Posts tagged "solution"

Strategy

What is your business model?

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“Great companies first build a culture of discipline…and create a business model that fits squarely in the intersection of three circles: what they can be best in the world at, a deep understanding of their economic engine, and the core values they hold with deep passion.” Jim Collins

In essence what this question is asking is, how does your business make money? To answer this question you must explain comprehensively how the different functions of your business fit together to make a profit. A good business model must satisfy two very simple core criterions, it must be based on it’s target market demand and must make financial sense. As simple as these two criterions may seem, many businesses, specifically in the “internet” era fail to pay attention to them.

One example is that of Webvan. They wanted to take grocery shopping, online. Great idea, huge demand from customers, however, it failed the financial test. The numbers did not add up and after spending hundreds of millions of dollars, the company was forced to close down. Another example of where the story did not make sense, is a company called Flooz. It wanted to convert real money to virtual currency to be used for spending online. After $35m, they found out that customers did not really feel comfortable with the idea.

The litmus test to put to business models, must cover:

1. Does it meet customer needs?: Is there a large enough target market segment willing to buy or use the product/service that the business is wanting to sell? It is essential that business models make sense and that there is a large potential target market.

2. Do the numbers add up?: Firstly, are the forecasts and projection based on solid foundations? Many a time when assessing businesses, I come across assumptions that seem to have been pulled out of a hat and  projections that are quite unrealistic. Secondly, have they taken the costs of doing business into account realistically? In the end, if the numbers do not add up and the business does not have a good plan, the chances of success and making money are very slim.

3. Is the business model scalable?: Investors and potential partners are always more interested in a business which has the ability to scale. Look into the future to see how the business model can be expanded and what it will cost the organization. If IPO and becoming an attractive takeover target is your goal, the business model has got to be scalable.

4. Can the business model be easily replicated?: Almost all models can be replicated. However, how much does it cost, and how long before your competition catches up? Look at DELL, it developed a business model which was very difficult for its competition to replicate because of its existing distribution channel agreements. Hence, even though the model could be replicated, they chose not too because they could not match it.

Listed above are a few things to keep in mind when developing an answer to the above question. It is important to clearly communicate how the business will make money, what assumptions the forecasts are based on, and whether it has the ability to scale. Investors are looking for something unique yet simple. It is challenging to find this balance, however if you do, success is right around the corner.

Strategy

What is your competitive edge?

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“The essential element of successful strategy is that it derives its success from the differences between competitors with a consequent difference in their behavior.” Bruce Henderson

The next logical question after hearing an initial elevator pitch is about the competitive advantage. What can you do that your competitors will have a hard time duplicating or catching up to? This is not the easiest question to answer, as most products and services can be replicated quite easily.

To provide a concise and clear answer to the question above, keep three segments in mind:

1. Customer Needs: Having a deep understanding of what the customer requires and wants from the product/service you are providing is critical. For such an understanding, the target segment of your business must be clearly demarcated, their expectations known, and their core needs clearly documented through research, feedback and surveys. It is only after such a thorough analysis can you develop a strong competitive advantage.

2. Competitor Capabilities: Never say your business does not have any competition! There will always be competitors, directly or indirectly. It is important that you understand how they are serving your target market. Gauge the benefits the target segment gets from their product/service. Research the areas they are unable to serve. What entry barriers have they created to the market? Where are they most vulnerable? What complaints do existing customers have with their service?  You need answers to all these questions to formulate a good answer.

3. Our Capabilities: After identifying the customer and the competition, a clearer understanding emerges for focusing and building competitive strengths . Efforts have to be made to operate in areas where your competition has difficulty in reaching the target customers. To help carve out such a segment you require a  strong team, patentable technology, strong alliances or any other factor to differentiate you from the rest.

Focus on these three factors will enable you to come up with the ‘where’ and ‘how’ to provide to your target segment. When you look at companies such as Amazon with their one click ordering system, Google with their patentable technology and algorithms or Toyota with its production system, notice how these great companies have been able to develop great competitive advantages in the face of excessive competition.

The answer to this question will hold the key to whether your business is going to be a long term success or not. Without an initial competitive edge, a company has slimmer chances of making it very far. They will have difficulty in getting investors to infuse money and a harder time getting customers to develop a level of trust in what they have to offer. What is your competitive edge?

Strategy

Why does your organization exist?

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“Whenever you see a successful business, someone once made a courageous decision.” Peter F. Drucker

The answer to the question above involves two fundamental factors, clarity of purpose, and passion. Without these two factors, one usually ends up listening to convoluted stories without the vital x-factor. The answer to this question is sometimes also called an elevator pitch. This is a concise snippet about one’s business and should be enough to intrigue a potential investor. Other than for investors, it can be used for customer presentations, networking events, or any other platform to introduce your organization. Failure to get the answer to this question right, usually means you will not get the opportunity to be asked other follow up questions. It is therefore vital that the answer to this question is carefully drafted and rehearsed to perfection.

A couple of key factors need to be addressed in your answer :

1. The Problem: Correctly identify the problem area  your business is attempting to target and alleviate. Having numbers and research indicating size of the problem is an added bonus and adds weight to your argument.

2. Customer Value Proposition: The next part of the pitch must cover how your product/service is going to address the problem, and what your competitive advantages are in relation to your competitors. Many CVPs are not formulated correctly, are often vague and abstract and leave potential investors or customers at a loss to understand it comprehensively. To read more about how to develop a good CVP please click here.

3. Team: If you have any outstanding team or board members who are well known and respected in your particular industry, mention them during the pitch. In the end it all comes down to execution, and having industry veterans backing you is a huge bonus.

The answer to this question should be given in less than 2 minutes, ideally. It is therefore essential to spend time perfecting the pitch and making sure that it is concise, clear and full of energy. One of the most important parts of the pitch is the opening sentence. This is usually called the “hook”, it must be cleverly drafted and be able to grab the audience’s attention instantly. Practice the delivery of this answer as much as you can, the feedback you get along the way should be incorporated into the pitch. In the end a well executed elevator pitch could help secure that venture funding you require.

Communication Customer Service Sales

Exceeding Expectations

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“There are no traffic jams along the extra mile.” Roger Staubach

My first company had the tag line “Exceeding your every expectation”. It was printed on everyone of our name cards and it pushed us to go the extra mile many a time. It is only after some years that I have realized, it does not take much to exceed customer expectation. They do not need elaborate gestures to make them feel special, all they need is to be treated honestly and fairly, to be provided with significant value for their purchase and to have all this done in a convenient and efficient manner.

From personal experience I know that there are many service providers I go to even though they may not be the cheapest, biggest or more convenient in the market. For example, all my computer needs and requirements are dealt with at a small shop I have been visiting for years. You may well ask why anyone would do this, in this day and  age of online ordering and convenience ? It comes down to the relationship I have with the owners of the store. It is good to walk into a store where everyone knows you by name and where you know you will always get that extra attention and exemplary customer service, whenever you walk in and need it.

As part of a startup , you need to identify areas where you can add greater value to your clients. You need to show them that you care about their success as much as they do. These are some of the ways I have used to go that extra mile :

1. Remember your customer’s birthdays and make sure you send out either an ecard or an actual card to show that they matter to your business.

2. Gather as much personal data regarding the customer as possible, such as hobbies, interests, family and  other information that may help you with future conversations as well as personalizing services.

3. Remember to thank the customer at the point of purchase and to follow it up with a note via email or mail, thanking them for their business.

4. Leave extra room for you to exceed their expectations. If you promised 5 days delivery time and deliver in three days, that goes a long way. Remember to leave yourself some wiggle room.

5. Put yourself in the customers shoes and ask yourself what you can do, to make the entire process more personable and enjoyable? Treat your customers the way you would like to be treated.

Going the extra mile is a defining and differentiating factor between good and great companies. Building such a culture from the start will provide you with clear competitive advantages. 

Do you have a special story of how you were wowed by a particular vendor?

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Communication Customer Service Strategy

Learning from Experience

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“Your most unhappy customers are your greatest source of learning.” Bill Gates

We have all been exposed to bad customer experiences. For those of us in the business or corporate world, we have also been on the receiving end when things didn’t work out as expected. That is part of life. Trying to please every customer to their complete satisfaction is a gargantuan and uphill task. However, it is essential to learn deeply from every complaint and put into place systems, which will take care of such incidents in the future. Listed below are a few pointers which should help expedite the learning process:

1. Refrain from pushing the blame onto external circumstances. Sometimes your supply chain gets delayed, it could be a mix up which your delivery system made or bad weather which resulted in your receiving a mouthful from your client. Accept the blame rather than pushing it onto someone else in the organization because that is the last thing an angry customer wants to hear. Once you have accepted the mistake you can go about resolving the issue in a more efficient and effective manner.

2. Extensively document the mistake. This will force you to think and put into a process the actual course of events and why they occurred. I have found the discovery process extremely interesting because you are forced to map out where the entire process started, who was responsible for what, at which stage and most importantly where we need to focus to ensure that the problem doesn’t happen again. It creates ownership in a business and a team constantly striving to deliver their best.

3. Finding the most efficient and effective solution. Once the mistake has been clearly identified the team should reach a collective decision regarding how to avoid a similar issue in the future. Control measures must be put into place and ensuring responsibility for its proper execution is essential. This is a critical step which should be documented and circulated to all team members to show that a decision has been taken.

Such experiences provide a great learning opportunity for the entire team. Once a mistake has been committed there is nothing we can to do to undo it, however , we can set into motion a series of actions which will alter the way we respond to them in the future. With a fanatical focus on ensuring that you cater to your customers every need and make the experience of doing business with you as seamless and comfortable as possible, will garner massive long term benefits.

What was your last customer experience horror story and did your organization do anything about it?