Category:

Sales Just Sitting There Waiting To Happen?

28/2/2017

There was an old retired school teacher who used to work part time for me.

Wyn was a breath of fresh air and had more enthusiasm than most guys half his age.

He loved people (and they loved him).

Wyn even taught me something about sales, a little nugget I’ve used many times since with great success.

When I first met Wyn, he told me he had been a teacher his whole working life, except for one year when he was burnt out and needed a change.

He took that one year off and worked as a sales rep for a printing company.

And in that single year, he became the top sales rep, against others who had been there for years with long term accounts.

This is a guy with no contacts in an industry he knew very little about, a total business newbie, with no previous sales training.

But he became the top sales rep in just one year before returning to teaching.

He told me he did it with just one idea…

Use the company’s biggest asset…

Their customers.

He made a list of all the old customers who had not bought from them in the last year.

He phoned every one of them and asked a simple question:

“Do you still consider yourself a customer and if not, what happened?".

Some had complaints, some were dealing with the opposition, some had just forgotten who they were.

Then he would simply ask if they would give them another go - and many said yes.

So what can we learn from Wyn?

a) The sales figures from Wyn’s simple strategy of following up old customers were so great he outclassed the other reps.

Can you afford not to do this?

It is an easy way to revive old leads and get more customers on board quickly. These are sales just sitting there waiting to happen.

b) Keep in touch with your customers regularly and don’t let them go cold, forget about you, or be stolen by the opposition in the first place.

If there’s one thing you must have in your business, it’s a complete list of your customers.

Every current customer, every previous customer, those who have shown interest in doing business with you (leads/prospects/quotes).

Also, include suppliers and those who deal with your type of customers that might refer you business (referral sources).

This is basic but so many small businesses just don’t have a list.

You should have systems in place to capture contact details and keep it up to date.

Your customer list is your greatest asset and also your insurance policy if you find yourself in quiet times, ever have to shift premises, or need to quickly contact your customers.

Use your list to full advantage and keep ‘em sweet. Show them some love by communicating with them regularly.

You could entice them to buy new products or services you offer, buy bundles instead of a single product, add one new suggested item to their regular buy, tell others about your services.

How confident are you that your customers even know about every product or service you offer? Obviously, they don't unless you tell them.

Imagine the boost in your sales figures if your customers just spent a little more with you each time they buy, or just came back more often.

This is part of the benefits of keeping in touch.

What's the bottom line here?

Well, Wyn knew instinctively what the research tells us:

If you send an offer to our customers, those who have brought before are 5-6 times more likely to respond.

So, it is more economic and easier to get repeat customers and revive old customers, than get new ones over the line.

Don’t make the same mistake Wyn’s company made.

If you don’t have a list or you aren’t keeping in touch with your customers and contacts regularly, you’re letting your opposition steal your biggest asset without a fight.

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Don't shrink your way to failure

30/6/2015

A brewery who sold a lot of beer was one day told by the accounting department that if they could just reduce the malt content in their beer and add sugar instead (because sugar is less expensive than malt), that they could increase profits significantly and no one would notice.

The brewery manager found initially that the accountant was right - no one seemed to notice - and they were making more profit. At least for the first year anyway, he found that no one really complained or no more than normal anyway. He did notice however over the next couple of years, that sales kept declining. This was easy to explain said the accountant - after all, people are drinking less than they used to, taxes keep making beer more expensive, and people have less to spend than they used to - and again it seemed the accountant was right.

But the brewery manager was not sure, so he did some investigating and started asking around some of his old customers. A number weren't drinking his brand anymore. When he asked why they said "We don't know why but your beer but just tastes a little different so we thought we would try something else for a change" or "We don't enjoy beer like we used to".

The brewery manager on hearing this, begin to wonder if maybe replacing the malt with sugar might have been a mistake. He checked the figures again and found that this beer sales had shrunk; total consumption of beer across the industry had also shrunk, but to a lesser degree.

He realised that by changing the beer recipe, although they had made more profit in the first year, they were now worse off. (NB. Take a look at the figures and you will see this is exactly what has happened in the brewery industry in New Zealand over the past 50 years. Even before drink driving and other considerations took effect.)

What is the moral of this story? Well, as a business owner, when you seek more profits by reducing your expenses and purchases, it's important to ensure your product or service is not compromised. In fact often you can make it better and charge more. Research shows that 15% of the buyers in a market will buy purely on price alone, but a whopping 85% of customers have other reasons for buying. The 85% is your market. Think about some of your own recent purchases - how often have you paid more for something because you chose to go for better quality or better service.

Here are some areas you should be very careful with when looking at reducing costs to increase profits especially when sales are in decline:

Raw material costs for your products (don't compromise on quality - this is why many of your customers buy from you)
Sales staff (if you don't have good sales staff, then you won't get the sales - especially the high performers)
Advertising (measure your results first and know which are the winning campaigns before you get rid of the losers)
Marketing (again measure and stay with the winners)
Suppliers (know what else is important to you with your suppliers, like quality, delivery times, reliability, replacement policy, etc)

These are just a few, there are many more.

Action Points
1) Identify areas in your business where you should NOT cut costs, to safeguard yourself and preserve the integrity and quality of your product (and stick to it).
2) List ways to increase profits for your business - without compromising on service or quality.

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My beef with Apple.

24/2/2015

My son recently got an iPad. And it was faulty.

It got me thinking:

To a large degree, the success of your business will ultimately come down to your customers expectations when dealing with you.

Do they think they are getting a great product and service from you, that is better than your competitors?

If something goes wrong do they expect that you will work hard to fix it, or that you just don't care?

Because if you want them to keep coming back, they must know you care - or it's only a matter of time before they will be motivated to go somewhere else.

The telecommunications industry in New Zealand is a very good example of where customerswith poor expectations have left companies in droves. Long wait times to talk with anyone, automated phone systems that seem to go in endless loops to nowhere, and call centres repswith poor English, have resulted in many customers leaving to go to other new players in the market.

Are the new players better? I'm not sure, but for some of these ex-customers it's not so much that the new company was necessarily better, but that they had run out of patience with their previous provider. Expectation was poor.

But technology is moving so fast it's almost impossible to keep up with, right?

With all the constant updates there are bound to be some unhappy customers, don't you think?

Back to my recent experience with Apple:

So, my tech-savvy 10 year old got an iPad. And he was really, really excited. He tracked it online through its 15-stage journey from Shenzhen, China. He even insisted we videoed him opening up the box when the courier arrived.

My wife (bless her) then took control of the set up and enabling the appropriate restrictions, but imagine the disappointment when everyone realised the long-awaited Apps wouldn't open!

My wife knows me well; she knows that technology that is not working properly drives me to tearmy hair out. Those of you who know me will appreciate that I don't have that much hair left which is even more reason to protect it. However I digress.

So from a safe distance I sat back and watched their dealings with Apple over the past week or so and I would have to say despite a faulty iPad (which is now going to be replaced) and many frustrating hours, they have achieved the remarkable feat of keeping exceptions high. Everyone is confident that the problems will be sorted and Apple will eventually get it right. No mean feat considering 10 year old's and sleep-deprived wives have limited patience.

So how have Apple been able to achieve this? From watching I have been able to glean some important clues:

1) They are easy to deal with:
You can contact them by phone, email, or live chat (online 24/7) and they speak English. They answer quickly and in almost all cases, give intelligent answers to some quite technical questions, or quickly refer you to higher technical support.

2) They are polite and attentive:
Here are some comments from the transcript of the help desk conversations. I don't know anything about the kind of training Apple give their people, but obviously they give them certain key phrases to use.

"Thanks for contacting AppleCare chat support. My name is Lindsay. Please give me a moment to look over your information" (Notice here Lindsay is letting his customer know that he is solely focused on them only)

"No worries at all .. it is my pleasure to help"

"Got it!"

"I do understand it being your son's and I am sorry he is disappointed"

"Actually, I do have a senior adviser, Tim, on the line here. He will take over the chat and pick up where we are leaving off with regard to the diagnostic. He is up to date on the issue, so let me know when you are ready and I will get you over to him."

Language is always attentive, respectful and understanding.

3) They build up expectation:

"If we are unable to fix it, it would be the first issue I have ever seen that was unable to be fixed so you better believe we are going to find a solution!"

"Your request has been received by our awesome help desk staff..... we are working hard to respond as quickly as possible"

You will notice Apple are working hard right through the conversation to keep their customers happy and also build high expectations of a good result for the customer. We all know technology can be frustrating and things can go wrong. But Apple in this case have decided that this is an important area to get right - after all they could end up with a lifetime customer as this will not be the only tablet my son is likely to buy over his lifetime.

Am I saying that Apple is better than Android? No.

Am I saying Apple gets it right every time? No.

This is just one example of a time where one company got it right.

So check out what your customers are thinking and expecting.

After all - the customer that keeps coming back is the most profitable!!

Action Point:
1) Ask 10 customers how they find your company to deal with, and what problems or frustrations they have had and how these were handled.
2) Contact 10 customers you no longer deal with and find out what made them shift (ok this one requires guts).
3) Listen in on some conversations your staff are having with customers when things go wrong.
4) Every time something goes wrong, be proactive, take responsibility for the problem and start building a positive expectation for your customer.

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Are Bad Customers Good For Business?

1/11/2014

As a business owner, I am sure you have heard or thought at some stage that "Every customer is a good customer". After all, every customer puts money in the bank and keeps you busy, especially when things are quiet. Right?

Wrong. Be very wary of this approach - it's a trap. If you run your business this way, you will be creating a lot more headaches than you want, and will be disappointed with your profits (or lack of profits!). Let me explain:

If you think about all your customers over the last year, they will basically fall into four types:

A customers
This customer values your service, and is prepared to pay what you ask. They don't argue over price and value your service and quality. They are raving fans of your business and tell others so. Very loyal, they repeat business with you regularly and won't go elsewhere. You often get referrals from them.

B customers
Most of your customers are B customers. They appreciate your service, but are a little more price sensitive. You need to work a bit harder to keep them, but they are still good business.

C customers
Not very loyal, they will haggle over price and will shift if someone else is a little cheaper.

D customers
Impossible to make profit from, they are always complaining - something is always wrong with your product or service. Often to get the bill paid, you have to argue and sometimes reduce the bill. They never pay promptly either, and take a lot of your time sorting out their constant whining and complaining. Keeping them happy is almost impossible because they always seem to come up with some new problem or complaint.

Warning: If you are getting a lot of D type customers, you are either accepting too much of the wrong kind of work, or it could be a sign you have poor systems for quality and customer service - which is a whole different problem in your business (and you will need to fix these issues first).

Once you have identified your customers, now you need a strategy for dealing with them.

A customers (A = Awesome)
Really look after them. Go above and beyond with exceptional customer service. Keep in touch. Let them know what you are doing for them; let them know what else you do and look for new ways to add further value to them. Tell them how much you appreciate their repeat business. For every referral you get from them, make sure you recognise it with a personal thank you note or gift. They will reward you with more of the same.

B customers (B = Basically sound)
You want to turn as many of these into A customers as you can. Treat these like A customers by making sure they understand and appreciate how and why you do things. Keep in touch regularly and get feedback from them on what they like and don't like about dealing with you. Then work on improving your service.

Tell them how important it is to you that they get the best service. For example, if you are a plumber you could explain why you test the fitting to make sure there are no leaks, why you use a certain grade of fitting, and why you won't use the cheap nasty ones that leak and will cost them more money in the long run; remind them that you are a Registered Master Plumber which means that you have a standard of work they can rely on.

Again, once the job is finished, thank them for their business. For a larger job, go all out with the thank you gift - I guarantee you that your customers will be blown away by this gesture, especially if it is unexpected. Sending a thank you is a tried and true approach that still works today and a great way of creating very loyal customers who tell their friends how great you are.

Also, these strategies work best when you put them into a system so you don't need to remember. For example whenever you get a referral, a thank you card should automatically be sent; when a large job is completed, a gift is sent one week later; on the job your staff should know to automatically explain to the customer the reasons why you do it the way you do; maybe send a free sample with the invoice if the job is over $1,000, etc...

Due to the nature of some businesses, there may not be a lot of repeat business, but this strategy is still worthwhile. Maybe you build new houses? Remember a small percentage will build again in the future, but more importantly, many will know others who are also looking to build, so are an ideal source of referrals.

There are lots of ways to get referrals but first you need to have happy customers who remember you.

C customers (C = Could do better)
Do your best to turn these into B customers. (Find out what they are really looking for - then you will get a better idea if they will suit your business - in some cases they may not, which is fine.). At the end of the day if they don't respond, don't be too worried. The non responsive customers are unlikely to stay anyway.

D customers (D = Don't want to deal with)
Every business gets a few of these. Get rid of them as quickly as possible. D customers take up all of your time and you will never make any money off them. They will send you broke trying to keep them happy and then they probably still won't pay. Send them to your opposition and let them have the problems instead! Just say something like "We are not really geared up for this kind of work, I would recommend you contact x competition, they might be better equipped. Here are their details. Have a nice day". This kind of approach will work best as it avoids confrontation and means both you and the D customer keep your dignity intact.

Never be rude of course. Just be aware of who you can deal with and who you can't. At the end of the day you are running a business (which your family and your employees rely on to be profitable), and you don't have unlimited time or resources.

It is worth mentioning that I come across a lot of business owners who get scared about letting these D customers go, as they are worried about less sales. If you are still feeling unsure then take a look at recent sales you have had with these D customers and if you are a service-based business, do a quick costing on the job. Include time involved at your hourly rate, cost of extra materials, freight, time spent explaining things to them, etc. Work out how much you lost on the job and then think about what you could have done with the extra time to make more profit in your business. How much did you make or lose on this job?. I'll bet that you actually lost money and are worse off.

The point of all this and the key: is to isolate your A and B customers, find out what they have in common, and use your marketing to attract more of those excellent profitable customers. Ditto D customers, if you are getting a lot of them, ask yourself why they are attracted to your company. What is going wrong in how you market your business?

The truth is, you need to be very strategic with your customers and your business. Get your customer base right, and your business will be much easier to run and you will achieve much better profits and margins.

Task

Take a look at your customers over the past year and give a rating of A, B, C or D to each one. Then decide how you will deal with each group. Make it into a system that is automatically followed and assign one particular staff member to follow through.
Look at each group and search for similarities. You will find that your A and B customers will be in a certain location or have very specific needs or a certain income or occupation. This is valuable to know because now you can target this specific type of potential customer! And chances are they will be excellent customers for your business and bring in good profits for you.
Make a decision to stop dealing with D customers. List who they are and make a clean break.

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Is your service up to scratch?

2/6/2014

It does not matter what industry or market you are in, at the end of the day your business will be made or lost on how well you deal with your customers.

A customer is four times more likely to defect to a competitor if the problem is service-related than price or product related.
96% of unhappy customers don't complain, and 91% of those will simply leave and never come back.

In most cases, businesses spend way more money trying to get new customers - and literally nothing on looking after the ones they already have.
The probability of selling to an existing customer is 60 - 70%. The probability of selling to a new prospect is 5 - 20%.

Customer service is the lifeblood of your business so don't underestimate its power!

Recently I was waiting in line at the kids section at one of the major department stores and was enthralled to watch exactly what you should not do - an example of customer service unfolded before my eyes. The cashier was a young girl in her early twenties and this was most likely one of her first jobs. She was serving a woman with kids (their target market) who wanted to charge some clothing items to her store card. Much to the surprise of the customer, the card had declined, and in her disbelief the customer explained to the cashier that money had been put on the card just two days ago. She wanted to know what had happened.

The cashier shrugged her shoulders and explained defiantly that she did not cause the problem or have any idea how to fix it. Her advice was to go and line up at a desk in another part of the store and they might be able to help her if she was lucky - that desk was busy handling other (more important) customers. The cashier made it very clear to this customer that she just didn't care. At this stage the customer was starting to get a little frustrated and after further questioning, the cashier pointed out she could do nothing more and pointed her finger in the general direction of the inquiries department who might know something about it. The customer headed off in the general direction with the parting comment "You have been incredibly unhelpful".

We have all seen this before or been on the receiving end of this type of terrible customer service.

So what is your customer service like?

By comparison a while ago I purchased a Freeview box for my TV from another well known store. I waited quite a short time, however the cashier acknowledged that I was waiting and let me know he would be just a couple of minutes. After serving the previous customer, he apologised to me for the wait and asked how he could help. He was passionate about his store and the products, and knew the answers to every question I had about how Freeview worked and the comparisons to other systems.

He sold me the unit and started explain a complicated system for installation (complicated to me anyway). He could see I was struggling so he offered to pre-tune the box, ready for me to plug in, which would take only seven minutes. Sounded like a great idea to me as it would probably take me two hours and even then it might not be right. (As you can tell, I am great at helping businesses become more profitable but not-so-great at setting up new technology.)

He then went in for the up-sell - "Would you like a warranty with that?". Usually this is not my thing, as I am of the view that if your product will not last the distance then maybe I shouldn't buy it. He could see that I was not convinced, but remember he already had my attention with his impeccable service. So he pulled out a Freeview box that had been pulled apart and showed me how small the parts were and that they are easily damaged through wear and tear or even small knocks. I thought why not, after all he seemed to have my best interests at heart. He got the up-sell and I walked away a happy customer with my purchase.

Did I tell others, absolutely. Will I go back, yes.

So what makes good customer service?
Well, we can take a few clues from my two examples above.

One knew their products well - the other not a clue.
One was interested in the customer - the other was not.
One went out of their way to be helpful - the other went out of their way not to.

So do you staff ...............

Know about your products and how best to use them?
Know the procedures on what to do when a customer complains?
Have a good helpful attitude to your customers?
Care about your customers and your company?
Take pride in their workplace?
Have a list of questions they can ask customers to lead them to the sale?

What does good customer service get you? It gets you repeat business (remember this is a lot easier to get than brand new customers), it gets you more referrals and a good reputation, and ultimately, it gets you a lot more sales. Good customer service equals a whole lot more profit!

Action Point: Listen in on some of your staff and how they are handling your customers. Or even better, ask some of your customers how they find you to deal with. Use these quick questions:

How do you find our company to deal with?
What do we do well?
What do you find frustrating when dealing with us?
What could we do better?

Listen very carefully especially to the answers to the last two questions. They will be your biggest clues to a much more successful and profitable business.

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You lost that deal. because you weren't in their world.

2/7/2013

Have you ever spent a whole heap of time wooing a new prospect, putting together a detailed quote or proposal and you just knew they would sign on the dotted line - but the deal didn't go ahead?

This one was in the bag, at least in your mind anyway. Now you are thinking about all the wasted time and effort you put into this sale that has just slipped through your fingers. And you don't have a clue why. What was your prospect thinking? They must have it wrong. It just doesn't make sense...

We have all been there, so let's have a look and discover what went wrong.

The main problem is that you didn't get into their world - you were still in yours. In their mind, you didn't offer the whole solution to their problem or at least have a better solution than your competition. Result = No sale.

In my world as a business coach, I try not to assume that I know what every business owner wants. But we all just want more sales and more profits, right?... Well, no, the reality is often more complex. Many business owners do need more sales and more profits, but sometimes they need other things even more. For some the highest priority is to get more time with wife and kids, less stress, a holiday once in a while, freedom where the business does not rely on them so much that they can't take a breath. For these business owners, if I talk about more sales and more profits, it just sounds like more hard work - exactly what they don't want!

In a sales meeting/presentation, or negotiation of any kind, both sides must agree first on the objectives of the meeting. If you do not, you will be heading in different directions and often this results in the sale being dead in the water.

So how do you get into their world? You need to be a detective and search for the real problems your prospect wants to solve. And here is a clue - often the first answer they give, is not the answer you are looking for - there is another important layer that you still have to find.

Let me give you a real life example from a sales training I did last year. I'll recount the story for you - details are accurate but not verbatim:

A real estate agent had a customer, who we will call Jan, who was looking for a house with a "nice view". Jan had been around all the real estate agents in the area and no one had been able to find a house she was happy with. Our real estate friend showed her all the houses that she believed had the best view including looking over the city, looking out to sea, overlooking some beautiful open parks. But much to her frustration and surprise, every single house Jan was shown, almost immediately received the same response: "No, this is not what I am looking for".

Every option seemed to be exhausted and she seemed no closer to finding a house Jan was even remotely interested in. So the real estate agent had to try a different approach as this one clearly wasn't working. So she asked her client a different question: "All the houses we have looked at I thought had a good view, but you didn't like them. So that I can understand more clearly what you are looking for, can you tell me what you mean by a good view?"

Jan explained that her husband liked repairing old cars and he would do this in the driveway. She was sick of looking at half assembled cars and car parts when she looked out her kitchen window. Everything she has seen so far had a view of the driveway from the kitchen window. Suddenly, our real estate agent understood what Jan really wanted, and she now had the complete answer. The next house she took Jan to, she loved. Jan found a house, the real estate made a sale and everyone was happy.

Now Jan is a raving fan, and this is what she said to the real estate agent once the deal was done: "You were the only real estate agent who took the time to understand me and what I wanted - Thank You". Did finding Jan a house have to take that long? - NO, it just needed the right question.

Our real estate friend was never going to get there by assuming, only by getting into Jan's world. This is a true story!

Here are some questions that will help get you into the customers world:

What are you expecting to get from using this product/service?

What are the main benefits for you?

What is the main problem you are expecting to solve with our product/service?

Try threading these into you next negotiation or sales meeting - you will be surprised what you discover. It may be the difference between making your next deal or missing out.

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Have you picked your low-hanging fruit?

28/4/2013

When I first begin working with a business to improve profits, we start looking for the low-hanging fruit first. Just like when you are picking fruit from a tree, some fruit is low-hanging and easy to get to. At ground level there will be some fruit you can just reach up and take without a lot of effort. However as you move further up the tree the fruit will be in harder-to-reach parts which may require climbing, or the help of a ladder.

The same principle applies to business. We are all busy and the reality is that if we look around the business there are literally dozens of things that could be actioned to improve profits. But the fact is, it is unlikely you have the time to action a dozen changes, certainly not in the short term anyway.

Here are some examples of low-hanging fruit I have seen in businesses, which, when actioned, had a dramatic effect on profit:

Negotiating with suppliers - Look at the pricing from your largest suppliers and compare with their competitors. Then renegotiate better buying pricing to increase your margins. Often with suppliers they supply pricing to a business, the business grows but they are still on old pricing based on smaller volumes.

Approach old customers - Start approaching the old customers who have not brought from you for a while. A number will buy from you again if you just ask.

Tell your customers about other products - Start offering your existing customers products/services they are not currently buying. Most will not even know what else you can do for them.

Shop window - In retail, displaying specials, new stock, or add-ons that goes well with products you sell a lot of, will entice customers to buy more, and bring new customers through the door as well.

Collecting the money - Instructing your accounts person to make a few phone calls to chase up outstanding debts can make a big difference. Holding them accountable to do this job takes only minutes.

Invoicing on time - Many businesses do not invoice on time and it causes problems down the line. This may not give you more profits directly but you will certainly have more time and less stress without cashflow headaches.

Pricing - Simply increasing your prices by a small amount will make a big difference to your profits and in most cases your customers will not even notice.

Promoting your best sellers - Identify your best selling products, and products that have great margins. You can easily promote these (for example in an email to your customer database, or on your Facebook page) - and sell more of them.

Regular staff meetings - If all your staff a) feel appreciated and encouraged regularly b) know what is expected of them c) know about your latest specials and where you are heading as a business - this will result in more efficient staff, more sales, more profits.

These are just a few examples. Take a moment to ask yourself "what is the low-hanging fruit in my business?" and "what are the easy wins that will increase our profits dramatically without a lot of effort?"

Remember, business does not have to be complicated. Even if you do not have a lot of time or energy, you can still be making small positive changes to improve your business. There are always some things we can do to improve that are quick and easy. So reach out and grab what you can get! I promise you the rewards are delicious!

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What NOT to do.

10/10/2012

I thought this month, that it would be fun to look at some of the things you shouldn't do with your business.

ABC Procrastinate Ltd
ABC Procrastinate liked profits and customers, but they had been pretty busy dining out on past successes. Financially things were now a bit tight so they decided to have a meeting to see what could be done. Here are some of the answers they came up with.

1) Having realised that what they were doing was not working, they decided to get everyone to double their efforts doing exactly the same things.

2) Having realised that their margins were terrible, they decided to buy a new truck and sell more product at the same price.

3) Having realised that they knew nothing about marketing, they decided to form a task group including more people who knew nothing about marketing.

4) Having realised that sales and profits were down, they decided to reduce their sales staff and cut their marketing budget in half.

5) Having realised they had no direction for the company, they decided it was time for a good lunch and a lively discussion about which paint colour they should choose for the new office door.

6) Having realised that results for the last quarter had been terrible, they decided to close early and go to the pub.

7) Having realised that they had lots of enquiries that they could not turn into sales, they decided to get angry at the people who didn't buy because it was clearly all their fault.

8) Having realised that they desperately needed some help with marketing, they decided to buy a good book even though they didn't think they would get around to reading it any time soon.

9) Having realised that their customer service was terrible, they decided it was the perfect time to advertise everything in the store at half price.

10) Having realised that their staff did not know what was expected of them, they decided that paycuts all round would help them to understand what they needed to do better.

11) Having realised that staff were disgruntled, they decided to put up a sign in the staffroom encouraging everyone to have a happy day.

12) Having realised that cashflow was not going well, they decided to ignore it because it was all too hard and it would probably come right by itself anyway.

Just a bit of fun this month - however amazingly I have seen and heard of these type of things actually happening.

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Five key problems in your business - and what to do about them (part two)

2/9/2012

In my last article, we looked at the five key problems in Canterbury businesses in the current economy, as identified by MYOB in their latest business survey results.

I am listing these for you, along with some strategies to help you conquer these big problems. I hope you find it useful.

'Competitive Pressures' and 'Customer Acquisition' ranked as the number 1 and 2 key problems. We looked at those last time. Here is number 3:

# 3 - Price Margins and Profitability
Although this has been ranked as third, in my book this would be first. Many, many, many businesses I come across just don't look at this closely enough. I always make sure my clients understand their profits and margins including what they need to make profit... because without profit you will eventually go broke. Every business owner must know their numbers to stay in business - it is just that important.

I often see companies increase their sales, but reduce their margins to get the work. Or even worse, they loose sales and then drop margins to compete - very very dangerous if you don't know the numbers.

Make sure you know the margins on all products and services you have. Also you need to see every month if you are making a profit or loss. If you don't have monthly figures, the good news is that they won't be to hard to get. Whoever does your GST returns will have them. This will be your accountant, bookkeeping service or staff member. Ask them to show you, and go through it to find out your sales, margins, and profits. When you know sales, margins, and profits, you can look at what you need to do to improve them.

Pricing is a good place to start; even an increase of just 5-10% will have a big impact on profits - and most of your customers won't even notice.

If you are still unsure on this one, give me, or your accountant, a call.

Another problem you may be facing is:

# 4 - Customer Retention
Keeping your customers coming back time after time is really the backbone of almost every business. It is important to understand that generally, by the time you pay for costs of getting a new customer (in advertising, discounts and so on), you do not start making money from them until they become a regular customer. If you have gone to all the trouble of getting them, it is worth spending some time thinking about how to keep them. Often business owners are so busy chasing after the new customers, they forget about the old ones. Madness!

There are literally hundreds of strategies for keeping customers coming back, but there are two principles that can be applied every time:

First, give them a reason to come back. Try a loyalty card or offer them a discount off their next order.

Second, keep in touch with your precious new customer through Facebook, newsletters, regular specials, offering them different/new products, a thank you card, etc.

Remember that friend that you were so close to a few years ago; you didn't keep in touch and now they have drifted away? Well, customers are the same. There are plenty of competitors that want your customers and they are spending thousands of dollars in ads and special offers to get them. Don't let them steal your customers! Keep in touch and make sure your customers know you value their business.

And rounding out the list of top five problems businesses in Christchurch and Canterbury have in the current economy - SURPRISE! it's:

# 5 - Cashflow
No money in the bank and lots of creditors to pay = stress, stress, stress. This one can be a real killer. Enough pressure from cashflow and it takes all the fun out of business.

Cashflow problems will be caused by one or a combination of the following:

Poor margins
Poor profitability
Too much stock
Not invoicing on time
Not collecting money when due
Rapid growth (don't underestimate this one - this will kill you if you don't see it coming)
Under capitalised
Buying new equipment or assets and trying to fund it from existing cashflow

(Re-visit my June newsletter for more on this; email me for a copy if you have lost it)

Bottom line is - to fix your cashflow problems you need to understand which area or areas are at fault.

Start setting up KPI (Key Performance Indicators) in whatever area you need to improve.

Just like in sports - all the best teams measure everything they can that will help them win the game. In rugby the Crusaders measure metres gained, number of tackles, number of missed tackles, number of penalties etc. They decide which key numbers will make the most difference to their game and then work on improving them.

In business it should be exactly the same. For example in Accounts Receivable start measuring how many of your customers are overdue, their dollar value and the percentages. Decide what is acceptable and start working on getting that number or better. This will put you back on track. But don't stop there - make sure you watch this figure closely every week and month. Compare each month to see if you are getting better or worse.

So - those are the top five problems in Canterbury businesses right now and some ways to deal with them.

The big question for you now is - what you are going to do next? Do you say, that was great information and carry on as you were. Or do you pick at least one thing and take action? Only then will it help your business and increase your profits.

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Five key problems in your business - and what to do about them (part one)

22/8/2012

Last month I attended a business advisers meeting and MYOB presented their latest business survey results. In this they highlighted the top five key problems Christchurch and Canterbury businesses are facing in the current economy.

As most of my clients are in Canterbury, I thought it would be useful to list each problem and give you some strategies for how to go about fixing them.

I have listed the problems in the same order as the survey results. This may not necessarily be the same order for your business, but I know that at least one of these is most likely one of your biggest challenges. The first is...

# 1 - Competitive Pressures
The pressures you are facing from other competitors in your market place. If you are in retail for example, a real competitive pressure is most likely the internet and the growing level of purchases online of similar or even the same products as what you are selling.

Every business needs to at least be aware of what these competitive pressures are for them, and how they are affecting business. I am not saying that you should spend all your time worrying about this, but it is important to pay attention.

A great place to start is by asking yourself these questions:

How are you rating compared to your competition and how are they affecting your business?
How are your competition getting customers?
What am I better at than my competition?

The last question is the most important one, for if you know what you are really good at, and play to your strengths, you will win the game here. Let me illustrate:

I stand a towering 5 foot 3, so I don't often get called a giant (except maybe by my kids). I used to play rugby in North Canterbury and would always be playing against much bigger and physically stronger players than myself. But I also had strengths - I was a little quicker than the others, I had a lower centre of gravity, and I was fitter, all of which meant I could still compete. For example when tackling players who were on average 1.5 to 2 times my own body weight, by going low around their legs, they could not fend me off, so my success rate in this part of the game was very good. However if I tried going high they would push me off and I would be the one kissing the dirt.

Nice story I hear you say, but how does that relate to me. Well, start by asking what your strengths are - it could be that your business has the best products, superior service, location, best staff, largest product range...

Now start promoting these to your customers, leads and prospects, and you are now standing out from the others. Do this well, and customers who value these strengths you offer will start flocking to your business. Play to your strengths, and make sure your customers know what you are really good at.

Going back to our retail shop, advantages they have over their online competitor could be better back up service, knowledge, expertise, less "risky" to deal with etc. That personal service still has value, and you can guide your customer in making the best choice product for them. Online in most cases cannnot provide this kind of one on one service.

Let's look at the next big problem that many businesses face.

# 2 - Customer Acquisition
Getting (acquiring) new customers. Every business needs a good healthy stream of new customers. You will always be losing some customers no matter how good you are. Sometimes they shift to another town, they are earthquake affected (we all fully appreciate this one), they no longer need your product or service, they are at a different stage of life, or... It is important to have a good robust short and long term marketing plan. Why short and long term? Because you need to be attracting the type of customers that give you a long term future for the business not just a short term boost without repeat sales.

The 50% off ad in the local paper, or Grab One? Sure it will give you a boost for a week - with one-time customers that take the deal and disappear off looking for the next bargain never to be seen again. This is great to help you be busy, but it won't necessarily create you a business. Better to first work out who your best type of customers are, and target them specifically. Grab One or 50% off may still fit, but you are now seeing the bigger picture.

A client of mine is a stock feed supplier. We discovered that a very profitable customer for him was farmers with lots of working dogs. They regularly buy biscuits and other products from him every month without fail. They were easily to find and they were regular steady income. They also had good profits and margins.

So work out the ideal customer groups for your business, and then work on attracting them. Remember we can't be all things to all people, but we can become very good, almost unbeatable, at servicing a certain type of customer.

So we have looked at the first two of five key problems in Canterbury businesses. Look out for the next exciting article and we'll look at the remaining three problems.

In the meantime, think about what edge you have over your competition. And how to attract new long term customers.

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What NOT to do.

Five key problems in your business - and what to do about them (part two)

Five key problems in your business - and what to do about them (part one)

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