  How would that change your life?

To win a customer for life, your business must offer a solution to a problem. Your target customer’s problem should be ongoing (best case scenario for your business), and they must never lose confidence in your solution and your ability to solve their problem. The theory is simple, and yet infinitely complex. Consider the following buckets when building your business strategy:

•        The benefit of your solution must outweigh its cost. You must also communicate the value of your solution to your customer; if your customer is not aware of everything that you do for them, it will be easier for them to replace you.

•        Your customer must like your solution and your company. When you are likeable, a competitor who successfully replicates your product will still need to break the bond between you and your customer. However, if your customer doesn’t like you, the minute that they have a viable alternative to your solution, they will seek it.

•        You cannot solve every problem your customer has. Build your solution around a problem that will support your business objectives. Choose the problem you will solve carefully:

o   A dynamic problem will require a dynamic solution. This means higher costs for ongoing development of solutions, higher costs for deployment of solutions, and, due to lack of experience with a new problem, a higher risk of not solving your customer’s problem perfectly.

o   A static problem is easier to solve, easier to ensure customer satisfaction, and easier to forecast potential for the future. Be aware, however, that a static problem makes it easier for new competition to enter your marketplace and will drive down the price for your solution.

•      You must prove your solution to be trustworthy. It would be wonderful to never make a mistake, but it is also impossible. As a result, it is critical to build into your strategy a plan for how to treat your customers when problems arise. One of the most powerful ways to build customer loyalty is to do such an impressive job fixing anything that goes wrong, no customer will ever doubt your brand’s credibility or your company’s integrity.

o   This is also the most powerful way to gain a referral, strengthen your bond with your customer, and create a barrier to entry for your competition.        

•       You must be able to support the delivery of your solution.

o   Whatever the medium for transmission of your solution, having the best people, technology, customer service, processes, and infrastructure etc to support your solution will be critical. Without excellence in the foundation of your business, there will be no stability to support your solution.

•        You must evolve your service proposition. What you offer today will become the standard your customer expects from you tomorrow. You need to find new ways to exceed their expectations.

•        Treat your employees like they are employees for life. They will respond with the same way when they are servicing your customers.

Regardless of the stage of your business, you will be well served to (re)consider each of these buckets. Test your strategies against these basic principles and keep your strategies simple so that execution is a foregone conclusion. Maintaining focus on these fundamentals will ensure that your business remains optimized and your customers remain yours, for life.

What Can Your Business Learn From American Idol?

Whether or not you are a fan of American Idol, this iconic / painful reality show represents success of the highest calibre in an extremely competitive marketplace. Let’s examine the categories of its success.

• Audience Engagement. Through phone voting, American Idol engages the local audience of each of its international shows. The audience is empowered to influence the show’s contest and as a result holds a personal attachment to the process and outcome. There is no more powerful way to maintain and grow a target market than to gain their involvement in your business.

• Advertising. American Idol is a case study of how to successfully maximize advertising potential and Share of Voice (SOV) in a commodity marketplace. In every single target market and country where the show is hosted around the world, Idol creates a small market media frenzy by hosting and publicizing try-outs for their upcoming show. Local media focuses on local talent and constantly engages new audiences in new-to-American-Idol communities. The media follows the successful applicants throughout the process until they reach the show. The show obviously creates massive PR but it doesn’t end there; a PR strategy is created to support the winners and runners-up to ensure that their success and near-success becomes stories unto themselves. Finally, by continuing to follow up and report on past winners, American Idol helps itself to build Idol’s reputation for each new show. The lesson here is that PR does not start and stop with the product or service being offered.

• Growth. What started out as ‘American’ Idol became a global powerhouse in the most lucrative television markets around the world. Recognizing that audiences outside of the USA would not be engaged in a contest of American talent, American Idol became ‘Idol’ and branched out into Canada, Australia, Asia, Israel, United Kingdom and Latin America. Local broadcasts are tailored to cater to local tastes (popular celebrity judges etc...) and each show builds upon the success of the original American Idol. The real benefit to the business of American Idol is that they have grown their revenue potential from advertising in the USA to being a global channel for national and multi-national enterprises. American Idol now derives revenue from not one market but all major markets in their industry worldwide.

Whether or not you are a fan of American Idol, step back and take a moment to analyze the simplicity of its business model and the key factors contributing to its success. If you are a business owner or leader, there is a lot you can learn from watching those who watch.

Can You Choose Not To Take Part In the Recession?

I recently had an enlightening conversation with a businessman whom I admire immensely. He commented on the stress and pressure he had been exerting on himself during this challenging economic state. The operative word here is ‘had’.

Completely at ease, he explained his 3am epiphany to me. Lying awake in bed with his family asleep all around him, this incredibly intelligent, successful, and influential business leader finally realized that it was not his fault. The downturn in his business was not his fault. No matter how much he denied participating in the recession, no matter how hard he worked and more importantly how smart he worked, he realized that he could not shield his business from the effects of the global economic meltdown. And then he slept.

His lesson to me was the following: it is okay to blame the economy. You can do everything right and still not achieve your business goals. Change your expectations; allow for all of your hard work to bear less fruit than it would have last year. And at the end of the day, go home and relax knowing that you are doing everything you can to help your business succeed.

Sleep well my friends, you are not alone.

It’s Who You Know

People don’t do business with people they don’t know exist. The same thing is true for companies. In this e-world of facilitated communication and information exchange, it is easy to assume that your target customer will find you if they need you. The reality is that they won’t go looking for you at all if they already have a contact offering your products or services.

This article is intended to be short so that you will use the time you budgeted to read a longer article to reach out to 3 people who you should have contacted a long time ago. Don’t wait for them to find you, especially if you haven’t given them a good reason to go looking.

Make the Swine Flu Work For You

There is (pardon the pun) a ‘viral’ amount of media surrounding the swine flu right now. The question is, how do you translate this into an advantage for your business:

1. Make sure that you do not actually have the Swine Flu

2. Advertise that your business is Swine Flu free and point out that your competitors have not been able to make the same claim.

3. Avoid speaking Spanish or with a Mexican accent when talking on the phone (this can help you to avoid rumours...).

4. Publicly condemn Swine Flu (if your target market includes politicians, you should communicate on their level).

5. Try your products or services on yourself. If you do not contract the Swine Flu afterwards, you can claim that your products or services may have saved your life.

6. Conduct a mystery Swine Flu shopper visit at your competitor’s establishment. Try to find out if they have been to Mexico lately, perhaps they eat burritos? The next step should be obvious: have them quarantined.

7. Try to get the phone number: 1 8NO FLU HERE

8. Create a large public notice board advertising how many days since the last cough in your workplace.

9. Set up Swine Flu protest marches in front of your competitor’s establishments.

10. Flights to Mexico are cheap right now, buy tickets for your competitors and send them in a card congratulating them on their integrity in this tough economic environment.

USA vs Canada – Doing Business in the US, From a Canadian Perspective

Before I start and to ensure transparency, I am Canadian. I also hold the American business market in extremely high regard and believe it to be the truest form of capitalistic opportunity available to the world. That being said, there are risks associated with targeting a market such as the US for international business, let the seller beware.

• The US population is approximately 10 times the size of the Canadian population. Ten times the buyers, and ten times the sellers. Before you decide that expanding your target marketplace to the US is the answer to all of your revenue dreams, spend a significant amount of time assessing the US competitive landscape. If you are having a tough time setting your business apart from its competition here in Canada, you will sink 10 times deeper into obscurity in the American market.

• One word: distribution. Creating an internet platform to enable effective web marketing and online revenues sounds wonderful. That being said, Americans tend to have cheaper production costs and cheaper shipping costs. You need to figure out how you are going to compete financially when your US competition has lower overhead for the same product that you offer.

• The United States has an entirely different legal system than we do in Canada. Prior to assuming that you can just start shipping your product across the border, consider the following:

o Your product may not be legally protected, (the patent you have may not hold water, or worse, be in conflict with a patent held by an American competitor).

o You create an entirely new risk for legal exposure. Think really hard before you throw rocks at a hornet’s nest. The American society is a litigious one and you don’t want to leave yourself open to a host of lawsuits.

o Insurance. Make sure that your insurance here in Canada covers you in the US.

• Americans prefer to buy American. How are you going to provide an incentive for them to counteract their protectionist ideologies?

• Are you going to try to get in and get out, or are you going to try to create a long term business relationship with the American marketplace. If your product is successful in generating revenue in the US, you can expect a number of US based copycat companies to come on board with the same products or services that you offer. If you are planning to stick it out with your American customers, you need a strategy in place to ensure that you remain relevant and competitive.

The lucrative market in the United States is far too attractive a revenue stream for any savvy business person to ignore. What I am stressing is that the US market needs to be respected as a truly international marketplace, not an extension of the Canadian market with deeper pockets. Do the due diligence required to properly assess your risks and your benefits. I bet that you will still see opportunity but will realize that it will take a lot more work to do it right than you would have ever expected.

Have You Got What It Takes?

Prior to embarking on a new business venture, entrepreneurs will often act responsibly by performing a detailed assessment of the potential of their business idea. They will analyze their target marketplace, the competitive landscape, the unique selling proposition of their product or service and how their proposed messaging will resonate with their target customers or clients. They will confirm the applicability of their business model, their supply chain, production, the legal requirements and accounting protocol for their business. They will forecast sales and new competitive entrants to their market. They will layout plans for public relations and corporate communications. Investor packages and documents will be prepared. They will research the process of taking their company public. And without a doubt, begin the process of selecting the international locations of their beachfront homes situated strategically around the world.

All of this is extremely important, well maybe not the last step so much.... But there is one essential thing that is almost never assessed during this lengthy process of due diligence: the assessment of the ability of the entrepreneur to successfully lead this new business. In other words, can they actually do the job.
There are a number of personality traits that are proven to be beneficial in the business world:

• Task orientation
• Logical thinking
• Ability to multitask
• Leadership capacity
• Integrity
• Work ethic
• Ability to eliminate emotion and ego from business decisions
• Vision
• Dependability

Before you invest time and money to investigate whether or not you have the next million dollar idea, spend some time assessing your own skills and abilities. Objective introspection is technically impossible so I would recommend the following to gain additional insights into your own strengths and weaknesses:

• Seek out an expert within your target marketplace, find out what you will need to be successful
• Meet with a business coach
• Seek out a mentor (someone who has your best interests at heart and has the experience to help you avoid making the same mistakes that they made)
• Talk to qualified family and friends (people who have some experience and knowledge about the business area you would like to enter into)

Once you are armed with their feedback, you will be better prepared to fill the gaps in your skill set with help from qualified individuals. You can also write a business plan that focuses on your strengths and thus has a far better chance of succeeding.

A Million Dollar Business Idea

Recently, I came to realize that several of the most fascinating, constructive, and lucrative business meetings I’ve had have been the result of the following process. When the realization first hit me, I walked myself back through my experiences and drew upon the conclusion that I could not have acted in a more focused and strategic manner had I planned it from the beginning. If there was a Nobel Prize for sales, the following process would be celebrating on a beach somewhere right now.

• Somewhere in back area of your office or store, set aside a small area which I will refer to as your ‘showroom’.

• Think hard about who your ideal customer or client is and identify a material object that they are likely to purchase.

• Using a sales forum specific to your local area (Craigslist, eBay, Kijiji, newspapers...) find a posting where someone is selling one of the items that you have selected.

• Set up a meeting with the seller and if you like what they are selling, purchase the item.

o The exact same process I am describing below is applicable to your purchase of this item. Do not waste this opportunity.

• Take the item back to your store or office and place it in your showroom.

• Using the same means by which you were able to track down the item for your purchase, advertise the item for re-sale. If you can charge more than you purchased the item for, consider it a bonus.

o I recommend free online advertising sites as they are extremely popular and have the added benefit of being free.

o Where there is a charge to post your ad, build the advertising cost into the price of your product whenever possible.

• Each time someone wants to purchase your item, they have to walk all the way through your office or store in order to reach your showroom and view the item.

• While they are walking through your store, you have a perfect opportunity to present your business and learn more about theirs.

• Most importantly, you have already qualified this person as a potential client or customer of your business because of the item that you are selling.

This process is all about qualified lead flow with guaranteed face to face engagement and presentation of your products and services. A multimillion dollar industry has been built providing qualified leads for businesses, usually just providing contact information of potential customers in the form of emails or phone numbers. My process is free and guarantees you multiple opportunities to meet with your target marketplace, both when you buy and sell your items. Best of all, this process is not only free but provides the opportunity to make a few bucks on each of your purchases.

How To Choose The Wrong Business Partner

Here are ten things you can do to ensure that you have the best odds of partnering with the wrong person:

1. Ignore your spider sense. Animal instincts and survival skills are not appropriate in the real world. Each of the concerns that you have when things are going well will definitely melt away when times get tough.

2. Ignore your friends’ advice. No one knows your business better than you. Listening to people who care deeply about your success will only distract you.

3. Don’t do a background check. It’s all about going forward. Don’t waste your time on proven track records and reference checks, only people who live in the past waste their time on these details.

4. Synergy is over-rated. You don’t have to get along with your business partner. Life is easier when you don’t have to waste time communicating.

5. Work ethic. If your partner works 10 hours a week, from home, and you work 80 from your store or office, that’s fair.

6. Shared goals. Don’t talk about your business objectives. If you want to make a $100,000 and your partner wants to make million, both are pretty good goals. Why nitpick the details?

7. Exit planning is for the future. If your exit strategy is targeted for 2 years and your partner’s plan is for 10 years, that won’t affect anything right now. Stay focused.

8. Energy is more important than experience. Picking a partner who works really hard will make you way more money than picking a partner who works really intelligently.

9. Pick a partner on the rebound. You’re lucky your potential business partner was just laid off or fired. Now they will be focused on your business and won’t be distracted by having too much stability in their life.

10. You don’t need to trust your partner. As long as you double check every single thing that they do, there is no risk to your business.

How To Value Your Business Decisions

As a business owner, you need to quantify the actual dollar value that you represent, per hour, for your business. This information is essential because you will base every decision about workload and responsibility on the result of this assessment.

• Determine the gross annual revenue of your business
• Determine the percentage of this revenue that you generate
• Multiply this percentage times the annual gross revenue and you will have quantified your annual revenue contribution to your company
• Divide your contribution by the number of days you work per year
• Divide this number by the average number of hours you work per day

Example:
• Gross revenue of a small business: $500,000
• Owner generates 80% of the revenue
• $500,000 multiplied by .8 = $400,000
• $400,000 divided by 300 (example of a business owner’s number of work days per year) = $1,333
• $1,333 divided by 10 (example of hours worked per day by a business owner) = $133
• This business owner generates $133 per hour for their business

The importance of determining this dollar value is that this business owner now knows that every hour they are working, they generate $133. Now, if the business owner knows that they are only spending 50% of their time generating revenue, the more accurate representation of their value will be double this amount or $266 per hour.

Every single business decision that this business owner makes should now be measured against this dollar value. Examples:

Hiring:
• It costs this company $266 per hour for the owner to read applicants’ resumes
• If an employee reads the resumes it costs the company perhaps $25 per hour
• It costs the company $240 per hour for the owner to read resumes

Ordering Inventory:
• Owner: $266 per hour
• Employee: perhaps $25 per hour
• It costs the company $240 per hour for the owner to order inventory

As a business owner, list the daily tasks that you are responsible for. Label every task as either RG (Revenue Generating) or D (Delegatable). Create and stick to a plan that optimizes your time and your contribution to your company’s revenue. You will quickly see that you aren’t saving your company money by doing some of these tasks yourself, you are costing your company money. Make smart, informed decisions, your business will live or die as a result of these decisions.

What, Exactly, is Sales?

I define sales as the act of negotiating the transaction between a problem and a solution. There are others who may argue, but they would be wrong.

A customer will only purchase something that they feel provides value. Value is entirely in the eye of the beholder and can take any form imaginable. But let there be no misunderstanding, there must be value or there is no incentive for the customer to purchase.

As a sales person, the goal is to identify exactly what the customer’s problem is. The most common tactical error is to start the selling process by presenting the service or product that you are selling. Without properly engaging the customer and identifying their problem, you have no right to present your solution and assume that they will match it to their problem. More importantly, you have no way to know the value proposition to present because you don’t know what problem is that you are trying to solve.

Take the time to engage your customer; learn what the problem is that they are dealing with. If you do have a solution to their problem, then it is time to present your solution and illustrate the return on their investment. Once they agree that your product or service is the solution to their problem, now the selling begins; it’s time to negotiate the transaction.

The best sales person in the word sells the same product as his or her competitor for a higher price. More importantly, their customer knows that they got good value for their money.

Does a Good Idea = A Good Business

One of the most uplifting and disappointing things about meeting someone with a new business idea is their belief that their idea could make them a fortune. Just to be in the same room with someone sharing their idea and its potential is an uplifting experience. The smiles, the conspiratorial atmosphere, the dreams that follow... But when the rubber hits the road, can they actually make any money on it? Disappointingly: not likely.

Good ideas require business savvy and expertise to translate them into financial success. In fact, I will argue that it has very little to do with the idea at all, but more importantly it is the people behind the idea who will determine the commercial viability of a product or service.

To prove my point, note the following:

• If I ask you to find a small stone, I bet you can do it in under a minute, anywhere in the world

• In 1975, Gary Dahl sold more than $15 million worth of small stones in 6 months (equal to more than $56 million today)

• Welcome to the Pet Rock

Now, think about how many great ideas have not been commercially successful, ideas that provided massive value compared to the Pet Rock, and try and tell me that the person behind the product isn’t the deciding factor.

There are a number of key questions that have to be asked when trying to determine the commercial viability of a product or service:

• Legally, are the rights to your idea available?
• How much will it cost to produce your product or supply your service?
• What is the $ value of your target marketplace?
• How will you connect with this target marketplace?

And the most important question of all:

• Can you make any money?

If you don’t have the skill set required to assess, develop, and close your new business idea, then the most important decision you make will be who you partner with to make your project a success. Each one of the simple questions above leads to a myriad of complex questions which need to be addressed prior to committing any significant resources, time or money, to developing your new business idea.

Spending a little money up front can save you an enormous amount of personal and financial heartache down the road. I much prefer to hear uplifting stories of success from people who did it right than listen to stories of disappointment that end with, “I learned a lot”.

SMEs - Live or Die

A business without revenue growth is an expensive hobby.

In small and medium sized businesses, it is the exception and not the rule that individuals start their business day with the singular goal of generating revenue. Most of the time, people simply pick up the work that they didn’t finish the night before, never stopping to prioritize projects or re-assess the economic reward of their outstanding workload. Occasionally, we encounter individuals who create hard copies of their calendars, ensuring that their unfinished tasks are completed. We have yet to meet an individual, with either a self-imposed or corporately-driven mandate, who begins every single day by prioritizing their scheduled tasks based on the potential of each task to generate revenue for the company. It simply doesn’t happen.

How did we forget why companies were created in the first place; to make money. We go to work every single day in order to generate revenue for our company, which in turn generates revenue for ourselves and our families. Can anyone tell me, for the love of all things sacred, how a small or medium sized company benefits from having its owner or a valuable employee spend any amount of time doing anything other than generating sales revenue? Interviewing and hiring, policies and procedures, cleaning, organizing, random meetings and updates... For all of you who think that duties such as these are a part of running a business, I offer a different perspective.

If the primary revenue generator of a small or medium sized business is responsible for 75% of the overall sales revenue for their business (often this number is closer to %90), and the business generates $250k a year in sales, the following holds true:

• This individual generates $3750 per week or $833 per day
• Assuming a 10 hour workday, They generate $83 per hour

Every hour that this individual does anything other than generate sales revenue, they cost their company $83 an hour. If you are the primary revenue generator for your company, you are not saving yourself money by doing your own hiring etc, you are costing your company money and that is unacceptable. Stay focused and make smart business decisions. Your job and your company will live or die as a result of your business decisions.

When To Fire An Employee

As a business owner, one of the most important responsibilities on your plate is to ensure that every single employee adds value to your company.

I define value as: individuals who generate income for your company or individuals who support those who generate income for your company. For this exercise, imagine that this ‘value’ is binary. Yes or No are the only two options.

An employee is either a positive or negative ‘asset’ of your company. How do you determine which type of asset your employee represents?

• Each employee should have a job description. The job description should include the role and responsibilities of the individual as well as the metrics being used to grade their performance. The employee should not only be aware of this document, they should have signed it. This document is the most important indicator of an employee’s success or failure in their role.

• 360 Degree review. As a performance review tool, these reviews are very effective at gaining feedback on your employees. Each review requires a questionnaire to be filled out by all of the colleagues who work directly with an individual (managers, peers, and subordinates). The summary is presented back to the individual (with all of the comments marked ‘anonymous’). The weakness of a 360 degree review is the required anonymity of the respondents. If the pool of respondents is too small, it will perceived as easy to figure out who made what comment. As a result, individuals are not confident that their feedback will be without repercussions and will withhold criticisms as a result.

• Monitoring of an employee. Keep an eye on your employee, what they are working on and how they perform in their role. The goal is not to micro-manage the employee, rather, the goal is to position your interest as providing support to the individual in order to help them succeed.

These three simple assessment tools can give you significant insight into your employee’s positive or negative contribution to your company. Remember that the scale is binary and there is no room for compassion. If the person provides value, reward them, support them, and develop them. If the individual does not provide value, remove them from your company. Whatever the appropriate action, it will be the best thing you can do to support your business.