June 2007
Grow Your Business By
Increasing Process Efficiency
Talking To Strangers
Out-Competing The Competition
Cross Selling Ups Profits
 
Grow Your Business By Increasing Process
Efficiency
In previous issues we have looked at three of the four
ways (and there are only four) you can grow your
business: increase the number of customers of
the type you want to have; increase the number
of times a customer comes back to buy from you;
increase the average value of each sale you
make. In this issue we cover the fourth way,
increasing the effectiveness of each process in
your business.
While it’s the last, it is by no means the least. In
fact this is the step that ties it all
together. Getting value from the first three
ways can only come about if the processes
involved in them happen efficiently within your
business. Without changing and improving the way
your business operates, it will be very
difficult to successfully implement the
strategies we’ve discussed.
When you think about it, a business is nothing more
than a group of processes – production,
marketing, selling, managing the finances and so
on – and it’s the actual quality of these
processes that determines the quality of the
outcomes. So increasing the number of customers
will be reliant on the effectiveness of your
marketing processes; increasing customer
retention on how well you handle customer
service processes; increasing the average value
of sales on how good your selling process is,
and, in general, making all other processes,
such as inventory management, cost efficient so
as to save money (increase profit) and minimize
waste.
One way of pinpointing where your operations can
improve is to take the time to really
investigate how the key processes are operating
so as to identify inefficiencies and performance
failures and establish the real underlying
causes for them. For instance, a business may
not be getting enough new customers. The
immediate reaction, in the absence of knowing
exactly why, might be a shotgun approach –
increase marketing spend to all sorts of
channels to attract more leads. In fact, take a
little more time to investigate and it may turn
out that the business is getting plenty of leads
but is failing to convert many of them. That's a
sales process that needs improving, and the
solution might be in getting sales reps to
perform more effectively, or getting back to
telephone inquiries faster rather than throwing
more money at marketing.
The fact is, most owner/managers don't see their
business as a series of processes. But that's
exactly what they are and each one needs to be
analyzed at some stage to see how efficiently it
is working and if the right drivers are being
measured. For instance, conversions per sales
rep and average time to respond to phone calls
in the case above, so that performance can be
tracked and the real reasons for poor
performance identified.
Deciding what drivers to track can sometimes be a bit
involved and it’s good to work out which ones
are relevant to your particular business in
conjunction with a business advisor. They’ll
usually start the ball rolling by giving your
business a "health check" to diagnose just how
well it is currently performing.
A business health check can look at both what is
happening in the business world around you and
at your in-house operations. You may be tempted
to look just at in-house operations, but
consider how changes in technology, for example,
could affect your production methods, or
upcoming legislation in, say, managing
pollution, which might alter the way you need to
handle waste. Those things may not necessarily
be negative – sometimes a review of the wider
world opens your eyes to new opportunities as
well.
The Four Ways of growing a business work best when
used together in an overall strategy. Think
about the concept of synergy, the whole is
greater than the sum of its parts. The mistake
many businesses make is to focus on just the
customer/sales processes, and thereby miss out
on significant growth opportunities from making
other processes more cost efficient as well.
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Talking To Strangers
Business networking is the process of establishing a
mutually beneficial relationship with other
business people and potential clients and/or
customers. For many business people that may not
sound like their experience of networking, which
is often equated with meet-and-greet functions
where it’s a race to exchange business cards
with as many "opportunities" as possible.
Identifying and cultivating leads is indeed one
of the functions of networking, but by no means
the only one.
People who claim to get something out of networking
will give you a different slant on how it works
and what it is all about. Networking for them
involves meeting people in a wide range of
formal and informal forums, people who could be
of help to them in some situations and to whom
they could be of help in others. In other words,
networking should be seen as building
reciprocally beneficial relationships. And the
opportunities networking provides can be of many
types:
- Learning from the experiences of others and sharing new ideas on whatever is of interest
- Receiving regular news bulletins and attending events that keep you up to date in what’s happening in your line of business
- Participating in or contributing to surveys or research in your field or business sector, and
- Meeting prospects, competitors, suppliers and service providers who could provide the opportunity for mutually beneficial deals
Networking is an investment, not a nuisance
By putting in the time to build your network you save
time when you need to get things done. Well
networked people don't have to waste time firing
off random emails or making cold calls for
advice and assistance to people they don't know,
buying leads or industry lists, or hunting
through dozens of resumes for the right
candidate. They know who to contact or they have
a contact who will know. And being in a
relationship with that contact they can probably
expect a speedy response – requests from
acquaintances get dealt with sooner than
requests from strangers.
Building a network of good relations with a wide
variety of business associates can really be a
big productivity improver.
What’s a good network for me?
When you think of a network as a group of people who
can offer you a mutually beneficial
relationship, the options for what to join
expand beyond the chamber of commerce and the
trade show or professional organization.
To keep your commitment manageable and focused though,
when considering a network to join or networking
events to attend, you will need to think of your
primary requirements, e.g. market information,
training and development opportunities, expert
advice, or leads. Aim to balance your needs with
the level of participation and involvement you
are able to commit to.
A primary contact is likely to be your trade or
professional association and after that you can
ask for recommendations from your business
advisors, e.g. your bank manager, lawyer or
accountant, for networking groups/organizations
matching your business requirements.
Be an active participant in your networks
Networks are established for collective benefit and
are most successful and effective where there is
give and take by the members. However, since not
everybody has the same amount of time available
and yet may be just as keen to learn and share
information, different forums may be useful to
different people.
If you can’t spare the time to attend functions and
events you might focus on finding a network
hosted on the Internet. Similarly, if you do not
think you are likely to be able to proactively
pass information on or help someone else in
return for advice then stick to joining a more
passive network that supplies newsletters and
bulletins and hosts online debates rather than
joining an events-based one.
Where you are involved in meetings-based groups you
will be expected to actively share your
experience by talking to the other members as
well as passively learning from hearing about
theirs. When you attend debates and discussion
groups don’t hesitate to contribute your ideas
and experiences or even deliver a talk on some
aspect of business you feel particularly
confident with.
A network's strength in any particular area or service
depends on how actively its partners exchange
information with each other and reciprocate when
they receive a request for assistance. If you
receive advice from a network partner be
prepared to offer your own help in the future.
To improve sales remember to regularly pass on
recommendations for other member’s businesses to
your customers – your network partners should do
the same for you. And if you have been pleased
with a particular supplier let your fellow
network members know so they also have an
opportunity to try them out.
Networking is a great way to get to know new business
professionals in both your own line of work and
in ones related to what you do. The results? A
high quality network of diverse business people
who can provide answers, insights and leads.
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Out-Competing The Competition
Ever walked through a mall or around the shopping
district and suddenly been confronted with a new
product that is the very product you deal in and
had that sinking feeling of “Yet another
competitor to outmaneuver”.
But how do you outmaneuver competitors? The only way
to really get to grips with them is to know
about them, how they operate and what they are
doing to make themselves attractive to customers
– and then beat them at their own game.
In the business world gathering information about
other businesses that could have a significant
impact on the way you conduct your own business
is known as competitive intelligence and two
really good sources of competitive intelligence
are close at hand and relatively cheap to tap
into – the competitors themselves and the people
who might use their product.
Find out what competitors say about themselves
Understanding how your competitors are selling
themselves and their products is useful to
understanding how to best compete with them.
There are a number of recommended ways to gather
competitor intelligence, some of them quite time
consuming and expensive. But by and large you
can get quite a good feel for what the
competitor is up to by looking at the obvious
sources; their own store, their website, their
advertisements. As well, your salespeople will
have spoken to customers and suppliers about
your competitors so get their insights also. You
can even order a product from your competitor
and compare their packaging, service and quality
to your own.
What they say about themselves is often a great
insight into what they feel their strengths are,
reveals their product range and what features
they promote (and so think will be attractive to
customers), shows what channels they use for
marketing (do they have a website or use email
as well as the yellow pages – should you be
thinking of following suite?), what product
support and guarantees they offer. How do your
products and customer service rate against them?
Know what others say about your competitors – and about you
The other great source of information is the consumer
of products like yours. Surveying a group of
people likely to be in the market for what you
supply and getting their opinions about your
product and your competitor’s version can
provide invaluable insights on how to make your
offering more attractive. Do they buy from you
because you have a wider range? Do they prefer
the competition because they provide free
parking or have a customer loyalty campaign
running? Those customer decisions affect your
profit, so knowing what they value is important.
A focus group can be easily arranged by you or your
business advisor. An independent presenter can
be an advantage – people are naturally reluctant
to be negative to the business owner in person
but it’s the customer turn-offs that you really
need to know. This will collect information you
can use to evaluate your own performance against
the competition, suggest ideas for exploiting
their weaknesses and even identify potential new
customers.
Take control of the game
Competition is a fact of life in business and you have
to have some type of an edge to be the winner.
You may have an excellent product or service,
but if everyone else is selling something
similar, then just how much of the market can
you expect to capture?
Getting to know your competitors is the first
step, and the most important, in winning a
competitive edge. You can use the knowledge to
play the game better yourself by considering
what you have learned from customers about what
they really value or ways to stand out from the
competition. And you can pick up ideas on how to
play the game differently, for instance in
recognizing currently unmet customer needs that
would provide market opportunities for you or
new ways and places to advertise.
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Cross Selling Ups Profits
Cross selling is encouraging a customer to buy a
little extra on top of their original purchase.
A hairdresser may suggest that the results of
the styling, or the overall hair condition, will
be maintained longer with a particular gel they
sell.
A cross sell item is usually a small purchase that has
obvious benefits, insignificant cost and doesn’t
require much thought to make the buy decision.
Why it works
Many business owners are reluctant to branch into
cross selling. They worry that they’ll put the
main sale at risk by appearing too pushy, but in
fact the cross sell offer comes after the hard
part of the sales conversation is already over,
often after the main sale has been made, and you
have already developed a rapport with the
customer. Customers are likely to appreciate
your thoughtfulness in offering them an added
benefit they didn't know about.
How to present your cross sell offer
Attempts at cross selling can go wrong, but not
because of any problem with the basic idea. The
main problem comes from technique. If you and
your employees aren’t trained on effective ways
to cross sell, chances are you will offend
customers by being too pushy or giving the wrong
message.
Consider this example. A customer buys a good quality
family sofa on a number of monthly payments. A
straightforward question “Do you want our
monthly cleaning service as well” is not likely
to get a bite. But an approach along the line of
“That’s a substantial investment you have made
and I’m sure that sofa will really make your
room look good. We offer a monthly professional
cleaning service for a bit extra that will keep
it looking good and ensure your warranty remains
valid”.
With that substantial investment in mind, the
potential for damage and the possibility of
protecting the warranty conditions there’s very
little resistance to cross selling them into the
monthly professional cleaning service deal.
In cross selling it’s essential to approach the sale
by seeding the benefits of the added
product/service and presenting the information
in a standard script.
One of the most effective cross selling techniques is
having the customer actually try the product and
experience the benefit right away. Our
hairdresser might put hair gel in the customer’s
hand and show them how to apply it themselves.
By showing the client how to get the salon look
at home they create an immediate value add that
will encourage the purchase.
Add-on products can be grouped together to form a
bundle with a special discount offer for taking
the lot. That works best where the products are
related and contribute to the same benefit of
the main purchase – in the hairdressing salon it
could consist of a discount offer for taking a
shampoo, a conditioner and a gel for a package
price.
For most businesses, a little thought and a little
training using some simple principles can make a
world of difference:
- Think through the combinations you can offer
- Work out simple scripts to introduce them that don’t cause a negative reaction (present the
information in a ‘by-the-way’ manner and mention benefits)
- Work out any deals that could apply for buying a group of add-on products
- Get your employees familiar with the packages and the script that goes with them
Businesses that have a formal cross selling
program report acceptance rates of between 40%
and 60% for their offers. This represents a good
return for an activity that adds little extra
time to the customer transaction and can be
scripted so any salesperson can do it.
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