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Have your B2B customers been “Amazon’d”?

In your B2B world, do worry about Amazon? Unless you are in the retail business, most business owners and leaders would answer no. But I believe that’s a mistake. The reason is that business customers (who are also consumers) are having their expectations raised by Amazon.

This applies in several ways. First, of course, is execution: how fast can a product get delivered (Prime has completely reset expectations). Second is the buying process with the famous one-click purchase. Third is information: most notably customer reviews.

How small and medium size companies can respond might be summed up as “ease of doing business” or, if you want something aspirational, “delight in doing business”. While this is hardly a new thought, Amazon has taken expectations to an entirely new level. And Amazon hasn’t stopped and is unlikely to stop. Therefore, if part of your business plan isn’t focused on improving your customers’ experience by a quantum leap, then you’re missing a critical bet.

Is this easy? Of course not. But your business survival may depend on it.

So how does your company go about meeting these raised customer expectations? One way to start is to adopt some form of Amazon’s (Jeff Bezos’) manta of “customer-centric.” But these aren’t buzzwords. From the beginning, Jeff Bezos has obsessed (his word) about making Amazon “the earth’s most customer centric company.” Here is what he said in his 2017 letter to shareholders:

“Why? There are many advantages to a customer-centric approach, but here’s the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf.”

Notice the last part: “invent on their behalf.” This means spending time with customers, doing the right market research, and really making invention and innovation a business priority…throughout the company. Sometimes this gets taken as a marketing or customer service initiative. But that is a big mistake. This type of innovation must impact the entire business: every operation. After all, Amazon doesn’t just provide a slick website or fast delivery. It’s all of the above.

As you think about invention for your customers, don’t get overly focused on high-tech innovation. Staying with retail for another minute, there is lots of innovation right now in retail that is competing successfully with Amazon. While many stores have had their business dramatically impacted by Amazon, some shopping malls, stores and other retail establishments are finding ways to be successful and thrive even while Amazon does the same. They are doing this by establishing a specific niche and/or a “destination”. In other words, something that Amazon and online can’t provide.

The path to your company’s future success requires meeting your “Amazon’d” customer expectations. If you don’t, you can be sure that your customers will find someone who does.

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Is it Sales or is it Marketing?

Why do many small and midsize businesses confuse sales and marketing? The answer often stems from a mistaken belief that the marketing role is simply to help sell. The real definition of marketing is much broader (see below).

Where does this misinformation come from? In many cases, it starts with the experience of business leaders. Many have “grown up” in an operational or technical role. Even those with sales experience often have a limited view of what marketing should do. Perhaps this is because in a smaller business, the broader marketing role often isn’t present at all or is done by the founder or the leader in an implicit way not labeled as marketing.

What is the right way to think about marketing? Let’s go to the source: here is Dr. Philip Kotler’s definition (author of the definitive textbook Marketing Management, now in its 11th edition).

Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit.  Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services.

 Marketing is often performed by a department within the organization. This is both good and bad. It’s good because it unites a group of trained people who focus on the marketing task. It’s bad because marketing activities should not be carried out in a single department but they should be manifest in all the activities of the organization.

The terms “small m” and “Big M” are sometimes used to distinguish this broader role (Big M) from the more tactical “small m” work. Using these terms, the mistake made by many businesses, large and small, is to focus on the small m and forget about the Big M.

If your business is stuck in a “small m” mindset, what should be the first steps to get out of the trap?

  1. Assign someone the “Big M” role. It should be one of your executives or, at least, they should oversee the effort.
  2. Assign resources. Start by thinking about what is needed to be the “canary in a coal mind” for your business. If you don’t have the skills in house (many smaller companies don’t), this is a good place for consultant help.
  3. Develop a 3 to 5-year marketing plan for your company that includes the key points from Kotler’s definition. Involve your leadership team to refine it and get buy in.

There is much more that can be done, but these simple steps will make a big difference to your company if it is missing Big M.

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Do you Listen to your Customers?

It’s trite to say listen to your customers. Yet I’m surprised at how many companies say, “We know what customers want.” No surveys, no market research, nata. If that is what you really believe, all I can say is “Good Luck.”

For those who do try to listen, many use a customer survey. The net promoter score* (NPS® a registered trademark of Fred ReichheldBain & Company, and Satmetrix) approach is widely used and accepted despite some criticisms. But that doesn’t mean it and similar surveys are well used in many applications. For example, in a recent experience the net promoter scores were high but there was clearly some dissatisfaction reflected in the comments.

Some of the comments were critical of individuals by name: not in a vindictive way but in what should have been viewed as constructive criticism. But that made it very hard to provide feedback that everyone would listen to, especially those whose names were mentioned. As a result, the feedback got watered down. In another example, one executive insisted that many customers would never provide positive feedback and certainly not a “promoter” rating (9 or 10). This despite substantial evidence to the contrary. In my experience, a customer who doesn’t provide a strong rating always has a reason…and we should try hard to find out what it is.

This type of behavior is particularly concerning for smaller companies and those with a relatively small number of customers.  In these cases, every interaction with a customer is critical and feedback that identifies even one issue is valuable. Furthermore, it’s very important to act on this feedback, otherwise customers will stop answering surveys and wonder why they’re being asked.

One common mistake I’ve seen in net promoter score surveys is to ask the NPS question but not ask the appropriate follow-up. My favorite follow-up question (which I can’t take credit for) is, “If you can’t rate us a 10 what would it take for you to rate us a 10?” This open-ended approach can yield surprising insights. Other open-ended questions such as “do you have any other suggestions or comments?” can also be useful: sometimes a person who answered with a 10 will still have a suggestion or comment.  Of course, this means going through the answers one by one but it’s worth the effort.

There is another major pitfall to watch out for. I’ve seen this more with larger companies but there are smaller companies that have fallen into the same trap. They ask the net promoter score question but in the context of customer service: for example, a telephone call or website chat. In this case, if the answer is based just on the service experience, the company is missing what may be real sources of dissatisfaction. Here is an example from the other day. I had to call Verizon with trouble on my phone line. I had to go through a long phone tree in order to reach a person. And this was after I had tried to reach a person or at least find the right contact number on their website. Once I did reach a person, she was very nice, professional and helpful. And while she had to go through her protocol of steps, she did fix my problem. So when I got the survey to rate her service, I gave her high marks. But to their credit, Verizon had an “other comments” box after that rating where I indicated that their troubleshooting process could be improved substantially by avoiding the long phone tree where it isn’t applicable. Whether they act on my suggestion or not isn’t the point. The point is that customers evaluate a company based on their entire experience not just the customer service interaction.

In a time when customers’ expectations continue to be ratcheted up by Amazon and other firms, small and medium-sized businesses need to do everything they can to raise their game. Doing surveys and acting on the results is the single best way I know for any company to improve its customer retention…and pave the way for new customers.

* Per SatMetrix: Net Promoter Score®, or NPS®, measures customer experience and predicts business growth. This proven metric transformed the business world and now provides the core measurement for customer experience management programs the world round.

Net Promoter Score rating scale

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Do All Businesses Need to Grow?

How important is top line growth for your business? Some business owners and executives would say it is essential. They see:

  • Unmet needs of their current customers, and/or
  • Opportunities to serve new customers, and/or
  • A competitor’s weakness that can be exploited to gain share.

Unfortunately, not every company that sees these opportunities is able to seize them. Why not? Often the opportunity is so “obvious” that we rush to take it without really understanding. For example, if we’ve concluded that a large competitor’s service image is slipping, we can immediately launch a targeted sales and marketing campaign. But what if the slippage is only in one region? Or what if our service image isn’t so hot? What if some of customers don’t care as long as the price is low?

The solution: careful vetting of the opportunity and possible responses. In most cases, this means some kind of market research to verify the opportunity and test alternative ways to respond. Not necessarily expensive or time consuming research: but information must be gathered. Skip this test at your peril.

Does this mean every business needs top line growth? Clearly not. Some business owners focus on steady profits and cash flow to assure their income. They may see growth initiatives as adding undue risk. This mindset has proven successful for many small and some mid-size businesses. But it does beg one important question.

What if your competitor(s) see one or more of the growth opportunities listed above with your customers?

Obviously, this could mean a big impact on the steady profits and cash flow. What if you lost your largest customer? What if the margins on your biggest product or service were squeezed? You get the picture.

The solution: think about growth opportunities before the other guys do. Especially:

  • Unmet needs of your best customers, particularly ones adjacent to your products and services
  • Your biggest competitive vulnerabilities, remembering that Jeff Bezos says, “Your margin is my (growth) opportunity!”

By proactively thinking about, then acting on these opportunities and risks, every business will improve its long-term viability and potentially find important new sources of revenue. A classic example is a manufacturer who adds implementation or other support services to complement their products, generating additional revenue and making it harder for competitors to replace their product.

One practical way to discover possible needs and vulnerabilities is spending a day (or more) “in the shoes” of your customer. But not in a typical “let’s go to lunch” mode. Instead, let’s follow the user(s) of your product/service through the part of their work day where they use the product. Get out of the way and observe (the people best at this are corporate anthropologists but anyone willing to park their ego and watch carefully can be successful). This type of careful study, with a few customers, almost always generates ideas and suggestions.

Bottom line: whether your business aspires to grow or “just” wants to remain successful, you need a growth mindset.

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Slider 4 Hard to Find New Sources of Revenue

 

Hard to Find New

Sources of Revenue?

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Slider 3 New Products Not Delivering

 

New Products

Not Delivering?

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Slider 2 Customers not responding to offers

Customers not responding

to your offers?

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Slider 1 Not hitting growth targets

Not hitting your

growth targets?

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4 Paths to Business Growth

At one point or another, if not all of the time, small and mid-size businesses and business units think about growing. In fact, as I’ve argued elsewhere, all businesses need to have a growth mindset.

But where can our revenue growth come from? In reality, there are only 4 sources, as shown on my napkin here.

 

While this picture may seem simplistic, it is very useful to clarify thinking and establish direction. For example, when thinking about revenue growth, most businesses aren’t focused on diversification.

 

To put the matrix in slightly more actionable terms, we can refer to the Ansoff Matrix  which tells us the actions we need to take. Somehow “market development” has a different ring than “attract new customers!”

Obviously, the actions required for success in each quadrant are quite different. Gaining share usually means improving price/performance or customer service, sometimes both. On the other hand, finding new customers, perhaps in new markets, means new sales channels and/or more sales people, new marketing messages, etc. Building a new product/service requires finding unmet needs among current customers that the company can meet cost effectively.

Conventional wisdom has it that gaining share should be the easiest option, followed by new customers, then new products. But, I’m not sure that this logic holds for many businesses. A company in a highly competitive market may find it too expensive to gain share. A company in a mature market may have to give up margin to win share. In cases like these (and many others), it is essential to explore new products/services and new markets.

But which is better: a new product/service or a new market? The answer depends on the company’s strengths. Have a great sales force, strong product and good service? A new market probably makes sense. Have strong technology and good product development? A new product probably makes sense.

To state the obvious, knowing your company’s strengths and weaknesses is essential to finding the right growth path. The first step is a comprehensive SWOT (Strength, Weakness, Opportunity, Threat) analysis of each growth path: i.e. 4 SWOT’s (or 3 if diversification isn’t in your remit). In most cases, the SWOT analyses will show a clear “best” growth path, that can (and should) be followed up with a business case.

In some cases, there are two paths that seem equally attractive. Often, this is because some of the assumptions being made aren’t rigorous enough. For example, the company’s ability to develop and launch a new product in a timely manner may be taken for granted. In reality, this is seldom the case. Far better to assign a probability for success and a (longer) time frame and see if this growth path still looks attractive.

Similar risks apply to assumptions about developing new markets. Relatively few businesses have proven capabilities to penetrate new markets so being explicit about risks and timeframes can make the growth path much more realistic.

In some cases, the optimum growth path may require both market and product development. For example, a successful product may look attractive for a new market segment with some modifications.

Finding the optimum growth path requires a careful understanding of both the market (customer) dynamics and your company’s capabilities. Combining these insights will put you on your best growth path.

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The Single Best Sales Tool

Every business is looking for the “silver bullet” that makes customers stay (companies with a subscription type service) or return regularly (those with transactional products or services).

I’ve sometimes heard reference to product/service “stickiness” as something that all businesses aspire to achieve.

In practical terms, where do we find this magic elixir?  Generally, by adding value with and around your product/service so that customers are less price sensitive and, best case, don’t want to be bothered by your competitors.

But what is added value and where do we find it? While the answer varies widely by business, most businesses can find it the same way: create excited customers. Some people call these customers advocates; others, like Bain and Company, call them promoters.

Regardless of label, enthusiastic customers behave that way for a reason: your company has figured out how to make their life better. Therefore:

  1. Find these customers
  2. Ask them why they like your company/product/service
  3. Figure out how you can do the same for other customers

How do we find them? You probably already know some of them as your best (repeat) customers. But the proven way is to do a simple customer satisfaction survey using the NPS (Net Promoter Score) question: “How likely is it that you would recommend us to a friend or colleague?” with a 0 to 10 answer scale where 0 is “not at all likely” and 10 is “extremely likely.” Followed with “Why or Why Not?”

There is a whole science behind and around NPS which I strongly recommend. But we can easily and quickly get important insights without getting hung up on the details. All we need to know is that customers who answer with 9 or 10 are promoters (advocates), those with a 7 or 8 are passive supporters and the lower scores are detractors; i.e. unhappy.

Knowing this, here are some of the actions we can take:

  • Determine what is different for the 9’s and 10’s vs. other customers. Answers to the “why or why not?” question are important here. We are looking for patterns but “one off” examples often yield insights as well.
  • We can do the same for passives and detractors but the issues identified may or may not turn them into advocates. Nonetheless, there may be important learning: e.g. a segment of customers whose expectations are very different than yours.
  • Calculate a “net promoter score.” Simply subtract the number of detractors from the promoters and divide by the total number of customers surveyed. This percentage is the formal NPS score. Obviously, the higher the better. But just as important is measuring the trend over time, which is why many companies do these surveys regularly.

Clearly there is a lot more we can do these types of analyses. But the title of this post is “The Single Best Sales Tool.” So what is it? Simple: a testimonial or case study from one of your advocate customers. Not only will they be glad to provide the testimonial, more than likely they are already promoting your company to others!

Bottom line: creating the sales tool is easy. Making sure you have enough enthusiastic customers is where the hard work needs to focus.