In the academic view of marketing the foundation is the four "P's," Product, Place, Price and Promotion. Often we get so caught up in the Promotional aspect of the discipline that we forget about the big picture. It is important to periodically get back to the fundamentals. It is difficult to trump the contribution of great "Product" to the success of any marketing effort. This goes beyond the physical product to include service and even customer experience. Before your next "Marketing Campaign" step back do some work on "Product."

Wrong End of the Telescope

Some time ago I overheard a coffee shop owner talking about a recent change he had made in his business. He cancelled his shop's loyalty card program. It was a very simple program which rewarded regualr customers. After purchasing ten coffees the customer got one free. His reason for cancelling was that he realized that he was giving free coffee to regular customers that would have paid for anyway. He saw all of the free coffee as lost revenue. This is looking though the wrong end of the telescope. Businesses that focus on their needs at the expense of the customer don't do as well as businesses that focus on the customer. In retail your best customers must be as important as best friends. Don't think of this situation as giving up revenue, you are saying a small thank you to someone that is important to your business.

Got Clipped

I recently got a hair cut at a shop that I have never been to before. This event prompts two thoughts. First, a look at one cause of people choosing a new sevice provider and second, I'll discuss what was a very poor result.

People may choose a new hair salon, new dry cleaner, or new pharmacy when there is a significant change in their lives. No matter how good you are you will loose some great customers when they move homes or jobs, which are the most common examples of significant change. As a business owner keep in mind that there are always great customers that are looking for someone new to cut their hair, clean their clothes or fill a perscription Put yourself in a position to win your unfair share of these people. How to do that is a whole other topic.

In terms of the "poor result" let me say that I was very clear what I wanted and the barber indicated that he understood and then cut my hair the way I'm sure he cuts every one of his customers. It was not even close to my liking. Listening to customers should be the easiest thing for a business. When a customer gives instructions on how they want things done they are committed to a purchase. Give them what they want and they leave happy and will hopefully return in future and recommend you to their friends. Beyond being easy, it really should be a fundemental part of the businesses.

The Other Side of the Counter

If you are a retailer, from time to time it's beneficial to move from behind the counter. Look at your business the way your customers do. What they see and experience is important. Does the appearance of the store reflect what you want the customers to feel? This starts with the obvious thought that a "dollar store" can have a cluttered look while a high end clothing store shouldn't. Take the assessment through to more refinement. Does the look reflect the price range that you carry or the market you are in? Are you contemplating a change in your offering? Are you bringing in a new line?

This can have a dramatic effect on the success of a business. A new owner of a small town jewellery store renovated the store and the result was a beautiful store that perhaps bordered on lavish. The locals felt uncomfortable in the store, it seemed beyond their means and they stopped shopping in the store.

This "other side of the counter" assessment should also include staff. How do they look? How do they interact with the customer? What is the customers' experience in your store? Get out from behind the counter and analyzing your business from your customers' perspective.

You Don't Need Better Sales People, You Need Better Customers

In a recent meeting with a prospective client we were discussing how to communicate with today's consumer. Compared to the past, today's consumer has increased money and decreased time. Today's consumer is less sensitive to price and more sensitive to time. Look at the extremely time stressed, if they saved a few bucks on a purchase but ended up having to bring the item back for service they feel as though they lost. "Plug and Play." They want to take it home and start enjoying. My "prospective" client will become someone else's problem. He was stuck on his need for "better sales people" with "higher closing ratios." His focus is on the process of converting traffic through his door into sales, instead of customer needs.

"Higher closing ratio" is more about control and less about delivering a wonderful experience. It's the difference between being sold and being helped to buy. Sometimes when you are in the sales game and you deal with a "closer" it's fun to go through the process and watch how the "closer" handles the situation. But when you are aware of the process you can choose to opt out because you know the techniques that are used. This is not fun when the consumer is not in the sales game and through manipulation end up making a purchase. The company that is focused on "closing ratio" thinks this is good but they are focued on their agenda and the consumers are being "sold." It is infinitely better to work alsonside them coaching them as you acquire what it exactly right for them.

Look at your business. Are you selling what you want customers to buy or are you helping customers get what they want and need? For the long term health of your business you are better off helping customers because they will return, often with lower resistance and they will refer their friends. A serious note of caution, when they do return with lowered resistance, NEVER take advantage. Treat this as a sacred trust. In the long run your closing ratios will go way up because you will be attracting better customers.

Customer Relationship Equity

As a follow up to my previous post on lost customers I am going to spend a few key strokes talking about building equity with customers. This is most important with "relational" customers. Very price sensitive customers are not loyal to a business, they are only loyal to low price where ever it goes. The building of equity means that one small slip in delivering a product or service doesn't result in a lost customer.

What are the factors that affect equity and how does a business build equity into the customer relationship? First, the purchase price of the product or service is an important factor. If the purchase is a 99-cent bag of chips the relationship isn't as important as it is with a $500.00 suit. The next factor is the purchase cycle. The longer the time between purchases the harder it is to build equity. With a long purchase cycle it has to become an ongoing project between purchases rather than strictly at each purchase event. The car business has known this for some time and they establish programs to contact customers on a regular basis. The third factor is how good the company is at satisfying/pleasing/delighting the customer. Obviously if you aren't even satisfying the customer you aren't building equity. The further along this satisfaction continuum your company performs the more equity you build with each purchase occasion. If you can delight customers consistently you build relationship equity faster than if you are just "pleasing" them.

My dry cleaner is an example of a business that has built equity in me as a customer. From about my third visit they remembered my name. It's consistently a good experience and it's even happened that they've seen me coming toward the store and they were searching for my clothes before I walked through the door. It makes sense to build equity to increase the likelihood that the customer will be loyal. They won't respond to a competitors temporary sale/coupon and the occasional mistake won't result in a lost customer.

There Goes Another One

I had a favorite Vietnamese restaurant and I just become a lost customer. Businesses make changes which result in lost customers. The customers don't say anything they just stop coming and becasue there is a lag between the change and the decline in business they don't see the connection.

Here's my story. I was taken to the restaurant originally by a friend. It was very similar to my previous favorite but a little better in a number of ways. The decor was a little nicer, it was a little bigger and the portions were better. In all areas the difference wasn't huge but all things added up to a better experience. Over time this has grown to be a pretty busy little spot.

One of my favorite dishes was their fried noodle with prawns and vegetables. I ordered this for lunch yesterday. Originally, in the vegetable mix they would use broccoli (the dominante vegetable), cauliflower, carrot, onion and asparagus. The changes have been gradual over time. Now there isn't a dominante vegetable. The amount of broccoli has decreased substantially, there is very little cauliflower, way more carrot and asparagus has been replaced with bok choi. And the portions size has gone way down.

The business owner is trying to squeeze a little more profit out of the business by cutting costs. However, as a customer I feel cheated. Without saying anything I stop coming. My friend stops coming. The business grew gradually and it shrinks gradually. What this business looses is its best customers, the ones that are there a regularly and they were bringing their friends. These are the most profitable customers a business has.

This same thing happened with my favorite Mexican restaurant and they are no longer in business. The irony here is that to make your company more profitable don't reduce the value of your offering, increase it. If you want your business to grow you have to be generous with your best customers. Sometimes there is cost cutting that can happen in operations but be very careful with your product value package. Carl Sewell, author of "Customers for Life" says it best. When you are in retail, anything you would do for your best friend do for your customer because in retail your customer is your best friend.