Wednesday, 30 October 2013

One size fits all?

I have been trying to do a bit of online shopping recently in an attempt to spruce up my wardrobe somewhat as getting dressed in the morning is becoming a bit like Ground Hog day.  While I’m a real fan of being able to trawl so many high street names from the comfort of my sofa, while watching Strictly, I would really like to know what the clothes on offer look like on a, shall we say, fuller figure.

For anyone who is not au fait with on-line clothes shopping, the big high street brands present their clothing collections, each item displayed at its best on a beautiful model.  Now I’m sure that the size 6 waif like forms show off the clothes at their most beautiful, but that doesn’t tell me what they will do for me.  So I guess I am going to have to brave the hordes of shoppers and deal with the premature Christmas decorations festooning the shopping centres in order to avoid a mountain of returns of ill fitting clothes.

Unfortunately this doesn’t seem to be true just for the clothing sector.  In fact many businesses, particularly when starting up, attempt the broad brush approach hoping that by casting the net wide they will “catch” more customers – but is this a wise tactic or, by trying to please everybody, will they succeed in pleasing nobody?

Often, the most successful businesses, particularly small businesses, aim themselves at a niche market.   If there was a website selling size 12 clothes for 30 somethings I would be there hammering the credit card.  So maybe a better tactic is to tell your potential customers exactly what it is that you can do for them, in their circumstances – the more specific the better.  Because people are much more likely to buy a product that they feel was made for them than a “one size fits all” offering.

So look at what your business is good at, what are its strengths?  Then aim to trade on those strengths to offer a superior product to customers you can make a real difference to.  This is a much better approach than trying to cover over areas of weakness in order to offer a mediocre product with a wider appeal.  Because, with very few exceptions, one size does not fit all.

Wednesday, 23 October 2013

Decisions, decisions, decisions ...

I went to my eldest daughter’s school PTA meeting last night, an organisation which is truly run by committee just like many other voluntary organisations that I have been involved with over the years .  Now this may be the most politically correct way to make decisions, but certainly is not the most efficient.

In the interests of trying to please all the people, all variations of all options are considered.  The eventual outcome then being the option that pleases most of the group members, which is not always the same as the option that best achieves the objectives of the group. 
Now this is fine for a PTA, after all what a PTA needs more than anything else is volunteers to run it and so keeping them happy has to be high on the list of priorities.  But a commercial business cannot run successfully in the same way. 
It is vital for the survival of any small business that it is able to quickly adapt to changes in the market in which it is operating.  Many start-ups are competing against well established businesses and as a new entrant into a market there is a need to be able to beat competition when it comes to fulfilling ever changing customer needs.
Over the course of my career I have worked in businesses of many different sizes and, in my experience, the size of an organisation seems to be directly proportional to the level of bureaucracy.  This means that the biggest player in the market will probably be the slowest to react to unexpected changes in the market and this gives the little guy a chance to get a foot in the door.

The little guy also has the advantage of being closer to the customer.  For a one man band, the distance from the front line to the top is very short indeed allowing customer feedback to translate directly into innovation in a very short time scale.
But not all decisions relate to market changes, there can be strategic or budget decisions to be made or difficult decisions to cut costs or streamline processes.  It is never advantages for a business to remain in a state of uncertainty whilst unnecessary deliberations are made, the recent US shutdown is evidence enough of that. 

So good decision making is vital, as is innovation and a clear awareness of market changes.  And remember, you can’t please all the people all the time.

Wednesday, 16 October 2013

The importance of Customer Service

While out and about this week I treated myself to a cup of coffee.  I ordered a large, skinny coffee but, had I not intervened, I would have been given a medium, full fat coffee.  The problem was that the barista was rather more interested in gossiping with her colleague than she was about making the cup of coffee that I had asked and paid for.  To be fair, the gossip was probably more interesting, but it did not feature on my list of priorities.

I left the coffee shop a disgruntled customer.  Although I had a perfectly good cup of coffee (made to my reiterated specifications) for which I had paid a reasonable price, I had not had a good experience.

I'm sure I read somewhere that a happy customer will tell 2-3 people while an unhappy customer will tell 8-10.  Well in this social networking society, those numbers increase substantially - I only need update my Facebook status and I've told hundreds of people about my grievance with minimal effort, a couple of likes or comments from friends and the number increase exponentially.

Now, with word of mouth being such an effective marketing tool, the value of customer experience is ignored by any business at their peril, see Ryanair's recent headlines if you're not convinced.  And in fact it is true to say that there are many circumstances where a business can charge a premium if they have a reputation for good customer service.

With apparent customer loyalty from discounted prices lasting only as long as the discount, which is usually unsustainable, investment in customer service can offer a low cost and effective way for a small business to really shine.  And as the small business proprietor is so close to the customers, customer satisfaction surveys and mystery shoppers aren't necessarily a requirement.

So what's the down side?  Choosing to invest in customer service may be the long game as results (in terms of increased customers) will not be instant.  But if you are in business for the long term, then surely the long game is the game to be playing.

So, what about the coffee shop?  I would love to be able to tell you that I won't be giving them any repeat custom, but the truth is that there isn't a convenient alternative.  So, due to lack of competition (see last week's blog), I will be back there again playing coffee roulette!


Wednesday, 9 October 2013

Healthy Competition

Last week I visited our local soft play area with my youngest daughter and her best friend.  This is not our usual haunt as we usually meet with a group of friends at another soft play centre 7 miles away and after my latest visit to our local I remember why.

Not wanting to bore you with the details but it was, in my opinion, over-priced and showing a few too many signs of wear and tear.   It used to be a lovely centre which, as I recall, was reasonable value for money but it would seem that those days are gone as they look for every opportunity to squeeze more money out of the customers coming through the door.

The falling standards and rising prices annoyed me somewhat which seems a little unreasonable when no-one forced me in there, it was my choice and I could have chosen to drive to our usual centre with two toddlers had I felt strongly enough.  But it was too far to go and so I paid the money and accepted the service being offered. 

And therein lies the problem with a lack of competition.  Why would our local centre charge a lower price or choose to invest in their equipment if they don’t need to?  They are safe in the knowledge that their nearest rival is a good car ride away providing something of a captive audience.  Surely it’s just good business sense to maximise profits by charging the highest price and keeping costs to a minimum.   After all, this is a business not a charity.

But, what if a new centre was to open just around the corner?  Suddenly there would be a need for innovation in order to stay in the game.  If you lose your unique selling point (in this case being the only supplier in the area) then you need to find a new one in order to hold onto market share.  So what will it be?  Customer loyalty won’t be enough, particularly if you’ve been ripping people off for years.  So you’re looking at falling profits as you slash prices and plough investment into your product to appeal to the customers who once had no choice.

This is great news for customers who now get much more for their pound, but maybe a warning to the supplier not to become too complacent while enjoying their monopoly position.  After all, nothing is forever.   This could be a lesson for anyone who runs a business to make sure that there are contingency plans in place for every eventuality including the entry of new competition into the market.

So then, in my humble parental opinion every town should have a soft play centre – they are brilliant places.  But maybe, in the interests of innovation and customer experience every town needs two.

Wednesday, 2 October 2013

Tax breaks for married couples

There has been a lot of discussion in the news this week about David Cameron’s proposed tax breaks for married couples, but in today’s day and age is it appropriate to show preference to this group of society over other, maybe less conventional, families?

I suppose your point of view on this issue will depend very much on your opinion of this long established institution.  However, it is worth noting that there are already many tax advantages to having a valid marriage certificate.

Sharing assets

One of my clients owns a small property letting business which he runs alongside his full time (and some would say very well paid) job.  As a higher rate tax payer he must pay tax on any profits from his property business at 40% while his (up until recently) girlfriend pays basic rate tax on income from her employment.  I say “up until recently” as they were married a few weeks ago and now are able to pass the property assets between them without any Capital Gains Tax implications allowing them to pay tax at 20% on the property business profits.

What if your partner dies?

On the other rather more sombre side of the coin, a friend of a friend of mine lost her partner of 15 years a few months back.  Although they were “life partners” with two children they were not married and so, in addition to all the stress of losing her partner and the father of her children, she must also pay inheritance tax on the portion of their house and assets that belonged to him.  This is a massive amount of money to find to be able to keep herself and her children in their family home.  But the issues don’t stop there.  Although she will receive a lump sum from his death in service insurance, there is no widow’s pension as, by the letter of the law, she is not a widow.

So maybe Mr Cameron’s current tax breaks for married couples proposals are just the tip of the iceberg.