Category Archives: Age Of The Customer

The greatest challenges of small business owners today

April 14, 2014 8:00 am ,

Ask any small business owner how business is and even those who honestly report, “It’s great!” will also likely say, “But we can always use more.”

Knowing this about the heroes of Main Street, to find out what’s really going on you have to ask the way we did recently in our online poll: “What’s the greatest challenge for your business right now?” Below are five options we provided, the responses, and my thoughts.

It was surprising to learn that less than 10% reported “Finding qualified people” was their big concern, which was down from past surveys. Some sources estimate there may be 4 million positions going wanting for qualified candidates, so my speculation is that this change has more to do with the economy than talent supply.

And it was interesting that less than 10% of our sample were troubled by Obamacare impacting their HR strategy, also down from past polls. Perhaps the fear factor has diminished since the president delayed the employer mandate to 2015. We’ll see if this response changes next year.

According to Dr. Bill Dunkleberg, Chief Economist for the NFIB, who’s polled small business owners for 40 years, their single greatest concern over this period has been taxes and regulations. But when we offered this option in our poll, only one-fourth of our folks chose it. Since taxes and regulations have actually increased in the past five years, the next response represents what it took to knock these perennial pains off the top.

The big number in our poll came in at 58% for, “We need more sales.” This response has to be juxtaposed over another response we’ve received for the past five years, which is that consistently three-quarters of small businesses feel they’re operating in a stagnant economy. At this stage of a recovery, the economy should be growing at 4%. But when you see this response from the sector that creates over half of U.S. GDP, it’s not difficult to understand why the economy has barely averaged 2% growth per year.

Response to the next option supports the previous one. Only 3% said, “We need a bank loan.” For five years small businesses that survived the Great Recession did so by de-leveraging and learning how to operate more efficiently. Bank loans are the primary source of small business growth capital, but when the economy isn’t growing so goes business loans.

Wall Street, once the leading indicator of the economy is now merely a leading indicator of itself. The new leading economic indicator is Main Street. If you want the economy to grow, create conditions that foster small business growth

If the economy is the chicken, small business is the egg.

Posted in: Age of the Customer, Management

Are you an Internet dynamo or a dinosaur?

April 11, 2014 8:00 am ,

Sometime during the spring of 1995, you and I were given access to the Internet for the first time.

Since then, related innovations have produced a new marketplace where businesses of all sizes turn prospects into customers in a virtual, parallel universe. Here is a short list of the significant innovations:

  • E-commerce – the ability to buy and sell online
  • High-speed internet replaced dial-up
  • Search engines indexing a gazillion online offerings
  • Mobile computing from convergence of mobile networks and smartphones
  • Social media transcending websites by connecting participants in online communities

After 10,000 years of the traditional marketplace, these innovations have at once produced unprecedented opportunity and disruption in less than 20 years. But here’s good news for small business: Part and parcel with the new capability is the incrementalization of virtual resources, which means they’re available in units and pricing that fit our focused (niche) applications and diminutive budgets.

We wanted to know how well small businesses are adopting the handy and affordable virtual marketplace tools, so in our online poll we asked: “How much of your sales can you attribute directly or indirectly to your online strategy?” Here’s what we learned:

Only 5% of our sample reported that 100% of their business resulted from an online strategy, while double that percentage said they did “more than half” of their business in the virtual marketplace. Just a few more, 12%, allowed that they got “about half” of their revenue from the Cloud, while our big group, 55%, said “less than half” of their business came from the Internet. And finally, almost one-in-five said the Internet produced “zero” business for them.

It’s good news that 81% of our respondents are experiencing some business from their online strategy. Twenty years after the telephone was introduced in 1877, I wonder how many businesses had adopted that proto killer app?

But another way to look at small business’s virtual marketplace adoption is that almost three-fourths of our folks still associate less than half of their business in any way to an online strategy. Sadly, that troubling news could foretell the unnecessary extinction of way too many small businesses.

After almost 20 years, customer expectations are increasingly evolving in the direction of more virtual interaction. Which way is your business trending?

Don’t act like a dinosaur – execute an online strategy.

Posted in: Age of the Customer, Mobile Strategy, Online Content

Business planning will always be relevant to success

April 7, 2014 8:00 am ,

The Age of the Customer is disrupting and making obsolete many older practices, but not the requirement for business planning, especially cash flow.

A business plan is the result of thinking, researching, strategizing, and reaching conclusions about how to pursue opportunities. It may exist only in the head of the planner, but it’s better when written down.

Whether elaborate or simple, a written business plan is an assembly of facts, ideas, assumptions, and projections about the future. Here are three ways to use a written plan:

  1. To document the due diligence on a new business or the future of an existing one.
  2. To evaluate opportunities and challenges, and compare them with your strengths and weaknesses.
  3. To assist when getting a bank loan and essential when courting investors.

So how does a static, written plan work when a business is always in motion? It works when you turn your plan into planning. A plan is like a parked car; planning is taking that car on a trip.

Planning is measuring your business motion against the baseline of assumptions and projections you made in your plan. Planning allows you to see how smart you were when the plan was written, or where your research and assumption skills need work. It also highlights external forces you face.

Written business plans often become collateral damage during challenging economic times. But you can’t allow planning to meet the same fate. Indeed, when things slow down there is even greater need to check your position than when things are rockin’ and rollin’.

Here is a critical two-step planning activity that is the heart of a business plan and the essence of planning. Beginning with these will help you operate more successfully anytime, but especially when things are slow.

1. Build a 12-month cash flow spreadsheet in a program like Excel, so you can project and track the monthly relationship between cash collections and cash disbursements from all sources. This planning tool will provide a rolling picture of cash flow in any given month.

2. Look at the “Ending cash” number at the bottom of each month’s column. A negative number in any month means you’ll need to add cash from sales, reduce expenses, add cash from another source, like a bank loan, or some combination.

A banker once told me that if I could bring him only one financial document with a loan request it should be a 12-month cash flow projection that included both how the borrowed cash would be used and the debt service. I always listen to my banker and you should too.

A business plan is important, but planning is essential.

Posted in: Age of the Customer, Future Thinking

It’s The Age of the Customer—the rules have changed

March 17, 2014 8:00 am ,

For 10,000 years, customers refined their search for products and services down to a couple of semi-finalist sellers based almost entirely on the classic competitive value proposition: price, product, availability, service, etc. I’ve termed this period the Age of the Seller.

That was a nice trip down memory lane, wasn’t it?

The new, prime differentiator today is no longer the competitive model, but rather a customer’s appraisal of how relevant a seller is to them, often before they even know if a seller is competitive. So does this mean that sellers no longer have to be competitive?

Not at all—no one will pay you more for less. But consider three new marketplace truths:

  1. With value now presumed, customers expect to find what they want, at a price they want to pay, from many sellers.
  2. Before a seller’s competitive position has even been established, they are being ruled in or out by customers.
  3. Differentiating by customers based on relevance is happening before prospective sellers even know the customer exists.

That last point is perhaps the most breathtakingly disruptive development in the shift from the Age of the Seller to what I’ve named The Age of the Customer®.

So what do you have to do to prove your relevance in order to be among the last to be considered and hopefully anointed as the Chosen One? Here are three important Age of the Customer relevance practices:

  • Technology matters. Your online capability must match the expectations of your profile customers, such as having a mobile-optimized website.
  • Contribute first, contract second. Now confident of acquiring value, customers are increasingly seeking and collecting trusted advisors and experts in their quest for relevance before they make a purchase decision.
  • Connect with credentials. Use new media to establish relevance credentials and connect with prospects and customers.

In his book Megatrends, John Naisbitt prophesied, “The more high-tech we have, the more high-touch we will want.” Here are three high-touch Age of the Seller practices still relevant in the new Age.

  • Remember the customer’s name and use it—often.
  • Make eye-contact and smile—early and often.
  • Be grateful and say “thank you”—a lot.

Find success in The Age of the Customer by doing the following absolutely in this order: be relevant, be useful, and then be competitive.

Your greatest danger is not being uncompetitive, but being irrelevant.

Posted in: Age of the Customer, Customer Care

The Age of the Customer: the new normal

January 13, 2014 12:14 pm , ,

The shift in who has control – seller or customer – is causing the 10,000 year-old Age of the Seller to succumb to the Age of the Customer®. Understanding this is key to the survival and success of your small business.

For millennia, there have been four basic elements of the relationship between a customer and a business: The product, the buying decision, control of information and word-of-mouth. For the first time in history, two of these elements are shifting in favor of the customer.

1. In the new Age, control of the product or service still remains with the Seller, but has diminished as a control factor for at least two reasons: a) virtually everything you sell has become a commodity; b) customers have multiple shopping and purchasing options including traditional and online markets.

2. As it has always been, the Customer continues to retain control of the buying decision. Shifts in the next two elements represent the primary difference between the Age of the Seller and the Age of the Customer

3. Not since Guttenberg’s printing press first made books available to the increasingly literate masses has there been such a shift in access to information. Indeed, innovations in the past 30 years made the entire universe of human knowledge generally available with a very low barrier-to-entry – including information formerly controlled by Sellers.

4. Once upon a time, knowledge about Customer experience was a function of the word-of-mouth maxim: “If a customer likes you they will tell one person, if they don’t like you they will tell ten people.” In the new Age, the influence of Customer experience has morphed and expanded from classic word-of-mouth to the disrupting phenomenon called “user generated content,” or UGC. This is the electronic posting of customer experiences, questions, praise or condemnation of a Seller’s products and services. If that old word-of-mouth maxim were being coined today it would sound more like this: “Whether customers like you or not, they have the potential to tell millions.”

Here are two Age of the Customer realities to which your business must be able to adjust: 1) customers have virtually all the information they need to make a purchase decision without ever contacting you; and 2) there is no place for bad performance to hide.

Your future survival and success depends on whether you embrace or disregard the Age of the Customer.

Posted in: Age of the Customer, Moment of Relevance