All is not lost for small business

Here is some video footage of me on a recent Kochie's Business Builders TV episode from the 7 network, talking with Kochie about why the current economic crisis is not all doom and gloom for small business.

Christmas Silliness

That time of year is upon us again and, at the risk of sounding like a ungrateful bah-humbugger, it often tends to bring out the marketing worst in businesses. This is largely because it underscores the 'check-box' mentality which persists in many businesses, particularly in a business-to-business environment.

I love to use old cliches and adages so here is one- if a thing is worth doing it is worth doing well. Building on this a little bit, part of the doing things well is doing things thoughtfully, passionately and meaningfully. If you don't have those things you are paying lip service. The first group who will feel the lip service is always your customers. They are the last ones you want exposed to lip service because they actually want to believe you care.

I had two examples today.

Let's start with the hoary old Christmas Card. If you are going to send a Christmas Card to your customers don't do it just because you feel you have to; or because everyone else does; or because you've always done it; or because it comes up every year on your to-do list. None of these is a good reason. Do it because you genuinely (and personally) want to send a message to your customers. It could be to thank them for their custom in the previous year; it could be to let the know you would have liked to do more business with them; it could simply be to let them know you are thinking about them (possibly, more specifically at the moment, hoping they are weathering the financial storm).

Today I received two cards in the mail. They came in identical envelopes (so I had a suspicion they came from the same place); both were addressed in identical hand writing; both were posted to exactly the same address and arrived on the same day; they were distinguished from each other because one was addressed to Mr. T. Pethick, the other to Mr. Tim Pethick. When I opened them both were identical cards; both from a service provider and......... both from the same owner/executive in the service provider business. The messages, also written in the same (perhaps computer generated?) hand were slightly different.

So, what is it telling me? I certainly didn't take it (the error) personally - how could I, there was nothing personal about any of it. And that is the first problem. But what does it say about the business? They aren't efficient enough to spot a duplicate name and address on the data base or they are too sloppy to care? Perhaps they just overlook the details. As I said in my things continue as they begin post, leopards don't change their spots. If a business has a problem in one area it might be manifest in others.

A duplicate Christmas card from the same person pales into insignificant though compared with today's second Christmas Faux Paux.

A courier arrived at the office with a lavishly wrapped, relatively large Christmas present. The card inside it indicated it was from a supplier who we have only recently started doing some business with. We have spent around $75K with them so we are not huge but it is a big spend for a little business like ours. Apropos my previous comments about cards, the card set things up correctly - it thanked us for the business this year and cheerily added that they looked forward to doing business again with us in 2009. If only they had stopped with the card.

I opened the present and was, quite literally, gobsmacked. I have attached a photo below which unfortunately doesn't do it justice.

It is a vase. On the base it carries a bar code sticker which says "Mosaic Trendy Vase" "Made in China". It is sort of a very crudely made, vase like version, of a disco ball. The mirrored glass (if that is what it is) on the outside is chipped in places and very crudely cut.

I was left spluttering - 'what were they thinking?' - to my team. Putting aside the question of taste, if we look at this as a marketing device what is it saying and what is it doing? The vase probably cost about $5, perhaps less (if it cost more, there is again a question of business judgement), but certainly less than the courier cost to deliver it. It is not a useful (or appropriate) gift.

Frankly, my initial reaction was either that it was some kind of (yet to be fully revealed) clever joke, or that they were sending me a message along the lines of 'p*** off - we don't want to do business with you', or perhaps "we sent the good clients a bottle of Moet but you didn't make the grade'.

I'm sure none of these interpretations is true but I am still left thinking - 'what were they thinking?' or 'did anyone think at all'. What was their strategy in sending out such a gift? How did it work as a piece of marketing/communications - not well!!

I know I may be sounding harsh and ungrateful in this assessment. But the point is that everything we do in business has an impact - even the littlest things. Successful businesses are built by people who focus on detail; who are thoughtful; who know what their brand stands for and who consistently deliver against the brand promise.

Sometimes it is better to do nothing than anything when building a business and Christmas seems to throw up more examples than not.

Serendipity and Happenstance

This afternoon I popped up to the bank and as I was passing the village supermarket I noticed the wall beside their carpark exit had been rebuilt - differently!

Those who follow my blog may remember my post on Smart Persistence on the 30th November. In it I described how the wall was continually being knocked down by trucks only to be rebuilt in the same way then to be knocked down again.

It would be easy for me to convince myself and others that someone in the supermarket hierarchy was reading my blog, saw the innate commonsense of my posting and immediately ordered a re-design of the wall.

In other words my actions brought about positive change for which I am due credit.

In 5th Form at high school my economics teacher introduced us to one of the 'Logical Fallacies' - Post Hoc Ergo Propter Hoc - and it has stuck with me. It is Latin and means roughly 'after the fact therefore because of the fact'. In other words, it is easy (but often fallacious) to ascribe a cause and effect relationship to two things one of which follows the other.

One week I blog about the need for a wall re-design and the next week it happens. To link the two is a logical fallacy. I doubt anyone at the supermarket read and reacted to my blog. I imagine they resorted to some commonsense thinking of their own and had things well in hand with the re-design long before I started writing about the subject.

Frequently in business good things (and bad things) happen because of serendipity, happenstance of just dumb luck, not action or activity. In the same way that "Success Has Many Fathers" it is often the case that we inadvertently claim the credit for outcomes which were not completely, or at all, resultant from our actions.

To be able to learn and grow, and to repeat past successes, we need to be able to discern when we might be deluding ourselves with a post hoc ergo propter hoc situation. Of course we should also never be so self deprecating tha we hide our true light under a bushel!

The supermarkets are dumbing us down

By and large in Australia we have little choice other than to buy our groceries from Coles or Woolworths. The concentration is pretty significant - each has close to 800 supermarkets so there are around 1,600 in total across the country.

There often times I discover something new in my local supermarket and get quite attached to regularly buying it only to find that some months down the track it just disappears from the shelves.

I suspect it is because it just hasn't produced the sales volume required by the supermarket. Both chains generally set USW (units per store per week) hurdle rates for new line products. This is the rate of sale expected from the new product on a weekly basis.

In the case of something like a nudie the USW might for example be 11. This means 11 units per store per week of each flavour ranged. That doesn't sound like a great deal until you multiply it by the number of stores. If you had a product in both chains and all stores nationally that would mean 17,600 units sold a week.

Selling 11 bottles of nudie a week in an up-market location like Sydney's Double Bay is a shoe-in, but it becomes more difficult in a lower socio-economic store location like Mount Druitt. The more stores you are ranged in the harder it becomes to achieve the same average sales level across the chain.

In the UK they have solved this problem in supermarkets like Tesco by stocking different things in different stores based on the shopper base for that store. It is less likely in this case hat the law of averages works against you.

Back here in OZ, I suspect there are some great products which are cut because they haven't managed a respectable average USW across the wide variety of stores they are listed in.

This must inevitably mean that our supermarkets will stock more and more 'mass market' lines and less and less niche lines.

The system works to dumb down our choices and that can't be good for anyone.

Consistency

Fortunately for marketers and entrepreneurs very few consumers suffer from neophobia. They are always prepared to give something new a go if it is relevant and useful or desirable to them.

But once they are hooked and the novelty wears off they want consistency. They want to relax into an easy state where they know what to expect.

In the early days of nudie the flavours of the product changed almost weekly (it is far more homogeneous now and I can't help but wonder why). The reason for this was that the fruit we used changed - different varieties; different seasons; different growers; different climatic conditions, all impacted - as anything which is natural and real will do. Initially this change was off putting for some consumers, but they quickly learned it was because a nudie was made from real fruit and there is no such thing as a consistently flavoursome strawberry for example.

Before long consumers expected subtle variations in flavour and wanted that consistently delivered because it was a reassuring hallmark of the integrity of the product.

We are creatures of habit. I will go to the same place every morning to get my coffee made by someone who 'knows how I like it' and who uses the same beans. If it all changed and it wasn't to my liking a few mornings in a row I would have a reason to think about exploring for another coffee shop.

Once you have determined the hallmarks of your offering - the product, the service, the quality and the brand - work at delivering it with consistency. If you do you will provide your most loyal customers with more reason to stay and spread the word.

Smart Persistence

One of the hallmarks of successful entrepreneurs is persistence. The ability to keep driving on; often in the face of all the reasons not to presented by the naysayers.

There are frequent setbacks in building a business. Many of them are small and occur day-to-day. Less frequently there will be a major setback - like the nudie fire. But big or small it is the attitude of persistence which allows an entrepreneur to keep pushing forward.

I think a worthy metaphor is the Bozo the Clown punching bag I had as a kid. He has a rounded bottom and is sand filled. So no matter how hard you bop him in the nose he keeps springing back up.

It is important to understand though that there is no virtue in dumb persistence.

We have a major supermarket in our village on the peninsula. At the exit to the car park there is wall which is relatively frequently partially demolished by departing trucks who can't successfully negotiate the narrow confines as they leave the loading dock.

With monotonous regularity, in its efforts to uphold the aesthetic, the supermarket calls in workmen to repair the wall. They patiently rebuild it brick-by-brick, then render it and paint it. Beaut - just like a bought one again! The quickest I have personally seen it re-demolished is about 48 hours.

As I picked up my coffee this morning I found yet another team of workers commencing the latest re-build of the wall which has been damaged now for about 3 months.

One can't help but think there are better uses for the work men's time and the supermarket's money. This is dumb persistence.

Smart persistence would have the wall re-designed - perhaps lowered or re-shaped - or eliminated altogether, or built of a different material which might withstand the occasional knock.

Successful entrepreneurs harness their capability for smart persistence to drive their organisations forward.

Simple Things

In their search for bold marketing moves businesses often overlook the simple things.

Regularly on my way to pick up a coffee or go to the bank I pass our local village bookshop. It has a high street presence and it's windows are often nicely and thematically arranged with some of their latest books.

This is a great start but invariably the window display is changed only sporadically.

The greatest way to draw someone into a store is to give them a reason and often the reason is something new. What if my bookstore had a poster in the window changed each week which simply listed "New into store this week" items. This would allow me to quickly check whether any of the new items are of interest and make a determination to visit the store.

Now what if this was extended by the bookshop and the next time I visited they asked me for my email address so they could email a weekly list of 'what's new in store'. What if they added am author 'watch list' to this so I could be alerted when any of my favourite authors had a new release. And then what if they shared lists and content with, say, the local video store so I could also receive a 'what's new in store' list from them on a weekly basis. How about they started adding some local gossip or a blog from the shop owner.

All of a sudden they would have their own online community of local interest; they would know their local customers in a more intimate way which would further bind their customers to them; they would be providing a valuable service and driving more foot traffic into store. And best of all they could pull their regular weekly ad from the local newspaper which is nothing more than a useless banner anyway. The money saved can be used to further build the local online community of interest.

It is best to start with simple, creative (and often low-cost), customer-centric solutions before you start blowing money on traditional advertising campaigns.

Current economic woes a potential boon for small business

We could be on the verge of great times for entrepreneurial businesses who focus on their customers. The current economic climate will drive customers to search for value.

Anyone can make money in boom times because free-spending is rife. But in the tough times we all become value conscious and we exercise more choice. Value is not necessarily simply the lowest price.

Big businesses are rarely customer centric (particularly in Australia) or customer friendly. By dint of their sheer size they have generally become ensnared in a net of bureaucratic systems and processes which drives further wedges between them and their customers. They are unwieldy and this makes them slow to change (at least in the right way). Their typical response to tough times is to cut costs and, generally, the first to suffer when corporate costs are cut are employees and customers.

This was reported by Kelly Burke in yesterday's The Sydney Morning Herald (21 Nov 2008):

"HOUR-LONG phone queues, multiple transfers, hollow promises of people getting back to you....and the automated voice telling you your call is important. Soaring complaints over customer service from telecommunications companies have prompted the Federal Government to crack down....."

Apparently for the first time in its 17 year history the level of complaints to the telecommunication's industry ombudsman about customer service has outstripped complaints about billing or payments. There has been a 61% increase in complaints over the previous year.

Our Aussie telcos have never been famous for their consumer-facing behaviour and trying to turn around a culture of disdain for customers is a gruelling task in a massive telco at the best of times (always assuming you have a desire to do so). But what happens when you are tightening your belt? Jobs go, indulgences are stripped out of the system, and efficiencies are introduced. In the case of telcos this can look like fewer call centres, more frazzled call centre staff, more IVR automation and so on.

In other words - a tougher time for customers.

If we didn't have to deal with them we wouldn't. And why do we have to? Because there is no real choice - they are all as bad as each other and we are left to pick the best from a bad bunch .

Big businesses are slow to move (because they are big); they are complacent (because they know there is no real choice for their customers); and they are risk averse (because they are subject to public scrutiny and because frequently their top brass are more focused on their careers than the business). This is generally true and not just for telcos.

So, in an economic environment where we are all going to be less likely to throw money around willy-nilly; more choosy about whether we do business (we might go without) and who we do business with; and more careful to extract every ounce of value from every transaction, is it big businesses who are going to quickly rise to the occasion and respond with something different and valuable for us? Not on your Nelly!

This leaves the door wide open for smart, small business operators to create solutions and it won't just be about creating a lower priced offering.

For example, sticking with the telco case, what if I created a re-seller of wholesale telecommunications services, called "FriendlyTel" where the customer promise ran something along these lines:

• We will provide a full suite of telco services for you - voice, data and mobile - bundled on one bill;
• We can't be the cheapest but we will always be the best;
• You can always talk to a real person - we will never have an automated voice system;
• The person you talk to will recognise you as a real person too and will always be empowered to resolve your issue without reference to a team leader or supervisor;
• We will do what we say we are going to do;
• If we loose you while we are talking to you, we will always call you straight back;
• If we can't figure out how to fix your problem we will tell you straight and keep working on it until we can figure it out, then we'll get back to you and let you know how we are going to get it sorted;
• We will always talk plain English to you and will never patronise you;
• We will provide a hassle free telco solution which you will never have to worry about;
• We won't ever have an offshore call centre;
• We will listen to what you have to say with empathy and understanding;

Oh, and by the way, we can only limit our offering to 5,000 customers because anymore than that and our service standards will drop and we'll be too big.

Could an existing big business telco offer this service? Of course, but it is so improbable as to be completely unlikely and if they did, it certainly wouldn't be a new offering they would launch in the face of a recession. But, an entrepreneurial, customer centric, people oriented business could pretty easily provide something like this. And what premium would you pay to be among the 5,000 customers - 20% more than you are currently paying? Possibly 40% or 50% more. It would still look like great value.

Of course you don't have to create an entirely new business like FriendlyTel. If you are already in business just roll up your sleeves and dive into re-engineering your current customer experience to make it as delightful and valuable for them as it can be. Eliminate every potential point of annoyance or frustration; make it real and personable; provide choice; allow them to deal with you in the way they prefer rather than the way you would prefer; make integrity a hallmark of every interaction; make it fun; equip them with stories to tell their friends.

Do these things and, in these tough times when people are more careful about how they spend their money, your customers will choose to spend their money with you. And not with some faceless corporation who doesn't give a toss about them and who can't possibly do what you do anyway because they are fat, lazy and on a cost-cutting drive.

Detroit's Executive Jets

It seems many people were horrified that the kings of the car companies in Detroit chose to fly (separately) on their private jets to Washington to beg for Government (i.e. taxpayer) support for their ailing monoliths.

Personally I am flabbergasted. The businesses they run are hemorrhaging billions; workers are being laid off in the thousands and yet they still think a (reportedly) US$20,000 one way trip on a private jet (a first class fare on a commercial flight would apparently have cost $900 return) makes solid commercial sense.

As was pointed out to them, even if they couldn't stoop to join the rest of us on a commercial flight, they surely could have private jet pooled and shared the one plane.

It was also reported that the chief of Ford uses the same private jet to commute home each weekend from Detroit to Seattle and that he took home a staggering US$25 million in salary, benefits and incentives last year.

It is of course easy to dismiss this as 'Nero fiddling while Rome burns' behaviour. But it is more than that.

These guys clearly live in a different world than the rest of us. They are closeted and cocooned. How can they possibly understand or empathise with their customers when they live in a fundamentally different but parallel universe? They can't.

And this is one of the primary reasons their organisations are being brought to their knees. No business which is disconnected from its customers can thrive. It is no wonder they kept building gas guzzling V8s when the market was turning to small, frugal, low emission vehicles.

Without any actual customer empathy, all you can rely on is market research and, as I have explored elsewhere in this blog, that is often a flawed indication of real consumer sentiment.

I think it would actually be a good thing for the large car companies to fail because it would open up the market for new, innovative, customer-focused, entrepreneurial start-ups who would create transportation solutions of value for us. But failing that, the best way to turn around these dieing corporate monsters would be to put someone at the helm who lives in the same world his customers inhabit, and who is solely focused on finding solutions which add value to them.

Things continue the way they begin

Have you ever been trapped behind a car driven by someone who has just done something annoying or silly (at least as far as you are concerned)? If so, you may have noticed they will repeat offend. Every few hundred metres they are bound to do something which is equally or even more infuriating to you.

Partly this is because after the first spot of bother you are actively looking to find fault, but more importantly it is because things generally continue the way they begin.

If the driver of the other car does something you deem to be stupid they probably have other traits or shortcomings which will cause you to become querulous.

The same is frequently true in business. I have been guilty of it in the past and I observe it often - people who mistakenly persist with trying to work with someone (partner; shareholder; manager; leader; supplier; customer) when there have been early warning signs that the relationship will not work.

Business is all about relationships. Effective relationships are the building blocks for any powerful business.

If there are strong early warning signs that a key strategic relationship isn't working for you it is often better to quickly figure out a productive way to exit the relationship rather then waste energy in trying to make it work.

Otherwise things have habit of continuing the way they begin.

Ironic iPhone

OK, I admit it - I have a new iPhone.

I am loving it and hating it in equal measures.

The one thing it seems to do extremely well is be an enhanced iPod.

My old Nokia was a better phone - the iPhone seems to have no reception in ridiculous places and drops out all over the place. Somehow yesterday, despite sitting in one place for most of the day, I had 4 calls slip straight through to voicemail with nary a ring and only received 3 calls. A 42% success rate is pretty abysmal for anything including a phone.

My Blackberry is much, much better for email and for syncing to my PC.

The iPhone does most things competently but is outclassed in a number of areas by other devices. So will I be swapping back?

No way.

It is just a beautiful bit of kit. It is aesthetic; it is delightfully tactile and it's fun (and it is a great iPod). As a result, I am prepared to forgive it for it's shortcomings.

Powerful brands with an emotional dimension are like this - they change our perceptions of value; the engender loyalty; they allow us to forgive them for their shortcomings and foibles; they are always competent but excel in some areas. The total package binds us to them in a way which delights.

Not many brands achieve it. Those that do are iconic and valuable.

Our aim in creating brands is to build something beautiful - just like an iPhone.

Inspired Communication

I received the above message in my inbox yesterday. What an inspired way to communicate a savings rate cut!

You would have to read it a few times to even realise they were announcing a reduction in the interest rate paid (and quite a hefty one - it was previously 7%), and even when you do realise it is still possible to feel warm and fuzzy about it.

The power of happy customers - almost there

In these troubled times all businesses will be looking for the edge which ensures they win the sale and build a loyal customer base.

Often it doesn't take much but it starts with some lateral thinking which results in doing things differently.

We have a very old house with a slate roof. Any old house needs continuous maintenance. For a while now we have been vaguely aware that there was a leak in the roof which was causing increasing damp in one of the walls.

Some months ago we had our usual roofing team out to do routine maintenance and replace some cracked slates. They scampered all over the roof and (apparently) replaced a number of slates. But after they had gone the leakage problem appeared to be even worse. Yet there was no comment from them about any problems remaining with the roof.

I eventually called them back to focus on the specific problem. They clamoured up a ladder (I should point out that out double storey house has very high ceilings (4m) and a very raked roof, so it is a long way off the ground to the apex of the roof) and had a look at the valley and gutter which I suspected was the problem.

They willingly agreed the whole gutter in question looked like a complete mess (why hadn't they pointed this out on the last maintenance visit?) and would need replacing.

Their astronomical quote for the repair was more than $8,000!!!

We sat on it.

After a few more rain storms when we had water pouring down the chimney and paint bubbling off the walls, we realised we had no choice but to get it fixed. Fortuitously another roofing company, who claimed to specialise in slate roofs - no doubt why they targeted us -chose that time to drop a card in our letterbox.

I immediately called them up and made an appointment to get a quote. Their owner turned up precisely on time for the agreed quotation inspection - always a good sign!

He popped up a ladder and immediately began throwing down comments like 'My god, what a dog's breakfast; this was done by some dodgy brothers with whatever they had in the back of their ute' and so on.

This is smart. He was placing himself firmly on my side and building empathy. I was already warming to him. But the extent of his musings about the nasty sight he found on my roof was convincing me it could be a far bigger problem than $8,000 would fix.

He descended and promised to get a written quote to me within the week.

Before the week was out the quote arrived - $1,800 was his estimate. Thinking there must be some error, I phoned him and had a chat about the whole situation. He knowledgeably discussed the problem and the proposed solution and confirmed the quote was correct. However it didn't include necessary scaffolding. I asked him for an estimate of that and his response was 'around $500'.

I accepted the quote and asked him to organise the scaffolding. He promised to call to let me know when he could do the job.

Sure enough, a week or so later I received the call to schedule the time to do the job. We agreed the day and I was told he would be there between 7 a.m. and 7.30 a.m. on the appointed day.

At 7.25 a.m. on the day he arrived at exactly the same time as the truck carrying the necessary scaffolding. He and his offsider were polite and extremely efficient. They got on with the job and I watched as bits of twisted metal gutter were dragged off the roof and new slates and a new box gutter was installed.

By the end of the day the job was done. Two days later I received the invoice. As agreed it was the $1,800 quoted with an additional $150 for the scaffolding. I was overjoyed that the scaffolding was less than half his estimate.

As I sit here typing this the rain is pounding down but no water is cascading down the inside of my chimney and no new bubbles of paint are appearing on the wall.

This is a great story of a tradesman who did everything right in a world where most do everything wrong- he did everything he said he was going to do; he was knowledgeable, empathetic and polite; he under promised and over delivered; he was reasonably priced; he got the job done. I happily paid his invoice the day I received it in the mail.

Building a base of happy customers is simple really - just delight them.

But even my roofer from heaven could have gone a step further.

My roof is more than 8m off the ground. I'm not going to climb up there. He could have taken before and after photos of the job and attached them to the invoice as a validation of the work he undertook. This would have made me feel even more comfortable that a great job was done. He could also have included a report with his invoice about a suggested maintenance program for my roof - he could even have sought to book in a maintenance visit. It never hurts to ask for more custom. Perhaps he might have followed up with a call in a few weeks time to thank me for my prompt payment and ask whether I am still happy with the job. He could use that same call to ask for some referrals.

Making sure you do what you say you are going to do is a fundamental for all successful businesses; under promising and over delivering is even better (and all deserved kudos to my new found roofer for getting the fundamentals right). But the highest growth businesses will go even further and find ways to differentiate themselves and add value to their customers. Happy customers will always reward the businesses that delight them with more and more custom.

Make it easy to do business with you

Everyone wants more business - at least of the right kind.

But I remain astonished at the number of businesses which make it bloody difficult to do business with them.

Often this is because they are clinging to antiquated models. Three common hallmarks of this Luddite approach:

1. Failure to use the power of the web as a distribution channel
2. A view that people need to be 'sold'; instead of an understanding that modern customer simply want to 'buy'
3. Driving customers to an endpoint which is 'pick up the phone and call us'

A point in case.

I decided this week that I wanted to do a direct mail - yes, you read that correctly, mail as in snail mail - campaign for one of my businesses (there is a logical reason for this which I will perhaps canvass in a future blog).

I found I could pretty easily find half a dozen web sites which could sell me address lists (either email or snail mail) although almost none of them were e-commerce enabled.

But I was shocked when I came to search for someone who could pull the campaign together - produce and print the addressed direct mail piece; stuff it in addressed envelopes; post it out. Of course there are loads of them out there who do this sort of stuff, but not one of them provided me the opportunity to get a price and set it all up online.

All the sites out there 'forced' me to pick up the phone to talk to someone who wanted the opportunity to 'sell' me a solution. Why-oh-why-oh-why???!!!

I would have instantly done business with one who:

1. Informed me about the likely costs, benefits and returns of conducting a campaign (case studies and $$$$);
2. Provided me a way to initiate it and set it all up online

Isn't that what the web is for in business?

Why force me to call someone - it wastes my time and theirs; it probably means there are a bunch of employees on their payroll who don't need to be there; but most importantly it erects a barrier between me and doing business.

Times are tough. Don't whinge about it. Simply make it easy for me to do business with you. Use the medium; make it work.

Easy really!

More Secret Squirrel Stuff

Apropos my previous post, secrecy is not all its cracked up to be in business.

I once knew an inventor who created an innovative and potentially powerful new product with international appeal.

Having come up with a new product and process to produce it he was hell-bent on protecting it at all costs. Unfortunately this translated into him trying to contain all the IP himself - in other words not sharing it with anyone.

Now if he was a superman who could not only conceive the product and process but could also build the factory, create the brand, sell the product, build the team and turn it into an international success, that would be fine.

He was not that superman. But it was a corker of a concept so he rapidly began to think of himself as a superman. He didn't understand his limits.

As the cracks in the proposition started to emerge he clung tighter to the IP and tried to find fixes with his own resources -to the extent that he refused to admit he didn't have all the answers; he failed to call in external experts when he needed them most and this jeopardised the entire project.

Most importantly by clinging tight to the idea, the process and the ownership, in a situation where his limits were significantly less than he perceived them to be, he was preventing the idea being carried forward.

If he was open and expansive and prepared to let go he could have created a global empire. Instead he clung tight and became small and increasingly miserable.

The moral of the (true) story is to know your own limits; to accept your faults; to be open and inclusive in bringing people along; to create a coalition of interest around a concept rather than to try and dominate it.

There is no currency in ideas

I am frequently approached by people looking for assistance who open up the dialogue with something akin to "I have a great idea".

This is often followed up with puzzlement about how on earth they are going to share the idea with me because they fear that by 'exposing' the idea they risk having it stolen (presumably by me!!??).

Their fears are generally groundless because the only things worth stealing are those that have value and an idea alone very rarely has value.

Some, thinking themselves more savvy, rapidly come to the conclusion that they need a NDA (Non Disclosure Agreement) executed before the big reveal.

It may be that deep down I harbour a degree of affront at these sorts of approaches. Essentially they are coming to me to ask for help. They need something. They believe I have something of value (knowledge; contacts; experience; a point of view; money) that they want. By taking this path they are essentially devaluing my expected contribution and overvaluing theirs and they are also basically saying they don't trust me. Not a great way to start any sort of relationship - commercial or otherwise.

But this is not the real issue here.

In my experience cloaking an idea in a shroud of secrecy is a sure-fire way to kill it.

I have rather provocatively said ideas alone have little value. Let me elaborate. I am not saying ideas are unimportant. I love ideas. I am inspired by many of them; I rapidly become enthusiastic about new ideas - some would say I do so too rapidly; they are an essential part of the process of innovation and invention.

So, I love ideas. But I live in a commercial world and my creativity is channelled into building businesses. There are myriad examples of fabulous ideas which are never turned into a commercial success and equally there are great businesses built from pretty mediocre ideas.

Too many ideas are orphans. At ?What If! Innovation they had an innovation equation - Insight + Ideas + Impact = Innovation. The 'parents' of ideas are 'insight' and 'impact'. Insight means customer insight. Ideas need to be well founded on the back of some insight about customer behaviour - often this is an unmet need. But, in my view, the power lifter in this family is 'impact'. I read 'impact' as 'execution'. Powerful businesses spring from effective execution - making things happen; getting things right; focusing on the detail.

If the world's best idea fell at my feet I would be pretty ho-hum about it. If the idea fell at my feet with a fully-worked business plan, a ton of customer insight work, and a cheque for the seed capital, I would start thinking something valuable had arrived. If the package came with proven, cracker-jack team who had worked together in the past and delivered success all my Christmases have come at once.

An idea is a starting point - it is what you do with it that creates value.

In “Innovate 2008: Is the Tide Turning?”, a recent report on innovation released by Boston Consulting Group, they noted:

“It is worth pointing out that only 20 percent of companies considered a shortage of great ideas to be the problem… Most companies, in fact, have an abundance of good, even great ideas. But having ideas and turning those ideas into cash are two entirely different things. Innovation is often equated with the former, when in reality it’s all about the latter.”

There is also a misconception that an idea has to be novel to be valuable for businesses. A new invention must obviously be based on a novel idea. But a successful new business (or the revamp of an existing one) doesn't need a new idea. It just needs an idea which is well executed.

The nudie product concept wasn't new. Nor were some of the elements of the brand. Many others had come before in the US and the UK - the likes of Fresh Samantha, Hansens, Odwalla, Pete & Johnnies and Innocent, to name but a few. The fact is that I took that idea and triumphed in the execution to create a $20m a year business.

My view is that value is created when you breathe life into an idea which is grounded in solid insight. People too frequently come to me with an idea believing it already has value and that leads to the secret squirrel stuff.

I can't count the number of times I have seen a potential idea choked to death when it is held too tight by its creator.

I have ideas all of the time. Occasionally they are pretty good ones. I am also an extremely open person. I love to share my ideas with as many people as I can because by doing so they either are exposed for the frauds they are, or are amplified into something really special by the input from others. In all the years of I have been openly sharing ideas none (to my knowledge) has ever been 'stolen'. It doesn't surprise me. I am not without guile and I openly share my ideas knowing the vast majority of people I talk to can't, or couldn't be bothered, bringing them to life through effective execution.

I can.

So by sharing my ideas I get input which builds and develops them - ?What If! would call it "greenhousing" - and then I can decide whether I am going to go down the path of implementing them.

NDA's are fabulous (perhaps) for protecting corporate information which is not in the public domain. They are not designed as some sort of intellectual property protection for an idea. If you are an individual or would-be-entrepreneur thinking about a start-up, my advice, unless you have novel intellectual property, is generally speaking don't bother with them. It will only slow you down.

This is mirrored by a widespread fear that small businesses or sole traders have in dealings with 'big business' along the lines of - 'they will steal my idea'. Believe me, 9 times out of 10, the big business will have seen the idea half a dozen times before. They still can't make it happen or they would have before you reach them.

The power of small business, and particularly entrepreneurial start-ups, is in making things happen. There is no need to be precious about ideas or waste time with meaningless NDA's.

Un - der done!

How many have seen the "Un" campaign? Unfortunately that is exactly what it is - a campaign. I was expecting more and it could have been great.


It started last weekend with teaser ads in both leading Sunday papers. I was hooked enough to start hunting for "Un" references on the web. Largely what I got was the United Nations.


This made me realise that someone had created a (brand or advertising) proposition which they couldn't 'own'.


The tease continued during the week as the massive billboard sitting atop the grain silos west of the Anzac Bridge (Sydney) was filled with 'un' words.



Finally today the big reveal - Un is "unworry" and is an NRMA (IAG) insurance campaign. For those who haven't yet seen "The Power of Un." ads here is a snippet to get you in the frame:



"'But what is Un?' Un is amazing. It's all around us. Without Un you can't undress and where does that leave you? In te same clothes forever. But with Un you can unstress. And uncomplicate. And unbother about it. Most of all, you can undo what you did. Like UN-SEND that all-staff email that was meant for your boyfriend. Or UNCRASH Uncle Percy's car. And unsmash the pergola that Uncle Percy's car drove into. Now, thanks to Un, Uncle Percy isn't cranky, he's uncranky. So you can both relax and be friends again. 'And that is the power of Un," I say."




Well its creative and different, its got attitude, they are developing a tone-of-voice which could work, and it has amazing potential.



But I think they have blown it.



If you go to unworry.com.au you get a website which gives you a bit more info on 'Un" and has a cute blue plasticine character not dissimilar to one I had developed for my (yet-to-be-released) 'wink' brand a couple of years ago.

The website even has some games. But when you get down to the pointy business of buying (or getting a quote for) car insurance all it does is pass you straight to the bog standard NRMA online quote engine.


In other words it is a pretty unusual and interesting front end to the existing business engine.



It could have been so much more.



I happen to know that IAG is (or at least was) developing a new online insurance start-up to tackle 'Bingle'. I sort of had a hunch when I first saw it last weekend that "Un" might be IAG's launch of his new initiative. So I was expecting lots and got a little.



Imagine an entirely new insurance brand, delivered online, around an "Un" proposition. The first incarnation of this is what they hint at in a tongue-in-cheek way - undoing what had been done by accident or act-of-God. But it could go much further - how about being unlike any other insurance company; being unwavering in their commitment to pay (quickly) legitimate claims; being unafraid to be different - well, you get the picture.



A brand is created around a promise, a personality and a proposition. I know a lot of people think of brands as being the brand identity - logo and name - but powerful brands are far more. NRMA had a chance to create a whole new proposition and a powerful new brand. Clearly there are some smart minds at work there. Instead they came up with a clever advertising campaign which is not even executed as effectively as it could be.



So what are some of the things wrong with it?

• It is just a new wrap to an old product and service offering


• They don't do enough to develop the character - the blue plasticine character could be "Un" and they could build him into something substantial; instead he is an incidental traffic light.


• They promise things they can never deliver - can they really help 'un-send' the all-staff email? Of course they can't. They would have been better off being upfront and saying unfortunately there are some things we want to "Un" but can't yet


• They could have created a brave new virtual un-world.


• Most importantly they could have uninvented all the conventional wisdom rules of the existing general insurance business and given us something refreshingly new and different.

Instead we have mutton dressed up as lamb.


Powerful brands are not created by clever copywriters. They are delivered through the actions of the business - consistently and with integrity. If you are going to tout "Un" the business has to be "Un". Not just a creative front end to the same old stuff.

Put the customer in control

I believe so much customer dissatisfaction results from the fact that we (as customers) frequently have low power in relationships with the businesses which supply us.

Rather than them responding to our needs and wants they tell us what to do and let us know (generally in a peremptory fashion) what they will deign to provide us.

Since we know this characterises our relationship it forms the way we approach our product and service providers - we already have the s***s with them before we pick up the phone or visit their establishments. No wonder call centre staff are often so stressed!

I had yet another example today. I found a reference in another publication to a newly launched magazine which included a cover shot of the new magazine's September 08 edition. One of the cover articles looked really interesting so I set out to find a copy of the magazine.

After visiting, in vain, 4 or 5 newsagents I began to realise it was incredibly naive of me to believe that I could find a September edition magazine in early September (after all we already have the October, and in some cases November, issues on the newsstands!!!!).

What does one do in such a situation - visit the web of course! Once again naively I expected I could either find the article online or, worst case, find a way to order a back issue (sorry to labour the point but why is a September issues already a back-issue in September?) over the web.

In Australia in 2008 neither was possible. I could find on the publisher's web site a 1300 number to call but I couldn't find a way to track down the article or order a back issue.

I don't want to call a 1300 number. I never do - who knows, I might end up speaking to an 'offshore' call centre. I want to be able to use the power of the web to deliver information to my desk top when I want it. I dug around and eventually found an email address - hallelujah!

I belted off a quick email expressing my desire to obtain a September back issue of the magazine. To the credit of the publishers I received a cheery email the following morning from the publisher's assistant letting me know that they were grateful for my interest and they had passed on my query to their 'subscription service' who would be able to arrange a back issue for the bargain price of $8 (not significantly more than the newsstand price).

An hour or so later my inbox pinged with an email from the subscription service business informing me that if I wanted a back issue all I needed to do was call the 1300 number.

24 hours after my attempt had begun I was right back where I started. Their very strong message - 'it's our way or the highway!!'.

I wanted the issue badly enough to capitulate and do it their way and so I dialled the 1300 number and organised the magazine.

But I had a feeling of antipathy about the whole process and everyone involved in it. OK, so they aren't sophisticated enough to have a web ordering facility (or an online version of the article), but surely they could have been sensible enough to respond to an email from me with a return email along the lines of 'we'll get a magazine in the post to you if you just fax/email your credit card details to....". Or what about better yet, 'sign up on email for a 12 month subscription today and we'll send you copy of the September issue gratis'?

Instead they dis empowered me. They made me do it their way, rather than seeking to do it my way. Most businesses do this today, often unwittingly.

The businesses which are in tune with their customers needs and wants are the one which will win. It doesn't take much.

Out of Touch - Lacking Customer Insight

Scarcity creates value; rarity even more so. A truism which seems to be ignored by many of the developers at work in my locale.

I live on a peninsula which is literally within spitting distance of the city. It started life as a working class suburb and many of the properties on the peninsula are tiny Victorian era 1 or 2 bedroom worker's cottages.

Of course the whole suburb has been gentrified in the last couple of decades and it is amazing what some people with vision, imagination and money can do to a worker's cottage. But the fact remains that even gentrified cottages are small and sit on tiny plots of land.

We have seemingly experienced a baby boom on the peninsula over the last few years and mothers pushing their ubiquitous Bugaboo prams are everywhere. What is craved and treasured by residents are large family homes with a decent sized garden and off-street parking. Castles to house the burgeoning families of the increasingly wealthy bourgeois. Yet almost none exist, so expanding families (or simply those singles or couples with a thirst for space) inevitably admit defeat and move off the peninsula.

This morning, on the way back from dropping the kids at school, I walked past the latest, newly completed development, on one of the last remaining large-scale development blocks we have on the peninsula. A block created by tearing down a dozen or so worker's cottages.

And what has the developer erected? A dozen or so 2 bedroom townhouses with pocket handkerchief back yards. The 1890s worker's cottage gives way to the 2008 worker's cottage.

It is mind-boggling really. Rather than thinking constructively, based on some sort of customer insight, the developer has done the usual and stuck to a supposed "winning formula".

Imagine if instead of 12 boringly 'same' tiny townhouses the developer had erected 3 substantial 5 bedroom dwellings with expansive backyards. In other words they created the unobtainable.

Even in today's market, the unobtainable property carries a price premium. It is unobtainable because everyone wants it (demand) and no one has it (supply).

Fundamental economics at play again. When demand outstrips supply an upwards price adjustment balances the market and super-profits are to be made.

We have become a society of non-thinking formulaic business people who ignore customer insight and therefore miss significant economic opportunity.

Hats Off

Since more often than not the companies that are supposed to serve us don't, it would be very easy for this blog to degenerate into a critical whinge.

To break way from that I want to celebrate in this post a start-up company in the US (well Canada actually) who is potentially turning a typical consumer whinge into an opportunity.

Hands up everyone who enjoys dealing with an IVR (Integrated Voice Response) System in the companies we contact. You know, the phone systems all big businesses hide behind - "to be marginally driven mad, press 1"; "to be almost pushed to the limit, press 2"; "if you didn't think it could be worse, press 3 and be introduced to an entirely new set of maddening sub-menus". I know no one is holding up their hand because we all hate IVRs, but businesses all use them because they 'streamline the customer handling process' (in other words they save money).

www.fonolo.com is a new business which, rather than joining the rest of us to whinge about it, is trying to turn this frustration into a business opportunity. They have built a 'spider' which phones the IVRs and builds a database of their menu structures (in much the same way a web search engine 'spider' builds a search index), which they visually display for you on the web. You can have a look at the menu structure and dive straight into where you want to be. They call it 'deep dialling'. You press the 'call' button at the point you want; fonolo goes through the hassle of calling the company and traversing the IVR structure and then they call you to put you through when they have the customer service agent you need.

What a cracker of an idea!

You can even 'bookmark' frequently used 'deep dial' locations AND you can record and store the calls so you have a record if, for example, you are involved in a billing dispute with the company concerned.

Where was this service when I was having my run-in with my ISP telco provider???!!

I really hope this works for the team behind fonolo - it should. They have spotted an almost universal consumer frustration; knowing that companies are unlikely themselves to respond to these frustrations, instead of waiting around for that to happen, they have seen an opportunity and created a solution.

The most powerful new businesses in my view are those that overcome an evident customer frustration.

I'll be watching this one with interest.

And whilst I am handing out plaudits, let's take our hats off also to our own AAMI who seem to have recognised that we all hate IVRs and have come up with their own solution - get rid of it. As far as I can tell every phone call to AAMI is answered by a real person who solicitously asks how they can direct your call. Yay! That is a point of difference upon which to build a great customer-centric insurance company.

No Added Value

I went to the movies last night (The Dark Knight is way too dark for me by the way).

A bottle of water and a choc top to enjoy in the cinema cost me about a gazillion dollars from the snacks counter in the foyer.

Throughout the movie I was seriously disturbed by the crinkling, crunching and crackling of packets of food and the eaters who munched through their contents.

Why do we pay four times as much for a bottle of water or a packet of chips or an ice cream in a cinema? Is it just because we are a captive audience? (From a practical point of view it is because I so frequently forget to buy something at a normal store on the way to the cinema - curses!).

I could understand paying more if the cinemas had some sort of value adding proposition, for example, cinema food with noiseless packaging which doesn't crinkle and disturb other patrons. But they don't - the food is the same as you can buy outside the cinema. I could understand it if the business model in cinemas is one where you don't pay for the tickets but instead pay through the nose for the food (and maybe this is the model - maybe cinema tickets should be $30 each if we didn't pay ridiculous prices for food and drink - but if so they aren't very good at communicating this to we poor customers) - but this doesn't seem to be the case.

So, the only conclusion to draw seems to be that cinemas are taking the piss and gouging us. Why-oh-why would they do this? Because they can, and because we all mutely put up with it.

More power to them! But what a missed opportunity to add value and build loyal customers instead of annoyed ones.

A Green Nightmare - Clinging to the Past

Yesterday I got stuck on the way back home behind a flat bed truck loaded with Telephone Books being delivered door-to-door.

For heaven's sake, this is 2008!

Almost everyone has access to the web (68% of households now have broadband access in Australia) or a GPRS or 3G mobile phone. Finding a listed telephone number doesn't require wading through a mountainous book.

Why do they insist on dumping a useless book on our doorsteps. In my case, as soon as it arrives I strip the (non-recyclable) plastic wrap from it and consign the books straight to the recycling bin - but what a waste!!

Assuming the powers that be are not completely stupid or have their heads buried in the sand, I imagine there must be some obscure legislation that mandates every household has to have a free white pages phone directory delivered to their doorstep.

Why can't they simply make it opt-in and save themselves and the community many $ and generate some green kudos at the same time?

The situation is worse in the case of the Yellow Pages. I imagine all that keeps these books being delivered to our doors is the huge commercial vested interest Sensis (Telstra) has in keeping alive the myth that it is a tremendous advertising medium.

I haven't opened a Yellow Pages book in many, many years. Why would I when I can search for it all on the web?

I accept some people may still find the Yellow Pages useful and they too could opt-in to receive one. This though would expose the real (and diminishing) underlying economic value of the Sensis advertising franchise and so will presumably never happen.

Pethick's Next Feast

There was an interesting article about me by Amanda Gome in www.smartcompany.com.au this week.

http://www.smartcompany.com.au/Premium-Articles/EntrepreneurOnline/20080729-Pethicks-perscription.html?source=RSS

It was OK but I took slight exception to the inference that nudie (and ?What If!) had been failure.

Here was my response to Amanda:

Hi Amanda

By using the term “fallen entrepreneur” in a pejorative sense you potentially obscure both the facts and the lessons for other entrepreneurs.

It is true I was “kicked out” of nudie. I certainly wasn’t without fault in the proceedings but, at the heart of this was the fact that I had a very different vision and strategy for nudie than the board did. It provides a hard-won lesson for all entrepreneurs. When it comes to a contest between an entrepreneur’s vision and an investor’s money it is always the dumb money that wins!

I believed (and still do) that nudie is a powerful brand, and that as such we should have concentrated on brand development and marketing and outsourced manufacturing and distribution, via license, to another organisation that had a comparative advantage in those areas. nudie could then focus on what we did best and leave others to do what they did best. This seemed to me to be both a scalable model and an economically desirable one. The board believed nudie was a juice company and needed manufacturing and distribution to give truth to that.

I believe history will prove me correct (perhaps has done so already) and in part this is evidenced by the fact that the VC’s in nudie exited at a significant loss some two years after I had been “kicked out”.

But in any event nudie was a staggering success. It proved it was possible for a bootstrap start-up to tackle huge and profitable incumbent players in a mature industry, and create a brand (voted in 2005, two years after commencement, by readers of brandchannel.com as one of the top 10 “most influential brands” in the Asia Pacific region) and a business (turning over $18m a year after two years in business) that shook up that industry (have a look at the chilled juice cabinet in any supermarket now) in favour of consumers. It is a story which has and should continue to encourage and inspire budding Australian entrepreneurs and innovators.

The ?What If! experience is also one I am content with because, apart from the lessons I learned about the apathy big Australian businesses have towards innovation (and therefore their customers), it was a tangible demonstration of my increasing commercial maturity.

With ?What If! I stepped in as CEO to a 6 year old business which had been losing money for the previous 18 months. My initial objective was to turn that business around (as I had done successfully in the past, for example when I inherited a very dysfunctional, loss-making Encyclopaedia Britannica as CEO in the mid nineties). In the space of 6 months I determined that it would be possible to turn it around but that the size of the prize for doing so simply didn’t warrant the investment or the energy. ?What If! is a global organisation and they were better off investing in more lucrative and receptive markets. In the old days I would have seen it as a virtue to ‘soldier on’ and swing the business around. The more commercially mature me is more prepared to focus on the size of the prize.

I have three university degrees but have long held that formal education is not a patch on the benefits conferred by ‘lifelong learning’. Everything we do or experience in life gives us something – often it’s a lesson which we can build from. Particularly in the case of nudie, which I was extraordinarily attached to emotionally, the experience came with significant pain, but it still ‘gave’ me something personally and something to share with others.

I am applying all those lessons to Sultry Sally currently, and making those lessons available to other through my new business. I believe Sultry Sally will be a great success (both emotionally and commercially) and I am focussed on achieving that success by relying on the lessons of the past.

Two of the things I am very passionate about are the necessity of innovation in favour of consumers and the power of lifelong learning. One of the reasons the most valuable entrepreneurs in the US are those that ave at some time 'failed' is that they are presumed to have learned lessons from those failures. They'll take those lessons into their next venture. In Australia we have more significant cringe around the "f" word and therefore are often not as focussed on the benefits (and value) of learning from experience.

Short Termism Rules - Or How to Screw Your Customer

One of the reasons there is more innovation in small businesses and in private companies is because they often take a long-term view. Large (particularly public) companies are the opposite. They are forever focused on the short term.

Markets dictate it. They want to know (and reward) what is happening this quarter or this half, not what the plan is for 10 years hence. And in any event, even if market pressures weren't driving it, the people in big businesses would.

The average tenure of a CEO is something like 5 years these days. Other 'C Suite' managers often last even less. They want quick 'wins' to build their reputations.

The thing about 'winning' is that is almost always involves someone losing. The losers, when it comes to short term quick 'wins' for businesses, are often customers. We know it and that's why we customers frequently resent the brands we do business with.

The easiest way to gain a quick win is to focus on cost control. Building value through innovation takes time and investment and is never as easy.

Here are three current examples of how customers are losing while businesses reap short term gain. And in the process these businesses miss opportunities to cement solid (and valuable) lifetime customer relationships.

Ads on Pay TV
Pay TV in this country has been losing money for years so its shareholders have been 'investing' to support it. These losses have been, in part, because it has taken time to build a critical mass of subscribers. For the last couple of years it has turned around and Pay TV operators are now making money. The variety and quality of programs on Pay TV has never been better and people are switching to it in droves (at the expense of Free-to-Air TV). This is the context and I am not blind to it.

I have had Pay TV for years now and so have observed the recent changes. The one that really annoys me (and, based on the extent of conversations I have heard or participated in, I am not alone) is the seemingly exponential increase in advertising.

I haven't put a stop watch to it, but my perception is that now there is the same, or a greater, level of advertising on Pay TV as FTA. So my customer experience with Pay TV has fundamentally changed. My viewing is now interrupted at a rate which is egregious. And what has happened to my subscription cost - it has increased of course!

I wish I was strong enough to cancel the service in protest. But I'm not. My favourite programs are on Pay TV. So, I feel captive. And whenever we feel compelled to put up with a situation we can't change, resentment breeds.

I don't begrudge the long suffering shareholders in the Pay TV industry finally extracting some return from their patient investment. But why didn't they do it in a way which invited customer participation and therefore provided customer empowerment. For example, they simply could have explained the situation and the need.

Even more compellingly, they could have offered me a choice - perhaps, in the same way insurance companies provide lower premiums for customers who select higher excesses, they could have offered me a stepped level of subscription rates. Maybe at twice my current subscription rate I get channels completely ad free; at 50% more I get a maximum of 5 minutes of ads an hour; at the current rate I get 10 minutes of ads an hour and at 50% less than the current rate I get 30 minutes of ads an hour.

The point is, at the moment, I am an unwilling recipient of this change; it feels very much like I am being taken for a ride - I am paying a pretty significant subscription (certainly more than I was a few years ago) AND I am now being bombarded with ads at an unprecedented level which I know is making them more money. They are making (short-term) hay while the sun shines.

I resent them and if an option ever arose I would grab it as quickly as I could. I am not a happy customer or brand advocate.

A new credit card surcharge
I have had a wireless broadband modem with one of the telco carriers for 18 months or so. I use it as a back-up when my primary access goes down. I pay a fixed monthly charge of $34 and, at their insistence when I took out the contract, that charge comes off my credit card each month.

Last month I noticed the cost was $34.22. This month it became $36.26. I investigated and discovered that last month they started imposing, seemingly without consultation or communication, a credit charge surcharge. This month, still with no apparent consultation or communication, they added a $2 charge to have my bill delivered by mail.

I'm under contract for another 6 or 7 months. So I can't get out. They know I am trapped.

I have been paying by credit card and getting paper bills since I took out the contract. These were implied terms of the contract I took out. The cost of postage hasn't increased in the time since I took out the contract and there have always been merchant fees charged to them for credit card collections. In another business I too am a merchant who collects payments from customers using credit cards, and my cost of doing so hasn't increased in the last couple of years.

So, the costs of these elements has always been the same for my carrier telco. The change is that they have all of a sudden decided to pass the costs onto me - without my consent.

I can just imagine some bright accountant in the bowels of this telco coming up with the pitch to their boss. "Hey boss, we could reap an extra $X million a year simply by levying a credit card surcharge on everyones bill. It is so small no one will notice it and even if they do what can they do about it - after all they are locked into contracts".

Short-term gain at my pain. And what disintegrates in the process? Any pretence of a relationship between the brand and its customers.

Recent rises in bank charges and interest rates
For the first time in Australia, the major banks are increasing interest rates even though there has been no Reserve Bank initiated increase in official rates. The banks argue that their cost of borrowing has increased and they have been absorbing those increases; they also argue they are not passing on the full cost of their borrowing in the rate increases. Then they ask us 'why should our shareholder's suffer at the expense of our customers?'.

This argument - 'we have a duty to our shareholders' - is one which is frequently used by organisations to rationalise any circumstance where customers are getting screwed.

What it misses is that customers are shareholders too. A corollary to this sort of notion was the basis upon which Henry Ford built the Ford Motor Company. He flew against conventional wisdom and paid his workers more, in a world where the emerging capitalist machine argued that workers should be paid as little as possible, because he knew that his car for the 'every day person' was going to be bought by his workers and people just like them. By paying them more he was creating the ability for them to become customers and therefore fuel his growth.

Back to the banks.

We have all watched as their annual profits have soared to record multi-billion dollar levels in recent years.

Thanks, in part, to the same market ructions which are causing the increase in bank's funding costs, consumers are doing it really tough. Inflation is running at a higher rate than it has done for more than a decade; consumer confidence is at a 17 year low; petrol and food prices are through the roof; mortgage defaults are at the highest rate for years and on it goes.

So, at a time when the bank's profits are at an all time high, and consumer confidence and disposable income is at an all time low, what happens - the banks start increasing mortgage rates out of step with official rate increases.

Is this more short-term profiteering at the expense of a 'captive' customer base? You bet! And it breeds the same kind of resentment already described.

What if a brave bank had come out and said - 'We recognise our customers are doing it tough; we are going to take a hit for a year or two and support them; we're going to hold rates and that means instead of delivering another x% increase in profits this year we are going to have a y% fall in profits'.

What customer (existing or new) wouldn't want to be part of that bank? They could recoup some of their cost of funding by cutting out all marketing spending for the year because their customers would become word-of-mouth advocates. In fact they would be beating off potential customers with a stick.

Of course no bank CEO would ever contemplate such an option because it would be short-term suicide.


There is real value in long-term customer relationships where customers are advocates for your brand. Many (most) large businesses sacrifice this for short-term gain. Unfortunately it often appears to work, because their customers are held captive. But it breeds resentment which must increase customer servicing and marketing costs. There is an opportunity here for small, privately held businesses to take a longer term view, do things differently and build value.

Little Things

When people talk to me about building brands or businesses they tend to focus on the big things like their strategy, their ad campaign, their brand identity and so on. All very important.

But it is the little things which sometimes make the biggest difference and businesses shouldn't ignore them. It's a bit like a chain - it is only as strong as the weakest link.

I was reminded of little things when we went to pick up our new cars. We had to swap over the old ones and, as invariably occurs in such circumstances, we still had some emptying out to do. We ended up with a small armful of rubbish.

In the expanse of the pristine car showroom there wasn't a bin to be seen anywhere. So we were sort of stranded with our rubbish wondering what to do with it. We ended up walking into a sales person's office and finding a bin behind their desk.

This is not the first time it has happened to me in a car dealership, and not just when switching over a car. When I take my car in for a service there is usually detritus such as a take-away coffee cup or a few old parking receipts which needs disposal, but even in a service area, car dealers aren't inclined to besmirch their premises with garbage bins.

Of course this isn't about bins or the lack of them. It is though a very small sign that the dealership is not really putting themselves in the shoes of their customers. They may be trying to think of their customer but they aren't 'being' their customers and so are missing the little things that are grounded in true customer insight.

Businesses that sweat the small stuff are showing they really empathise with their customers and, as a result, are often creating significant points of difference for their business.

Oh, and whilst on the little things - what does it tell me when the clock on the brand new car is set 4 years, 3 months and 7 hours earlier than the delivery time as I drive out of the showroom?
Forgive the rhetorical question - it tells me they are sloppy when it comes to attention to detail and that is likely to characterise all their customer interactions.

Consumer Power (or lack of it)

It was actually quite difficult to buy our two new cars.

Like most consumers now do in advance of any major purchase decision, I had done extensive research on the web about the cars I wanted to buy. I knew their features and benefits; I knew how much they cost; I knew their pros and cons and had read numerous reviews.

Based on all of that I made a decision. Once having made that decision all that was necessary was to cut a deal.

I arrived at my chosen dealership seeking to cut such a deal.

It quickly became obvious that the dealership didn't want to sell me the cars in the way I was prepared to buy.

The first problem I encountered was a salesperson who was determined to walk me through all the details of the (first) car. I really didn't want to know. I had researched it all well before hand. Despite my attempts to avert him he remained determined that we couldn't get down to business until he had completed his sales routine around the car. Eventually I gave in and let him say his piece.

"Now", I implored, "can we talk turkey?" "But surely Sir would like to test drive the car first?", was his response. Actually, I didn't want to test drive the car I just wanted to see what the numbers looked like. The salesperson was scandalised. I could see the thought going through his mind - how could I possibly contemplate buying a car if I hadn't test driven it? At that point he seemed to make up his mind - I obviously wasn't serious - and I think that mindset set the agenda for the rest of our interactions.

It actually took me 3 visits to the dealership, and multiple phone calls, before I could come close to getting a deal done. Every time there seemed to be a new problem. For example, I wanted to buy two different makes of car. Both are retailed from the same dealership and this is why I chose the dealership, and persisted with them in the face of the difficulties I had getting the deal done. But clearly the business was not set up to accommodate someone who was trying to cross the brand divide. No one seemed to have an oversight function.

Eventually, in discussion we both (the dealership and I) got our differences on the table:

• They wanted people to be emotionally committed to a vehicle (for obvious reasons) prior to purchase;
• They wanted the prospective purchasers in the dealership, face-to-face with a salesperson to crunch a deal;
• They wanted to keep the sale of the two cars separate, in separate parts of the dealership;
• They wanted an opportunity to up sell and to cross-sell financial services and so on;
• They actually admitted, "We have a way of selling and we've found we are pretty comfortable sticking to it".
• I wanted a 'deal' based on the fact that I was prepared to buy two cars;
• I wanted their best set of numbers committed in writing;
• My preferred way of dealing was by email rather than wasting time going into the dealership;
• Mine was a rational purchase not an emotional one;
• I knew what I wanted and didn't want anything else or any extras.
• I felt harassed by their constant phone calls attempting to 'sell me' on something else.

We got there in the end but it could have been quicker, easier and happier for both of us. It wasn't a pleasurable experience.

They have fallen into the trap that so many businesses do these days. They want to force customers to deal with them on their terms, rather than being flexible enough to deal with customers in any way the customer chooses.

Consumers want choice. Not just in the products and services they buy but also in the way they buy them.