business

good profit // bad profit

“Do you want me to mount the spare for you?” the voice over the phone asked. He had just told me that my tire was unrepairable and the others were nearly worn out. He seemed hurt I didn’t take him up on the implied offer to buy a new set of tires. The flat tire actually just had a slow leak so it didn’t matter if we swapped out the spare or not so I said, “Sure, why not.”

I recently wrote about a used tire shop with a unique business model. Four days after buying a set of tires, I picked up a slow leak in one. Rather than driving all the way across town to the used tire place, I took it to a national chain tire store less than a block from my office. The contrast between the two businesses really highlights what some have termed “good profits” and “bad profits.”

Bad profits are profits made at the expense of the customer in a way that hurts good will, the overall customer experience, and prevents generating long-term profits from the customer. From my experience, the mobile phone industry follows a bad profits model. All the effort is made to acquire new customers with little effort being made to retain customers. Any business that focuses on fees or charging the customer more with little in return is a business focused on bad profits.

Good profits, in contrast, are profits made in a way that add value for the customer, creates good will, improves the customer experience, and increases the likelihood of long-term profits from the customer. Rather than seeking ways to charge the customer more fees, etc., a business focused on good profits is trying to find ways to serve the customer that makes them want to spend more. Apple and Zappos are regularly used as examples of businesses seeking good profits.

This national chain tire store told me my tire was unrepairable and the rest were getting thin and needed replacing. Then charged me $20 for installing the spare in place of the leaky tire – after they offered to; I did not ask. Lies, fees, and scare tactics to upsell the customer from a cheap repair to $800 worth of tires. They relented on the fee after I protested, but not ripping off the customer when they call you on it is not the same as treating the customer well.

I immediately drove over to the used tire shop where: they told me “no problem” on repairing the tire, hustled my tire through even though they were crazy busy, offered to install it on my truck for me, oh, and didn’t charge me anything for the repair because I bought the tires from them. No written agreements, no need to hassle them, no arguments, just a focus on doing right by their customers.

It’s cheaper and easier to retain customers than to find new ones. Why is this so hard to understand? Which business will I return to in the future? Which business do I refer to others? Which business do I want to support and see thrive? Which am I happy to give money to?

how do i know what to do? priorities for success

It is possible to show up early, stay late, be busy, and work hard on all the wrong things. It’s possible to give it your booty kickin’ all on some pretty stupid things. Spend enough time and effort on the in the wrong places and you can turn the bottom line into a sieve.

So, how do you know if you’re focused on the right things? Only you know your business, goals, and priorities, but I can share some guidelines to help you sort things out.

ONLY spend time, thought, and effort on actions that are:

* Legal, moral, and ethical. This is a baseline given. If you can’t get this one right, the others don’t matter. I realize that only taking actions that are legal, moral, and ethical would shut down major chunks of entire industries, but we find over and over again that the short-term gains of taking legal or moral shortcuts are crushed out by the potential long-term consequences. Cut corners long enough and someone is going to find out and make your life absolutely miserable.

1. Beneficial to the customer experience. Take care of your customers and they’ll take care of your business. Hurt the customer and they’ll hurt your business. Be indifferent to the customer and they’ll hurt your business. My tip to all businesses: Spend your time and effort worrying about the fifth sale to me, not the first. I might buy from you once but if you make it painful or forgettable I probably won’t buy from you again and I certainly won’t recommend you. Make the process so remarkable that there is no question that I’ll be making my second, third, fourth, and fifth purchases from you.

2. Beneficial to the employee experience. Ultimately, your business lives or dies based on your employees. Treat your employees as though you need your them more than they need you. Operate from that philosophy and you’ll be fine. Treat your employees as though they are easily replaced cogs and you’ll soon have your company staffed with the people who have so few options left in their lives that they are easily replaced cogs.

3. Beneficial to the long-term success of the business. Yes, certain reports and paperwork must be done. No, you can’t buy every employee a Porsche as a signing bonus. No, you can’t operate without a balanced budget. Yes, decisions and tradeoffs and compromises must be made according to the mission and vision of the business. Just don’t confuse “convenient and short-sighted” with “long-term success.”

Anything else is box-checking bureaucracy. If you can’t justify an action under one or more of these conditions, why are you working on it? If you can’t show a direct connection between an action and a legal and ethical benefit to the customer, employee, or business, that action is doing far more harm than good. Stop it.

[Note: this is an expanded version of a response I made on Laurie Barkman’s “Passionate Performance” blog post People Say (and Do) The Darndest Things. She had a great example of a manager whose actions probably followed policy but were a stupid waste of time and hurt the employee experience (which hurts the customer experience, which hurts long-term success).]

the business-human paradox

Business cannot get done without humans, yet we forever want to ignore the human side of the equation. It’s messy and we can’t control it as much as we’d like and it’s unpredictable and it’s really stinkin’ hard to quantify and it requires a long-term focus in a short-term world and, and, and…

So we choose to downplay it, put it aside, focus on the things we can quantify and control. Yes, we need to get that side of business right too. But because that side is where businesses would rather spend their time, it is much more difficult use it to gain much of an advantage over the competition. And because  the human side is so hard, the companies that get it right reap some phenomenal long-term benefits.

It’s really interesting that, because business cannot get done with humans, businesses WILL address the people issues sooner or later. When you focus on and nail the human side you free up time to really concentrate on making and delivering great products and services. When you ignore the human side, you spend every waking moment dealing with people issues. The paradox – the cosmic joke – is that the more you ignore it, the more time you spend dealing with it.

 

[Note: this is a slightly expanded version of a comment I made on Gareth Jones’ blog in response to his post, Organizations: The World is Still Flat. That’s twice this week he’s inspired me – thanks, Gareth!]

keep it simple, make it easy

Want to know a secret of great businesses, of great customer service, of just getting stuff done? If you want someone to do something, make it as easy as possible for them to do it.

The best example is Amazon and their 1-click checkout. It doesn’t get any easier to give a business my money. Although it sounds intuitive, there are tons of examples of businesses that do the opposite. For example, I used to live near a dry cleaner that didn’t take debit cards (?!?). They never understood that forcing me to go to an ATM before getting my cleaning pretty much ensured I used a different cleaner.

There are many examples that are much, much subtler. This is on my mind because just this week alone, I was assaulted with several examples of people wanting something from me but making it very difficult to do:

  • A company I’m a certified trainer for emailed to let me know that revised materials were now available on their website. But no mention of where. It took me a good five minutes to track them down when a hyperlink in the email would have taken them no more effort and would made it a snap for me to find (and use) the new materials.
  • A friend forwarded a newsletter on training and l liked it enough to go to the website to subscribe. Unfortunately, they REQUIRE me to give name, company, address, email, phone number, some demographic info about the company, etc. I just wanted a newsletter, not a relationship. If they had only asked for an email I would have subscribed then they could have wowed me into buying their products. Instead, they made it easier for them to do a sales call to me, but made it harder for me so now they won’t get the chance.
  • I received an email that wanted me to provide some information and then told me where I could find the address to send it rather than just providing the address. What? The odds of me replying went down substantially.
  • I’m attending a training in the fall and was sent a reminder that “to sign up if I hadn’t already”. There are – maybe – 30 people eligible for the training and they couldn’t look at the roster and send out the reminder to only those who still need to sign up? Instead I received an email that I didn’t need to get UNLESS I haven’t signed up yet and only thought I did so now I have to email them just to confirm.

That was all just this week. Great customer service – great leadership – means finding ways to remove barriers to action – not adding them.

keepin’ it relevant

Recently my daughter and some friends were doing a scavenger hunt where they followed a series of clues to discover the prize at the end. One of the clues was, “The place where we get bills.” Immediately, my daughter rushed to the computer because that’s where we pay bills. Uh oh. The last thing a business wants is to be irrelevant to the customer.

Your business, your department, and even you become irrelevant to your customers the second they no longer think of you as a resource and solution to their problems. Few think about it that way, but it’s true. Customers are trying to solve a problem they have and need you to do it. Put another way, from the customer’s point of view, your business (department, team, etc.) is useful and relevant only if you can solve their problem.

Banks exist to solve the problems of safely storing and accessing money. Lawnmowers exist to solve the problem of an unkempt lawn. Car dealers exist to solve personal transportation problems. Human Resources departments exist to solve the problems of finding, hiring, managing, and developing people. And so on. Internal or external, it doesn’t matter – your job is to help your customers solve their problems.

When salespeople don’t listen to the customer, they don’t (can’t!) provide solutions. When employees judge their worth to the company by their tenure rather than the problems they are solving, they are missing the point. When HR departments focus on administration they are solving only the lowest level of problems (which are easily outsourced). When your potential customers avoid you or work around you or tolerate you because you are the only option (for now), you become a problem to them.

You become a problem that they will look to someone else to solve.

the world’s still shrinking

More and more we are playing on a global scale. Even when buying from the shop on the corner, there’s nothing to prevent that corner from being in a different state, country, or hemisphere.

With a smart phone in hand consumers can quickly and easily compare prices while in the store. Love the product, but hesitant on the price? A quick picture of the barcode will turn up the best prices available. I’ve recently been seeing concern that people will use local stores to find the perfect item, size, etc. and then order from elsewhere. This has always happened, it’s just easier than ever now.

I recently upgraded the brakes on my mountain bike. I purchased an American brand of brakes (buy American!) that were made in Taiwan (buy American?) from a store in the UK (wait a minute…). This was the first time I’d purchased from a store outside the country, but I believe we’ll be seeing more and more of it. There were no currency issues  –  their website showed prices in US Dollars based on the current exchange rate and the credit card works everywhere. Unlike the big box store that made it seem like a major hassle to order an out of stock laptop they were running a special on, this store made it as easy as possible to purchase. Finally, on top of a great price, they shipped for free and it only took a week to get it once it shipped.

Yes, there are downsides. It would be a pain if I had to return anything, it took a little longer to get than if I’d ordered from somewhere in the States (in fairness, the holidays probably slowed things down a bit), and I’m not supporting a local business (but then, I still wouldn’t be if I’d ordered from an internet retailer in the US).

Would I purchase from them again? Probably. I enjoy variety and having access to quality brands that are uncommon in the US. I’m amused by the idea of shopping in a foreign store. More important, they are getting it right. Even five years ago it would have been a real pain to order internationally. Today it’s as easy as any internet purchase. Where other businesses would shy away from international business – dealing with currency, taxes, shipping, and customs on top of long-distance customer service – this business decided to become the largest internet bicycle retailer. They have the volume to offer better pricing and invested in the effort to sort the customer service side of things.

This isn’t about bicycle parts, foreign stores, or my desire to be a little quirky. This is where the world is heading. Competing on price is difficult because there is always someone cheaper somewhere. For most businesses, especially local ones, the differentiator is really understanding the customers’ needs, service, follow-up, convenience, a cool vibe or good feeling, great people, extensive knowledge, problem solving focus, etc.

Your business is now competing with every other business on the planet. You probably won’t win on price (though you do need to be in the ballpark), but what makes your business stand out is simply: 1) how easy and pleasant is it to shop and purchase from you; and 2) how good are your people at solving the customer’s problems? It all comes down to processes and people. What is your business investing in?

good enough isn’t, but great enough is

I was discussing the idea that good is the enemy of great the other day and someone said, “You ever notice how people say something is’good enough’, but they never say it’s ‘great enough’?”

Great enough. Love it.

I’m a big believer in the concept that good enough isn’t. Hitting the bare minimums isn’t success, it’s temporary survival. Sadly, most companies seem to struggle to reach even the level of good enough. They shoot for good enough customer service, good enough prices, good enough hiring policies, good enough management development, good enough training, etc. The problem is that, at the very theoretical best, it will only be good enough. In the real world, a bunch of attempts at good enough added together tends to equal not good enough. Aiming for “good enough” seems to get us to “doesn’t completely suck”.

In fact, I’d like to propose a real world rating scale. Feel free to use it for performance appraisals, evaluating processes, due diligence for investments, whatever you need a rating scale for. Here it is:

  1. Sucks
  2. Doesn’t completely suck
  3. Good enough
  4. Great enough
  5. Phenomenal, but exceeds the point of diminishing returns
On this scale, there is only one rating worth hitting: “Great enough.” Although “Phenomenal” sounds like a good thing, there comes a point in any quality improvement where the costs/effort/resources required for additional improvement become an exponential curve while improvements move along a very flat linear curve. In other words, you’re spending tons of resources for ounces of improvement.
But, “great enough”… Getting to great enough requires a completely different set of questions, decisions, actions than it takes to be merely good enough. Consider this: getting your life to good enough is easy. You’re probably already there. But what would having a great enough life look like and what would it take to get it there?
How freakin’ cool would it be to work for a company that focused on doing everything great enough? How incredible would it be to know that all your efforts at work were consistently great enough? Who wouldn’t sing the praises of a company that only hired people who were great enough?
I’ll give you tonight to mull it over. Tomorrow morning, what are you going to do to start kicking butt and creating great enough relationships with your friends and family? What are you going to do to create great enough health? To start getting your finances into great enough shape? Come Monday morning, what are you going to do to take your team to great enough? If you’re in HR, what are you going to do to create great enough selection and onboarding processes? To help the managers you serve to become great enough leaders? To create a great enough company culture?
Great enough. Love it!

one basic tenant of business success

Technology should simplify and make things easier for the customer/end user. There’s really no other purpose. Technology for the sake of technology is, well, annoying at best. But then anything for the sake of itself is inefficient, ineffective, and dumb. Case in point: my  local newspaper recently ran an article on a program to encourage shopping at local businesses.  It sounded like a cool program, but if I wanted to find out more about how to participate or which businesses were involved I had to either go to a website or use my smartphone to scan a QR code. Dumb, dumber, and desperate. Too much, too late.

I get that this is a multimedia world, but there is one basic tenant of business success that should never be overlooked: make it as easy and simple as possible for customers to give you their money. Amazon, Apple, etc. are all great businesses, but their genius is (say it with me) making it as easy and simple as possible for their customers to give them their money. It’s not the books that set Amazon apart, and I’d argue that it’s not even really the prices (although those help), it’s that they make it really freakin’ easy to buy a book. Ditto iTunes. This is really what innovation is all about – making it easier for people to solve their problems (even the problems they didn’t know they had).

There is a minimart/gas station near my house that I buy 80% of my gas from even though it is 1) out of my way; and 2) more expensive. So what’s their competitive advantage? I don’t have to pre-pay. I can pull up to the pump, fill my tank, grab my favorite source of carbonated caffeine, pay all at once, and leave. Every other place makes me pay first, which means that I either have to do two transactions, and, if I’m paying cash, walk back and forth to the cashier a couple of times. I will pay more because they have made it as easy and simple as possible for me to give them my money.

So the newspaper, in a very misguided effort to be relevant, has made it more difficult for me to get the information I need. I instantly stopped caring about a program I’d otherwise be curious about. Them forcing me to go to my phone is just as silly as, say, Amazon’s Kindle telling me to go find a dictionary when I ask it to look up a word. But we can learn from this editor’s mistakes. In an ideal world, everyone would be forced to  voluntarily use their own products and services to experience it from the customer/end users point of view.

If you’re in HR, just how easy is it to apply for a job at your company? Are there any hoops you’re making folks jump through that could be put off until later? (For example, do you really, truly need to get everyone’s SSN on their initial application? Here’s a hint – the answer is no and you’re driving away top candidates if your automated process insists on it.) Do you actively seek ways to make it easier for candidates? Do you explain the process to them up front? Do you keep them informed and regularly updated on their status or do you force them to waste their (and your) time by initiating all communication with you?

If you’re a small business, do you accept all forms of payment? If you can’t process credit and debit cards, you’re not really serious about being in business. (No, seriously, these businesses exist.)

If someone calls your business, do they talk to a person who can actually resolve their problem/concern/request/order/desperate attempt to buy something from you? Or, and I’m thinking about the freight company that made a concerted effort to not deliver my new bicycle, do you have an automated voice “recognition” system that doesn’t actually recognize voice commands and eventually connects you with a minimally trained and hard to understand person who insists on reading the script even when the script doesn’t apply?

Does your website load superfast and is it easy to navigate? No matter how cool the graphics are, many of your potential customers have about a 1.6 second attention span. Too slow? Too hard to figure out how to get the right info? Good bye.

Examples go on and on. The principle is simple, but easy to get wrong when we think about what would make the shopping/buying/applying/etc. process most easiest for the company instead of what would make it most useful to the customer.