Category Archives: customer relationships

Be Prudent not Paranoid

checking youSoon after starting my business in computer products distribution, I got burned by a couple of retailers passing bad checks. Whether they were dishonest or just bad managers, the result was the same:  Whack, NSF!

I was still an inexperienced young entrepreneur, so it was easy to over-react and go beyond caution and become suspicious and distrustful of every customer. Not a good idea. I started to notice that the sales reps and customer service staff were following my lead too well. Aggressively pushing for cash-on-delivery or making unreasonable demands before accepting sales on credit.

Now we had a new problem. Customers were getting turned off and going elsewhere to competitors who were easier to do business with.

We adjusted our attitudes and went back to dealing in good faith and treating customers and other business partners with more respect. That means trusting them implicitly and expecting the best of intentions. Then if things ultimately go badly, we can still be friends and work it out.

It does not mean blind faith or being naïve. Prudent business practices are necessary and that includes clear terms and conditions on every sales order and purchase contract.

Be aware of the risks of doing business and then manage them.

Unfortunately, they cannot be avoided. Unless you lock the doors and don’t answer the phone.

 

Your Uncle Ralph, Del Chatterson

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We could all be even worse off, but let's hope it gets better from here. For most of us the impact on our businesses has been inconsistent and inconclusive.

What are the right management strategies and action plans to get through this economic turmoil with a more resilient and successful business?

Here are the lessons we have learned from clients, commentators and other experts, so far:

1. Do not rely on the headlines.
They are just trying to get your attention and a train wreck is more interesting than a success story. They will not provide either balanced or insightful input to your planning or decision making. You will have to dig deeper. Make sure your market data and competitor intelligence is current and accurate.

2. Communicate Communicate Communicate.

Keep employees and customers informed. They are worried, confused and need to be reassured that they can count on you. Unfortunately, you may not have good news for them, but it will be appreciated that they are hearing directly from you and are not left guessing what's next.

3. Keep on Selling.

Now is not the time to cut back on marketing and sales. Your efforts now will be more even conspicuous and effective as your competitors back out of the market and away from their customers. Be selective and very focused. Work on building stronger customer relationships by being relevant and responsive to the current economic circumstances. Avoid the “cry for help” advertising that only confirms “we’re desperate and need the sales”. Calmness, confidence and competence are much more appealing to those potential buyers who are still spending and want reliable, long term suppliers.

4. Do quickly what obviously needs to be done.

If it’s clear to you it's also clear to the people affected. They are waiting for you to act and will be more confident and proactive themselves if they see you taking action. Face the facts, don't fight the facts.

5. Adapt.

Remember Darwin's "survival of the fittest": those who adapt to their environment are most likely to survive; not the strongest or the biggest. This is not the time to be stubbornly persistent about your plans. Look around and be creative. Your destination may still be the same, but the route, the vehicle and the passengers may need to be changed.

6. Be confident, but cautious.

Recognize the difference between calculated risk and a state of uncertainty. Make a decision if the potential outcomes and the percentage probabilities are reasonably clear, but hold fire if they are not.

7. Show conspicuous leadership.

President Obama understands the concept of being the conspicuous spokesman for his plans and policies. No one can do it better than the one who is ultimately responsible. We may not all be as adept communicators as he is, but we can all speak with more sincerity than any spokesperson or intermediary on our concerns, our strategies and our plans.

Good management will be tested during these times, but good decisions now will mean a better business for the future. Keep at it. This too will pass.

A recent article in the Financial Post by Steven Kates, SFU Business Professor, prompted me to reply.

I also use Starbucks as an instructive example for other businesses. But Steven Kates has it wrong in suggesting that Starbucks needs to "emphasize that it is continually learning how to be a good corporate citizen, not simply appear as one." Sorry, but that is not a relevant response to recessionary times.

He has it right in the first sentence of his article, "I have an abiding love for the Starbucks brand." That is the hot button to push for Starbucks - their astonishingly loyal, dedicated customers. Leverage that relationship to make the business recession proof. Recognize and reward loyalty. Keep them coming back; don't disturb or distract them from the attraction of the ambiance and the attitude that comes with visiting Starbucks. I know of no other brand loyalists that are such fierce defenders of their daily fix. (Some even admit that it's somewhere between an addiction and a cult.)

Starbucks customers might back off the $5 latte for a cup at $3.95 in response to current economic pressures, but they are unlikely to go to Tim Horton's for their coffee.

My advice to businesses in these difficult times is to focus on key customer relationships and know what will continue to work and what needs to change for them to stick with you. Starbucks is doing that very well by eliminating outlets in oversaturated markets and by returning to the service concepts that made them indispensable in the first place.

Harvey Mackay has some great suggestions on learning from dogs. Here is an extract from his recent newsletter (Nov.6/08).

We can learn a lot from dogs. Live simply. Love generously. Care deeply. Speak kindly. We give dogs time we can spare, space we can spare and love we can spare. And in return, dogs give us their all. It's the best deal anyone has ever made.

When loved ones come home, always run to greet them. Dogs treat us like celebrities when we come home. There's nothing wrong with showing people that we care about them.

Never pass up the opportunity to go for a joyride. On warm days, there's nothing wrong with stopping to lie on your back on the grass. I think of Richard Gere's character in the movie Pretty Woman. He was so busy working—doing big business deals—that he never stopped to enjoy walking barefoot in green grass until Julia Roberts showed him.

Take naps. Many of us are on overload, so in life you have to know when to throttle up and throttle down. If you can't take a nap, at least take a break. It will improve your disposition.

Run, romp, and play daily. If you have a chance to have fun, go for it. Life presents plenty of difficult times, and we all need a break every now and then. My motto: work hard and play hard.

Let people touch you. Don't be aloof. Allow people to get close to you.

Avoid biting when a simple growl will do. Just make sure your bark isn't as bad as your bite. It's okay to warn people that you're upset or even angry, but keep your temper in check.

When you're happy, dance around and wag your entire body. Happiness is the American way. After all, the Declaration of Independence says we are endowed "with certain unalienable rights that among these are life, liberty and the pursuit of happiness." So we have a right to be happy!

Delight in the simple joy of a long walk. Exercise is always good. I've been doing it all my life. It just makes me feel better, gives me energy to work more productively and, I hope, live longer. My philosophy is: Exercise doesn't take time; it makes time.

Be loyal. In a recent column about loyalty, I wrote that one of the first qualities that I look for in both employees and friends is loyalty. And my friends know they can expect my loyalty in return.

If what you want lies buried, dig until you find it. I'm constantly asked what the secret of success is, and persistence is at the top of the list. When you study truly successful people, you'll see that they have made plenty of mistakes, but when they were knocked down, they kept getting up ... and up ... and up.

When someone is having a bad day, be silent, sit close by, and nuzzle them gently. People remember two things in life—who kicked them when they were down, and who helped them on the way up.

Mackay's Moral: My goal is to be as good a person as my dog thinks I am.

For more from Harvey visit: harveymackay.com.

Quietly drifting in no particular direction. That's what the doldrums mean to me, based on vague memories from high school history classes of the great explorers in their sailing ships . (Confirmed by Wikipedia it's apparently an area near the equator, famously described in the "Rime of the Ancient Marine" by Samuel Taylor Coleridge.)

For business it often means a quiet period too. Everyone is enjoying their family holidays or summer recreation activities rather than starting new business activities.

But it can also be an opportunity to spend more time building stronger client relationships because there is less pressure and conversations can be more relaxed and informal. It may be a good time to reflect, plan and strategize with key customers before the hectic season of "back to school" arrives. Trying to fit in some social contact with customers during the summer doldrums may help you be more successful during the winter flurries of activity that follow.

Sometimes we get so preoccupied with marketing and sales activities and all the associated details that we forget the original strategic objectives.

The basic objective, of course, is to generate and grow sales revenue. But to have sales you need customers. And to have sustained, profitable and growing sales, the best strategy is to develop loyal, long-term customer relationships.

So the marketing, sales and customer service activities should all be aligned to deliver a customer experience with you, your company and your brand that evolves from a first time buyer to a loyal, long-term customer.

The customer experience typically evolves through four levels:

1. Satisfaction with price and availability

On the first exposure to you and your business, customers will quickly, maybe even subconsciously, compare price and availability to their expectations based on prior experience with your competition. There will likely be no sale, and maybe no second chance, if this minimum expectation is not met.

2. Recognition of superior service levels

The first point of differentiation and the first step to building a stronger customer relationship will be when the customer recognizes that you offer superior service. You can demonstrate it in many ways – faster response to inquiries, easier access, more stock, better prices or terms, better delivery, better warranty service and support.

3. Appreciation of the value of your knowledge and experience

After the basic needs of price and availability are met, and you have distinguished yourself with superior service, the customer experience should then lead to an appreciation of the added value of your knowledge and experience. This will be demonstrated by applying your product knowledge, training, education and experience to educate the customer and give him/her the confidence to make better purchasing decisions. Now you are building a valuable customer relationship.

4. Connection on values, mission and vision

The final step in cementing loyal, long-term relationships will occur when the customer recognizes a common sense of values, mission and vision in the way you both do business. This connection will be developed over several interactions, particularly when problems are solved together, or you meet on non-business related issues.

The sooner you can meet customer expectations at these four levels, the faster you will build lasting and loyal customer relationships.