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Never Forget The Core Reason Why People Buy From You
I love coffee shops. For some reason ,my neighborhood is a magnet for gourmet coffee establishments. There are seven within a three-mile area (and I live in the suburbs).
One small shop has been my absolute favorite since I moved here years ago. It’s a fun place to hang out. They do all of the little things right. The barista’s have personalities, they’re fun, and they’ve make me feel welcome.
The problem is that over the last month, more times than not, when I arrive there, eager to be re-caffeinated by my friendly baristas, they have been out of coffee.
Call me rigid and dogmatic, but I believe for some reason that one thing a coffee shop should not do is run out of coffee. Every morning that I have to stand there and watch my coffee brewing gets me more steamed than the milk in a latte. The barista who seemed so charming feel much less charming.
My little coffee spot is under new ownership. One of my favorite barista’s decided to buy the place. She is passionate about the place. She’s installed new floors, added to the food menu and added a greater selection of coffee. Her excitement and effort have increased business noticeably. She must remember, however, that people go to coffee shops for coffee.
This is a lesson for every business to keep top-of-mind. If you do everything great, but you don’t have the coffee, you have failed. If you spend so much time “adding value” but you lose sight of the reason why you exist, you won’t sustain growth.
This morning I arrived for my 7am cup. I saw several cars in front of the shop and bet myself that the place would be out of coffee. Sad to say, I was right again. I feel terrible about it, but my loyalty to the place has been replaced by irritation and distrust. A cup of coffee can be a very personal thing. They’ve let me down, and I take it personally.
Where will I go for my coffee tomorrow morning? I don’t know.
Until next time, Doug
The Hidden Truth About Creating Value: If You Don’t Create It, You Destroy It.
Over the last month, I’ve received several questions about creating value. For those who are not familiar with my views on this subject, creating value is the foundation for everything a company does to accelerate or sustain growth. If you do not create value, you are a commodity. If you are a commodity, your growth and profits are at risk.
Value, in the business sense, means providing something people are willing to pay a premium for. This is the only useful definition of value for fast-growth businesses. If your company doesn’t do something your customers are willing to pay more for, you are not creating value. You may be doing things that enable you to keep your customers, but you are not creating value.
This applies to everything you do. It is especially important when you assess your business development efforts. Here is how to determine whether or not your sales and marketing efforts are creating value for your company. Answer this question: Would your prospects be willing to pay for the opportunity to read your advertising or talk to your salespeople? If you need an example, look at the people in your industry who charge admission at conferences and other events to let people hear them talk about what they do. Look at the people who publish their ideas in the business journals people pay to read.
Think about it. The next time you go on a sales call (or go on a call with one of your salespeople) ask yourself, was there enough value created in the conversation that prospects would have paid for it if they had to? Was it a special event? Was it a conversation where the prospects sincerely appreciated getting some insights that could help them do their job better? My experience says the answer more than 90 percent of the time is, “No.”
Here’s the critical point: Value is binary. If you are not creating it, you are reducing it. If someone meets with your salespeople and they wouldn’t have paid for the privilege of the sales call and they end up buying anyway– they are buying in spite of your salespeople, not because of them – and that’s dangerous. Every activity has a cost, whether it’s time, attention, opportunity or money. Any time a customer or prospect interacts with your company and they don’t feel they’ve received more benefit than what it cost them in time, they feel cheated. Your salesperson has reduced the time your prospect has to work with without providing enough value in return. Even if the interaction is “neutral,” neither negative or positive, the prospect has lost the opportunity to take advantage of other opportunities.
If you want an example of what you don’t want your salespeople to be, think about checkout people at the grocery store. They may be friendly, collect money and sometimes provide some assistance by bagging your ice-cream separately, but the transaction doesn’t add value to your grocery-buying experience. In most cases, it reduces the value of the transaction because of the time you lose dealing with them. Grocery stores have employed checkout people despite the lack of value because, until now, they didn’t have an alternative. When our local supermarket introduced self-checkout, customers (including me) took advantage of the new service quickly. Imagine that — by taking out the “service component,” the perceived value was actually increased. Talk about being a commodity.
Want another example? Travel agents used to account for just about every airline ticket sold to travelers. But guess what — they only communicated value, they did not create it. They were nice and everything; but people used travel agencies in spite of the travel agent. Once direct booking became viable and travel agents began charging for service to cover their costs, people deserted them in droves. I wouldn’t want my sales efforts to rely solely on the fact that there isn’t an easier alternative…yet.
If you want to know more about how to create value, click on the blog post on the bottom or view the article on my website that explains this further.
Until next time, Doug
By the way, not creating value is only one major barrier to growth. I have an excellent tool to help assess what other barriers to your growth may be. If you are enjoying my blog, take a look at my Growth Barriers Diagnostic.
The Hidden Truth About Creating Value: If You Don’t Create It, You Destroy It
Over the last month, I’ve received several questions about creating value. For those who are not familiar with my views on this subject, creating value is the foundation for everything a company does to accelerate or sustain growth. If you do not create value you are a commodity. If you are a commodity, your growth and profits are at risk.
Value, in the business sense, means providing something people are willing to pay a premium for. This is the only useful definition of value for fast-growth businesses. If your company doesn’t do something your customers are willing to pay more for, you are not creating value. You may be doing things that enable you to keep your customers, but you are not creating value.
This applies to everything you do. It is especially important when you assess your business development efforts. Here is how to determine whether or not your sales and marketing efforts are creating value for your company. Answer this question: Would your prospects be willing to pay for the opportunity to read your advertising or talk to your salespeople? If you need an example, look at the people in your industry who charge admission at conferences and other events to let people hear them talk about what they do. Look at the people who publish their ideas in the business journals people pay to read.
Think about it. The next time you go on a sales call (or go on a call with one of your salespeople) ask yourself, was there enough value created in the conversation that prospects would have paid for it if they had to? Was it a special event? Was it a conversation where the prospects sincerely appreciated getting some insights that could help them do their job better? My experience says the answer more than 90 percent of the time is, “No.”
Here’s the critical point: Value is binary. If you are not creating it, you are reducing it. If someone meets with your salespeople and they wouldn’t have paid for the privilege of the sales call and they end up buying anyway– they are buying in spite of your salespeople, not because of them – and that’s dangerous. Every activity has a cost, whether it’s time, attention, opportunity or money. Any time a customer or prospect interacts with your company and they don’t feel they’ve received more benefit than what it cost them in time, they feel cheated. Your salesperson has reduced the time your prospect has to work with without providing enough value in return. Even if the interaction is “neutral,” neither negative or positive, the prospect has lost the opportunity to take advantage of other opportunitities.
If you want an example of what you don’t want your salespeople to be, think about checkout people at the grocery store. They may be friendly, collect money and sometimes provide some assistance by bagging your ice-cream separately, but the transaction doesn’t add value to your grocery-buying experience. In most cases, it reduces the value of the transaction because of the time you lose dealing with them. Grocery stores have employed checkout people despite the lack of value because, until now, they didn’t have an alternative. When our local supermarket introduced self-checkout, customers (including me) took advantage of the new service quickly. Imagine that — by taking out the “service component,” the perceived value was actually increased. Talk about being a commodity.
Want another example? Travel agents used to account for just about every airline ticket sold to travelers. But guess what — they only communicated value, they did not create it. They were nice and everything; but people used travel agencies in spite of the travel agent. Once direct booking became viable and travel agents began charging for service to cover their costs, people deserted them in droves. I wouldn’t want my sales efforts to rely solely on the fact that there isn’t an easier alternative…yet.
If you want to know more about how to create value, click on the blog post on the bottom or view the article on my website that explains this further.
Until next time, Doug
By the way, not creating value is only one major barrier to growth. I have an excellent tool to help assess what other barriers to your growth may be. If you are enjoying my blog, take a look at my Growth Barriers Diagnostic.
The Entrepreneurial Dilemma – An Abundance Of Possibilities
Over the last few weeks, I’ve become aware of a fundamental dilemma entrepreneurs face regularly: What opportunities should they focus their attention on?
Personally, I deal with this problem on a regular basis. I have been known to come up with a lot of ideas on my own; and to make matters worse, not a week goes by where someone doesn’t say to me, “Doug, what you should really do is (fill in the blank).” There is no way I can pursue every opportunity that comes my way.
How should entrepreneurs decide which opportunities they should pursue and which opportunities to ignore? I’ll tell you how most entrepreneurs approach this question. They ask a simple (and on the face of it, intelligent) question: “Can I make money on this idea?”
The problem with this question is that every potentially successful growth company I have ever come across has many more potential money making opportunities than it has resources to implement them. Peter Drucker, the late guru of management consulting, said the primary reason small businesses go out of business is not because of starvation (the inability to get profitable business), but because of indigestion (the inability to manage the business they already have effectively). Michael Gerber, author of The E-Myth, says the number one reason for business failure is undercapitalization.
They’re both saying the same thing. Companies that sustain growth concentrate their resources only on those activities they are great at. A company can only be great at so many things; and if they’re not great they’re just a commodity.
What are your thoughts? How do you make decisions like this? Share your thoughts with me and if I get enough interesting responses I’ll share them in a future blog posting. Click here to send your thoughts.
Until next time, Doug
Trying To Grow From “Good To Great?” Don’t Get Stuck With Less-Than-Great People On The Bus
Before I begin I need to give a disclaimer, I provide outsourcing services.
Jim Collins, and many other thought leaders (myself included) often talk about how having the right people is often more important than having the right strategy. The problem with the advice that Collins, Brad Smart (Topgrading), and many other “staffing advisors” offer is that it really only applies to large, resource-rich, multinational organizations. What is right for GE, Honeywell or IBM is not necessarily right for mid-sized businesses.
The challenge mid-sized businesses face is that there is simply not enough money available to hire the best people for every seat on the bus on a full-time basis. Too often, you are forced to hire only ‘the people you can afford.’ This situation is doubly counter productive: you don’t get the level of talent or experience you need in the short term and you’ve given a valuable seat on the bus to a less-than-exceptional person who will probably have a less-than exceptional effect on your company’s overall culture and results long-term.
In addition to financial resources, there are two additional barriers mid-sized business face in getting the best people. First, with the exception of mission critical functions, mid-sized businesses don’t have enough work to justify hiring the best available talent on a full-time basis. Even if they could justify hiring them, non-mission critical work won’t keep great people engaged.
Finally, mid-sized businesses can’t get the best talent for non-mission critical work. Let’s say that as a growing business you decide that you need a top person on your bus in the seat of the VP in charge of business development efforts. Because you believe that the key to success is hiring the best people, you set out to find the best person. Now, what is the ideal candidate doing currently? They are probably the owner or president of another growth company. Or they are at the VP level in a much larger organization. So, before you even start looking, you have to accept the fact that you don’t have access to the best candidates. Again, you start out at a talent disadvantage.
What’s the solution? Don’t hire for every position. The mantra for a mid-sized business in the ever-flattening 21st Century, should be: Only hire employees for mission-critical tasks. Outsource everything else, even positions thought un-outsource-able. Business guru Peter Drucker put it best: “I believe you should outsource everything for which there is no career track that could lead into senior management.” His reasoning? “Most look at outsourcing from the point of view of cutting costs, which I think is a delusion. What outsourcing does is greatly improve the quality of the people who still work for you.”
Is having a chief financial officer mission-critical to your organization? If not, outsource it. Is a vice president of Human Resources mission-critical? If not, outsource it.
This approach gives you two key benefits:
1. You can concentrate your capital on nurturing and promoting the employees you can’t do without.
2. You get access to better people, often better than the multinationals have at a similar position. For instance, I provide a variety of highly strategic business development functions for mid-market companies, from training and coaching their sales team to helping them upgrade their marketing efforts. I prefer working “with” my clients as a “virtual” executive part of the time to working “for” someone else full-time, no matter how big they are. As a result, my clients get the benefit of top-level strategic skills without having to put a full-time senior executive on their payroll when they don’t really need to.
Bob Corlett, a talented staffing advisor to mid-sized organizations (and a contributor to my fast-growth newsletter) has an excellent article about this approach. I encourage you to read it.
Until next time, Doug
McAdvertising
If you don’t yet believe that traditional approaches to advertising and growth are dead, I encourage you to check out this blog post from Skip Jones’ Brains on Fire blog.
Carnival of Marketing
Noah Kagan’s creation, The Carnival of Marketing, is in its fourth week. It’s a great way to get the latest thoughts on effective marketing and growth. John Moore of Brand Autopsy is hosting it this week, and we’re honored that one of our posts made his cut of seven. There are other links to some great blogs that you may or may not know about, so be sure to check it out.
December Issue Of Harvard Business Review Tops Our Holiday Reading List with Articles On Strategy And Marketing
The December 2005 issue of Harvard Business Review is a must read for any executive or entrepreneur serious about accelerating growth. You can go out and buy the magazine, or you can download the articles on the web. The articles cost $7.00 to download and it is well worth it. Here are the two articles I recommend:
Strategy and Your Stronger Hand, by Geoffrey Moore (one of the world’s best thinkers and writer’s on the topic of strategy) explains how to develop and stick with the right strategy. In this article, Geoffrey explains one of the underlying causes of commoditization better than any I have seen (and he does it in one paragraph). If you want to get his insights right now, click here.
Marketing Malpractice: The Cause and The Cure, by Clayton Christensen, Scott Cook and Taddy Hall explain why traditional marketing approaches fail – and what you can do about it. Clayton Christensen is the author of “The Innovator’s Dilemma” and “The Innovator’s Solution”&mdashtwo of the best books you can find on the challenges of growth. Click here to get the article now.
If you buy the full issue, there are some other articles that are excellent, but the two articles above are must reads.
Until next time, Doug
Don’t Be Tempted To Trade Customer Satisfaction
I just got back from a business trip in Toronto. Monday night I had the privilege of meeting with a terrific restaurateur named Tony who really understands what growth and being remarkable is all about.
Tony’s restaurant is an upper mid-scale Italian restaurant – but it’s more than that. It’s a ‘place.’ It’s a place where families go to celebrate. It’s a place where couples go to talk about important decisions. But most of all, it’s a place that just makes you feel at home When I asked Tony how he characterizes his restaurant, he said he calls it a “neighborhood restaurant.”
Tony knows who his customers are. Tony knows why he is successful. Two weeks ago a food critic from one of Toronto’s major newspapers was eating at Tony’s with his family. Tony knew who he was, and Tony knew that he wasn’t from the neighborhood. He asked if he was there for business or pleasure. The writer admitted he was there for business and was going to write an article about the place. Tony asked the writer not to. When the writer asked why, here is the answer he got:
If you write an article about my place, at best it will interest people from outside the neighborhood to come in. They’ll come, but they won’t stay because they are not from the neighborhood. The problem is they’ll take the seats that my regular customers use, and my customers won’t be able to come in and eat when they want to.
When I heard the story, the only thing I could think of was, ‘Wow.’ Most people would kill to get the coverage Tony was about to get, but Tony knew the success would be fleeting and his restaurant would no longer be remarkable – it wouldn’t be the neighborhood’s place.
One more thing, Tony’s restaurant was packed on Monday night – a night when many restaurants don’t even open because so few people go. Wow.
Until next time, Doug
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Resources
Doug's Washington Business Journal Columns- Intelligent Growth Articles
Third Wave Selling Blog
Products to Grow
