Improving the Customer Experience

Most people understand that having a great customer experience for their customers is the key to customer satisfaction and positive word of mouth.  The customer experience is not just the buying process but starts with the awareness phase and continues past the actual purchase to loyalty and advocacy.

The first thing to understand is that customers have different needs and desires and are different in many, many ways.  They may have children or not, be older or younger, be of different ethnic or linguistic backgrounds, have different core values, etc.  Their priorities, values and experiences inform their perspective (how they see the world).  This means that different customers want different things, at different times and provided differently.  So you need to be aware of each situation and be prepared to meet this differing expectation.

Someone who has little time may prize fast service.  Others may want to understand all the options and then choose.  A starting point to improve the customer experience is to identify the characteristics of your most valuable customers and craft service strategies to meet their needs.  I will explore more on this topic over the next several weeks.

Do you really need a Marketing Strategy?

Potential clients constantly ask me to develop a marketing plan for them that will really work and deliver more customers.  So, I ask them to describe their marketing strategy.  Mostly they cannot do this.  They just want more of any type of customers.  Just bring them in.  So I ask them what is unique about what they sell/do or unique about the way they do it?  After some discussion, they can usually tell me.  Often though, it is not very compelling.  So finally, I ask them who their customers are now?  Are they middle income or affluent?  Where do they live, why are they their customers?

Marketing is going to be ineffective until it is possible to describe a target set of customers, understand what they need and can delivery it in the way they want.  In short, that is what a marketing strategy is.

A marketing strategy is the framework by which a company increases sales and achieves a sustainable competitive advantage.  It is based on a company’s Unique Selling Proposition (USP) which requires a review of customer needs, competitors, opportunities, consideration of all of the internal and external environmental factors, identification of constraints (resource and other) and the evaluation of other factors including technological, economic, legal or political.

When you figure out what you are really selling, (e.g. convenience?), have a unique twist to doing it, and know who your target customer is, you have the outline of a marketing strategy.  Your special sauce, if you will, is best if it is difficult to imitate or it won’t work for long.  This is where the evaluation of your competitors and potential competitors come in.  It is also the place to understand what you do really well so you are building on your strengths not your aspirations.  This is where something like a Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis comes in.  This helps you figure this out.

In any case, taking the time to develop a well thought out marketing strategy is time and money well spent, because without one, you will be wasting your money on developing and executing a marketing plan that just won’t work.

Getting More Customers

Every business owner wants to get more customers.  The question is how to get them.  Assuming that you already have both a marketing strategy and a unique selling proposition (i.e. the reason someone should buy from you), then the next step is to have a solid marketing plan.  A marketing plan lays out the actions to be taken to get more customers and more sales.  Of course, every company today needs a web site so customers can find them online and most companies need a presence on social media.  Both should offer compelling reasons why a prospective customer should want to do business with you.  If you are a company selling to consumers, you need to get customers’ attention and drive them to action.  This can be accomplished by a combination of online and offline activities. For companies selling to other businesses, I will cover this topic in another post.

Online activities can include running paid ads, search engine optimization, social media campaigns, email campaigns, text messages, etc.  Paid ads are ads that come up when a consumer takes a specific action on the web such as searches for something.  Search engine optimization strives to get your company to come up on the first page of Google (and other search engines) in the organic listings.  Organic listings are listings that are not paid for when customers search.  Social media campaigns can range from efforts to keep your brand top of mind, to company pages, other paid advertising, the use of influencers, etc.

Offline activities can include paid print, television, and radio advertising, direct mail, networking, expos, the use of a direct sales force, etc.  You are no doubt familiar with these.

To be most effective, you will need to coordinate these and have a comprehensive marketing plan.  Unfortunately, each of these methods is complicated and most require specialized skills.  I have seen companies spend a small fortune on both online and offline marketing with little or no return.  So be smart and understand each method or if you don’t have enough time available, get some help.

Pricing Changes Lead to Increased Profits for Small Business

 

In a previous post, I provided an overview of the role of business modeling in improving profitability.  So in posts for the next several weeks, I will be providing examples of the kinds of insights business modeling provided and their impact on increasing profitability.

 

For a multi-location day care provider, the model showed that the key to profitability was to increase capacity utilization.  When running the day care, almost all of the costs were fixed no matter how many customers they had on any given day.  If a lot of people came in, it was highly profitable because the revenue was much higher but the costs were almost level.  If they had few customers, the location lost money that day.  This led to pricing changes so that customers had a significant incentive to sign up for a monthly service rather than a day at a time.  Even though the monthly service was discounted, and provided the lowest cost per day to the customer if used for each weekday, it provided much greater revenue.  In addition, the daily price was raised to discourage drop-ins. In this way the pricing was set up to incent customer behavior to be consistent with the cost of doing business.

Small Business Estimating, Estimating, Estimating!

I can’t tell you how many contractors, plumbers, painters, electricians, woodworkers, cabinet makers, flooring contractors and specialty manufacturers I have worked with who leave a lot of money on the table because they don’t engage in formal estimating.  So much money, that many of these business owners were either living hand to mouth or flat out losing money.  Of course, when they called me in they thought they were making money but somehow never had any cash to pay bills or themselves.

You don’t have to be a management consultant to think that something was wrong.  One of the things that I did for each of them was to institute a formal estimating process.  This may have taken the form of making up a set of Excel estimating templates that covered a range of situations or setting up more formal estimating software and creating the processes around it.

Of course, getting all of the costs for estimating took some detective work.  Some of the obvious things like labor and cost of materials were not too hard to figure out (as long as you don’t forget payroll taxes, fringe, an allocation for paid time off including vacations and holidays, etc.).  Next, we have the proper allocation of space to work in, and money to maintain and replace tools.  Then we have trucks that have to be insured, paid for, maintained, fuel, etc. worked out to a per job cost.  Don’t forget overhead, advertising (the cost of getting that customer), and so on.  If you leave something out or your estimates understate certain costs, you may not see the full improvement that you want.

And don’t tell me you have been doing since the invention of the wheel and you have it covered.  I have not had a single client yet that did not see big improvements in profit with the methodical approach to estimating that I helped them with.

Once you have worked all of this out, the next challenge is to properly estimate how much of each resource you need for a specific job or order when estimating a new job.

Now, here is the biggest tip in this whole article: You must then track the actual hours used by sub-activity (e.g. prepping a room for painting) and the actual cost of materials and use of major equipment for each and every job.  Enter this info at the completion of each job and compare it to what you estimated.  Account for any change orders.  USE THIS INFORMATION TO BETTER ESTIMATE THE NEXT JOB.  After all, if you price too much, you will lose out to competitors when bidding.  If you don’t charge enough, you won’t cover all your costs and make as good a living as you deserve.