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Friday, February 26, 2010

Business Information: Check your source

Pay attention and be mindful of how you get your information. As our grandparents have said, “Don’t believe everything that you hear, and half of what you see.” With this simple, yet straight forward admonishment, I want to delve this week into watching more than the numbers with your business. My daughter has been studying about atoms at school and it can lend us a lesson. That big solid paperweight sitting on your desk turns out to be made of billions of atoms. According to Micotrends, this is the ultimate way to conceptualize the true micro trend. It reminds us to not miss the tree, because of the forest.

Here is an example. When President Clinton was elected into office, it was the general theme that “It’s the Economy, Stupid!” The basic idea was that the economy was horrible, and there were no new jobs being created. Once November statistics from 1992 came out, the period showed actual growth. Attitudes prior to the election had been stirred to be quite negative in a time of actual growth. The public was sold on the idea of doom and gloom based on “the forest has a problem” message when in fact their own personal tree was probably not doing so badly.

I bring this fine, but significant point out as we begin to emerge from the recession. The reminder is to check your attitude. At risk of sounding like a bad scene from “The Office”: Attitude is Amplitude. Cliché, but true. The challenge is to collect your information from multiple sources to include your own instincts as you move into 2010.

According to Robert Guest writing for the Economist, we are indeed emerging from the recession, and many companies will do so leaner and stronger. Households will emerge leaner as well. Not surprisingly, consumption patterns are predicted to continue to change in response to the slimmer side of buying patterns. Though the United States will continue as the biggest economy, over-stretched American consumers will no longer drive the world economy as before. Expansion bent markets will continue to look to China, Brazil and India for growth. This will push trade issues directly to the front, and the risk of a protectionist sentiment may arise. We have seen governments work together to contain the global financial crisis, but will they do so when it comes to trade? We should take a moment to think about the impact of this if China decides to stop lending us money. Hmm… Compound on this the harbinger of rising taxes as a method to ease budget deficits and the ultimate affect on not just corporations but business owners, and you can perhaps agree that now is a time to REALLY pay attention.

We have discussed in previous articles here that there is a growing distrust of government and big corporations. Think about the impact on the bottom-line when consumers retract further from spending due to a “pass through” tax that makes its way from the corporation to the consumer in the form of price increases. This should certainly stop us and make us think as it creates serious concern of back sliding into recession again with an economy that looks like a “W” instead of a “U”.

The challenge is to stay informed and to take control of the controllable. One big controllable is in fact your attitude as mentioned above. Would Vietnam please come to the front of the class? Again, Micro trends research shows us that much of the success of Vietnam in recent years is due to their abject optimism. Gallup World surveys show that 9 out of 10 Vietnamese Citizens state that this year will be better than the last. (Greece was the most pessimistic, edging out Iraq.) We would be wise to recognize the distinct differences between Capitalism and Democracy as presented by Vietnam. According to author Mark Penn in Micro trends, doi moi is the secret. Doi Moi is a series of market based reforms designed to stimulate the Vietnamese economy. Their constitution (Yes! They too have a constitution!) was amended to guarantee equal treatment for state and private companies, and eliminate bureaucracy. While all is not perfect in a country that we still view as an “Authoritarian” state, that rate of economic progress is still stunning in a country that has been so very war torn, and speaks to the serious entrepreneurial force that has brought it to this path. A quick look in our own towns of Fultondale and Gardendale will give us strong examples of the burgeoning nail shops that our Vietnamese friends own, and manage.

Take some time this week to seek out information as it pertains to your National, State AND local political decisions. It will impact your business sooner or later, so jump in there now and get involved.

And remember, take care of your customers, or someone else will.

Tuesday, February 16, 2010

Customer Loyalty

The essence of marketing isn’t about goods and services. It isn’t about selling. It isn’t even about profits or beating the competition. It’s about developing a relationship with customers so that they will grow loyal to a company’s goods and services. It’s about developing trust between customers and the firms from which they purchase goods and services. Let’s face it, getting and keeping customers is an expensive endeavor. The average U. S. business loses half its customers in five years. Generating a new customer costs five times as much as keeping a current one and firms pay a steep price when customers stray to other brands. In a slow economy, creating unsurpassed value for a customer so that they stay with you is even more important. Contemporary Marketing, Boone & Kurtz, p. 3.

How do we keep our customers? An important trend in marketing planning is relationship marketing. Relationship marketing looks at customers as equal partners in the buyer-seller transaction. When this process works the way that it should, what you see is a motivated customer entering a long term relationship in which they repeat purchases and buy multiple brands from the same firm. This allows marketers to get a more clear understanding of their customer needs. This intern leads to better customer service and improved products. The end result is increased sales with lower marketing costs.

You can develop an intentional approach to retaining customers by cultivating your relationship marketing plan. Your plan can be centered on some straight forward strategies such as routinely offering small, but noticeable, favors for your customers. Fulfilling orders early, upgrading software before it is requested, thank you notes, calling customers when sought after items arrive in the store, answering the phone with a person instead of an automated system, all of these are just a few ideas of an intentional strategy to understand and manage your customer preferences. Don’t stop there. As we have discussed before in this opinion, empower your first line sales people or service representatives to creatively add value, boost referrals, and create retention. Think about how you feel when you go to your favorite restaurant and ask for “YOUR” waiter or waitress; the one that really takes care of you, and makes your visit unique.

An important measure of relationship marketing is the “lifetime value of a customer.” This refers to the revenues and intangible benefits such as referrals and customer feedback that a customer brings to the seller over an average lifetime, less the amount the company must spend to acquire and service the customer. In keeping with our restaurant theme for example, let’s suppose that a customer eats at O’Charleys in Fultondale twice per month and spends $25.00 each time over five years. That business translates this calculation to revenues of $600 per year or $3000 in five years. When the business owner then subtracts out the average cost for labor, food, and overhead, she is left with a per-customer profit. This type of information helps the business owner to focus on drivers to enhance the customer relationship, control marketing costs and ultimately lead to increased sales.

Bottom-line is this: If you have an infinite stream of potential customers you can probably keep them happy only once and perhaps still grow your business just fine. But, if you are like the rest of us, a strategy to include some relationship marketing strategies that will keep your customers coming back could really help to drive your sales, fine tune your customer service, decrease your marketing cost and sell a good bit more.

Remember to take care of your customers or someone else will.

Saturday, February 6, 2010

Trends in Business Continue

I have truly enjoyed the last few weeks searching for information concerning trends in business that are driving our undercurrent of change. In my search for more information, I was able to attend a lecture this week by Frank Luntz, noted Political Pollster and Communications Professional. Mr. Luntz was the key note speaker among several noted speakers at the Business Council of Alabama 2010 Health Reform Update. Luntz has been called the Poll Czar by Fox News, and his research tells us what Americans are REALLY thinking. While the presentation by Mr. Luntz focused heavily on the health industry, I find his ideas to have far reaching relevance to many areas of business. Luntz has conducted much respected research that is helping us to better understand the hopes and fears of Americans. As the saying goes, “Seek first to understand, then to be understood,” and it holds particular relevance in today’s fight to stay competitive.

According to Luntz, what customers want is to RESPECT the company that they buy from today. Stretching this idea further, loyalty to corporations and governments has declined to such a degree that it is imperative that it be regained. How do you do this? A good start may be found in seeking ways to regain respect of the employee and the consumers. According to Luntz, the directive to company leadership should be to allow the customer to feel more in control of the buying decision. Alternatively, it is important for the employee to feel a sense of ownership in the decisions that drive business. A sense of control on the part of both the buyer and the seller is the bedrock to building trust.

This is a tall order given that consumers are expressing serious frustration with corporate America where CEO’s continue to give themselves big bonuses while they lay off people. In Luntz research he states that only 22% of people favor Corporate America, and even fewer at 15% favor CEOs. He positions that the employees view of the company, not just the consumer is at risk. According to Luntz, employee trust in employers is gone. They have grown to resent the stock options, year end bonuses, and golden parachutes that are funded by employee layoffs, wage freezes, and benefit limitations. Government does not escape this ire. Issues with healthcare remain in play in spite of a solid lack of support by American voters. Pundit Dick Morris states this morning that the bill is highly likely to get passed anyway. Astonishing! Makes you wonder who is really listening.

As companies continue to reinvent themselves for the coming decades, much of the work and energy toward branding and identity creation may want to pull from the work of Luntz. Taking a lesson from his first book entitled, “Words that Work: It’s not what you say, it’s what people hear,” Luntz encourages businesses to focus on opportunities to exhibit social responsibility and accountability, as well as measureable results. He encourages us to be mindful of our word choice and to say what you really mean to be best understood. For example, we should say “free market”, “not private.” Say words like performance, not bonus and profit. Use words like lawsuit abuse, not tort reform, prevention, not maintenance and health, not healthcare. You get the picture. Words mean something and people are listening as well as watching. Consumers want to buy from a business that has more in mind than just the bottom line. Employees want to work for a company that has more in mind than just the bottom line. Communities want leadership that is accountable and responsive and interested in more than getting reelected. Consumers are expressing a desire for companies and government leadership that can do it all. They want to work for companies that make quality products that they can afford without causing loss of jobs and without excessive wasteful spending. They want to live in cities where leadership keeps them and their children at the forefront of decision making.

Can it be done? Time will certainly tell, but there is a trend emerging from the frustration with corporate America that may be driving the growth in Stay-at-home workers. This trend represents a 23% increase from 1990, and 100% increase from 1980 in the number of people who work at home. This doesn’t include the estimated 20 million people who work from home “sometimes”. What is allowing this exodus from corporate America? According to Micro trends, the primary reason driving work-at-home is because you can. Blackberries, cell phones, videophones make the home office nearly indistinguishable from the office. Think about it, does it really matter if you take that conference call from your office at work, or the Starbucks around the corner? Besides, when you work from home, you feel more in control, more like the boss, and closer to the day to day decision making and challenges. Hey, you may just become the very boss that you were complaining so much about!

And remember, take care of your customers, or someone else will.