Posts Tagged ‘service’

Pilot, Perfect, Scale Up

Tuesday, February 26th, 2013

You have to change what you’re doing now in order to grow your company.Change what you're doing to grow your business

That’s unavoidable – and it means taking risks.

But some changes are less risky than others.

For example, how much risk do you take selling a well-proven product or service to new customers? And how does that compare to, for example, investing in a new promotional campaign?

Let’s talk about that promotional campaign for a moment because lots of business owners have had a bad experience with one.

The challenge is that you have to spend money getting someone to create a new message which will get your prospective customers to do something you want.

The risk lies in the fact that the business owner has to pay for the new message and for getting it out there before they know if it will have the desired result.

But this is not entirely true.

You don’t have to pay for a full promotional campaign before you know if it will work. At the very least you can narrow the odds of failure and limit your investment.

How? By following a process called “pilot, perfect, scale up”.

For example, you can test as many variations of the message as it takes, on a small group of customers, until they see and hear what you want them to see and hear. That’s the piloting part.

Then, instead of emailing the message to everyone, you first send it to part of your database and check they are getting the message and, if necessary, make further changes. That’s the perfecting part.

Only when you’ve done that do you scale up and launch the campaign to everyone.

The same technique can be used for developing (or adding) new products. Pilot them by testing the concept and then the prototype with a few potential customers. Use their feedback to modify and develop your original idea.

Then roll it out locally. If there are unforeseen problems, you can perfect the new product/service by either shipping them back or getting support people out to customers relatively quickly and inexpensively.

Scale up by going for a regional or national launch only after managing the risks by taking the first 2 steps.

You can apply this process to almost any change or risk you have to take to grow. For example, want to:

•    Grow your retail business? Get one outlet running profitably by perfecting the systems and documenting the processes there. Then transfer them to other, remote locations. (Not exactly my idea, see Michael Gerber’s “The E-Myth”.)
•    Add new markets? Do it in increments rather than by put everything on the line by overstretching.
•    Hire a consultant? Give them a small project and see how they do with that before giving them the big one.

This seems so simple, so fundamental you may wonder why I’m even writing about it.

It’s because we continue to see situations where “pilot, perfect and scale up” should have been used and wasn’t.

 

If you enjoyed this post you’ll also enjoy Cop Out Or Common Sense?

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Ask 5 Questions To Find Out What Customers Want To Pay

Tuesday, September 18th, 2012

I’m a Scotsman and happy to admit that I fit the “cost-conscious” stereotype that sticks to people from the country of my birth. In fact my friends call me “the canny Scotsman”.

While I’d hardly say that pricing strategy is my favourite part of what we do, I keep an eye open for anything that will give us – and our clients – an edge in that area.

That’s why a blog post about how to find out what customers will pay caught my eye.

The author, Rafi Mohammed, is a pricing consultant and he says that it’s as simple as asking your customers. My first reaction was that they won’t tell the truth. Human nature being what it is, it would be only natural for them to give a “low ball” answer.

But, as with so many things in life, it turns out that it’s not so much what you ask, it’s how you ask it.

Rafi suggests that, rather than ask the question directly, say that you’re carrying out a customer satisfaction survey. Tell your customers that you’re trying to understand what they like about your product or service so that you can serve them better in the future.

Then include these 5 questions in a series that probes general customer satisfaction.

1. “What competitive products did you consider buying?” If the answer is “none” then the customer is not price sensitive and you may have room to increase price. I think that, at worst, the answer will tell you who else your customers are looking at – a valuable piece of intelligence in itself. But, in this economic climate, I don’t think there are many companies that don’t consider alternatives.

2. “What do you think of our prices – are they too high or too low?” The logic is that some customers will clam up when asked this question – but that others will give a lengthy answer. Listen to the second group carefully, without probing any further, and then move on.

3. “What other features would you like added to the product/service?” I really like this question. The information you gather can be used to offer different versions of your service e.g. Silver, Gold and Platinum. It will also tell you what your customers would be willing to pay a premium for – fuel for the development of your next version of the product or service.

4. “What do you like and what don’t you like about our pricing strategy?” I like open ended questions like this. Everyone can find something to say, so the question gets people talking. And lays the groundwork for more probing.

5. “Are there other ways you would like – or even prefer – to buy our products?” This is the kind of question that – 9 times out of 10 – will produce an unsurprising answer. But that lone surprising answer, when it does come, could shake your current assumptions to their core.

If you want to read more, the blog post is called How to Find Out What Customers Will Pay.

By the way I’m not at all bothered being lumped into the Scottish stereotype. In fact I think being called “canny” – a term we Scotsman invented – is a compliment. The Pocket Oxford Dictionary defines it as “shrewd and cautious; worldly-wise; thrifty.” How can that be bad?

If you enjoyed this post you’ll also enjoy Prices – 6 Reasons To Keep Them Up.

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Things Really Good Consultants Say

Thursday, April 5th, 2012

I am so excited!

There’s an absolutely fabulous article on the Inc. magazine web site. Okay, everything they publish is good. But this article is way up there.

The point the author makes is that consultants who get results and deliver a great service say certain things while they are pitching for business. Business owners who listen for them can dramatically reduce their risk when selecting or hiring a consultant.

Why am I excited? Because we say these things all the time – we really do!

Here are my favourites.

1.    “I don’t know.” Why would you say anything else? The client is going to figure out that  you don’t know what you’re talking about sooner or later.

And we’re not in business to learn at a client’s expense.

Consultants should only offer services in areas with which they’re intimately familiar (no I won’t use the “expert” word, I dislike it intensely). That’s because they’ve spent a long time acquiring skill and experience in the topic. And they’re still learning and staying up to date in the field.

Our field was originally strategy development and execution. To that we’ve recently added succession planning

2.    “You can do that on your own.” I’m going to meet a client later today and tell him just that. Why? Because he has the expertise to complete some of the project steps in house.

I appreciate it when the people and companies I deal with try to save me money. Why wouldn’t our clients feel the same? And the time that we save by taking this approach we spend looking for things that truly only we can do.

It’s also our policy to bill out at the rate of the person who does the work. So if we use support staff to complete a task, we bill it at their rate, not mine.

Yes I’m a Scotsman but I like to live up to my name as the “canny Scotsman”.

3.    “I still don’t understand the requirements.” I’ll risk appearing slow to understand at the front end of a project to avoid risking missed expectations at the back end.

Despite the number of years I’ve been in business it never ceases to amaze me how quickly and easily misunderstandings occur. One bad assumption about what was meant can lead to great frustration – and damage to our reputation.

So, if there’s any room for misinterpretation it’s better to ask a clarifying question.

4.    “We’ll want to come back later to see how things turned out.” The challenge for our profession is that the consulting assignment could be finishing just as the real work is starting.

Call me nosey but, while some consultants will walk away at the end of the project, I want to know if the work we did produced results. That’s as important for us as it is for our clients.

If we’re not getting results we won’t be in business long. And I’d like a lot of warning and an opportunity to do something about it before that happens.

We offer review meetings as an option for our strategy development and strategy execution services. Even if the client opts not to use us to structure and facilitate those meetings I’ll often ask if I can sit in for part of one and listen.

The article which caused my state of advanced excitement is called “8 Things Great Consultants Say” and it’s written by Jeff Haden.

I think he’s really hit on 8, if not the 8, differentiating factors of really effective consultants.

So what do you think? Want to share some experiences?

If you enjoyed this post you’ll like Why You Need A Consultant With Hands-On Experience

Click here and automatically receive our latest blog posts

Things Really Good Consultants Say

I am so excited!

There’s an absolutely fabulous article on the Inc. magazine web site. Okay, everything they publish is good. But this article is way up there.

The point the author makes is that consultants who get results and deliver a great service say certain things while they are pitching for business. Business owners who listen for them can dramatically reduce their risk when selecting or hiring a consultant.

Why am I excited? Because we say these things all the time – we really do!

Here are my favourites.

1.    “I don’t know.” Why would you say anything else? The client is going to figure out that you don’t know what you’re talking about sooner or later.

And we’re not in business to learn at a client’s expense.

Consultants should only offer services in areas with which they’re intimately familiar (no I won’t use the “expert” word, I dislike it intensely). That’s because they’ve spent a long time acquiring skill and experience in the topic. And they’re still learning and staying up to date in the field.

Our field was originally strategy development and execution. To that we’ve recently added succession planning

2.    “You can do that on your own.” I’m going to meet a client later today and tell him just that. Why? Because he has the expertise to complete some of the project steps in house.

I appreciate it when the people and companies I deal with try to save me money. Why wouldn’t our clients feel the same? And the time that we save by taking this approach we spend looking for things that truly only we can do.

It’s also our policy to bill out at the rate of the person who does the work. So if we use support staff to complete a task, we bill it at their rate, not mine.

Yes I’m a Scotsman but I like to live up to my name as the “canny Scotsman”.

3.    “I still don’t understand the requirements.” I’ll risk appearing slow to understand at the front end of a project to avoid risking missed expectations at the back end.

Despite the number of years I’ve been in business it never ceases to amaze me how quickly and easily misunderstandings occur. One bad assumption about what was meant can lead to great frustration – and damage to our reputation.

So, if there’s any room for misinterpretation it’s better to ask a clarifying question.

4.    “We’ll want to come back later to see how things turned out.” The challenge for our profession is that the consulting assignment could be finishing just as the real work is starting.

Call me nosey but, while some consultants will walk away at the end of the project, I want to know if the work we did produced results. That’s as important for us as it is for our clients.

If we’re not getting results we won’t be in business long. And I’d like a lot of warning and an opportunity to do something about it before that happens.

We offer review meetings as an option for our strategy development and strategy execution services. Even if the client opts not to use us to structure and facilitate those meetings I’ll often ask if I can sit in for part of one and listen.

The article which caused my state of advanced excitement is called “8 Things Great Consultants Say” and it’s written by Jeff Haden.

I think he’s really hit on 8 (if not the 8) differentiating factors of really effective consultants.

So what do you think? Want to share some experiences?

3 Times When You May Need To Change Your Strategy

Thursday, February 2nd, 2012

We all do things that are crazy.

One of my things is telling people that they shouldn’t be changing their strategy.

I do it when business owners – or CEOs – say things like “It’s time for our annual strategy meeting”. The implication – for me at any rate – is that they change their strategy every year.

But that would be just plain wrong.

Changes to a well thought-out, well-crafted strategy shouldn’t be driven simply because it’s been in place 1, 3 or 5 years.

A strategy shouldn’t necessarily be changed even if it isn’t producing results. In this situation I always look at how well (or badly) the strategy is being executed before I look at the strategy itself.

So when should a company review its strategy? And what makes that review and any subsequent adaptation, revision or recreation necessary?

Here are three occasions.

1.    When the company has outgrown its strategy.

There’s research which suggests that companies can “plateau” when they achieve certain levels of revenue. Depending on the industry those levels are around $5 million, approx. $10 -12 million, somewhere between $18 – 30 million and so on.

Typical symptoms of “plateauing” are upward spikes in revenue which can’t be maintained, increasing lead times delivering the product or service, decreasing levels of customer satisfaction and higher employee turnover.

The plateauing occurs because the things – e.g. strategy, processes – the company has done up to that point in its life can’t support any more growth. It’s like expecting a teenager to fit into the clothes they wore when they were eight.

To rekindle growth the owner either has to change the strategy, the way it’s executed – or both.

2.    Significant internal change.

This occurs when, for example, a company develops a game changing new product or service or finds a new way of doing its existing business. This gives it an edge over its competitors by e.g. reducing costs or increasing efficiencies.

To reap maximum benefit from this new competitive advantage the owner will have to adapt or change the existing strategy.

3.    Significant external change.

In this case the owner or CEO has to react to e.g.:

  • A competitor who is taking advantage of a significant internal change.
  • The industry “maturing”. In other words the business has been around long enough for a number of competitors to have become large enough to e.g.:
    • Reduce their costs and pass this on as reductions in the selling price or,
    • Buy up smaller players who introduce game changing technology or process improvements. This is also known as industry consolidation.
  • Major changes in e.g. the economy, labour pool, legislation governing the industry, or all of the above.

Continuing with a “business as usual” approach under any of these situations is clearly not going to be effective.

To be fair, when business owners and CEOs say “It’s time for our annual strategy meeting” they usually mean that it’s time to start the annual business planning process. That is something that must be done every year.

And, since we have services which can make the annual business planning process more effective, perhaps I’m not as crazy as I look – I mean sound…….

If you enjoyed this you will also enjoy 2 Things That Cause Bad Strategy

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2 Key Questions Every New Product Must Answer

Friday, June 10th, 2011

1. It Failed!

Everyone can think of companies – large and small – that have committed resources and spent money on new products/services only to fail.

Does anyone remember Sony’s Mini-Disc or the Apple Newton? Then there are those high profile classics New Coke and Crystal Pepsi.

How do large, credible organizations make mistakes like these?  And if they can do it, what chance do smaller, owner managed companies, with significantly less resources, stand?

2. Here’s A Reason Why.

One reason for these lapses is that the team members making the key decisions (who often spend most of their time in the company’s offices not in the field) believe passionately that the idea is going to work. That’s because, when you’re close to something it’s easy to become convinced you’re right. And when you feel that way you tend to push on regardless.

Maybe their research was faulty, or maybe they just didn’t do any.

Or maybe they didn’t take the time to take a step back and ask the question “What role can our product/service play in the market?” before committing resources to the initiative.

That’s not just a marketing strategy question – it’s a business strategy question. Because if it’s a bad idea and it fails, money and other resources that could have been deployed elsewhere are wasted. And the reputation of the company as a whole – and the people backing the project – is damaged.

3. Products Have To Earn The Right To Exist.

A company’s new products have to earn the right to exist. They do that when the answers to the following 2 questions are “Yes!”
• Do the products provide value that is perceived to be unique compared current offerings?
• Can they generate sufficient revenue, profit and cash to be sustainable?

As a business owner you can find the answers to the questions in a couple of different ways.

The first is by posing them in the early discussions about the products. Finding the answers will generate a lot of the information that will be required to assess the target market, develop a marketing mix, complete financial forecasts and weave them all together in a business case. So it’s hardly a waste of time!

The second is to wait and look for the answers when the business case has been completed.

4. The Important Thing Is………

Both approaches have their advantages and disadvantages. The important thing is to choose one and use it.

If you proceed without answering the 2 questions then you are taking unnecessary risk with your money and other resources – and your reputation.

Physician Heal Thyself

Monday, September 13th, 2010

We’ve just finished the business planning session for our fiscal year which started 1 Jul 10, using the same tools and processes we use with our clients. But it’s so much easier when you’re telling someone else what to do.

The first thing was that we were late getting started. So we immediately broke one of our own cardinal rules – get next year’s plan in place before the end of the current fiscal year. This is something we preach relentlessly to the business owners we work with.

We had done all of the regular quarterly reviews of last year’s plan giving us, under some circumstances, a pretty good starting point for this year. For about a nano second I was tempted just to roll things forward.

But last year was our best year ever and the business had grown in some interesting new directions. Also, we hadn’t taken a look at our 5 year goals during the quarterly reviews. Rather than break another rule, we decided to do a full analysis and went through the lot – target market; competitive evaluation; product and service offering; pricing strategy etc.

So we set some dates on which we’d work through the steps – and then proceeded to change them, pushing them out. Well, I heard myself say, we can’t let day-to-day operations slip, there’s client work to be done; we can’t miss those deadlines. And a little voice asked “Hmmm, where have you heard that before?”

While we were figuring out where we had to be in 3 years’ time that voice in my head was back. At first I couldn’t believe it – that can’t be me. But it was – I’d slipped from consultant into business owner mode. I had to have a stern talk to myself – “Come on Jim, be realistic, where’s your objectivity?”

Going through the gap analysis and figuring out what had to be done was relatively easy. But when we got to prioritization and looking at the investments we had to make I actually broke into a cold sweat at one point.

Then I thought – I’ve done this dozens of times, what’s the problem; this isn’t nearly as difficult when we do it for other companies! The answer was really simple – it was my baby (I mean company); it was my future (I mean retirement plan); it was my money we were risking (for those nasty investments).

To make a long story short, we finished the planning process and identified 5 strategic initiatives I am convinced will take us to the next level. The action plans are in place and being worked on even as I write this. We made some minor adjustments but we confirmed again, from our own experience, that the process we use with other companies works.

And I promise to be more understanding with other business owners in the future!

Prices – 6 Reasons To Keep Them Up

Monday, November 23rd, 2009

Some of the questions which I get when I finish a seminar, workshop or webinar inevitably involve price strategy. It’s a topic close to my heart (I am a Scotsman after all) and one that provokes strong emotion amongst most business owners. And that’s interesting really, because most buyers typically rank price around 4th in their list of buying criteria.

Price is important only when the product or service being sold is a commodity and very few products actually are true commodities (can you think of one right now)? Large consumer goods companies spend millions on advertising to convince us that some products which are commodities, really aren’t. (Does it really make a difference if you buy gas from PetroCanada or Shell?)

But it probably isn’t necessary for the average business owner to cut prices, offer discounts or to spend a lot of money on advertising to get customers to pay a price which enables them to make an acceptable profit. In fact here are 6 reasons why you shouldn’t be discounting or cutting prices.

Reason # 1. There is no business that doesn’t have the potential to command an acceptable price for its products or services if it is able to market those products or services in such a way that the customer perceives added value. If you don’t believe me just think about the difference in price between a Lexus and a Hyundai – they’re both just a means of transportation. Tip Top tailors and Harry Rosen both sell men’s clothes – but don’t wait for Harry to have a $199 sale before buying your next suit!

Reason # 2. As business owners it’s our job to create the perception that our products and services offer superior value and to back that up with superb service. How do we do that? One way to begin is to figure out who your best customers are (they buy regularly and never complain about price) and ask them why they buy from you rather than from someone else. But don’t ask them to rate the reasons you think they buy from you, ask them to tell you what they consider is important and then ask them to rate your performance on those. Then you can figure out what makes you unique in their eyes.

Reason # 3. Two easy ways to add value are to really understand what’s going on in your customers’ business and how your products impact their success; then pass this information on to your staff and train them to provide what your customer will see as great customer service. (Of course maintaining the quality of your products, and doing regular customer satisfaction surveys won’t hurt either.)

Reason # 4. Remember if your gross margin is 30% and you reduce price by 10%, sales volumes must increase by 50% to maintain your initial profit level. For some reason we’ve come to believe that offering price discounts is a good long term strategy. If you still believe that consider the problems that the North American car manufacturers have created for themselves with, for example, “Employee Pricing” campaigns. Or think about how hard it was for the Bay to get away from “Bay Days” or Sears to stop their “Scratch and Win” promotions. You’re right, despite saying they were going to stop them they’re both still doing them. Once you’ve dropped your prices it is very difficult to get them back up to previous levels.

Reason # 5. Price discounting works in only two situations – where you have a definite cost advantage over your competitors and/or your product or service is one where customers are genuinely, truly, price-sensitive. We’ve already dealt with the price sensitive case and if you have a cost advantage why would you pass the entire extra margin on to consumers rather than investing some of it maintaining your technological or other advantage? Let’s face it, you aren’t in business to simply match the price your competitors set, you are here to serve your customers well and make a profit.

Reason # 6. Remember, if your gross margin is 30% and you increase your prices by 10%, you can sustain a 25% reduction in sales volumes before your profit is reduced to the previous level. Research shows that roughly only 15% of customers think in terms of price. They are better left to your competitors because they will never be satisfied and will always be looking for a better ‘deal.’ Their loyalty is impossible to achieve and they’ll never recommend you to anyone else. Focusing resources on servicing this ‘low’ end of the market won’t sustain the future growth of your business through either your turnover or profitability. It’s far better to work with those people who are happy to pay for value.

If you don’t believe my math or that customer surveys don’t have don’t have to be expensive or if you just want to know the date and location of my next seminar drop me an email

6 Tips for Managing in Recessions

Sunday, July 26th, 2009

Despite what the media suggest, the recession will not lay waste to every company and household in Canada. Some will be seriously affected and my sympathy lies with them. However, for most of us the impact will be bearable. We know from experience that there are things you can do to mitigate, even minimize, the impact of a recession and articles containing tips and suggestions are already becoming quite common. Here are 6 of what I consider to be the most valuable ideas from the articles I’ve read recently.

Tip # 1. The best time to look for money is before you need it, so make contingency plans now. Do a spreadsheet analysis of the impact of a 5 or 10% decline in sales on your cash flow. Go and talk to your Bank, they’re tightening their terms and restrictions already but they will work with you if you’re a good customer. It’s also a good idea to build a relationship with a second Bank, if you haven’t already done so.

Tip # 2. Look inside the company for cash, for example….can you renegotiate payment terms with your suppliers to avoid borrowing money to pay them? Or will they give you a discount for cash payments? Can you trade off extended lead times, less than 100% fill rates, variable (but not unacceptable) product or service quality against price reductions to improve your gross margins? Sell off unproductive assets, aggressively discount and sell slow moving (i.e. almost dead) inventory, don’t let your Accounts Receivable extend their payments.

Tip # 3. Don’t Lower Prices – Add Value. Avoid the temptation – and pressure – to cut your prices. It will be almost impossible to raise them again later. Either launch a de-featured version of your current product or service and attach a lower price point to that. Or talk to your customers and find out what they need to deal with their challenges and find other ways to “add value” to your current offerings without inflating the cost.

Tip # 4. Don’t make deep cuts to headcount. Letting good employees go can have serious long term effects. You immediately lose the investment you made in training and developing them and you lose an employee whose strengths – and weaknesses – you know. It’s also not uncommon to find that an employee you’ve laid off carried far more knowledge about the operation of the company in their memory than you had realized – and didn’t write it down before they left. There are always some employees who are not pulling their weight. If you have to let anyone go, release them.

Tip # 5. Don’t make deep cuts to promotional activities. Resist the temptation to reduce your promotional budget. If you’ve spent money to create awareness you’ll lose the benefits of that investment if you stop or dramatically reduce your expenditures on, for example, Trade Shows, Advertising and Sponsorships. Look critically at the response rates for your promotional activities and freshen the message or switch dollars from one tool to something more effective – but don’t make deep cuts to the total dollars.

Tip # 6. Help your employees cope. Watch for signs that your employees – particularly the key members of your team – are having problems coping with the recession personally. Everyone makes bad decisions occasionally and, given the easy access to credit of the last few years, many people have overextended themselves. Help them find the advice or counselling they need to deal with their temporary problems. Don’t solve their problems for them – but support them while they do it themselves.

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