I am struck by how often a good product or service will be the victim of its own success. Scaling a business is challenging, no doubt, but I am amazed at how often companies abandon the principles of their early days in order to scale.
I recently tried to build a eBay store for a client. It had been awhile since I had built a store, and I was surprised at the number of changes that had taken place. Most were for the better, including a streamlined and intuitive interface that adds a layer of consistency to product listings, features which help sellers filter through the ever-multiplying pages of products.
What stopped me in my tracks was the onerous burden that had been placed on Sellers. The client had been paying for the store for 3 months when I was able to get their products up, but no sooner had they appeared when the account was suspended pending verification. A long process ensued, whereby we were stuck trying to decipher the cryptic suspension notice and what to do next. All the product listings were immediately removed (an hour lost there), and there was no immediate way to rectify the situation.
Interestingly, the email did not provide a phone number to call. We were instead directed to a webpage, which didn’t answer any of our questions, and ultimately led to a convoluted process whereby we had to request a PIN to call and reach someone.
After sorting out the problem (we needed to provide ID to verify my client’s identity), we faxed in our documentation and waited. 48 hours later, we were still waiting, so I called eBay back. The reason there was no response: it takes 72 hours to scan all the faxes they receive (or so they say). When I asked why they weren’t digitized automatically using technology that dates back about 25 years, the customer service rep said no, they print and scan every one. Why does that seem like it can’t possibly be true?
Forgetting How You Became Successful
I can understand why these processes are now in place. As eBay has grown, the opportunities for fraud expanded exponentially. Despite constituting a small percentage of listings, a sheer volume of fraudulent auctions creates enormous headaches. Reducing fraud is an admirable, and important objective.
The problem occurs when you place the burden squarely on the people who create the market in the first place. ID checks, puny monthly sales limits, and long wait periods to get money from Paypal all add to a rather miserable customer experience. If eBay had started this way, it would have died an anonymous death 6 months after launching.
Don’t let Success Steamroll Your Values
I’m sure Pierre Omidyar and Jeff Skoll never envisioned a site where sellers were forced to endure security checks more lengthy and bureaucratic than a National Security clearance badge. I imagine they would be mortified at how the site has taken on a grossly inefficient apparatus that serves to stifle growth of the site.
In an era where 5 minutes gets me a listing on Craigslist for free, why would anyone endure the hassle and cost of using eBay? For some products, it is clearly worth the effort, and the global marketplace cannot be rivaled. I use it to buy electronic parts constantly, and I would be the first to admit that it is a wondrous place for niche items you can’t find elsewhere, no matter how large a city you live in.
So here we wait, hoping we can get the products up next week. The experience has left a bitter taste, not only because of the messy, inefficient, and maddening bureaucracy, but also the inevitable and inescapable feeling that they just don’t care. I’ve heard 29 ‘sorry for the inconvenience, Sir’, but not one person has tried to actually fix the problem. When you start supplying customers with empty apologies and outlandish excuses, like the print and scan every fax excuse, you’ve lost your way.
For those running your own small business, remember that it is the values you hold most closely that your customers will respect you for. Betray those values, and you risk eroding your business from its very foundation.
I love working with small businesses. I really do. The people I’ve met over the years have been amazing – inventive, creative, thoughtful, and above all, hard working.
Which is why I shed a tear inside every time I call a small business and someone answers ‘Hello.’ Just ‘Hello’. Nothing else. Nada.
I find this particularly applies to tradespeople. My estimate is about 15% of small business owners or employees answer with a sentence that identifies them or their business. Worse yet, about a quarter answer with just a ‘Yes’, or just their first name, barked out in an annoyed tone.
If you are one of those people, even the odd time, can I please please please implore you to change your ways. I really want to know I’ve reached Al’s Appliance Repair, or Steve’s Superior Painters, or Mike’s Mechanics. Really, I do. I really want to avoid asking ‘Is this Phil’s Phone Technicians?’ – it makes me feel awkward, and probably makes you think ‘Of course it is – who do you think you’re calling?’
By identifying yourself properly, it is a win-win situation. I know I’ve called the right number, you take the pride in announcing your business. We both start off the conversation on the right foot and get down to business.
The Importance of Phone Etiquette
While my introduction applied to my experiences with tradespeople, I have noticed that business professionals have similar afflictions. And don’t get me started on younger folk – I actually had this exchange with a job applicant:
Applicant: “Yeah.”
Me – “Can I speak to Steve, please?”
Applicant: “Yeah.”
Me: “Steve, it’s Chris Healy speaking.”
Applicant: “Yeah.”
Hey, I’m not perfect either, but there are limits.
The problem with all these phone introductions is that I really don’t know you, and your first impression is overwhelmingly underwhelming. It is like seeing a bad advertisement for a product – the product may be amazing, but the ad is so bad, it transfers a perception of low-quality to the product. If you don’t care enough to make a good ad, what is your attention to detail on the product?
If you don’t think this is true, look at the overwhelming body of evidence that supports how much weight we place on physical appearance and ‘first impressions.’ We may try to guard against it, but the cold, hard reality is that we have formed unconscious evaluations within 30 seconds of meeting everyone. If you looked like you’ve slept in a bathtub when I meet you, that image is going to be stuck in my head forever, no matter what you wear next time.
Whether I am looking for a web developer or a pipefitter, my overriding criteria is ‘can you do the job?’. If you answer the phone professionally when I call you, I am primed and ready to hear your message. If you sound like Sylvester Stallone in Rocky, and grunt ‘hello’ into the phone, my expectation of professionalism goes out the window.
Remember – I am calling you. This is my business that I am bringing to YOU. This is the best thing that can happen in sales – the warm lead! I am calling because I have a need that you can potentially fill. Don’t let this opportunity go to waste by giving an unprofessional image! It is a tragedy that can be fixed by just a few more words.
“Chris’ Carpentry and Cabinets, Chris speaking.”
Was it that hard? Of course not. Sure, keep the quick salutations to people you know, but that is the beauty of call display: you should know when Uncle Billy is calling you with the latest political joke he’s heard versus a potential new customer. Even if you just use your full name, it is better than the one word grunt.
And if you are in an office, whether in your first job or a seasoned executive, for heaven’s sake – please let me know who you are. Tell me you are a professional by the way you answer the phone, and that you are someone I want to
a) do business with
b) potentially recruit, and/or
c) trust
So, for the last time: please answer the phone correctly. Your business will thank you for it.
I’ll give a mea culpa up front- I love being a Grouponconsumer. It is an amazing way to ‘shop’ for deals on a vast array of services and products here in Toronto. At last count, the city had over 36 deal-of-the-day type sites, in all shapes and flavours. I can’t recall the last time my wife and I at a meal without using a ‘coupon’ from somewhere. (for those not familiar with the concept, this article provides a decent overview)
What it does for businesses, however, remains to be seen. So far, the majority of the support for using deal-of-the-day services has come from the site operators themselves. The Gap promo also fueled Groupon hype, but that is hardly the kind of case study that is relevant to smaller shops. They talk about repeat business and high satisfaction levels, but what matters most to small businesses is the bottom line – has the coupon successfully grown my business?
Last Fall, the owner of a small cafe in Portland, Oregon, Jessie Burke, wrote a blog post describing her disastrous experience running a Groupon promotion. For anyone thinking of signing on with one of the deal-of-the-day sites (LivingSocial, TeamBuy, TeamSave etc..), this is absolutely essential reading.
What is particularly interesting about the blog post are the comments. While the tone certainly varies, I was amazed at how many people expressed relief that someone finally spoke up and dispelled the myth of the invincible Groupon juggernaut.
On TechCrunch today, Rocky Agrawal provides a nice summary of Burke’s experience, based on his own interviews with her. His article contains several valuable lessons, and a look into the Groupon machinery that has helped create a $25 Billion dollar enterprise. While he does acknowledge that Burke’s story is a single case study of Groupon-gone-wrong, the illumination into the company’s business practices is frightening at times.
I’ve synthesized some of Agrawal’s take-aways into a short list, emphasizing those that matter most to small business, and presenting them more as ‘best practices’, rather than a list of ‘don’ts’.
Shop around. If you are in a major metropolitan area, there are bound to be competitors out. With deal aggregator sites popping up, consumers are certainly not loyal to only one deal-of-the-day operator. Groupon may be the largest, but it is not the only game in town, nor the only one with deep pockets. This is a recurring theme in the comments section of Burke’s blog post.
Ask for hard data from the coupon sales rep, including average value, uptake, redemption, and fraud rates. The Groupon rep told Burke that 98% of coupon buyers spend more than the face value, but what is important is how much over face value. The business gets 100% of that money, whereas the deal-a-day site has an incentive to boost the coupon value as high as possible. Ultimately, the face value should be in line with your average purchases. Burke’s average was just $5, yet the Groupon face value was for $13, which ultimately led to inventory problems.
Data should be particular for your industry (don’t settle for restaurant data when you are a pet store). Said Burke “Merchants are primarily reliant on the information and recommendations of the coupon sales reps, which can often conflict with the business’ best interest. …(N)obody knows the parameters unless you tell them. No one told me the parameters.”
Stand firm on negotiating the cut the deal-of-the-day company will take. In Burke’s case, the Groupon rep asked for 100% of the revenue, which would have left her essentially giving away $13,000 worth of gift cards. For a small café, the economics were crushing.
Have an efficient way to track the coupons. I’ve seen many retailers do it by hand, which inevitably leads to fraud.
Negotiate the start of a deal that works for you, not the deal-of-the-day site. If your traffic peaks in the summer, negotiate that the deal starts on September 1 or later. Days of the week are also important – Thursday deals can lead to a flood of customers the next weekend.
Get informed. Every deal-a-day operator should provide a detailed guide with commonly asked questions (how to handle expired coupons, for example). If you feel like you are on your own, you probably are.
Have a marketing strategy ready to capture those ‘new’ customers. Asking for emails, getting people to check in on Foursquare, or running another promotion for followers on Facebook are all options.
Don’t think you are alone. As Burke says in the interview, “What was the saddest part of it for me was that this had had happened to a lot of businesses but because no one had ever said anything we all just assumed (and myself included) we just assumed we were bad business people. That we just didn’t know what we were doing. If everyone loves Groupon so much, we must be wrong.”
Personally, I think we are going to see more and more of these types of stories. Burke lost $10,000 on the deal, and the harm to her reputation has been significantly higher. She indicates that other businesses have faired even worse. While other businesses may be reluctant to step forward right now, I think the wave is starting to crest. I’ve already had two coupons ‘expire’ because the business went bankrupt, and while I got my money back, I often wonder if the rush caused by a popular coupon just pushes struggling businesses further over the brink.
As markets like Toronto become supersaturated (can there really be room for 36 deal-a-day operators?), I think we’ll also start to see casualties on the other side. How many unique offers can there really be? When there are 4 hair salons offering similar coupons every week, it looks increasingly like the market is becoming commoditized.
It also starts to shift the power balance. Whereas 12 months ago, Groupon could have asked for 100% of the revenues from an offer, no one in their right mind would agree to that now. If you are considering using the deal-a-day model to promote your business, use your position of power to get the best terms possible. Use the list above to ensure you know exactly how the coupon will run, and what to expect. If the operator can’t provide that to you, move on, or spend your marketing dollars elsewhere.
I’ll finish this off with a story relayed in Agrawar’s piece. Apparently a Groupon rep called Jessie Burke recently. Her response: “ She suggested that he Google “Posies Cafe.” The rep responded a few hours later with, “A simple Google search showed that I’m an idiot. I’m really sorry.” ”
The Adam Ad Group out in British Columbia writes a Monday Morning Motivator column that is definitely worth your time. This week’s article (entitled The Emperor’s New Clothes) discusses the myths behind social media as the next great marketing tool for business.
Social media has its place, but one should always approach it in the context of a broader, comprehensive marketing strategy and program. As we wrote last week , social media is wrapped in a layer of hype that is difficult for small businesses to unravel. Before you jump at the promises made by ‘social media experts’, take a look at your customer base and what marketing tools have worked in the past. I’ll let Drago, from Adam Ad Group, take it from here:
“Facebook promises hypertargeting but this has been the promise of every media since the invention of advertising. Newspapers have been divided into sections for nearly a century. “Do you want to target men in the Sports section, women in the Lifestyle section, or businesspeople in the Business section?” Magazines were invented to allow us to target micro-groups that shared a common interest. Television and radio stations promise psychographic targeting through specific programming. Billboards promise tightly controlled geographic targeting. And each of these media is hampered by the same limiting factor as Facebook and Twitter. It is an inescapable truth: Response to your message will be dictated by its relevance and credibility, not by the vehicle of its delivery.
There is benefit to be had through a presence on Facebook. Twitter is a quick way to blurt 140 characters to whomever will give you a moment’s attention. If you enjoy these things, do them. Your business will certainly derive some benefit.
But they are not the highest and best use of your time and energy.”
Keep Focused on What Matters Most to Your Business
If you’ve been lying awake wondering if you are tweeting enough, or if your Facebook page is getting ‘Liked’ enough, or if you should be ‘checking-in’ with Foursquare, organizing industry Meetups, or getting your blog posts ‘dug’ on Digg, Peter Shankman has this advice: get back to sleep.
Shankman recently delivered a scathing critique of ‘social media experts’ entitled “Why I Will Never, Ever Hire A “Social Media Expert”. In his posting, he makes a number of excellent points that are worth reinforcing, particularly as they pertain to small businesses struggling to make sense of this new world of social media marketing.
His key message: social media is just another part of your overall marketing and customer service strategies. “Social media, by itself, will not help you,” Shankman writes. Social media isn’t transforming business, revolutionizing markets, or reinventing B2C relationships. It is a useful tool, and one you may not even need.
(illustration by Hugh Macleod)
Haven’t We Seen This Before?
12 years ago, with the rise of Amazon, eBay, and the rest of the dot-coms, business writers breathlessly talked about the end of ‘bricks and mortar’, and how dot-coms would replace our concepts of the physical world by making all our commerce experiences virtual. Pricing transparency, fierce competition, and choice would drive consumers online in droves, leaving malls as empty ghost towns.
Social media is riding a similar wave. You can’t open the newspaper, or browse a newsfeed without seeing an article about the social media revolution. ‘Social media experts’ are everywhere, playing on widespread ignorance among small business owners about the impact of Twitter and Facebook. “Being an expert in social media is like being an expert at taking the bread out of the refrigerator,” writes Shankman, “The goal is to make an amazing sandwich, and you can’t do that if all you’ve done in your life is taken the bread out of the fridge.”
Go Where Your Customers Go
Before you start sweating your social media presence, ask yourself one simple question: “Are my customers using social media?”. Once you have an answer, ask yourself the more important follow-on question “Are they engaging with companies like mine?”
Coca-cola needs a social media strategy. A B2B business selling electrical connectors does not. I don’t use social media channels to shop for professional services, I use Homestars (Angie’s List for our US friends). If I want a restaurant review, maybe I will, but Yelp and Urbanspoon already do a great job.
As Peter writes, “Do you know your audience? Have you reached out to them? I’m not talking about “tweeting at them.” I’m talking about actually reaching out. Asking them what you can do better, or asking those who haven’t been around in a while what you can do to get them back. It’s not about 10 percent off coupons or “contests for the next follower.” For God’s sake, be smarter than that.”
Before you run out and invest in a ‘social media strategy’, take a hard look at your current online marketing program. Where are you ranked in Google on relevant search terms? Do you have profiles in relevant directories, or professional networking sites like LinkedIn? If someone searches on your business name, what do they see? (go and try it now)
If your customers are already finding you on Google, or Yahoo!, or Bing, you should really question the return on money (or time) you’ll need to spend building out, and maintaining, a social media profile. Despite anecdotal evidence that social media is influencing consumer behaviour and brand awareness, keep in mind 2 things: 1) that data is largely, if not exclusively provided by the social media companies themselves, and 2) the social media experience of Nike (or any other multi-national brand) is not at all comparable to your strategy.
No One Size Fits All
Finding your audience and speaking to them is an art. It is creative, organic, and evolves over time as we learn about our customers. Social media won’t solve your marketing problems, and it certainly won’t solve your business problems. Building a strong brand and a successful business is going to the gym every day, not popping diet pills. As Shenkman says, “It’s about generating revenue through solid marketing and stellar customer service, just like it’s been since the beginning of time.”
I couldn’t have written it better myself.
Remember the Power of the Written Word
And speaking of writing, Peter critique of today’s prevalent writing is spot on. If you picked up a novel and saw abbreviations, poor grammar, or incomplete sentences, you wouldn’t read past the third page. Great TV, like The Wire, or West Wing, is driven by an excellent script. The key to marketing, in whatever form, is good writing. “Good writing is brevity, and brevity is marketing,” Peter writes, “Want to lose me as a customer, forever, guaranteed? Have a grammar error on any form of outward communication.”
[Tiny Briefcase was invited to speak at the Business Innovation in Changing Times Conference, hosted by the York Small Business Enterprise Centre at the Glenway Golf Course in Newmarket, on Friday, May 6, 2011. This post is based on that presentation. You can download a text version of the presentation here.]
‘The Cloud’, and its more specific cousin, ‘Cloud computing‘, are arguably two of the most overused buzzwords of the last 3 years. The terms have entered the mainstream lexicon through mass media advertising, giving rise to an array of differing, and sometimes conflicting, definitions. As one commenter in the blogosphere noted “There is a clear consensus that there is no real consensus on what cloud computing is.”
One of the best definitions we’ve found is this one from researchers at the University of California, Berkeley : “Cloud Computing” refers to both the applications delivered as services over the Internet and the hardware and systems software in the datacenters that provide those services.
For individuals and small businesses, the ‘Cloud’ itself encompasses Internet services we now take for granted (webmail and portals like Yahoo), to newer, more powerful and specific applications like Aviary, FreeAgent, and Basecamp.
When we talk about the ‘Human Cloud’, we refer to a virtual labour force that performs work without a physical presence. The Internet is used to to find, review, hire, manage, and pay for this labour. Your browser thus becomes the interface for completely managing an nearly-infinite pool of human resources. For most of us, the limitations of the Human Cloud are only what cannot be rendered digitally, and even then, global courier companies can overcome time and distance barriers for moving physical goods. As long as a task is structured properly, no job is too large or too small to complete in the Human Cloud.
Harnessing the Power of the Human Cloud
The Human Cloud vs. Outsourcing
Harnessing the Human Cloud is a form of outsourcing. This term, however, tends to have a negative connotation, mostly because the popular press has often used it interchangeably with offshoring. When you say ‘outsourcing’, the majority of people immediately think jobs lost to low-cost countries. People also tend to think outsourcing is unfair competition, or slave labour, or job stealing.
In our business, we spend a lot of times with clients who have limited budgets. Without access to the Human Cloud, they couldn’t afford to get the things done they need to succeed. Harnessing the Human Cloud is about competing, about staying agile and nimble in an age where speed matters. Many of us work in industries where a competitor can start up tomorrow and start taking business away. The Internet has been a catalyst to this new era of business, and if you are a small business, it can be daunting to try to compete without substantial money or resources to draw upon.
The Human Cloud helps level that playing field, literally bringing a world of resources to your business. Using those resources judiciously can give your business a powerful edge, and make the difference between thriving or merely surviving.
Advantages of the Human Cloud
There are 4 key advantages that come from harnessing the human cloud. The first is Flexibility. The ability to add expertise and resources when, where, and how you need them can be the difference between remaining competitive and being left behind. Large corporations have the luxury of pulling resources from other parts of the organization to meet demands. Small businesses all share a common challenge: they need to get things done, but don’t always have the ability, time, or people on staff to do them.
The ability to add expertise and resources when, where, and how you need them can be the difference between remaining competitive and being left behind.
In an ideal world, it would be great to bring someone onto your team to lead your social media program, or take charge of your administrative work, or run advanced analysis on your sales patterns. Few small businesses have that luxury. Using a virtual workforce allows you to add exactly the skills you need without having to hire someone full-time, or even part-time, when you can’t afford it.
The second advantage is Cost Saving. One of the biggest gains that has come through the outsourcing market is the transparency in the cost of services, and the ability to get specific tasks done quickly and efficiently. There are literally thousands of good graphic designers who are happy to design a brochure for you for a few hours of work. This takes nothing away from your regular designer – if you have one, that is a great advantage! If you are running a lean budget, there are probably many small design tasks you’d like help with to make your company look more professional, but you’ve held off because of budget. The human cloud frees you from that restriction.
For higher-end work, there are many extremely talented professionals, some with over 20 years of experience, willing to spend 3 days helping you with your strategic, sales, or marketing plans for a third of what you would pay hiring a marketing consultant in person. More often than not, these experts are around the corner rather than across the globe. The human cloud has a large segment of people who have stepped back from the workforce, whether to raise a family, achieve better work-life balance, or simply retire from ‘active duty’. Outsourcing work allows all these groups to remain engaged on flexible terms that work with them, and ultimately, work well for you, too.
Speed of delivery is the third significant advantage of using the human cloud. When one of our clients needs a programming change to their website right away, we can literally get the task done overnight. Instead of hunting for recommendations for a good programmer, interviewing them, calling their references etc., you can hire someone in a matter of a few hours, and have them working the next day. For large tasks, like data entry or complex research projects, the human cloud gives you access to an almost limitless pool of talent in minutes, allowing you to get massive projects completed in a fraction of the time.
Which brings us to the last advantage of harnessing the human cloud, which is Transparency. In the traditional human resources model, your knowledge of an expert comes from their CV and their references, which aren’t the most objective sources of information.
In the online outsourcing marketplaces, you can see the quality of someone’s work in their portfolio, and read honest testimonials from prior clients. This transparency not only means you can find really good talent, but it also brings a high level of accountability to the contractor. You can, and should, monitor their progress as they work with you, and instead of being labelled a micromanager, you are actually fostering a good client-contractor relationship that helps the contractor deliver high quality work. The more explicit you can be, the better the outcome of the project.
What It Means for You
The Human Cloud is about time. It is time-to-market for a new product, time-to-execution on a client project, time-to-knowledge for gathering key competitor data. Most importantly, it is about time for yourself. Whether you are a business owner, entrepreneur, manager, or simply an employee in an organization, the Human Cloud can free your time.
The Human Cloud is about time. It is time-to-market for a new product, time-to-execution on a client project, time-to-knowledge for gathering key competitor data.
Imagine if you had an entire hour to exclusively focus on your work each day. 60 minutes without email, to-do lists, interruptions, or any other demands on your time. What would you do with that time? Maybe you’d use it to grow your business, conduct training, or reach out to new customers. Or maybe you’d simply go home an hour early, spend some time with your family, or spend it on yourself by working out, or volunteering.
Once you’ve recognized how valuable your time is, you need to look at the tasks that are adding the least value to your work. Look at all the tasks you do, not just in a day, but over a week or month. If you are in a small workgroup or company, you might be wearing multiple hats, with demands pulling you in different directions. Is everything you do creating value? If not, there are more efficient ways to get that work done.
The Human Cloud is about finding that efficiency. It is not a low-cost way to reduce your headcount, but a resource to draw upon to grow your business, to respond to competition, and to remain agile, innovative, and dynamic. It is about capturing your most valuable resource – time – and then using that time to focus on what matters most.
I recently tried a dry cleaning service that picked up and delivered right to my office. It sounded ideal, and a great solution to my problem of timing pickups. With a hectic after-work schedule, I have always struggled with getting to the local dry cleaner before 6pm. A delivery service would at least put the dry cleaning in my hands – how it got home would be a different matter.
I sensed something was wrong when I first tried to call for a pickup. No one answered, not even voicemail. This is a virtual dry cleaner, but they don’t ensure the phone is answered? The first red flag went up.
So I went to the website, and found that they recommend clients fill out a form. The form nicely captured all my contact details, but nothing about my order. It also gave no indication of when I the pickup would occur, but instead asked when I wanted the pickup. I would think nearly every client would want a pickup as soon as possible, wouldn’t you? We’re talking dry cleaning, not grand pianos. Second red flag went up the flag pole.
After waiting for 24 hours for a call back to schedule the pickup, I finally picked up the phone myself. After some friendly banter and a few questions, I asked when I could schedule a pickup. The response: I had to wait 7 business days until someone was “in my area”. I work 6 kilometers from their main office, and it takes 7 business days to get a pickup?
Undeterred, despite red flag number 3, I arranged a pickup. Late on the scheduled day, my bag of dry cleaning was picked up while I am out of the office. The ‘receipt’ I received was just a generic carbon copy receipt page, with no pre-printed branding for their address or phone number. There was no scheduled delivery date, and there was no reconciliation of what was in the bag – my only record of what I gave them is my own notes. Red flags 4 through 6 went up.
As I am writing this post, it has now been a full week since the pickup. I have received nothing from them regarding the status of my order, though I have been billed. The billing was accurate, but I received three emails regarding the same transaction, each one with a different piece of information.
When I finally called this morning, I was assured the delivery would take place before 5pm. It is the last workday of school March break, and the delivery window is 6 hours (and I am a 10 minute drive away)?
While I am sure the owners of this dry cleaning business have the best of intentions, they need to take a hard look at how their processes are hurting their business. And they are not alone. I meet business owners all the time who have a good product or service, but the way in which customers move from first contact to sale is deeply flawed. In fact, most owners we work with can’t accurately describe their internal process – what they think happens is often far removed from what actually transpires.
Why is this? Small businesses, and a surprising number of large ones, usually rely on processes that were designed out of necessity. Take the simple act of invoicing. We recently met a client with multi-million dollar sales that still invoiced customers through Excel, yet wondered openly why it takes customers 42 days (on average) to pay their bill. While Excel was fine for invoicing in the beginning, the invoice process needed to evolve with the business. They were trying to power a freighter with a pair or oars! By walking through the entire chain of customer interactions, I was able to show how the inconsistent billing process was being perceived by the customers themselves, and how the inconsistency said “pay whenever you can”, as opposed to “pay within 15 days”.
The key to uncovering these breakdowns in your internal processes is to put yourself squarely in the shoes of a brand new customer. When was the last time you tried to purchase your own product, or use your own service? Have you completed a purchase on your website within the past month? Have you tried the various contact methods (phone, email, website form) to observe the response times and quality of response?
Although certainly more time consuming, getting insights directly from new customers is even more valuable, and has an even greater potential for uncovering flaws in your process. The key is to gather feedback after each customer interaction, starting with the first point of contact. Did they find the relevant information from your website? What were the key criteria for choosing your product or service? How did they feel about the initial interaction with you or your staff?
Start by drawing up a list of 3-4 key questions for each stage in the process you want to evaluate, then determine how you can capture those insights while they are still ‘fresh’. You can even outsource this process to a contract call center, providing them a list of clients to contact (from whom you’ve received permission), and have the call center follow-up after each stage. There are also numerous options for conducting online questionnaires, and affordable ways to outsource the management of these survey campaigns.
Lastly, once you’ve gathered these insights, be sure to put them into action. Identify the areas that are causing the most problems for your customers, and focus intensely on improving the process to the benefit of the customer.
In later posts, I’ll talk more about how to address the most common process flaws, but that said, even the smallest changes can yield big improvements. In the case of our client who was still invoicing using Excel, they were able to implement an online invoicing tool in half a day, and see an almost immediate reduction in their accounts receivable.
As for my dry cleaning, the convenience of pickup and delivery has definitely been outweighed by the 2+ weeks their process has required to fulfil my order. At this point, I’m just hoping my shirts come back in one piece!
As a small business owner / manager, you know the value of a dollar. With so many competing demands on your resources, being careful with your time and money is critical. When it comes to discretionary spending on areas such as marketing, technology, or financial advice, you can easily tempted to go it alone, or contract-out based on the lowest possible price (often to friends or family). In this post, we’ll show you why this is can be a mistake, and one that be much more expensive in the long run.
Let’s say you wanted to build up your online presence. You have done some homework, and decide you want to invest in 3 things: an updated website that is optimized for search engines like Google, a social media strategy, and an email marketing campaign. You have a good idea what you want to achieve, but are not sure how to make it happen.
There are 3 options you could consider:
1. Hire someone on a part-time basis to join your company as a junior marketing manager
2. Contract the work to a full-service ‘interactive’ marketing agency
3. Engage Tiny Briefcase under our Brand Broadcast package
Let’s look the pros and cons of each one:
1. Hire Someone to Join Your Company Part-Time
A part-time marketing role at a small-business salary will likely attract marketing professionals early in their career or just out of school looking for experience.
Pros: You’ll be in close contact with them on a daily basis, and be able to shape their work to get the desired results. They will be eager to show you what they can do.
Cons: They’ll be inexperienced, and may not have the depth of knowledge necessary in the specialized areas of SEO, web design, and managing marketing campaigns. You will also need to spend considerable time educating them on your business and brand. Do you have enough work for them to continue once they are done?
Total Cost: 2 months @ $3,300 / mo., plus a minimum of 15% for taxes and related overhead = $7,590.
2. Contract to a Full-Service Marketing Agency
A good marketing agency with depth in online marketing will easily be able to handle your needs. Agencies usually have experts in all major disciplines such as web design and social media.
Pros: You should get a very high standard of work and expertise.
Cons: In addition to spending the time to find, interview, and hire a firm, you’ll also have to explain your business and your marketing objectives. Firms sometimes assign junior personnel to small files, which can lead to disappointing results. At upwards of $300 an hour, the high level of service won’t be cheap, either.
Total Cost: $10,000 to $25,000, depending on the agency.
3. Use Tiny Briefcase
With Tiny Briefcase, we get to know your business from the start. Our marketing packages are designed to boost your brand through a series of coordinated activities from Day 1.
Pros: We employ experts in all the areas of design, social media, print etc., that deliver high-quality results that capture your brand and company image. By spreading our service over a full year, we can adjust your campaign as your needs change.
Cons: Our packages are designed to deliver incredible value to small and medium sized enterprise. For clients that have sophisticated or elaborate marketing needs, we will match you with a trusted 3rd-party that can manage an intricate campaign on a daily basis.
Total Cost: $2,898 for 12 months of our Brand Builders package [$750 for our initial consultation, plus $179 a month].
“But wait!”, you say, “Can’t I just do this myself? I’ve built web pages before, and Adwords isn’t that hard to figure out.”
To which we say: “By all means, go right ahead!” We would be the last people to discourage clients from educating themselves about the web and social media. First, however, we encourage you to consider the full cost of doing all that work yourself, and how confident you are in achieving the results you want (and deserve!).
Conservatively, to complete the website, build a presence within a social media channel, and launch an email marketing campaign, you will need approximately 50-60 hours of time. If this seems high, consider the time you will need to properly learn the technical tools required, write the creative content required, and manage the process properly. Even with the template-driven tools available for website creation and email marketing, you’ll need to become an expert if your brand is going to be as professional as your business.
And while you are doing all this, you are also running your own business- generating sales, meeting with clients, and performing the work. Creating a website might be a good learning activity, but aren’t those hours better spent developing your customer base? How many customers could you secure if you devoted 50 hours to sales initiatives? 2, 20, 200?
Whatever the number, the value of those customers is likely several times more than what you are saving doing it yourself. That’s dollars in your pocket, with satisfied customers that will translate into even further sales. If we have one message for any client we work with, it is to say this: your time is your company’s most valuable resource. It is also very scarce, and must be focused on the activities that create the greatest value for your business. By using outsourcing services like Tiny Briefcase, you not only gain a trusted advisor who understands your business, you also gain time to spend with your customers.
A paperback version of organizational-development consultant Erika Anderson’s book entitled, “Being Strategic” has just been released. In it, she puts forth an excellent definition for her take on ‘strategy’, which she articulates as ‘consistently (making) choices that move you towards your goal’.
The book is a welcome departure from the typical business book that talks in great length about the need for strategy. Reading the best seller list, you can understand why. You are more likely to develop a neurosis over your failings as a business leader than find the path to a working, viable strategy in most ‘must-read’ business books.
Large corporations revel in strategic plans, spending vast sums of money and time composing amazing strategic plans year after year. Few are ever followed, and fewer still reviewed and critiqued at a later date. When large corporations talk about strategy, they usually point to a large binder on the bookshelf and say ‘there it is!’.
Anderson’s book rejects the focus on strategy as a final destination (‘I have a strategy, now let’s get back to work’), and instead gets the reader to think about the process. She stresses the importance of taking a detached and objective view of your business, your environment, and yourself. It is only then that you can have an honest conversation about your business goals, and how you plan to reach them.
Being strategic is a frame of mind, a way of regularly analyzing your situation and asking yourself “Am I focused on the biggest barriers to my success?”
In our work with clients, no word has caused more angst, pain, and frustration as strategy. We have long stressed that developing a strategy should not be a goal unto itself. Being strategic is a frame of mind, a way of regularly analyzing your situation and asking yourself “Am I focused on the biggest barriers to my success?”. Only by thinking systematically through the challenges you are facing can you see the interconnectedness of the environment around you.
Take the example of a steam cleaning business we worked with. The owner, who we’ll call Brian for this article, was frustrated by the lack of growth in his business. When we met him, he was about to start his ‘strategy for growth’, which involved diversifying into upholstery and drapery to increase his revenue potential per job.
As we walked through the various aspects of his business, we realized that the problem wasn’t one of revenue potential, but one of customer acquisition. Brian’s typical customer was within five kilometers of his office, had found his business through the Yellow Pages, and often had not used a steam cleaning service before. We learned, however, that most prospects shied away from the quote he gave over the phone.
We also learned that when he had repeat customers, the size of the subsequent jobs was much larger than the first. When asked why this was the case, Brian indicated that his once customers saw the results of his work, they wanted all their carpets done on a regular basis.
By laying out the motivations of his customers, Brian was able to see how his strategy was not aligned with what prospective buyers wanted. We replaced his diversification strategy with a ‘strategic customer focus’, consisting of a series of changes to his marketing and prospecting processes. Brian started actively targeting families with pets (he himself had three dogs), and offered free onsite quotes to customers in his target area. He also invested in some lighter-duty equipment to handle small jobs more efficiently, so he could offer customers a quick and cost-effective solution to small cleaning jobs.
Brian’s business started to flourish, and his referral rate shot up dramatically. His strategic process kept revealing new insights from his customers, and he was slowly able to add additional services into his portfolio without significant investment. While he has contemplated expansion, he is enjoying plenty of work from repeat customers.
As Brian discovered, small business ‘strategy’ can often be distilled down to little more than opportunistic diversification. Becoming strategic involves clearly articulating where you want your business to be, and then laying out the paths to get there. It is also a continual process, making decisions with the best available information, then re-evaluating when new data comes to light. If it all sounds a little intimidating, pick up Erika Anderson’s book. We promise you’ll look at ‘strategy’, and your business, differently.
Bill Taylor, co-founder of Fast Company magazine, recently posed the question “Why Is It So Hard To Be Kind?” on his Harvard Business Review blog. In the post, he tells of the experience his father had purchasing a new Buick, and how one dealer went over and above to secure his father’s business. He closes the article by asking “What is it about business that makes it so hard to be kind?”
Kindness isn’t hard. The difficulty is that in large business, it is impossible to capture kindness in a process. Customer service training involves scripts, operational procedures, and policies to follow. Consequences for disobeying these ‘rules’ are clearly defined, and more often than not, performance metrics heavily favor efficiency over quality of customer service. This trend is best observed in the legions of outsourced call centers that offer nothing more than programmed responses to customer complaints, where even the most extenuating circumstances are met with “I’m sorry, that is not allowed under our company policy”.
While uniform policies and low-cost call centers may boost the bottom line of big business, they also present unique opportunities for small and medium sized enterprise (SME) to steal customers. I call it Competing on Kindness.
Kindness isn’t being a pushover, or developing deep emotional rapport with every customer. What it means is simply treating your customers with understanding, respect, and fairness. In other words, observing the Golden Rule; treat your customers like you would want to be treated. In practice, that means adopting the philosophy of flexibility when it comes to addressing customer issues, and training employees to adopt a similarly flexible attitude when it comes to dealing with customers.
When I talk about Competing on Kindness to clients, the response I often receive is ‘I’ve tried being understanding in the past, but I’ve been burned too many times.’ Usually, being ‘burned’ has involved a customer fraudulently claiming a product or service was defective, and ultimately receiving a refund. Business owners have often felt so betrayed, and so angry at themselves for ‘being gullible’, that they immediately implemented a policy to eliminate any similar event from occurring in the future.
Customer service policies are often like fishing dragnets, capturing everything and dragging them along the proverbial sea floor, dolphins be damned.
While this has the effect of eliminating that specific type of fraud from occurring again, it has the unintended consequence of punishing customers that have valid reasons for returning a product, or complaining about the service they receive. Customer service policies are thus like fishing dragnets, capturing everything and dragging them along the proverbial sea floor, dolphins be damned.
Here’s the catch- the customer who felt they were mistreated by your policy is about to become your biggest detractor, while the fraudster in the crowd has simply moved on to a new target. As I wrote about in an earlier post, customers dissatisfied with customer service they receive are going to tell, on average, 6 other people about their experience. That is 6 other potential customers you aren’t going to see, and possibly much more if those 6 people discourage their own networks to use your business.
The reverse is also true: a customer that has received a truly extraordinary service experience will become your greatest evangelist. In writing his blog post about his father’s experience with a Buick dealer, Bill Taylor just gave General Motors a powerful and compelling endorsement in front of a highly-targeted, relevant national audience. Cadillac not only lost Taylor’s father as a customer, you can bet they lost the majority of his circle of influence as potential customers, most of which fit perfectly in their target demographic.
Calculating the Kindness Return on Investment
Unsure where to add a dose of kindness into your customer service policies? One place to start is to take a hard look at how much you risk by implementing customer-friendly policies.
What is the cost of providing a money-back guarantee to your product or service? How many customers would take you up on that offer? How many new customers would you gain because of it?
Imagine you are a furniture retailer, and your average margin is 40%. A customer claims a table they purchased was defective, and you refund the full value of $1000. You find out the customer actually broke the table, and you can’t recoup any of your money from the manufacturer. You are now out of pocket $600.
However, your policy has attracted several customers who only shop with you because of your generous return policy. They have encouraged their network of influence to start shopping at your store. In total, you conservatively estimate that your 2 most loyal customers have brought an additional 8 customers into your store throughout the year. To recover the money lost because of 1 dishonest customer, you only need to sell $1500 worth of additional furniture to those new customers. In fact, you are able to sell ten times that much, netting you $6000 in additional profit.
While you have lost $600 due to an unscrupulous customer, you have also gained $6000 in additional sales due to a generous and understanding return policy. You’ve treated your customers fairly, trusting that returns are based truly on defects. Since the policy is ironclad, it is much easier for your staff to know how to react when a customer wants to return a product. Where there was once suspicion, you now have kindness and compassion.
While such customer-friendly policies should always be applied within a specific business context, the principles of kindness should be universal. It is one of the few ways that SMEs can still differentiate themselves, and in some cases, truly distinguish themselves from their competitors. By stepping back and assessing the true cost of policy changes, you can see just how far you can go to accommodate your customers. You might be surprised by how generous you really can be!
