Tuesday, October 20, 2009
Building The Customer Centered Business
I have owned and managed my small software business for nearly 26 years. My average customer has been with me and used my systems for 17 years.
What is it that compels a customer to remain loyal for such a long time? Customers buy and use products and services that will benefit them in the long run. So how have I maintained this base for so long? That is what I will attempt to explain in this article.
My business has centered around the development and marketing of a fairly sophisticated high end accounting system for small to medium sized businesses. This system provides things like payroll, cash management, job-costing, inventory and other important accounting functions. My customers range from professional accountants to construction firms to restaurant chains.
How many of you have been enthusiastic about starting a business relationship with a new company, only to become disenchanted the first time you required some service, or needed a question answered? How many of you have found surprises in dealing with a new supplier after you have signed on the dotted line? It seems that customer service has been replaced by something called CRM (romantic, isn’t it??). CRM is a software program that is designed to manage customer relationships. This approach, if done properly, can be an excellent one to manage a large number of customers. A good example of a company that has done really well with servicing huge numbers of customers is Amazon.com. Conversely, if this approach is mismanaged, as it is in so many instances, it can leave customers feeling angry, cheated and unheard.
When customers call my company, it is usually because they have a question about how to do something, or something has gone wrong in an unexpected way. Very often, what has gone wrong has more to do with their computer environment, their Internet connection or some other factor external to the software. However, we do not play the “it’s not the software” game. We try to diagnose the problem, whatever it is, and get them help to get it fixed. If they have an accounting question or problem, we do what is necessary to get them an answer. When they want something in the software changed or something added, we work with them to iron out a solution that is economical and will meet their needs.
In our business we take the approach that there are no foolish questions, even when the question may seem, well, a bit foolish. My industry trade journals are full of amusing stories about computer users doing dumb things and asking questions that seem very elementary, for example. In truth I am sure I could contribute many similar stories myself. Regardless, there is no situation where it is a good idea to embarrass a customer or make them feel badly that they called. That is simply unacceptable customer service.
The software business model has evolved and consolidated to the point where there are fewer and fewer small shops like ours around. We ourselves have evolved into a new business model that will carry us into the future: on line accounting services. The larger companies with millions of users, take a very different approach to customer service than we do. Often the large companies’ methods result in unsatisfactory customer attitudes toward the product and frustration with its support.
We will continue to listen and to pay attention to our customers’individual needs. No matter how many customers we sign up in the coming years, we will always try to make them feel as though they are part of something special.
Tuesday, September 1, 2009
Today, I would like to focus on some specific and hopefully helpful ideas to help you keep your businesses afloat for 25 years or more.
1. Stay on top of what is going on in your industry, and incorporate new ideas that you find useful.
I am in a high tech business, and as such, it is absolutely essential that I keep up to date with the latest technological advances, and make a determination as to how these advances can benefit my customers. I work very hard to keep myself informed about new and cheaper computer and printer hardware, new web design ideas and methodologies, and most importantly, advances in computer security.
There are a number of reasons why this approach is essential. First, it provides a valuable service to my customers. If I am up to date on what is relevant to their computer installations, then I am a resource that they can turn to at any time for advice, making me a valuable asset to their business success. Secondly, it provides me an avenue to stay sharp and fresh. Any business can become stale. One of the greatest enemies to the life of a business is the idea that “That’s the way we’ve always done it!” You can easily become stuck, stale and irrelevant to your customers.
2.Pay close attention to what your customers tell you. Listen, listen and then listen some more.
It is common for business owners to presume that they know what is best for their customers. Many large corporations have developed very bad reputations with respect to customer service because they no longer listen. They operate in a vacuum without any firsthand knowledge of what their customers need, want or value. Unfortunately many small businesses fall into the same trap.
Not everything a customer will tell you is something you want to hear. However, these are the most important things out there for you to hear, especially if you hear the same thing from more than one customer. You have to know what they need, what you are doing right, and most importantly, what you are doing wrong, if you want to be the one to meet their needs. And it does not matter what your industry is. Listen, and pay attention!
3.Pay very close attention to your expenses and income. Understand where your revenue is coming from and where it is going.
This is a very crucial aspect of small business ownership. You HAVE TO MANAGE IT, even if it is a one person business, like mine. At the beginning of each year, I create a revenue budget and an expense budget. These are not just spreadsheets that end up collecting dust in some abandoned corner of my hard drive. I compare my actual results to my budgets for both income and expenses every month. If you do not know where your revenue is going to come from, then how can you plan how to market your product or service?
And if you don’t maintain an iron grip on your overhead, it can get away from you faster than you could ever imagine.
Along these lines, as you grow it is essential to put controls in place so that you can continue to understand the financial aspects of your business. Here your greatest ally is a CPA who understands small business. The value of a CPA to your business cannot be overstated.
Several times over the last 25 years I have fallen into periods of “burnout.” These happen to all small business owners, sometimes as a result of stress, or even boredom. I have been lucky enough to use these as an opportunity to take a hard look at what I was doing. Your customers will respond way better to someone who sounds glad that they have called. Everyone has days when they are cranky, but if your burnout, and associated crankiness last for any length of time, your customers will hear it, and many will be turned off by it.
Make absolutely sure that you maintain outside interests. Running a small business can be an intense and extremely demanding task. It is absolutely essential that you take care of yourself by getting adequate rest, having outside interests, spending time with family and friends. Have a life outside your business. It will keep you fresh.
These are but a few of the many things we can do to keep our small businesses and ourselves afloat.
Thursday, July 2, 2009
Keeping any business afloat for a quarter century can be a challenge, as we have recently seen with General Motors and Chrysler. Who’d have thought that we would be witnessing the demise of large businesses such as these auto giants, or the investment banks, media companies and airlines we have also lost. These situations illustrate that no business is immune from the effects of an economic downturn. Small businesses are especially susceptible to difficulties during such downturns.
What kind of business perseveres during difficult times? What are the qualities that allow businesses to be successful even in the face of adverse conditions?
My own small business recently celebrated 25 years in business. I develop and market accounting software systems for small businesses. These include payroll, inventory control and other such accounting modules. My average user has been with me 17 years. What has been the major factor in my survival? It is because I pay attention.
I pay attention to my customers’ needs. I pay attention to what things cost me. It is lack of awareness that can sneak up and put you out of business. An unhappy customer lurking out there, feeling ignored and unsupported can be a real horror, especially if that customer makes his or her unhappiness known to others. Runaway overhead costs can put you behind the cash flow eight ball faster than anything else. Failing to collect your accounts receivable can damage your cash flow beyond repair.
It can seem overwhelming to pay attention to all the aspects of a business. The way I have dealt with this issue has been to limit my growth, and to limit the amount of new business I take on each year. This works for me because I am a one-person business. By staying small, I have the capacity to listen to each of my customers, limit the amount of overhead expense, and make sure I collect all my receivables each month.
This strategy cannot work for all small businesses. I have not had to worry much about marketing, as my customer base provides both new projects and sufficient referrals each year to keep things going at a brisk, but not daunting, pace. Many businesses in a variety of industries must market themselves in order to be successful. Many small businesses need growth to survive.
Being a small business owner implies that you have to keep your eye on ALL the balls in the air coming at you. Careful planning can be your greatest asset in dealing with all those balls. You need a yearly plan to help manage your expenses, and you need to monitor it and stick to it. That way you know what is being spent and where. You need a marketing plan in place so you know how you are going to generate new business. You need a customer service plan in place so you can make sure that your customers are cared for in the way you would want to be taken care of. In other words, you can leave nothing to chance.
If you are completely on your own, or if you do not feel expert enough in these areas to design and execute these plans yourself; help is available. The value of a good team of advisors cannot be overstated. A CPA can help you with the financial planning and accounting needed to keep the financial end of your business in shape. A good business attorney can help you in a number of ways, including choosing the best structure for your business (corporation, LLC and so forth). A good business attorney can review leases, advise you about trademarks, and assist you in establishing employment policies. Being careful and attentive in your hiring decisions can bring you skilled and hard working employees who will help your business grow.
In coming articles I will get more specific about several of these areas. Next time we will focus on the financial aspects of your business.
I’d like to close with a story about a fellow who embodies small business success. This man is a realtor. I tell people that when you look up realtor in the dictionary, there is a picture of Jason Boggs. When he is your realtor, he is your advocate. He listens carefully to your needs. He tells you the truth. He acts in your best interest. He does what he says he is going to do. If someone needs the services of a realtor, I always recommend him. As a result of the way he operates, he has been, and continues to be very successful. His value system is at the core of how every business should function.
So there you have it. You have to pay close attention, do what you say you’re going to do, and act in your customers’ best interest. We will discuss how best to do this in future articles.
GO Industries LLC
Monday, May 18, 2009
This week begins a series of essays on business ethics. I hope to discuss a variety of subtopics under this main topic. We will begin with the concept of “caveat emptor”, or ‘let the buyer beware’.
This is an age old concept that asserts that when we enter into a transaction, we should be skeptical and we should perform all possible due diligence to protect ourselves from being cheated. This concept remained the conventional wisdom for centuries. In the marketplace, those buyers who did the most homework were able to most often avoid being cheated. And those who did not got plucked, like the pigeons they were. Who among us has not read a story about someone falling for the “Nigerian Banker” scam, shook our heads and smugly thought, “I’d never fall for that!”
For purposes of this discussion, let’s leave aside all the obvious scams, ponzi schemes, spam, phishing and pump-and-dump operations. We hopefully all know enough to avoid these types of scams. But what about navigating the everyday marketplace?
There are many who will argue that the ‘marketplace’ is sacrosanct, and should not be regulated in any way. The marketplace, so this logic goes, will police itself, and cheaters and scammers will be winnowed out because buyers are smart and can spot them. There are many areas of the ‘marketplace’, where this argument simply does not hold water. Why? Because the game is rigged. The average person’s chances of success in certain ‘marketplaces’ are as poor as they might be in a casino, or a lotto.
A while ago I was in a supermarket and was looking at soap to purchase. The particular soap I wanted was $1.79 for a regular bar. Next to the individual bars, they had a special group of the same sized bars banded together and labeled with a “ SPECIAL 2 for 3.99!”, inferring that the better deal was the “2 for 3.99”. I wandered around the store and found several other such examples where the inference was that buying multiples would be cheaper, and in each case, purchasing 2 of the single item was cheaper than the multiple offer. Do we really have to always be on our toes to this degree when we go shopping in order to avoid being taken advantage of?
Corporate America brings to bear some powerful weapons to motivate us to do whatever it is they want us to that day. And we are all susceptible. Because we are busy, tired, stressed and overworked we are susceptible to motivations and mild misdirection.
In the pharmaceutical sector, we are deluged with ads urging us to ask our doctors if “lipo-hydro-oxy-blasto-narco-soma is right for you”. Often these ads are very clever at glossing over the real facts behind the use of certain pharmaceuticals they advertise. Under the idea of ‘caveat emptor’ we would drag out our “Physician’s Desk Reference” and read all the chemistry and pharmacology related to any medicine we are considering taking, so we are fully aware of it’s implications. Or perhaps we could suspend our normal career and get a degree in biochemistry or pharmacology.
We are deluged with come-ons from financial service companies that then bury the terms and conditions in layers of incomprehensible jargon, so that we are hard pressed to make a determination as to the benefits of the offer. Perhaps here, we can all become lawyers to protect ourselves against hidden or obscure terms and conditions buried in a mountain of legalese.
Retailers, telecommunications companies and other giants often obscure the true pricing of what they are selling in order to preclude us from being able to comparison shop.
In virtually every area, commerce with larger entities (not every one, mind you, but a good many) becomes a futile exercise in trying to determine what is real. What is the real price? What fees will I be charged? What are the side effects of this medicine? What if I want to cancel my plan?
As consumers, we are obviously not going to become lawyers, doctors or pharmacists just to learn the truth of each advertisement we see or hear. But we can pay attention, we can do the math, we can bring to bear a healthy skepticism about any advertisement to which we are exposed.
And as businesses, can we not try to be more forthright in our advertising? Are the bottom line and shareholder value so important that we are willing to compromise all our ethics to achieve positive results? I do not think it would be naïve of me to suggest that we are now witnessing the consequences of too much emphasis on shareholder value. If you trade in your ethical standards for increased shareholder value, you will end up with neither.
Wednesday, April 8, 2009
Lately in the financial meltdown, we have seen lots of examples of what I’ll call “Short Term Thinking Disease”. This is an infirmity that causes us to think only in terms of short term advantage, as opposed to longer term strategic thinking. The simplest example I can cite is the person who spends $10 a week on lotto tickets, looking for the big score, as opposed to saving the $10 a week in a savings account or IRA. Unless this hypothetical person is extremely lucky, in 10 years this person will be out $5200.00. Had they saved this amount in a conservative investment paying even a 4.00% return, they’d have: $6383.33.
This is a simple example. But we humans are wired for this sort of thinking, and unless we find a way to rise above this, we are quite possibly in a great deal of trouble. Consider the many CEOs of large corporations who, at the risk of alienating customers and employees, make savage cuts in service and quality in order to show a short term profit. They seem not to be concerned at the long term consequences of their actions. And inevitably the customer base shrivels up over time, and the corporation that has behaved like this is acquired or goes away completely. There are any number of companies that are dancing this type of death dance.
I once lived in a city that had two car dealerships that sold the same brand of car. One dealership treated customers respectfully, had a very good service department, and tried really hard to build a loyal following around not only the brand of car, but also their dealership. This resulted in a steady and respectable business that was sustainable. Their competition was not concerned about whether customers came back. They were all about getting a customer’s name on a sales contract. If the customer later discovered that they had been cheated, so what? It was too late. In addition, they ran a shoddy and dishonest parts and service department. People would go there once, and never go back again.
Sell one car to every eligible buyer in the city, or slowly and steadily build a loyal customer base? If you choose the former, what happens when you have swindled every possible customer? It simply is not sustainable.
We find ourselves in a difficult situation with respect to the economy precisely because of this same type of thinking at every level. Do we do the research buy a solid stock and hold it (boring!) or play the day-trader game (exciting!). Do we buy a home we can’t afford with a mortgage that will become intolerable 5 years down the road? Do we borrow to buy what we want to have today rather than saving for it?
All of this at every level has brought our economy crashing down. Why? Simply that this type of behavior is not sustainable. It may be flashy, it may bring instant gratification (which is just as quick to disappear), and it may even accrue short term financial gain for some.
I have had my small software business for 25 years now. I cannot tell you that I have always thought strategically for the long term. There have been times that I made a mistake or irritated a customer. There have been times I have chosen projects poorly, underestimated the time or costs involved. This sort of thing happens to all small business owners. For the most part, though, I have charged less than the competition and given my customers more. That is why I am still around, thriving and successful. This is why my average customer has remained with me for 17 to 18 years, with many having been on the books for over 20 years.
It is very difficult to resist the temptations presented by the mass media to go for the short term gain. But resist we must.
Corporations and small businesses need to obsess less about the bottom line, and more about pleasing customers and building quality products and services. Odd thing about that is that if we all do that, the bottom line will take care of itself.
All of us need to start being more self sufficient. Take $5 a week and build a slush fund. Take another $5 and save for the future. You won’t miss it. You can use the slush fund every now and then for some discretionary treat. And your future will thank you very much.
Monday, March 9, 2009
We are witnessing the greatest financial meltdown of our lifetime. Many of our friends and neighbors have lost a job, are in the process of losing a home, or are suffering under staggering medical bills. How is that we find ourselves in such a place?
I contemplate these issues at a time when my own small business has just passed its 25th anniversary. I am proud of the fact that I have managed to outlast several economic downturns, moves across the country, health issues, and many other of the vicissitudes of life. I am proud to say that I have several customers who have been with me more than 20 years. Why is this so? Am I cheaper than everyone else? I do not think so. I think it has to do with integrity. I am not writing this to brag about my own integrity. I leave that for my customers, friends and family to judge.
What is painful to watch in this economic downturn is the staggering lack of integrity that corporate America has shown. And now they are reaping the whirlwind. But if it were just some inept CEO’s and their henchman that were suffering as a result of the meltdown, that would perhaps be OK. But so many of us are suffering life threatening (or at least livelihood threatening) consequences for absolutely no reason.
Every day we hear some horror story about cheating in the marketplace. From salmonella peanuts to Credit Default Swaps to Collateralized Debt Obligations . We hear about exorbitant bonuses paid, not for meritorious performance, but just simply to keep the mediocre performer from moving elsewhere to perform in a mediocre fashion.
In addition, whether or not the average consumer is aware of this, there is a war on. We, as consumers of food, health care, insurance, financial services and entertainment are at war with corporate America. Or rather , they are at war with us. We are deluged moment by moment by advertising. We are expected to make important decisions without being given all the information that we need to make good choices. We are expected to believe what their marketing machinery tells us without independently verifying their claims. Many corporations do not want us to make informed choices (it’s bad for the bottom line!). So we must fight to get the data we need to make a good choice. Whether it be a cell phone plan, cable television for our home, a mortgage, a credit card, or a prescription drug.
So what are we to do to fix this?
The answers are not simple. But here are some things both individuals and businesses can do to help.
If you are a consumer:
• Always make your consumer choices based on the best available data. Use Consumer Reports and other objective sources to help in your evaluations.
• Do not support businesses that lie to you. If a company will not tell you what something costs, perhaps you ought to look elsewhere.
• Do not support businesses that engage in predatory competitive practices. Keep informed about the practices of companies with whom you do business.
• Do not accept mediocre customer service. There are many fine web sites, such as “The Consumerist” and “Rip Off Report” that can help you fight back.
• Develop a healthy skepticism about advertising that you read, hear or see on television.
And if you are a business:
• Always do what you say you’re going to do. Always. Period.
• Pay attention. So much of life is about paying attention. Listen to your customers. Listen to your employees. Listen to your suppliers. It is amazing what you do not miss when you listen.
• Provide good value.
• Always fully disclose the terms and conditions you require to do business with you. Never use hidden fees.
• Treat your employees with respect. History shows us that an adversarial relationship between employer and employees is very bad for business.
• Treat your customers with respect.
• If you take care of your employees and your customers, as well as control your costs, the bottom line can usually take care of itself.
• Not all customers are good for your business. There are bad customers as well as bad businesses. If you find yourself with a bad customer, fire them.
There are those who will read this and say that I am some sort of socialist: that I am anti-business. I am not anti-business. When I have received good service from an airline or a bank, I write letters to compliment them. What I am against is mediocrity, poor service, indifference, cynicism and dishonesty. These have no place in running a business. And if, with the government in conjunction with the outrage of ordinary citizens, we have to regulate ourselves back to a healthy business climate, so be it.
The days of “every person for themselves!” are over. We need to start acting like a society.
Wednesday, January 7, 2009
We look forward to 2009 as a year of positive change and renewal for all of us. I will keep everyone posted on the progress of our new services.
Have a good month
- ▼ 2009 (7)