Negotiation Backfire!

A week ago, I wrote about a business negotiation I was doing for some yellow pages advertising space.  You can read that at the following link:  http://chelmsmba.blogspot.com/2010/08/negotiating-experience-of-day.html.  Today, I finalized the deal and wanted to tell you about the outcome.  The title of this post is "Negotiation Backfire!", because of the way it ended up for the sales lady.

After she applied time pressure to me last week, unsuccessfully, she went on vacation and didn't get back to any of my emails until today.  When she finally replied to me, she told me that her boss wouldn't accept my offer of $2,500 per month for the back cover of the phone book (basically the best advertising spot on a phone book), and that it was originally going for $4,500 per month.  Incidentally, reading back to my previous post, $200 above my offer would have been $2,700 per month and I would have said yes to the deal.

Since I last spoke to her, I surveyed lots of my customers to find out that 72% of them use the internet for search instead of the phone book.  Seems like a no-brainer to me too, but written statistics can be very powerful, so I put together the data.  I presented the data to her and told her that with that information, I no longer cared if I was in the book or not, and that I would just go ahead and continue my previous 1/2 page advertising, but I would need it for 1/2 the price.  This was not a threat.  It was just a matter of fact that I was going to cut my advertising in half with her phone book.  That's a great negotiating principle - sometimes, a great impact can come from pulling dollars off the table that were already assumed to be part of an agreement.

Her response was priceless for me.  She sort of did the same thing that I did.  She told me that because we took so long to come to an agreement, that the advertising on the inside of the book had already "closed" and that my previous ads were no longer an option for me.  The only remaining option was this UNSOLD back cover, so she offered it to me for $2,800 per month.  (No kidding, as I write this my I'm smiling with a feeling of excitement.)  Anyways, I turned that back around and offered to take 100% of my dollars off the table instead.

I said that since I couldn't get my prior "ineffective" ad space for half price because she took a vacation in a failed attempt to apply even more time pressure on me and caused me to lose the only thing I had even a little interest left in, that I would pay $1,400 per month for the back cover.   If we couldn't do that deal today, I told her I would just take that $1,400 and advertise with her competition (it wouldn't be the first time I had to do that anyways).  She faxed over a contract for $1,400 two minutes later.

So, let me summarize the value that I got from working all of the necessary tactics on this deal.

Back Cover original price = $4,500 per month ($54,000 per year).
My Final Negotiated price = $1,400 per month ($16,800 per year).
A difference of $37,200 per year in my favor.

The real killer part of this deal though is not in the money that I saved above, and that's a lot of money for something like this.  No, the best part is that for $329 LESS PER MONTH, I have the BEST advertising spot available.  Being inside the book is like being burried in and around the competition.  Now, for $329 less per month that my previous ineffective 1/2 page ad, I'm able to help my prospective new customers to never have to look inside the book where my competitors are.  I essentially get to make my competition invisible.

OK, so here are some negotiating lessons that you should gain from my this experience.

1.  Never fall to time pressure.  Turn it around and use it to your advantage.

2.  Deadlines are very often not real.  Push them back as often as you can so that time pressure is on your side.

3.  Take money off the table that was previously assumed to be part of the deal in order to get a better deal.

4.  Paint the portrait of pain.  I did this by showing the sales lady how I would take all of my money out of her book and put it in her competitors' books.  She would have lost the sale and her competitors would have gotten stronger.  I was absolutely going to do this.  Be prepared to do what you say you're going to do.  If your bluff is called, that can seriously backfire on you.

5.  Use market data to back up your position.  The power of the written word, especially in relevant statistics, can be a very powerful tool.

Build Your Marketing Machine

A lot of companies don't understand that in order to excel in business, they can't just be the company that they are. They also can't simply be a company that does marketing as a part of business. For a company to excel - NO - for it to dominate in business, it must transform itself into a MARKETING MACHINE. The marketing machine exists to generate an over-abundance of new customers. Everything that it does serves the singular purpose of creating new customers. All of its working parts need new customers in order to continue moving. New customers are the very fuel that powers the machine. The marketing machine doesn't care what industry it is in. It doesn't care what kind of widget it makes or which services it provides. It only cares about doing it in a way that creates new customers and keeps them coming back for more.

Companies who want to be marketing machines must completely change the way they view themselves and the way that they do business. These companies can no longer see themselves simply as the company that they are. Instead, they must become a marketing machine that does _____________. For example, a medical office can not simply view itself as a doctor's office. Instead, it must become a marketing machine that sales medical services. Hair salons are no longer just hair salons. They must become marketing machines that sale beauty. If you look at the top companies in any industry, you will likely find a tremendous marketing machine. Nike, Adidas, Coca-Cola, Gatorade, McDonalds, NFL, NBA - just to name a few.

As you read this list of top-tier companies, you're probably thinking, "sure, but these companies spend millions marketing their products. I can't spend that kind of money." Agreed. Maybe you can't spend that kind of money. So, let's make an agreement about spending right here. You decide how much you can afford to spend on marketing your product or service. Then, think about how much you can afford NOT to spend money on marketing. Once you have spent adequate time on the money, get past it. Marketing is not ONLY about spending money. That's small thinking. MARKETING IS ABOUT EVERYTHING THAT YOU DO. That's why you're a marketing machine.

You market your company by the way you treat customers. You do it with the packaging of your product. Your pricing structure is part of your total marketing presentation. The neatness of your uniforms and the cleanliness of your business location markets the company. The way you say things markets your company. Your company name markets your company. Your colors, designs, and logos market your company. The quality of your personnel markets your company. Marketing must be built into everything that you do in your business. In fact a marketing machine never makes a move without considering the impact on the customer, especially how it will effect the inflow of new customers.

The marketing machine has certain internal rules that it never violates:

1. Everything it does has a purpose - to create a new customer.
2. Every single piece of written (marketing) material has a killer, customer-focused headline.
3. It always answers the customer's question, "What's In It For Me?" (WIIFM)
4. It never spends money on anything that is not working to generate new customers.
5. When budget cuts must be made, it NEVER cuts the marketing budget.
6. It always knows how customers heard about it and why they chose it over the competition.
7. It always does more of everything that works to generate new customers.
8. All of its working parts (employees) are a vital part of the sales team.
9. It never forgets its historical numbers and its current targets and benchmarks.
10.It unconditionally loves its customers.

Because it is a machine, the marketing machine makes everything automatic, only auto-drive happens in over-drive. Policies have a built-in customer focus. Procedures are created in a way that saves the customer time and encourages the customer to buy from you more often, and certainly instead of the supposed competition. Training is done fanatically so that customers receive a consistently excellent experience and consistently excellent products. Customer service is more important than dollars and cents. Therefore, employees are taught and encouraged that customer satisfaction is the minimum acceptable outcome - that customer enthusiasm is the pinnacle of the customer service plan. That's right - the customer service plan because in the marketing machine, everything is written up and standardized - especially the expected enthusiastic customer experience. When the marketing machine senses or is alerted to a potential dissatisfied customer, it takes immediate action to turn that customer into a source of future fuel that will enthusiastically tell others about their excellent experience.

Finally, once the marketing machine builds up a full head of steam, it becomes a locomotive that is ready to treat illnesses, give hair cuts, repair broken pipes, replace roofs, personal train clients, make hamburgers, or whatever else it does along with marketing. The marketing machine will dominate its industry because it is first and foremost a marketing machine that exists to do just that.

Is your company a marketing machine?

Paint the Portrait of Pain

It is well studied that most people will go to great lengths to avoid pain. In this case, I don't necessarily mean "pain" literally. Pain could be a problem that people would want to avoid. It could be a significant loss that would result from a specific action or inaction. It could be financial and it could be social. For now, we'll use "pain" to mean anything that a person would like to avoid in order to avoid a negative consequence.

In sales, the idea of pain avoidance is a powerful tool. Currently, gold dealers are promoting the pain of a falling dollar because gold will not likely ever lose its value. Put your money in gold, they say, and not only will you get a great return, but your money will not be worthless when things get worse. Who wants their money to be worthless? Nobody. And these companies tell you to buy gold in order to avoid the pain of a worthless dollar (they may be right by the way).

Doctors know all about this principle too. When you're seeing the doctor and all you have to pay is your copay, what do you think you would say if the doctor asked you, "would you like to get blood work to rule out a life-threatening illness?" Hmm. . . let me think about it. OK - go ahead since it could save my life.

What pain do your customers suffer when they don't buy from you? What pain do they suffer when they go to your competition. In my medical office, when an injured worker goes to the competition, he finds himself back at work with an injured back. That's literal pain. Some of them go to doctors who don't understand workers comp rules, so they don't get their forms filled out correctly and they get fired from their jobs. When I tell them how we solve these problems, they wouldn't consider going to the competition and I don't blame them.

Personal trainers have a captive audience of gym members who experience various levels of pain - from being overweight and unhealthy to being almost as strong as the next guy. When they paint the picture of an ineffective workout being performed in a gym that they are paying a monthly fee to belong to, and show prospects the success of their past clients, they not only paint the portrait of pain, but they paint the portrait of solution at the same time. Powerful.

You have to figure out how your customers experience pain if you want to be able to solve their problems and promote those solutions to future prospects. Customers who want economic cars likely have the pain of a long, expensive drive to work. So, hybrid dealers sell them an inexpensive car that gets 40 or more miles to the gallon. Problem solved. Lawn care guys go door-to-door leaving business cards at the houses with the worst yards. They assume that the home-owner doesn't enjoy doing his own yard or it would look nice like the neighbors. They fix the pain by offering a service that other people want to avoid. During "tax season," firms promote the avoidance of scary IRS audits. Who wants that kind of pain? Nobody, so these companies make a ton of money by using (at least partially) fear avoidance.

To attract more customers and prevent your existing customers from going to the competition, you must identify their areas of pain, solve their problems, and promote the ways in which you solve their problems. Paint the portrait of pain and then paint the solution through advertising and promotions.

Covert Customer Loss

Smart companies budget their marketing, advertising, and sales costs, and these costs can be significant, but even greater when they don't produce the desired results. Take the following example into consideration.

Say you spend $15,000 per month in total marketing, advertising, and sales costs. For this, you expect to get 100 new customers per month. That's $150 per new customer (assume this is a great deal with a high return-on-investment). What if you only attract 80 new customers? Now your cost is almost $188 per customer. Many companies have relatively low profit margins which means when your cost per new customer increases by $38, like in this example, your margins are swallowed up in the new customer loss. Incidentally, another way to look at this is that with only 80 new customers, you lost $3,000 in advertising costs (because they were ineffective) plus all of the sales revenue that you hoped to receive from those lost 20 new customers. Assuming a 10% margin, each of the 20 lost new customers would have brought the company $165, for a total of $3,300. That's a total loss of $6,300 per month, and over $75,000 per year if this continues. Wait just a minute!

$75,000? We should probably take a deeper look into why our marketing, advertising, and sales budget was so ineffective. So, you go back and find that your ads are perfectly designed and perfectly located in the perfect geographic areas and media to make a perfect impact. Your sales team is doing a perfect job attracting new customers and your marketing plan was written perfectly to maximize the company's tools in each of the promotional areas.

Really? Then what happened? All of this perfect effort achieved a 20% loss in new customers. I'll tell you what happened. Your receptionist turned away new customers when they called because she didn't understand how valuable that call was. Your on-site staff wanted to leave early a few nights so they weren't available to help the new customers. Your phone was busy when the new customers called, so they just called the next number listed in the yellow pages. Your staff underwhelmed new customers by their lack of customer focus or by their lack of product knowledge. You had some crazy policy or procedure that unknowingly limited new customers and nobody told you about the problem. When the customer called, your phone sales staff wasn't trained well enough to close the deal.

And. . . all of this stuff happened right under your nose. It happened in the evening when you were no longer in the office. It happened during the afternoon when you were really busy working in the business. It happened because you and your management team didn't have or make time to ensure that it did not happen. This is one other very important reason for you to spend more time working ON the business than IN the business. It's another reason that you must focus your effort on training, not only your staff, but their managers as well. You need to set up "secret shopper" phone calls to find out what's being said on the phone. Send "secret shoppers" into the office / store to find out how the on-site sales team operates. You must find all of the areas of covert customer loss that kill your business right under your nose.

When you don't know that all of these things are happening (and believe me, they are happening), you spend more time on advertising. You fire your sales team, you re-work your otherwise effective marketing plan. You spend valuable time and money on all of the wrong things and then as a result, you continue to get the same poor returns.

Be aware of your company's areas of covert customer loss. Find them, and you will see the result of your otherwise excellent plan, people, and marketing materials.

Blown Away

I had a recent experience at a local tanning salon, named MAX TAN, that literally blew me away, from the perspective of customer service. It made such a huge impression on me that I feel compelled to write about it. The lesson you will learn is so simple: remember names and address customers by name. Here's the story. . .

I last visited this tanning salon 5 years ago. When I decided to go back 5 years later, I walked in and the manager, who was there 5 years ago, said, "Hi Chris". It stopped me in my tracks. I couldn't believe it. He remembered my name after 5 years. He walked around the corner from a hallway, made eye contact with me, and addressed me by name without hesitation. I have to admit that although I recognized him, I couldn't remember his name. He made a dramatic impact on me (and I teach this stuff!). Of course, I asked him, "How did you do that?" He didn't have any tricks. He said that he just remembered. Every day since then, he has addressed me by name and I always remember the 5 year thing. What an impression!

The other great thing about this company is that every person who works there addresses me by name - even some of the people who I have never met or been introduced to. One of the employees even opened the door for me when I left there today. This company truly gets CUSTOMER SERVICE. What does it cost them to use my name? Zero! Guess how many people I've told? Before writing this article - at least 10. That's the best marketing a company can ever hope to get - a customer's enthusiastic testimonial and recommendation.

As an additional note on this company's overall service, their salon is always ridiculously clean, the employees are always smiling and making eye contact, they price their services reasonably and give customers multiple options for the various levels of available tanning agreements. They are simply unbeatable.

As a business manager, or as a person who simply wants to make a great impression on others, take a lesson from MAX TAN. Address people by name. Do whatever it takes to remember names. There are books available on remembering names. Get one if that's what it takes. Take pictures (with consent) of your customers to attach to their profile in your company database. Whatever it takes, address customers by name. You will blow them away.

Don't Get Mad at the Money

As I've said before, customers who complain are a valuable opportunity for a company. Unfortunately, many times, when customers do complain, staff get upset or even angry. They take it personal because they don't realize what a great opportunity that complaint can be. It will give them an opportunity to evaluate and improve systems, products, staff, and services. You need to train your employees to accept complaints and learn from them. Even more, you need to train them to thank customers for complaining and giving them an opportunity to improve.

In my office, when a customer has a complaint that hasn't been handled to their satisfaction by another employee or supervisor, I always speak with that customer and make them happy if it is at all in my power to do so. What I usually find is that one of my employees has followed policy the way they were trained to do, but the situation warrants breaking policy to make the customer happy. Some policies are meant to be broken on a case-by-case basis. After all, policies are for staff - not for customers. I'm not talking about very important company policies like the ones that address following laws or that prevent workplace injuries. I'm just talking about "smaller" policies. For example, my doctor's office has a policy of needing to personally meet with patients who need certain forms filled out. Well, if that patient (customer) is going to be late getting back to work if she has to wait long for the doctor, maybe we can just interrupt the doctor and get the formed filled out right then. We have another policy of taking our last patient 30 minutes before we close. However, if a new patient were to come in 15 minutes before closing time, it's a good idea to help them out and get an account started so that we can see them again tomorrow. These are less important policies that are meant primarily to maintain order and give all associates a frame work for how to operate. They are not policies for customers, so customers don't need to care about them.

When a customer talks to me and I "over-rule" one of my employees, that person will sometimes be upset with me because I didn't "back them up". I just tell them that making customers happy is the top priority for all associates at all levels of the organization. I'm a brick wall when staff complain about customers. Customers = Money. So, I say, "Don't get mad at the money."

Train your staff to make customers happy and empower them to break policy on a case-by-case basis, to make customers happy. At least encourage them to talk to their supervisor about finding a solution that can make the customer happy. Complaints are a valuable opportunity for creating happy customers that refer other customers.

Don't get mad at the money. Instead, make customers happy so they will tell all of their friends about how you went above and beyond to take care of their needs.

Working ON the Business

As a top manager or business owner, the way you spend your time at work will determine the impact you have on the business - either positive or negative. You can not allow yourself to get buried in the day-to-day tasks of your organization. If you, for example, answer phones, stock shelves, purchase inventory, or do other work that could be handled by someone else, you are hurting your business because you aren't serving your primary purpose of growing the business. When you spend most of your time working in the business, it's like you're a hamster on a wheel - you're working really hard and getting no where.

As the top manager or owner, you need to spend the vast majority of your time working on the business. When you work ON the business, you are doing things that grow the company in many different ways, from creating policies and procedures, to devising strategy for getting new customers. Some tasks that you should be doing instead of the day-to-day tasks of the operation are:

1. Writing and modifying policies and procedures.
2. Writing marketing and strategic plans.
3. Creating budgets and reviewing financial statements.
4. Talking to customers to get their feedback on ways to improve the business.
5. Training others to do the day-to-day tasks of the organization.
6. Reviewing sales reports.
7. Reviewing your chart of graphs to find problems and opportunities.
8. Training people to do the training of others.
9. Delegating assignments and following up on their completion.
10. Working with suppliers to get better deals.
11. Talking to established clients and future prospects.
12. Talking to your staff to find out what problems they are having and identify areas needing improvement.
13. Creating new products for sale.
14. Building alliances with complimentary products and services.
15. Finding ways to get more efficient.

These important tasks can not be left to someone else. You are ultimately responsible for the success or failure of you operation. Jefferey Fox suggests (and I agree) that you first need to hire a office / business manager and a marketing / sales person. You will be able to delegate many key tasks to these positions which will save you the time you need to work on the business. While these people will also be charged with doing their part to work on the business, their key responsibilities will be to work in the business and ensure that your priorities are handled effectively.

Working ON the business is the only way for you to grow the business to the level that you envision in your own mind. Start delegating the day-to-day tasks of the organization and do the things needed to grow your business.

Critical Missing Sales Step

Businesses that do great marketing and sales have a well written marketing plan, with a killer sales offering, a compelling message, and effective marketing and sales materials. As part of the marketing plan, one or more sales people may be charged with face-to-face marketing with key referral sources. During these sales attempts, the marketer / sales person will try to get time with key decision makers. They will hopefully present the sales materials (brochures, booklets, presentations, etc.) in a way that compels the decision maker to send them more new business / customers.

But, with the potential high cost of marketing and sales, and in spite of the effective sales materials, the effort to reach decision makers, and even with having what you think is a spectacular marketing / sales person, if the following critical sales step is missed, the entire cost and effort could result in a frustrating and damaging nothing. What is this critical missing step?

Always Ask For The New Business. Always Ask For The Sale. Always Ask For The Referral.

Yes - you must ask if you want to receive. This seems so obvious, but the number of sales attempts that end without actually asking for the business is shocking. This sometimes happens when the sales / marketing person is intimated by the decision maker, so you must hire someone for this position who is not only very skilled, but very confident (almost cocky). It also happens when the sales person is not trained on effective sales techniques or even worse - when the sales person simply doesn't believe in your product. In the first case, you need to make sure your sales team is highly trained. In the last case, you just have the wrong person in that key position. Get someone else fast.

Asking for the new business can dramatically improve your sales effectiveness. While there's a lot that plays into this step (enough to write an entire entry on the subject) you must be aware that your sales / marketing team may not be doing it, and this is hurting your business. Make this part of your marketing and sales policies. In policy, you should clearly mandate that asking for the business is part of the sales and marketing process. Asking for the business should also be found in your marketing and sales materials. Do not take it for granted that your customers will do business with you just because you have good materials and good people. Instead, always ask for them to do business with you.

What are You Really Selling?

I think it's critically important for you to understand what you're really selling to people. If you can't identify your real product, you will never be able to effectively sell your product or service to the masses that you want to sell to. Let me give you some great examples.

1. Hair Stylists do not sell hair cuts.
2. Chiropractors do not sell adjustments.
3. Electronics stores do not sell big screen TV's.
4. Furniture stores do not sell beds.
5. TV advertisers do not sell advertising.
6. Realtors do not sell houses.
7. Athletic shoe stores do not sell shoes.
8. Lawn Care guys don't sell lawn mowing.
9. Gyms don't sell gym memberships.
10. Photographers don't sell photos.

So, what do all of these people really sell? Well, hair stylists sell people self-confidence and a strong ego. Chiropractors sell relaxation and freedom from pain. Electronics stores sell an entertainment experience you can share with your friends and family. Furniture stores sell the best night's sleep you've ever had. TV advertisers sell companies a dramatic increase in new customers. Realtors sell dreams and a better life. Athletic shoe stores sell a better jump shot. Lawn Care guys sell a beautiful yard that is the envy of the neighborhood. Gyms sell beach-ready bodies and photographers sell memories that last forever.

When you know exactly what you sell, you're able to create more effective advertisements with more powerful headlines and better sales pitches. You create a mission that everyone who works for you can get behind and believe in. Most importantly, you give your customers an emotional reason for buying from you instead of your competition.

What are you selling?

Great Managers Reject Average

Great managers reject average because they know that it comes at the cost of excellence. Average does just enough to get by. It requires little effort or thought. It achieves average results. It settles for second best and even third best. Average doesn't impress customers, but it also doesn't bother them too much. It doesn't look for better ways to do things and it doesn't identify problems to be fixed. Average clocks in and clocks out and works just for a pay check. It is not invested in the company, the customers, or even in itself.

Despite its rejection by great managers, average is widely accepted by most of the public. Is anyone really ever surprised anymore when someone doesn't address them by name? Do we ever really complain when service is average or substandard? At restaurants, don't we see mistakes with the meal as just part of the experience?

I recently had an experience with a major delivery carrier that actually caused me to write this blog. After the delivery agency promised to have my package to my home after 5pm, the delivery attempt actually happened at 3:15pm. I was home by 4:15pm (early considering the promised delivery time), so I called the carrier and asked them to send the delivery man back to my house before the end of his shift. Fortunately, he was still in town, so I thought I was in luck. However, despite being just 10 minutes from my house, I was told that he couldn't make it back, but that I could meet him on the other side of town. I could drive 10 minutes to receive my home delivery, after the delivery time was not honored, but the driver could not spare those 10 minutes for me - the customer. When I questioned this decision to the telephone "service" agent, she actually told me that this decision was based on "driver discretion".

Driver discretion! But, what about the customer? It was too much for me to expect a promised delivery time, or an additional 10 minutes of drive time to just satisfy a customer. Don't these average companies know that they have competitors who will earn these customers right away from them? And guess what - it will take a just-better-than-average effort.

Now, as an example, here's how that delivery experience could have gone:

Telephone Service Agent - "Mr. Helms, please accept my apology for the mix-up. I am going to call the driver right away and re-route him directly back to your house. Can you hold the line for just a short moment please sir?" When she comes back on the line: "Mr. Helms, the driver wanted me to convey his sincere apologies as well. He understands that you left work early to receive this package on-time and he is going to be back at your house in 10 minutes. Will that be OK with you Mr. Helms? Also, the next time you need to ship a package Mr. Helms, please give the attendant the following reference number and receive 50% off of your delivery. We really appreciate your confidence in our ability to delivery your package on-time and with great accuracy Mr. Helms. Have a great day and enjoy your package!"

Mr. Helms - "Wow!"

Directive to all Managers: DO NOT ACCEPT OR TOLERATE AVERAGE!

Expect excellence in everything you do, and in everything your company does. Train your staff to be excellent. Recruit and hire only those people who have a history of and desire for excellence. Make your customers say, "WOW!" Achieve excellent results. Set high targets and exceed them. Reward your employees for achieving excellent results. Never reward average, as these are not results - these are the things that happen naturally just for getting out of bed in the morning. When you shoot for excellence, your company will be the sacred "Purple Cow" in your industry and certainly in your town.

Yes, great managers reject average because they know that average comes at the expense of the only acceptable outcome - EXCELLENCE.

High-Value Marketing Tips

Your marketing department might just be you, or as described in The Ultimate Sales Machine, "A one-person army," or you might have multiple people on your marketing team. Either way, you need to understand these important marketing tips in order to run a tight and effective marketing machine.

1. Use a marketing budget to avoid excessive and wasteful spending. However, always exceed the budget on everything that gives you your desired return-on-investment.

2. Test, test, test. This means finding out what works and what does not work. Kill everything that doesn't produce new customers.

3. Survey customers to find out what works. What the manager thinks is irrelevant if the customers don’t agree. Stop funding for all marketing projects that are not supported by positive customer feedback.


4. Establish multiple pillars of marketing. For example: web sites, yellow pages, brochures, mail-outs, signs.

5. Create a customer-referral program. Reward referrals for the right kinds of customers.

6. Make customers say, “WOW” in order to become a referable company. Focus close attention to excellent customer service.


7. Formula for Growth = Capture + Amplify + Maintain. Capture new clients. Amplify the customer relationship. Maintain that client relationship. (From Your Management Sucks!)

8. When customers leave, you must find out why. Try to get them back and learn from mistakes.

9. Always ask for referrals, especially from happy customers.

10. Don’t try to win awards with advertising. The best award is new customers.

Customers, Customers, Customers

Wonder what this blog's about? Wrong! It's about customers.

Peter Drucker, the father of management, said the purpose of business is to create customers.

Jeffrey J. Fox says the only reason for business to exist is to solve a customer's problem and make customers feel good.

Jay Abraham says that you should fall in love with your customers.

So, let's put these 3 comments together into one tremendous customer service statement:

The purpose of business is to create customers and keep them by solving their problems and making them feel good by falling in love with them.

Just imagine the idea of falling in love with customers. What would you do for a customer that you were in love with? I like to say that there is no wrong way to make a customer happy. If you're in love with the customer, you'll do whatever it takes for his or her happiness. Don't forget to hire people who also want to love your customers and train them to love them the same way that you do.

It's interesting that Drucker says the purpose of business is to create customers. He even makes a point to say that profit is the wrong measuring stick. Wow! That one really made me think. Imagine though - what would happen to your profit if new customers stopped showing up?

I think, talk about, and act on customers and customer service a lot. Do you? If you're my competition, feel free to cut it out right away. Thanks.

Does Your Marketing Plan Address All the Right Areas?

A top-level marketing plan must address all areas of marketing, even the often forgotten areas. To evaluate the effectiveness of your company's plan, answer the following questions.

Who? - Who will your plan specifically target?
Where? - Where do you find your customers?
How? - How will your customers find you?
Why? - Why should your customers buy from you?
What? - What do you have to offer that differentiates you from your competition?
When? - When will everything in the plan happen?

How do you know?
1. How do you know which marketing efforts are working?
2. How will you track the ways in which customers find out about you?
3. How will you know if your marketing and sales teams are doing the right job?
4. What will you immediately stop doing?

What information should you use?
1. What has worked for you in the past?
2. What are customers telling you now?
3. What is your marketing cost per new customer, for each marketing pillar?
4. What are your strengths, weaknesses, opportunities, and threats?
5. What drives your company's economic engine?

What areas are missing from your plan?
1. Did you consider the impact of customer service on your current and future customers?
2. Does your plan contain any customer retention initiatives?
3. Does your plan address an increase of sales dollars and sales attempts per customer?
4. Did you consider your competitors' offerings?
5. How do your individual marketing pillars tie together?

Do you have adequate training at all levels of the organization?
1. How will you train all of your staff on customer service, retention, and sales?
2. How will you train your sales team to use influential sales tactics to increase customer value?
3. How will you train your marketing and promotions team to create killer headlines?
4. How will you educate all levels of the organization on the efforts of the other departments?
5. How will you ensure that everyone understands how to sell your products.

Your marketing plan will need to consider all of these questions. It will also include a complete list of all marketing, promotion, and sales efforts, along with a strategic time-table for each. The marketing plan is a complex piece of the organization's total strategy. A complete and effective plan is the necessary first step for the marketing team.

Killer Sales Offerings Answer the Question: What's In It For Me?

I was driving today and I passed a business with a big, expensive banner that said, "We Appreciate Our Customers". How wonderful. Why didn't the sign just say, "We do the minimum to make a sale"? Or, it could have just as easily said, "We blow our money on the wrong advertisements". The main purpose of business is to create new customers. In order to do this, you must answer the question, "What's in it for me?"

A better message on that banner would have been, "20% Off" or "Buy 1 Get 1 Free" or "Bring a Friend and get $10 off". The key point here is that you need to create a compelling reason for customers to come in. Appreciating customers is a great idea, but it is really a minimum. It certainly isn't worth throwing money away on a huge banner to say so.

If you really want to show your appreciation towards customers, then reward them for doing business with you and for promoting your business to their friends and family. Tell them you're going to do this. Give them an expectation of a showing of appreciation. Killer sales offerings answer the question, "what's in it for me".

Here's what's in it for you: Spend $500 and get $50 off your next purchase. Bring us 5 new customers and get a $100 gift certificate. Bring a friend next time and you both get half off.

Let's compare killer sales offering #1 (Spend $500 and get $50 off your next purchase) to the cost of the appreciation banner. What if this banner cost $500 to produce? It gives no incentive for customers or potential customers to spend money with you. Instead, you can pay $50 and make $500 or more. If you "have" to spend $50 10 times, that means that customers spent $5,000 or more. Your killer sales offering would have netted you $4,500 compared to a loss of $500 on the banner. And, that's just for the first 10 customers.

Everyone can create a killer sales offering. Just remember to reward your customers for helping you to grow your business. Get more new customers. Get more sales per customer. Get more sales attempts per customer. Reward these things and you will be answering the question, "what's in it for me?".

Are Your Customers Coming Back?

"Fine." If your customers say this, everything is not fine. What's worse? When they say nothing at all. Most customers won't tell you when they are unhappy. They'll tell everyone else though. Depending on how unhappy a customer is, they could just keep telling people bad things about you right up to the point that they completely forget you. This may be the only time it is good for the customer to forget about you and your business.

I think that it is fairly well understood that unhappy customers tell a lot more people about your business than happy customers do. What is usually missed, are the very fortunate subtle hints you get when an unhappy customer decides to speak up. And, these hints usually sound something like this: "fine." "How was everything Mrs. Jones?" "Fine." "Is there anything else we can do for you?" "No thanks. I'm fine."

Guess what's next? You never hear from that customer again, but depending on how not fine things really were, all of her friends will hear about you for quite a long time. Those friends might even pass the word along to their friends too. Not so fine, huh?

So, here's what you have to do. Wow them! Work like crazy to make your customers enthusiastically happy. These customers will turn into walking advertisements, except these advertisements will also have some level of influence over those they are advertising (talking) to. It's not enough for you to personally wow them. You must also train all of your staff to do the same. In fact, this must be a part of each person's job description.

Finally, survey your customers. Find out what they think about everything that's going on in your organization. Don't do anything without the customers' approval. Add this to an enthusiastic experience and you won't have to worry about whether or not your customers are coming back. They'll be back and they'll bring others with them.

To get started, read "The Fred Factor" by Mark Sanborn, and "Raving Fans" by Ken Blanchard. These easy-to-read books will set your organization on the right path to creating enthusiastically happy customers.

Develop Strategy to Win in Business

To win in business, you must have a clearly defined strategy that is communicated to all levels of the organization. Strategy can be devised for an entire organization AND for individual business units within an organization. Yes, all managers can create and follow a strategy, especially when the organization's strategy is clear enough that business unit managers understand what their goals and mission are. A great business unit manager will go the extra mile to have a strategy that allows the individual business unit to set goals and break records.

In order to create a strategic plan, you must have a focused mission statement that motivates the organization to work together to accomplish the organizations goals. A great mission statement will bring out an emotional response from the reader. You want all members of the organization to not only be behind the mission, but to live the mission by taking it to heart. This emotional mission must also be customer-focused and customer-centered since getting new customers is the most important function of business.

After a mission, strategy depends on an acute understanding of the organizations SWOT - Strengths, Weaknesses, Opportunities, Threats. Build on strengths. Minimize weaknesses. Take advantage of opportunities. Defend against and attack threats. Strengths and weaknesses are primarily internal factors, while opportunities and threats can exist internally and externally. It is best to bring the top minds in the organization together in order to clearly identify and define an organization's SWOT.

Finally, after a clearly defined mission and SWOT analysis, the strategy is created. Remember, strategy should be focused on creating new customers. However, the other ways to increase revenue (other than creating new customers) is to create more sales per customer and to increase customer visits. Also, don't forget to get more efficient so that you can reduce costs and become more profitable.

Organizations need clearly defined strategies in order to win in business. So, first create the plan, then follow through and remember to set up feedback points to make sure the plan is working.

Delegation Improves Management

Nobody can do everything. Anyone who thinks they can do it all isn't doing the important things. Priorities change all the time. As soon as you have completed a couple of high-value tasks, the priorities of remaining and new tasks will be different. It is the job of the manager to determine which tasks are valuable and important enough for the manager to do him/her self and which tasks should be delegated to someone else.

The manager's most important job is to grow the business or the business unit he/she is responsible for. Anything that does not accomplish that goal should be delegated to someone else, and it could be argued that those tasks should not even be done at all. Growing the business or business unit entails increasing new customers, increasing sales per customer, increasing customer visits, and increasing total profit. Managers should never take their eye off of that goal and they should train their staff to focus on the goal as well.

One thing that can stop down a manager's day is reporting. Managers need valid and accurate reports in order to develop strategy, reduce waste, and fix problems. These reports need to be clear and concise. Most importantly, they should be created by someone else. The manager should act on information, not develop the information. To make the best use of this time and information, find someone who is strong in that reporting area and get them on it. Delegate.

The other thing that will waste a manger's time is not having or following an organizational chart. First of all, if you don't have an org chart, get one now. Associates need to understand who they do and do not report to. All levels of the organization need to know who does each task. Org charts should have sufficient detail to let everyone know who does what. Once you have an effective org chart, everyone must follow it. A good manager will be one that associates feel comfortable talking with. This is a great strength because it helps to find problems and to motivate people to do a great job. The problem is when people bypass their direct supervisors and bring too many things to your office. You have to remind people to report issues to their supervisors. This is a part of delegation. It ensures that the direct supervisors are doing their jobs so that you don't have to. Empower your management team to make decisions so that you don't have to do their jobs for them.

With company email, staff has very easy access to a manager who does not redirect them to their direct supervisors. Don't get sucked into the role of email decision maker. Instead, simply reply by reminding them to go to their direct supervisor and copy the supervisor so that everyone knows not to bury you inside of your own inbox.

Managers have to keep an intense focus on the primary goal. Delegation is a key to achieving these goals. Empower the management team to be in-charge. Teach the staff to rely on their direct supervisor. Use reports, don't create them. Stay focused, achieve your goals, and have great success.

Delegation improves management,.