Did you know that it has been ...

Did you know that is has been estimated that businesses spend 5-10 times more money attracting new customers than they do looking after existing clients?

Before you settle down to read this piece, grab you P&L or your Budget; they should be in easy reach because as a responsible business owner you will be scrutinising them on a regular basis (at the very least monthly). Have you got it? Great…

Now scroll down to the line where you have budgeted a sum of money for looking after the customers you already have. A word of warning, you may have a little trouble finding it because in the vast majority of cases it is an area that is pretty overlooked in business.

Vast sums are spent enticing new customers into businesses, yet little or no money is invested looking after the people who already know, like and trust you.  In actual fact, statistics show that 68% of people take their custom elsewhere because of perceived indifference; they think you don’t care!

These businesses are making life very hard for themselves because of their “get new customers in faster than we are losing them” mentality. They are not taking into account the lifetime value of a customer!

Consider this question; where would your business be if you still had every customer you have ever attracted?

The strange thing is that if businesses were to invest more time looking after their customers building lasting relationships and creating great experiences for them, the outlay on marketing would be greatly reduced.

This goldmine is neglected goldmine in a vast majority of businesses, so therefore provides a massive opportunity for any business that makes the customer experience their number one priority.

Ever had a conversation with a business owners that goes something like this? “What makes you different from your competition?”

Or

“Why would someone purchasing your service/product choose you over anybody else?”

“We give good service.”

“Really, how do you know?"

"I just do..."

“Interesting.”

The challenge is that we often view the customer experience from our point of view, yet rarely -if ever- step into our customer’s shoes and see it from theirs and we never realise the real cost of overlooking their perspective.

So a quick question, “When was the last time you asked your customers for meaningful feedback?” The key word being meaningful. I am sure you have all at some time completed a customer survey that at some level you knew was just a compliance exercise it may never get read and almost certainly not acted upon.

Here are some steps you might like to invest some time mulling over when you think about your business and the lifetime value of your customers. If you already have these steps in place, how could you improve them? If you haven’t, what steps do you need to take to implement them?

1.    Follow up, follow up, follow up - Make sure your customers are happy after they have transacted with you. Are they happy with the product/service? How was the experience for them?

2.   Seek feedback – “Feedback is the breakfast of champions” says Ken Blanchard. Ask your customers, “How could we make your experience even better?” and then act of the feedback. Change your thinking to complaints are great because they give us the opportunity to become even better.

3.   Develop the culture – Culture trumps everything in business, so look at yours, does it encourage an environment in which you and your people exceed the customer expectations each and every time do you provide a WOW factor?

4.   Think long term relationships – In our private lives, if we want a long term relationship with anybody, we would invest time learning to understand them, what makes them tick? What are their likes and dislikes? What hobbies to they have? Etc. Do the same with your customers and use this information for opportunities to keep in touch with them instead of the usual trying to sell them something at every point of contact.

5.   Provide great value – People only buy on price when you let them. Become the expert, most reliable, most personalised service in your industry.

6.   Be proactive and not reactive – Always be anticipating and solving problems before they arise. Be honest with yourself and never overpromise and under-deliver.

7.   Focus on the customer experience and not your profits – Sometimes we tie our businesses up in so much red tape to protect our bottom line that it detracts from the customer experience. Change your focus to the customer experience and the bottom line will take care of itself. Profit is the applause you get for providing a memorable experience.

I would be really interested to hear you, ideas, tactics and strategies that you employ to build long lasting customer loyalty.

If you feel your business would benefit from developing long lasting customer loyalty and would like to look at this subject in much greater depth this will definitely be of interest to you…. 'How to Build Your Business with Confidence'

Thoughts:

“Customer satisfaction is worthless, customer loyalty is priceless” Jeffrey Gitomer

“Once you create a loyal customer base, its tough for a competitor to take them away” Joe Mansueto

“So I think instead of focusing on the competition, focus on the customer” Scott Cook

“The first step in exceeding your customer’s expectations is to know those expectations” Roy H. Williams

Chester Zoo’s Fantastic Customer Service Reveals How You can Gain The Winning Edge Over Your competition

After a recent visit to Chester Zoo, a lady named Fiona Gray returned to her car to find a note left by a kind hearted member of staff. The note explained that a member of the car park team had noticed that her rear car tyre looked a little flat, so they had gone to the trouble of pumping the tyre up a pressure of 30psi and that would hopefully be enough pressure to get the car home.

The note (as shown in the above photo) has since gone viral on the internet, has headlined in several newspapers and is a great lesson to businesses everywhere that if you place great customer service at the centre of everything you do it will mean customers coming back time and time again.

Additionally, it demonstrates how customers can become your secret sales and marketing team, by going away and telling stories about the service they received. At the time of writing this blog, Fiona’s Facebook post has had 90,000 likes.

Before I move on, I do believe it is also worthwhile mentioning the name of the hero in this piece, Paul Weaver.

What Paul did is commonly known as to provide a CNE (Critical Non Essential). A term I first came across whilst reading the book ‘Winning’ by Sir Clive Woodward. Sir Clive learnt the terminology from an Australian Dentist by the name of Paddi Lund. I highly recommend both Sir Clives’d book and Paddi’s book, The Happiness Centred Business.

If you pay attention in your business and provide meaningful CNEs, it can be the springboard to take your business from a good business to and outstanding business.

Essentially, CNEs are the parts of your business that differentiate you from the rest of the competition.

As the name implies they are not essential to your service (Paul didn’t need to pump up Fiona’s tyre), but it is how you ensure the quality of your customer service is far superior to your competition.

At Paddi Lunds Dental Surgery, you are greeted by your own care nurse and every aspect of the sensory experience is totally different to any other Dental Surgery, fresh flowers are everywhere, there is a full size cappuccino machine, and they even bake dental buns on site! You get your own waiting room where you are served tea in bone china cups. As for the actual dental service you are offered a pain free guarantee.

In isolation these non-essentials don’t define dentistry or win more business, but together they give Paddi’s business the winning edge against his competition.

Interesting question “Do you think Paddi is the cheapest Dentist around or do you think the service he provides allows him to charge a premium?”

For today’s businesses, the ever increasing and more competitive marketplace, means that your Critical Non Essentials, assuming you have some, will be the difference that makes the difference between you and your competition.

It has been estimated that, in some sectors, a customer’s lifetime value is 20 times their annual spend. So if a customer spends £1000 per year with you and enjoy the experience they have a potential £20,000 lifetime value. Alternatively that’s the potential £20,000 loss if you don’t look after them!

Questions you might like to ask yourself:

• Where are the flat tyre opportunities in your business?
• What standards are you setting?
• What makes people talk about you?
• What makes our customers look forward to doing business with us?
• What have you got in place to ensure your customers tell others about you?
• What do you need to do to do to make your customers experience so good that you no longer need to sell your product or service, instead you need to ration it?

In the world of business, biggest doesn’t necessarily mean best. A change of focus from trying to be the biggest in your market to being the best will certainly pay dividends. You can’t always outsell your competition but you can definitely out serve them.

If you enjoyed reading this blog and would like a more in depth look at how you can provide meaningful CNE’s and Outstanding Customer Service take a look here

Thoughts:

“The customer experience is the next competitive battleground” Jerry Gregoire

“Kind words can be short and easy to speak, but their echoes are truly endless” Mother Teresa

“Well done is better than well said” Benjamin Franklin

“Quality is remembered long after the price is forgotten” Gucci Family Slogan

“A delighted customer is the best business strategy of all” Uknown

Lessons From a Flock of Geese ...

I am presently reading the new Sir Alex Ferguson book ‘Leading,’ I highly recommend it for every business owner. As a result, I watched with anticipation the recent BBC programme Secrets of Success in which reporter Nick Robinson who has analysed leaders for most of his life set about discovering what made Sir Alex so successful. He also wanted to learn how he was able to keep himself and his teams hungry for success year in year out.

I realise for some reading a book by Sir Alex is a definite no-no, yet I would ask you to consider if someone could help you crack the code for running a successful business year in year out would you not put your prejudices aside and just soak up the wisdom? After all, another famous business philosopher said “The more you learn the more you earn” a famous quote from the one and only Bart Simpson.

The BBC programme was full, as indeed is the book, of golden nuggets for any leader but there was one story in particular that really perked my interest and it was Fergies fascination with the lessons he learned, modelled and taught about Geese.

During the programme Ryan Giggs mentioned that one day during training Fergie stopped the players mid-game so that they could observe a flock of geese flying above.

Also featured on the programme was British Ryder Cup Captain Paul McGinley. He told how he had asked Fergie to give a talk to his team before their match with USA. Once again Fergie told the Geese story to a team of golfers at the absolute top of their game. More importantly how using the principles of a flock of Geese could help them secure the Ryder Cup.

So what is it that two of the most successful teams in British sporting history have learnt from Geese and that we business owners can learn to transform not only our leadership but also the teamwork within our businesses? (For those of you who aren’t yet employing team members you still have a team. Customers, suppliers, your Accountant etc are all part of your team and these principles apply)

I thought we could look at these principles as a set of facts and then look at the lessons we can learn:

Fact 1 - When you see Geese flying in “V” formation, you might consider what science has discovered as to why they fly that way. As each bird flaps its wings, it creates uplift for the bird immediately following. By flying in V formation, the whole flock adds at least 71 percent greater flying range than if the bird flew alone.

Lesson Learned – People who share a common direction and sense of community can get where they are going much quicker and easier because they are travelling on the strength of one another. Make sure your team and Company are aligned towards a common goal.

Also flying in a V formation increases the visibility as every Goose can see what’s happening in front of them. How visible is your company in both organisational chart directions? Having a top-down approach enables leaders to stay connected with the edges of the company to make better informed decisions. Bottom-up visibility enables employees to see the bigger picture thus engaging them and empowering them to better align themselves with the company objectives.

Fact 2 – Whenever a goose falls out of formation, it suddenly feels the drag and resistance of trying to fly alone and quickly gets back into formation to take advantage of the lifting power of the bird immediately in front.

Lesson learned – If we have as much sense as geese, we will stay in formation with those who are ahead of where we want to go and be willing to accept their help as well as give ours to others. Another lesson here is to be humble and admit the challenges we face and to seek help as soon as we get stuck. This humility will enable you, your team and your company to move faster and achieve more.

Fact 3 – When the lead goose gets tired, it rotates back into the formation and another goose flies at the point position.

Lesson Learned – It pays to take turns doing the hard tasks and sharing leadership. Empower others to also lead. Micro-managing and keeping tight control will eventually burn you out. It will also disengage and demotivate those around you. All your team have their own unique skills, capabilities and gifts to offer and if you prefer to keep an iron fist around you company you will disengage and demotivate those around you.

Show your people trust and give them a chance to shine, you will be surprised with the outcomes.

Fact 4 – The Geese in formation honk from behind to encourage those up front to keep up their speed.

Lesson Learned – We need to make sure our honking from behind in our teams is encouraging, and not something else. How are you praising your people and giving them the recognition they deserve?

Lack of recognition is one of the main reasons employees are unsatisfied at work and eventually leads to them quitting or even worse staying when they are unmotivated and disengaged from the company objectives. Remembering to constantly provide recognition and encouragement is vital and keeps teams motivated to achieve their goals.

Fact 5 – When a Goose gets sick, wounded or shot down, two Geese drop out of formation and follow it down to help protect it. They stay with it until it is able to fly again or dies. Then they launch out on their own, with another formation or they catch up with their flock.

Lesson Learned – If we were to have as much sense as Geese do, we too, will stand by each other in difficult times as well as when we are strong. It is easy to be part of winning teams, but when things get difficult and people are facing challenges that’s when your teammates need you most.

Fact 6 – The Geese migration routes never vary. They use the same route year in year out. Even when the flock members change, the young learn the route from their parents.

Lesson Learned – Stay true to your core values and purpose. Products, strategies and tactics may change for a company to remain relevant in the market place but GREAT companies and teams always stick to their core purpose and values and preserve them with vigour. A company’s culture trumps everything else.

So there you have it 6 lessons for us all from a flock of Geese, apply them, live by them and see what happens to your company.

As a footnote. Above is a photo of the victorious European Ryder Cup Team along with their trophy. If you are wondering what they are pointing and smiling about just as they posed for this photo a flock of Geese flew overhead honking their support.

Ps If you would like a copy of Sir Alex’s book you can order yours here:

http://www.amazon.co.uk/Leading-Sir-Alex-Ferguson/dp/1473621178/ref=sr_1_1?s=books&ie=UTF8&qid=1444645408&sr=1-1&keywords=leading

Thoughts:

“None of us is as smart as all of us” Ken Blanchard

“Alone we do so little, together we can do so much” Helen Keller

“Remember, teamwork begins by building trust. And the only way to do that is to overcome our need for invulnerability” Patrick Lencioni

“If everyone is moving forward together, then success takes care of itself” Henry Ford

“The strength of the team is each individual member. The strength of each member is the team” Phil Jackson

A Re-think on Aged Debtors…

I was reminded last week, whilst speaking at a Planning Workshop, of our very first client. We were discussing cash flow and how to close the cash gap that is evident in almost every business (companies like Dell are changing this). Back to my first client, it became evident that he had lost control of his business. Whilst he was paying the interest on a rather large overdraft, the guy whose role it was to collect the money was failing to do so, because he didn’t like asking for it!

In this business, debtors had risen from 68 days to 132 days and that meant that if we could return his debtors back to 68 days we would put £492,000 back into the business owner’s bank account. Like so many business owners out there, he had no structured way of chasing his debtors. Very little was measured, there were no targets and the whole system was reactive instead of proactive.

Cash flow (or lack of it) is the cause of many a sleepless night for business owners all over the planet, mainly because there are no systems in place to collect the money that is due.

What I would like to do is share a really powerful technique I used with my first client that had a profound effect on the way he looked at his debtors.

Terms of trade – are you becoming someone else’s bank?

What are your terms of trade? From day one with a new customer you are educating them on how to do business with you. So, if you have a problem with debtors, first place to look to fix the problem is in the mirror! Ask yourself why am I offering my present terms? If you offer 30 days, why not 21? If you offer 21 why not 14?  Most owners are too nice, and feel they have to offer long terms to win the sale. The challenge is that they are, in actual fact, turning their businesses into a bank. The money that should be in their bank accounts is instead in their customers’ accounts, possibly earning interest!

So tip one: take a good look at your terms and what assumptions are you making?

Take a look at your outstanding debtors.

This should be very familiar to you because, unlike the client above, you will, I’m sure, be looking at it on a regular basis, at least monthly. Alongside each debtor you will normally have brackets for outstanding days 0-30, 31-60, 61-90, over 90.

Let’s assume a business with £200,000 outstanding debtors it could break down like this:

0-30: £80k, 31-60: £60k, 61-90: £40k over 90: £20k

Next step would be to turn these into percentages so in our example

0-30 is 40%, 31-60 is 30% 61-90 is 20%, over 90 10%

What I would like you to consider is that the 0 – 60 day debtors is your cash flow and the 60 – above 90 are your profit. As you can see your profit is in a very precarious position the older the debtors the slimmer the chances of them paying. You have some big decisions to make about dealing with these customers in the future.

Now armed with this information you will want to set some targets for a shift in the percentages, assigned to each debtor’s period for instance:

0-30 will move from 40% to 58%

31-60 will move from 30 to 35%

61 – 90 will move from 20% to 5%

Over 90 will go from 10% to 2%

The key action you must now take is to decide who you are going to chase. As a suggestion, I would advise you look at spending most of your time on the customers that owe bigger sums of money. This might sound like a bit of common sense, yet, in my experience, when it comes to chasing debtors common sense isn’t that common. A key thing to remember here is that it is YOUR money you’re asking for!

To recap take a look at your debtors and look what the percentage split is across the four date periods. Set targets for the ideal split you would like to see in the future. Make sure whoever collects the debts is aware of their new targets and the fact that they will be held accountable to them and also make sure there is a much bigger focus on the bigger sized debts.

How An Italian Economist Can Help You Transform Your Business...

During our recent 'Understanding The Numbers Workshop,' I happened to mention Pareto’s 80/20 rule. The discussion that followed proved to be so popular with the delegates, that it got me wondering how many other business people have never considered applying this rule within their businesses.

Vilfredo Pareto (1848-1923) was an Italian economist who essentially showed that 80% of the land in Italy was owned by 20% of the population. He later went on to show that 80% of the peas in his garden came from 20% of his peapods.

The principle was then further developed by Management consultant Joseph M Juran and he suggested a link between cause and effect, roughly 80% of effects come from 20% of causes.

The interdependent effect between cause and effect can be applied to all areas of life and business:

·         20% of the clothes in your wardrobe are worn 80% of the time.

·         20% of the tools in a toolbox are used in 80% of tasks.

·         80% of work absence is due to 20% of staff.

So how can you apply this principle to your business? Questions you might like to consider:

·         Which 20% of staff generate 80% of new customers?

·         Which 20% of staff delight 80% of customers?

·         Which 20% of staff deserve 80% of bonuses paid?

·         Which 20% of staff account for 80% of poor attendances?

·         Which 20% of suppliers account for 80% of the late deliveries?

·         Which 20% of products or services generate 80% of sales?

·         Which 20% of customers generate 80% of sales?

·         Which 20% of customers generate 80% of complaints?

·         Which 20% of customers generate 80% of overdue accounts?

·         Which 20% of equipment generates 80% of your repair costs?

·         Which 80% of fixed costs are capable of a 20% reduction, without affecting day to day operations?

·         Which 20% of your sales team produce 80% of your sales?

If you would like a more in depth list and an action plan get in touch.

Just imagine what difference it would make to your bottom line and your stress levels if you were to carry out and 80/20 on your business?

Sadly as the principle states 80% of you will do nothing with this information yet the 20% that do will produce 80% better results!

Thoughts:

“Doing less is not being lazy. Don’t give in to a culture that values personal sacrifice over personal productivity.” Tim Ferris

“20% of management theories are responsible for 80% of results. That’s assuming the Pareto Principle makes the cut.” Ryan Lilly

“Chuck your to do list, make a not to do list.” Richard Koch