Would You Like a Beer With That Latté?

Alan Zell, author and retail marketing expert said, “Every business needs more business. That is an accepted fact. The unaccepted fact is that most businesses don’t use all the opportunities available that will bring them additional business. When one looks for additional business, the primary goal should center around getting second sales. What are second sales and why are they important? Second sales are add-on sales, repeat sales and sale by referral. They are important because they are much less expensive to get than first sales.”

I wrote about second sales, or up selling as it is more commonly referred to, last week. Today I will present two more ways to squeeze additional revenue out of your existing customer base. Allow me to begin with an actual example.

If you are a pet owner, you are aware of a powerful strategy veterinary clinics employ to drive sales and increase profits. That strategy is boarding facilities. Think about your experiences boarding pets. Chances are you also have them washed and groomed, and probably address checkups, shots and other recurring medical needs. Of the $65 average daily bill when boarding our Rottweiler, over half is for services other than boarding. I willing pay the $65 because it meets another important need. It buys the added assurance that if anything happens to my 12-year-old dog, she will be well taken care of until I return.

The point is that in addition to being profit centers in their own right, boarding facilities attract customers and generate revenue for other areas of veterinary services.

Ask yourself, “What is an equivalent up selling strategy for my business?” To be successful, it should be either complementary or counter-cyclical to your primary business. Here is an example of each strategy.

Complementary strategy: Starbucks announced a textbook example of a complementary marketing strategy in 2010. They began test marketing beer and wine sales at several Seattle locations. Designed to supplement a product line that holds diminishing customer appeal after the morning rush hour, alcohol goes on sale at 4:00 PM. Starbucks also announced their Starbucks VIA® Ready Brew coffee in 2010. It comes in four flavors, and is available online and through grocery stores and other retail channels. Not surprisingly, it was widely reported in 2011 that Starbucks has replaced Burger King as the nation’s third largest restaurant chain, a major accomplishment for a “non-burger and fries” chain.

Counter-cyclical strategy: Installing holiday lighting is big business in my town. Contractors spend most of November and early December installing lights. They spend January removing, repairing and storing lights for the summer. What do the installers do the rest of the year? I frequently see their trucks around town. I have also met several installers over the years. Everyone had a lawn maintenance or landscaping business that not coincidentally keeps them busy from March through October.

Finally, consider the capital investment (inventory, new equipment, sales training etc.) required for your new products or services, and the payback period expected before the strategy generates a positive cash flow.

© 2011 by Dale R. Schmeltzle

Too Foolish To Fail – Part 2

On Friday, I began a two-part post on Mark Zuckerberg’s three mistakes in starting Facebook. Mistake # 1 was not coming up with an original idea, but merely improving on other people’s ideas. It turns out that was not a mistake after all.

Today, I will analyze his other mistakes, namely:

2. He waited too long to “cash out.” He should have jumped at the first opportunity to raise some serious “beer money” like a normal college kid. If only he had, he would be a millionaire today!

3. He failed to exercise basic common sense! Anyone smart enough to get into Harvard should know that a dream of launching a worldwide business to redefine a major facet of society is destined to break your heart. Homer Simpson said it best, “Trying is the first step toward failure!”

Let’s analyze these missteps.

I am frequently surprised at the short-term vision baby boomers adopt in their business planning. I often encounter entrepreneurs who hope to build a successful business and “cash out” in five years or less.

This view is a distraction from your value proposition, the very reason you went into business in the first place. Think about it. Customers are at best indifferent to your retirement plans. Would you pick a new dentist if you knew she planned to sell her practice in two years?

It also introduces a bias that will slant business decisions in favor of maximizing short-term cash flows at the expense of building long-term value. For example, owners will forego investments in customer service and product design if payoffs extend beyond their timeline. This situation is analogous to watching a runner round the bases as you chase a fly ball. There are already plenty of opportunities to falter in business without unnecessary distractions. Do not take your eye off the ball!

It seems counterintuitive that a college student, given the opportunity to finance what would have been a carefree life style, would follow a business plan that extended beyond the next frat party. To his credit, now 27-year-old Mark Zuckerberg has resisted the temptation to monetize his 24% stake in Facebook for 7 years. Instead, he has continued to lead the company according to his vision.

It is hard to argue with his success. Earlier this year, Goldman Sachs valued the private company at $50 billion. Mark kept his eye on the ball, even when faced with what would have been an irresistible temptation for us mere mortals. Cashing out four or five years ago would have cost him billions.

You were right, Zuck. My partner and I were….we were….well any way, you were right. Gloating is so not cool, Mark!

That brings me to his third mistake. Mark should have listened to the voices in his head that are quick to point out all the reasons why his grand plans would surely fail.

Abraham Lincoln once described a general who was unwilling to make decisions under pressure as “acting like a duck that had been hit on the head.” Fear of failure is a powerful motivator. It causes some of us to avoid decision making altogether.

Decision making is a cognitive process involving logic, reasoning and problem solving skills. Unfortunately, each of us enters that process with certain preconceived biases. We are often quick to listen to any voice that supports them. It is normal to exhibit a reluctance to move off those biases, even if faced with new facts, circumstances or opportunities. Therefore, the safe decision (i.e., to spend our career as a corporate wage slave rather than launch a new venture) is often the default decision.

Samuel Clemmons once said, “It’s not what you don’t know that will get you in trouble. It’s what you know for sure that just ain’t so.”

To his credit, Mark Zuckerberg did not let what he did not know about launching a business get in the way of his success. His vision was inspiring; his execution was courageous.

In the final analysis, my partner and I could take a lesson from him. So can you!

 © 2011 by Dale R. Schmeltzle

It’s Nice to be Lucky

Someone recently asked why I prefer consulting to corporate positions. The truth is I am not sure I do. However, the question got me thinking. That got me writing, so here I go.

A number of years ago, family circumstances forced me to leave the corporate arena, where I had established a 25-year record of success. Consulting offered the only viable opportunity to feed my family.

Back then, the World Wide Web as we called it was still in its infancy. Only large companies had websites. E-commerce was virtually nonexistent. Facebook would not be introduced for another four years. My personal computer provided email access. However, many people still lacked an email address, especially at home. I cannot recall whether I could attach documents. I suspect not. Cell phones typically cost hundreds of dollars per month, largely due to a now antiquated practice of assessing “roaming charges” for long distance calls. Blogging? That sounded more like something my Rottweiler does after she eats grass than a mass communications tool.

I did not have a marketing clue, let alone a marketing plan!

What I did have was a telephone. It attached to the wall with a long wire. You may remember the device, having seen one in your grandmother’s house or perhaps a museum. It could serve as a fax, but only if the recipient also had one. Although it sometimes seemed to weigh 500 pounds, I was occasionally able to muster the strength to use it.

The third phone call I made landed a million dollar client. It also launched what became a 15-person consulting firm. You can choose to characterize the call as pure dumb luck, divine intervention or anything in between. I will find no fault with whatever label you assign. The bottom line is consulting supported a comfortable life style for several years, while allowing me to address challenging family issues.

A decade later, circumstances beyond my control again forced me into consulting. Since then, I have defined my value proposition (I had no idea what that was 12 years ago) by offering cost effect advice to small and medium sized businesses. My advice is usually very specific, lengthy and often somewhat technical.

Today I will depart from my recent path. Instead, I will present two brief and decidedly nontechnical suggestions. I share both from very personal experience.

1. Mr. Tom Lewis, an online marketing consultant from “across the pond” put the whole concept of small business marketing in a rather interesting and concise perspective. He said, “All these new media buzzwords like social networking and technology like LinkedIn are just new ways of complementing (some would say avoiding) personal contact. Get out there and get your face known! Pick up the phone and call some potential clients. Speak at some networking events. Knock on some doors.”

As Mr. Lewis’ quote insinuates, there is a significant difference between merely communicating and actually connecting with customers and prospects. I can instantly communicate with thousands of people with the click of a few buttons. Yet even with the myriad of now common “high tech” options, the only better way of really connecting with someone other than the lowly telephone is in person. Unfortunately, that option is often unavailable.

My first suggestion is therefore quite simple. Include some “low-tech” tactics in your marketing plan. Pick up the phone and start dialing. Your next large client may be waiting at the other end! Mine was.

2. As of July 2011, 13.9 million Americans (9.1% of the civilian workforce) were unemployed. Over 6 million people are deemed long-term unemployed, Washington-speak for out of a job over six months and desperate. Motivated by a lack of alternative employment opportunities, large numbers eventually migrate into their own business or consulting, as I did. Unfortunately, many are fundamentally unprepared for the operational and emotional challenges that line the road to successful self-employed. Nevertheless, they are more in need of a simple word of encouragement than business advice.

I end with a quote by Thomas Edison. He said, “Many of life’s failures are people who did not realize how close they were to success when they gave up.” That is as true in today’s difficult economy as it was in 1879 when Edison perfected the light bulb after experimenting with over 10,000 different filaments.

That leads me to the shortest and most basic suggestion I have ever dared offer. Hang in there!

Until next time, I wish you good fortune in all your business endeavors. Let me know if I can be of assistance.

 

© 2011 by Dale R. Schmeltzle

SLIDESHARE, HOW DO I LOVE THEE? (PART 3)

Earlier this week, I began a three-part series on SlideShare, a free online slide hosting service. Part 1 discussed the first three of ten important things you should know about SlideShare, its demographics and norms. Part 2 explained how to embed YouTube videos and how to access SlideShare remotely. As promised, I have saved the best for last.

Here are today’s suggestions.

9. SlideShare provides truly excellent support through LinkedIn, Twitter and Facebook. I have promoted several files through my LinkedIn groups. I have twice received emails saying, “XYZ file is being talked about on LinkedIn more than anything else on SlideShare right now. So we’ve put it on the homepage of SlideShare.net (in the “Hot on LinkedIn” section).” In both cases, view counts increased dramatically, if briefly.

Another benefit of tweeting SlideShare files is the potential of promoting your brand on a worldwide basis through Paper.li. It takes Twitter streams and extracts links to news stories and videos. It then determines which stories are relevant based on criteria the user establishes. It creates themed pages based on specific topics using hashtags. Paper.li subscribers distribute their daily or weekly publication as a unique newspaper, written from a perspective of what is of interest on the Web that day. Every Twitter user is therefore a potential editor. Their followers (including CFO America on several occasions) serve as unpaid journalists. To view a sample of Paper.li, read The CFO America Daily at http://paper.li/CFOAmerica/1300800014.

10. Finally, the number one reason for my love affair with SlideShare is what I call the “60 minute Twitter boost” phenomena. To experience it for yourself, open your file on the “My Uploads” tab and click on the Twitter icon. The following tweet will appear, “Check out this SlideShare document: The Title of Your SlideShare Document” along with a shortened URL. Modify the tweet with a few appropriate hash tags. Without fail, the file experiences a marked increase in views and downloads for about an hour. In my experience, views have jumped up to 35 times their daily average. I have tweeted friends’ documents with identical results. The boost trails off quickly, and totally evaporates within 24 hours. However, it can be extended with multiple tweets over the course of a day. Use different hash tags for each tweet.

In closing, I offer my apologies to Victorian era poet Elizabeth Barrett Browning for the shameless exploitation of her classic poem. Imagine how quickly it would have gone “viral” if only Ms. Browning had the same access to SlideShare.net that you and I now enjoy.

Go forth and share!

You are Invited to my Party

Small business coach and author Robert Gerrish said, “For many, one of the greatest moments in business is the joy of attracting a new customer or client. In such circumstances, it is easy to get so caught up in the excitement that we forget to spend time on realizing the value of one of our business’s best assets, our existing client base.” For example, you may have heard banks criticized for offering free checking to new customers while charging existing customers for the same service.

As Mr. Gerrish suggests, all too often promotions only target new prospects. Show your appreciation of existing customers by holding promotions and events designed exclusively for them.

  • A special after-hours personal shopping event or trunk show, complete with entertainment, refreshments and “invitation only” discounts is an example. If your products typically require sizing or fitting (such as clothes), allowing a two day presale can create additional excitement. Customers select their purchases in advance, which you hold until the actual sale. This procedure also requires customers to visit your facility at least twice.
  • The luxury day spa I spoke of earlier invited my wife and I (did I mention she is one of their most loyal customers) to an art exhibit by a nationally recognized concert pianist. The event also included a wine tasting.

Another way to demonstrate your appreciation for existing customers, suppliers and employees is to hold an open house or reception. This is a great way to display your operations. It will also strengthen relationships between customers and staff that have not met. If your facilities do not include a suitable physical location, host it at your home, a nearby restaurant or under a tent on the front lawn. Moreover, while your open house or reception must be memorable, it does not have to be expensive. Class is not measured in dollars.

  • You may find network contacts are willing to help cater the event, print programs and menus, provide entertainment or other useful services at substantial discounts in order to promote their products and services to your customer base. Always take full advantage of your network and be ready to reciprocate by supporting and promoting their events.
  • Avoid scheduling functions on weekends or when likely to conflict with numerous holiday events. Use all of the communications tools and options previously discussed to ensure good attendance. There is nothing more discouraging than hosting a party when no one shows up.

A final caution about special event promotions is that in order to be truly special, you cannot hold them too often. Any promotional tool that is used too frequently runs the risk of creating customer expectations that will cause them to avoid full price purchases in anticipation of a sale or event that may never happen.

Next week, I will present an exciting 3-part series on my ongoing love affair with SlideShare.net. It picks up where a June series on this topic left off. I think you will enjoy it. Until then, stay safe and enjoy your weekend. You earned it!

 © 2011 by Dale R. Schmeltzle

Can You Offer Free Lunches?

There is an old adage that there is no such thing as a free lunch. The same is true of free shipping. It is a variable cost of doing business. It ultimately must be passed on to customers, directly or through increased prices.

So why did Wal-Mart, America’s largest retailer, announce in early November 2010 that it was offering free shipping through December 20? Furthermore, why did competitors like Target and JCPenney quickly announce similar plans?

The answer is they all read the same market research. Consumers love “free” shipping. It is as close to a guaranteed way of increasing customer satisfaction as you will find. Conversely, an online shopper survey by Compete.com reported that high shipping costs were the number-one reason online shoppers were not satisfied with their orders. It is also why 65% of respondents indicated they prefer the “in store pick up” option, when available.

This tendency to avoid explicit shipping costs can present marketing opportunities to a creative businessperson. For example, a few years ago, one of the national pizza chains decided to offer a home delivered pizza that was larger than the in-store version. Customers willingly paid extra for the super-sized pizza, especially since it came with free delivery. Customers did not know (or did not care) that there was no incremental cost for the larger product. The extra price was in reality a hidden delivery charge.

The moral of this example is simply that customer perceptions and opinions define value in every transaction. If they are reluctant or unwilling to pay for one service, perhaps they will perceive value in some other feature that can fund the cost of the first service.

Finally, if you decide to offer free shipping, test the bottom line impact by initially setting a minimum threshold (for example, only available on orders over $50) on sales.

Accountability is a key to every successful marketing campaign, and this is no exception.

 

© 2011 by Dale R. Schmeltzle

 

Do you really need to be on Facebook?

A friend recently asked me why a small business needs a social media presence. The first question is whether a small business needs a social media presence. The short answer is: it depends! More specifically, it depends on your marketing objectives and target audience. Let’s discuss both.

The ultimate purpose of a marketing initiative is to influence consumer behavior in ways that accomplish your business goals. What exactly do you want to accomplish? Define your goals by listing the results you hope to accomplish. Desired results may include multiple objectives, including:

  • Business production
  • Brand awareness
  • Reduce marketing costs
  • Consumer education
  • Lead generation
  • Establish expertise
  • Specific promotions

New business production is often difficult to achieve using any strategy. I have spoken with many professionals who do not view social media as a source of new customers. That mirrors my experience. To be fair, I have not found the traditional web a meaningful source new business either. I believe that having a website is now a prerequisite for credibility. I suspect it is often true of Facebook and other social media sites as well. On the other hand, I know insurance agents, tax specialists and social media vendors who generate significant business through social media.

Again, business production is only one of many marketing goals. I recently spoke with an account executive at a major brokerage. He wants to increase his Internet footprint. His assumption is that the odds of a prospect becoming a client are proportional to the number of hits when they search his name. The broker wanted to know how many hits “CFO America” generates. The answer was 7.7 million. While nine of the first 10 were my company, many were not. However, if only 1% is, it far exceeds several regional and national competitors. That exposure results from an extensive social media effort. It is also consistent with an April 2010 survey by Michael Stelzner of SocialMediaExaminer.com. He found 85% of participants reported social media generated exposure for their business.

Two other marketing goals supported by social media are search engine results and cost reduction. I spent $10,000 developing a traditional website. I was promised a “top 3” ranking for the phrase “fractional CFO.” While it accomplished its goal, I am still waiting for the phone to ring! Very few people search that phrase, largely because they do not know what it means.

Could I have used social media to boost search rankings and save money? The Stelzner survey found 54% of participants thought social media marketing improved their search rankings. It also found 48% experienced marketing expense reductions. I am now using blogging, Facebook, Twitter and other sites to educate the small business community on what a fractional CFO is and how it can benefit them. Since I cannot afford a national print media campaign, this is the only way I know of to accomplish my goal.

The second area to explore in evaluating the need for a social media presence is your target market. The question to ask is where potential customers turn (Internet, newspaper, Yellow Pages, etc.) to learn about your products or services, and businesses that offer them. The answer is largely dependent on customer demographics like age, education, income level, gender and so on. The statistics are easily summarized. If your marketing “sweet spot” lies in young, educated, and/or high-income consumers, you need social media. Using Facebook’s active U.S. users as a proxy for all of social media, 80% are under age 45, 66% have at least some college education, and 67% have incomes over $50,000. U.S. active Facebook users (like many social media sites) exhibit a bias in favor of women. However, on a worldwide basis, Facebook has slightly more men than women. Visit www.alexa.com to find matches for your target market.

Does your business need a social media presence?

That is a key marketing question, one you must ultimately decide on your own. I hope you will base your decision on an objective analysis of your marketing goals and target audience. I now end by confessing the obvious. I love social media marketing! I am excited about the possibilities it offers small and medium-sized businesses to communicate their message across a wide spectrum of prospects. Having said that, it is difficult to conceive of goals and audience demographics that are not supported by social media marketing. It is impossible to conceive of a more cost-effective strategy.

Reducing Fear and Uncertainty, Part 3

This week, I have been talking about the important marketing topic of decreasing consumer fear and uncertainty to increase sales. I conclude the series today with a discussion of introductory offers and giving away free service.

  1. Customers want to know approximately how much they should expect to spend in advance, without having to keep an anxious eye on the clock. This is often an issue for lawyers, CPAs and other highly compensated professionals who generally charge hourly rates. If this situation applies to your business, structure an introductory offer. For example, as an attorney with a billing rate of $250 per hour, you might offer to incorporate a new business, obtain all required permits and tax identification numbers and organize their corporate records for $499 including an initial consultation. If the project is completed within two hours, you earned your standard rate. If not, the introductory offer still works if you provide subsequent services using your regular fee schedule. You may also land full-price referrals because of your introductory offer.
  • As you complete assignments, you will likely find ways to reduce time and costs, lowering your breakeven point in the process.
  • The introductory price is independent of who performs the work. You can further reduce your costs if you can delegate portions of the assignment to your staff or outsource to lower-cost vendors.
  • For example, if you are a personal wealth manager, offer a free analysis of a prospect’s retirement investments. That is an important part of your main service. Your hope is obviously that some prospects will be so impressed with your knowledge and advice (or so unhappy with their current manager) that they will retain you to manage their portfolio. Other examples of providing a free service include a carpet cleaner who offers to clean one room free of charge, or an alarm company conducting a free home security analysis.
  • Jewelry stores illustrate an example of attracting customers with auxiliary services. They often provide free ring cleanings or replacement batteries for watches. With the highest gross profit margins in retail, very few prospects have to make additional full-price purchases in order to make the free service a successful strategy.
  1. My final suggestion under the topic of reducing fear and uncertainty to increase sales is an extension of the previous one. It is admittedly controversial. The idea is to provide free service in the hope of gaining new customers for full-price services. However, what you are giving away is neither the “2-cent sample” variety of the previous idea, nor the deluxe version of your service. It is somewhere in-between, probably closer to the former than the latter. Your free offering should be either a limited version of your primary service, or a less expensive auxiliary service.

I conclude the discussion of reducing fear and uncertainty to increase sales by reminding you of Monday’s quote by Mr. Ziglar. The next time you deal with an unhappy customer, take it as an opportunity to learn more about their needs while reducing their perception of risk. Remember also that helping them address their needs and concerns is critical to the ultimate success of every business.

Reducing Fear and Uncertainty, Part 2

On Monday, I introduced the topic of reducing consumer fear and uncertainty, and the distrust that often accompanies those emotions. I suggested that building a reputation for post-sale customer service and offering free samples might help overcome these marketing obstacles.

Today I will discuss offering satisfaction guarantees.

3. A self-described marketing expert once insisted I needed to offer a “100% money-back guarantee” to win new clients. It gets worse! He also suggested I guarantee savings of at least 10 times my fee. I had two major issues with the suggestion. First, in a profession where it was actually illegal to advertise only a few years ago, it sounded too much like an old-fashioned “snake oil” marketing approach. Secondly, all I do is counsel and advise clients. The value of that advice is ultimately dependent on their success in implementing recommendations in a timely fashion. I cannot guarantee the actions of others. Neither can you!

With that said, the concept of a money-back or satisfaction guarantee might have value to service providers within some narrowly defined parameters. Carefully consider the following matters:

  • At the risk of sounding like a cynic, get paid up front. Clients will be less likely to take advantage of your guarantee if they have to look you in the eye and lie about their dissatisfaction while asking for a refund.
  • Place clear and reasonable boundaries on what customers must do to qualify for a refund. Assume for example that I promise to develop your website and have it running within 60 days. That commitment must be contingent upon you providing a list of items like graphics and content, and on your timely approval of my work at various stages of completion. If your failure to perform those obligations is the primary cause of me missing the deadline, forget the money-back guarantee.
  • Consider offering a money-back guarantee on only part of your services. For example, weight loss centers advertise you will lose 20 pounds in 10 weeks for $20, or you get your money back. Since these centers cannot guarantee customers will follow the program, they cannot guarantee anyone will lose weight. They do not seem to fret much over that minor annoyance. Part of the weight loss program is that you eat their food for the entire 10 weeks. That will cost another $75 or more a week. No one can reasonably expect a refund for food they consumed, no matter how little weight was lost. Furthermore, some customers will simply be too embarrassed to admit their failure and ask for a refund. More importantly, for every customer who has their $20 fee returned, others will be so pleased with the initial results they will decide to lose 50 pounds. The extra 30 pounds are not at $1 per pound, and you still buy food from the center. This money-back guarantee is pure marketing genius.
  • Be aware that guarantees sometimes carry negative marketing connotations that can reflect poorly on your brand. That is largely due to all-too-common marketing promotions that border on deceptive advertising. I once had a client who previously developed a product marketed exclusively on late-night infomercials. You are no doubt familiar with the type of promotions to which I am referring. Everything is a huge value (whatever that is), yours for only $19.95 plus shipping and handling charges. The product always comes with a satisfaction guarantee. My client explained the rules of the game. The key phrase is “plus shipping and handling,” a greatly inflated sum that includes the actual cost of the product. That explains why infomercials frequently offer a second item “free” if customers pay separate shipping and handling fees. The $19.95 is pure gross profit! If a disgruntled consumer wants a refund, they must first return the product at their expense. The shipping and handling is not refunded. Therefore, the seller’s “worst-case scenario” is that the customer paid the full cost of the product and is now allowing them to resell it. Meanwhile, the refunded $19.95 was an interest free loan. I trust this deceptive practice is incompatible with your mission statement and value system. Do not risk long-term customer relations and reputation for the sake of short-term gains.

I will conclude this series with a discussion of introductory offers and giving free service. I look forward to meeting you here bright and early Friday morning.

Reducing Fear and Uncertainty

Let me give you a hypothetical illustration. You have a choice between two mutually exclusive investments. The first offers a guaranteed 3% return. The expected value of the second investment is 6.25%, more than double the first. It has 75% chance of returning 25%. However, it also has a 25% chance of losing 50% of your investment.

Which one do you choose?

If you picked the first one, you are in the majority. Physiologists tell us that the fear of losing what we already have is a powerful motivator. You picked a “sure thing” because the second investment’s higher expected value was not enough to overcome your fear of an uncertain outcome. In other words, you are risk adverse!

The same predisposition toward risk aversion applies to most consumers. Every business must recognize the fear of uncertainty, especially when marketing to new consumers or offering new products or services. Why, for example, would a prospect buy from you when they already have an existing relationship with your competitor?

You are the “uncertain outcome” in our investment example.

Uncertainties instill a level of customer distrust. Starbucks CEO Howard Schultz explained the reason for this distrust. “In the 1960s, if you introduced a new product to America, 90% of the people who viewed it for the first time believed in the corporate promise. Forty years later, if you performed the same exercise less than 10% of the public believed it was true. The fracturing of trust is based on the fact that the consumer has been let down.”

Your challenge is to overcome distrust and risk aversion. This week, I will discuss several ways to help you meet that challenge. Here are today’s suggestions.

1. Perhaps the ultimate way of overcoming customer perceptions of risk and uncertainty is simply by building a solid reputation for post-sale customer service. American author and motivational speaker Zig Ziglar said, “Statistics suggest that when customers complain, business owners and managers ought to get excited about it. The complaining customer represents a huge opportunity for more business.”

Statistics do indeed support Mr. Ziglar’s comment. The White House Office of Consumer Affairs reports that the average dissatisfied consumer will tell between 9 and 15 people about their experience. Approximately 13% will actually tell more than 20 people. Compare those prospects to the results of a survey by Lee Resources. They found that 70% of complaining customers would do business with you again if you resolve the complaint in their favor. Fully 95% will do business with you again if you resolve the complaint immediately.

2. We have all ventured out of our culinary shell from time to time and took a risk by ordering a new entree or dessert, only to discover we hated it. Ice cream shops have found a cheap yet completely effective way of eliminating this risk. They offer free samples on tiny plastic spoons. The sample (including the spoon) costs less than two cents. Supermarkets hand out free food samples in little plastic cups. Wine tastings accomplish the same objective.

Free samples, or alternatively a free trial period, may be the best way to encourage customers to try new products or services without the fear of having to pay for something that does not meet their needs or tastes.

On Wednesday, I will discuss money-back guarantees. Stay cool until then!

  • RSS
  • Newsletter
  • Twitter
  • Facebook
  • LinkedIn