Ray Silverstein's Blog

TARGETING CUSTOMERS MAKES MORE SENSE THAN EVER

We’re all committed to working smarter these days. We’re busy cutting expenses, trimming the fat, and streamlining processes whenever possible. But there’s one wasteful habit we’re loathe to give up. Many of us still want to sell to “everyone.”

 

These days, most entrepreneurs are thrilled to sell their wares to anyone who wants to buy them…and that’s fine. However, when you try to include “everyone” in your marketing message, you may actually end up reaching no one. 

 

When you broaden your message too much, you risk watering it down to the point where it no longer resonates with your best prospects. That’s symptomatic of a lack of focus, a dangerous flaw to have, especially now.

 

Furthermore, small businesses simple don’t have the time, resources, or staff to chase every demographic. The reality is, you can’t sell to everyone. Nor should you want to.

 

Yet many companies continue to take a scattershot approach to marketing and sales, thinking they’re more likely to score a hit. The truth is, if you want to hit the bulls eye, aim with a rifle, never a shotgun.

 

How do you do this? Start by determining who your best customer is, by reviewing your current customer base. Identify your “A” list customers, along with what makes them valuable. Describe them in as much detail as possible. What common attributes do they share…is it age, gender, or annual income?

 

If you’re a B-to-B operation, you can use the same kind of process. Do you value large firms or small ones? Companies in certain industries or areas? Keep thinking until you arrive with a detailed description of your target B-to-B prospect.

 

Next question: what draws them to your products or services? What needs do you fill? How do you fill them better than your competition, and how can you improve on it?

 

By the time you complete this exercise, you should not only know who your target market is, but what message you should be marketing to it.

  

Targeting customers is yet one more way you can cut, trim, and streamline your business. It will save you money, time, and aggravation. Best of all, it will also position you for future growth.

 

P.S. Need help defining your customer? Email me at ray@propres.com for a free copy of my “Target Your Market” brainstorming worksheet.

 

Cutting Payroll? Think Beyond the Pink Slip

 

Difficult times present especially difficult challenges for small business owners. Perhaps the most painful of all: terminating employees because earnings are down.

 

When business is bad, you have no choice but to reduce expenses. However, cutting payroll doesn’t automatically mean resorting to layoffs. Before you get to the point where you’re drawing up pink slips, create a payroll reduction plan. Your plan should address three points: where you’ll cut, when you’ll cut, and how to minimize the damage moving forward.

 

 Layoffs are a surefire way to cut operating costs, but it’s also the most traumatic. That’s why is wise to plan this in advance, as opposed to reacting in panic because you’ve waited to long. 
 
If you do have to implement layoffs, base your decisions on employee capability and contribution, not seniority or personal need. Create a list, starting with your most productive personnel and working down to the most marginal. That way, if you have to start cutting, you’ll know where to start. 

Once you determine what emergency actions you’ll take, identify your tipping point for setting that plan in motion. This is your point of no return: if business falls to X, then you’ll enact Y.
 
It’s up to you to determine what your threshold is. Every business has its own tipping point. For example, you might tie yours to cash levels such as receivables, inventory levels, aging of outstanding bids, number of bids, backlog in hours or dollar.

 

The point is, when you set an objective, measurable point of action, you remove some of emotional upheaval from the process.
 
Whatever form of payroll reductions you make, recognize that your employees will be traumatized. It’s up to you to set the tone. The best approach is to be positive and upbeat, but truthful about the challenges facing your company.   
 
When announcing cutbacks, look your employees in the eye. Be frank, be real, appeal to their sense of reason. Remind them of the greater economic picture: “I know you’re disappointed…I’m disappointed, too. But people in the unemployment line have even greater hardship then we do.”
 
Leadership starts at the top. When asking employees to make financial sacrifices, you must make those sacrifices, too. Your people must see that you share their pain.
 

Horsing Around: Is Your Business an Old Gray Mare?

I recently had the opportunity to have dinner at an old, very well known restaurant in Chicago, the Cape Cod Room in the Drake Hotel.

The Cape Cod was known as the apex of seafood restaurants in the United States.  It had classic decor, responsive service and outstanding food.  This time around, the experience was different.  Thank goodness I had a lively dining companion or the evening would have been a total disaster.  Nowadays, the  dining room decor is dated, the service extremely slow and non-responsive and the food okay at best.

What does this have to do with small business in general and your business specifically?  It is an example of what not to do.  Do not take your customer and your market position for granted.  Do not let your brand deteriorate.  Do not let your service capability and responsiveness "go south." 

The Cape Cod Room was a premium restaurant with premium prices.  It is now an average restaurant with above average prices.  At one time, it was perceived to be a value.  The experience then was extremely satisfying and customers flocked there.  Now, the experience creates a reluctance to ever return.

In your business, what are you doing, every day, to enhance the customer experience?  Due to the Internet, it is much harder to create a WOW with your customer.  You should be thinking about your key customers and how to create the WOW.  You must have a strategy to make your company “top of mind” and build the personal relationship with your customer--even in a digital world.

A branding expert I know states that your brand is only as good as your last "touch" with your customer.  Small business does not have the marketing dollars to create a major brand, but does have the ability to create a brand within its target market (niche).  Small business does have the ability to be top of mind to its customers or get a last look if you’re a contractor.

Today, competent service is expected and is not a differentiator… unless the service is poor.  The result: you get left out!   Is service and responsiveness a keystone of your business?  You have the opportunity to make sure your organization has the right people to accomplish this.  There are lots of very good people available.  So, it is your responsibility to have the right people in place who are trained with good procedures.

The business environment is difficult, but now is the time to enhance your relationship with customers.  When business improves, companies with strong relationships with customers will reap the harvest.  Sow your seeds now.  Customer service is not expensive.  It is actually less expensive than poor service.  You don't have the rework, corrections, credits, customer hand holding and most important, lost customers.

In the small business owners’ peer advisory boards I facilitate, we discuss the attitude that management must have as well as the employees they need to maximize their business in a soft economy and to soar when the market improves. 

We are always concerned about getting new customers, but now is the time to make sure you retain your existing business.  Don't give your customers the experience I recently had at the Cape Cod Room.  Don't become the Old Gray Mare, or you may get a kick in the ass.

 

 

 

Vision: The World is Changing … What About Your Business?

It’s a new world out there, and if we want to stay competitive, small businesses can’t afford to do “business as usual.” 

For example, I know an entrepreneur who owns a karate studio. Despite the recession, he still requires that students sign-up for at least six months of classes. That worked just fine in the good old days, but it isn’t working now. Enrollments are plummeting, and so are his revenues. But he insists that “I have to pay my rent!” and refuses to change his terms.

But alas, something bigger already has changed: namely, his customers’ spending priorities. Parents aren’t willing to make long-term financial commitments when they’re worried about losing their jobs.

If Mr. Karate wants to stay in business, he’s going to have to acknowledge this reality and update his terms. For example, he could offer month-to-month memberships, or guarantee refunds if parents lose their jobs. Yes, he has to pay his rent. But isn’t it better to collect the rent money one month at a time than to blindly forfeit it altogether?

Now, what about you? Are you operating by obsolete “rules” that are holding you back? Perhaps it’s time to reevaluate your business, to approach it from an entirely fresh perspective. Here’s a few of the questions every entrepreneur should be asking:

• Who is my customer? Has my customer changed in the last two years, and how?   
• What are my customers buying, and why? What aren’t they buying like they used to?
• What are all the things I said I’d “never, ever” do or sell? Is it time to reconsider?

If you don’t know what questions you should be asking, email me at ray@propres.com for a free copy of my “Expand Your Vision” worksheet. The world is changing, and if you want to survive, you need to change, too.

Biography Ray Silverstein is a small business expert who specializes in helping entrepreneurs grow. He is president of PRO: President’s Resource Organization , a network of entrepreneurial peer advisory groups in Phoenix and Chicago. He recently took his own advice and expanded his business to include The PRO Alliance  —it’s the peer group experience, minus the peer group. He is also the author of “The Best Secrets of Great Small Businesses” and a columnist for Entrepreneur.com. You can reach Ray at 1-800-818-0150 or ray@propres.com.