Monthly Archive for May, 2009

Small businesses: deliver what customers want, not what they need

Spend time in the marketplace and you’ll have many close encounters of the third kind with the most interesting species in all of nature: the human being. And just as we have learned about the nature of other animals, we also know that the nature of humans isn’t much different: All need to breathe, eat, drink, procreate and survive.

But there is something that clearly sets humans apart from all other fauna, sentience. And one of the manifestations of being self-aware is that beyond whatever humans need, they also want things.
The most essential fact that we small business owners must understand about the nature of those very important humans — our customers — is the difference between what they need and what they want.

Every human who owns an automobile will need to buy new tires at some point. But what they want is to not blow an entire Saturday finding and acquiring tires.

So if you’re in the tire business, should you advertise your tires, which are commodities and, therefore, very much like those of your competitors? Or should you develop a marketing program that anticipates when a customer’s tires need replacing and handles that project for them, including pick-up and delivery?

How about this tag line: “New tires AND your Saturday back”?

Basically the hairless weenies of the animal kingdom, human beings need the shelter of a house. But what they want is a home. So if you’re a realtor, should you focus your assistance on the obligatory list of a house’s features or how the physical setting and interior space fit what you’ve learned is your customer’s sense of what a home should be? Try this on:

“Mrs. Johnson, counter tops can be replaced. What I want to know is how much will you enjoy the sun rising over that ridge as you enjoy your first cup of coffee every morning?”

Humans, like thousands of other warm-blooded species, need to eat every day, whether they get to or not. But unlike other animals, only humans want to dine. So if you own a fine dining restaurant, do you emphasize the food that will soon be forgotten, or the atmosphere that can create a memory? Check this out:

“Long after you’ve forgotten how wonderful our food is, you will still remember that table for two in the corner or the booth next to the fireplace.”

In the 21st century marketplace the difference between delivering what customers want and what they need is, as Mark Twain said, “like the difference between lightning and a lightning bug.”

What customers need are commodities over which price wars are fought. That war is over, and small business lost. Don’t go there. What customers want is anywhere from a little bit more to everything. And along that continuum you will add technical service and customization as you deliver products to customers, resulting in higher margins for your business. Remember, everyone isn’t your prospect, just the ones who will pay for what they want.

Small business success requires that we do what we do better than anyone else: Deliver what customers want. Find out what that is, and then deliver it! Let the Big Box competitors give humans what they need.

I talked about this topic on my small business radio program, The Small Business Advocate Show. Take a few minutes to listen. And be sure to leave your own comment.

Clarifying the record on start-ups and co-opetition

In any given month, I will be interviewed by various national and international media outlets. The contacts are appreciated because it allows me to leverage my opinions and whatever I’ve learned on behalf of small business issues. And, let’s face it, any PR is good PR, so the attribution is good for my brands.

There is one problem, however, with these kinds of interviews: The interviewer is taking notes as I am speaking, and the final product may not be as spot-on with regard to what I have said. Anyone who has ever been quoted by the media knows what I’m talking about. Sometimes the quote is perfect, sometimes it’s a little off and sometimes it bears no resemblance to what was said.

Recently, as a result of two interviews, I was quoted in ways that I feel I should respond to. Neither interviewer did anything wrong, but a little clarification and expansion is warranted.

In an interview with the Los Angeles Times (click here for article), I was asked about the concept of small businesses establishing alliances with each other to maximize limited resources during a recession. I have long considered this behavior to qualify as a best-practice, so it was easy for me to comment. I said, “There is a term called ‘co-opetition,’” and went on to explain that this is where businesses that were otherwise competitors would actually partner to accomplish a specific goal, like a contract with a larger customer.

When the article came out, I was incorrectly given credit for actually coining that term. As a thought-leader and unrecovering egomaniac, I coin new terms (and laws, see below) all the time, but alas, co-opetition isn’t one of them. Don’t know the genius who did coin this extremely intuitive and handy term, but it wasn’t me.

Last thought on co-opetition: If you’re having trouble qualifying for the specifications of a request for proposal (RFP), consider partnering with someone, even a competitor.

More recently, an Asian news agency contacted me about the impact of small business on the economic recovery (click here for article). One of the points I mentioned was the access-to-capital environment for start-ups. I said start-ups weren’t going to have as much of an impact on this recovery as in previous ones because the currently diminished availability of personal credit would limit the ability to fund a new launch. I was quoted correctly, and I stand by my opinion, but there are a few things that should be added.

It must be said that, clearly, there will be many start-ups who will find a way to launch their dreams against all these odds. The good news is, because of the extreme commitment of these entrepreneurs, their enterprises will probably have a higher success rate, just by sheer dint of will. An entrepreneur who will not be denied is a force of nature.

On the other hand, easy credit often allows for the creation of start-ups that should never have happened. Blasingame’s Second Law of Small Business states: “It’s easy to start a small business, but it’s not easy to operate and grow one successfully.” The casualty rate for start-ups in an easy credit environment is nothing short of grotesque.

Sometimes start-ups don’t price their products and services properly because they don’t yet know how much gross profit they must generate to fund day-to-day operations while simultaneously capitalizing growth. Consequently, in the process of failing from a combination of too much debt service and not enough gross profit, these newbies devalue the prices for their products, while the remaining industry players must work harder to get prices back to a level that allows for sustainability.
Making a sale by offering prices that don’t allow the company to survive is a Pyrrhic victory.

Thanks for allowing me to sort of correct the record while taking the opportunity to expand my thoughts on these issues.

Jack Kemp is dead – small business has lost a champion

America lost a great leader this weekend. Small business lost one of its champions.

Jack Kemp was a leader in all of his endeavors. He was an NFL quarterback, Congressman, HUD secretary, Vice Presidential candidate and Republican Party thought-leader.

Kemp didn’t win all of his games in football, nor all of his campaigns in politics, but he was a winner in life because he won the hearts of those who agreed with his ideas as well as the respect of those who disagreed. What better could be said of anyone at the end of a life?

Jack Kemp didn’t just believe in America’s free-market economic system. As my friend, Rich Galen, observed, Kemp was a zealot. He wasn’t just an outspoken advocate for supply-side economics and the phenomenon of dynamic scoring; he was one of the forward thinking minds that created, birthed and nurtured these ideas into reality.

By the way, dynamic scoring is where the government actually increases tax revenue as a result of lowering taxes, which creates an environment that fosters risk-taking by entrepreneurs and, therefore, increases productivity and economic growth. This isn’t some esoteric theory; it has been proven in the past 30 years. President Clinton’s Council of Economic Advisers wrote this in a 1994 report: “It is undeniable that the sharp reduction in taxes in the early 1980s was a strong impetus to economic growth” (from Mullings.com). It’s gratifying to Kemp’s disciples that he lived long enough to be proven right.

No right-wing ideologue, Kemp was sometimes referred to as a “bleeding heart” Republican. That means he believed in how government could actually help people who really needed it, but not in making government’s beneficiaries into victims and hand-out addicts. Notwithstanding his VP nomination with Dole in 1996, one of the great mysteries to me, and perhaps an indictment of the Republican Party, is why Kemp wasn’t even more prominent in national politics in the past 20 years.

Jack Kemp cared about small businesses, and he believed in the importance of American entrepreneurship. For those small business owners who, like me, just want the government to not take too much of our precious capital away in taxes and get out of our way as we attempt to serve customers, create jobs and achieve financial success for ourselves, we’ve lost a champion and a friend.

America has lost a great leader, intellectual honesty has lost a valiant debater, free-market capitalism has lost a vociferous voice, reason has lost an irreplaceable advocate and the energy level of planet Earth has dropped now that Jack Kemp has passed.

Recently, on my small business radio program, The Small Business Advocate Show, Rich Galen (Mullings.com) joined me to celebrate the life of Jack Kemp. I hope you’ll take a few minutes to listen to our thoughts. And, of course, be sure to leave your own comments on Jack Kemp and his legacy.

Think online communities instead of social media

“Social media” is a new term for one of the oldest of human activities: communication.

For individuals, the term is completely intuitive: connecting and sharing through on-line technologies. And when platforms like Facebook and MySpace were built, the Digital Natives (part of Gen X and all of Gen Y) strapped this latest craze to a rocket and blasted it into the popular culture stratosphere.

But for a business, a social media strategy isn’t about being intuitive, it’s about return on investment. Consequently, the term could be a stumbling block for businesses on two levels.

1. Decision-makers older than the Digital Natives, not appreciating the time and resources spent on something called “social,” might say, “If you want to visit, go see your grandmother. I need you to sell something today.”

Indeed, even this industry’s leaders have yet to produce anything but red ink for their fish-eyed bankers and long-suffering investors.

2. The bloom is already falling off the public relations rose of the popular social media sites as the mainstream media shifts from ga-ga over the popular culture fruit-of-the-month to more critical reporting on business model viability, security, privacy and other issues. Therefore, business owners and managers may, unfortunately, associate challenges of the social media industry with the importance of building and serving on-line communities dedicated to their own customers.

So, what’s the answer? Here are two thoughts:

1. In a business application, let’s replace “social media” with the more accurate term, “business networking on-line” or how about, “building on-line communities”? This isn’t, as Shakespeare would say, a rose by any other name. Any business activity that is as essential as building on-line communities is becoming deserves its own name.

2. Businesses large and small should focus appropriate resources on the essential 21st century marketing strategy of creating and nurturing on-line communities where they connect with customers and prospects who hang out there because they agree with the values of the hosting business and benefit from the value they find there.

As eBay became just another marketplace in the clouds, social media will morph into just another wrench in your marketing tool box. But the on-line communities your business builds will increasingly be the way you establish quality relationships with customers. In the future, more customers will connect with your business through on-line communities you build and serve than from any other marketing source.

Recently, on my small business radio program, The Small Business Advocate Show, I interviewed two of my Brain Trust members who are community building experts, and I also went solo with my thoughts on social media vs building customer communities. Jeff Zbar, Chief Home Officer and I talked about small business and social media, then Chuck Martin, president of NFI Research, revealed some very exciting research on business adoption of social media. Take a few minutes to listen to these conversations to help you build your business’ on-line communities. And, as always, be sure to leave your thoughts.

My interview with Chuck Martin:
My interview with Jeff Zbar:
My thoughts on this issue:




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