Posts Tagged ‘Business Lessons’
I was recently investigating a change to the 3 essential services needed for any home – Internet, Phone and TV. Concurrent to this quest, I received a series of unsolicited offers in the mail from a nationally known provider of said services. I had some free time between appointments one day so I decided I would take my multitude of offers and nail down that great price for the telecommunication trio.
I walked in the store and was quickly waited on by a representative. I explained that I had these offers, every one of which was better than the one before. He didn’t seem interested in my offers and proceeded to tell me what they had on sale. The last bundled 3 pack offer I got had the ultra low price of $79 for the holy trinity. He printed off his sheets for 100 channels 200 channels and 300 channels and the prices were curiously all about the same between $115 and $125 per month. This is still a better deal than I have with my current set up but what happened to my $79 dollar deal?
He tried to explain to me the differences in the plans but I only had about 30 minutes before my next appointment so I had to leave and study the information back at HQ. This should not be so complicated. What happened to the deal that got me in the store? There were so many variables and things going on “behind the curtain” that I was very distrustful of the entire process. They did a bait and switch teaser rate and muddied the waters so I could not make an informed decision. Is this the ideal way to treat a customer? I think not.
I suspect that they realize they are providing a service that is essentially the same as the competition. What they aren’t telling us is that their 300 crappy channels are just like Brand X’s 300 crappy channels. The way they differentiate themselves from the competition is with their commercials. They want us to choose them because their cute puppy is better than the competition’s talking unicorn or some such nonsense.
I think what they should do is give their customers a reason to stay with them and potential customers to do business with them. How about touting good service when a problem arises? What about consistent delivery of the product with minimal amount of down time? That might also be a good thing. Perhaps they should take a cue from Delta Airlines who says the real difference between them and the competition is that the people at Delta are better.
I am still looking for an answer to my telecommunications decision but I am getting closer and closer to going retro and buying an antenna for my roof and using Hulu Plus and/or Netflix as my content provider. Of course I will buy a subscription to MLB.tv for about $10/month for my baseball needs. Doing this I will save about $60 per month and I will program my own network of stuff I like to watch.
Have a great week being authentic with your customers. They will thank you with their loyalty.
The original Wizard of Oz is one of my favorite movies and I am surprised that it took me this long to blog about the business lessons to be learned from the movie. I have not seen the recently released Oz The Great And Powerful but plan on renting it someday. From a quick scan of critic ratings it seems as though it has more disappointing ratings than positive ratings but making a prequel to a classic will add an extra level to expectations. I will judge once I have seen it. Enough about movies, let’s get to business.
The three main characters besides Dorothy each believe that they have a flaw and are trying to remedy it by visiting the wizard. One lacks courage, one lacks intellect and one lacks a heart. In the movie, it is clear that the characters possess these qualities and just need encouragement to use what they already have. As a small business owner you may also have flaws and unfortunately there is no wizard available.
If you have not read the book The E-Myth I suggest you do so to understand what you have gotten yourself into. There are three key skills needed to operate a business and if you do not have all three you will struggle. You must have technical skills, managerial skills and must have entrepreneurial skills. Most people who start a business do so because they are a good technician. They can provide “the deliverable” but that is only a small part of running a successful business, especially if you want to grow it beyond a single-person shop. Having only two out of the three skills is as good as having a stool with 2 legs or having intellect and courage but no heart.
What do you do if you recognize you are lacking in one of the skills? Depending on the situation, you can try to learn the skill but running a business and devoting time to learning a vital skill is not the best idea. You may not have time learn the skill because you may be out of business before you are adept at it. My advice is to do what you are best at and hire good employees or outsource your weak spots. After a while you may develop your missing skill(s) but hopefully by then you will be best at entrepreneurship and will have an empire to manage while you create the vision for your company.
It may be easy for me to say (and self-serving) that you should hire or outsource areas that you cannot do well but I do have a good basis for my reasoning. That basis is Economist David Ricardo’s Law of Comparative Advantage from his book published in 1817; On the Principles of Political Economy and Taxation. This law can be explained by using a simple example we can all understand. For our example let’s say you are a maker of highly fashionable and sought after widgets. These awesome, industry-leading widgets sell for $100 and you can make your widgets in one hour and cannot keep up with the demand. If all of this is true, why would you waste time cutting your grass when you can pay the polite neighbor boy $20 to do that task which also takes an hour to do? By cutting your own grass you are losing $80! This might seem like a no-brainer to you but that is what you doing by handling all of your administrative tasks, social media marketing/website maintenance, Human Resources and, dare I say, your own accounting with QuickBooks? In a small business it does make sense to wear several hats but choose those hats wisely. For example, I enjoy writing and I believe and have been told that I have a skill for it so that is why I write my own blog. If I was terrible at writing and hated doing it, it would make no sense for me to write my own blog.
Have a great week travelling wisely down the Yellow Brick Road to success.
Question: Should I discount?
Answer: Probably not
Let me explain and offer an example of the harm that a discount can do to your bottom line. First of all, I would say that you need to do a better job at creating value for your customer. If you were making a proposal on a job and you were going to sell a widget at $60 per unit but were asked to discount to get the business do you do it? The answer is it depends. One thing to note before I go further; is that the “widget” can be a manufactured product, an item you re-sell as a wholesaler or it can be an hourly rate if you are a service provider and you sell your time.
Assuming your $60 price is reasonable based on a fair assessment of the market place, that request for you to discount means you are not doing a good enough job showing the value you are offering at $60 per widget. You need to work on that before entertaining thoughts about cutting your price. I wrote about that topic last year in my blog entitled; Pricing Your Services.
If you want to realize the harmful effect to your bottom line that a seemingly “small” 10% discount has on your future revenue stream take a look at this example. In the example below I have shown the price for units sold over a five-year period. The first example shows a year one sales price of $54/widget after a 10% discount from $60/widget. In both examples it is assumed that each year there is a 3% price increase passed on to the customer. In the second example, no discounting took place in year one and the sales price in year one is $60/widget. Take note that it takes until year five to get the sales price back to $60/widget when offering the discount. I also show the total lost sale revenue over the five-year period and I believe it is significant.
With the example above I hope I have given you motivation for you to polish your skills so you can adequately demonstrate the value in your goods or services. It is worth the effort to sharpen these skills. I can think of 47,772 reasons. Please note that I also showed you why you need to try to get discounts from your suppliers – it works both ways.
Have a great week defending against the insidious effects of saying yes to a discount.
I wrote about Delta airlines last fall and my comments were not very flattering. Well, to be fair I had an experience with Delta Airlines that needs to be reported and can serve as a nice business lesson. I was booking a flight for travel later this month and made a mistake on my return flight that forced me to cancel and re-book it. I tried to re-book the flight and was unable to do so noting however that the fee to change the flight was $150.00. I was nervous to say the least as I was directed to call the number on my Delta frequent flyer card. I called the number and was put into a cue of callers but I elected to receive a call back within 5 to 6 minutes from a representative. I hung up and was skeptical. Sure enough, 5 minutes later I got a call from a nice lady that who handled my problem and informed me that there was a 24 hour grace period and that there would be no fee to change my flight. She proceeded to take my information and in minutes a bad day just got much better.
So, what is the lesson? There are a couple of lessons that I took from this incident (which was totally my fault.) The first was how much goodwill Delta earned by simply being fair. I don’t know if all airlines have this 24 hour “bonehead” rule but I assume most do. In today’s business environment, especially when dealing with a huge company expectations are very low. So low that just by being treated fairly I was blown away.
The second lesson is that much of the competition is sub par and by just doing what is right will set you apart. Keep in mind that doing what is right is the bare bones minimum of how a company should act – just above ripping someone off. Taking that thought further, do a little extra and you will be superstar. If you do a lot more than required your praises will be sung far and wide. I hope no one is satisfied with doing a little better than the competition. Make it your customer service goal to blow away the competition and higher profits will be your reward.
Have a great week rising above your competition.
I was eating a restaurant recently and was served a ton of food, as was my wife. This is a fairly common practice in the dining industry. I am sure you can name a few restaurants that are known for their large portion sizes with diners carrying out Styrofoam encased leftovers. As my wife and I had lunch the next day on the ample leftovers, we were discussing our dining experience. During the discussion, it occurred to me that the restaurant was using a good sales tactic. Serving large portions (at the commensurate large price) is using one of the tactics I wrote about in my blog Ways To Increase Sales In 2010.
In that blog I spoke of 4 ways to increase sales. For review I have listed them below:
1) Increase frequency of the transactions
2) Increase the number of the transactions
3) Increase the value of each transaction
4) Increase the price of the transactions
In a subtle way the restaurant has increased the value of the transaction. Whether you realize it or not; when you go to the restaurant that has large portions sizes along with a higher price they are not just selling you dinner, they are selling you tomorrow’s lunch too. They magically combined two transactions into one and you are actually happy about it. How many times do you glowingly tell a friend about the place by saying; “they really feed you at…”?
The next time you go to your favorite place with the large portions, remember that a real life business lesson is playing out before your very eyes. The trick is to use one of the 4 ways to increase sales in your business. Think about it over dinner and get and get back to me. Perhaps you can mull it over at dinner at the place with the gigantic portions.
Have a great week determining your sales strategy for 2013.
Yes, we can even learn a business lesson from Neil Young. Rust Never Sleeps was the name of a live Album he released in 1979. I wore that thing out in College and even for a few years after when I copied it to cassette. I think I still have that cassette but no longer have a cassette player that works.
I have no idea what he meant by that phrase but over the years I have used it for motivation. I was thinking about what that title means to me recently while riding my bike on the first cool, overcast and blustery day this fall. I used that phrase in the early 90’s to get out and ride my bike in less than desirable weather to stay ahead of the competition. Back then I reminded myself that the competition was always getting younger while I would always continue to age. I also reminded myself that someone was out riding, staying in shape getting ready to put me further back in the pack.
Now, I apply the lesson to my business and it means that I must continually be looking for ways to stay ahead of the competition by trying harder and with innovative thinking. I don’t mean to say that there is never a time to relax and rest or to take a vacation. I think as a business owner you must always have the wheels running in the background – even when on vacation or on the weekend. Some of my best ideas come to me when I am “zoning out” on a bicycle ride. I would call this passive work performance. I think it might be due to relaxing and blocking out other recurring issues while not really thinking about anything specifically. It is kind of like letting your mind, which I believe is like a muscle, work without impediments just like a golfer who nails a perfect drive under the most pressure because he lets the muscles repeat the action they have done thousands of times before on the range.
However you do it, I suggest you learn the lesson and remind yourself that Rust Never Sleeps. When you are tired and don’t feel like going to another after-hours business mixer you better think before staying home. Before mailing it in someday when you are working for a client, remind yourself that you can’t be satisfied with good enough.
Have a great week and remember; a rolling stone gathers no moss. Wait, I was talking about Neil Young not the Rolling Stones…
I recently had an experience with a youngster that reminded me how to sell my services the smart way. I was at an Apple store while my wife was looking to upgrade to a newer version of the iPad. As I patiently waited, I saw a young child of about 5 years of age in the store. He was using an iPad and I asked him if he liked the iPad because he could go to the internet and play games and listen to his music. He replied in 5 year old speak “I like my iPad because I can see my mommy on Skype when I miss her!” When I first heard this, I thought how cute and how tech savvy kids are these days. After letting that set in a few days it hit me that the kid must be a sales genius without knowing it. He stated what the benefits of having a new iPad were so convincingly. He didn’t tell me about the features – you can play games and music on it, he told me in a very emotionally charged way he can see his mommy when he misses her with this product. What approach makes YOU want to buy and iPad? Incidentally, I think he must have had the iPad 2 or the newest iPad since the original iPad does not have a camera.
I assume the reason this lesson “bubbled up” after a few days is because I have been working on my marketing efforts and reviewed my profile of services offering to a group that serves as my informal board of directors and was told to go back and try again. They did not say that in as many words but they were reminding me to focus my message in a way that would most likely engage a customer. I was using phrases like CFO services. They asked me what are CFO services and I realized if they had to ask I am not doing my job of communicating my message. Identifying and interpreting trends as opportunities or threats sounds more descriptive and is a benefit my services offer not a feature.
What can you learn from this? Hopefully you can take some time and reshape the message you are sending so you can maximize your marketing efforts and increase your conversion rate. To put it a better way, sell the benefits of your product or service now and see your bank account grow later as you check your balance on-line from a cruise ship.
What is a more compelling case for you to use a pest service?
- My product lasts 90 days and is environmentally safe
- Your 5 year old won’t wake up with bugs in their bed with XYZ Company. We help you sleep peacefully knowing the only unwanted visitors you get are the in-laws.
Have a great week, modifying your message. I need to start making changes to my web site.
Yes, business lessons from Coffee. Stay with me, I will explain and I am sure it will make sense when I am through. Coffee has many attributes. It is bold, robust and can be enjoyed whether hot or cold. Let’s take a closer look at those attributes and see what is revealed.
Coffee is bold. That is an attribute that all business owners need to have. Just taking the step to start a business is a bold step and thus it can be easily said that all businesses owners are bold… or were at ONE time. Don’t lose the ability to strike when the time is right. Stay nimble and be willing to take a calculated risk. Those traits are important. No one got rich taking the easy way out. The easy way out is to collect a paycheck and make someone else rich. Business owners are not going to be happy with that answer. Getting rich is not always the end game, of course, many business owners wanted to be the boss. They want the satisfaction of running the show by doing things their way.
Coffee is robust. What exactly does robust mean? Some synonyms are: healthy, vigorous, stout and hearty. That certainly sounds like a trait to which we should aspire. Business owners need to keep their businesses healthy and thriving. Being robust could be equated with continuous improvement initiatives. Now that is some fancy business jargon that you hear quite often these days. Hmm… coffee might be on to something.
Coffee can be enjoyed hot or cold. This is perhaps one of the most important attributes of coffee. It also must be an attribute you have with your business. Can you enjoy the day-to-day activities of your business in good times and bad? Can you bring your “A” game when you are not in the mood? You better, because more often than not you are the face of your organization and your tone permeates down to the most entry-level person at your company. You are your brand so you better represent yourself well. Read about building your brand here.
I hope you see my point now. Have a great week displaying the attributes of coffee.