The Tale of 2 Coffee Shops

from the Not-So-Secret Writings of ScLoHo:

You are in the People Business

Posted: 19 Jul 2011 04:00 AM PDT


I started writing this in March:

No matter what you produce, provide, sell….

No matter how automated and sleek your systems are…

No matter if you wear jeans or a three piece suit…

You are in the people business.

There’s a couple of coffee shops on the same street in my town that have very different personalities.

My favorite has been in business for over 10 years and has switched coffee providers once or twice, changed some of the details and each year they seem to do a little remodeling.

They used to have live music on Friday and Saturday nights. They don’t anymore. They used to be open late on weekends. Now they close at 8pm every night. They have a couple of the original staff, and the others that work there fit in to the culture.

Most of the furniture is old, some is getting a little threadbare, but it is a comfortable place to go and get a bite to eat, a white mocha, a smile and a little conversation.

Down the street is another coffee shop that roasts their own beans and is also family owned. They moved from across the street to the same side as the first shop and expanded their offerings.

Along with having coffee, they also have a full service bar and on Friday and Saturday evenings they would have a special theme menu that would include ingredients from their garden and recipes crafted from their own chef. Coffee shop #2 really had it going for them as a place that my wife and I would often visit for dinner on Saturdays.

Not anymore.

Recently on a Saturday night at 6pm we walk in the door and notice the weekend menu’s were not out. They were on the door, but not on the tables or at the bar. The owner and his wife are usually there when we show up, but not this time.

Instead of feeling comfortable, it felt like sort of weird. The guy at the register was busy counting change, the young woman who took my wife’s drink order not only had to pull out the recipe card but had to ask what kind of liquor to use and she seemed very unsure of herself.

When I asked for a menu, they said they aren’t doing the weekend dinner menu on Saturdays, only Fridays. Which was very disappointing since the read the menu as we walked in and was trying to decide which delicious items we would enjoy. Instead we had a drink and left.

It’s now 4 months later. Neither one of us have been back. As a matter of fact, a couple of days ago, she asked me if coffee shop #2 was still in business, as we drove by on Saturday afternoon. That’s not the lasting impression you want to leave with your customers is it?

And yes, they are still in business.

Update: my wife and I visited them Friday night. Dinner was both unique and delicious. Service was a little better as one of the owners was tending the bar.

Saturday I told some friends about our Friday night experience and apparently they have done a lot of damage in their reputation beyond what I was aware of personally. These friends will never go back.

Which leads me to share once again: Where Did They Go?

Missing Someone?

from the Not-So-Secret Writings of ScLoHo:

Where Did They Go?


Ever wonder about the customers you don’t have anymore?

Where did they go?

Some have moved out of town.

Some have died.

Some simply don’t need what you are selling.

Some have found an alternative.

It’s the last one that should concern you the most.

You need to find out what that alternative is and why it became an alternative for your customers.

You also need to find out why you are losing customers.

No matter how many new customers you have coming in your front door, if you can keep them from going out the back door, you should see your profits increase.

Now go do your homework.

The words of Scott Howard aka ScLoHo

You Decide


Last month I got a call from a Marketing/Advertising agency that was turning down a potential client.

My friend at the agency, told me that the $10,000 budget was too small for them to work with.

In reality, it was also not the type of work that their agency focuses on.

When the referral came to me, I considered it. The money would have been nice, but what they needed and the time it would take… I decided to pass too.

Instead I checked around and found two other agencies that would do the work and passed along the info.

Seth Godin wrote about this:

Choosing your customers

Yes, you get to choose them, not the other way around. You choose them with your pricing, your content, your promotion, your outreach and your product line.

When choosing, consider:

How much does this type of customer need you

How difficult is this sort of person to find…

and how difficult to reach

How valuable is a customer like this one…

and how demanding?

It’s not a matter of who can benefit from what you sell. It’s about choosing the customers you’d like to have.

The New Normal in Car Sales


There’s a young man named Brian who works at one of the most recognized car dealerships in Northeast Indiana, as the General Sales Manager.

Over the past 9 months, I’ve learned a lot from Brian about changes in his business. His dealership has lost inventory, because G.M. scaled back the number of brands they carry.

Gone is Saturn. Gone is Hummer. Gone is Pontiac.

What’s left? Cadillac, Buick, and GMC Trucks.

And three empty buildings.

Brian has learned how to manage, though. He was recently promoted to GSM for the used cars along with his other duties.

There’s a lesson for all of us. Our old ways of doing business are changing, and often those changes are beyond our control.

How we adapt however, IS in our control.

Check out this story about the auto business and perhaps you’ll get some ideas on what you can do in your business:

Life At 11 Million U.S. Transactions

What To Do When You Lose 6 Million Sales? Shake Things Up, Top To Bottom

So how does the car business cope with the loss of nearly 6 million annual sales in the space of three years? It reinvents itself — top to bottom.

Look around and you see a different auto industry taking shape — a “transformational moment,” says AutoNation Inc. CEO Mike Jackson.

Why are companies that struggled in 16 million sales years doing just fine in a market of 11 million? Because discipline is breaking out all over — at manufacturers, suppliers and dealerships. A pragmatic, tightly controlled approach has evolved from the recession, and the changes touch almost everything.

Incentives are smaller, simpler and more tactical. No-haggle and limited-negotiation pricing are getting a real tryout across the country. And inventories are lean and balanced.

Here’s how that’s playing out in the showroom:

Pete DeLongchamps, head of manufacturer relations at retailer Group 1 Automotive, tells of a neighbor who said he planned to stop by his dealership, trade in his 140,000-mile Chevrolet Suburban SUV and drive out in a new one.

DeLongchamps gently explained the new reality: “The factory’s working 10-hour shifts,” he told his neighbor. “You can’t get Suburbans.”

So the guy ordered one with exactly the equipment he wanted and drove his old Suburban for eight weeks until delivery.

“Instead of walking the lot, we sit with our customers, talk about their needs, place orders and take deposits,” DeLongchamps says.

That anecdote illustrates how the “push” system of building and selling vehicles is fading. Automakers are closely matching production to sales — a dramatic change for the Detroit 3.

That means U.S. inventories are hovering near record lows — 2.1 million cars and trucks on July 1, half of the 4.2 million that were in stock on July 1, 2004.

General Motors Co. — which used to run its factories at any cost, trying to create demand with hefty incentives and high, low-profit fleet sales — now is underproducing hot models. On July 1, Chevrolet had just a 22-day supply of the Equinox crossover, a 31-day supply of the Traverse crossover and a 37-day supply of the Suburban — all well below the pre-crisis norm of 60 days.

GM wants dealers to operate with much lower inventories and turn their stock faster. But one executive says many are having trouble adjusting to the new paradigm and regularly scream for more inventory. The exceptions, he says, tend to be dealers who also have Toyota franchises and understand how to function with fewer vehicles on the lot.

Dennis Egglefield, owner of Egglefield Bros. Ford in Elizabethtown, N.Y., says he is forced to live with lower inventory.

That means he risks not getting Mustangs in time for his spring-summer season or four-wheel-drives before the snow flies. To compensate, the dealership is encouraging regular customers to order in advance and also is trading vehicles more often with surrounding dealerships.

“Our floorplan is down,” he says, “not from necessity but because we can’t get the merchandise. We do a lot more dealer swaps than we used to.”

For manufacturers, leaner inventories mean lower incentives. Average June incentives were down more than $300 from the industry’s peak of $3,165 per vehicle in March 2009, Edmunds.com says.

“There is no faster way to profitability than to cut incentives,” says Dave Cole, chairman of the Center for Automotive Research.

Structural change
Carmakers — and not just Chapter 11 survivors GM and Chrysler Group — have taken advantage of the crisis to fix structural problems.

Toyota, for example, had too many factories below capacity in 2008. This year it has closed NUMMI in California, consolidated Tundra pickup production in San Antonio and revamped plans at its new Tupelo, Miss., plant. Instead of the Prius hybrid, Toyota will make the high-volume Corolla in Mississippi.

Supplier relationships are changing, too. All three Detroit 3 purchasing bosses — recognizing the difficulty of getting by without the technology and expertise of key partners — have vowed to collaborate more closely with suppliers.

For instance, Chrysler this summer began offering more formal protections to suppliers. Previously, says purchasing boss Dan Knott, “I could pull the trigger at the last minute” and drop a supplier because “I didn’t like the way you look.”

Conversely, some old loyalties are crumbling. Auto advertising was once known for its stability, but a few of the oldest ties between carmakers and agencies — Campbell-Ewald and Chevrolet, for example — were severed this year as automakers struggle to re-establish brands and shake off tired stereotypes.

Dealers’ new approach
Nowhere is the change more profound than at dealerships. Dealers have slashed costs in every corner of their stores to focus on the bottom line. Because of those cuts, many say they’ll be profitable this year no matter what.

The combination of lower sales and shrinking margins has led dealers to experiment with new ways of paying salespeople. The traditional straight commission of 20 percent of gross profit has so squeezed salespeople that dealers fear a wave of departures.

A common switch: Pay a base salary plus commission.

With finance and insurance revenue falling as a result of lower sales, some dealers have cut dedicated F&I staff and let salespeople share some F&I commissions.

Some dealers are pushing their service departments to compete with repair chains such as Jiffy Lube. And they are tinkering with new pricing models, testing variations of no-haggle selling. By the middle of this decade, AutoNation plans to have all of its 200-plus stores using low everyday prices and limited negotiations.

Smarter suppliers
Suppliers that happily used to accept jobs with razor-thin margins just to keep their factories running are concentrating on contracts that are sure winners.

“You can’t just launch 10 different car platforms (and have) four of them be winners and six of them losers,” says BorgWarner CEO Tim Manganello. “That’s a recipe for disaster. You need nine out of 10 winners.”

Behr America CEO Heinz Otto says suppliers are chasing margins above 5 percent of sales. In the past they were OK with 2 or 3 percent, he says.

There’s a dark side to the new emphasis on the bottom line: Many suppliers are moving engineering jobs out of the United States.

“You always have to look at your engineering structure — and how possible is it to use engineering resources that are offshore,” says James Rosseau, CEO of Magneti Marelli USA. “We offshore certain administration functions to reduce costs. I don’t think we’ll revert. The support functions, I believe, are gone.”

With their lower breakevens, parts makers are poised for strong profits at today’s volumes of 11 million to 12 million units annually.

That could be critical. Rebecca Lindland, head of auto research for the Americas at IHS Automotive, says current low sales are not building future demand but instead are working off the excess supply of the past.

“There’s very little pent-up demand,” she says.

Permanent? Or just a blip?
Are these changes permanent, or will they disappear with the first sign that things are back to “normal”?

It’s a crucial question, since analysts say the industry’s long-term health rests on continued discipline.

“We have a greater opportunity to make change that’s permanent,” says Jeff Schuster, head auto forecaster for J.D. Power and Associates.

“But as the sun comes out, it’s easy to let go of some things you have learned.”

(Source: Automotive News, 08/02/10)

Remarkable

The word can be used to describe something good, or bad.

Last Saturday I experienced both. Read my story of the Good & Bad here.

Here’s what you need to do to be both Remarkable and Rememberable from the CustomersRock blog:

Is Your “Lack of Remarkable” Preventing Customer Loyalty?

Posted by Becky Carroll on July 28th, 2010

target photoToday we have a guest blogger with us here on Customers Rock!, Nate Bagley. Nate is the Social Media Expert at Mindshare Technologies. Mindshare is a leader in the Voice of the Customer industry, helping companies foster consumer satisfaction, build customer loyalty, and support employee retention. Click here to learn more about Mindshare.

Is Your “Lack of Remarkable” Preventing Customer Loyalty? by Nate Bagley

The most important aspect of any customer-driven business is consistency. If you cannot provide a consistent experience, it is impossible to generate loyalty within your customers. Without loyal customers, a business is just a whole lot of wasting assets.

The businesses that thrive despite a struggling economy, intense competition, or market saturation are those who have built intense customer and employee loyalty.

The best way to create loyal relationships is rather simple: You must measure the customer experience continuously. Measuring your customers’ feedback and acting on any inconsistencies (both good and bad) should be how you approach your business every day!

Recently, I attended a sports themed restaurant to watch the World Cup match between England and the United States. By the middle of the first half, the restaurant was packed with crazed fans… standing room only. I kept an eye on our server as she tended to dozens of guests within her section. She remained pleasant, yet incredibly busy.

Somehow, through all of the tumult, she managed to check on our table every few minutes. When she noticed our cups were running low on water, she brought us a pitcher, knowing she wouldn’t have time to fill them individually. She kept us happy, assessed our needs, and did it with a smile, despite having to work a section that was far over capacity.

Will we be returning? You bet we will, especially if every subsequent experience is of the same caliber as this one.

How can this restaurant chain ensure that every location provides the same level of service consistently to every customer? How can they make sure every staff member within the organization is consistently hitting customer service home runs like this? They must set a standard and then measure as many transactions as possible against it until they are consistently hitting the mark. The easiest way to identify irregularities in customer experience is through customer feedback. You must consistently listen to what customers are saying! Keep doing the things they love, and improve the things they don’t.

“When we measure satisfaction, what we’re really measuring is the difference between what a customer expects, and what a customer perceives he gets.” (“The Experience Economy,” Joseph Pine II & James H. Gilmore)

What are you doing to provide a consistently remarkable experience for every transaction in your business?

(Flickr Photo Credit: ogimogi)

Competition


From Harvey Mackay:

Competition teaches you to outswim the sharks

By Harvey Mackay

Codfish are a delectable treat in America’s Northeast. But when attempts were made to ship them fresh to distant markets, the cod did not taste the same as they did closer to home. To deal with this, shippers decided to freeze the cod and then ship them. But the fish still didn’t taste right.

Then the fish merchants tried shipping the codfish in tanks of seawater, but that proved even worse. Not only was it more expensive, but the codfish still lost their flavor and, in addition, their flesh became soft and mushy.

Finally, some creative soul solved the problem in a most innovative way, according to Charles R. Swindoll in his book “Come Before Winter and Share My Hope.” The codfish were placed in a tank along with their natural enemy — the catfish. From the time the codfish left the East Coast until it arrived at their westernmost destination, those catfish had chased the cod all over the tank. And, as you may have guessed, the cod arrived at the market tasting as if they had just been pulled from the ocean. If anything, the flavor was better than ever.

What a competitive environment and daily challenge can do for codfish works for humans as well. Competition and challenges make us better.

But a problem I see all too frequently is that people are afraid of competition. Perhaps it’s because they fear losing, but I suspect a better reason is that they know they are not as prepared as the competition. They are not willing to put in the necessary hard work, training and sacrifice. They think things will be easier for them than for others, possibly because others have made things look easy.

Former New Jersey Senator Bill Bradley was a basketball star at Princeton University and later with the New York Knicks. When he was at Princeton, Bradley’s father used to tell him, “Son, when you’re not out practicing, someone else is. And when you meet that person, he’s going to beat you.”

I love to watch basketball and there is no better time than the NCAA Final Four or the NBA playoffs. Basketball is taken to another level at this time of year. You really see the competitiveness of players emerge.

The Incas of ancient Peru played a primitive form of basketball, the object of which was to shoot a solid rubber ball through a stone ring placed high on a wall. The winner was traditionally awarded the clothes of all spectators present. The loser was put to death. (You can check out more of these fascinating facts in “The Best, Worst & Most Unusual” by Bruce Felton & Mark Fowler.)

It’s the same in business, except the part about the clothes and being put to death. When it’s crunch time, you want the people who are willing to roll up their sleeves and jump in. You want gamers. You want people who are confident in their abilities.

As much as I love to come out on top, I’m too realistic to believe the “winning is everything” philosophy. Because after so many years in business, I know that you can’t win ’em all. But there is no excuse for not giving it your best shot. And you can be the winner more often than not.

Athletes and actors have long hired coaches to help prepare for a specific competition or role. But today there are coaches available to help people in any field improve their “game.”

If you think that leaders don’t need coaches–that if you’re already at the top, a coach couldn’t offer you anything new–think again. Why does someone like tennis champ Serena Williams have a coach, whom she could handily defeat on the coach’s best day?

For the same reason all high-performing individuals have one, says professional coach Daniel Pendley: “1) We cannot see our own mistakes; and 2) If we are not getting better, we are getting worse.”

Your competitive urge is sometimes the only real advantage you have. Someone else will always have more money, more resources, more connections, or more experience. You will compete with larger companies, smarter people, and less ethical organizations. Use these experiences as opportunities to improve your game.

Mackay’s Moral: As I like to say, you CAN swim with the sharks without being eaten alive!

The Price of a Solution


Imagine naming your price and having someone pay it without negotiating.

It all depends on what you are selling.

From Seth Godin’s blog last week:

Hourly work vs. linchpin work

There’s a gulf between hourly work and linchpin work.

You should pay people by the hour when there are available substitutes. When you rely on freelancers you can put a value on their time based on what the market is paying. If there are six podiatrists in town, and all can heal your foot, the going rate is based on their time and effort, not on the lifetime use of your foot.

On the other hand, if there are no short term substitutes, then you don’t pay what the market will bear, instead you pay what someone is worth. Big difference.

Consider, for example, someone putting together a series of concerts for which they intend to sell subscriptions or even have the musicians sell tickets.

They could seek out pretty good musicians and imagine that paying them $500 or more per hour is very fair compensation. After all, that’s more than a podiatrist gets, and she gives you back the use of your foot.

But when they find a linchpin, someone who will either make it easier for them to sell subscriptions or will bring an audience with them, the question isn’t how much time it took for the musician to do her set, the question is what did she bring in terms of value, right? An indispensable person, someone with a rare asset, has few substitutes and an hourly rate makes a lot less sense.

So, if a musician is going to sell 300 subscriptions for you and you earn $200 a subscription from that effort, that person just added $6,000 worth of value. Who cares if it took a minute or a day? What’s on the table is who gets what portion of the value added…

I had a college professor who did engineering consulting. A brand new office tower in Boston had a serious problem–there was a brown stain coming through the drywall, (all of the drywall) no matter how much stain killer they used. In a forty story building, if you have to rip out all the drywall, this is a multi-million dollar disaster. They had exhausted all possibilities and were a day away from tearing out everything and taking a loss. They hired Henry in a last-ditch effort to solve the problem. He looked at the walls and said, “I think I can work out a solution, but it will cost you $45,000 if I succeed.” They instantly signed on, because if he succeeded, the project would be saved.

Henry asked for a pencil and paper and wrote the name of a common hardware store chemical and handed it to them. “Here, this will work.” And then he billed them $45,000. That’s quite an hourly wage. It’s also quite a bargain.