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Building business relationships
Thursday, November 1st, 2007

The other day, a customer said that he had been coming to The Illahe Lodge every year for the last 24 years.

Why might a customer use a firm for an extended period of time? Certainly advertising costs are lower and customers and the business have greater knowledge of what each offers. What are the costs and benefits associated with this decision? Think about the difficulties that could arise if a major customer experienced financial hardship or became dissatisfied. Consider too the pain that can result with changing the business model. Still, there are risks associated with every business decisions and every business model. It seems to me that we have to choose the approach that involves risks we find more tolerable. What one person may find more tolerable may be unacceptable to someone else…

So what is the moral of the story? Business relationships need to be aligned with a firm’s business model. Some firms do this by offering discounts on return visits, accepting higher prices or paying higher compensation based on tenure, or weighing their decision matrix towards suppliers with longer tenure.

Now, think about your business model and the importance of repeat and referral relationships. Who are you targeting as customers, suppliers, and employees? What are some steps that you are taking to appeal to people in these groups who meet your criteria?

Want to know more or talk about your situation specifically? If so, please feel free to send me an email at infoli@c-davisconsulting.com, or click on the button at the right to contact me.

Posted in Business Acumen, Business Tips, Marketing, Planning Tips, Solving Problems | No Comments »



Relationship Tip: Go the extra mile
Sunday, August 26th, 2007

John (not his real name), a senior executive at a public company, asked me the other day what the company needed to do to strengthen relationships with customers.

The short answer to John’s question is that companies have to go the extra mile, if they want to improve their relationships with customers (and suppliers or employees, for that matter). What does that really mean though? Well, I will give you a real example of two things that I have done in the last couple weeks to build a relationship with one of the outfitters and the customers at The Illahe Lodge.

A couple weeks ago, an outfitter was washing his plastic silverware that is used for lunch as his customers float down the Rogue River. The outfitter mentioned that he was trying to find sturdy plastic forks and all he had found was forks that break. As it happened, I was in town a few days later and looked for forks. Low and behold, I found a package of 1000 sturdy plastic forks for $1 or $2. So, I bought them for the outfitter. It was a small investment on my part. When the outfitter was back in a couple days ago, he was surprised that I bought the forks and gave them to him. It took 5 minutes on my part, yet it is already paying dividends in that he knows I look out for my customers. Yes, the outfitter paid me for the forks, although it was unnecessary. What goes around comes around, right? In addition, I washed the outfitter’s plastic silverware.

A second thing that I did was to offer the guide the choice of desserts on the final raft trip of the year. The choice? Blackberry or apple pie, both home made with fruit that I had picked. The guide selected blackberry pie. The customers asked about the pie and, by the way, they were very impressed that I took the time to pick the fruit and make the pie by hand. Impressed enough that I received a nice tip, which I split with the person who helped me with the meals.

The lessons to be learned from these situations are simple.

- Think about what you can do to improve your customers’ experience. The difference between a satisfied customer and one that talks about you with his or her friends may be the little touches that make you stand out.

- Something that happens once may be luck. When something happens repeatedly, there is more going on than mere luck. The forks were a first time. I had been impressing the outfitter with the pie for about three weeks and, each time, the tips have been better.

- Share rewards with team members so that they are more likely to contribute to the team’s success. Often, people receive tips in restaurants and are required to split the tips. Rather than adopting rules, why not do what is right? I was able to impress the customer because other members of my team were backing me up, helping me wait tables, washing dishes, clearing tables, etc. I may get the credit in my current role, but would the best pie in the world make up for lousy service or other issues? I think not…

The lesson ot be learned is to think about what your customers value. From here, look for opportunities to go the extra mile, in a way that is cost effective and makes your firm stand out in your customers’ memory as different, unique, and special? That is what “delightment” is all about…

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Marketing: Fit the approach to your desired customer
Monday, August 13th, 2007

The other day, a potential customer called my family’s business, The Illahe Lodge. After we talked about the lodge which has 12 guest rooms (with bathrooms), a large dining room, and a large living room, the potential customer wanted to know if we have a website.
Instead of relying on websites, The Illahe Lodge has always relied on its greatest asset… Its customers. Over the years, they have talked about their experiences and this has led to repeat and referral business for us. Through the customers, the lodge has received some publicity - Sunset did an article about hiking the Rogue River Trail and the lodge was mentioned in a book about fly fishing vacations.
Customers come to the lodge for many reasons - fishing, hiking, sightseeing, bonding with their families, connecting with their history, experiencing a simpler time, to hang out with my family, and getting away from it all.
It is easier to work with customers that we know. One customer always wants dinner at 7 P.M. Other customers have specific food preferences. Because we know these things, we are able to provide the customers with experiences that are better aligned with what they are seeking.
Another customer wants to come here just to hang out with my father. Being a helpful sort, I’ve suggested that he simply rent the lodge or that he pay for the privilege of working at the lodge. Not sure if that will happen, but…
Anyway, what I tell my consulting clients is that, rather than mass marketing for the sake of mass marketing, use the marketing approach that is most likely to attract the customers that you are seeking. Is that what you are doing?

Posted in Business Acumen, Marketing, Negotiations | No Comments »



Positioning: Using context to reposition offerings and find opportunities
Sunday, July 15th, 2007

Some businesses are complaining about the weather in the Dallas area, at the same time other businesses are benefitting from the unusual amounts of rain. 

As noted in the Dallas Morning News, umbrella sales, car washes, and car dealers are doing well.  In contrast, concrete, water parks, and some restaurants are experiencing difficulties this summer. 

This situation illustrates an important aspect about facts.  In isolation, facts have meaning only in context.  Our perspectives provide context and help us decide what the fact means.  Each of us has a slightly (or substantially) different perspective so every person may see things a little differently from others.  

Think about what this means for a business and how context can be used to create opportunities.  What is your strategy for doing so?  Let’s consider a scenario so that you can decide if there are opportunities to improve your current strategy.

Scenario

Suppose that a customer offers $30,000 for a product or service. 

If the product or service normally sells for $20,000, the supplier is likely to be happy. 

If the product or service normally sells at $50,000, the supplier is likely to be unhappy or disappointed.

Positioning

If presented by a situation in which the customer wants to pay less than what a supplier normally charges, many suppliers reposition their offering.

Three types of changes that can be made to reposition an offering are:

Message.  Message questions relate to the content and manner of communication. 

What is communicated? 

When is it communicated? 

To whom is it communicated? 

How is it communicated? 

Where is it communicated? 

How often is it communicated?

Offering.  Changes to the value of an offering can be made by:

Eliminating unnecessary features and functionality.

Adding features and functionality.

Finding new uses for the features and functionality.

Modifications to the method of doing business that are based on customer requests and feedback.

Creating a new offering that is better aligned with the customer’s needs. 

Markets.  Changing the markets where the product or service is offered by:

Finding groups that will need the offering.

Helping customers define their perspectives and understand their needs.

Exporting the product to other countries.

Changing where the product is offered (either increases or reductions). 

Finding markets where the same customers may be more likely to buy the offering or are more likely to buy it in a way that is aligned with the supplier’s needs.

Next Steps

Think about the critical success factors that explain why customers purchase your product currently.

Consider positioning options that bear similarities to the current positioning.  This can be an easier approach to expand the positioning because you are able to build on what already exists.  The credibility built through the current positioning allows the positioning to evolve into the new opportunities.  Success in this situation requires the new customers to understand how they are similar to the existing customers.

As the information is gathered, keeping an open mind and listening to the customer is important.  In many cases, customers will see opportunities that suppliers may overlook.

Engaging customers and potential customers in the dialogue, building relationships, and creating value for them increases the likelihood that they will share their candid feedback with you.  Sometimes, their feedback may be different from what you are hoping, expecting, and looking for.  When this happens, you have important information that can be explored and evaluated.

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Value: What matters to your customer?
Friday, July 13th, 2007

One of the buzz words in business is “value proposition.”  How many times do people ask, “what is your value proposition?” 

Before defining a value proposition, it is very helpful to think about what your customers value.  In other words, what matters and has value to customers?

Typically, customers find value in having the solutions to their actual problem provided in a way that makes sense at a reasonable price.  Speaking from a procurement perspective, customers often value: 

Tailoring of the solution to their environment so that customers can roll the solution out and, like a piece in a jigsaw puzzle, it just fits snuggly into place without gaps or overlaps.

Quality of the processes and deliverable solution so that the project is relatively painless - the process is smooth, conflict is minimal and quickly resolved, administration of the contract is easy for the parties to do, and the results meet the business needs. 

Responsiveness to the customer’s needs is often valued.  From project to project and customer to customer, the responsiveness that the customer needs can vary a great deal.

Some people try to sell customers on a solution to a situation that the customers do not perceive as a problem.  This involves multiple layers of selling.  Customers have to be sold on the idea that they have a problem.  Then, customers have to be sold on the importance of resolving that problem.  The third thing that customers have to be sold on is that the specific problem is more important than whatever the funding would have otherwise been used to correct.  Finally, after all that, customers have to be sold on a supplier’s suitability.  Wouldn’t it make more sense to find out what the customer perceives as the problem, understand why the customer needs to resolve it, explore the customer’s budget, and save the selling for the end when it is necessary to help the customer understand the supplier’s qualifications?

Reasonable prices.  Price is a double-edged sword.  If a supplier is perceived to undercharge on price, the supplier is likely to be eliminated based on quality concerns.  In other words, the customer is uncertain if the supplier can meet the customer’s needs.  In contrast, if the supplier is perceived to overcharge on price, the customer tries to negotiate price (often with inadequate information) or walks away because the price is too high.

By understanding what matters to customers, suppliers can tailor their offering to reflect what customers value.  At the end of the day, this is the most compelling value proposition of all.  How do you get there from here? 

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Veterinary records online
Monday, July 2nd, 2007

Would you want to have your pet’s veterinary records online?  Would you want to visit the online clinic online, rather than just making a phone call?  Main Street Veterinary Clinic in Lewisville thinks that the owners (parents?) of its patients might.

Check it out by going here…  Then, please let me know what you think.  Is this a good service, or an example of an idea that is going too far?

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Is an Internet presence right for your business?
Thursday, June 28th, 2007

Many small business owners create a website and expect that website to work miracles.  They have heard about the importance of Internet marketing and assume that having a website is enough.  If a small business is in a hot area, having a website may be enough.  For others, an Internet presence may be a part of the marketing puzzle.  In some cases, an Internet presence is counter-productive.

In deciding if an internet presence is right for your business and how much of an investment to make in creating a website for your business, you may want to consider a variety of questions including those discussed in this posting.  As this list illustrates, it is critical to think about issues, rather than to adopt an approach because “everyone” else seems to be doing so. 

What can an Internet presence do?  A website can attract people who do not know about your business.  It may help people who know you think about you, if you have a good rating with search engines.  (Which explains why there are so many specialists in search engine optimization.)  A website can help people who know you learn about your business as well.  The website may have little impact in terms of actual sales.  

How do your customers select suppliers?  Often, in the business-to-business environment, people who visit the website may not be making decisions.  Instead, they may be in support organizations, such as procurement or accounting.  In many cases, the people who are doing searches on the Internet are may be seeking information which supports the purchasing decision that has already been made. 

Will your website be visited by your customers?  When the website will be visited by advocates, rather than customers, sales can occur if the site (1) convinces people that they need your offering and/or (2) educates potential advocates so that they are able to talk with others about your services or they think of your firm/industry when a need arises.

Are your customers online?  If so, it is easier to justify a website because your customer might search for the products and services that you offer.  If not, remember that adding layers rather than talking with firms yourself can increase costs, cause confusion, and, in many cases, requires more time in the sales cycle.

Will your customers value a relationship?  Many customers want to know their suppliers.  If a customer is spending what it sees as a large sum or is buying something important, the relationship can be paramount.  In such situations, the customer may base decisions on information that is provided as well as customer referrals, face-to-face meetings, and dialogue.  Websites may be unimportant to customers who rely on such approaches as part of their decision process.

Do your customers want or need for you to have a website?  Customers may not need for you to have a website.  If they do not need a website to access, learn about, or purchase products from, they may be slow to use the website, even if it exists. 

How often will the website be updated?  If the website contains outdated information, it may reflect poorly on a business.  Rather than attracting and retaining customers, it may drive customers away.  Alternatively, it could result in requests for services that have lower margins or reflect a prior direction of your business, rather than its current vision. 

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