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!