Never mind the quality?

Eeyore being sad.
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I love being in business, and not being an employee and part of someone else’s business. Many of you have heard that from me before. Just the same it is not all plain sailing and that is partly because we are dealing with other human beings.

Eeyore

Over the years I have had many lovely people as clients and who have appreciated the service they have received. Happy clients are those who are prepared to pay for what they get because of the benefit they perceive. However, there are some who are not very often of a cheerful nature and no matter what they get, try to pay as little as possible for it. These are the glass-half-empty people, the pessimists and the generally grumpy who want to pay as little as possible and never want add-on services. They are the people who can get you down if you let them. This is the Eeyore view of life.

Weeding

As we have said before, start-up businesses take on as many customers and clients they can get, and that’s only natural. As the business grows and develops, an owner, particularly of a service business, can afford to weed out the ungrateful and low coupon clients and concentrate on the higher value and generally more appreciative clients, and at the same time have more enjoyment in dealing with the higher coupon work which is generally more interesting.

If you haven’t got to the point of being really choosy who you work with, at least sack the miserable cheapskate customers because all you will get from them is grief; you certainly won’t get a decent profit.

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Uncomfortable market positioning

The Waitrose store in Peterborough, Cambridges...
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Price wars

Writing the other day about supermarkets and what one in particular can teach us about comfort reminded me that our up-market supermarket in the UK, Waitrose, is now competing on price, or at any rate telling us that they are no more expensive than Tesco on a range of products. I think this is a big mistake though understandable in a time of austerity and a depressed economy.

Perceived quality

As many would know, Waitrose is the supermarket offshoot of the John Lewis Partnership, which is a chain of stores renowned for the quality of its goods and the quality of its services. I know a few people who swear by John Lewis and wouldn’t do their birthday or Christmas shopping anywhere else, or indeed buy their TV or dishwasher or pashmina scarf from any other shop.

Waitrose has always carried this ethos through to the supermarket environment. The Waitrose image is of quality and while customers always understood that they might pay more, that cachet of comfort has always ensured loyalty of customers who like to feel different. I hope the chain management doesn’t lose sight of this in their desire to compete with the big players in food retail. After all, a lot of people buy into image when they are shopping, otherwise Gucci wouldn’t be such a successful brand, and IPhones and Macs would be less popular given that there are cheaper quality smart phones and computers on the market which deliver the same services. Of course the loyal Apple following might see this as controversial, but I am complimenting Apple on their image, market positioning and closed exclusivity of software and apps management.

Know our minds

I believe we in business all need to know where our place is in the market, and indeed to work at our positioning. If we are providing a service we need to make sure it is distinct from and better than everyone else’s and in my view the last thing we want to do is be cheap.  We just need to be different and high quality as Waitrose has always been, and if they have any sense, will continue to be.

What do you think?

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It is all about getting in the cash

We have had some gloomy forecasts about the British economy recently with the Bank of England downgrading its own for growth in the immediate future. It says that growth in 2011 will be less than 3% compared with the previous forecast of 3.5%. Many independent forecasters think that is still over-optimistic. At the same time Germany’s GDP has leaped in the last quarter, so that might help to pull the UK up, but there may be some disadvantage on this side of the water in that the UK is weak in manufacturing and we may expect a further climb in unemployment, so fewer people will be buying.

The cuts to Government spending will account for the further losses of jobs and not only in the public sector, but also in the private sector as the State buys less products and services. There is also a trend towards higher unemployment in the US, partly seasonal, and although the administration has tried spending more and cutting less. My kitchen-sink economics cannot tell you who is right, but despite the personal debt figures in the UK rising my instinct tells me that it is more natural for the Government to be cutting its coat according to its cloth, which is deeply ingrained in the British psyche from Victorian days.

I keep hearing that people do not have money to spend and there is talk all the time of cash-flow problems for small business owners. I read the other day an article telling us that employees do not apparently go out so often for a drink with their colleagues after work on a Friday night or indeed any night. Much as I would like to think that is because the population is becoming more responsible over the imbibing of alcohol I suspect it is because they simply have less money to spend on alcohol or anything else. Alcohol is anyway cheaper in the supermarkets and perhaps there is more drinking at home.

One in ten pubs has closed in the last five years. There are no doubt several reasons for this, including the duty on alcohol, the competition from the shops, the recession and the easy answer, the ban on smoking.

I think the ban on smoking has helped drive the adaptability of the other pubs who are doing their best to survive. The magazine, The Publican, has published a survey stating that 52% of pub sales are now of food though there seems to be some dispute over the method of calculation. Certainly pub food sales are much higher.

We have seen a rise in gastro-pubs and there is excellent value to be had. The stale cheese sandwich and the chicken-in-a-basket are thankfully long gone as is the smoky atmosphere. A good pub meal is something to look forward to, no one feels obliged to buy loads of alcohol any more, and Sunday lunch at a pub is a pleasurable experience without the anticipated terror of an enormous bill. We can estimate and budget the cost.

What does this mean for the rest of us? I think the lesson for us and certainly for me is that we must adapt to what our clients and customers want. We must be prepared to do things differently, to do new things and stop trying to sell the old products and services that people may no longer want. Above all we must think about maximising profit not by raising our prices en bloc but by delivering value that people will pay for because we are giving them what they want.

That’s what I think. What do you think?

© Jon Stow 2010

The perils of under-resourcing

One of my family members who is now rather frail but insistent on staying in her own home has carers to visit her four times a day, to get her in and out of bed and to prepare meals and attend to other needs as necessary.

Obviously we have to deal with the agencies providing the carers and it may surprise you to know that we are now employing the third agency in about four months.

The first two agencies were a disaster. Their visiting times were erratic and sometimes they failed to come at all, leaving the poor lady in bed until lunchtime as we only later found out. They failed in many other irritating and occasionally unfortunate ways, but I will spare you the details.

Some of those agency employees were indeed caring. They explained that things went wrong because they were understaffed and trying to cover too many clients. They had no back up if one had a major problem with a client and could not send a relief person to deal with the next client on the list, which was why our relative was left to lie in bed until lunchtime on that occasion.

Finally we were referred to another agency, who it has to be said are a bit more expensive. They have a smaller staff and fewer clients, but even so they have more than enough employees to cover all their clients’ requirements. Our invalid is very happy. She doesn’t worry about when the next visit will be. We don’t worry because we know that she is at last in good hands and we will not get that telephone call to go to the rescue at whatever time of the day or night.

There is a business lesson here, it seems to me. The first two agencies were chasing every bit of business they could and accepting everything flung at them by the local authority. They were never honest and said “we are at full capacity and we haven’t the resources to meet your or the clients’ needs.” That means that they will continue to fail and they will always lose clients as quickly as they get them. Even though it is a narrow sector they have a high client churn rate and lose what should be long-term business.

The current agency charges more. They provide a great service, which is why they get referrals rather than have to fight to stay afloat. They have the staff to cope. They do not have to tout for business; it finds them. They take away the clients’ pain and they take away our pain in terms of worry.

Most of us are in business to take away our clients’ and customers’ pain. If we can provide a great service we will get more referrals and we will be able to charge more too, because relief from stress is what everyone wants, and the price is worth paying. Don’t you agree?

© Jon Stow 2010

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Related post

Why quality is important – lessons from BMW and Waitrose

Keeping our clients in the loop

Many of us have several client projects agreed and on the go at the same time. That is the nature of many of our businesses. We all know it is important to give the client an idea of how long an engagement will take to come to fruition. The client needs to be given a realistic expectation of delivery.

Life being what it is, sometimes not everything runs smoothly. Things go wrong. Our contractor fails to deliver their part promptly. Someone is ill. Another client has an emergency and needs to be saved from complete disaster, and we have to make a decision to delay another client’s project slightly in order to save our desperate client’s bacon.

We do need to make sure everyone knows what is going on.

  • With a new project set a sensible time for expected completion bearing in mind what other work our business has and in accordance with the client’s needs.
  • Keep the client up to date on how their project is going.
  • Involve the client in the process to make them feel comfortable in the relationship.
  • If something goes wrong or there is an unforeseen delay, keep the client informed.
  • Do not make promises we can’t keep. Do not promise delivery be the middle of next week without checking we have all the resources, materials, personnel, permissions or whatever we need to make it happen.
  • Apologize if we need to. The client will understand if there really is some problem beyond our control.

If we deliver late without a proper explanation we will not be given the next project our client needs to be carried out. We will not be recommended and referred. We will lose business down the line. We may end up with a fee dispute over the current project.

In the end, keeping our clients informed is part of basic customer service, and there is nothing more important in business than that, is there?

What do you think?

© Jon Stow 2010

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How to avoid problem clients and customers

Have you ever wished that when you started your business you had known then what you know now? I certainly have, but sometimes we have to learn the hard way. However, if you are starting your business now or very shortly, and you are reading this then you have an advantage that I did not have when I started.

This week I went to see a new prospect. I knew that there might be something I would not like, but it is better so see for oneself rather than turn down what might have been a good opportunity. The prospect business-person told me over the telephone that he was afraid his accountant wasn’t claiming everything he should. In general this is unlikely, especially with a smaller business. After all, once you have prepared a proper set of accounts you know more or less what you should be claiming.

I have learned from experience that a gripe over a financial issue such as that, and especially when coupled with the next comment, “a friend told me I should be claiming for this and for that”, indicates a likely problem client. Firstly, they are no more likely to trust you than their previous adviser (and trust is important) and secondly they are going to be very fee-resistant and will not appreciate the excellent service you will deliver.

I looked at the “records”, a plastic tub of receipts, concluded that the unfortunate but adequate accountant had already been driven too low in the fees he charged, and decided not to offer to relieve him of his agony. It was an easy decision, based both on instinct and on logic. Neither of these qualities was as fine-tuned when I started out in business and when I was anxious to gain every new client I could. Now I knew I should walk away.

As it happens, I have a job which I grabbed in the very early days of my business and with twenty-twenty hindsight wish I had turned down. Far from responding to my advice on record keeping and on paying the right people at the right price for the things the client is not good at himself, he just seems to be getting worse. He is making it harder for me, and pushing up my fees which would not have happened if he had invested suitably in qualified help on the administration side. Given that he does not like spending money buying in help, he takes the same attitude with me too. Frankly we are getting to the point where it is not worth the headache for my firm to carry on.

Unless the client has a road-to-Damascus style revelation as to the error of his business ways I am afraid we will part company, and I am sorry also that I introduced a friend to help him who is getting the same resistance in terms of fees and attitude.

I now know that when we meet a prospect we have to ascertain that the person will pay a proper price for our offering, that they will accept our advice and act on it, and that they will not cause us to worry. Bad clients can endanger our business well-being and our health, and even if they pay whatever we ask for our service, sometimes it is just not worth it.

Trust your instinct with clients and with prospects. Actively think about how you feel about them, and if you are not comfortable, walk away. There are plenty of nice likeable people to have as clients, and they will trust and appreciate you more.

© Jon Stow 2010

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Why quality is important – lessons from BMW and Waitrose

I had a strange dream last night. I had been asked to work at a trade exhibition selling BMW cars. Quite why I am not sure as I am no salesman, but I was asked how I would approach this task, to which I responded that all cars have a wheel more or less at each corner and for the most part were a simple mode of transport. So I said I would concentrate on the enjoyment and wonderful experience of driving a BMW, and of course their reliability, making them better cars and better performers than the rest. That of course is the BMW approach to marketing, and whilst I do not have one of their cars, clearly my subconscious as been imbued with their philosophy.

Some people I know, both clients and family, have been let down recently by people they trusted, and in all cases this has been because they were engaging amateurs and people not up to the task. I have mentioned previously that it is no good employing anyone to provide services to your business who is not a full time professional in their area. Part-timers and co-opted amateurs will not be up to the job and indeed it is not fair to ask them to do it in the first place, because it will all end in tears; ours and those who have failed us, and there will be bad blood.

What I have been thinking about is that we need to engage trusted and recommended people to support our businesses, and we need to be the best in our field at what we do. We need to be different from the rest, to have something special as far as our prospects are concerned so that they want to be our clients. We need to be the Waitrose experience, top quality products and services for which we can charge a decent amount and have our clients or customers and clients come back to us again and again. Jim Connolly would explain it better actually, so why not ask him?

In this difficult market it has been hard to avoid grabbing at every piece of business even where the reward is not great. I have done my best in the last couple of years because it is no good working hard without proper profit. I already provide a quality service. I am going to try even harder to live up to the philosophy of providing perceived quality in the coming years. What about you? What do you think?

© Jon Stow 2009

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Practicing what we preach – seeing value over cost

When we are selling our product or service, what many of us aim to do is to persuade our customer or client of the value of our offering. That way we get a proper reward, and of course we have to live up to our promises in delivering the quality to fulfill our customers’ expectations. I work hard to maintain the quality of the service I provide and to ensure that my clients have peace of mind, because as someone effectively offering business support services in tax compliance and other areas, peace of mind is what I am selling. My clients are then able to concentrate on their core businesses whilst knowing that most of the red tape compliance is being taken care of.

This is all well and good, but sometimes in business we are guilty of not seeing the value of the products and services for which we ourselves are customers. I see people including some of my own clients finding value in one service but penny-pinching over another. We may think that we know what we are doing, but I have resolved to find help in marketing through my websites in the New Year. I am a specialist in one area and pretty nifty in at least one other but I have to admit that I do not know all the tricks of internet marketing whereas someone else will. For that reason, this very blog may look a little different in a month or so, though I will still be writing it of course.

It is no good being a cheapskate as a purchaser of goods or services. Generally, a better product or service makes life easier all round, so do not skimp on buying in website design or bookkeeping or whatever it is you need. Check the track record of anyone you engage, look at their work or get a decent reliable reference for any contractor whose services you buy in. Quality will cost money but should deliver greater value and help you make a lot more money. Unfortunately it really is true that if you pay peanuts you get monkeys. What you don’t get is satisfaction in delivery and you may be no better off and end up having to spend a lot more to have things put right.

© Jon Stow 2009