Your systems should focus on your clients

Do your systems serve your internal customers or all of them?

By internal customers, I mean your accounting department, the staff on the shipping dock, customer service representatives, sales people and so on.

Systems that serve your internal customers do things such as accept, validate and record orders, track commissions, automate shipment notifications, manage inventory and a multitude of other things necessary to make sure that orders for products and services are properly fulfilled.

These systems (investments, really) serve your “real” clients as well, but in many cases their service to the client is indirect. I say indirect because your client rarely sees this service, even though they benefit from it. These systems enable your staff to serve your clients, keep track of where their package is and keep track of the fact that they’ve paid their bill. That’s service they benefit from – even if it is indirect.

Clearly, these investments are valuable. My assertion is that these systems don’t often focus on the client’s needs, even though they ultimately serve that client.

For example?

You knew I’d have an example or two.

You’ve probably seen a cryptic medical bill at some point. These bills have improved vs. the bills of five or ten years ago, but they could still be easier to read. Focusing on client needs might mean making the effort to create a customer-focused bill where info other than the total amount due is intelligible to the patient and their family.

A recent cold snap snuffed the battery in my wife’s car. When I went to replace it, I had to take it to a different store in the national (but locally owned) chain where I buy auto parts. Because the store’s systems are focused on internal customer needs, they were able to see inventory in stock and tell me which stores in the area had the battery I needed. While that’s useful information to help me get a new battery, it fell short of the staff’s needs and my own.

Unfortunately, they had no way to access my purchase information from a few years ago so that they could provide the appropriate discount on the new battery, since the old one expired during the warranty period.

The last time I bought a battery from these guys, they calculated the discount from the date on the battery (ie: the month and year that are picked off at the counter when the sell it to you). This time, that date was considered irrelevant. Further, I was scolded for not having a three year old receipt (which I probably have, but haven’t found).

I asked for advice to avoid this in the future, since I was used to the prior system where the pick-off date on the battery was what the trusted. The guys at the counter suggested that I tape the new receipt to the battery so that I’d have it next time. It seems like a good idea, but tape plus battery plus Montana weather times three or more years tells me that reading that receipt might not be so easy in the future.

Where’s my warranty discount?

The discount was trivial and really isn’t the point, but the situation provides a good example of a business system that primarily serves internal customers. The store that sold me the new battery has the ability to check inventory of the store where I bought the old battery and get a part from that store – both of these features primarily serve internal customer needs. A missing internal customer need that would also serve the external customer would allow store personnel to confirm a purchase at another store in the chair, as well as track the purchase for warranty purposes.

You’ve seen this before. Pharmacies are able to track prescriptions at any of their stores and refill them in any other store even if the original was called into a pharmacy thousands of miles away. To be sure, there are laws covering the record keeping of these purchases, but they could make it much more difficult to buy in the second location than they do.

Why do they buy from you?

The point is that your clients have a choice. If your internal systems make it easier for your clients to buy, redeem, refill, obtain service, and buy again…. they’ll likely buy from you.

Create a truly meaningful guarantee

Does your guarantee provide value and eliminate risk for the prospect, or does it simply give their money back?

While giving their money back is often seen as an ideal guarantee, the fact is that while it’s the easiest effective guarantee you can make, it’s also the least common denominator.

Does your business reputation depend on least common denominator service? I suspect it doesn’t.

Least common denominator?

A least common denominator is like a best practice.

The term “best practice” implies something only the best companies employ, but the reality is that there’s so much focus on best practices that they’re often the average.

“Average” because these best practices are what most businesses do. The truly best practices of the best companies are often unseen to most other, or they’re simply not recognized as something that provides a substantial competitive edge.

These things don’t have to be expensive or mind-blowing. They simply require seeing your business relationship with the customer from their perspective. One example is being mindful of opportunity cost.

What about opportunity cost?

While a money-back guarantee does eliminate the client’s obvious loss-of-investment risk, it doesn’t take into account their opportunity cost – the cost to them of your inability to deliver.

Protecting the client from lost opportunity isn’t part of most guarantees, but it should be part of yours.

Let’s look at airline flight guarantees to understand why.

If you book a seat on a plane for travel to a critical face-to-face meeting and the plane is late for reasons other than severe weather, the airline may reroute you, book you on a competitor’s flight or worst case, get you a hotel room for the night so they can try to get you to your destination the next day.

What they won’t do is compensate you for missing the meeting, even your late or non-arrival is entirely their fault. How would they calculate what to pay you, assuming they could afford to?

If you miss a meeting due to air travel issues and this ultimately costs you $20 million, do you expect the airline to cough that up because you bought a $400 plane ticket? Only the narcissistic would have such expectations.

All the airlines can really offer is a full refund in the form of a future flight, a flight on their competitor, or to ask you to be patient while they work to eventually get you to your intended destination.

Even if the airlines sold “guaranteed travel” tickets at a much higher price, the logistics of delivering a guaranteed service would likely make it unprofitable for them.

Given the possible reasons that a flight can be late, it’s understandable, so why does the lack of an opportunity cost guarantee come off as weak in your business?

Create a truly meaningful guarantee

Most of you don’t have the logistical issues that airlines have, so you can offer a guarantee that deals with lost opportunity cost without a huge expense or effort. All it takes is some thought, action and follow up.

That’s why not protecting a client’s opportunity is weak.

If you own a local hotel, there will be times where you can’t fulfill a reservation. Plumbing leaks. Power fails. Stuff happens.

If you have an arrangement with nearby competitors, a bed and breakfast and a few airbnb hosts, you can avoid leaving a guest out in the cold. While it might not seem like a big deal to you, these things have a way of happening when the prospective guest is an influencer on Trip Advisor, or worse, a travel writer with two million Facebook likes and a cable TV show.

The same thought can go into guaranteeing carpet cleaning, car rentals or whatever you do. Take away the investment risk like everyone else, then wrap the opportunity loss in bubble wrap.

Go to the bullpen

When a pitcher throws so many pitches that they “lose their stuff”, managers call the bullpen for a pitcher with a fresh arm.

That’s what customers want. They don’t want excuses. They just want whatever you promised. Your job is to figure out how to deliver that even on your worst day, or when your pitcher has lost their stuff – whatever that means in your business.

To a client, an appointment or a reservation is a promise – and often that client has made promises based on the one you made them.

Who accepts the risk of buying from you?

free
Creative Commons License photo credit: Amanda Nicole Betley

If you don’t accept the risk and responsibility of a purchase, the customer automatically does.

How does that hurt your ability to get a product or service into the hands of someone who very much wants or needs it?

Consider these thought processes that might be going on in the mind of your prospective customer:

If I buy this and it doesn’t work out….I’m going to have to take the hit for this purchase decision from the big boss. I can’t take that risk because I’m due for a review next month and I really want a raise/a promotion/to keep my job.

If I buy this and it doesn’t work out…my spouse is going to blame me.

Are they going to take care of me when the bloom is off the rose (ie: after they have my money)?

Are you going to take the risk of explaining this purchase to my spouse if it goes south? Or am I still on the hook?

Or will you simply guarantee what you sell in a manner that eliminates risk as a concern in the buyer’s mind?

Sales are lost every day because the apparent risk is too high when compared with the trustworthiness of the salesperson, their company, the manufacturer backing the product, or the service provider.

While we signal that with little things that say and do, our guarantee and our history in backing it up goes a long way.

Who accepts the risk of buying from you?

Do you offer a recession anxiety warranty?

Fed Up
Creative Commons License photo credit: Furryscaly

Remember the outrageous 7/70 bumper-to-bumper warranty Chrysler introduced back in the early 1980s when they introduced K-cars?

At the time, Chrysler’s quality problems were front and center reasons to avoid buying their cars. Likewise, major car manufacturers limited long-term warranty coverage to the engine and powertrain (ie: transmission, axles and such).

Iacocca came up with the “outrageous” warranty to get people past the quality question so they would  give Chrysler’s cars a chance. He knew the warranty was only good to get them INTO the cars – they’d have to meet their quality goals or that warranty would bankrupt them.

High Anxiety

While the warranty was a big change for car owners, the main purpose was to provide a little anxiety release. To get you to realize that Chrysler’s quality had changed, so much so that they were willing to cover *everything*, and thus, you could trust them to buy their vehicles.

Obviously, it worked. The K-cars saved Chrysler (for the time being, at least) and they paid back the then-controversial billion dollar loan (guaranteed by Congress) in 3 years, rather than the required 10.

It should be noted that Iacocca says much of the reason to pay the loan off quickly was to get the Feds out of his business. No question there is lots of controversy about the 1979 bailout / loan guarantee and the terms that went with it, but that isn’t the topic of the day.

Fast forward to today – when you wouldn’t dream of buying a car without a very-long-term bumper-to-bumper warranty.

So what does your business do in an environment of high buyer anxiety?

Remove the anxiety

Hopefully the obvious answer is to remove it.

Back in the Granite Bear days, we found some buyer anxiety issues cropping up. The few people who would ask for a refund would do so right at the deadline date. In almost every case, we found that those were also the folks who hadn’t started using the software yet. They were worried they’d be stuck with it and having not tried it, the obvious thing to do was ask for a refund.

One of our solutions was to extend our 30 day money-back guarantee to 60 day and then to a whole year. As I’ve noted before, some people thought we were nuts and would give back tons of refunds on day 364, but that ignores the reason people bought business management software in the first place – to manage their business and save them time. Who in their right mind would invest a year into integrating software into their business (and vice versa) and then toss it out the door on a specific day? That’s nuts.

In our case, we knew that if they really *used* it for a year, they’d never ask for their money back. We were right and it made a huge difference in sales, despite seeming like an insane thing to do. Our upfront costs of sales and implementation were mostly buried by day 30 (and definitely by day 60), so it made no difference whether we gave back the software on day 60 or day 364.

We also implemented other things that got them moving right away – another guarantee. Do you have specific guarantees for different parts of your business?

Recessionary buybacks

Recently, you’ve seen a number of major car companies offer to buy your car back if you lose your job – and that’s after they make several months of payments for you.

Hyundai started it and several other manufacturers felt the pressure to follow suit.

As I hear it, one very dark economic area’s local Hyundai dealer had their best weekend *ever* after corporate started offering these deals.

Something else that tells you about people in a recession: They aren’t all broke. If the buyback changed car buying behavior of a large group of people – did it also put a bunch of money in their pocket?

Of course not. Clearly they had the ability (and desire) to buy, but their anxiety about the future kept them from buying.

Your turn

In my case, I guarantee my marketing / strategic planning work.

Some people suggest that I’m nuts to do that. I might be nuts, but that has little to do with the fact that I’ve never been asked for a refund.

Meanwhile, it’s a huge differentiating factor because almost no other consultant guarantees their work. They either don’t have the confidence in their work, or the gumption to hang that guarantee out there – likely for fear that someone will use it. Maybe that even tells you something about the work product they provide from a strategic perspective.

Someday, someone might ask for a refund. Even if they do, it’s a great anxiety reliever for every other client – regardless of the economy.

What are you doing to take your clients’ anxiety off the table (or reduce it substantially) and get them from thinking to taking action/buying?

Bad apples make you taller, thinner and better looking (until Dec 1 2009)

Sir Millard Mulch
Creative Commons License photo credit: rick

One of the things I’ve always counseled you to use in your marketing is testimonials: carefully chosen things your customers have said about their experiences using your products and services.

On Dec 1 2009, that changes a bit.

In some ways, it’s a good thing. It’ll make almost all those lame infomercials edit their fake testimonials.

In others, it’s a bad thing because it will punish (or frighten) good businesses by making them think they can no longer use testimonials or that the ones they can use have to be gutted.

Neither is true.

A great testimonial addresses…

…a common sales objection.

Getting a testimonial – particularly a strong, believable, honest one that directly addresses a common sales objection – can be difficult. Not so much because they are hard to get, but because people don’t always like to talk about their use of a product/service. A lot of that depends on what it is.

Not everyone understands what kind of testimonials are truly valuable. When people tell you they love the product or that they love working with you and your service is wonderful, those are nice and heartwarming comments, but they aren’t strong testimonials.

One type of strong testimonial states specific results, such as “We’re up 70% in same month, prior year sales after working with Mark to improve our marketing over the last 3 months”. That’s a good testimonial, and it’s (naturally) the exact type of thing the FTC doesn’t like.

Why? Because it states specific results that might be 100% factual for one person (or 100, if you have that many), but it still doesn’t mean that every single Joe Blow can achieve the same results by simply falling out of bed in the morning.

If everyone who buys your product can’t typically achieve a documented, 100% factual result stated in a testimonial when THEY use your product / service, you will have a problem using that testimonial EVEN IF 99% OF YOUR CUSTOMERS NEVER USE IT.

Isn’t that grand? “Lowest common denominator” comes to mind.

As you likely assume, these regulations came about mostly because of the bad apples out there. So be it. Let’s get to the details.

Bad apples beware

The new FTC regulations that take effect on December 1 2009 that will require you to be far more careful about the testimonials you use.

Quoting the hard-to-believe results of one highly-motivated person and then saying “these results are not typical” is no longer sufficient. You have to state typical results that your customers get when using your product or service. If those turn out to be difficult or impossible to achieve, expect the FTC to come calling – and not for dinner.

If you haven’t already done so, you need to check your marketing materials TODAY for any claims that – no matter how real and accurate – are not typical.

You can see the FTC-issued guidance on this at http://www.ftc.gov/opa/2009/10/endortest.shtm

This applies to bloggers, advertisers of products/services and many others, so I strongly suggest you give it a look. It’s not a game. Regardless of what party is running Washington, these folks seem to revel in making examples out of business people to ‘send a message’ to everyone else.

Sometimes, these things come down very unfairly. Don’t let it happen to you.

More details from the FTC are available here.

Be gone with you, Debbie Downer

Now that we have the “Debbie Downer” stuff out of the way, there is some good news in this because it does punish the slime in your market along with the good guys.

Several things come out of this, but one thing is clear – it makes measurement all that much more critical to your success.

If your product or service can somehow anonymously document what it does – easy for some products and services, almost impossible for others – you will be ahead of the game.

A lot of this applies to software businesses and those with automation in their products / services – but if testimonials are important to your business, measurement might become essential across your entire product line.

Implement results measurement into your products and services. Not only will it help your product / service, but it will help you sell them to those who REALLY need them AND it’ll be the evidence you need to prove the results of typical use.

NO, I’m not a lawyer. If testimonials are central to everything you do, I strongly urge you to consult your attorney about these regulations.

Meanwhile, you should be measuring results. Imagine what will happen if your products / services can prove to your customers what they are doing for them (and what they are not).

That’s why we’ve had this measurement conversation for years prior to the FTC forcing it upon you.

In a nutshell, the FTC is making some modifications to how US firms, and those advertising in the US, can use testimonials.

It’s no longer good enough to point out that the results mentioned might be exceptional. If you use results-based testimonials or case studies, you also have to tell the viewer or reader what the typical results are that your customers achieve using the product.

This is tough for physical products, such as weight loss programs and the like, but it’s doable. It’s damned near impossible for “how to” products.

The reasons are pretty simple: Most people buy them and don’t do anything with them. Others add or remove processes, or do various things really well or poorly. All of that affects results, and makes it incredibly hard to describe “typical,”

even if you can get people to tell you their results.

Getting them to tell you what they achieved can be a tough row to hoe to start with. Many people are embarrassed to tell you they did nothing with it. Others overstate their results out of pride, or as a means to get more credibility. Some will understate them, to keep attention away from their successes.

None of this has any reflection on the product, or the truth of the advertising involved. It’s a matter of record-keeping and regulatory compliance that may prove beyond the capabilities of many information publishers.

The power of measurement

Despite Chris’ assertion that information wants to be free, some of it just isn’t. Sorry.

In fact, some information is worth far more than the paper it is printed on (or the pixels it lights up).

For example, imagine that your company publishes technical articles. Short, sweet, fine-tuned to a specific purpose for a very specific audience.

The trick is making money from them, so maybe you’ve found that the best way to do that for your company (vs all other models) is to charge for access to your publication.

The Wall Street Journal does this. So does Investor’s Business Daily, as do a number of publications (online or print) in technical fields like auto mechanics, programming and FOREX trading.

Prove it

One of the biggest challenges these firms have is proving their publication’s worth at renewal time.

When renewal time comes up, or the charge appears on the credit card bill, the customer thought process goes something like this:

Come on, why should I pay $300 a year for a technical investing article resource when I can find everything Google has indexed for free?

The answer these businesses might commonly respond with include some of these:

  • Because it’s well-indexed so you can quickly find the exact trading info you need.
  • Because it has a search engine that understands investing terminology so you can quickly find exactly what you need
  • Because our publication is fine-tuned to the audience’s investing style (or whatever). It’s as if it was written solely for day traders with between $4200 and $6500 to trade per day.
  • Because it includes proven step-by-step guides for trading without losing my shorts (pun intended).

All of that is warm, fuzzy but not so exciting.

#3 and #4 aren’t bad but #1 and #2 are Google’s domain. They get better at it every day and paying you for it is going to get less and less likely unless you are much, much better at it in your specialty area.

I got your proof right here

Bottom line, almost all of that is pretty subjective. Bean counters (and spouses?) want hard numbers: “Why do you need this?”

Why not let them tell you?

If your article instructs them and provides them with a skill or offers a way to discover a new technique, make sure your feedback mechanisms (on the site or whatever) allow a way to say “Dude, this article saved me 2 or 3 days of struggling with this task”.

And yeah, it’s a lot like a Digg or a reTweet, but it’s more accurate than that.

The mechanism that works for you might need to be a number they can type in, or it might be a radio button with selections like “Waste of my time”, “Saved me maybe an hour”, “HUGE, DUDE. This got me back on track after a week”.

Whatever it is, it provides them with a way to tell you how much time, money, etc your information, your service, your product, your help saved them.

Think about where you could go with that info, even if it is largely anecdotal and not scientifically defensible.

If you have 100 clients and they (on average) provide feedback via a mechanism like this that says you save them 112 hours per year, seems to me that your prospects might want to know that information.

It also seems like it would be a great way to totally defuse the “your price is too high” argument (and maybe a number of others).

It might tell you how outrageous you can make your money-back guarantee. If it’s 30 days but it should be a year or 5 years, these numbers will give you some insight into it.

Who knows, you might even find out that your pricing and your value proposition are in vastly different places.

3 guarantees that will grow your business

One of the places where you don’t see a lot of creativity in is guarantees. Yet they are one of the least expensive ways to market your products and service.

In a world where it sometimes seems that there are only two guarantees (that death and taxes thing), it’s a great way to stand way out in front of the dont-get-its in your market.

A guarantee serves one purpose to the client: it eliminates the risk that holds a buyer back just before they purchase. The expense of providing an incredible guarantee is extremely cost effective. Yeah, cheap.

Why? Because a small minority of people will use them – and more importantly, if you are really doing your job – they’ll rarely be used.

Your goal: To perform so consistently that your guarantee rarely gets used.

Not getting used is the real focus of a guarantee, but you may not be thinking of the reason why: it’s a great motivator to get your business to reach the levels of performance that you want to attain.

No good customer really wants to use your guarantee. It simply serves to protect them in case your service and products don’t match what you promised. 

So here are 3 guarantee ideas to use as seeds for your new guarantee:

Guarantee #1: For big ticket items (a fridge, furniture, and similar), guarantee that delivery will be on time, within a 1 hour window, or their delivery is free (assuming it isn’t already) plus you’ll buy the customer dinner for 2 at a nice local restaurant as an apology.

Result: Forces you to organize and streamline your delivery scheduling and execution. Tells the customer that they aren’t going to get that “sometime between 8 am and 5 pm on Tuesday” delivery promise.

How you turn it into more than a guarantee: Talk the local restaurant into co-oping the dinner expense. They want customers. They can get 2 dinner customers one time, split the cost of the dinner with you, and if they do things right – they have customers for life. You save a little money, the restaurant gets 2 new customers. Win-win.

Guarantee #2: The big audacious one year money back guarantee on something that no one else guarantees for a year. Yeah, I know. That little guy sitting on the left shoulder. He says they’ll never return it in a year, so what’s the point.

The point is that they can return it for a year, not that they will. It doesn’t matter that 98% of those asking for a refund will do so within 30 days. 

Result: More sales due to less risk. This guarantee is particularly effective on products and services that are normally guaranteed for 30 days but might see the bulk of their return for 60. If you raise yours to 60 days, your competitor would probably follow suit. If you raise it to a year, they’ll think you’re nuts and they’ll never realize what happened

Guarantee #3: Guarantee the intangible thing that no one else will: Peace of mind. “If you don’t feel that our product has made your family/life/business more comfortable, more pleasant, more successful and less hassle-filled, we want it back.” Your wording will probably need to be different than that, but that should  get the idea across.

Result: Forces you to remember what you are really selling. You aren’t selling a will or estate planning, you’re selling peace of mind, knowing your clients’ kids will be . You aren’t selling tax preparation services, you’re selling peace of mind, knowing that the IRS isn’t going to catch you goofing up your return because a real pro prepared it. Remember Michelin and the baby. They aren’t selling tires. They’re selling safety for that family and their baby. The sooner you remember that, the better off your business will be.

I’m curious to hear from you about this: What’s the best guarantee you’ve seen? Why did it motivate you to trust and buy from whoever offered it?

How to make a guarantee say “Buy me NOW”

Several months ago, we talked about businesses that could study the chaos going on at the airport – specifically in the security line – and create a business in short order.

Of course, you could also reinvent your business by doing what Targus and other laptop case manufacturers are doing: Making a security-compatible laptop case to cure one of the most annoying parts of passing through TSA security checkpoints.

Yep, taking the laptop out of your computer bag. I’m not sure which is more annoying that, or taking off shoes. You tell me.

As the NY Times article referenced above notes, one of the risks that the bag makers face is that some yahoo decides that they don’t care if the bag is implicitly TSA-approved, all laptops must come out of their bags.

Anyone who has seen what happens at a checkpoint when a traveler tosses the TSA’s rules back at them knows that its a great way to miss a flight, much less win a free body cavity check.

So what does the bag manufacturer do to combat this obvious sales objection?

If they’re smart – they’ll include a Buy Me Now feature in their warranty.

For example: “If the TSA forces you to remove the computer from our bag, even after opening it on the xray machine belt, we’ll buy back the bag, no questions asked.”

It’s risk reversal 101. Remove all risk and the client is more likely to buy.

Quite often, once they buy, they’ll have no regrets. Getting them past that point with a great guarantee is your job.

Craft a great guarantee. One that says Buy Me Now, not one that says “weasel clauses ahead”.

Many would be tempted to worry about the refund rate. I suggest that you test it at first. My experience has shown that you’ll find that refunds may climb a little.

However, the volume of increased sales that result because of your “Buy Me Now” guarantee will more than make up for the increased refunds.