Small Fish Noticeboard

The Forgotten Part of Referral Marketing

Wed, 07 Mar 2012 03:15:00 GMT

Referral marketing is all the buzz these days, and in fact we use it quite heavily in Small Fish. The idea is that your customers are out there talking to people every day, and if you do it right, they send you customers on a regular basis. It’s powerful, and it works well when done right.

You can find all kinds of resources, seminars and consultants who are prepared to help you put this in place for your business. But I find it odd that there’s a fundamental part of this process that many people are ignoring.

You do business with a customer. The transaction is done, so you ask them if they could please send referrals your way. If you do this skillfully, they don’t feel like you’re pushing them beyond their comfort zone. Perhaps you even offer a little token of thanks when people do this.

But the core part of this process is that your customer must be extremely satisfied with the product or service you sold them. We all have many examples of “horror stories” that people tell about bad business experiences – in fact, there’s a bit of a perverse pleasure in telling and re-telling stories like that. These stories actively drive customers away.

But most of the experiences you have as a customer are, well, rather ordinary. I regularly patronize a certain grocery store, but it’s mostly because it’s close and I know the store layout. If they asked me to send referrals, would I ever bother? No, because I don’t want my friends to think that I’m an idiot for recommending a store that’s, well, ordinary. At most, I’ll tell them where I bought something if they ask, but I’m not going to rave on and on about how they just MUST visit it. And, honestly, I don’t care if they do.

On the other hand, there’s businesses that I do rave about. There’s that restaurant with the unbelievable chocolate desserts. The dinner theatre with great performances and good prices. The airline that I flew back in 2007 that absolutely blew us away.

It’s the quality of service that makes the difference. If I’m going to recommend someone to a business I want to be almost guaranteed that they’ll have as good an experience as I had.

If you want referrals, deliver excellent service. Then, when you ask customers to refer you to their friends, they’ll do it.

Carl Dierschow
Small Fish Business Coaching Fort Collins, CO
www.smallfish.us

The Benefits of Business Coaching

Tue, 13 Apr 2010 15:00:00 GMT

A recent study by the International Coach Federation (ICF) reported that among small business owners, the top six professional and business development areas identified in the study were:

Productivity and effectiveness
Planning
Sales and marketing
Business management
Positioning their firm for the future
Leadership

The most valuable results of the business coaching experience reported in the ICF coaching study by small business owners were:

28% said brainstorming was the most valuable result of business coaching
28% said independent viewpoint was the most valuable result of business coaching
18% said encouragement was the most valuable result of business coaching
15% said being accountable to the coach was the most valuable result of business coaching

BOTTOMLINE: Business coaching is one of the four required elements for achieving lasting business excellence (...the others being a systematic business-building methodology, practical activity alignment technologies, and an organization that is ready and able to change.)

Gordon Frandsen
Small Fish Business Coaching
www.smallfish.us

How to deal with price increases

Mon, 29 Mar 2010 15:00:00 GMT

Like night follows day eventually we all have to put our asking price up ... the question when and by how much?

Go talk to your accountan and she/he will tell you the best way to get an instant increased in profitability is to put up your price.

Small to medium sized business operators know how hard it is to win a new customer and how easy it is for regulars to stop buying, so naturally they want to be very cautious with price rises.

But your costs steadily rise, little by little they eat away at your profitability and probably more importantly the implicit value you have built in your business.

I am a coffee snob (well I am a bit of an all round food, wine and other beverage snob if the truth be known), so I take an avid interest in Starbucks fortunes since its grand plans for coffee dominance came crashing down in 2008 with the closure of 61 of its 85 Australian stores and divorce of 685 partners (Starbuck euphemism for employees).

With 22 stores left in Oz when I checked this morning (2 stores must have been closed on top of those announced in 2008) Starbucks Australia still lost $4,580,000 last year selling coffee. That’s a whopping average loss of $208,118 per store.

To gloat, 15 years ago I managed to convince a very large conglomerate not to buy the right to own and operate Starbucks in Oz. My other blue-suited pals within the company said it was “very brave advice” (translated .. are you completely mad!.. must avoid being seen around this one too much!). The company MD then went to the USA, got on the turps, and ended up buying “Denney’s” instead. Go figure!

Now, I have set up quite a few coffee operations in my time and I tell you there is real big money in coffee. But not for Starbucks in Oz... this story will have to wait for another time, because I am here to babble about increasing prices.
Conventional micro economic thinking is, when hard times hit cut back on expenses and cut your prices to keep the customers.

Starbucks in the midst of US recession did this. It also increased prices. Both things worked.

For number lovers see junk in box below;

Starbucks Score Card
Fiscal First Quarter 2010

* Consolidated net revenues increased 4% to $2.7 billion.
* Comparable store sales increased 4% driven by 1% increase in traffic and a 4% increase in average ticket.
* U.S. operating margin significantly improved to 17.3% from 5.8% in Q1 FY09.
* International operating margin improved to 7.4% from 2.6% in Q1 FY09.

What did they do?

Howard Schultz, chairman, president and ceo said

“Continued innovation, the successful enhancement of the customer experience and a transformed, more-efficient cost structure have brought Starbucks to a significant milestone---a return to profitable growth,”

But he is just joshing us. He got away with increasing his prices in a terrible recession by lowering those for which he had direct aggressive competition and increasing signature items.

Worked for Starbucks: store sales up 4%, 1% more customers and 4% increase in average spend.

The biggest selling stuff which has direct competition from MacDougal’s got lowered prices.

Their signature items, you know the ones with funny names, went up by 8%.

Note for all restaurateurs, pub owners and club operators.

Your “specials” need to be more expensive than your normal big demand items; otherwise we customers think you are just trying to shift old stuff or to address purchasing mistakes.

Try regular high volume stuff cheap and specialty stuff expensive.

Loyal customers are price sensitive. Howard (hope he won’t mind if I call him by his first name) gave a present to his price conscious regular users by decreasing their prices. They thanked him by staying with his enterprise. Mental note; do not read the popular book ‘The Loyalty Effect”, do give the regulars “mates rates” and they will keep coming back.

An unnamed Australian company spokesman said at end 2009 Starbucks “now believes that it is well positioned for future growth and will support the remaining 23 (sic now 22) Australian stores.”

I doubt it. But I have been wrong before –see Bledisloe Cup 2002 in Christchurch, even paid for an airfare to see us (Wallabies) beat them (whatever) at their place for the first time. As I said I have been wrong before but gosh that was a fun trip. Again, a story for another time.

Give some thoughts to Starbucking your products prices.

Time for another coffee

Seamus O’Brien
Small Fish Business Coach

For your free e copy of “The loyalty effect: the hidden force behind growth, profits, and lasting value” by Frederick F. Reichheld and Thomas Teal, cut and paste this into your favourite search engine. http://books.google.com.au/books?id=JzkD_ooCNlYC&dq=the+loyalty+effect&printsec=frontcover&source=bn&hl=en&ei=MN2mS6GgK4rg7AOMlcGQCQ&sa=X&oi=book_result&ct=result&resnum=4&ved=0CBcQ6AEwAw#v=onepage&q=&f=false