I've spoken elsewhere about the folly of risk aversion and the desire to be risk free. As I pointed out, profit comes from entrepreneurs taking calculated risks. But of course the customer also needs to take calculated risks in order to generate their profit too.
“It is the customer's perception of these risks that is important. No
matter if some of them aren't actually real!”
There are seven types of risk for the customer:- Will it work?
- What will I lose financially if it fails?
- How much time will I lose if it fails?
- I absolutely have to make a choice now, so will it be the right choice?
- What if it doesn't do what I thought it would do?
- What will the 'neighbours' think?
- Will it harm me?
As with value, it is the customer's perception of these seven risks that is important. No matter if some of them aren't actually real; in the mind of the customer if they are creating anxiety then they are real enough that you need to help the customer achieve an acceptable balance between overall risk and overall reward.
If you agree with these thoughts and would like to find out more about structuring your business in a better way, selling properly, how to make sales without selling and get paid what you're worth,, visit www.sws3.co.uk to download 30 more free practical ideas you can implement straight away in your business.
Service providers who charge for their time or their materials, or whose prices are influenced by their competitors can find out how to get paid what they're really worth at www.sws3.co.uk
Many will be familiar with the four Ps of Marketing:- Product, Place, Promotion and Price. But are you really sure in your mind what all four Ps mean? Could you define them all? Could you describe them all to someone else?
One analogy that I think makes things much clearer is to think about an arable farm. The farmer decides which crop to grow in each field, then prepares the ground, sows the seed, nurtures the crop and reaps the harvest.
“Think about an arable farm”
In this case:- The seeds and the planting process are the equivalent of Product
- The type of soil where the seed is planted equates to Place. Another equivalent of Place is target niche or ideal customer type.
- The fertiliser and water applied to the soil to encourage growth of a healthy crop are analogous to Promotion
- The harvest which is gathered in, the value which results from the other three Ps, is the manifestation of Price
And for those using cost-based pricing there is a fifth P: Prayer!
If you agree with these thoughts and would like to find out more about structuring your business in a better way, selling properly, how to make sales without selling and get paid what you're worth,, visit www.sws3.co.uk to download 30 more free practical ideas you can implement straight away in your business.
Service providers who charge for their time or their materials, or whose prices are influenced by their competitors can find out how to get paid what they're really worth at www.sws3.co.uk
Given the choice, and supposing there's a restriction allowing you to only do one or the other, should you focus on efficiency or effectiveness?
Is it good to be doing the wrong thing brilliantly? Firms can be inefficient yet effective. Few if any can increase effectiveness by increasing efficiency!
Productivity and efficiency are ratios - Output divided by input - But what inputs should we take? None will have any effect on the outputs of an artisan, knowledge worker or service provider. So who knows? Actually, who cares about the efficiencies of these groups?
Because costs are easier to compute than benefits, most will focus on cutting costs in order to increase the efficiency. This may well prove so, but it has little impact on effectiveness. And as noted above, we don't even know how to measure the efficiency of knowledge workers!
Efficiency is meaningless unless we know what was being attempted. It is linked to what people want and what they are willing to pay for it.
“Most will focus on cutting costs in order to increase efficiency. This
may well prove so, but it has little impact on effectiveness.”
Efficiency in the business sense or the 'knowledge worker' sense is not the same as efficiency in the thermodynamic sense. How would you go about increasing the efficiency of an orchestra? Get rid of some of them?
Efficiency is only concentrated on because it can generally be measured more easily than effectiveness, but that doesn't mean we can control it or manage it.
Efficiency and productivity should not be totally ignored, but please note that neither is a competitive advantage.
If you agree with these thoughts and would like to find out more about structuring your business in a better way, selling properly, how to make sales without selling and get paid what you're worth,, visit www.sws3.co.uk to download 30 more free practical ideas you can implement straight away in your business.
Service providers who charge for their time or their materials, or whose prices are influenced by their competitors can find out how to get paid what they're really worth at www.sws3.co.uk
It is almost business suicide for a professional services provider to operate as a commodity supplier - For example publishing a 'catalogue' listing services and prices and then competing on price - Yet many professionals put themselves in this category by their actions.
In reality the professional at least provides an 'experiential' service, with many customers demanding something totally unique. The mistake is to treat all customers equally, by having just one hourly rate - Indeed by charging by the hour at all.
“Measuring what's easy to measure is a poor substitute for
innovation. Benchmarking outside your own industry would at least
be innovative!”
Believing you are a commodity is a self-fulfilling prophesy. If you think you are a commodity - And demonstrate the fact in your products, promotion and pricing - Then so will your customers. There's nothing else for them to believe!
Benchmarking yourself against your competitors helps perpetuate the commodity myth. It's another symptom of lazy people measuring what's easiest to measure, rather than what's most important to measure. Benchmarking studies results and not processes - It confuses cause and effect.
“If you think you are a commodity then so will your
customers. There's nothing else for them to believe!”
These lazy people compare apples with apples because it's easy. Sure, they will vehemently claim that the things they measure are the important things to measure, but in fact it's just a poor substitute for innovation. Benchmarking outside your own industry would at least be innovative.
If you agree with these thoughts and would like to find out more about structuring your business in a better way, selling properly, how to make sales without selling and get paid what you're worth,, visit www.sws3.co.uk to download 30 more free practical ideas you can implement straight away in your business.
Service providers who charge for their time or their materials, or whose prices are influenced by their competitors can find out how to get paid what they're really worth at www.sws3.co.uk
It's a good idea to map out every conceivable way in which customers may come into contact with your business, even the most mundane. No potential contact point should go unmanaged. People tend to view a visit to a professional - dentist, bank manager, accountant? - as not an enjoyable experience, so do something about it.
You need to consider the four factors that affect customers' experiences - Quality, Price, Service and 'Intellectual Capital', i.e. how the purchase grows their knowledge and skill - and the balance of these four that you will deliver. You cannot compete at zero level in any of them!
“Even if you already provide unsurpassed customer service, you can
still learn from the top firms”
Even if you already provide unsurpassed customer service, you can still learn from the top firms. For example, what could you learn from Disney? Their theme parks charge for entry, not for time spent inside. But they don't charge for entry to their stores because the experience is less than at a theme park. You might even wonder what Disney would have to do to their stores to justify charging for entry, but without destroying demand for the theme parks.
Mapping this onto a professional services firm, you might have a minimum price for all customers. If you do, what should be in the minimum, or standard, package to induce people to pay your 'entrance fee'?
If you want to create wealth and remain relevant, you have to decide how much effort you and your team will put into creating and testing new ideas such as these, versus time and resources spent on executing existing ones.
If you agree with these thoughts and would like to find out more about structuring your business in a better way, selling properly, how to make sales without selling and get paid what you're worth,, visit www.sws3.co.uk to download 30 more free practical ideas you can implement straight away in your business.
Service providers who charge for their time or their materials, or whose prices are influenced by their competitors can find out how to get paid what they're really worth at www.sws3.co.uk
The application of modern Health and Safety legislation has elevated the assessment of risk in our thinking, and some of the most over-zealous examples make the headlines and get into the folklore. But, as the professionals in that sphere will tell you, the goal is to be 'safe enough' which is not always the same as 'safe as possible'.
The truth is we cannot, and we should never try to make our lives risk free. This would stifle all progress. Darwin's theories say that the most adaptable are the fittest to survive new circumstances. The most highly adapted may well have bred out some of that adaptability; restricted their gene pool if you will.
Risks should be weighed against each other, not reduced to zero or judged on 'acceptability'. We happily drive faster family cars today than we did in the 1950s because we've developed better brakes!
“We drive faster cars today than in the 1950s because we've
developed better brakes!”
In business, profit comes from taking risks! Eliminating risk in business would have the same progress-limiting effect as in the plant and animal kingdoms. Risk avoidance is the antithesis of successful business.
All purchase involves risk, and services are intrinsically riskier than products, but the upside of this is that customers show greater loyalty to service providers as the risk of change is so great.
You need to analyse the risks your customers perceive when deciding to make a purchase, and mitigate them as appropriate. Most professional service firms do an inadequate job in this area.
If you agree with these thoughts and would like to find out more about structuring your business in a better way, selling properly, how to make sales without selling and get paid what you're worth,, visit www.sws3.co.uk to download 30 more free practical ideas you can implement straight away in your business.
Service providers who charge for their time or their materials, or whose prices are influenced by their competitors can find out how to get paid what they're really worth at www.sws3.co.uk
Forget selling. Concentrate on helping customers to buy!
Easy to say, but how easy is it to do? Well, there are certainly many examples in the world of retail. Do staff in a sweet shop have to try to sell sweets or are they just order-takers? And what about a supermarket? Here the effort is first of all in getting people into the store, then once they are there presenting them with appealing and compelling propositions. Not forgetting of course, working hard to make their whole shopping experience pleasurable by adding superb customer service.
What then are the equivalents in a business to business, service scenario? Getting people into the store would be replaced by lead generation and appointment making for new customers, and by keeping in touch with existing ones. It is in the equivalent 'appealing and compelling' where steps can be taken to get the customers asking to buy, and 'appealing and compelling' generally comes down to enabling the customer to derive the value they seek.
“Appealing and compelling generally comes down to enabling the
customer to derive the value they seek”
But your price will affect 'appealing and compelling' too. A price which offers customers a huge return on investment when compared to their perceived value will be hard to resist. If a customer shows signs of buying on price alone, removing value allows consideration of a lower price, a much better strategy than just unilaterally lowering the price.
Another issue that can be dealt with by adopting a strategy that encourages customers to ask to buy is payment collection. You can effectively remove payment resistance by agreeing prices and payment terms before work ever starts, and then make paying as easy as possible!
If you agree with these thoughts and would like to find out more about structuring your business in a better way, selling properly, how to make sales without selling and get paid what you're worth,, visit www.sws3.co.uk to download 30 more free practical ideas you can implement straight away in your business.
Service providers who charge for their time or their materials, or whose prices are influenced by their competitors can find out how to get paid what they're really worth at www.sws3.co.uk
You need to focus on the total customer experience, and a large part of this involves meeting and sometimes exceeding customer expectations.
To check if customer expectations are being met, one great strategy is to become a 'mystery shopper' and discover what your organisation looks like when seen from the outside. If you can't do this, the next best thing is to regularly ask your customers about their expectations.
If you find their expectations are too high, find ways to lower them or you'll need to walk away. If you don't satisfy the customer's expectations, you'll fail to deliver value. If you can lower their expectations whilst still addressing their key issues, it's easier to exceed them.
“Your competitor is anyone who raises the customer's expectations”
Please realise, expectations are dynamic - Keep asking yourself, "What are we getting paid for? What is the customer trying to get done?" And check this with customers too, of course.
Your competitor is anyone who raises the customer's expectations, and you'll need to react when this happens. Be creative and innovative - You are free to borrow ideas from outside your own 'industry'. For example, freight companies first introduced bar-code tracking, but this then set a standard that the airlines were keen to follow for passenger baggage. The early adopters used it as a differentiator, already knowing its appeal.
If you agree with these thoughts and would like to find out more about structuring your business in a better way, selling properly, how to make sales without selling and get paid what you're worth,, visit www.sws3.co.uk to download 30 more free practical ideas you can implement straight away in your business.
Service providers who charge for their time or their materials, or whose prices are influenced by their competitors can find out how to get paid what they're really worth at www.sws3.co.uk
