The naked entrepreneur

Great Customer Service Builds Brands

2009-12-03T21:50:00.000-08:00

Last year I ordered a free-range turkey to cook for family Christmas dinner. I'd never cooked a turkey before and had some small disasters (another story) but the end result was fantastic and a number of our guests commented on what a great turkey it was.

So this year I decided to repeat it and just placed an order from the same supplier (I've had no dealings with them before last year and no subsequent dealings). I also ordered a ham.

I placed the order via email at 3.24p.m. At 3.42p.m. I received an email back from the CEO (and son of the founder):

Hi Tim,

Thank you for your order.

It’s great to have you back buying from us again this Christmas.

Take care and all the very best.

Regards

Anthony Puharich
CEO

What a great way to endear yourself to a customer; what a great way to build a brand. It is no wonder they have built such a successful business and it is clearly no accident.

Hats off to Vic's Premium Meats (and I can genuinely recommend their turkeys)

SME Technology Summit

2009-11-30T20:01:00.000-08:00

You can find the slides (available for download) from my presentation this morning at the SME Technology Summit by following this link to Authorstream.com

Web Denizens

2009-04-21T04:03:00.000-07:00

I am shortly to be involved with an initiative designed to get more small businesses using web search engine marketing. Part of the key to this is that it is available even to those businesses who don't have a website.

Many small (or micro) businesses are stuck in an outmoded paradigm where they have turned their back on the web. They are often fearful of it because they don't see themselves as part of the web generation; sometimes it is because they feel it is unnecessary for their business; sometimes they are mystified by it and don't really know how to approach it. There are myriad reasons (or excuses).

Part of this outmoded paradigm is to continue to allocate the majority of their advertising dollars to the good old yellow pages.

During conversations to plan for this initiative I was asked by those behind it what one thing I could say to small business owners about why they should be concerned with the web. My answer was simple - Even if they are not denizens of the web, the vast majority of their potential customers will be. You make it difficult to for them to access you at your peril.

If you are going to fish in a pond, fish in the one where the most fish are. Get onto the web.

Business Lessons Through Tragedy

2009-04-21T00:09:00.000-07:00

We can't fail to be moved by the tragic story of 17 year old David Iredale who lost his life on a bush walk which went wrong in 2006.

The greatest tragedy of the entire story, emerging during the inquest, is that it appears his death could have been avoided. It has been reported that his repeated calls to the 000 emergency number were met with sarcasm, insensitivity and slavish attention to an ill-conceived script. Vital information from the calls, which may have helped pinpoint where David was lost, was apparently not passed onto police until some days after the calls were made.

According to reports :

"The court heard a major failure of all calls was that relevant information David provided about his whereabouts was not recorded or passed on to police rescuers. The operators had been "fixated" on asking for a street address because it was in accordance with their training and the steps they were to follow within the computer program."One particular call, the last call we received from Mr Iredale, the calltaker's demeanour appeared quite uncaring, not responsive to information received and the distress that was evident from the caller," Superintendent Payne said."

The operators were 'fixated' on a scripted call procedure and they allowed this fixation to override their common sense (and perhaps compassion). In this case this slavish adherence to procedure my have helped contribute to a death. Most of us can understand that no street address can be provided for a walker lost in dense bushland - it is common sense.

Perhaps there are factors here which might mitigate the actions of the triple-0 staff - maybe it has been proven that deviation from procedure in emergency calls causes more tragedy than it averts - after all in many emergency situations, such as the evacuation of an aircraft, failure to observe procedure may risk other's lives.

Most of us in business don't live in a world where our actions have life or death consequences (thank goodness), and this blog is about business. But, there are business situations where systems and procedures are allowed to overrule common sense in the same way as occurred in the David Iredale case, and it is generally to the detriment of the customers of the business.

How many times have you bumped into a futile conversation with a call centre operator which defies all common sense; or tried to fill out a web form which demands a field which you can't fathom before you can move on?

I once had a situation where I had four separate accounts with a major corporation. I had always wanted one consolidated account but after some of months of trying to organise it I gave up - their systems just didn't allow it. Apart from the fact that this meant frustratingly that I had four separate monthly payments to make rather than one it wasn't much of a bother - until I moved and had to change the billing address. I phoned to change the billing address and first had to "identify myself" to the operator. We went through the long list of questions and my responses until I heard the magic words , "OK, thank you sir, I have identified you so now I can update your address details.", which he proceeded to do for the first account. I then asked him to change the details for the next account and the first thing he said was he would have to ask me some questions in order to "identify me"! On the same phone call to the same operator, for four separate accounts in the same name, I had to go through the same identification process four separate times. As I got increasingly annoyed, he kept on telling me "it was procedure" and he had no choice other than to go through it. I kept on pleading it was nonsense and it was clear to me that he agreed but he had to do it anyway.

Common sense and empathy are the two most valuable attributes any business can apply when dealing with it's customers - unfortunately so many businesses mistakenly don't allow them to come to the fore.

Organisations, particularly larger, distributed ones, need procedures and some rules if they are to function efficiently. But if you really want to satisfy and delight customers, and even potentially turn them into evangelists for your brand, you need to make sure you build 'escape hatches' into processes which allow common sense to override dogma.

It shouldn't be an afterthought. It is fundamentally important in engineering a customer experience in a high growth business.

Kochie's Business Builders Bushfire Special

2009-04-19T20:10:00.000-07:00

A special edition of Kochie's Business Builders was aired on the Seven network yesterday. It was an episode about the plight of business owners affected by the Victorian bushfires.

We were filming in the area for three days and unfortunately the final program was only a half hour episode so there was much that was filmed that couldn't be aired.

Fortunately you can find it all in the "Video Extras" section on Kochie's Business Builders website - "Surviving a Disaster Extended Version".

There are some key insights which struck us all as we spent time in the affected region:

There probably isn't enough focus on businesses when it comes to support - both charitable and government. In regional communities it is small businesses who provide employment. In the case of Marysville, for example, there was one business premise left standing in the main street - the bakery. All the businesses will need to rebuild and re-establish themselves and until they do there won't be a great deal of employment in the town. Much of the support thus far has been directed (appropriately) at re-building homes, but unless the local economy is rebuilt concurrently there won't be much for the residents to do. A separate focus is required to getting businesses back on their feet.
This is no time for solos solutions. The community needs to work as a community to get back on it's feet. Sticking with the Marysville example, many businesses are waiting to see whether other businesses will rebuild and reopen before deciding what they will do. Most are waiting to see whether the residential accommodation providers will re-establish first. Many business operators leased their premises and landlords are waiting to see whether other businesses will re-open before they make a decision to re-build. It is easy to understand this waiting game - many of us would do the same - and it will be easy for the business community to fall into paralysis as a result. Everyone needs to move together and that requires leadership and an openness to embrace (figuratively) other business operators, even erstwhile competitors.
The importance of business interruption insurance was very clear. A number of businesses had insurance for their buildings but not for their business continuation. It may take months or even years to rebuild and re-establish and it will be virtually impossible for those who don't have an income stream to sustain them until they get back on their feet.
Some sort of rudimentary disaster recovery planning is vital for all businesses. In the US about 55% of businesses who experience a 'disaster', and have done no disaster recovery planning, fail within 12 months. This is significantly higher than the failure rate for businesses who have done some planning.
Recovery for many businesses is going to require some lateral thinking and perhaps some strategic shifts. For Buxton Trout Farm, for example, it will mean diversification of revenue streams; a shift away from holiday maker customers to day trippers; and some pretty clever concomitant marketing.

If you are in business I encourage you to think now about how you would cope if a disaster strikes. As I say in the program, you don't want to be doing that thinking in the stressful post-disaster environment when you judgement might not be as acute as it is now.

What looks like a problem can become a marketing coup

2009-04-17T21:48:00.000-07:00

When nudie was subjected to a devastating arson attack which destroyed the factory and office, we were obviously set back. But I believe every dark cloud contains a marketing silver lining. I used the nudie fire as the basis for a concerted media campaign which positioned us as an underdog and effectively put nudie on the map.

These days, in moments of black humour, I joke that I wish every business I am involved with had a lucky break like an arson attack to propel it into the stratosphere.

I read today about the plight of Damien Tscharke, a vigneron who for the last five years has been making "Girl Talk" wines using albarino grapes - of Spanish origin. They have proven to be so popular that other wine makers have raced in and planted albarino grapes as well. And now it appears that the albarinos are not albarinos at all. They may in fact be a French varietal -savagnin blanc - which is not the same as sauvignon blanc. Apparently those tricky Spaniards exported the wrong root stock and all the Australian vignerons who planted albarinos have been duped.

As I read he story I imagined much figurative cursing and gnashing of teeth amongst the growers as the cry has goes out - "Ruination!! Oh woe is me! Its the wrong grape!"

Indeed Mr. Tscharke is quoted as saying, "It's the largest volume wine we make, we have several hectares under cultivation, and I'm facing significant financial losses potentially."

Initially I was tempted to dismiss it as a storm in a teacup. So, its the wrong variety of grape - who cares? It looks the same as it did yesterday before they knew, it tastes the same, it makes the same wine it has done for five years now. What's the big deal, it all seems like humorless nonsense to me.

And then it struck me that this is Mr. Tscharke's fire! What fun he can have with it on his "Girl Talk" labels - "Girls, have you heard? They're keeping schtum at head office, but there's a rumour we aren't who we think we are. The French sabotaged our Spanish sugar daddy's and we aren't albarino we're trashy savagnin blanc instead!"

There is an endless stream of marketing creativity and publicity which can be generated from this slip up. Far from being the undoing of the enterprise it could be the making of it.

All that is required is to look at it as an opportunity rather than a threat.

Wine Clubs

2009-04-17T02:18:00.000-07:00

It seems that out of every second envelope I open these days spills a letter, brochure or flyer for a wine club associated with the initiator of the post. I decided to count them up.

Apart from the monthly mailing I get from the Wine Society, and the bulky post I get from Cellarmaster, both of whom are in the solos business of selling wine, I have received another eight entreaties to participate in wine buying from other organisations in the last fortnight alone.

They come from credit card companies, retailers with charge cards, airlines, industry and professional associations, and a whole host of others. Newspaper publishers even want to get in on the act and insert invitations with the renewal notices for my newspaper deliveries. Today I received a letter announcing the National Trust was launching a new wine club for it's members. What has wine got to do with the position or brand values of the National Trust?

It strikes me that almost none of the myriad wine club offers can demonstrate a point of difference. They all claim to have wine no one else can get, from boutique little wineries that are so small that they can't supply the majors; they all claim to be able to provide wines which I can't find in any high-street retail shop; they all claim to know more about wine than anyone else, or to have a more extensive selection or a better selected range. The fact is that to an average punter like me they all appear the same and the clamour from them is deafening.

This seems to be analogous to how many business operators get into business in the first place. Rather than thinking about customers, and what they want or need, they think about what they can do.

You can imagine the thought process behind some of these wine club launches. They sit down and think along these lines - 'We might be a professional association, but we have a database of university educated professionals, who have high disposable incomes and in surveys of our member base we have found 6 out of 10 have an interest in drinking wine; they trust us and are affiliated with our brand. We could provide them with wine and it would be seen as a 'value-add' and will generate some incremental revenue for our association. Most importantly we like wine ourselves.'

And so they get into the wine business. And how do they do that? Of course they need scale to make the economics work, and they don't really know anything about procuring, selling and distributing wines, so they outsource their wine club to one of the handful of providers who also supply wine club services to all the others. So they have the same offer as everyone else differentiated merely by the badge of their association.

They get into the wine club business because they can. Not because they have a startlingly different proposition or perspective; not because they have spotted an unmet need, an opportunity to step into a gap; probably not even because they have abiding passion for wine.

Powerful, high growth businesses are those that do something differently and better than anyone else does or can do in favour of their customers. By innovating and creating value for their customers they build at least a temporary monopoly which allows the creation of enterprise value. This is what nudie did when I created it and this is why it grew like a weed, carried along by the energy and enthusiasm of it's delighted customers.

If you are going to build a business don't do so just because you can; ensure you stand out from the crowd and deliver something to your customers they can't get anywhere else. Otherwise you risk being just more junk mail.

More on value and efficiency (and Picasso)

2009-04-16T17:51:00.001-07:00

Apropos my comments on value. Particularly the notion that value of input does not necessarily equal value of output. In actual fact powerful and profitable businesses are obviously those where the value of the output is significantly more than the value of the input - these businesses are highly and effectively leveraging their inputs.

Putting some numbers around this might help to illustrate this.

The traditional services business model works like my painter in the previous post.

Let's say he takes 100 hours to do something and he charges out at $60 an hour. This means the job is invoiced at $6,000. But if my perception of the value of the finished product is only $4,000, the business has problems. There is a $2,000 value deficit. It may be an inefficient business and, because of the perceived value deficit, it is producing frustrated and unhappy customers. This is unlikely to be a high growth business.

What if there was a business which took 40 hours at $60 an hour to produce an outcome that was perceived to be worth $4,000 to the customer. Instead of $4,000 or $2,400 the business invoices $3,500. In this case there is a value increment of $500 perceived by the customer. This business has a highly leveraged value creation process and can effectively make what economists would call a 'super profit'. It is also creating happy customers. This is very likely to be a high growth business.

It reminds me of a story, supposedly true, I heard some time ago about Picasso, whose reputation was already secure at the time.

Picasso was apparently meeting someone for a drink in a tapas bar in Barcelona. His companion was running late and whilst he was waiting for him to arrive Picasso began doodling on his napkin. As he put his pen down one of the other patrons in the bar, who had recognised Picasso, boldly approached and proffered - "Maestro, I couldn't help but notice your doodling on the napkin. I would be very happy to purchase the napkin from you". "Certainly", replied Picasso, "the price will be US$10,000".

"How could you possibly charge $10,000?", blustered the would-be buyer, "I watched you and it took but a few minutes of your time to create".

"Yes", said Picasso, "But I AM Picasso and it has taken me 40 years to arrive at the point where I can create a work of art, worthy of bearing my name, in a matter of minutes".

Whereupon one of the other patrons in the bar who had been observing the exchange leapt to his feet and said "Picasso, I'll give you $12,000 for the napkin if you'll just sign it".

This story illustrates a number of points including the power of brand (in this case Picasso); the apparent disconnect between effort (input) and value creation (output); the customer perception of value; and the value of wisdom and experience.

Clearly by the time of this story Picasso was already a very effective, efficient and valuable business.

Focus on Value

2009-04-16T16:45:00.000-07:00

Value is something which is created by businesses in the work they do (how often do we talk about "value add"; "added value"; "the value creation process" and so on?) . A bit like beauty, it is also in the eyes of the beholder - it is a perception. The art and process of selling and marketing is to create, for customers, a positive perception of value.

Interestingly this notion of 'value creation' means that value is an output or an outcome from a business process. In the current "down market" (as our American colleagues have been quick to euphemistically call our situation) customers are more focused on value than they have been in many, many years.

And yet so many businesses seem blind to this customer need; to the requirement to deliver real value. In fact many don't seem to have any concept of how their customers might perceive value.

I seem to have had a few of these tough and frustrating conversations with service providers in the last few months where I have very clearly felt that they have not delivered value. There is a common theme in the way they deliver their defence - they fall immediately back to two points:

"But look at the amount of "input" (which is usually time or materials) we have used in creating the outcome",
"You should have intervened earlier to prevent the inputs (costs) mounting up"

I'll come back to the first point in a moment, but to address the second point, it is my contention that there is no point having a dog if you are going to do the barking! It is not my role as a customer to police the input process of my service providers.

To provide some context for this, my concerns have ranged from situations at home, such as one involving a house painter, to work, such as various marketing services providers.

For example, my house painter did some touch up work around the house over an extended period of a few weeks. Some days he was there, others he wasn't; some days he started early, others later. Mostly he worked alone during the day when we were at work and was long gone by the time we arrived home. We were pretty relaxed about the arrangement both because we had no time pressure to complete and because we have used this painter for a dozen projects over the last 8 or 9 years. When he finished the bill was presented and it blew me away. It was thousands and thousands of dollars. I simply didn't believe that the output represented many thousands of dollars of value, so I queried the bill.

The response was that he had arrived at the bill by looking at the number of hours spent on the job and that if I had been concerned about the possible cost I should have called a pause earlier in the job (in other words I should have monitored and policed the hours involved).

Now I could have possibly averted the price 'sticker shock' by getting a fixed price quote and, perhaps if we didn't have such a long standing relationship with the painter, I would have, but that misses the point.

I don't believe there was thousands of dollars worth of value in the work that was done. I am the customer. The service provider is responsible for my perception of value. Telling me the number of hours spent doesn't cut it as a solution. The number of hours are an input to the process and they are a measure of efficiency not a measure of the value of the output. We all know of people who are more efficient than others - some painters might do twice as much in an hour as others.

There are ways the painter could have changed my perception of value. For example, he could have taken me around the house and shown me places where there was intricate cutting-in work necessary which was extremely time-consuming but vital for the quality of the finished job; or he could have shown me places where extraordinary surface preparation was required before painting; or he could have shown me places where there were 5 coats of paint and so the surface was so hard it could resist minor scratching unscathed; and so on.

Instead he told me the number of hours involved multiplied by an hourly rate. Since this is only a measure of efficiency that leaves me with a perspective that he must have been inefficient and I am paying the price - ergo, the output is not valuable. Despite my many attempts to get him to see things from my point of view, the painter simply couldn't step into my shoes as a customer.

When customers don't see value they don't come back and they don't spread positive word-of-mouth (even worse, they often spread negative word-of-mouth).

The key lessons in this for successful business are:

It is necessary to focus on, understand and deliver value to customers. What value is your business delivering?
It is your responsibility to manage the customer's perception of value.
Value (i.e. as an output) is in many instances divorced from the quantity and value of the factor inputs.
It is vital for businesses to be able to stand in the shoes of their customers if they are going to understand customer value perception.

The law of large numbers

2009-04-14T06:13:00.000-07:00

I don't know whether it was the weather or simply a potentially slow week but I received three unsolicited telemarketing calls today.

Let me disclose my bias up front - I hate telemarketing. My view is, if it is important and really interesting and different, put it in an email to me where I can study, digest, assimilate and use it as a springboard for web research before making a considered decision. I have joined the 'do not disturb' (a.k.a 'do not call') register, but I still seem to get calls anyway (and let me forestall those who might quickly point out my right to report or complain - I know).

Clearly some people respond positively to an unsolicited phone call or they wouldn't do it. But this is the same as the fact that spam email works for some people. Apparently about 30% of web denizens have responded to spam email. This type of marketing relies on the law of large numbers - if you spam, or call, a large enough number of people sooner or later you will get a positive response.

It might work but it really does nothing to build brand or relationship.

One of the things that really sets me off with the telemarketers is the lack of transparency; the truth is often hidden behind a wall of obfuscation. How can a meaningful customer relationship be built on a foundation of lack of truth?

My first call of the day was point-in-case. A cheery voiced person told me she was calling on behalf of my (large and pervasive) credit card company (the "on behalf of" is the giveaway). She asked me whether I had time now to chat about a particular "benefit" the magnanimous card company was making available to card holders such as me. I responded in a very guarded manner because I was already fearing this was another attempt to sell me some sort of credit insurance policy (I've had numerous calls on the subject in the past).

Despite my temporising she charged on. Before she got into the meat of the call, which she hoped I didn't mind would be recorded, she wanted to check the contact details she had on file for an annual travel insurance policy I had previously taken out.

My heart sank because I realised this was a very scripted attempt to establish relationship and empathy - a sort of 'you have bought insurance from us in the past so we are trusted and close allies'. I was certain now she was going to try and sell my some credit protection insurance.

This prompted me to ask her - 'where did you say you were calling from again - are you from (leading charge card) company?'. "Mr. Pethick, I am calling on behalf of XYZ insurance and your (leading charge card) company but I work for custom call centres". "So you want to sell me some sort of insurance policy?", was my response. "Sir, I want to talk to you about one of the benefits you get as a valued card holder".

I'll spare you the pain of a much longer call. The bottom line was she was trying to sell me credit protection insurance, but it took some time to extract the information from her.

This is all just lies and deceit. She certainly wasn't calling from my charge card company and the opportunity to buy a useless insurance policy at a normal market rate certainly isn't a "benefit".

Why, oh why, couldn't the whole conversation have some honesty and integrity to it - "Mr. Pethick, I'm calling from a telemarkeing company engaged by your credit card company; my mission today is to sell you an insurance policy which you can charge to your card, and, before you hang up on me, at least give me an opportunity to try and convince you it might be useful to you. This call will take about 5 minutes and I know 5 minutes is probably precious to you but I reckon it will be the best 5 minutes you'll spend today", and so on.

The reason they can't have an honest and open conversation like this is because they are engaged in 'law of large numbers' marketing and that largely relies on bamboozling unsuspecting people with scripted pseudo-benefit speak.

I am guessing we get the marketing we deserve. If we all said "no" to such approaches we may quickly train companies to stop patronising us; to start dealing with us openly, honestly, with good grace and good humour, and we might all start to do some mutually beneficial business.

Let's start a revolution by saying 'no' more frequently when we are being patronised.

And there is a great opportunity for a business to create a "purple cow" by pursuing an open, honest and refreshing dialogue with their potential customers.

More on 2GB

2009-04-14T05:59:00.000-07:00

Apropos my much read (thank you Tim Burrowes) posting on the surprising, but well appreciated, result from the Sultry Sally 2GB campaign, I've had an email from an old mate of mine - Chris Smith - who is their afternoon presenter (and I note he again increased his share in the latest rating survey). Chris's wife and mine were 'pram buddies' and we have known each other for a few years as a result.

Chris has had a go at thinking about why the campaign has been so successul. I particulalry like his thought about talkback radio being a verbal blog:

Hey Tim,
One of those jocks here: Chris Smith from 2GB.
Good to see that some of you new-age types have been humbled by the real secret of AM talk radio and 2GB.

It's about a growing younger audience thirsty for talk and information;
It’s about live testimonials, to a wide audience, who want to hear about products … that’s why they tune to commercial AM.
And, most importantly, they have faith in their hosts… which is why they ask for a 3 hour non-stop earful everyday.

At Singo's request we all went gangbusters for Nick, and with almost all our shows at number 1 in their timeslots, it was always going to work...
We had the actual chips to devour on-air as well.
In fact, as the radio market dropped 10% last month, we increased our ad share by 10 plus. All due to results on-air.
It’s not all that old… and sometimes the tried and trusted means to send a message, are just as relevant in a more modern era.
After all, talkback, could be regarded as the most effective and direct blog in town!
Cheers mate
Smitty

Credit Cards

2009-04-09T06:27:00.000-07:00

When the official rate has been cut to 3% and mortgages are now at 5.25% why are we still paying 18% to 21% on our credit cards in Australia?

Why is no one asking the question? I have seen no public commentary.

Oaths

2009-04-09T06:13:00.000-07:00

I've just had to fill in a statutory declaration and had the usual problem finding a Justice of the Peace, Notary Public or Practising Solicitor to witness it. Apart from the difficulties of finding one there is the frustrating time commitment required to do so.

For many, many years I was a Justice of the Peace. I was sworn in as one at my local courthouse on my 18th birthday. I had no training or special qualifications, in fact I hadn't even completed my first university degree. I was simply a callow university student with pretensions. I did receive, at my swearing in, a booklet with tips for being a JP, which I studiously read and referred to subsequently.

In thinking about these things I wonder why a JP (or the like) is still required to witness a legal document such as a stat dec. Why couldn't one of the people in the office do it? Some years ago it might have been me witnessing someones signature and let's face it, I didn't really add any value to proceedings.

I imagine it is a now anachronistic throw-back to the days when JP's and notary publics were the landed gentry and the only ones who could be entrusted with such an important task - we couldn't have the rank-and-file stepping above their status to do such a thing.

Surely in 2009 we could do away with it all and allow fellow citizens to witness? Why don't we? I suspect no one is challenging the status quo.

The starting point for any creative innovation is a challenge to conventional wisdom. Entrepreneurs and innovators are continually challenging.

Manage your communication

2009-04-08T19:56:00.001-07:00

All communication - internal and external; explicit and implicit - can impact the way your brand is perceived and need to be effectively managed.

Two bits of poor communication from this week.

A leading professional services firm has just laid off 200 workers as it tightens it's belt in the face of the current crisis. The CEO, in an internal email to staff, apparently said:

"While I am unable to guarantee that we won't need to make further difficult decisions as events continue to unfold, I would like to reassure you that the overall health of the business is very sound."

Let's remove the corporate double-speak. With this message he is effectively saying - 'no one's job is safe but we're [the partners] alright jack'!

What was this message supposed to do? It certainly isn't reassuring to staff, if anything it is quite the opposite. It comes across as cold, clinical and unfeeling - perhaps even a little insensitive.

The same message could have been delivered in a far warmer, more effective way which built equity in the brand. The starting point might have been to ask whether email is the correct medium for this message. Perhaps staff meetings and a chat might have been more effective.

But if email it had to be, how about something along these lines:

"In common with most businesses whose focus is on financial services, the current global crisis, has knocked us about a bit. Thankfully ours is still a healthy and robust business, and that is in no small part as a result of the efforts of everyone in the team. We recognise that all of you are who make us who we are, and so we are working to preserve jobs against an eventual upturn in conditions. But we can't hide from the fact that a downturn in revenue has meant we have had to let some people go. This impacts us all - both those who have gone and those remaining - and is always difficult and regrettable. We can't guarantee that there will be no further job losses if the crisis continues to bite, but we can guarantee we will do everything we can to make sure further job losses are a last resort."

With some time I could polish this and even streamline it, but you get the idea - human, warm, honest, transparent and empathetic communication, builds brand and culture. It does however require some thought (and of course it must be true).

The second poor communication is implicit. As the TV stations enter the non-ratings Easter hiatus, one of the first actions from the 7 network was to pull is regular 'hit' programming (after all, why squander a good program when it doesn't count for the ratings). But they did so without really telling anyone. So many people sat down to their regularly weekly fix (of whatever) only to find a repeat from a couple of years ago. So much for the resolution to last week's cliff-hanger ending - and when will the regular programs be back?

This is all a little bit patronising for the viewers and sends a very strong message - 'we don't value or care for you; you are simply a set of eyeballs we can use to sell advertising to; we'll be back to you in a few weeks when we need you again'.

It does nothing positive for the 7 brand.

Don't erect barriers

2009-04-06T05:24:00.000-07:00

I was passing a local shoe store this morning and spied the notice in their window:

This is an e-store

We only accept eftpos or credit cards

Hang on; You mean - 'we don't accept accept cash, coin, our legal tender'?

The swift confirmation was received. Correct - you are not welcome to pay with anything other than cards. Wow!!

Now I am the card carrying member of the 'e-society', and in fact 9 times out of 10 I will pay bills with eftpos or over the Internet, but why place a limitation on how people can pay you? Particularly when the payment method you are ruling out is the one that the vast majority of the populace are most comfortable with??!!

There are a number of cardinal rules with small business:

1. Maximise your sales (and sales opportunities)
2. You can't get paid unless you invoice (so make sure you invoice as soon as you can)
3. Convert your sales to cash as quickly as you can

A subset of rule number '3.' is - allow your customers to pay in any way they choose as long as it is economically feasible.

The shoe shop is placing unnecessary barriers between their potential customers and a sale. They will put people off buying in the first place and they are making it difficult for customers to pay. Why? Business is difficult enough in the current circumstances without introducing further unnecessary difficulties.

I pay almost all of my bills now over the Internet. I notice that I receive all of my payments in the same way. Yet, as I have previously commented, I am astounded by the number of small businesses who fail to put their bank account details on their invoice. Make it easy to pay and people will do so. Make it difficult and people will use it as an excuse to prevaricate.

No business should erect a barrier to a sale or to receipt of a payment - particularly in the current climate.

I was wrong - I succumb to conventional thinking sometimes

2009-03-20T04:59:00.000-07:00

Sultry Sally chips are available nationally in Woolworths. Woolworths launched their own (Select) brand of low fat chips in direct competition. I actually welcomed their entry because two of us makes a "Better For You" category. Years ago when I did my MBA we talked about the "Ice Cream Sellers on Bondi Beach". One ice cream seller on Bondi Beach is a vendor; two is a market. Two ice cream sellers will generate more revenue each than one will.

But Woolworths supported the launch of their product with more than $2m of advertising support including prime time TV. The result was that we have been suffering a sales decline for a number of weeks as people switch to the Woolies low fat offering.

The rub here is that if we are to maintain the Woolworth's listing we need to increase sales to demonstrate our worth - difficult when our 'landlord' is also our competitor. It seemed that some traditional advertising was required on our part and in fact Woolworths almost implicitly demanded it.

I am not a huge fan of traditional advertising for new brand launches. I believe people are too busy and not really listening (another blog pot will be necessary to explain why). So to be forced into a position where I have to take a traditional, main media approach is anathema.

This was quickly compounded. I guess if most marketers were asked to focus on traditional advertising these days (and TV was too expensive) the focus would quickly shift to online, and specifically to either search or social media. I have some partners in the business who are most definitely 'old media' types and wouldn't countenance online in a month of Sundays.

One of my partners (Nick Moraitis) has a great relationship with an old advertising war horse - a inductee into the Australian advertising hall of fame - John Singleton (AKA 'Singo"). Singo owns an AM (!!) radio station in Sydney - 2GB. Nick decided, "Timmy, we need to go and see Singo; he'll help us out on 2GB and everyone listens to 2GB".

My heart sank. Strategically, I couldn't think of anything worse. We are talking radio; worse, AM radio; worse still, talk-back radio; even worse, a radio station that everyone knows is only listened to by a few old punters - way, way off target and brand for us.

But I met with Singo and Nick and Ray Hadley, one of their Jock presenters. Most of the discussion revolved around race horses ( a shared interest for all of them), but the bits that didn't and were comprehensible to me, were equally scary - sort of a "Trust us mate, we'll see what we can do" approach.

No, no, no thought I, this is all wrong. But Nick persisted and prevailed. "They are mates", he said, "Everyone listens to 2GB; it's the highest rating station in Sydney".

I braced for the impending disaster as the ink dried on a 6 week deal with 2GB.

I couldn't have been more wrong.

Our phones have been ringing off the hook; NSW Woolworths stores have been emptied of product. It is working like nothing I have seen before. I have been forced to eat my words and humble pie and I couldn't be more grateful.

Every bit of conventional thinking says this can't work - wrong demographic; wrong for the brand; wrong medium; just plain wrong! - but it has.

I love the fact that some old dogs can still teach us 'young 'uns' some old new tricks; I love the fact that the old ways still count for something; I love the fact that I can still be surprised, be wrong and learn from it.

The lessons? Respect and value your elders; be open minded; be prepared to try different things; don't be instantly dismissive; and finally - you are a champion Ray Hadley!

Rethink 2009 - Barcelona

2009-03-18T02:30:00.000-07:00

My old friend Martin Lindstrom recommended me (thanks Martin) and, as a result, I was fortunate to be invited to provide a keynote presentation at a marketing conference in Barcelona this month. The conference topic was "Rethink - The Basis of Communication" and was generally about how businesses can deal with marketing in the face of the global crisis.

It was a fantastically interesting event which was made so by the calibre of my fellow speakers.

Martin Oetting, from trnd in Berlin, is an international expert in word-of-mouth marketing (in fact he has just completed a doctoral dissertation on the subject).

Nigel Barlow a British, fortunately now reformed, erstwhile lawyer, had coincidentally written a book called 'Re-think" some years before and was an inspirational proponent of creative thinking. I enjoyed immensely his company and his stimulating ovation.

Steve Hatch is the Managing Director of mediaedge:cia in London. They seem to be doing some very creative and different work (to me, surprisingly so, since they are part of WPP).

Jose Molla, originally from Argentina, but now living in Miami was a swarthy, straight from central casting, Latin American, advertising creative with his own agency called la comunidad.

But I am going to devote most of this post to a professor of economics. Dr. Kjell (pronounced 'Shell') Nordstrom, hails from Stockholm where he is an Associate Professor at the Institute of International Business at the Stockholm School of Economics. We all know that economics is generally impenetrable to all but economists - I have a Master of Economics degree and still my eyes glaze over usually - but Kjell is not that sort of economist. He is best described as a 'Rock Star' economist because that is how he looks and presents. He was riveting! In fact at the end of his key note speech the room erupted with a standing ovation. I challenge anyone to recall the last time an economics presenter received such approval (even adulation) at a business conference.

Perhaps his talk resonated with me because he gave more articulate voice to many of the views I have long held - he even managed to serendipitously identify as an opportunity, one of the nascent business ventures I have been working on for a while now. With Dr. Jonas Ridderstrale, Kjell is the co-author of Funky Business and Karaoke Capitalism. Both are worth reading and provide a very different perspective on the state of the world and how to make money in business.

I'm not going to try to paraphrase Kjell's analysis or words of wisdom because I simply couldn't do them justice - in fact I will endeavour to get him here for an Aussie tour. But some stimulating thoughts from him:

1. The art of making money is not just to have a great idea but to ensure that idea provides a temporary monopoly; there is no money to be made in competition.
2. The world is dramatically changing - not just in the face of the current economic storm - and those changes will have a profound affect on how we do business. For example, we are becoming more urbanised than ever before in history and urban conurbations are developing cultures of their own. An example - the US is not one market it is a number of cities with very distinct personalities and cultures.
3. How about this one - more than 2/3rds of uni students today (the world over) on average are women. Young men have become emasculated - they have given up. This will have a profound impact on the leadership (and culture) of organisations in the future.
4. The family unit is breaking down. Increasingly (and it is accelerating) the majority of households in cities around the world are sole person households. For example, in Stockholm this is 64% of households. This will have a dramatic impact on the shape of business.
5. Many people have, as result of the crisis, written off the USA as a global economic super power. This is a mistake. The US will continue to dominate as one of the top 3 wealthiest nations on earth because it is the only country in the world which is a true meritocracy and is available to anyone regardless of birth. For example, Arnold Swartzeneger, born in Austria, can become Governor of the 5th largest economy of the world; 86% of people working in Silicon Valley were born outside the US; 9 of the top 10 universities of the world are American.
6. There has been a dramatic shift of power (in everything) from the centre to the periphery. This is demonstrated so powerfully with the web which has empowered (well, let's face it) everyone. This changes fundamentally the nature of business.

And on and on it went. If you can, read his books. Even better, if you can, hear him speak. He throws out pearls of wisdom.

One thing is certain to me. We should not expect the world has changed and will change back again. The world has changed. There is no going back. Businesses which will thrive are those that recognise the change is forever and come up with customer inspired solutions to the new world order.

Bureaucracy (Vodafone) Gone Mad

2009-03-17T04:29:00.000-07:00

I have recently travelled to Barcelona to speak at a marketing conference about how marketers can deal with the global crisis (more on that later).

As is usually the case I travelled with a laptop, iPhone and Blackberry (actually two Blackberry's). All worked extremely well at keeping me in constant touch. One of the Blackberry's was a Bold provided by Vodafone which I have been using for a few months now. The other was my old Blackberry (clunky) provided by Telstra.

I love the Blackberry Bold and choose it over the iPhone for email. The Bold was provided to me by Vodafone as part of a wider deal (involving a number of staff phones) I have with them, and, despite the initial problems getting it provisioned by Vodafone, has previously functioned flawlessly.

I went the long way to Barcelona across the top of Europe, via Helsinki, and had no problems with the Bold working in Bangkok, Helsinki or Barcelona. Things fell apart though on my return journey.

I arrived for a 7 hour layover in Bangkok and there was no service on the Bold. I tried rebooting a number of times but still no emails despite the fact that it was clearly showing a network connection and signal strength.

Annoyingly I had to resort to email on my iPhone (I had packed the backup Telstra Blackberry in my checked luggage figuring I wouldn't need it, so I had no choice). One of the emails was a transcribed voice message from my office phone system, from Vodafone, asking me to call them on an Australian 1800 number (which was of course not accessible from overseas). I guessed I knew what the problem was and thought, since I had 7 hours to kill anyway, I might as well try and resolve it.

The problem I envisaged was that I have NEVER received a bill from Vodafone and therefore have never paid them. I knew sooner or later I would have to pay but figured it wasn't my role to beg them for a bill. I had given them all my contact details (home and office) when I signed up, and clearly they at least knew my office phone number, so I wasn't trying to avoid them or my fiduciary duties.

I found a way to get my laptop online in Bangkok airport and went digging on the web for a Vodafone contact number I could call from overseas. I finally tracked one down and made the call.

I got through to "Laura" their inept human interface to an IVR system. I, like almost any sane consumer, hate IVR systems and I hate them even more when they dress them up with a faux helpful and cheerful human voice interface who asks me to simply 'say the thing I need'. I speak perfectly good English and I have a well remunerated public speaking career which attests to it, yet 'Laura' and her ilk never seem to comprehend my requests. The result is an increasingly frustrating farce where 'she' repeatedly tells me "I'm sorry I didn't understand that, can you say again what you want - it is a good idea to speak slowly and simply'. Grrrrrr!!!! There is never simple enough language to make 'Laura' understand.

This sort of obfuscation is fine when you are calling them on their 1800 number, and it is not costing you anything, but it is maddening when you are calling from overseas and it is costing you global roaming charges.

Eventually I got through to the right sort of IVR option but Laura wasn't going to put me through to a real person until I had provided my PIN number security code. When 'Laura' asked for my PIN number my heart sank because I had no idea at all what it was. I have a great head for numbers and knew it wasn't just a case of my forgetfulness - I have never had a Vodafone PIN. I vainly tried a few of the 'old faithfuls' only to be told in a very condescending manner by 'Laura' that the numbers were incorrect.

Thank heavens (or so I thought) 'Laura' gave up in frustration and put me through to a real person. The first question I was asked by the real person - "Tom" - was, you guessed it, my PIN number. "I have no idea at all", was my plaintive reply. "Well try guessing", said Tom. "I've been guessing for the last half hour and Laura tells me all my guesses are wrong, what's the point in trying again with you Tom?" was my response. "Try anyway". So I did. Of course, all my guesses were incorrect.

Tom refused to talk to me unless I could identify 'myself' with a PIN number - he was concerned about my privacy. Well, I wasn't going to let it go at that. I told him I was in Bangkok and my beloved Blackberry wasn't working. He managed to confirm that for me. I suggested that the reason might be because they had cut it off because I hadn't paid the bill. He was more cagey with that one because he didn't want to reveal anything to me but it was clear that was the case. I played my trump card - "But Tom, I am returning your call - you called me to talk about this". He begrudgingly admitted he (personally) had called and left a message but he still couldn't talk to me because I couldn't identify myself. I asked him how on earth I would know he called me unless I was the person who he called but he still wouldn't budge.

I tried a different tack - "Look Tom, I'm happy to pay any outstanding bill to get my Blackberry working again, just switch the Blackberry back on and email it to me and I'll pay it - I don't know where the bills have been going but I have never received one." He admitted that he could "see, from the files at least 3 potential reasons why my bills weren't getting to me, but [he] still couldn't discuss it [with me] because I couldn't provide the PIN" and so he didn't know who I was. He offered to talk to to his supervisor if he could put me on (expensive) hold for a couple of minutes.

He came back and said that his supervisor had told him that if I could fax him, on Company letterhead, a letter signed by a Company director, requesting them to release to me my PIN he could do so and then I could call back and talk to him. I lost it at this point and suggested common sense should prevail - I was in Bangkok airport, not near a fax machine or printer and in any event I didn't have a letterhead (at all - who does these days?) . This brought us to a grinding impasse.

He went back to his supervisor who proposed a cunning plan - 'How about I nominate a $ figure I would be prepared to pay to have my Blackberry service reinstated and, if that was acceptable to them, I could pay it via credit card over the phone and then we could both sort it all out when I got back to Australia.' I dismissed this for the obvious nonsense it was.

I suggested a number of alternatives - how about I email you a letter including my company ABN? How will you do that said he - from my Optus iPhone of course! That might work, he admitted. Is there any other way I asked - how about you ask me for my date of birth, the colour of my eyes, my mother's maiden name, the name of my first pet or first car? No, Tom wouldn't have any of that.

So, after nearly 2 hours on the phone, I hadn't gotten anywhere with Tom. I tried the only thing which provided a glimmer of hope and sent him an email from my iPhone. I didn't receive a response.

And still haven't! It has been a week now since I have been back. I've tried emailing and calling but they still can't talk to me because I still don't know my PIN, which to the best of my knowledge, I have never set up in any event.

I still have received no invoices anywhere and my Vodafone Blackberry is still down for the count.

The day I arrived back in OZ I popped around to Telstra and upgraded my old, spare Blackberry for a Bold. So for the last week I have been happily using a Blackberry Bold again but with a different carrier.

I guess I'll wait and see what Vodafone does. At least I know they correctly have my office telephone number but I haven't received any calls from them. Even if I did I am sure the first question they would ask is my PIN - stalemate again.

There are so many things wrong with Vodafone evident from this story that I don't know where to begin to summarise them. I would have thought that in this challenging economic time it was more imperative than ever to apply common sense; collect cash from your customers; provide exceptional service and so on. Not Vodafone. Heaven help them - if you have shares, sell!

March 2009 Already!!??

2009-03-17T04:26:00.000-07:00

No excuse I know, but I have been extraordinarily busy and I note my last post was December 2008. Perhaps I need a March New Year's resolution (there surely must be some form of New Year kicked off in March - if not I'll settle on St. Patrick's Day) to be more diligent in my attendance.

All is not lost for small business

2008-12-12T17:42:00.001-08:00

Here is some video footage of me on a recent Kochie's Business Builders TV episode from the 7 network, talking with Kochie about why the current economic crisis is not all doom and gloom for small business.

Christmas Silliness

2008-12-07T21:36:00.000-08:00

That time of year is upon us again and, at the risk of sounding like a ungrateful bah-humbugger, it often tends to bring out the marketing worst in businesses. This is largely because it underscores the 'check-box' mentality which persists in many businesses, particularly in a business-to-business environment.

I love to use old cliches and adages so here is one- if a thing is worth doing it is worth doing well. Building on this a little bit, part of the doing things well is doing things thoughtfully, passionately and meaningfully. If you don't have those things you are paying lip service. The first group who will feel the lip service is always your customers. They are the last ones you want exposed to lip service because they actually want to believe you care.

I had two examples today.

Let's start with the hoary old Christmas Card. If you are going to send a Christmas Card to your customers don't do it just because you feel you have to; or because everyone else does; or because you've always done it; or because it comes up every year on your to-do list. None of these is a good reason. Do it because you genuinely (and personally) want to send a message to your customers. It could be to thank them for their custom in the previous year; it could be to let the know you would have liked to do more business with them; it could simply be to let them know you are thinking about them (possibly, more specifically at the moment, hoping they are weathering the financial storm).

Today I received two cards in the mail. They came in identical envelopes (so I had a suspicion they came from the same place); both were addressed in identical hand writing; both were posted to exactly the same address and arrived on the same day; they were distinguished from each other because one was addressed to Mr. T. Pethick, the other to Mr. Tim Pethick. When I opened them both were identical cards; both from a service provider and......... both from the same owner/executive in the service provider business. The messages, also written in the same (perhaps computer generated?) hand were slightly different.

So, what is it telling me? I certainly didn't take it (the error) personally - how could I, there was nothing personal about any of it. And that is the first problem. But what does it say about the business? They aren't efficient enough to spot a duplicate name and address on the data base or they are too sloppy to care? Perhaps they just overlook the details. As I said in my things continue as they begin post, leopards don't change their spots. If a business has a problem in one area it might be manifest in others.

A duplicate Christmas card from the same person pales into insignificant though compared with today's second Christmas Faux Paux.

A courier arrived at the office with a lavishly wrapped, relatively large Christmas present. The card inside it indicated it was from a supplier who we have only recently started doing some business with. We have spent around $75K with them so we are not huge but it is a big spend for a little business like ours. Apropos my previous comments about cards, the card set things up correctly - it thanked us for the business this year and cheerily added that they looked forward to doing business again with us in 2009. If only they had stopped with the card.

I opened the present and was, quite literally, gobsmacked. I have attached a photo below which unfortunately doesn't do it justice.

It is a vase. On the base it carries a bar code sticker which says "Mosaic Trendy Vase" "Made in China". It is sort of a very crudely made, vase like version, of a disco ball. The mirrored glass (if that is what it is) on the outside is chipped in places and very crudely cut.

I was left spluttering - 'what were they thinking?' - to my team. Putting aside the question of taste, if we look at this as a marketing device what is it saying and what is it doing? The vase probably cost about $5, perhaps less (if it cost more, there is again a question of business judgement), but certainly less than the courier cost to deliver it. It is not a useful (or appropriate) gift.

Frankly, my initial reaction was either that it was some kind of (yet to be fully revealed) clever joke, or that they were sending me a message along the lines of 'p*** off - we don't want to do business with you', or perhaps "we sent the good clients a bottle of Moet but you didn't make the grade'.

I'm sure none of these interpretations is true but I am still left thinking - 'what were they thinking?' or 'did anyone think at all'. What was their strategy in sending out such a gift? How did it work as a piece of marketing/communications - not well!!

I know I may be sounding harsh and ungrateful in this assessment. But the point is that everything we do in business has an impact - even the littlest things. Successful businesses are built by people who focus on detail; who are thoughtful; who know what their brand stands for and who consistently deliver against the brand promise.

Sometimes it is better to do nothing than anything when building a business and Christmas seems to throw up more examples than not.

Serendipity and Happenstance

2008-12-07T21:12:00.000-08:00

This afternoon I popped up to the bank and as I was passing the village supermarket I noticed the wall beside their carpark exit had been rebuilt - differently!

Those who follow my blog may remember my post on Smart Persistence on the 30th November. In it I described how the wall was continually being knocked down by trucks only to be rebuilt in the same way then to be knocked down again.

It would be easy for me to convince myself and others that someone in the supermarket hierarchy was reading my blog, saw the innate commonsense of my posting and immediately ordered a re-design of the wall.

In other words my actions brought about positive change for which I am due credit.

In 5th Form at high school my economics teacher introduced us to one of the 'Logical Fallacies' - Post Hoc Ergo Propter Hoc - and it has stuck with me. It is Latin and means roughly 'after the fact therefore because of the fact'. In other words, it is easy (but often fallacious) to ascribe a cause and effect relationship to two things one of which follows the other.

One week I blog about the need for a wall re-design and the next week it happens. To link the two is a logical fallacy. I doubt anyone at the supermarket read and reacted to my blog. I imagine they resorted to some commonsense thinking of their own and had things well in hand with the re-design long before I started writing about the subject.

Frequently in business good things (and bad things) happen because of serendipity, happenstance of just dumb luck, not action or activity. In the same way that "Success Has Many Fathers" it is often the case that we inadvertently claim the credit for outcomes which were not completely, or at all, resultant from our actions.

To be able to learn and grow, and to repeat past successes, we need to be able to discern when we might be deluding ourselves with a post hoc ergo propter hoc situation. Of course we should also never be so self deprecating tha we hide our true light under a bushel!

The supermarkets are dumbing us down

2008-12-05T01:52:00.000-08:00

By and large in Australia we have little choice other than to buy our groceries from Coles or Woolworths. The concentration is pretty significant - each has close to 800 supermarkets so there are around 1,600 in total across the country.

There often times I discover something new in my local supermarket and get quite attached to regularly buying it only to find that some months down the track it just disappears from the shelves.

I suspect it is because it just hasn't produced the sales volume required by the supermarket. Both chains generally set USW (units per store per week) hurdle rates for new line products. This is the rate of sale expected from the new product on a weekly basis.

In the case of something like a nudie the USW might for example be 11. This means 11 units per store per week of each flavour ranged. That doesn't sound like a great deal until you multiply it by the number of stores. If you had a product in both chains and all stores nationally that would mean 17,600 units sold a week.

Selling 11 bottles of nudie a week in an up-market location like Sydney's Double Bay is a shoe-in, but it becomes more difficult in a lower socio-economic store location like Mount Druitt. The more stores you are ranged in the harder it becomes to achieve the same average sales level across the chain.

In the UK they have solved this problem in supermarkets like Tesco by stocking different things in different stores based on the shopper base for that store. It is less likely in this case hat the law of averages works against you.

Back here in OZ, I suspect there are some great products which are cut because they haven't managed a respectable average USW across the wide variety of stores they are listed in.

This must inevitably mean that our supermarkets will stock more and more 'mass market' lines and less and less niche lines.

The system works to dumb down our choices and that can't be good for anyone.

Consistency

2008-11-30T16:23:00.000-08:00

Fortunately for marketers and entrepreneurs very few consumers suffer from neophobia. They are always prepared to give something new a go if it is relevant and useful or desirable to them.

But once they are hooked and the novelty wears off they want consistency. They want to relax into an easy state where they know what to expect.

In the early days of nudie the flavours of the product changed almost weekly (it is far more homogeneous now and I can't help but wonder why). The reason for this was that the fruit we used changed - different varieties; different seasons; different growers; different climatic conditions, all impacted - as anything which is natural and real will do. Initially this change was off putting for some consumers, but they quickly learned it was because a nudie was made from real fruit and there is no such thing as a consistently flavoursome strawberry for example.

Before long consumers expected subtle variations in flavour and wanted that consistently delivered because it was a reassuring hallmark of the integrity of the product.

We are creatures of habit. I will go to the same place every morning to get my coffee made by someone who 'knows how I like it' and who uses the same beans. If it all changed and it wasn't to my liking a few mornings in a row I would have a reason to think about exploring for another coffee shop.

Once you have determined the hallmarks of your offering - the product, the service, the quality and the brand - work at delivering it with consistency. If you do you will provide your most loyal customers with more reason to stay and spread the word.

Smart Persistence

2008-11-30T14:07:00.000-08:00

One of the hallmarks of successful entrepreneurs is persistence. The ability to keep driving on; often in the face of all the reasons not to presented by the naysayers.

There are frequent setbacks in building a business. Many of them are small and occur day-to-day. Less frequently there will be a major setback - like the nudie fire. But big or small it is the attitude of persistence which allows an entrepreneur to keep pushing forward.

I think a worthy metaphor is the Bozo the Clown punching bag I had as a kid. He has a rounded bottom and is sand filled. So no matter how hard you bop him in the nose he keeps springing back up.

It is important to understand though that there is no virtue in dumb persistence.

We have a major supermarket in our village on the peninsula. At the exit to the car park there is wall which is relatively frequently partially demolished by departing trucks who can't successfully negotiate the narrow confines as they leave the loading dock.

With monotonous regularity, in its efforts to uphold the aesthetic, the supermarket calls in workmen to repair the wall. They patiently rebuild it brick-by-brick, then render it and paint it. Beaut - just like a bought one again! The quickest I have personally seen it re-demolished is about 48 hours.

As I picked up my coffee this morning I found yet another team of workers commencing the latest re-build of the wall which has been damaged now for about 3 months.

One can't help but think there are better uses for the work men's time and the supermarket's money. This is dumb persistence.

Smart persistence would have the wall re-designed - perhaps lowered or re-shaped - or eliminated altogether, or built of a different material which might withstand the occasional knock.

Successful entrepreneurs harness their capability for smart persistence to drive their organisations forward.

Simple Things

2008-11-23T15:23:00.000-08:00

In their search for bold marketing moves businesses often overlook the simple things.

Regularly on my way to pick up a coffee or go to the bank I pass our local village bookshop. It has a high street presence and it's windows are often nicely and thematically arranged with some of their latest books.

This is a great start but invariably the window display is changed only sporadically.

The greatest way to draw someone into a store is to give them a reason and often the reason is something new. What if my bookstore had a poster in the window changed each week which simply listed "New into store this week" items. This would allow me to quickly check whether any of the new items are of interest and make a determination to visit the store.

Now what if this was extended by the bookshop and the next time I visited they asked me for my email address so they could email a weekly list of 'what's new in store'. What if they added am author 'watch list' to this so I could be alerted when any of my favourite authors had a new release. And then what if they shared lists and content with, say, the local video store so I could also receive a 'what's new in store' list from them on a weekly basis. How about they started adding some local gossip or a blog from the shop owner.

All of a sudden they would have their own online community of local interest; they would know their local customers in a more intimate way which would further bind their customers to them; they would be providing a valuable service and driving more foot traffic into store. And best of all they could pull their regular weekly ad from the local newspaper which is nothing more than a useless banner anyway. The money saved can be used to further build the local online community of interest.

It is best to start with simple, creative (and often low-cost), customer-centric solutions before you start blowing money on traditional advertising campaigns.

Current economic woes a potential boon for small business

2008-11-21T21:14:00.000-08:00

We could be on the verge of great times for entrepreneurial businesses who focus on their customers. The current economic climate will drive customers to search for value.

Anyone can make money in boom times because free-spending is rife. But in the tough times we all become value conscious and we exercise more choice. Value is not necessarily simply the lowest price.

Big businesses are rarely customer centric (particularly in Australia) or customer friendly. By dint of their sheer size they have generally become ensnared in a net of bureaucratic systems and processes which drives further wedges between them and their customers. They are unwieldy and this makes them slow to change (at least in the right way). Their typical response to tough times is to cut costs and, generally, the first to suffer when corporate costs are cut are employees and customers.

This was reported by Kelly Burke in yesterday's The Sydney Morning Herald (21 Nov 2008):

"HOUR-LONG phone queues, multiple transfers, hollow promises of people getting back to you....and the automated voice telling you your call is important. Soaring complaints over customer service from telecommunications companies have prompted the Federal Government to crack down....."

Apparently for the first time in its 17 year history the level of complaints to the telecommunication's industry ombudsman about customer service has outstripped complaints about billing or payments. There has been a 61% increase in complaints over the previous year.

Our Aussie telcos have never been famous for their consumer-facing behaviour and trying to turn around a culture of disdain for customers is a gruelling task in a massive telco at the best of times (always assuming you have a desire to do so). But what happens when you are tightening your belt? Jobs go, indulgences are stripped out of the system, and efficiencies are introduced. In the case of telcos this can look like fewer call centres, more frazzled call centre staff, more IVR automation and so on.

In other words - a tougher time for customers.

If we didn't have to deal with them we wouldn't. And why do we have to? Because there is no real choice - they are all as bad as each other and we are left to pick the best from a bad bunch .

Big businesses are slow to move (because they are big); they are complacent (because they know there is no real choice for their customers); and they are risk averse (because they are subject to public scrutiny and because frequently their top brass are more focused on their careers than the business). This is generally true and not just for telcos.

So, in an economic environment where we are all going to be less likely to throw money around willy-nilly; more choosy about whether we do business (we might go without) and who we do business with; and more careful to extract every ounce of value from every transaction, is it big businesses who are going to quickly rise to the occasion and respond with something different and valuable for us? Not on your Nelly!

This leaves the door wide open for smart, small business operators to create solutions and it won't just be about creating a lower priced offering.

For example, sticking with the telco case, what if I created a re-seller of wholesale telecommunications services, called "FriendlyTel" where the customer promise ran something along these lines:

We will provide a full suite of telco services for you - voice, data and mobile - bundled on one bill;
We can't be the cheapest but we will always be the best;
You can always talk to a real person - we will never have an automated voice system;
The person you talk to will recognise you as a real person too and will always be empowered to resolve your issue without reference to a team leader or supervisor;
We will do what we say we are going to do;
If we loose you while we are talking to you, we will always call you straight back;
If we can't figure out how to fix your problem we will tell you straight and keep working on it until we can figure it out, then we'll get back to you and let you know how we are going to get it sorted;
We will always talk plain English to you and will never patronise you;
We will provide a hassle free telco solution which you will never have to worry about;
We won't ever have an offshore call centre;
We will listen to what you have to say with empathy and understanding;

Oh, and by the way, we can only limit our offering to 5,000 customers because anymore than that and our service standards will drop and we'll be too big.

Could an existing big business telco offer this service? Of course, but it is so improbable as to be completely unlikely and if they did, it certainly wouldn't be a new offering they would launch in the face of a recession. But, an entrepreneurial, customer centric, people oriented business could pretty easily provide something like this. And what premium would you pay to be among the 5,000 customers - 20% more than you are currently paying? Possibly 40% or 50% more. It would still look like great value.

Of course you don't have to create an entirely new business like FriendlyTel. If you are already in business just roll up your sleeves and dive into re-engineering your current customer experience to make it as delightful and valuable for them as it can be. Eliminate every potential point of annoyance or frustration; make it real and personable; provide choice; allow them to deal with you in the way they prefer rather than the way you would prefer; make integrity a hallmark of every interaction; make it fun; equip them with stories to tell their friends.

Do these things and, in these tough times when people are more careful about how they spend their money, your customers will choose to spend their money with you. And not with some faceless corporation who doesn't give a toss about them and who can't possibly do what you do anyway because they are fat, lazy and on a cost-cutting drive.

Detroit's Executive Jets

2008-11-21T20:38:00.001-08:00

It seems many people were horrified that the kings of the car companies in Detroit chose to fly (separately) on their private jets to Washington to beg for Government (i.e. taxpayer) support for their ailing monoliths.

Personally I am flabbergasted. The businesses they run are hemorrhaging billions; workers are being laid off in the thousands and yet they still think a (reportedly) US$20,000 one way trip on a private jet (a first class fare on a commercial flight would apparently have cost $900 return) makes solid commercial sense.

As was pointed out to them, even if they couldn't stoop to join the rest of us on a commercial flight, they surely could have private jet pooled and shared the one plane.

It was also reported that the chief of Ford uses the same private jet to commute home each weekend from Detroit to Seattle and that he took home a staggering US$25 million in salary, benefits and incentives last year.

It is of course easy to dismiss this as 'Nero fiddling while Rome burns' behaviour. But it is more than that.

These guys clearly live in a different world than the rest of us. They are closeted and cocooned. How can they possibly understand or empathise with their customers when they live in a fundamentally different but parallel universe? They can't.

And this is one of the primary reasons their organisations are being brought to their knees. No business which is disconnected from its customers can thrive. It is no wonder they kept building gas guzzling V8s when the market was turning to small, frugal, low emission vehicles.

Without any actual customer empathy, all you can rely on is market research and, as I have explored elsewhere in this blog, that is often a flawed indication of real consumer sentiment.

I think it would actually be a good thing for the large car companies to fail because it would open up the market for new, innovative, customer-focused, entrepreneurial start-ups who would create transportation solutions of value for us. But failing that, the best way to turn around these dieing corporate monsters would be to put someone at the helm who lives in the same world his customers inhabit, and who is solely focused on finding solutions which add value to them.

Things continue the way they begin

2008-11-21T20:24:00.000-08:00

Have you ever been trapped behind a car driven by someone who has just done something annoying or silly (at least as far as you are concerned)? If so, you may have noticed they will repeat offend. Every few hundred metres they are bound to do something which is equally or even more infuriating to you.

Partly this is because after the first spot of bother you are actively looking to find fault, but more importantly it is because things generally continue the way they begin.

If the driver of the other car does something you deem to be stupid they probably have other traits or shortcomings which will cause you to become querulous.

The same is frequently true in business. I have been guilty of it in the past and I observe it often - people who mistakenly persist with trying to work with someone (partner; shareholder; manager; leader; supplier; customer) when there have been early warning signs that the relationship will not work.

Business is all about relationships. Effective relationships are the building blocks for any powerful business.

If there are strong early warning signs that a key strategic relationship isn't working for you it is often better to quickly figure out a productive way to exit the relationship rather then waste energy in trying to make it work.

Otherwise things have habit of continuing the way they begin.

Ironic iPhone

2008-10-28T02:20:00.000-07:00

OK, I admit it - I have a new iPhone.

I am loving it and hating it in equal measures.

The one thing it seems to do extremely well is be an enhanced iPod.

My old Nokia was a better phone - the iPhone seems to have no reception in ridiculous places and drops out all over the place. Somehow yesterday, despite sitting in one place for most of the day, I had 4 calls slip straight through to voicemail with nary a ring and only received 3 calls. A 42% success rate is pretty abysmal for anything including a phone.

My Blackberry is much, much better for email and for syncing to my PC.

The iPhone does most things competently but is outclassed in a number of areas by other devices. So will I be swapping back?

No way.

It is just a beautiful bit of kit. It is aesthetic; it is delightfully tactile and it's fun (and it is a great iPod). As a result, I am prepared to forgive it for it's shortcomings.

Powerful brands with an emotional dimension are like this - they change our perceptions of value; the engender loyalty; they allow us to forgive them for their shortcomings and foibles; they are always competent but excel in some areas. The total package binds us to them in a way which delights.

Not many brands achieve it. Those that do are iconic and valuable.

Our aim in creating brands is to build something beautiful - just like an iPhone.

Inspired Communication

2008-10-14T16:08:00.000-07:00

I received the above message in my inbox yesterday. What an inspired way to communicate a savings rate cut!

You would have to read it a few times to even realise they were announcing a reduction in the interest rate paid (and quite a hefty one - it was previously 7%), and even when you do realise it is still possible to feel warm and fuzzy about it.

The power of happy customers - almost there

2008-10-14T02:11:00.000-07:00

In these troubled times all businesses will be looking for the edge which ensures they win the sale and build a loyal customer base.

Often it doesn't take much but it starts with some lateral thinking which results in doing things differently.

We have a very old house with a slate roof. Any old house needs continuous maintenance. For a while now we have been vaguely aware that there was a leak in the roof which was causing increasing damp in one of the walls.

Some months ago we had our usual roofing team out to do routine maintenance and replace some cracked slates. They scampered all over the roof and (apparently) replaced a number of slates. But after they had gone the leakage problem appeared to be even worse. Yet there was no comment from them about any problems remaining with the roof.

I eventually called them back to focus on the specific problem. They clamoured up a ladder (I should point out that out double storey house has very high ceilings (4m) and a very raked roof, so it is a long way off the ground to the apex of the roof) and had a look at the valley and gutter which I suspected was the problem.

They willingly agreed the whole gutter in question looked like a complete mess (why hadn't they pointed this out on the last maintenance visit?) and would need replacing.

Their astronomical quote for the repair was more than $8,000!!!

We sat on it.

After a few more rain storms when we had water pouring down the chimney and paint bubbling off the walls, we realised we had no choice but to get it fixed. Fortuitously another roofing company, who claimed to specialise in slate roofs - no doubt why they targeted us -chose that time to drop a card in our letterbox.

I immediately called them up and made an appointment to get a quote. Their owner turned up precisely on time for the agreed quotation inspection - always a good sign!

He popped up a ladder and immediately began throwing down comments like 'My god, what a dog's breakfast; this was done by some dodgy brothers with whatever they had in the back of their ute' and so on.

This is smart. He was placing himself firmly on my side and building empathy. I was already warming to him. But the extent of his musings about the nasty sight he found on my roof was convincing me it could be a far bigger problem than $8,000 would fix.

He descended and promised to get a written quote to me within the week.

Before the week was out the quote arrived - $1,800 was his estimate. Thinking there must be some error, I phoned him and had a chat about the whole situation. He knowledgeably discussed the problem and the proposed solution and confirmed the quote was correct. However it didn't include necessary scaffolding. I asked him for an estimate of that and his response was 'around $500'.

I accepted the quote and asked him to organise the scaffolding. He promised to call to let me know when he could do the job.

Sure enough, a week or so later I received the call to schedule the time to do the job. We agreed the day and I was told he would be there between 7 a.m. and 7.30 a.m. on the appointed day.

At 7.25 a.m. on the day he arrived at exactly the same time as the truck carrying the necessary scaffolding. He and his offsider were polite and extremely efficient. They got on with the job and I watched as bits of twisted metal gutter were dragged off the roof and new slates and a new box gutter was installed.

By the end of the day the job was done. Two days later I received the invoice. As agreed it was the $1,800 quoted with an additional $150 for the scaffolding. I was overjoyed that the scaffolding was less than half his estimate.

As I sit here typing this the rain is pounding down but no water is cascading down the inside of my chimney and no new bubbles of paint are appearing on the wall.

This is a great story of a tradesman who did everything right in a world where most do everything wrong- he did everything he said he was going to do; he was knowledgeable, empathetic and polite; he under promised and over delivered; he was reasonably priced; he got the job done. I happily paid his invoice the day I received it in the mail.

Building a base of happy customers is simple really - just delight them.

But even my roofer from heaven could have gone a step further.

My roof is more than 8m off the ground. I'm not going to climb up there. He could have taken before and after photos of the job and attached them to the invoice as a validation of the work he undertook. This would have made me feel even more comfortable that a great job was done. He could also have included a report with his invoice about a suggested maintenance program for my roof - he could even have sought to book in a maintenance visit. It never hurts to ask for more custom. Perhaps he might have followed up with a call in a few weeks time to thank me for my prompt payment and ask whether I am still happy with the job. He could use that same call to ask for some referrals.

Making sure you do what you say you are going to do is a fundamental for all successful businesses; under promising and over delivering is even better (and all deserved kudos to my new found roofer for getting the fundamentals right). But the highest growth businesses will go even further and find ways to differentiate themselves and add value to their customers. Happy customers will always reward the businesses that delight them with more and more custom.

Make it easy to do business with you

2008-10-09T04:47:00.000-07:00

Everyone wants more business - at least of the right kind.

But I remain astonished at the number of businesses which make it bloody difficult to do business with them.

Often this is because they are clinging to antiquated models. Three common hallmarks of this Luddite approach:

Failure to use the power of the web as a distribution channel
A view that people need to be 'sold'; instead of an understanding that modern customer simply want to 'buy'
Driving customers to an endpoint which is 'pick up the phone and call us'

A point in case.

I decided this week that I wanted to do a direct mail - yes, you read that correctly, mail as in snail mail - campaign for one of my businesses (there is a logical reason for this which I will perhaps canvass in a future blog).

I found I could pretty easily find half a dozen web sites which could sell me address lists (either email or snail mail) although almost none of them were e-commerce enabled.

But I was shocked when I came to search for someone who could pull the campaign together - produce and print the addressed direct mail piece; stuff it in addressed envelopes; post it out. Of course there are loads of them out there who do this sort of stuff, but not one of them provided me the opportunity to get a price and set it all up online.

All the sites out there 'forced' me to pick up the phone to talk to someone who wanted the opportunity to 'sell' me a solution. Why-oh-why-oh-why???!!!

I would have instantly done business with one who:

Informed me about the likely costs, benefits and returns of conducting a campaign (case studies and $$$$);
Provided me a way to initiate it and set it all up online

Isn't that what the web is for in business?

Why force me to call someone - it wastes my time and theirs; it probably means there are a bunch of employees on their payroll who don't need to be there; but most importantly it erects a barrier between me and doing business.

Times are tough. Don't whinge about it. Simply make it easy for me to do business with you. Use the medium; make it work.

Easy really!

More Secret Squirrel Stuff

2008-09-28T04:33:00.000-07:00

Apropos my previous post, secrecy is not all its cracked up to be in business.

I once knew an inventor who created an innovative and potentially powerful new product with international appeal.

Having come up with a new product and process to produce it he was hell-bent on protecting it at all costs. Unfortunately this translated into him trying to contain all the IP himself - in other words not sharing it with anyone.

Now if he was a superman who could not only conceive the product and process but could also build the factory, create the brand, sell the product, build the team and turn it into an international success, that would be fine.

He was not that superman. But it was a corker of a concept so he rapidly began to think of himself as a superman. He didn't understand his limits.

As the cracks in the proposition started to emerge he clung tighter to the IP and tried to find fixes with his own resources -to the extent that he refused to admit he didn't have all the answers; he failed to call in external experts when he needed them most and this jeopardised the entire project.

Most importantly by clinging tight to the idea, the process and the ownership, in a situation where his limits were significantly less than he perceived them to be, he was preventing the idea being carried forward.

If he was open and expansive and prepared to let go he could have created a global empire. Instead he clung tight and became small and increasingly miserable.

The moral of the (true) story is to know your own limits; to accept your faults; to be open and inclusive in bringing people along; to create a coalition of interest around a concept rather than to try and dominate it.

There is no currency in ideas

2008-09-28T03:04:00.000-07:00

I am frequently approached by people looking for assistance who open up the dialogue with something akin to "I have a great idea".

This is often followed up with puzzlement about how on earth they are going to share the idea with me because they fear that by 'exposing' the idea they risk having it stolen (presumably by me!!??).

Their fears are generally groundless because the only things worth stealing are those that have value and an idea alone very rarely has value.

Some, thinking themselves more savvy, rapidly come to the conclusion that they need a NDA (Non Disclosure Agreement) executed before the big reveal.

It may be that deep down I harbour a degree of affront at these sorts of approaches. Essentially they are coming to me to ask for help. They need something. They believe I have something of value (knowledge; contacts; experience; a point of view; money) that they want. By taking this path they are essentially devaluing my expected contribution and overvaluing theirs and they are also basically saying they don't trust me. Not a great way to start any sort of relationship - commercial or otherwise.

But this is not the real issue here.

In my experience cloaking an idea in a shroud of secrecy is a sure-fire way to kill it.

I have rather provocatively said ideas alone have little value. Let me elaborate. I am not saying ideas are unimportant. I love ideas. I am inspired by many of them; I rapidly become enthusiastic about new ideas - some would say I do so too rapidly; they are an essential part of the process of innovation and invention.

So, I love ideas. But I live in a commercial world and my creativity is channelled into building businesses. There are myriad examples of fabulous ideas which are never turned into a commercial success and equally there are great businesses built from pretty mediocre ideas.

Too many ideas are orphans. At ?What If! Innovation they had an innovation equation - Insight + Ideas + Impact = Innovation. The 'parents' of ideas are 'insight' and 'impact'. Insight means customer insight. Ideas need to be well founded on the back of some insight about customer behaviour - often this is an unmet need. But, in my view, the power lifter in this family is 'impact'. I read 'impact' as 'execution'. Powerful businesses spring from effective execution - making things happen; getting things right; focusing on the detail.

If the world's best idea fell at my feet I would be pretty ho-hum about it. If the idea fell at my feet with a fully-worked business plan, a ton of customer insight work, and a cheque for the seed capital, I would start thinking something valuable had arrived. If the package came with proven, cracker-jack team who had worked together in the past and delivered success all my Christmases have come at once.

An idea is a starting point - it is what you do with it that creates value.

In “Innovate 2008: Is the Tide Turning?”, a recent report on innovation released by Boston Consulting Group, they noted:

“It is worth pointing out that only 20 percent of companies considered a shortage of great ideas to be the problem… Most companies, in fact, have an abundance of good, even great ideas. But having ideas and turning those ideas into cash are two entirely different things. Innovation is often equated with the former, when in reality it’s all about the latter.”

There is also a misconception that an idea has to be novel to be valuable for businesses. A new invention must obviously be based on a novel idea. But a successful new business (or the revamp of an existing one) doesn't need a new idea. It just needs an idea which is well executed.

The nudie product concept wasn't new. Nor were some of the elements of the brand. Many others had come before in the US and the UK - the likes of Fresh Samantha, Hansens, Odwalla, Pete & Johnnies and Innocent, to name but a few. The fact is that I took that idea and triumphed in the execution to create a $20m a year business.

My view is that value is created when you breathe life into an idea which is grounded in solid insight. People too frequently come to me with an idea believing it already has value and that leads to the secret squirrel stuff.

I can't count the number of times I have seen a potential idea choked to death when it is held too tight by its creator.

I have ideas all of the time. Occasionally they are pretty good ones. I am also an extremely open person. I love to share my ideas with as many people as I can because by doing so they either are exposed for the frauds they are, or are amplified into something really special by the input from others. In all the years of I have been openly sharing ideas none (to my knowledge) has ever been 'stolen'. It doesn't surprise me. I am not without guile and I openly share my ideas knowing the vast majority of people I talk to can't, or couldn't be bothered, bringing them to life through effective execution.

I can.

So by sharing my ideas I get input which builds and develops them - ?What If! would call it "greenhousing" - and then I can decide whether I am going to go down the path of implementing them.

NDA's are fabulous (perhaps) for protecting corporate information which is not in the public domain. They are not designed as some sort of intellectual property protection for an idea. If you are an individual or would-be-entrepreneur thinking about a start-up, my advice, unless you have novel intellectual property, is generally speaking don't bother with them. It will only slow you down.

This is mirrored by a widespread fear that small businesses or sole traders have in dealings with 'big business' along the lines of - 'they will steal my idea'. Believe me, 9 times out of 10, the big business will have seen the idea half a dozen times before. They still can't make it happen or they would have before you reach them.

The power of small business, and particularly entrepreneurial start-ups, is in making things happen. There is no need to be precious about ideas or waste time with meaningless NDA's.

Un - der done!

2008-09-21T03:23:00.000-07:00

How many have seen the "Un" campaign? Unfortunately that is exactly what it is - a campaign. I was expecting more and it could have been great.

It started last weekend with teaser ads in both leading Sunday papers. I was hooked enough to start hunting for "Un" references on the web. Largely what I got was the United Nations.

This made me realise that someone had created a (brand or advertising) proposition which they couldn't 'own'.

The tease continued during the week as the massive billboard sitting atop the grain silos west of the Anzac Bridge (Sydney) was filled with 'un' words.

Finally today the big reveal - Un is "unworry" and is an NRMA (IAG) insurance campaign. For those who haven't yet seen "The Power of Un." ads here is a snippet to get you in the frame:

"'But what is Un?' Un is amazing. It's all around us. Without Un you can't undress and where does that leave you? In te same clothes forever. But with Un you can unstress. And uncomplicate. And unbother about it. Most of all, you can undo what you did. Like UN-SEND that all-staff email that was meant for your boyfriend. Or UNCRASH Uncle Percy's car. And unsmash the pergola that Uncle Percy's car drove into. Now, thanks to Un, Uncle Percy isn't cranky, he's uncranky. So you can both relax and be friends again. 'And that is the power of Un," I say."

Well its creative and different, its got attitude, they are developing a tone-of-voice which could work, and it has amazing potential.

But I think they have blown it.

If you go to unworry.com.au you get a website which gives you a bit more info on 'Un" and has a cute blue plasticine character not dissimilar to one I had developed for my (yet-to-be-released) 'wink' brand a couple of years ago.

The website even has some games. But when you get down to the pointy business of buying (or getting a quote for) car insurance all it does is pass you straight to the bog standard NRMA online quote engine.

In other words it is a pretty unusual and interesting front end to the existing business engine.

It could have been so much more.

I happen to know that IAG is (or at least was) developing a new online insurance start-up to tackle 'Bingle'. I sort of had a hunch when I first saw it last weekend that "Un" might be IAG's launch of his new initiative. So I was expecting lots and got a little.

Imagine an entirely new insurance brand, delivered online, around an "Un" proposition. The first incarnation of this is what they hint at in a tongue-in-cheek way - undoing what had been done by accident or act-of-God. But it could go much further - how about being unlike any other insurance company; being unwavering in their commitment to pay (quickly) legitimate claims; being unafraid to be different - well, you get the picture.

A brand is created around a promise, a personality and a proposition. I know a lot of people think of brands as being the brand identity - logo and name - but powerful brands are far more. NRMA had a chance to create a whole new proposition and a powerful new brand. Clearly there are some smart minds at work there. Instead they came up with a clever advertising campaign which is not even executed as effectively as it could be.

So what are some of the things wrong with it?

It is just a new wrap to an old product and service offering

They don't do enough to develop the character - the blue plasticine character could be "Un" and they could build him into something substantial; instead he is an incidental traffic light.

They promise things they can never deliver - can they really help 'un-send' the all-staff email? Of course they can't. They would have been better off being upfront and saying unfortunately there are some things we want to "Un" but can't yet

They could have created a brave new virtual un-world.

Most importantly they could have uninvented all the conventional wisdom rules of the existing general insurance business and given us something refreshingly new and different.

Instead we have mutton dressed up as lamb.

Powerful brands are not created by clever copywriters. They are delivered through the actions of the business - consistently and with integrity. If you are going to tout "Un" the business has to be "Un". Not just a creative front end to the same old stuff.

Put the customer in control

2008-09-11T04:58:00.000-07:00

I believe so much customer dissatisfaction results from the fact that we (as customers) frequently have low power in relationships with the businesses which supply us.

Rather than them responding to our needs and wants they tell us what to do and let us know (generally in a peremptory fashion) what they will deign to provide us.

Since we know this characterises our relationship it forms the way we approach our product and service providers - we already have the s***s with them before we pick up the phone or visit their establishments. No wonder call centre staff are often so stressed!

I had yet another example today. I found a reference in another publication to a newly launched magazine which included a cover shot of the new magazine's September 08 edition. One of the cover articles looked really interesting so I set out to find a copy of the magazine.

After visiting, in vain, 4 or 5 newsagents I began to realise it was incredibly naive of me to believe that I could find a September edition magazine in early September (after all we already have the October, and in some cases November, issues on the newsstands!!!!).

What does one do in such a situation - visit the web of course! Once again naively I expected I could either find the article online or, worst case, find a way to order a back issue (sorry to labour the point but why is a September issues already a back-issue in September?) over the web.

In Australia in 2008 neither was possible. I could find on the publisher's web site a 1300 number to call but I couldn't find a way to track down the article or order a back issue.

I don't want to call a 1300 number. I never do - who knows, I might end up speaking to an 'offshore' call centre. I want to be able to use the power of the web to deliver information to my desk top when I want it. I dug around and eventually found an email address - hallelujah!

I belted off a quick email expressing my desire to obtain a September back issue of the magazine. To the credit of the publishers I received a cheery email the following morning from the publisher's assistant letting me know that they were grateful for my interest and they had passed on my query to their 'subscription service' who would be able to arrange a back issue for the bargain price of $8 (not significantly more than the newsstand price).

An hour or so later my inbox pinged with an email from the subscription service business informing me that if I wanted a back issue all I needed to do was call the 1300 number.

24 hours after my attempt had begun I was right back where I started. Their very strong message - 'it's our way or the highway!!'.

I wanted the issue badly enough to capitulate and do it their way and so I dialled the 1300 number and organised the magazine.

But I had a feeling of antipathy about the whole process and everyone involved in it. OK, so they aren't sophisticated enough to have a web ordering facility (or an online version of the article), but surely they could have been sensible enough to respond to an email from me with a return email along the lines of 'we'll get a magazine in the post to you if you just fax/email your credit card details to....". Or what about better yet, 'sign up on email for a 12 month subscription today and we'll send you copy of the September issue gratis'?

Instead they dis empowered me. They made me do it their way, rather than seeking to do it my way. Most businesses do this today, often unwittingly.

The businesses which are in tune with their customers needs and wants are the one which will win. It doesn't take much.

Out of Touch - Lacking Customer Insight

2008-09-11T03:40:00.000-07:00

Scarcity creates value; rarity even more so. A truism which seems to be ignored by many of the developers at work in my locale.

I live on a peninsula which is literally within spitting distance of the city. It started life as a working class suburb and many of the properties on the peninsula are tiny Victorian era 1 or 2 bedroom worker's cottages.

Of course the whole suburb has been gentrified in the last couple of decades and it is amazing what some people with vision, imagination and money can do to a worker's cottage. But the fact remains that even gentrified cottages are small and sit on tiny plots of land.

We have seemingly experienced a baby boom on the peninsula over the last few years and mothers pushing their ubiquitous Bugaboo prams are everywhere. What is craved and treasured by residents are large family homes with a decent sized garden and off-street parking. Castles to house the burgeoning families of the increasingly wealthy bourgeois. Yet almost none exist, so expanding families (or simply those singles or couples with a thirst for space) inevitably admit defeat and move off the peninsula.

This morning, on the way back from dropping the kids at school, I walked past the latest, newly completed development, on one of the last remaining large-scale development blocks we have on the peninsula. A block created by tearing down a dozen or so worker's cottages.

And what has the developer erected? A dozen or so 2 bedroom townhouses with pocket handkerchief back yards. The 1890s worker's cottage gives way to the 2008 worker's cottage.

It is mind-boggling really. Rather than thinking constructively, based on some sort of customer insight, the developer has done the usual and stuck to a supposed "winning formula".

Imagine if instead of 12 boringly 'same' tiny townhouses the developer had erected 3 substantial 5 bedroom dwellings with expansive backyards. In other words they created the unobtainable.

Even in today's market, the unobtainable property carries a price premium. It is unobtainable because everyone wants it (demand) and no one has it (supply).

Fundamental economics at play again. When demand outstrips supply an upwards price adjustment balances the market and super-profits are to be made.

We have become a society of non-thinking formulaic business people who ignore customer insight and therefore miss significant economic opportunity.

Hats Off

2008-08-14T03:29:00.001-07:00

Since more often than not the companies that are supposed to serve us don't, it would be very easy for this blog to degenerate into a critical whinge.

To break way from that I want to celebrate in this post a start-up company in the US (well Canada actually) who is potentially turning a typical consumer whinge into an opportunity.

Hands up everyone who enjoys dealing with an IVR (Integrated Voice Response) System in the companies we contact. You know, the phone systems all big businesses hide behind - "to be marginally driven mad, press 1"; "to be almost pushed to the limit, press 2"; "if you didn't think it could be worse, press 3 and be introduced to an entirely new set of maddening sub-menus". I know no one is holding up their hand because we all hate IVRs, but businesses all use them because they 'streamline the customer handling process' (in other words they save money).

www.fonolo.com is a new business which, rather than joining the rest of us to whinge about it, is trying to turn this frustration into a business opportunity. They have built a 'spider' which phones the IVRs and builds a database of their menu structures (in much the same way a web search engine 'spider' builds a search index), which they visually display for you on the web. You can have a look at the menu structure and dive straight into where you want to be. They call it 'deep dialling'. You press the 'call' button at the point you want; fonolo goes through the hassle of calling the company and traversing the IVR structure and then they call you to put you through when they have the customer service agent you need.

What a cracker of an idea!

You can even 'bookmark' frequently used 'deep dial' locations AND you can record and store the calls so you have a record if, for example, you are involved in a billing dispute with the company concerned.

Where was this service when I was having my run-in with my ISP telco provider???!!

I really hope this works for the team behind fonolo - it should. They have spotted an almost universal consumer frustration; knowing that companies are unlikely themselves to respond to these frustrations, instead of waiting around for that to happen, they have seen an opportunity and created a solution.

The most powerful new businesses in my view are those that overcome an evident customer frustration.

I'll be watching this one with interest.

And whilst I am handing out plaudits, let's take our hats off also to our own AAMI who seem to have recognised that we all hate IVRs and have come up with their own solution - get rid of it. As far as I can tell every phone call to AAMI is answered by a real person who solicitously asks how they can direct your call. Yay! That is a point of difference upon which to build a great customer-centric insurance company.

No Added Value

2008-08-14T03:09:00.000-07:00

I went to the movies last night (The Dark Knight is way too dark for me by the way).

A bottle of water and a choc top to enjoy in the cinema cost me about a gazillion dollars from the snacks counter in the foyer.

Throughout the movie I was seriously disturbed by the crinkling, crunching and crackling of packets of food and the eaters who munched through their contents.

Why do we pay four times as much for a bottle of water or a packet of chips or an ice cream in a cinema? Is it just because we are a captive audience? (From a practical point of view it is because I so frequently forget to buy something at a normal store on the way to the cinema - curses!).

I could understand paying more if the cinemas had some sort of value adding proposition, for example, cinema food with noiseless packaging which doesn't crinkle and disturb other patrons. But they don't - the food is the same as you can buy outside the cinema. I could understand it if the business model in cinemas is one where you don't pay for the tickets but instead pay through the nose for the food (and maybe this is the model - maybe cinema tickets should be $30 each if we didn't pay ridiculous prices for food and drink - but if so they aren't very good at communicating this to we poor customers) - but this doesn't seem to be the case.

So, the only conclusion to draw seems to be that cinemas are taking the piss and gouging us. Why-oh-why would they do this? Because they can, and because we all mutely put up with it.

More power to them! But what a missed opportunity to add value and build loyal customers instead of annoyed ones.

A Green Nightmare - Clinging to the Past

2008-08-02T20:34:00.000-07:00

Yesterday I got stuck on the way back home behind a flat bed truck loaded with Telephone Books being delivered door-to-door.

For heaven's sake, this is 2008!

Almost everyone has access to the web (68% of households now have broadband access in Australia) or a GPRS or 3G mobile phone. Finding a listed telephone number doesn't require wading through a mountainous book.

Why do they insist on dumping a useless book on our doorsteps. In my case, as soon as it arrives I strip the (non-recyclable) plastic wrap from it and consign the books straight to the recycling bin - but what a waste!!

Assuming the powers that be are not completely stupid or have their heads buried in the sand, I imagine there must be some obscure legislation that mandates every household has to have a free white pages phone directory delivered to their doorstep.

Why can't they simply make it opt-in and save themselves and the community many $ and generate some green kudos at the same time?

The situation is worse in the case of the Yellow Pages. I imagine all that keeps these books being delivered to our doors is the huge commercial vested interest Sensis (Telstra) has in keeping alive the myth that it is a tremendous advertising medium.

I haven't opened a Yellow Pages book in many, many years. Why would I when I can search for it all on the web?

I accept some people may still find the Yellow Pages useful and they too could opt-in to receive one. This though would expose the real (and diminishing) underlying economic value of the Sensis advertising franchise and so will presumably never happen.

Pethick's Next Feast

2008-07-30T17:23:00.000-07:00

There was an interesting article about me by Amanda Gome in www.smartcompany.com.au this week.

http://www.smartcompany.com.au/Premium-Articles/EntrepreneurOnline/20080729-Pethicks-perscription.html?source=RSS

It was OK but I took slight exception to the inference that nudie (and ?What If!) had been failure.

Here was my response to Amanda:

Hi Amanda

By using the term “fallen entrepreneur” in a pejorative sense you potentially obscure both the facts and the lessons for other entrepreneurs.

It is true I was “kicked out” of nudie. I certainly wasn’t without fault in the proceedings but, at the heart of this was the fact that I had a very different vision and strategy for nudie than the board did. It provides a hard-won lesson for all entrepreneurs. When it comes to a contest between an entrepreneur’s vision and an investor’s money it is always the dumb money that wins!

I believed (and still do) that nudie is a powerful brand, and that as such we should have concentrated on brand development and marketing and outsourced manufacturing and distribution, via license, to another organisation that had a comparative advantage in those areas. nudie could then focus on what we did best and leave others to do what they did best. This seemed to me to be both a scalable model and an economically desirable one. The board believed nudie was a juice company and needed manufacturing and distribution to give truth to that.

I believe history will prove me correct (perhaps has done so already) and in part this is evidenced by the fact that the VC’s in nudie exited at a significant loss some two years after I had been “kicked out”.

But in any event nudie was a staggering success. It proved it was possible for a bootstrap start-up to tackle huge and profitable incumbent players in a mature industry, and create a brand (voted in 2005, two years after commencement, by readers of brandchannel.com as one of the top 10 “most influential brands” in the Asia Pacific region) and a business (turning over $18m a year after two years in business) that shook up that industry (have a look at the chilled juice cabinet in any supermarket now) in favour of consumers. It is a story which has and should continue to encourage and inspire budding Australian entrepreneurs and innovators.

The ?What If! experience is also one I am content with because, apart from the lessons I learned about the apathy big Australian businesses have towards innovation (and therefore their customers), it was a tangible demonstration of my increasing commercial maturity.

With ?What If! I stepped in as CEO to a 6 year old business which had been losing money for the previous 18 months. My initial objective was to turn that business around (as I had done successfully in the past, for example when I inherited a very dysfunctional, loss-making Encyclopaedia Britannica as CEO in the mid nineties). In the space of 6 months I determined that it would be possible to turn it around but that the size of the prize for doing so simply didn’t warrant the investment or the energy. ?What If! is a global organisation and they were better off investing in more lucrative and receptive markets. In the old days I would have seen it as a virtue to ‘soldier on’ and swing the business around. The more commercially mature me is more prepared to focus on the size of the prize.

I have three university degrees but have long held that formal education is not a patch on the benefits conferred by ‘lifelong learning’. Everything we do or experience in life gives us something – often it’s a lesson which we can build from. Particularly in the case of nudie, which I was extraordinarily attached to emotionally, the experience came with significant pain, but it still ‘gave’ me something personally and something to share with others.

I am applying all those lessons to Sultry Sally currently, and making those lessons available to other through my new business. I believe Sultry Sally will be a great success (both emotionally and commercially) and I am focussed on achieving that success by relying on the lessons of the past.

Two of the things I am very passionate about are the necessity of innovation in favour of consumers and the power of lifelong learning. One of the reasons the most valuable entrepreneurs in the US are those that ave at some time 'failed' is that they are presumed to have learned lessons from those failures. They'll take those lessons into their next venture. In Australia we have more significant cringe around the "f" word and therefore are often not as focussed on the benefits (and value) of learning from experience.

Short Termism Rules - Or How to Screw Your Customer

2008-07-25T04:35:00.000-07:00

One of the reasons there is more innovation in small businesses and in private companies is because they often take a long-term view. Large (particularly public) companies are the opposite. They are forever focused on the short term.

Markets dictate it. They want to know (and reward) what is happening this quarter or this half, not what the plan is for 10 years hence. And in any event, even if market pressures weren't driving it, the people in big businesses would.

The average tenure of a CEO is something like 5 years these days. Other 'C Suite' managers often last even less. They want quick 'wins' to build their reputations.

The thing about 'winning' is that is almost always involves someone losing. The losers, when it comes to short term quick 'wins' for businesses, are often customers. We know it and that's why we customers frequently resent the brands we do business with.

The easiest way to gain a quick win is to focus on cost control. Building value through innovation takes time and investment and is never as easy.

Here are three current examples of how customers are losing while businesses reap short term gain. And in the process these businesses miss opportunities to cement solid (and valuable) lifetime customer relationships.

Ads on Pay TV
Pay TV in this country has been losing money for years so its shareholders have been 'investing' to support it. These losses have been, in part, because it has taken time to build a critical mass of subscribers. For the last couple of years it has turned around and Pay TV operators are now making money. The variety and quality of programs on Pay TV has never been better and people are switching to it in droves (at the expense of Free-to-Air TV). This is the context and I am not blind to it.

I have had Pay TV for years now and so have observed the recent changes. The one that really annoys me (and, based on the extent of conversations I have heard or participated in, I am not alone) is the seemingly exponential increase in advertising.

I haven't put a stop watch to it, but my perception is that now there is the same, or a greater, level of advertising on Pay TV as FTA. So my customer experience with Pay TV has fundamentally changed. My viewing is now interrupted at a rate which is egregious. And what has happened to my subscription cost - it has increased of course!

I wish I was strong enough to cancel the service in protest. But I'm not. My favourite programs are on Pay TV. So, I feel captive. And whenever we feel compelled to put up with a situation we can't change, resentment breeds.

I don't begrudge the long suffering shareholders in the Pay TV industry finally extracting some return from their patient investment. But why didn't they do it in a way which invited customer participation and therefore provided customer empowerment. For example, they simply could have explained the situation and the need.

Even more compellingly, they could have offered me a choice - perhaps, in the same way insurance companies provide lower premiums for customers who select higher excesses, they could have offered me a stepped level of subscription rates. Maybe at twice my current subscription rate I get channels completely ad free; at 50% more I get a maximum of 5 minutes of ads an hour; at the current rate I get 10 minutes of ads an hour and at 50% less than the current rate I get 30 minutes of ads an hour.

The point is, at the moment, I am an unwilling recipient of this change; it feels very much like I am being taken for a ride - I am paying a pretty significant subscription (certainly more than I was a few years ago) AND I am now being bombarded with ads at an unprecedented level which I know is making them more money. They are making (short-term) hay while the sun shines.

I resent them and if an option ever arose I would grab it as quickly as I could. I am not a happy customer or brand advocate.

A new credit card surcharge
I have had a wireless broadband modem with one of the telco carriers for 18 months or so. I use it as a back-up when my primary access goes down. I pay a fixed monthly charge of $34 and, at their insistence when I took out the contract, that charge comes off my credit card each month.

Last month I noticed the cost was $34.22. This month it became $36.26. I investigated and discovered that last month they started imposing, seemingly without consultation or communication, a credit charge surcharge. This month, still with no apparent consultation or communication, they added a $2 charge to have my bill delivered by mail.

I'm under contract for another 6 or 7 months. So I can't get out. They know I am trapped.

I have been paying by credit card and getting paper bills since I took out the contract. These were implied terms of the contract I took out. The cost of postage hasn't increased in the time since I took out the contract and there have always been merchant fees charged to them for credit card collections. In another business I too am a merchant who collects payments from customers using credit cards, and my cost of doing so hasn't increased in the last couple of years.

So, the costs of these elements has always been the same for my carrier telco. The change is that they have all of a sudden decided to pass the costs onto me - without my consent.

I can just imagine some bright accountant in the bowels of this telco coming up with the pitch to their boss. "Hey boss, we could reap an extra $X million a year simply by levying a credit card surcharge on everyones bill. It is so small no one will notice it and even if they do what can they do about it - after all they are locked into contracts".

Short-term gain at my pain. And what disintegrates in the process? Any pretence of a relationship between the brand and its customers.

Recent rises in bank charges and interest rates
For the first time in Australia, the major banks are increasing interest rates even though there has been no Reserve Bank initiated increase in official rates. The banks argue that their cost of borrowing has increased and they have been absorbing those increases; they also argue they are not passing on the full cost of their borrowing in the rate increases. Then they ask us 'why should our shareholder's suffer at the expense of our customers?'.

This argument - 'we have a duty to our shareholders' - is one which is frequently used by organisations to rationalise any circumstance where customers are getting screwed.

What it misses is that customers are shareholders too. A corollary to this sort of notion was the basis upon which Henry Ford built the Ford Motor Company. He flew against conventional wisdom and paid his workers more, in a world where the emerging capitalist machine argued that workers should be paid as little as possible, because he knew that his car for the 'every day person' was going to be bought by his workers and people just like them. By paying them more he was creating the ability for them to become customers and therefore fuel his growth.

Back to the banks.

We have all watched as their annual profits have soared to record multi-billion dollar levels in recent years.

Thanks, in part, to the same market ructions which are causing the increase in bank's funding costs, consumers are doing it really tough. Inflation is running at a higher rate than it has done for more than a decade; consumer confidence is at a 17 year low; petrol and food prices are through the roof; mortgage defaults are at the highest rate for years and on it goes.

So, at a time when the bank's profits are at an all time high, and consumer confidence and disposable income is at an all time low, what happens - the banks start increasing mortgage rates out of step with official rate increases.

Is this more short-term profiteering at the expense of a 'captive' customer base? You bet! And it breeds the same kind of resentment already described.

What if a brave bank had come out and said - 'We recognise our customers are doing it tough; we are going to take a hit for a year or two and support them; we're going to hold rates and that means instead of delivering another x% increase in profits this year we are going to have a y% fall in profits'.

What customer (existing or new) wouldn't want to be part of that bank? They could recoup some of their cost of funding by cutting out all marketing spending for the year because their customers would become word-of-mouth advocates. In fact they would be beating off potential customers with a stick.

Of course no bank CEO would ever contemplate such an option because it would be short-term suicide.

There is real value in long-term customer relationships where customers are advocates for your brand. Many (most) large businesses sacrifice this for short-term gain. Unfortunately it often appears to work, because their customers are held captive. But it breeds resentment which must increase customer servicing and marketing costs. There is an opportunity here for small, privately held businesses to take a longer term view, do things differently and build value.

Little Things

2008-07-15T03:28:00.000-07:00

When people talk to me about building brands or businesses they tend to focus on the big things like their strategy, their ad campaign, their brand identity and so on. All very important.

But it is the little things which sometimes make the biggest difference and businesses shouldn't ignore them. It's a bit like a chain - it is only as strong as the weakest link.

I was reminded of little things when we went to pick up our new cars. We had to swap over the old ones and, as invariably occurs in such circumstances, we still had some emptying out to do. We ended up with a small armful of rubbish.

In the expanse of the pristine car showroom there wasn't a bin to be seen anywhere. So we were sort of stranded with our rubbish wondering what to do with it. We ended up walking into a sales person's office and finding a bin behind their desk.

This is not the first time it has happened to me in a car dealership, and not just when switching over a car. When I take my car in for a service there is usually detritus such as a take-away coffee cup or a few old parking receipts which needs disposal, but even in a service area, car dealers aren't inclined to besmirch their premises with garbage bins.

Of course this isn't about bins or the lack of them. It is though a very small sign that the dealership is not really putting themselves in the shoes of their customers. They may be trying to think of their customer but they aren't 'being' their customers and so are missing the little things that are grounded in true customer insight.

Businesses that sweat the small stuff are showing they really empathise with their customers and, as a result, are often creating significant points of difference for their business.

Oh, and whilst on the little things - what does it tell me when the clock on the brand new car is set 4 years, 3 months and 7 hours earlier than the delivery time as I drive out of the showroom?
Forgive the rhetorical question - it tells me they are sloppy when it comes to attention to detail and that is likely to characterise all their customer interactions.

Consumer Power (or lack of it)

2008-07-09T21:33:00.000-07:00

It was actually quite difficult to buy our two new cars.

Like most consumers now do in advance of any major purchase decision, I had done extensive research on the web about the cars I wanted to buy. I knew their features and benefits; I knew how much they cost; I knew their pros and cons and had read numerous reviews.

Based on all of that I made a decision. Once having made that decision all that was necessary was to cut a deal.

I arrived at my chosen dealership seeking to cut such a deal.

It quickly became obvious that the dealership didn't want to sell me the cars in the way I was prepared to buy.

The first problem I encountered was a salesperson who was determined to walk me through all the details of the (first) car. I really didn't want to know. I had researched it all well before hand. Despite my attempts to avert him he remained determined that we couldn't get down to business until he had completed his sales routine around the car. Eventually I gave in and let him say his piece.

"Now", I implored, "can we talk turkey?" "But surely Sir would like to test drive the car first?", was his response. Actually, I didn't want to test drive the car I just wanted to see what the numbers looked like. The salesperson was scandalised. I could see the thought going through his mind - how could I possibly contemplate buying a car if I hadn't test driven it? At that point he seemed to make up his mind - I obviously wasn't serious - and I think that mindset set the agenda for the rest of our interactions.

It actually took me 3 visits to the dealership, and multiple phone calls, before I could come close to getting a deal done. Every time there seemed to be a new problem. For example, I wanted to buy two different makes of car. Both are retailed from the same dealership and this is why I chose the dealership, and persisted with them in the face of the difficulties I had getting the deal done. But clearly the business was not set up to accommodate someone who was trying to cross the brand divide. No one seemed to have an oversight function.

Eventually, in discussion we both (the dealership and I) got our differences on the table:

They wanted people to be emotionally committed to a vehicle (for obvious reasons) prior to purchase;
They wanted the prospective purchasers in the dealership, face-to-face with a salesperson to crunch a deal;
They wanted to keep the sale of the two cars separate, in separate parts of the dealership;
They wanted an opportunity to up sell and to cross-sell financial services and so on;
They actually admitted, "We have a way of selling and we've found we are pretty comfortable sticking to it".
I wanted a 'deal' based on the fact that I was prepared to buy two cars;
I wanted their best set of numbers committed in writing;
My preferred way of dealing was by email rather than wasting time going into the dealership;
Mine was a rational purchase not an emotional one;
I knew what I wanted and didn't want anything else or any extras.
I felt harassed by their constant phone calls attempting to 'sell me' on something else.

We got there in the end but it could have been quicker, easier and happier for both of us. It wasn't a pleasurable experience.

They have fallen into the trap that so many businesses do these days. They want to force customers to deal with them on their terms, rather than being flexible enough to deal with customers in any way the customer chooses.

Consumers want choice. Not just in the products and services they buy but also in the way they buy them.

A tale of two finance companies

2008-07-09T19:39:00.000-07:00

We decided recently to replace out two cars. We live in the inner city and do few kilometres. It seemed extravagant, both in terms of the dollars and the environmental impact, to have large cars, so we determined to switch to small, Low Emission Vehicles (LEV). More on that purchase in a later post.

Both new cars are being financed as were the old ones. The new cars are costing significantly less than the old ones. We invited both existing finance companies to quote for the new cars.

One of the finance companies (let's call them "A") is one I have been dealing with for more than 20 years. In all, I have financed more than 10 cars through them. We have a perfect history together - I have never had any problems with them nor they with me. Whilst it is a finance company associated with a particular make of car, they do provide finance for any type of vehicle.

The other finance company (we'll call them "B") is one which we tried for the first time 3 years ago when we bought a new car - it is affiliated with the car marque we were buying at the time. Ordinarily, they only finance the particular make of car they are associated with.

Both finance companies came back with quotes which were within $50 a month of each other.

The cheapest though was "B", who also came back and said that, in light of our payment history over the last 3 years, we had an automatic approval and wouldn't need to fill in any type of application or provide supporting documentation. This for two new cars which are in no way related to the car make "B" is associated with.

The more expensive was "A" who also came back and said that, since it was 3 years since we took out the last contract, we would need to provide a full application including financial statements, accountants report and so on.

If there are some universal truths for consumers today (all of whom are time-poor) it is that we want hassle free 'buying' experiences and we want to be valued and recognised.

"A" failed on both counts. They should have recognised me as a valued, long standing (surely 20+ years should count for something??!!) customer and rewarded me with both a discount and an easy path through. Instead they allowed another company to sweep me off my feet simply by doing what "A" should have done as a matter of course.

And who wins the word-of-mouth advantage in this case - "B" of course. "B" is really known as Mercedes Benz Financial Services. Well done to you.

Interestingly the finance manager who I was dealing with at "A'' said in their defence, "It was nothing personal". Of course it was personal!

Businesses spend vast amounts of money to woo and win new customers. A satisfied, loyal and regular customer is one of the greatest assets any business can have. It astounds me when businesses fail to recognise that. When businesses fail in this way they leach value from their business and brand.

The lesson here is to work at recognising your most valuable customers; reward them for their custom (it is cheaper than acquiring a new customer) and build relationships with them.

Lacking Insight

2008-07-07T04:04:00.001-07:00

I participated in a focus group this evening.

A retailer is replacing their in-house charge card with a new co-branded credit card in partnership with a leading global card provider.

The details of the card offering have apparently been decided and now we are down to the very pointy end - the design of the actual card.

In fact there have been numerous prior designs and focus groups and our group was looking at the refined designs as a result of that activity.

It quickly became apparent that the issue was finding a card design which encouraged people to use the card outside the retail store in question (since that is obviously how both partners stand to make the most money).

It seems to me that there are some significant issues with both the question and process.

We were asked to look at about 15 different card designs. Whilst there were subtle difference between each, when the were all laid out on a table, from a distance of about 60 cm away, they all looked much the same. I began to think there was an element of 'emperor's new clothes' about it. They kept wanting us to comment on the differences and how we felt about each. I was indifferent towards all of them - they were after all just credit cards - but their repeated insistence on comment on each eventually forced me (and I suspect others) to create opinions.

I couldn't help but think that I was witnessing gross corporate waste and inefficiency. A bunch of designer had created a bunch of card designs that were really pretty indistinguishable from each other; then a whole host of focus groups (we weren't the only one) were held (with paid moderators and clients looking on) with participants (for a fee) being forced to invent comments on each of the cards so it appeared we were doing something. This will inevitably lead to a raft of expensive analysis of results before an 'informed' decision about a card design will eventually be made.

They have lost the plot! An entrepreneur would ask his/her family and friends to pick between a couple of designs and then go with the one they liked in the first place. Thousands, perhaps hundreds of thousands, being saved in the process. I am not sure the snap decision of an entrepreneur would be any less effective.

But that still wouldn't create the right outcome.

I am not sure that the design of a credit card influences usage. But if it does, rather than testing dozens of different designs created by their designers, they should be allowing each individual to design their own card. This is after all 2008 and the age of consumer created content and Web 2.0. If they really believe that the look of a card will cause people to use it more they should be allowing the user to create their own look. This will ensure they pull it out of their wallet at every possible occasion. It isn't a new idea. In Australia, ANZ has been doing it for a while with http://www.designmycard.com.au/

Businesses and brands will always win when they give customers real choice rather than imposing an outcome on them.

nudie's troubles with the ACCC

2008-07-06T01:55:00.000-07:00

Although I have not been actively involved with nudie for about 3 years, I am still somewhat synonymous with it, so it would be remiss of me not to comment on the recent troubles nudie has had with the ACCC.

It was widely reported, but for those who didn't see it, here is just one of the articles:

Sydney Morning Herald - June 21, 2008 "nudie's labels bare-faced cheek" http://www.smh.com.au/articles/2008/06/20/1213770924125.html

Basically, nudie's Rosie branded cranberry juices were actually 80% apple juice (and made from re-constituted apple juice to boot!). The ACCC believed nudie misrepresented them (through their labelling and marketing) to be cranberry juice.

nudie's defence hinged around two primary points. Firstly, that they were effectively using the apple juice as a natural sweetener instead of adding sugar. Secondly, that they always had the apple juice content clearly identified on the ingredients listing so they weren't hiding anything. (By the way, apple juice is significantly cheaper than cranberry juice).

I can see some marginal merit in both these points but it isn't enough to sway my opinion on the subject (nor was it enough to overcome the ACCC's view that a misrepresentation took place).

I feel disappointed about it as I am sure many other nudie consumers would. It is worth noting here that the ACCC action was sparked by a consumer complaint - a member of the consuming public felt cheated enough to raise a complaint.

There are many, many reasons I was able to build the nudie brand from nothing to one of the top 10 most influential brands in the Asia Pacific region (as voted by the readers of http://www.brandchannel.com/) in the space of just 2 years. In the life of this blog I hope to be able to reveal and explore many of those reasons. But one central one was that nudie, whilst always witty, was also always completely authentic, transparent and real. It earned rapid trust with consumers by having integrity.

nudie's actions with the Rosie cranberry juices breached the trust because the actions were not authentic or transparent and they lacked integrity (even if it was not a deliberate action on their part). In so doing they have damaged the brand and the relationship the brand has with consumers and therefore devalued it. This sparks my disappointment.

Last year I spotted some research (from both STW Communications and Grey's Eye on Australia Study) which resonated with me about what consumers thought were the attributes of a great brand. Here is a summary:

71% say a great brand had to be trustworthy
65% say it should never let them down - it should be dependable
63% say it should be honest
61% say it should be credible
60% say it should be the the best quality [product or service]
Also important - it needs to be fun, innovative and recommended by people I know.

Anyone assessing nudie's actions with Rosie against this list would immediately see those actions are NOT what we expect from a great brand.

From nudie we had a right to expect better. They have let us down. How could they!!??

Whilst this question is somewhat rhetorical it does deserve some investigation to see whether there are any lessons to be learned.

I am surmising here rather than working from a basis of certain knowledge:

A lot of pretty pedestrian juices are reconstituted. i.e. made from concentrate. Concentrate is a generally aseptic sludge derived from cooking up a juice and evaporating off the water content in the cooking process. To reconstitute concentrate you generally add back water to take it back to a 'brix' level which approximates the original unconcentrated juice. nudie frowns on concentrates and quite rightly uses real (single strength) fruit and juices in it's eponymous products. But with Rosie they have used some concentrates. It may be that they used apple juice instead of water to reconstitute those concentrates and this would account for the high volume of apple juice in the products. In that case they may have perceived themselves taking the moral high ground and may have been outraged by the ACCC's views to the contrary.
All this deception took place with Rosie branded products, so nudie may have felt that the high standards applicable to the nudie brand could be relaxed when it came to Rosie.

There are flaws with both these arguments.

I guess I am a much more informed consumer in this area than almost any other would be. I raced out and bought Rosie cranberry juice when it was first launched. I certainly examined the labelling and packaging, but until I was informed of the ACCC action I believed it to be cranberry juice or largely cranberry juice. I really had no idea that it was in fact cranberry-flavoured apple juice. If it deceived me, it is certain it would deceive less informed consumers. There is no moral high ground for nudie to take. Common sense should have revealed the problem.

On the second point, nudie seems to have fallen into a classic trap for those who really don't understand brands. Brands are far more than just logos and brand names (identities) - great brands have personality; they have values which are played out in the brand promise. 'Brand Slapping' is where you take a brand identity and 'slap' it onto any old product or service, hoping to get some of the commercial value from the brand rub-off on the product. But if the product which has been 'slapped' doesn't live up to the brand promise, you inevitably leach value from the brand. nudie has tried to have its cake and eat it as well. They launched the new Rosie brand and product and then plastered the label with the nudie brand to provide endorsement value. This meant Rosie should have lived up to the high ideals of the nudie brand and it clearly didn't. Apart from being largely apple juice it had concentrates in it an nudie eschews concentrates.

Even with all these problems nudie could still have averted the extent of the problem by living up to their brand values in how they handled the issue. Roughly, (since I am working from memory), the timeline of the issue went something like this:

Rosie was launched in about October 2007;
The ACCC commenced their investigation as a result of a consumer complaint in November 2007;
nudie changed the Rosie labels, to have pictures of Apples all over them, in January 2008;
The ACCC announced the Federal Court action in February 2008;
There was a Today Tonight 'expose' of the issue in February 2008 - nudie declined to comment;
The Federal Court orders by consent were delivered in June 2008;
The media frenzy such as the article above started after that - nudie continued to decline to comment.

An open, transparent, real brand with authenticity and integrity, a brand like nudie should be, should have leapt straight into the public forum on the issue when they first became aware of the consumer complaint (November 2007). Even if they genuinely didn't believe they were in the wrong they should have thrown themselves on their sword and cried 'mea culpa'. Since they lent the nudie brand to endorse Rosie they should have communicated directly with their nudie customers (not just the Rosie customers, who eventually saw a label change). They should have admitted the error, apologised, explained and changed and shouted the whole lot from the tree-tops (including acceptance that there was an error). They should have invited the opportunity to talk to consumers about it through the media. Such actions would have completely diffused the situation, lived up to the brand values, earned the respect of consumers and gained acceptance of the apology.

Avoidance or denial of the issue compounds it, even if the avoidance or denial is not deliberately constructed.

Great brands and great people have nothing to fear from the truth if they go through life with integrity.

I think it is entirely possible that none of this situation results from nudie deliberately or maliciously setting out to mislead or deceive consumers. They may have 'fallen into a hole' with the best of intentions (this is often called an accident), and then simply not known how to dig themselves out. A quick review of the ACCC wesbite would suggest they are in the company of many august branded players including in the FMCG space, so they certainly aren't Robinson Crusoe.

Nor do I think it is terminal for them. But they will have to work much, much harder future to regain the trust lost.

Great brands are not built through great advertising. They are built through powerful actions.

Incidentally, nudie may have to take some of the Rosie learning's and apply them to the traditional nudie products. For example, I noticed (and I came across it purely as a result of the Rosie issue), that nudie's 'cranberry, raspberry & more crushie' (otherwise known as the "fire fighter nudie") has just 2.5% cranberry. I originally devised and created the recipe for this product and when it was launched, and for a number of years afterwards, it had 15% cranberry content. It's apple content has increased from 40% at launch to 55% currently. It still comprises 17% raspberry.

As far as I know there has been no announcement from nudie that they changed the recipe somewhere along the line. In fact the nudie website still (as at 30 Jun 08) has the original recipe listed.

Once again, I can't speak to nudie's motive. It may well be that there is a perfectly sound reason for changing the recipe. For example, cranberries are very tart; cranking down the cranberry content and cranking up the apple content would make the product sweeter and smoother and possibly, as a result, more appealing to a broader taste. Another, possibly reasonable, explanation might be that there is a worldwide crop shortage of cranberry (I have no idea whether that is the case) and they simply couldn't get enough of them.

So, I am not suggesting there is anything sinister in the fact that the recipe has changed. But for whatever reason it did change there should have been direct, open communication with nudie consumers about when and why. That sort of communication is once again what we expect from the nudie brand.

Innocent, the fabulous smoothie company in the UK, last year changed the recipe of one of their launch products - mangoes & passionfruit - after about 5 years. When I was last in the UK I bought the new recipe product and couldn't honestly discern a difference from the previous one. I can't recall now why or how they changed it, but I can recall they heralded the change on their website and in their newsletter. They spoke to innocent customers and 'asked their permission' to change the recipe before they did so. And once they had received that permission, and changed the product, they told everyone they had done so.

What a great example! It is one of the reasons why the innocent brand is an inspirational example to all, and the company goes from strength to strength in Europe.

Wasted Opportunity - Market Research 1

2008-07-04T16:50:00.000-07:00

I was picking up coffee this morning in the main street of our village and decided to get some cash from the ATM.

My local bank has recently installed a shiny new ATM to replace the slightly tired looking old one which had served faithfully for many years.

I stuck my card in and a few seconds later the new machine coldly dispensed a few $50 notes.

Now I hate $50 notes. They're just awkward. Shops never seem to have enough change for them; taxis wont accept them for short trips. I'd rather have a wad of $20's and $10's - far more useful day-to-day. Clearly, or perhaps just presumably, I am in the minority.

The old ATM had a really useful feature where, before dispensing the cash, it would ask me how I wanted it, and give me the option of a number of combinations of denominations. That would seem to me to be useful for both the 'big noters' who wanted piles of $50's and $100's AND those of us who wanted something smaller. Freedom to choose is the greatest gift a consumer can be given; and it should be a fundamental right.

Now here is the rub. Not once but three times over the past 18 months my bank has emailed me asking me to participate in market research about ATMs. I always try to participate in market research - I think it is great to provide feedback when asked. So I answered three different but similar online questionnaires about ATMs. In each there was a whole series of questions about how I felt about the fact that, unlike other bank's ATMs, their ATMs allowed you to choose the denomination you wanted dispensed. It was the only thing in the market research I wanted to focus on. As far as I am concerned an ATM is an ATM; at least my bank had a point of difference with theirs that really delivered a customer benefit.

Anyway, despite the fact that I was puzzled about why they had to do the same market research 3 times, I was pretty confident in each of them I had got my message across loud and clear - I love the ability to be able to choose how my currency is dispensed!

You can imagine how I felt this morning when I rocked up and found they had taken away my choice. Anger and frustration were the two primary responses - why keep asking me what I want if I am going to be ignored???!!! This is exactly how brands alienate their customers.

It is also one of the primary frustrations created by market research. We are asked but rarely listened to.

Of course, I am prepared to accept that I may have been amongst a minority. The vast majority, when asked, may have said "No, take our choice away! We don't want the hassle of the extra step in the process. Just gives us whatever currency you want to give us".

But if that were the case the bank still missed an opportunity. They could have had their cake and eaten it as well. They managed to track me down 3 times to ask me the questions in the first place. They surely could have tracked me down a 4th time and let me know things weren't going to go my way.

If I had received an email from them saying something like, 'look, we know you felt passionately about our ATMs primary point of difference, but the vast majority of people didn't give a toss about it; we are sorry, but this time around majority rules and we are going to change the software on our ATMs', a few things would have happened:

I would have felt like they were listening
I would feel valued
They would have put a human face on their otherwise corporate bank
I might have had time to ponder and prepare for the change
I would feel like I wasn't being patronised by them

And as a result I would continue to be a brand supporter rather than a brand agitator.

It is the little things that make a lot of difference when you are trying to win the hearts and minds of consumers.

Apathy

2008-07-04T04:14:00.000-07:00

It is often said that we end up with the politicians we deserve. It seems to me that we end up with the businesses we deserve as well.

I am always appalled at the extent to which businesses and brands seem fine with the fact that they more frequently disappoint their customers (or potential customers) than delight them, but maybe we are partially to blame.

Why do we, as customers, put up with the mistreatment we receive at the hands of businesses who are really there to serve us?

We are an apathetic bunch - particularly here in Australia. We deserve better but never demand it. We put up with crap, and certainly whinge about it to our mates, but we never really seem to punish those that dish it out by withdrawing our custom.

When was the last time someone really enjoyed spending an hour on hold to a Telstra call centre trying to sort out a problem which should never have arisen in the first place? Yet how many people will be in the queue to get one of the first iPhones flying out of Telstra's door?

The positive flip side of this is that businesses who don't disappoint; who truly do focus on their customers and give them something valuable and different; who stand out from the crowd and who delight their customers (as nudie did when it first started - alas no more), create customer evangelists who will spread the message and help build the business.

Hail the power of word-of-mouth.