Customer Focus – there needs to be something in it for the customer
I have just read a line in a great book – Trust Based Selling by Charles Green. The line included the following words “…customer focus – must actually have something in it for the customer”. I could not agree more as it frustrates me as well to hear or read business people say that their business is focused on the customer when all they are saying is that they are working on the best way to sell more. Customer focus is delivering value to the customer. The customers interests must be considered first and foremost.
This issue has been particularly highlighted with the 2008 sharemarket collapse and the financial planning and advising industry. Have they always made decisions with the clients best interest in mind. Those who are commission based would have had a challenge in 2008. The argument of fees vs commission raises it head. Look at it from the clients viewpoint.
So in your business what is in it for the customer?
Government Plan for Construction Industry
The Australian Government has announced a $4billion plan for the construction industry. The notion is that this support package will preserve jobs and therefore it appeals. But.. it is taxpayers money we are talking about. Is this the best usage of our funds to provide support to developers and commercial builders. Our taxpayer dollars could be used to build more units on the Gold Coast meanwhile ensuring developers profits are preserved. Yes the government needs to be proactive to assist those affected by the downturn but is this the correct way. I don’t think they should be picking winners in the building industry.
Inflation or Deflation – what does it mean for your business.
At the beginning of 2008 we were all worried about inflation. This was the case in Australia as well as all of the other developed economies. We were concerned about interest rates rising to curb inflation and what this would mean to business. Now at the beginning the concern seems to have flipped to that of deflation.
Deflation refers to falling prices. The CPI (consumer price index) would decline. Deflation occured in the 1930′s and more recently in Japan. Deflation can be good but if it is connected with falling wages, rising unemployment and falling asset prices it can be very nasty.
With our high household debt levels, deflation could be ugly. If the house prices fall at the same time as incomes are affected then consumers will cut their spending and try to sell assets to reduce debt.
US inflation has fallen from 5.6% to just 1.1% and it’s still falling. So far, Chinese inflation has fallen from a peak of 8.5% in April to 2.4% in November. Also based on the Reserve Banks comments inflation in Australia is falling.
The CPI has been signficantly affected by the falling oil and food prices. However if businesses increase their discounting of goods to sell more then further reduction of inflation will occur. Also a recession normally leads to spare capacity. This is happening in China now. This means they reduce their prices to keep production going leading to deflation in the trade partners of China. Our fall in the exchange rate will push up import prices and this will lessen the impact on Australia. Still inflation is likely to fall in Australia.
But a rerun of the deflation of the 1930′s is unlikely because the central banks have means to continue to prime the economy. Our Reserve Bank like the other central banks of the world have shown a capacity to drop interest rates significantly in an attempt to keep the economy moving. Lastly our weak exchange rate will help to keep prices of imported goods higher.
So I believe that in 2009 inflation will tamed and deflation is a concern but should not be significant concern in Australia. It may be more of an issue in the US where they are in a severe recession.
Visit to Pike Place Fish Markets
During my trip recently I visited the Pike Place Fish Market in Seattle. This business is phenomnal and its story produced the book series “Fish” which have sold millions of copies. They create an exciting business through selling fish in an open market. The team perform a number of routines. For instance when a person purchases some fish one of the team will yell out the order eg one salmon to Vancouver and then all of team yell out the order in unison. Then he THROWS the fish to another person who wraps it and settles the transaction. On the day I was there the vast majority of the crowd at the store had cameras and were watching for the action. They have developed a worldwide reputation. There is also I understand a waiting list to work there.
However I came across a recent quote from the owner to would be copycats – “People want to copy us.. but we tell them, Your success isn’t in doing what we do; it’s in discovering your own way.”
This quote is excellent. Look at your competition and businesses outside of your own industry to learn but discover your own way. Develop something unique to your business and clients.
Interconnectivity of Economies
Given the turmoil that we have experienced in the world financial markets in 2008 it has proven beyond a doubt that we are all connected more than we ever thought. In 2006 and even 2007 there was the theory of decoupling of the various economies. For us in Australia it was said that we were more connected to China than Europe or the USA. When the first rumblings started to happen in the US economy in late 2007 there were many pronouncements that this would have no impact on Australia.
But now that the market is down 45% from the levels of late 2007 the theory is on the scrapheap. The turmoil that started in the US housing markets has extended to Europe, China, Australia and the rest of the world.
Over the last decade we have seen globalisation gather steam in business. Businesses of all sizes have improved their supply chains. Orders made by clients in Australia can effect production in China within hours.
The Australian economy is very reliant on the mining industry and given the downturn in demand in US and Europe, China cut it’s production immediately which has had a significant impact on the producers in Australia.
The lesson we have learnt is that we are all very closely connected. Australia is not an isolated island. As a business we need to keep aware of the developments around the world. What are businesses doing in your industry around the world? What does the development in the economies of world mean for your business?
Build-A-Bear Workshop
We as a family had a holiday in Canada & USA. During this time my wife and daughters (aged 8 & 12) had to visit Build-A-Bear Workshop in Banff & Edmondton Canada. This business has been hugely successful throughout North America.
Essentially it is a store where you pay money to create your own teddy bear. So you pay money to get the materials and there is a step by step process to create the bear and then of course there is a myriad of options to dress the bear. There is a range of accessories as well. Off course there is the range of birthday parties and other events.
So why am I telling you this? This is a business that has taken something traditional like the teddy bear and turned it into an experience. The customers are paying money to customise their own bear. The whole process is staged but the customers love the experience. Now about the customers. It is not just the children but also the parents who love the experience as well.
Sure there is still a market for a normal teddy bear but there is a large market for those who want to create something that they perceive is unique and enjoy the experience.
How can you make your service an enjoyable experience for your customers.
Say what you mean, Mean what you say
I have been looking at large company information from a potential investment perspective. What has struck me is the use of two phrases.
“Our people are our most important asset” & ” We value our customers”
Now haven’t we heard these before. Have you ever said this about your business? Do they mean it? Do you mean it? Do their actions live out these phrases? I have rung large companies with call centres to have a machine answer with the words that they value their customers but obviously not to highly otherwise they would have a human answer the phone.
So say what you mean and mean what you say? If you use these phrases make sure your actions give them life and meaning.
Old vs New
I have been visiting my in-laws in Taree (mid north coast NSW, Australia) area. This is a town with about 25000 people. There is an interesting business case study happening in this town. To keep things in order I have keep the name of the stores out of this post suffice to say that the stores in question are electrical goods retailers.
There is one store who has been in Taree for a long time. This store we will call OLD. It is a second generation business and the current owner is in his 70′s. The store is a disorganised mess. It is poorly set out. Also there is the main front section and then you go through a back door to another section (that is if you know where to look). The floor desperately needs attention. However they have a great reputation for service and sourcing anything you may want. Because of the time in town however they have a loyal customer base.
In recent months a new (new to Taree, but has a number of stores in NSW) has opened. This store is very well set out, well stocked and with a large range of items. The store feels fresh, clean and modern. The staff seem helpful and courteous.
Both stores stock similar goods and apparently their prices are similar. Which store will win the bigger business? My in-laws previously a loyal customer of OLD recently bought from NEW. When I asked why, they could not directly answer. However when I started to ask for impressions on the store, the issue of presentation and range came to the fore. (It was not price).
So even though OLD had a loyal regular customer, they lost the business because of the competitors range and presentation of the store.
Too many businesses do not pay enough attention to presentation. It is about the little things that matter. That is the floors, lighting, cleaniness. We notice these items subconsciously.
Remember just because your customers are regular repeat now, be warned that you need to keep fresh.
Service is King (Deliver more value)
Following on from the previous post regarding what is important when the economy has a slow down I know explore the second important item for business. Service is King. In a downturn customers / clients become very choosy in who they use. This applies to the general consumer as well as the business client. Now I hear some people say they become price driven. I say they become more conscious of value. They want value for their money. So it is not about reducing prices, but rather about delivering better value. Not only do businesses have to be more conscious of the value being deliver but they have to make sure that their clients understand the value. AAn often complaint in service business is that client X just does not understand the work/effort etc that has gone into the service. It is the businesses responsiblity to firstly understand what is important to the client and to educate the client on the value being delivered. Take the effort to truly understand what is important to the client. What is it exactly that they are after? Then deliver and exceptional service. With this exceptional service and an educated client your business will thrive in any recession. How can you find out what is important to your clients? Ask them. How can you deliver better value? How can you improve your service?
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