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The two most valuable parts of a conversation

Every single day, I see problems that would be solved with better (or any) understanding, speed and an order of magnitude improvement in quality if people would just pick up the phone.

I know, especially the more technical folks out there, you want that cocoon. You want to hide and just create. Some of you might even want to focus rather than hop back and forth between your IDE, Skype, Facebook and so on.

When you’re in that mode, the phone is the last thing you want interrupting you (the interruptions are not necessary but I’ve said plenty about that in the past).

Thing is, if you don’t talk to the customer, don’t watch them use what you create, you’re missing a massive piece of the equation.

They’ll never tell you everything in a tweet, email or wall post. Never, ever. They might be meaner because of the nature of the media, but you’ll never get the whole story. You’ll never see the gleam in their eye or the song (or despair) in their voice in an email or other online message.

Don’t get me wrong – those media are important, but they aren’t as rich as you need at certain times.

Are you “Unknown” or “Blocked”?

Yesterday, I had some work done on the Mrs’ chariot and they called me to tell me it was ready.

Thing is, they called me from a number that shows up on caller id as “Unknown”.

Business owners and those-in-charge-of-telecom – NO ONE wants to talk to whoever is calling when the phone says “Unknown” or “Blocked”, particularly in an election year.

I see this regularly on customer service feedback loops, customer “your (whatever) is ready” and even SALES calls.

If the relationship you have with people requires “Unknown” or “Blocked”, I wonder why you bother to call. You have work to do on your customer relationships.

Want them to answer

Unless I’m missing out on a management secret that involves making phone calls that you don’t want answered (maybe a push poll would count there, but this isn’t a politics blog), your goal should be to get the phone answered by your customer – NOT to have it ignored.

You want to talk to them. Make it easy. Create a relationship that makes them glad to see your name on the caller id.

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Business model Competition Customer relationships Getting new customers Improvement Lead generation market research Marketing Positioning Restaurants Retail service Small Business strategic planning Strategy

How to find their path from new customer to great customer


Creative Commons License photo credit: c_ambler

Last time we started a conversation about growth and left it off with a brief discussion about digging deeper into customer behaviors.

In particular, we were starting to look at the behavioral signals that indicate your best clients or simply the signals that show they’re about to become a customer. Either way, it’s valuable information to have.

To continue from where we finished last time, let’s turn one of my final comments from the last piece into a question: “What behaviors identify a person about to buy?” and “What behaviors identify potential ‘ideal’ clients who are already a customer – but haven’t transformed into that ideal customer quite yet?”

Order history helps

When we’re looking for behaviors that indicate what a great (“fanatical”, to use Rackspace’s lingo) customer is, one place to look is order history.

Your order history is rich in information that can help your detective work on buying signals and customer behavior.

I know, you want some examples of what you might look at. From gut feel, identify your five best customers, using whatever means you use to determine “best”.

Your business may not fit all of these questions I’m about to ask, so look at them in a way understand that they might require a slight adjustment. It’ll depend on what you sell, how you sell it and how rich your product line is.

The questions:

  • How often do they buy from you? In other words: What’s the average number of days between purchases?
  • Does transaction size increase over time or does it shrink over time?
  • Of the customers who buy everything you offer, do their purchase intervals or transaction sizes “look different” than everyone else’s (on average)?
  • If your best customers don’t buy everything, what do they buy that no one else buys? Of those people, study the behavior prior to that particular purchase. What did they ask? What did they buy just before that?

Now…looking at the patterns that these “best” customers have established, what *existing* customers fit the early part of those patterns? These are the customers who are likely to join the “best customer group”. The difference is that you know the candidates in advance.

Not all of them will move into your best customer group, but in watching this process/movement, you’ll eventually learn what behaviors indicate that move.

Interaction clues

Look at your interaction data for each class of customer. When I say “class”, I mean your best customers, your newest customers and so on. You need to look at each because you’ll need to be able to detect a behavior that occurs when a customer moves from one to another.

When they do that, they’re sending a signal. Your responsibility is to act on it.

Interactions include sales and support inquiries, price list requests, orders, email (including subscribes) and the like. Remember “guinea pigs” vs. “guinea pig” from last time? Your most important indicator of “I’m going to be a great customer” could be that subtle.

Interactions and order history indicate future behavior. Your best customers’ behavior is there and shows patterns along the road to “BestCustomerVille”.

Misunderstanding metrics

By now you’re probably wondering about the not-too-standard things that I’m suggesting you observe. What about standard metrics? Where do they fit in?

Standard metrics, like the number of customers you have, the number of leads you have, the number you add each day/week/month, sales this month vs. last month and so on are certainly worth looking at, but remember that they primarily indicate *where you are*, not what you need to do to (re)produce those gains.

What do you learn from knowing that you have 1344 customers today and that you had 912 customers this time last year? Unless you look in the context of what resulted in the net gain of 432 customers, you learn little that allows you to reproduce that gain.

That’s what you want to know and repeat.

A “You are here” marker doesn’t help much if you don’t have a map. The behaviors we discussed are part of the map that shows you the path from new customer to great customer.

THAT is why we’re talking about behaviors. They are the invisible signals you have to detect.

 

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Direct Marketing Getting new customers Lead generation Marketing Pricing Restaurants Retail Sales Small Business Strategy

How to fine tune your pricing

What do you focus on when it’s time to improve profitability?

Sometimes barely twisting a knob can make all the difference.

This 8 minute and 30 second running stride analysis video might be a little dry if you’re not a runner, but the focus on small improvements and 300FPS video to break down opportunities to improve performance inspired me not only to re-examine my stride but to consider it in the context of your business.

Even if you don’t run, the method used to break down the runner’s performance and focus on what would make a radical improvement in his running is worth the viewing time.

You might consider the same type of approach with your pricing, particularly before you offer a discount, BOGO or raise a price.

Small price increase, big impact

Let’s say that you charge $8.99 for a meal at your restaurant. Out of that $8.99, you have to pay our food costs (33%, or $2.97) and your overhead (33%, another $2.97). That leaves a gross profit of 33.92%, or $3.05.

What happens if you raise the price by a dollar?

Your food cost and overhead don’t change. They’re still $2.97 + $2.97 = $5.94. Your gross profit obviously increases by only a dollar, to $4.05. The gross profit percentage increases to 40.5%

Not bad.

Coupon coup…for who?

Now let’s look at what happens if you discount that meal by a dollar like you might do with a coupon.

That cuts the meal price to $7.99. Your food and overhead costs are still the same, $5.94. That dollar discount comes right off the top, reducing your profit to $2.05, or 25.6%

Now what happens if instead of a coupon, you offer a “buy-one, get one” (BOGO) free deal? People love those, right?

Your food cost and overhead double to $11.88, since two meals are involved. Thanks to your buy one get one free deal, your revenue is still $8.99. Profit has gone from $3.05 (33.92%) to a loss of $2.89 (32.1%).

If we change that to “buy one, get one at half price”, your food cost and overhead are still $11.88, but your revenue rises to $13.49. In this case, gross profit is $1.61, or 17.9%. Not a lot, but better than a 32% loss.

Is a one-time drop in profit from $3.05 to $1.61 worth getting those two people in the door? You’d better know based on what these customers will do (as a group) over time.

A plan, not a guess

As we talked about last time, coupons/discounts have to be used strategically. Fail to run the numbers and they can sink you.

Losing money on a BOGO isn’t ideal unless you know your numbers very well and know that over time, that offer will bring you a new, loyal customer who has a lifetime customer value that fits your business model.

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Competition Getting new customers Marketing Positioning Restaurants Retail Sales Setting Expectations Small Business

Do you have (or provoke) Decision Clarity?

Yesterday, I was talking with someone about a ToDo management tool and they mentioned that they dismissed it because it claimed to be “design-y”.

Later that day, someone else mentioned that they didn’t consider a Getting Things Done (Yes, the David Allen thing) software product because “the name was silly”.

These built-in biases don’t do you any favors.

Have you considered that they keep you from considering the best candidate for a job? The best product or service for a need?

How have you built biases into your products/services?

How do the built-in biases of your clients and prospects put them off re: your products and services?

Might be worth considering.

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attitude Business culture Employees Leadership Management Public Relations Restaurants Retail Small Business Word of mouth marketing

Watch your mouth

A good discussion re: vocabulary in a business setting: http://lifehacker.com/5859392/swearing-to-make-your-point-a-tale-of-fk-and-sht

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Automation Direct Marketing ECommerce Internet marketing Marketing Point of sale Restaurants Retail Sales Small Business Technology The Slight Edge Trade Shows

Small business owner: “What’s with these funny new barcodes?”

Ralp Lauren Rugby QR code
Creative Commons License photo credit: mackarus

You may have seen those odd-looking square barcodes in newspapers and magazines, on product boxes, etc.

You might even have noticed them in the middle of the star-shaped signage in some Macy’s television commercials.

They’re called “QR codes“.

Why should business owners should care about them?

A smartphone can scan/read a QR code, which will take it to a specific web site address (URL).

Why use them at all? Who really cares about yet another barcode?

Your prospects and customers do. Some of your websites make it really hard to buy.

For prospects and customers using smartphones, it can be particularly annoying. But your customers don’t use smartphones, right?

Let’s talk about that. Currently, Nielsen (yes, those TV ratings people count other things too) says 40% of U.S. cell phone users use a smartphone.

A web search will tell you that there are 327 million active mobile subscriptions in the U.S. Yes, that’s more mobile subscriptions than there are adults, per the 2010 census. The numbers get a little whacked partly because of the number of people with a personal account/cellphone and a business one (provided to them or otherwise).

327 million is a fairly big number. Too big, maybe. To get a better handle on the numbers, a glance at a 2009 CTIA (wireless telecom industry group) survey of their members report indicated that 257 million Americans have data-capable devices and about half of those are phones. The rest are laptops and tablets. So we’ve reduced the number to roughly half the population, which is close to the Nielsen number.

Again, that’s a end-of-2009 number….BEFORE the availability of iPhone4 (and 4S), iPad and other modern-ish tablets.

Seems to me a number that’s even 10 million smartphones too big would be enough to provoke interest in the experience mobile/smartphone website users have at your site.

So now that you have big scary (or exciting) numbers to think about – particularly if your business deals in retail, tourism and other core business-to-consumer fields – get back to solving “we make it hard to buy” problem.

Important safety tip about using QR codes

Never (yes, never) use your home page URL as the destination.

Reason #1 – QR code users are, by definition, mobile users. Presumably you have a URL that is designed to be used by mobile browser users so they don’t spend all of their time squinting, pinching and spreading (or pressing zoom buttons) to read about your cool new product. If your site automatically senses mobile browsers and changes behavior or reroutes them to pages designed for mobile users, all the better.

Reason #2 – Sending them directly to your home page can make it far more difficult to measure inbound visitor numbers.

Why is that important? Because you want to know how your QR code links are performing by media/by ad/by publication etc. If you have them going to different URLs (web site addresses) such as MyReallyCoolsite.com/QR1 and MyReallycoolsite.com/QR2, then you can figure out their individual performance.

If QR code A works better than QR code B, you have information about the effectiveness of the media, placement and other characteristics of the location of that code. You can eliminate this reason by including QR code specific analytics codes (Google Analytics, et al) in your URLs, but that doesn’t eliminate the most important reason…

Reason #3 – Why did they scan (and hopefully share) that QR code/URL? Because they wanted something specific that they were looking at RIGHT THEN. If I’m looking at a Corvette ad in an in-flight magazine, do I want to go to Chevy.com or do I want to go to the page that describes the smokin’ Vette I’m looking at?

The primary reason to use them

Consider how annoying it is to navigate not-so-mobile friendly sites on a smartphone. Make yours the friendly, easy site for mobile users.

Make your customers’ life easier. Make it easier for them to visit your site, visit the right page and share something about your business that they want to share.

Ask anyone in the publishing business about pass-along numbers. They’re important to readership, so much so that they claim pass-along readership as an asset to advertisers.

Transfer that thought to your website, catalog, ads, trade show materials, demo products and other materials. Do they need a QR code so that people can view/share them easily?

In many cases, I think so.

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attitude Business culture Community Competition Consumer Advocacy Creativity Customer service Entrepreneurs Hospitality Leadership Management marketing to the affluent Marketing to women Restaurants service Small Business

A business problem, not a water problem

Photo credit: Michael Hyatt

When book publisher Michael Hyatt posted this image saying “When you read this at Panera, you know your city has a water problem”, it struck me as a business problem.

Sure, the city might have a problem, but that shouldn’t be your customers’ problem.

Every day, we must adapt to the cards we’re dealt.

Rather than “We are not serving tap water, sodas or brewed tea today” and taking what might be perceived as a political shot at the city (the same one who does their next restaurant inspection?), a customer-centered management team could have called Culligan (et al) to get all the restaurant-approved water they’d need to provide glasses of water and brewed tea.

If you’re Culligan, there’s a win-win there.

Perhaps you can’t easily and quickly alter the water supply for a soda dispensing system, but that still doesn’t require a sign.

A quick look at last week’s sales totals from the register would have told them that they sell 430 sodas per day on average and run over to Costco or Sam’s (or called their normal supplier) for a canned/bottled supply that would span the gap for them.

The next work day, they could consult with their soda mix supplier and explain the situation further, ask for advice on water supply adaptation and then contact their plumber to arrange for a way to feed the third-party water into their soda system. Or they simply could have adapted using pre-mix, though that would probably be too much of an interference to the restaurant’s workflow.

Instead, they chose to sell no soda and no tea (both high profit margin items) and take a shot at the city.

Maybe the city needed a smack, but the place to do that is at the city offices, at a council meeting and worst case, in the local press.

Using your customers as pawns in that game makes for a losing battle, especially when they are standing at your front door with their wallets and purses open.

PS: Interesting that coffee wasn’t mentioned on that sign. Might be because many places use high-tech water filtration systems for their coffee water supply lines. I wonder if a non-franchise restaurant would have reacted the same way.

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Advertising Business model Competition Direct Mail Direct Marketing Email marketing Entrepreneurs Feedback Improvement Internet marketing Management Marketing Restaurants Retail Sales SEO service Small Business tracking

Billboards and plumber’s pants

Drive around long enough and you’ll see a billboard that says “If you’re looking, it’s working”.

I see the same slogan on electronic advertising displays, which can be found everywhere from restaurant restrooms and gyms to billboards.

Is it “working” when you accidentally glance at the back of a plumber’s pants when he’s on his knees with his head buried under your sink? Or when you stare at an auto accident?

A definition

“My ad is working” means “people take action as a result of the ad”. It does not mean “someone with a heartbeat saw the ad”.

“Working” doesn’t always equal spending money, but it does always mean taking action.

After you glance over at that auto accident, if you put on your seat belt…. that’s action. Cause and effect. Taking action.

That’s what “working” means when it comes to an ad.

“But, you can’t track billboard response”

Yes, you can.

I’ve yet to see a media whose usage cannot be tracked.

To be sure, you can’t track how many people read your ad on a billboard or in the newspaper, though you can estimate numbers based on drive-by traffic statistics published by governmental agencies (for billboards) and subscription + newsstand buys + online page views (for newspapers).

The number *reading* your ad isn’t the important number. Sure, if you have a general consumer product, you want to tell as many people as you can, but you don’t go to the bank with “eyeballs”, page views, newsstand copies or cars-per-day.

You go with sales revenue.

What you really want to be paying attention to is how many people took action as a result of your ad, no matter where it is.

You can absolutely track what happens if readers take action, but many businesses don’t. As a result, they’re operating on gut feel, guesswork or a seat of the pants idea of what their ads are doing.

Look at the advertising you’re doing. Are you tracking any of it? If not, how do you know which ads work and which don’t? How do you know which media work (for you) and which don’t? (or don’t work as well)

Just because an ad or media is “free” doesn’t mean you shouldn’t be tracking results.

Start tracking and you’ll start knowing what’s working and what isn’t.

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Blogging Community Customer relationships Facebook Internet marketing Marketing marketing to the affluent Marketing to women Public Relations Restaurants Retail Small Business Social Media Twitter Web 2.0 Word of mouth marketing

Arriving late?

Today’s guest post is for those business owners arriving late at the “social media party”.

For those making an entrance, business-wise, here’s a nice social media startup guide from the NYTimes’ “You’re The Boss” blog.

It talks about restaurants specifically, but the advice is sound regardless of what your business does.

As usual, salt to taste.

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Advertising Competition Influence Marketing Restaurants Retail Sales Small Business Strategy The Slight Edge Word of mouth marketing

Ask them to tell your story

Once it has been pointed out, most people understand that benefits / tangible results do a better job of generating interest in your products / solutions than a dry corporate list of bullet items.

It’s easy for you to say “If you use this, <something> will result.”

Some people will believe you.

More people will believe it when it comes from your customers in their own words, even if you have to prompt them to answer a question.

Give your customers a chance to tell your story.

They’ll often say it better than you do, especially when sharing what they gained from working with you.