What is your major objective in running your business?

If you answered making money then I guess you most likely have the wrong job. To quote Zig Ziglar, a popular motivational speaker, "the only people who make money, work in a mint. The rest of us have to earn it". I believe that he hit the nail on the head. We have to earn money and we do this by earning the respect of our customers, suppliers, and business associates. Now there are many ways of earning the respect of your customers and business partners, but the best way is to give them the respect that they deserve. I have met with many companies and business leaders over the last year and yes, I have heard the same thing from most of them; "This is probably the worst year that we have ever had." My question is why? Has the world really stopped spending or have they just become more aware of costs? Over the course of the last 6 months, I have driven down many streets and have seen that many businesses have one major thing in common; they are all having 50% off sales. Now when one company starts this, others feel they have to follow to keep the clientele coming in. But what does it really tell the general consumer? Does it tell them that your are about to go out of business? Maybe. Does it tell them that your product was so grossly over-priced that you have been ripping them off for years and that you can drop your price in half and still stay in business? They might get that idea too. Maybe you could be telling them that you have just brought in a new line of inferior products compared to what you regularly carry. I feel that the major message that businesses are telling the general consumer is; shop around for the best deals as we are all dropping are prices, and if you don't buy today that is okay because someone will drop their price by 75% tomorrow. Don't laugh, I saw a company last week that was giving 50% off of all Sale items and then another 25% off of that if they bought today. At this rate if I, the consumer, waits just one more month, I can get it for free. So getting back to your business objective; is it working? Are you earning more or less.

Now let's turn this around and focus on earning respect. They know, just as you and I know that times are tough, and for you to cut your prices, you are in turn trying to cut your costs. Many times cutting costs means removing a level of service, cutting staff or paying them less. Sometimes it means that you are re-negotiating with your suppliers or even moving to different suppliers. When the level of service drops, it is usually followed by the level of customer loyalty dropping. When playing hard-ball with long-time loyal suppliers or moving to other suppliers that you don't really know, the effect is usually the same. Service drops and sooner or later that will affect your customer.

The outcome is generally not what most small and medium sized companies are really wanting; as the more customers that you lose, the more statistics are proven right. The big get bigger and the little guy or girl goes to work for them.

So what is the answer? I believe that it is two fold. First if 80% of your business comes from 20% of your customers, then you had better treat them well. Second, you need to find more customers like the 20% and if you can do that your business will increase. Now if you have been in business for a while, this information is nothing new to you, but occasionally we all need a reminder. My question is if we all know this why are we advertising our prices at 50% off? (Yes, at times I have fallen into the same rut trying to encourage business). Meanwhile we are paying large amounts of money to increase sales from customers that are just looking for the best deal that they can get today, and not those that will stay with us in the future.

 
Now statically the average company spends 3 to 6% on advertising with the hope that the return on investment will be ten fold. This figure seems to drop during a recession with smaller companies, and grows with larger companies. Now if you are advertising in the newspaper, on a couple of radio stations and maybe even TV, how do you know exactly which medium is delivering you the type of customer (the one who is responsible for your 80%) that you want. How much will you have to spend to reach that type of customer?

The answer is actually less money, and just a little more time. Earn the respect of your customer by getting to know them, and know them well. Many years ago, I had contacted a number of equipment suppliers as I needed some pretty unique machines. Three out of the ten or so that I contacted made a point of really getting to know me. Even though I am no longer in need of that type of equipment, I still receive an email once a month with specials that they have and in fact will send me an alert if the exact piece of machine that I was looking for comes on the market. Do their sales people have great memories, probably not, they probably have a great database. Does it pay off for them? After all I don't need the equipment anymore. You bet! Because I still have friends in the industry. You get to know your customer better, by gathering information about them and you can get a lot of information about them when they visit your website. Through the use of on-line surveys, interactive customer forums, membership areas, and email programs such as Constant Contact that return an interest report as to what articles you customer's click through to, you can respond to your customers needs and wants. Through Google Analytics I have been watching a potential customer in New Brunswick average ten to twenty minutes a day for the last three days on our website, while another in Florida has been returning every other day for the last week.

So why are potential customers coming back to our website so often and spending so much time? The answer is quite simple; I try to change the content, add a new page, or add more to my photo gallery every day. If you were to buy the newspaper today, read it and then buy the newspaper tomorrow but the content was the same, would you buy it again the following day? Then, if your website content isn't changing why would someone want to come back to your website. Many people that have websites built are more concerned with the appearance than they are with the content. Although we encourage our clients to get websites with Content Management Systems, we can't force them to change the content. That being said, if you take the time to continually update your website it will pay great dividends and the Return On Investment will grow each day. You see, unlike a newspaper advertisement or say radio advertising that once it is read or listened to is gone, your website is on-line 24/7 and is available to an audience of millions. With an investment of less that it would cost you to reach 100,000 people, 4 times a day for a month on the radio, you can reach more for years and keep them coming back to you.

So looking at the business objective of earning more. You can reach out to your customers regardless of where they are located. Interact with them, get to know them and appeal to their interests all through your website and effective internet advertising at a fraction of the cost of other advertising mediums.