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How a great system can help your business and your customers

What drives your pricing?

For many businesses, it’s strictly keystone. Cost times 2 or 3 (or some other number) = retail price.

A friend shopping for his college-aged daughter mentioned two tool kit prices to me. One item has red accents and is priced at $24.99. The other has pink accents and is priced at $14.99. The kits are almost identical, differing only in the box cutter tool housing – and tool handle coloring.

There is one other difference. The red item is not sold in stores. The pink one is not sold online. Not sure about the logic there.

What message does this situation send to the consumer? Is it just a mistake? Does it reflect solely on the vendor cost? Is the higher price intended to drive the customer to buy in the brick and mortar store, where the consumer is likely to find something else to buy?

No matter what the reason…it’s interesting.

Why do I mention this?

Because it reflects on the quality of your internal systems. Systems that are designed to help your customer. Systems that are designed to prevent embarrassment of your business and your staff. Systems designed to help you improve profitability. Systems designed to inform and advise.

A good retail system will identify substitute items when the item you want is out of stock. It might also tell you which store has that item, in the case of a multi-store retailer. It might also suggest similar items at a range of prices and colors – but only those in stock. It might even tell you that the Antarctic Blue Super Sports Wagon won’t be in for another 6 weeks. (props to Jupiter Chevrolet)

What does your system do? Who does it help? Who should it help? How can it be improved?

The items? Right here.

See for yourself at http://www.target.com/p/apollo-39-pc-household-tool-kit/-/A-10230581

 

See this one at http://www.target.com/p/39-pc-genera-l-tool-kit-pink/-/A-14044873

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Business Resources Competition Corporate America customer retention Customer service Employees Leadership Positioning Sales Small Business Software business Strategy

Why clients don’t take your advice

One of the groups of software folks I work with has wisely decided not to support Windows Vista.

Vista was released in November 2006 and while old, it’s not quite half the age of the now-prehistoric Windows XP released in October 2001.

Yet plenty of people still use both. So why is it wise not to support Vista?

In this case, the products involved deal with a complex industry in an enterprise environment.

The software simplifies that industry – a pretty common task for vertical market software. They don’t support Windows Vista because there are a number of issues that are not easily resolvable without upgrading Windows itself – networking problems being one of them.

Enterprises and network problems do not mix well.

These things might not be apparent on the day the product is installed, but you know these problems will present themselves at a less than ideal time. At 4 pm Friday, it won’t matter that the OS is the problem when a pallet needs to go out the door and the software somehow prevents that shipment. It will only matter that the shipment can’t go out. Are they going to blame Microsoft or are they going to blame you?

So how do you sell what looks like a “might, maybe, shoulda coulda woulda“?

Step Back

People aren’t going to take perfectly valid advice when that advice appears to serve them no purpose.

Yet we regularly give it in our context rather than showing the customer the benefits in theirs. We don’t do this because we’re selfish (mostly) but because we tend to forget that our reasons, however valid, are often meaningless to the customer.

Really, it’s Sales 101.

This “you need to upgrade your Windows” conversation was going on with a now-cranky customer in a context that was not meaningful to them, so I was asked to help sell the idea.

My comment went something like this:

Vista “isn’t supported” because Vista’s frequently encountered problems will get blamed on us/our apps and we will be powerless to fix them.

He can use Vista but he needs to be aware that it has a number of issues that are systemic in nature. He may encounter problems that cannot be resolved without upgrading to Windows 7.

Is that the position he wants to be in on Friday afternoon with a shipment on the dock? Is that what he wants to defend to his manager after a shipment doesn’t go out on time?

Microsoft charges $199 for the Windows 7 upgrade. Is saving $199 now worth the possibility of having a late shipment at some random time in the future? That’s really what we’re talking about. We’re trying to save him the embarrassment and cost of a possible failure or shipment delay by encouraging him to upgrade now rather than when he is under time pressure.

What did I really say?

I put it in terms that the customer values: personal accountability and business failure.

One reason for suggesting this change is to prevent a failure that will cost the customer money, embarrassment and/or the loss of their customer.

While this failure might initially be blamed on the software vendor, it’ll eventually come to light that the cause was a “small decision” to skip a $199 Windows upgrade.

What if the delayed shipment is a critical time-sensitive pallet going out to the company’s best customer? If you’re Joe the dock guy, you don’t want Monday’s first management conversation to start with “Joe tried to save 199 bucks which ended up delaying a $45000 shipment to OurFaveBiz and now they’re ticked at us.”

Maybe Joe won’t care that he gets blamed, but right now almost everyone with a job wonders if they’ll have that job tomorrow. Making decisions in the best interest of the company is unlikely to make Joe a target.

What did I not say?

I didn’t pass along advice in a context that benefits the software company.

Upgrading everyone off of Vista provides a benefit to the software business by reducing support that is solely a function of using Vista. While that benefits the customer in a trickle-down sort of way, you really can’t sell that to the guy sitting at the warehouse logistics desk. He doesn’t have any reason to care about it.

What he cares about is shipping on time to the right place.

When selling your advice, be aware that your customers’ concerns aren’t much different than Joe’s. Speak to them.

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Business culture Business Ethics Competition Corporate America Employees Leadership Management Small Business

Stains That Don’t Wash Out

Bacteria
Creative Commons License photo credit: kaibara87

Yesterday, for perhaps the first time in his life, former Superman Lance Armstrong stopped fighting.

As a guy, it’s impossible not to admire Armstrong.

Fighting testicular cancer is typical behavior. When we get that sort of bad news, almost all of us suddenly find ways to do things we never had the gumption to do in all our prior days.

But winning, much less competing, year after year in a sport that punishes the boys like pro cycling does is way beyond typical.

A way of life

Lance has never seemed all that typical, though. He’s fought off cancer, Basso, Kloden, Ullrich and others. These days, he’s focused on helping others fight the “big C”.

And finally, he’s learned that proving a negative is a fight that’s far more difficult to win.

I can’t say one way or the other what Lance did or didn’t do, despite being a little bit familiar with the test results that have been made public. Without a doubt, the act of bailing out of a fight looks bad for Lance. The behavior of the USADA and their CEO looks no better.

Assumptions will cloud the view people have of every professional and Olympic-class racer.

Lance repeatedly tested clean, but he still quit fighting them” is all that’s needed to stain competitive cyclists everywhere. “The USADA had hundreds/thousands of clean tests from Lance, but they just kept chasing him” will be all that’s needed to bring the motives of testing organizations into question. Their authority will be suspect for years.

No matter what the reality is, both behaviors are now firmly seated in the public’s mind as cycling’s norm.

For the wanna-be yellow jersey wearer with Armstrong posters on their bedroom wall, it’s like watching road racing’s version of the Kobayashi Maru, except that this time, Captain Kirk just gave up.

“Did he?” will be the question that likely chases Lance for the rest of his life…the one pursuer that he can’t break in the mountains.

Closer to home

How do you bring this situation back to your small business and learn from it?

Ask Enron. Does anyone you know want to be the next creative wheeler-dealer in the energy business? If not, is it because they have a preconceived notion about what that business *really* does?

Almost everyone can think of a business (or business person) whose behavior has stained an entire industry, even if they were later found to be clean/innocent.

When the accusations are true, they’re often rooted in the smallest decision at a weak moment. A decision that rolls downhill like a snowball, gaining mass and momentum like an avalanche. Enron didn’t start off totally out of control. It was learned behavior that started with small decisions.

Small decisions begin momentum. They lead to bigger decisions. Soon, inertia makes it seem impossible to do what you know you should have done all along. History is full of examples of these things. Talk to your staff about them.

Start by setting the example every minute, every hour, every day. The little things people see will tell them how you deal with the big things.

Don’t be the answer to the question that your industry can’t shake.

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Is there something more important that they could be doing?

Most of us who use computers in our work do so because they relieve us of tedious work or eliminate slow, inefficient, error-prone techniques for producing our work, even if we do have fuss with drivers and hardware failures once in a while.

In the newspaper business, I doubt anyone wants to return to the days of working with sheet film, X-Acto knives and the Gutenberg press.

While it would be fun to create something once in a while using the movable type of almost 600 years ago, do we really want to word wrap by hand, day in and day out?

The computers we sometimes love to hate help us keep track of financials and inventory, they help us communicate with customers, vendors and prospects and so on, but they could do so much more.

Look around the office. Is there someone doing a job on a computer that could be performed by someone with little or no training? Is their work repetitive? Do they have to have distinctive knowledge about your business, your market or your customers to do this work?

There might be something out there (free or otherwise) that could either replace that work or make it far more productive, freeing that person up to do more important value-creating work for your business.

It’s common sense, but we get so busy doing the everyday that we frequently miss the opportunity to ask ourselves how some of those processes could be improved – and it isn’t just about computers.

Your micro economy

The same is true of most repetitive work that doesn’t require knowledge of the market – and the work isn’t limited to “mindless” repetitive things. Some of these jobs simply must exist, but a fair number of them could be done by a system, machine, software or similar – and done at a lower cost with more consistency. Consistency and cost aren’t the only factor. When you have people doing these jobs, those jobs are at risk because they *can* be replaced by a system, machine or software at your competitor – who will then put pressure on you via improved speed, consistency and perhaps better pricing.

It isn’t just about your business being more efficient. It’s about the micro-economy that your business creates being stronger and more resilient. That economy involves you, your suppliers, your employees and/or contractors and their families, your landlord if you rent or lease space, and so on.

When you create a job, it’s a great day. It means many positive things. Yet we want to be careful to create jobs that deliver as much value as possible to our businesses and to our customers. Jobs that CANNOT be easily replaced by the aforementioned system, machine or software.

The easiest way to afford that is to replace the ones that can be replaced. When we do that, we create opportunities for our businesses and our staff. The other thing this does is create jobs that are difficult to devalue. Devalued jobs are too easily discarded because they don’t create enough value. You can’t afford them. They’re “overhead”, not value creators.

Learn from Undercover

In the show “Undercover Boss“, the plot is always the same. The CEO of a large company leaves their office, dresses up like a line worker, does “real work” with their line staff for a week and realizes that their focus on their front line has been lacking.

They learn that the money they think they’re saving by not updating equipment, improving systems and training staff are costing them dearly because they’re impacting the quality of their products, services and/or experience their customers.

The now eyes-wide-open CEO then makes changes that usually involve training, equipment and systems. They see how much time a wasteful process or an outdated piece of equipment costs them as it is multiplied by every person who does that job. It reminds them of something they knew when they got into this business – and what might once have been the difference for them – that the effectiveness of their line employees are critical to their success.

Ask your line employees one question: What would help you do your work better, faster and with more consistency without losing quality?

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How to make it easy for customers to fall in love


Creative Commons License photo credit: MahPadilha

Back in March, I wrote about a lamp shopping experience I had in a local store.

Today, this story in VentureBeat (reminds me of TigerBeat…) and Forbes caught my eye.

It’s about the preferred angle of the MacBook screen on store displays in the Apple Store.

The lamp and the MacBook stories… are about the same topic. Love.

I’ll ask again… Are you paying attention to the things that make it easy for people to fall in love with what you sell?

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Business culture Business Ethics Competition Corporate America Customer relationships Entrepreneurs Leadership Small Business

Profit is not the problem

In Steve Denning’s Forbes commentary this week, he mentions a presentation made by author and Harvard business professor Clayton Christensen decrying U.S. business schools’ focus on numbers-above-all, saying the pursuit of profit is killing innovation and the US economy.

The pursuit of profit is not the problem, nor is profit itself.

What the always interesting and provocative Christensen veers away from (to discuss related issues) is that the problem occurs when the pursuit of profit is taken to the extreme.

I’ll say it again so the naysayers hear me as clearly as possible: The problem is not profit, nor is the problem our quest for profit.

Profit is good. Profit is one of the fuels that drive communities, families and businesses to do more and better things.

The problem occurs when profit is the only value a company’s management uses to decide right from wrong, good from bad, do it from don’t do it.

When that occurs, we end up with exactly what Christensen talks about – and that’s why he called U.S. business schools to task for it.

No numbers?

I do not mean that you should make all your decisions from some touchy-feely “Let’s all sing kumbaya” kind of place.

Remember that I teach all sorts of measurement mechanism for all sorts of things, from internet, to customer retention, to improving direct mail response, to finding your one number and so on. Remember that I talk about finding little things to improve profitability all the time.

Yet you should also remember that in that same context, I do not suggest that these improvements should be found at all costs. Nor do I suggest that you eke out these little bumps in profit at all costs.

There’s no doubt that financial ratios, profit and other financial measures are critical parts of business decision making.

These numbers do not/should not stand alone. It’s likely there will be times where you must focus solely on dollars, often due to short term needs. Over the long term, your situation won’t always be that way and your decision-making won’t always be so focused on the short term.

Christensen’s point is driven home particularly well by the quarterly reports make or break the stock prices of stock exchange listed companies. The nature of quarterly reports encourages short-term decision making. In some cases, shareholder lawsuits reinforce that these short term decisions should be driving the business.

But that is short-sighted.

However…

You simply cannot exclude character, ethics, economic sustainability, community sustainability or consideration of what is best for the customer and your staff from the decision making process and expect things to end well.

When the only thing on your mind is the numbers, the decisions of national retail chains who start their After-Thanksgiving sales at midnight the Friday after Thanksgiving seem downright obvious.

It’s just math, so the discussion leading to a decision sounds like this: “The earlier we can open, the better the chance we can get the sale and the more it’s about us”. Sounds a bit like “How early and then supposedly influential can our Presidential primary become?”, doesn’t it?

Re-read that: “You simply cannot exclude character, ethics, economic sustainability, community sustainability or consideration of what is best for the customer or your staff from the decision making process and expect things to end well.”

I saw a sign in a local store this week (this is not a chain or franchise) saying they would be open at 4:00 am on the Friday after Thanksgiving. Perhaps they are hoping that they’ll catch some traffic heading to (or worse, back from) the box retailers who have midnight to 4:00am openings.

Really? 4 am in a small mountain town?

The Race

Don’t get me wrong. Black Friday shopping hours are just a symptom.

This is about the core fundamental business values being instilled in students today and the importance of having someone in your organization with the gumption to say “That looks great for the numbers, but is this all we’re about?”

Whether it’s said or not said, others will watch this process, learn something from it and model the behavior when they make a decision.

Sometime in the wee hours of Black Friday, I hope some introspection happens.

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Indivisible

Coffee
Creative Commons License photo credit: Selma90

Howard Schultz is doing what few large corporate CEOs have done: Following up rhetoric with leadership, action and money.

While I prefer freshly-roasted beans from local roasters and rarely do Starbucks outside of airports, I will stop in this week in order to support this.

The post title? It’s inscribed on a wrist band you get if you donate $5 to the job creation fund the Starbucks Foundation started.

http://www.reuters.com/article/2011/10/03/us-starbucks-idUSTRE7921M320111003

 

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Box stores Business Ethics Corporate America Customer relationships Retail Small Business Strategy

Being Noble

As you probably know, Borders is now gone. For those like me who live in rural areas, Borders took a chance on our community and many appreciated it.

Earlier this week, Barnes and Noble bought some of their assets. I assumed that Barnes and Noble would do something like this, and I’m pleasantly surprised at how they are handling the assets they purchased.

Classy *and* smart. Think about that when the opportunity to acquire a business crosses your path. I’ve been through this process first hand. How you handle it from day one had better be square. You just picked up a pile of customers who in most cases are total strangers to you and vice versa.

Here’s the email I received.

Dear Borders Customer,

My name is William Lynch, CEO of Barnes & Noble, and I’m writing to you today on behalf of the entire B&N team to make you aware of important information regarding your Borders account.

First of all let me say Barnes & Noble uniquely appreciates the importance bookstores play within local communities, and we’re very sorry your Borders store closed.

As part of Borders ceasing operations, we acquired some of its assets including Borders brand trademarks and their customer list. The subject matter of your DVD and other video purchases will be part of the transferred information. The federal bankruptcy court approved this sale on September 26, 2011.

Our intent in buying the Borders customer list is simply to try and earn your business. The majority of our stores are within close proximity to former Borders store locations, and for those that aren’t, we offer our award- winning NOOKâ?¢ digital reading devices that provide a bookstore in your pocket. We are readers like you, and hope that through our stores, NOOK devices, and our bn.com online bookstore we can win your trust and provide you with a place to read and shop.

It’s important for you to understand however you have the absolute right to opt-out of having your customer data transferred to Barnes & Noble. If you would like to opt-out, we will ensure all your data we receive from Borders is disposed of in a secure and confidential manner. Please visit www.bn.com/borders before October 15, 2011 to do so.

Should you choose not to opt-out by October 15, 2011, be assured your information will be covered under the Barnes & Noble privacy policy, which can be accessed at www.bn.com/privacy. B&N will maintain any of your data according to this policy and our strict privacy standards.

At Barnes & Noble we share your love of books â?? whatever shape they take. We also take our responsibility to service communities by providing a local bookstore very seriously. In the coming weeks, assuming you don’t opt-out, you’ll be hearing from us with some offers to encourage you to shop our stores and try our NOOK products. We hope you’ll give us a chance to be your bookstore.

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Not a nerd? Not a problem.


Creative Commons License photo credit: f_mafra

If you’ve been reading what’s going on in the economy, it seems like a fair percentage of the new jobs that are still out there are going to technical people.

Even today in Silicon Valley, the number of applicants in the job pool for a specific skill are roughly equal to the number of open jobs in that niche.

Meanwhile, local employers here in Montana are telling me they get 100-300 resumes/applications for every open job they post – which isn’t too many right now.

Every day, more and more jobs involve technical knowledge. Even tattoos are technical these days, as evidenced by the ink on this girl’s neck.

It’s html, the language used to create web pages.

Technical people

When I say “technical people”, I mean programmers, engineers and similar folks.

While some of the work these folks do can be outsourced, the work that isn’t tends to require local cultural context that isn’t often available to the technical person in another country.

Cultural context means a knowledge of the culture of the target market for the product you’re designing. Some products require it, some do not.

For example, an electrical engineer in almost any country or region of the world can design a cell phone component because “everyone” knows what a cell phone is and how it’s used.

The same isn’t always true when the design target is something in the cultural context of a particular area.

If you are in the U.S. or Canada, would you know the important aspects of designing a motorized trike designed for the streets of Delhi or Shanghai? Probably not, unless you have traveled extensively and spent time in those places.

That doesn’t mean you can’t learn those critical design points or someone from that region can’t learn those specific to work in the U.S. and Canada, but there is a learning curve.

Not all jobs require that context. Quite often, when you look at the jobs that have been outsourced, you’ll find that those jobs were lost because those jobs *can* be outsourced.

That doesn’t mean they aren’t technical. It simply means that they are technical but anyone with the skills can perform them – no matter what culture they grew up in.

Lots of people get really angry about that, just like they got angry at steam engines, the cotton gin and other advances that changed how our economy works. Meanwhile, that outsourced job went to some guy in somewhere who’s trying to feed his kids like everyone else. He might be making $1.10 a day doing that work, but it could be twice his previous pay.

Regardless of what the pay is, that’s a job that COULD be outsourced. Technical or not, it’s too general.

I received this (redacted) email from a friend today who has forgotten more enterprise network stuff than I’ll ever know.

So now I have another big contract.

These guys build big infrastructure for municipalities and large facilities. Perfect shovel ready stuff for millions of dollars and several years putting America back to work.

My job …. getting a working solution that allows them to move the technical work to a big city outside the US. Seems those folk need the work a LOT more than their counterparts who happen to be in, of all places, a city here in the US).

This is not the first time I have had a project where the purpose was to move American jobs overseas but it sucks more and more each time.

Add the that the fact that the Sr. Management team for this company is amazingly draconian with amazing bad morale and it proves that some people truly have just about sold out to the highest bidder.

The technical work being outsourced here is highly technical, but it is also generalized. It has no local context that matters, has nothing substantial to differentiate it, nothing to keep the work from being done elsewhere, whether elsewhere is Kansas or Kazakhstan.

Not a nerd

What if you aren’t “technical” in the context I’ve described here? Let’s say you’re a cabinet maker (which to me seems very technical).

Have you made the effort to determine what needs these specialized businesses have? Their success and their specialized needs might fuel yours.

Just an example, but worth some thought and perhaps, some effort.

Not being outsourced is as much your responsibility as anyone’s. Make the effort.

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attitude Business culture Business Resources Competition Corporate America Creativity Customer relationships Entrepreneurs Management Positioning Small Business Strategy

Becoming the Easy Button

downhill
Easy – like going downhill.  Creative Commons License photo credit: Mikelo

Ever made life difficult for internal customers?

Oh, I don’t mean intentionally. Really I don’t.

Last week, I was talking to a friend who works for a large multi-national corporation.

The conversation reminded me about corporate culture, something I’ve mostly missed out on since my Electronic Data Systems (EDS) days. That was the pre-GM, pre-HP, Ross Perot era, if you’re keeping score.

He reminded me of situations including those where you can often get an outside vendor to provide a service faster, better and cheaper than an internal corporate division that was built and funded to provide those very same services to co-workers.

It also reminded me how easy it is to understand (logically, at least) how companies can lay off thousands at a time.

Thousands. Sometimes tens of thousands.

Think about the financial, cultural and emotional impact on a community (or communities) when that occurs, not to mention the impact of those workers on their employer’s financials from a return on investment perspective. Did they make themselves irrelevant?

Ouch.

What’s your corporate pleasure?

Your small business might specialize in the type of work that a corporate person needs from their internal division – but can’t get. That work might be hydrology, remote sensing or language translation, and I expect that your business is likely do a better job than a corporate division or department that is supposed to take care of those services for their company.

Sometimes “better job” means “we actually deliver the service”. Sometimes it means more than that.

The internal customer goes out on the open market and finds cooperative, hungry vendor, beats them up on price (perhaps), sets a deadline and then has the audacity to expect on-time delivery.

All of that happens faster and with far less hassle than dealing with the internal department designed to do this work for the company.

It’s not hard to see how profits could be hard to come by when there are whole buildings full of people making life difficult for their colleagues.

Instead of pushing the issue and making a stink within their management food chain, those colleagues get the job done because they need the job done sooner rather than later.

They don’t have time for “Dancing with the Stars” style management politics.

They don’t need a five week wait, a nine meeting approval process, an internal purchase order and the signatures of 12 people to get an engineering report delivered.

They just need the work done – effectively, the What-You-Do version of the Staples “Easy Button”.

Divide and Conquer

One thing I always found interesting (if not amusing) was the widespread acceptance of  “small” $2999 (or some similarly “almost the next big amount” number) corporate credit card payments.

At some levels of management, corporate card holders can spend up to some amount of that nature every month without purchase orders, without RFPs, without any other massive paperwork and they can buy TODAY.

IF, that is, you are willing to accept split payments over a few months so that this person can get the work done rather than spend all their time writing proposals, reviewing bids and greasing the finance committee.

To be sure, some spending abuse occurs when this happens, but most of the time, it happens because the grind to get things done through channels is more work than the work you actually want to get done.

The point of mentioning this is to make sure that your corporate clients are well aware that you offer this sort of thing as a payment option.

The corporate buyer’s responsibility is to get things done. Internal purchasing policy hassles make for a poor excuse to upper management. Fixing those hassles is management’s job, so it is ironic that they will find them poor excuses.

Regardless, your direct contacts have things they need to get done. Help them do so.

The Employee Shoe

If you’re the corporate type, one thing to be very careful of here is that the treatment you get as an internal customer doesn’t negatively affect your work with your external customers.

Sometimes it’s hard, but I can tell you this – if you think and work like a business owner rather than as an employee, you’ll be the one who benefits in the long run.