Do you truly add value?

When times were good and money was flowing fast it was easy to generate business without a high level of differentiation or an incredibly strong value proposition.  But now that the economic times have gotten tougher and every business and personal consumer is carefully considering how to spend their dwindling resources, unless  you can clearly show that your business adds real value to the customer… you’re going to have a really hard time finding any customers!

Let me give you a very quick example.  About four years ago my wife and I had a good friend of ours build a custom home for us.  When it was time to choose the lighting for the new house we went to a local “lighting gallery” to sit down with the owner and pick out all of the various lighting fixtures and fans we would be putting throughout our new home.  We spent about two hours going over catalogs with him, as he suggested specific fixtures that would go nicely in our craftsman-style home and match the rest of our decor.  We had made it clear that our budget for purchasing all of the lighting fixtures and fans was between $9,000 and $11,000. Twelve days after we met with him we received an estimate for $21,000!  We quickly realized three important things:

1.  Obviously “budget” did not mean a darn thing to this vendor.  Actually, we ran into this time and time again when building our home, we would tell people exactly what we wanted to spend and then they would come back with a price that was often 60% to 120% higher than what we had stipulated.  When we would comment to them that this was far out of our budget, the common refrain was, “well, then just add some more money in your budget.”  Folks, the days of being able to give your customer that sort of response… are gone.  Even back then I felt this was an awfully arrogant thing to say, today it would be downright stupid.

2.  If you’re going to send me a proposal that is twice what I asked for, it shouldn’t take twelve days to get around to offending me.  At the very least I would expect extremely fast and courteous service if I was being asked to spend double the amount of money I had intended to.  Slow service and outrageous prices… not exactly a winning business formula.

3.  When we got the estimate, and picked our eyeballs back up off the floor, one of my first thoughts was, “Why did he let us pick out the fixtures that were so far out of the price range we wanted to spend?”  I felt that as our “lighting consultant” it would have been his job to help steer us toward the fixtures that were within our budget.  However, when my wife decided to Google a few of the products we had picked (using the exact SKU numbers off of the estimate) we discovered that everything on the list had been marked up by 80 to 150%.  The next day we took a trip down to local Home Depot where we looked at the exact same fan we had picked out at the lighting gallery, which had it priced at $480 on our estimate, and was now sitting in front of us at Home Depot for $245.  We promptly went home and ordered everything off the Internet.  Total bill for all the lighting fixtures (the exact same ones we had chosen out of the catalog at the lighting gallery) was $7,300… which included shipping and tax!

The reason I dragged you through this entire story was to make this point: even though my friends at the lighting gallery had been in business for 22 years, in the new Internet-enabled “watch-every-penny-economy” it only took them about three years to go out of business.  That’s right, I drove past their building the other day and there’s a “for sale” sign out front.

They did not go out of business because they sold a bad product, their lights, fans and fixtures were all of the highest quality.  What drove them out of business was the fact that their old way of doing business is obsolete.  They added no value to the equation.  I could go online and find every single thing I wanted, at half the price or less and have it all delivered to me with absolutely no hassle.  Their building, their displays, their catalogs and even their consultation certainly did not add up to enough value to make me want to spend twice what I could get everything for from the comfort of my home.

Unfortunately, I am seeing the same scenario played out in company after company.  For years they have motored along picking all the low hanging fruit, delivering good (but not truly fantastic) products and services and enjoying high profit margins for basically low-value offerings.  Now that the economy has made selling even the best products and services challenging, these companies are having an incredibly hard time demonstrating the real value-add they bring to the equation that justifies their high profit margins.  The old equation used to be “high-quality… fast… or cheap… pick any two you want.”  Today customers demand the best quality, delivered immediately, at the lowest possible price, with superior customer service throughout the entire buying and owning process! If you cannot clearly differentiate yourself on all of these aspects… combined, you’ll find it very tough to convince customers to buy from you, or at least to buy from you without totally beating you up on price.

So here are my questions for this blog: How do you truly add real value to your customers?  What is everything that is unique and different about the way you add value that would make your customers be willing to pay a premium price to do business with you and feel absolutely great about the transaction?

Two things to keep in mind as you try to answer these questions:

a) Remember, value is from the customer’s point of view, not what you think.  As Mark Twain once said, “The only critic whose opinion counts is the customer.”

b) If you cannot answer these questions in a clear, honest and very compelling way… you have some serious work to do.

I hope you found this post of value. I look forward to your feedback and questions.

John Spence is an accomplished businessman and a leading authority on strategic thinking, advanced leadership development, and many other building blocks for successful businesses. He ranks highly among the most sought-after executive educators and has conducted workshops for numerous Fortune 500 companies.

Extreme Customer Focus

I have some very strong beliefs about what I feel it takes to run a highly successful business. For example, I am completely convinced that whoever “owns the voice of the customer” and uses that information to build an organizational culture of Extreme Customer Focus… will own the marketplace. Unfortunately far too few businesses really understand their customers at a deep level which severely inhibits their ability to deliver consistently superior customer service and win an unfair advantage in customer loyalty. And who doesn’t want an unfair advantage? But rather than give you a bunch of theory and vague ideas, let me bring my point home with several real-life examples. As you read through the following list I want you to ask yourself three incredibly important questions:

  1. What can I do with this?
  2. How can I make this work for my business?
  3. What can I do right away?

What is Extreme Customer Focus?

  • The family restaurant that has bathrooms cleaner than yours at home, with fresh flowers, free diapers, handi-wipes, lotion and mints.
  • The doctor’s office with a juice, coffee and fresh fruit while you wait (or better yet, that get’s you in on time, every time).
  • The lawn care company that leaves a nicely arranged bouquet of fresh flowers from your yard every time they trim your plants.
  • The women’s clothes store that has large fitting rooms, with a comfortable chair, plenty of hooks for your garments, a shelf for glasses and purse and NO limit to the number of items you can bring in to try on (and big, soft, cushy reclining chairs… and a TV… so that husbands actually tell their wives to shop a little longer while they rest and watch the game while enjoying a cold soda or juice and a cookie.)
  • The upper-end restaurant that gives you a hand-written thank you card with your check.
  • The drycleaner that simply sews on any missing buttons they find.
  • The downtown business that offers to “feed the meter” while you shop.
  • The restaurant that offers you a free desert for taking 5 minutes to fill out an in-depth survey.
  • The bank that hosts a dinner for their top 30 clients to have an open discussion about how they can serve them better.
  • The marketing firm that offers to do pro-bono work for their top client’s favorite charity.
  • Any store that empowers their frontline people to find a way to say “Yes.”

The list goes on and on with a million different ways to delight, surprise and entertain your customers. Sadly though, I see very few companies that understand how important (and easy) it is to stand out in a crowded world of me-too products and average service. So how do you develop a talent for finding ways to improve your customer focus and service? I have two suggestions. The first is; ASK your customer what they want. Ask them often and in various ways, but never stop asking and listening to what the people who pay your rent are telling you is important to them. The second suggestion is to become an expert at looking for customer service ideas that you can steal and use. Jerry Seinfeld did this with his comedy. Someone once asked him how he came up with so much fantastic material and he replied, “It is simple. From the moment I get up in the morning until I fall asleep at night, I look at everything I do and situation I encounter and ask myself the same question: what is funny about this?” So from now on, whenever you encounter either very good service or very bad service just ask the three questions: What can I do with this? How can I make this work for my business? What can I do right away? You’ll be amazed with the answers you find!

John Spence is an accomplished businessman and a leading authority on strategic thinking, advanced leadership development, and many other building blocks for successful businesses. He ranks highly among the most sought-after executive educators and has conducted workshops for numerous Fortune 500 companies.

What Impact Does Culture Change Have on Results?

In Cindy Krischer Goodman’s article “Culture change: Just do it” (Miami Herald, 10/6/2010), there are two examples of successful cultural transformations in progress. If you missed the article, it was about how Barbara Simmons, CEO of Plantation General Hospital, has rallied her employees’ customer service and job satisfaction and the efforts of Kim Cripe, CEO of Children’s Hospital of Orange County to increase the quality of service at her institution.

In both cases, the CEOs realized the need to make changes to their corporate culture in order to improve outcomes. Most companies want to change outcomes but are not really committed to doing what it takes. They usually change some policies and procedures and throw in a training course. While these steps are valid parts of the journey, the real issues usually are cultural, stemming from the top and cascading down. They are flawed leadership and management philosophies and are hidden weaknesses that prevent organizations from getting what they need. Until the CEO takes responsibility and makes personal changes, there will be no sustainable improvements in the rest of the organization.

Goodman’s article pointed to three important factors. First, for cultural transformation to take hold, an organization has to be ready to make a 2-to 3-year commitment. Employees will likely push back, expecting yet another “program of the month” that will fade shortly after it’s announced, and, because change is never comfortable, will try to make things stay the same. Second, it is essential to create a vision to rally everyone around and to clarify the non-negotiable core values that will be expected from everyone. You then have to train everyone on what behaviors demonstrate those values and institutionalize them. Lastly, the CEO (most importantly) and top leaders must put themselves out there as the catalysts for changes. They have to be out there every day as the catalyst for change. You cannot outsource or delegate this to a consultant, trainer, coach, or subordinate.

Howard Shore is a business growth expert that works with companies and people that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at 305.722.7213 or shoreh@activategroupinc.com.

 *Reprint

Customer Retention is a Business Imperative

Do you sometimes focus so hard on getting new business that you lost sight of how crucial it is to keep existing customers coming back for more. How many of your key priorities for this quarter relate to programs to increase customer retention? Customer loyalty is one of the strongest indicators of how healthy your business is and it should be a big part of your business strategy. The percentage of customers who continually come back for more of your products or services is proof of business goals set and achieved. Customer retention is a business imperative in order for your business to maximize its profitability.

Retaining customers is vital to your business development efforts, and is far more impact to your bottom line than getting new ones. Companies with a great new business funnel don’t necessarily outperform those who keep clients long-term. I’ve seen companies that effectively use marketing materials to tout how different they are from the competition. They focus on how they add value to justify their price point and close a lot of new business. But this is not a good business strategy if your customer turnover is too high. Higher turnover will ultimately lead to higher customer acquisition costs per customer and lower yield on each customer.  In other words, you lower the average life time value of a customer. It’s clear that a business strategy focused on retaining customers by delivering on promises creates consistent revenue and a healthier business model.

Too often companies assume this is the nature of their industry and accept the turnover. I worked with one such company that decided to make it a business imperative to lower customer turnover. As quickly as they brought in new clients, the old ones would jump ship. After careful review of their operations and conducting root cause analysis they found they could make major improvement in turnover. The primary cause of turnover was that they were investing in the wrong type of employees and processes in customer service, which was directly affecting satisfaction of their customers who were already was under constant siege by competitors. They made some minor tweaks in process and one personnel change to set the example, and now customer retention is way up and each account is growing steadily.

How many existing customers have you sacrificed for new ones and how much has it cost your business?

Howard Shore is a business growth expert who provides business strategy and consultation services. To learn more about how an executive coach, management consultant, leadership training, or business coach can help your team with employee engagement, please visit his website at activategroupinc.com or contact Howard Shore at (305) 722-7216 or email him.

Why Your Customer Service Sucks

Customer service is the new luxury. I’m convinced that the company that owns the voice of the customer and uses it to build an organizational culture that focuses on delighting the customer through uncommon service strategy will own the marketplace. Unfortunately far too few businesses think like their customers, which affects their ability to deliver superior customer service and win a major competitive advantage.

What is does enlightened customer service look like? Here are a few examples:

  • The family restaurant that has bathrooms cleaner than yours at home; with fresh flowers, lotion and mints.
  • The lawn-care company that leaves a lovely bouquet of fresh flowers from your yard after they finish.
  • The drycleaner who automatically sews on missing buttons.
  • The downtown business that offers to “feed the meter” while you shop.
  • The bank that hosts a dinner for their top 30 clients to have an open discussion about how they can serve them better.
  • Any store that empowers their frontline people to find a way to say “yes” and solve problems before they escalate.

The list goes on and on with a million different ways to delight, surprise and entertain your customers. Sadly though, I see very few companies that understand how important (and easy) it is to stand out in a crowded world of me-too products and average service.

So how do you find ways to delight your customers with uncommon attention to service? Here are two quick ways:

  1. Ask your customers. They will be your best source of ideas. Never stop asking and listening to what your customers identify as important to them.
  2. Borrow ideas from other industries. Basically steal and use ideas that worked for others. Look at other companies you see doing amazing things to service their customers and ask: What can I do with this? How can I make this work for my business? What can I do right away?

What can you do right away?

Howard Shore is a business growth expert who provides business strategy, business coach and customer service consultation services. To learn more about how an executive coach, management consultant, leadership training, or business coach can help your team with employee engagement, please visit his website at activategroupinc.com or contact Howard Shore at (305) 722-7216 or email him.

 

Customer Service Points You Have to Get Right

A few weeks ago, JD Power released its list of 2012 Customer Service Champions. I found it interesting that there were three airlines on the list. You don’t usually think of the airline industry as customer-focused. Yet three airline companies managed to impress JD Power with their fanatical attention to customer service—so much so that they made it onto this list of just 50 companies that are “champions” of service.

I am not surprised that the three companies are Southwest, Virgin America and JetBlue. These airlines have used customer service as differentiators for some time, each in their own unique way. Their customer service is finely honed and crafted especially for their core customer, which is why they all have such impressive brand loyalty.

The important thing to note is that great customer service is not a one-size-fits-all strategy. The customer service experience is drastically different between all three airlines, and that is by design. The loyal Southwest customer is drastically different from the loyal Virgin America customer. These customers expect different things and demand different experiences, and you could never interchange them. In all likelihood, a loyal Virgin customer would hate the experience of flying with Southwest.

Think like these customer service champions and design your customer service experience around the preferences and demands of your core customer.

Define Customer Service “Moments of Truths”

When I work with a company as a strategic planning consultant, one of the most important company functions we examine is customer service. When we evaluate their service processes, we identify their “Moments of Truths”. These are essentially their most crucial customer touch points—the times and places in their new business acquisition, servicing and retention processes that are so impactful to the customer that if they don’t get them all right, it could cost them that piece of business.

Every company and industry has three to five service “Moments of Truth.” How you touch your customer at these points defines your service experience. Let’s look at the restaurant industry as an example. Every restaurant must meet a certain standard in four key areas: Service, Price, Food Quality and Cleanliness. These are the four Moments of Truths for a 5-star restaurant or a fast food joint. However, how these two very different businesses deliver on these touch points is highly important for their core customers.

The 5-star restaurant customer expects extremely attentive and formal service, gourmet food and impeccable cleanliness, and for that they are willing to pay a premium price. The fast food customer still expects cleanliness, but service should be quick and casual at a low price. Both restaurants can be customer service superstars, but they must understand their core customers and design the service experience around them.

What are the Moments of Truth in your customer service experience? Define them and define the ways that you will use them to differentiate your company in the marketplace.

Howard Shore is a strategic planning consultant who works with companies that need customer service strategy and coaching. Based in Miami, Florida, Howard’s firm, Activate Group, Inc. provides strategic planning and management coaching to businesses across the country. To learn more about strategic planning consulting through AGI, please visit activategroupinc.com, contact Howard at (305) 722-7216 or email him.

Employees Are Your Most Important Customer, Part 2

I wrote an article about the many reasons why your employees are your most important customers. I wrote about how keeping your employees happy is one of the easiest ways to keep your customers happy. Happy employees give great customer service and create great word-of-mouth for the company.

When I read an editorial in the New York Times written by an ex-employee of Goldman Sachs on his last day of work, I was reminded again about the value of keeping employees engaged. This is a real-life example of how unhappy employees can cause considerable damage to reputation and potential threats to customer retention.

The Goldman employee, Greg Smith, spent his entire career at the company, rising up in the ranks and maintaining a great amount of pride in the company and its values. He says in the wake of a recent leadership change, the company lost sight of its values to focus on blind profits. He decided to exit the company in dramatic fashion by writing this lengthy editorial detailing his first-hand experiences and resulting disgust. He exposed degrading language used within the company and the practice of selling worthless assets to unsuspecting buyers.

Was his account accurate? We don’t know for sure. Regardless, what he did (besides commit career suicide) was create a great amount of doubt in Goldman’s trustworthiness. Plenty of Goldman customers read that editorial and some probably considered whether it was worth remaining customers.

Remember, your employees are the eyes, ears and voice of your company. They can be your biggest cheerleaders or your worst nightmares. It is crucial you keep them engaged and satisfied. Training, coaching and communication are keys to their engagement. And if they become disengaged for too long they will tell you…or anyone who will listen.

Howard Shore is a management coach who works with companies that need leadership development and strategic business coaching. Based in Miami, Florida, Howard’s firm, Activate Group, Inc. provides strategic planning and management coaching to businesses across the country. To learn more about management coaching through AGI, please contact Howard at (305) 722-7216 or email him.

Let Your Customers Do the Talking

We live in an increasingly social world. Today, roughly 90% of consumers will read product or service reviews online before making a purchase decision. Clearly our customers, and the information they provide to others about us, influence our success and our reputation.

There was a great article from Bill Lee on the Harvard Business Review’s website recently that challenged executive leaders to think about customers not just as purchasers, but also as providers of value and knowledge. Customers are as much assets as anything else in your business. Not only can they help you improve your products with their feedback, but they can also act as an extension of your customer service team. This is the reality of our digital world and must be considered during strategic planning and goal setting.

Online tools like social media and mobile applications are platforms that almost everyone is using today, and they offer a tremendous opportunity to build your brand and increase awareness. By simply making these tools available to customers you are increasing opportunities for your customers to share feedback and endorse you to their network.

On the other hand, screw up the customer’s experience and you may feel the social media wrath just as quickly. It’s a double-edge sword, so make sure you are on the right end and let your customers help you sell more product. Here’s how:

  1. Make Your Website Social. Make sure you have social plug-ins and sharing buttons on every page of your website. This allows users to quickly and easily share any piece of content with their network.
  2. Allow Reviews and Comments. If you highlight products or services on your website, be sure to integrate review and/or comment functions on those pages. This allows customers to provide valuable feedback and helpful tips to other users.
  3. Consider User Forums. If you provide a highly technical product or service, consider adding a knowledgebase forum or message board to your website. With your own help forum, experienced customers can help each other and provide their own tips and suggestions to each other.
  4. Reward Vocal Customers. If you start to see great comments coming from the same customers, thank them publicly. You could even reward them with special discounts, gifts, or other rewards to acknowledge their loyalty.
  5. Acknowledge Bad Reviews. Somewhere along the line, you will probably be on the receiving end of a bad online review. When that happens, respond quickly and publically by apologizing, acknowledging the unmet expectations and offering a solution. Never get into a he-said, she-said argument online. Try to get the reviewer to contact you offline so you can get more information on his experience. After you resolve the situation, ask the customer if they would be willing to post a follow-up comment indicating their satisfaction.

Encouraging customers to share feedback on your products and services creates opportunities for company endorsements, brand awareness and product improvements. It is time to embrace your customers as the knowledge assets they are and give them the tools they need to spread the word about you!

Howard Shore is a strategic planning consultant and founder of Activate Group Inc, based in Miami, Florida. His firm works with companies to deliver transformational management and business coaching to their executive leadership. To learn more about strategic planning through AGI, please contact Howard at 305.722.7213 or email him.

Is Customer Loyalty in Your Strategic Plan?

In his book, Customer Satisfaction is Worthless:  Customer Loyalty is Priceless, Jeffrey Gitomer said, “Satisfaction is no longer the acceptable measurement of customer service success”. This is the reality of business today: No matter how satisfied you think your customers are, you need to make an emotional connection and develop a long-term relationship, or that satisfaction is ultimately worthless. You customer loyalty program needs to be part of your overall strategic plan.

Here’s why…

Great customer service is all about sending customers away happy and bringing them back for more. They need to be happy enough to pass along positive feedback about your business to others who may then try your product or service and hopefully become repeat customers themselves.

Why Customers Come Back

Customers will come back, with their family and friends, if:

  1. The experience at every touch point of the buying process was so strong that it left a mark on their memories.
  2. Your relationship with them is based on trust. You want your customers to seek your personal assistance, and be willing to pay for it.
  3. They feel you really care about their needs. Always put your customer’s interests and needs ahead of yours.

Here are some statistics that provide proof that emotional connections with customers matter:

  • A typical dissatisfied customer will tell 6-10 people about their bad experience.  A typical satisfied customer will tell only 1-2 people.
  • It costs six times more to get a new customer than it does to keep an existing one.
  • Of those customers who don’t return, 68%of themdon’t because they experienced indifference from the company or an individual.
  • About 7 out of 10 complaining customers will do business with you again if you resolve their complaint to their satisfaction.
  • If you resolve a complaint on the spot, 95% of customers will do business with you again.

Pretty powerful stuff!

Do You Believe Your Customer will Recommend You

Ask yourself this question: On a scale of 1 to 10, how likely is it that your customers will recommend you to someone else?

If your answer is below seven, or you don’t know the answer, it is time to think about developing a customer loyalty strategy as part of your strategic plan and start creating the emotion in the experience with your business.

Howard Shore is a strategic planning consultant and founder of Activate Group Inc, based in Miami, Florida. His firm works with companies to deliver transformational management and business coaching to executive leadership. To learn more about strategic planning through AGI, please contact Howard at 305.722.7213 or email him.

The Most Important Conversation You Should Have

Throughout my career I have seen history repeat itself over and over again: leaders making important changes without having a conversation with their most important sources — their customers. You see, what leaders are looking for is data that supports the path they have always followed or believed to be the best strategy for their organizations, but when you look carefully you will see that what the data supports is the opposite.

Things Are Always Changing

What worked in business years ago does not work today. Times are changing. Customer wants and needs have also changed. Imagine twenty years ago, when some technologies didn’t exist, and customers’ desires were different than today. A great example is the fast food industry. The menus are constantly changing. They are always trying to keep up with what their customers’ needs are. Are you?

Change Starts With You Too

The obvious place to start is with your customers. Create solid questions to receive solid feedback. Analyze the solid facts. Most importantly, take what you have learned and implement it into fixing your current strategy. When Americans started eating healthier, McDonald’s reacted to it by including healthier options to their menu. Did the trend take anything away from them? No, because they now can have customers who became health-conscious continue eating at their establishments.

Don’t Go With Just Your Gut Feelings

With so much competition and new products and services coming out every day, businesses can no longer act on whims. There must be secure, solid systems in place to learn how to grow your organization. Leave the “I feels” at home and state the facts. Customers often shop based on emotion. Businesses do not succeed based on emotions. There’s a difference.

To learn how to start collecting solid customer feedback, check out my previous article “Business Strategy Based on Knowledge Instead of Belief.”

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