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Get back to
basics to recharge your firm... |
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Entrepreneurs sometimes find themselves in a dangerous
comfort zone. They are doing well enough to get by, but they aren't learning
and their companies aren't growing. |
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What do you do if you're trapped in this
adequate-but-mediocre state? The trick to growth is to go back to basics and
review how well you know your business and are fulfilling your
expectations. |
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Here's a quick guide to reviving a stagnant business: |
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Understand your customer. Start by reviewing
information you have accumulated on customers. It is useful to have a breakdown
of their gender, demographic distribution and family income. What percentage of
disposable income do they spend on your product and how often do they use it?
Review average ages, number of family members and, if it's relevant to your
market, ethnic origin. |
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If your data base contains this basic information, you can
quickly sort it into a useful format. If you don't have the information, you
can capture it in a number of ways. |
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For example, restaurants often offer a free meal drawn from
business cards dropped in a container on the front counter. The cards provide
useful customer information for just the cost of a single meal. |
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In another case, an entrepreneur who had just purchased a
dry cleaning business was able to discover, by offering some free services,
that most of his customers came from within a three-kilometer radius. |
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Once you have this information, you can decide whether these
are the customers you really want. |
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What are customers' expectations? The picture is
incomplete unless you understand what clients expect of your company. Customers
will have both positive and negative exceptions based on experiences with
companies offering products similar to yours. |
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The best way to get this information is to ask customers how
they feel about companies in your industry - and why. For example, most drivers
would tell you they like the high quality inherent in certain automobile brands
but they hate the whole buying process. |
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For a dry cleaner, the usual expectation is that most outlets
do an average job on everyday clothes, but a terrible job on those worn for
special occasions. |
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How are you exceeding these expectations? As part of
the conversation with customers, you need to find out how you rate against
others in your industry. You have now established your customers' expectations
and their actual experience. The gap between the two offers you an opportunity
for positive change. |
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In the case of the dry cleaner who had just purchased his
business, he soon discovered his potential customers perceived the shop's
quality as being only average. They didn't like the fact the store was not open
for later hours and on Sunday. They never knew how much cash they would need to
bring with them to pay for cleaning - and they felt the price was a little too
high. |
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What do you need to do? Your basic research will have
given you a lot more knowledge than you had before you started. Separate this
information into two categories - things clients really value and things that
frustrate them. |
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Maintain or strengthen the things customers value and
eliminate features that frustrate them. For example, an automobile dealer might
discover that his customers really value his service department but can't stand
dealing with the sales people. He should find a way to draw service
representatives into the sales process, perhaps by having them show customers
the features of new cars while the old ones are being fixed. |
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The dry cleaner in our example made some major changes. He
installed a computer system to provide customers with the exact cost of their
cleaning when they brought it in. He began accepting credit cards and opened
the outlet for longer hours and on Sunday. For dry cleaning brought in on
Sunday for pickup later in the week, he granted a 40-per-cent discount. |
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He offered each customer a guarantee to replace any garment
damaged in the dry cleaning process. If any garment was not cleaned properly,
it would be redone free of charge and the next cleaning would be free. With
more accurate data from his computer system, he was able to staff his store to
minimize labour cost and schedule maintenance for his equipment. |
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The data base allowed him to determine precisely his average
revenue for each customer, the demographics of his customer base and the profit
for each customer. More important, he was able to target mailings directly to
his customers and to sell this list to the local florist who wanted to mail to
the same customer base. |
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He was at the leading edge of data base marketing. His
business volume tripled over a year and his profit growth was even higher. |
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By going back to basics, entrepreneurs can move away from a
comfort zone to rapid growth. The key is to understand customers' expectations
and to satisfy them while eliminating the negative elements. Highly successful
entrepreneurs master this process on a daily basis. |
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Published August 4, 1997 |
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