Three Guiding Principles

You have a choice. You can get your staff to do the right things by constantly directing what they do or you can give them some clear principles that will guide them to make the right decisions and to take the right actions. Here are three guiding principles I can recommend.

1. Make it easy.

Customers want you to make it easy for them to do business with you: Easy to find you. Easy to understand what you do. Easy to contact you. Easy to get hold of someone who can help them. Easy to get information about your products and services. Easy to make the right decision about what to buy. Easy to order and pay for your products and services. Easy to learn how to use them. Easy to get help after the sale.

Making it easy for your customers to do business with you is not just nice to do. It is at the heart of business success. As you know, business is the activity of creating value. Customers do not want products and services. They want the value they can extract from them.  Customers consider they have received value when they perceive the benefits they get from products and services outweigh the costs of obtaining them. Remember, price is only one of the costs customers pay. They also pay time, effort and emotional costs. The more difficult it is to do business with you, the more time, effort and emotional costs your customers will have to pay and the less value they will think they got.

The key to making something easy is to make it simple. Complexity leads to difficulty and is time consuming. Therefore, it discourages customers from doing business with you. I took a load of re-cycling to the tip in Taupo over the holidays and the whole process was so complicated that the next time everything is going to be hidden in rubbish bags and tossed into the landfill!

2. Do not spend money on things you customers do not value.

Do you spend time and money doing things that your customers do not value? Imagine you invoiced your customers for everything you did for them. Would they pay? Every time I fly across the Tasman I am offered a newspaper and noise-cancelling headphones and every time I turn them down. I just do not value those things. They are not useful to me because they do not solve any problems I have.

As a general rule customers value, and are therefore are happy to pay for, things that benefit them. A benefit is something that will solve a problem the customer has that bothers them or will prevent such a problem from occurring. Many ‘great’ ideas companies have for sales promotions or delighting their customers do not benefit their customers and therefore are seen as destroying value not increasing value. I was buying something for my boat the other day and saw a product that came with a free dive torch. I do not need a dive torch so I was not motivated to buy the product.

As I said earlier, business is the activity of creating value and value is defined as what customers are prepared to pay for. Do you know what your customers will happily pay for? It is worth finding out because giving them something they do not value is a waste of your time and their money.

3. Aim to make your customers successful.

Make sure your staff understand that aiming to satisfy your customers is not enough. The aim in business is to have profitable customers who stay a long time and unfortunately satisfied customers are not necessarily loyal. In fact, studies show that up to 86% of customers who defect are satisfied customers. And why would a satisfied customer defect? Because they got only what they expected to get and because that is all they got, the transaction did not leave them with a burning desire to return. On the other hand, over 20 years ago Xerox found ‘very satisfied’ customers were six times more likely to re-purchase. This is because customers are rarely very satisfied. A very recent study by Forrester Research in the USA found the customer experience provided by 61% of companies was rated by customers as being only OK, poor or very poor. Therefore, when a customer gets an experience that leaves them very satisfied, they are going to remember that company and be motivated to buy again.

A better goal is to make your customers successful. Any customer who believes you are part of their success in business or life will be loyal. To make your customers successful the first thing you have to know is what they are trying to do. Make sure your people are more than just order-takers. Teach them to find out why the customer wants a particular product or service. Tell them to first understand the problem the customer is trying to solve before giving them a solution. And make sure the customer knows how to use the product or service to get maximum value from it.

Communicate, communicate, communicate

The best way to get your staff to believe in these principles, to remember them and to follow them is to communicate them constantly. Holding group and individual meetings with staff members is a good first step but it is only a step. Ministers of the church and sports coaches understand the power of repetition. Advertising agencies also know how important it is to repeat their message. That is why we all know what you get at the Warehouse and also where you “never buy better.” But managers think it is enough to tell staff something once. Hold meetings, put signs up, and talk about them one-to-one but keep at it. Find every opportunity to weave them into the conversation. When their eyes roll back in their heads as you speak, you will know you are getting somewhere!