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Never Forget Your Customers

by Bob Reiss on Feb 27, 2010

This guest post was written by Bob Reiss (@bobsreiss), the author of Bootstrapping 101. Reiss is an Army veteran and graduate of Columbia University and Harvard Business School. He has been involved in 16 startups and is a three-time INC 500 winner. He has been the subject of two Harvard case studies and is a frequent speaker at University Entrepreneurial classes.

The No. 1 need for business success is a customer.

That’s pretty obvious, so why am I telling you this?

It may be obvious but most companies seem to quickly forget this essential fact. Small and startup companies desperately need customers to begin their journey to profits and sustainability. Many large Fortune 1000 companies forget the customers who made them successful.

Just look at all your daily life experiences in dealing with a phone company, an airline, a utility, your cable provider, a government provider, etc. In an effort to develop systems to deal with their size, they become impersonal and forget about the one constituency that propelled their success. In turn, the customers become increasingly frustrated with their treatment and become open to changes in their buying behavior.

You might posit that orders are most important, but, orders do not create more orders. Only satisfied customers do that. Happy customers whose expectations are met or exceeded become your best salespeople and effectively promote your wares by word-of-mouth, at no cost to you. You can’t buy more effective advertising than that.

Satisfied customers are likely to become long-term customers who will look forward to buying your new offerings. It is much easier to increase revenues through existing customers than to find new ones and much less costly. The bonus is that these satisfied customers get you new ones through singing the praises of your company, its products and/or services to their friends, family, and acquaintances.

Unlike other forms of media advertising, there is no cash outlay for this. There is, however, an investment in maintaining the quality, service, need fulfillment, value, timelines and warranty of your offering. If you deliver on these actions, positive word-of-mouth will enable you continued growth and sustainability. Likewise, if you fall short, you’ll have to deal with negative word of mouth, which can rapidly lead to your decline and is difficult and costly to reverse.

Your orders from products or services will eventually yield revenues which can be used for payroll, expenses, taxes, innovation. Most importantly, continued sales leads to profits.

So if we were to simply chart what we’ve said above, it would look like this:

CUSTOMER + ORDER = MONEY

Add the sales element to this equation and we have what I call the “Anatomy of a Business.”

SELLING + CUSTOMER + ORDER = MONEY

Sales is often demeaned and downplayed by academia, students, ordinary people and even some business people. However, sales is a profession and key to any organization’s success. As we see above, the customer is also a key element because they make purchases, which creates cash flow–the lifeblood of a business. Selling is the process of persuading customers to initiate these orders. It can be a simple quick one-on-one encounter or a complex long-term process. Without sales, you will not get orders.

These basic principles are easy to forget but it would benefit all entrepreneurs to remember the anatomy of a business in their hectic schedules Of course, it gets more complicated when competition is added to the mix. When you add in dealing with other issues like having the right resources to accomplish your goals and creating a culture of integrity and innovation, remembering customer satisfaction can fall by the way-side.

So, amid all the chaos, problems, uncertainties, new opportunities and setbacks, don’t forget for a moment how all your decisions and actions affect your customers. Neglect them and be prepared to pay a high price. Satisfy them and prosper.

(This article first appeared at www.entrepreneur.com – 2/23/10)


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7 Ways to Get Great Referrals

by Bob Reiss on Feb 6, 2010

This guest post was written by Bob Reiss (@bobsreiss), the author of Bootstrapping 101. Reiss is an Army veteran and graduate of Columbia University and Harvard Business School. He has been involved in 16 startups and is a three-time INC 500 winner. He has been the subject of two Harvard case studies and is a frequent speaker at University Entrepreneurial classes.

This article is based on the contents of the book Bootstrapping 101.

The most effective advertising a company can get is more difficult to achieve but much more effective and lasting than traditional media advertising. It is word of mouth advertising and it’s earned rather than purchased. It is your customers’ opinion of your product, which can fluctuate from very vocal with praise to very vocal with derision.

Word of mouth is available to start-ups as well as large corporations. It can be achieved with minimal cash outlays by just doing things right. Word of mouth can be earned quickly or over a long period of time, depending on the product or service you are selling, and sometimes it’s instantaneous. After people view a new movie, they talk about what they’ve just seen. It could be “What a great picture” or “That was a stiff.” Descriptive word spreads quickly, and new viewers of that movie result if those who saw and liked it tell their friends.

On the other hand, word of mouth can take a long time to develop for some products; you’ll probably put a few thousand miles on a car before recommending it to others, or that new diet might not budge your scale for several weeks before finally proving all the work was worth it.

Here are seven factors to consider for creating good word of mouth for your company and its products:

  1. Quality: From your first day of business, all company employees must be aware of the importance of maintaining quality, and systems must be put in place to monitor it. Any products or components outsourced must be rigorously inspected to see that your standards are met.

  2. Service: Regardless of whether your product is a high or low service one, customers’ problems must be addressed and solved with a minimum of effort on the customer’s part and in a timely fashion.

  3. Instructions: Many products need to be assembled or explained. The instructions accompanying the product must be clear and concise. Many companies fail miserably in this area and devote little time and effort to it. Poor instructions can turn off consumers to all your future products and create bad word of mouth. Even if your product doesn’t require assembly, customers will appreciate a thorough explanation of its uses and functions.

  4. Communications: All contact with your customers and their inquiries must be courteous and knowledgeable. This starts with the telephone. Have a human answer your phones, not a computer like most large companies do. This simple move will start you on the path to good word of mouth with your customers.

    Your receptionist, who I call “The Director of First Impressions,” is a more important hire than most employers acknowledge. You want an upbeat, intelligent, pleasant person in that slot.

    Don’t forget that managers’ interactions with employees, suppliers and stakeholders affects the word of mouth of your product and brand, also.

  5. Value: The value of the products you deliver to your customers is paramount if you want them to return and spread the good word about you. The value must meet or exceed their expectations. A good maxim to make sure all employees understand is under promise and over deliver.

  6. High integrity: You want all your stakeholders and customers to trust you. This trust must be earned continuously. It takes time to develop, but can be lost in an instant. Customer and client complaints must be addressed and solved quickly. Problems cannot be ducked, delayed, or shifted. Mistakes should be admitted and corrected. People want to do business with and work for trustworthy companies.

  7. Be a good citizen: There is no doubt that a company’s prime responsibility is to make money. So do not be embarrassed to earn a profit. However, I believe the company has a responsibility to take actions to enhance the quality of life of its community and employees. This good citizen appellation should not be just empty promises for show. If your intentions are pure, it is also good for your business, your family, and your sleep.

(This article first appeared at www.entrepreneur.com – 2/4/10)


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