Archive for June, 2010

Slow Economic Recovery Makes Business Cash Flow A Priority

June 30, 2010

by Doug Smith, President, The Woodhaven Group

The economy is not bouncing back as quickly as some expected.  There is confusion and doubt about the path of the economic recovery.  Even the economists that projected a choppy recovery are seeing that the resumption of growth is slower than anticipated.

This means more than ever, it is important for every business of any size to maintain a strong cash flow position.

In my opinion, the facts supporting a continued slow recovery are obvious:

  • Consumer confidence remains mixed at best.  Two different reliable reporting groups  reported May consumer confidence moving in opposite directions.  For many reasons, I believe consumers do not feel good about things now and I don’t see that changing for a while.  The future of the economy is tied directly and indirectly to the feelings of the everyday consumer.  If they are not confident then the consumer will not spend and cash flow of businesses will be impacted.  This important indicator will have to be closely monitored going forward to determine what the real truth is.
  • Housing sales are not showing any upward momentum.  With the government tax credits going  away there are fewer homes being sold.  This decline reverberates throughout the economy.  There will have to be a further drop in prices to trigger an increase in demand.
  • Commercial real estate problems still exist.  Increased vacancies in retail and office space is a reflection of a soft economy.  If businesses do not expand or even reduce in size then they don’t need space.  The landlords holding this space still have mortgages to pay. This problem will still be a front burner issue in 2011.
  • There will be no more government stimulus prior to November 2010 elections. The prior stimulus methods temporarily helped boost the economy.  The political mindset now is to reduce debt.  Going forward,  the private sector has to carry the weight of the recovery by themselves. 
  • The Federal Reserve will not reduce interest rates further.  When it comes to lowering interest the Federal Reserve has done all that it can.  Don’t look for lower rates to further stimulate the economy.
  • The unemployment is still high and will be for the forseeable future.  Government census workers helped boost employment for awhile.  Additional workers will only be hired as business confidence suggests a reason to expect improved revenue over the longer term.  That confidence currently is not there.

So, what should a business be doing?

Here are 7 action steps your company should be doing right now:

  1. Have realistic revenue goals going into the second half of 2010.  Do not gear up for a sales increase that won’t be there.  Your original sales projections for the year may now be outdated.   All other expense areas take their direction from the sales plan so get it as accurate as you can.
  2. Know your business’s breakeven point.  Make sure you operate at or below it.  Failure to do this will consume precious cash flow.
  3. Maintain good relations with key suppliers.  Don’t create surprises for your partners and you will find most of them will be there to help if you need assistance like extending terms.  Do this by communicating how things are going.  It helps your suppliers plan for the future too.
  4. Do not lose existing customers while attempting to generate new business.  New customers cost more to add than keeping old customers. If you have a zero sum game with the number of customers in  your database this too will eat up cash flow. A tip to keep customers happy is to deliver some type of  added value (ie: free shipping, etc) that may not be expensive to do but is attractive to your customer.
  5. Now is not the time to start new projects.  Keep a cash reserve and add to it if possible.  New opportunities will still exist in the future.  Make sure you are there to capitalize on them.
  6. Keep marketing costs in line with revised sales projections.  Do not assume that by increasing the marketing budget that more sales will automatically follow.  Don’t stop marketing but invest dollars in marketing channels that are proven.
  7. Keep gross margin in line.  Do this by making sure you are priced to make a profit.  That does not prevent you from running a short-term promotion that might temporarily decrease gross margin percentage but increase gross margin dollars.

A positive:   Banks appear to be adding fewer reserves for bad loans than before.  This will increase earnings and should start freeing up money to lend to consumers and businesses. This will be one source of cash flow that well run businesses will need in order to grow going forward.

Make sure your business model and financials are in good shape to access this cash from your bank as it becomes available.

Cash flow is the lifeblood of any business, especially in uncertain times.  Make sure you are protecting it.

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Have A Down Payment Pricing Policy To Speed Up Cash Flow

June 29, 2010

by Doug Smith, President, The Woodhaven Group

Does your business perform a unique service or make a custom-made product?  If so, start including a down payment requirement when quoting a price for services or products.  This will dramatically speed up your business cash flow.  Combine this with extended terms from suppliers and that line of credit at the bank may not be needed.

Many companies are reluctant to ask for a down payment out of fear that it will upset the customer.  Our society has trained customers to expect to pay a down payment when purchasing certain products and services.  Most consumers would expect to be asked for a down payment when purchasing a home or car.  Unless your business is a retail transaction in a store where the customer gets the product immediately (ie:  restaurent, drug store, oil change, etc.), then try this tip and see your business cash flow take off.

It should always be a policy that any custom product or service  should require up to 50% down payment.  These funds early in the transaction can be used to offset materials & labor, marketing, and sales cost.  Or, just put the cash in your bank account and earn interest.  By receiving a down payment it also shows commitment on the part of the buyer.

Examples of a few products or services that should be getting up front down payments are:

  • Landscaping projects
  • Website design
  • Home or commercial remodeling of any kind
  • Caterers
  • Interior decorators
  • Direct mail design and production
  • Tailoring
  • Machine shops
  • Excavation
  • Dock repair or replacement
  • Mold remediation

Always make sure a complete purchase order or contract is signed by both parties spelling out the contract price, amount of down payment and balance owing so there is no misunderstanding at the end of the job how much the final payment will be.

Put this pricing policy in place today and watch your business cash flow immediately increase.

13 Foolproof Steps To Delivering Superior Customer Service

June 25, 2010

by Doug Smith, President, The Woodhaven Group

If a goal of your company is to increase the sales, business cash flow and net worth for shareholders, then superior customer service has to be at the center of everything you do.

Your business can have cutting edge technology at the best price.  The structure and funding of your company can allow you to scale the enterprise quickly.  Your business plan can be the envy of venture capitalists and angel investors.  Your start-up may have been listed last year on the Inc. Magazine’s Top 500 fastest growing companies. 

In spite of that, if your customer service is not the best it can be then nothing else matters.  Your company will lose marketshare.

In speaking with companies of all sizes from many various industry groups, I find most saying that the difference in their own company from the competition is their customer service.  Really?  I find myself wondering if these companies really know what superior customer means.

From the corner office to the front lines it is time for all companies to step back from the day-to-day operations and ask themselves what superior customer service means, what does it look like, and how do they deliver that unique trait to their customers.

Here are 13 foolproof steps to delivering superior customer service.  Ask yourself if your company is doing the following:

  1. Listening To Your Customer:  It all begins here.  You may think that you have the world’s best value proposition, product, service,and employees.  But does your customer or prospect agree?  Ongoing feedback on how your company is doing is critical and the only opinion that counts belongs to your customer. Feedback may be from a customer forum on your website, a live person taking calls or some other method .  Review the information discovered at a meeting of top management.  A characteristic I have noticed of successful companies is that the customer is discussed frequently at management meetings.  Unfortunately that does not happen enough in most companies.  The simplest and most effective feedback process I have ever seen belongs to Nordstrom department stores.  They have a half page with horizontal lines.  Across the top it says “I would like to hear from you”.  Thats it.  As a result, Nordstrom gets their customer’s top of mind opinion without being distracted by a series of survey questions.  The comments may be positive or negative but I am sure management reads every one of them.
  2. Timeliness Of Replies:  None of us has enough time in our day to get done what needs to get accomplished.  Your customer is the same way.  When they ask a question, request a quote or have a problem you must respond as quickly as possible even if you do not have the answer.  Anything less screams to your customer that they are not a priority to you.  With email and voice mail available, there is no excuse for not getting back as soon as possible.  Have a process in place to measure the timeliness of replies.
  3. Maintain A Good Reputation:  Is your business the first one the consumer thinks of when they need a solution to a problem or need a desire fulfilled?  If you are a restaurant, are you the first choice where to dine for the weekend?  Are you the plumber at the top of everyone’s list when a leak occurs?  A good reputation is not just a result of superior customer service.  Your mother was right about reputation.  Make sure you maintain a good reputation whether it is on consumer forums, with the Better Business Bureau, or at the corner coffee shop in the morning.
  4. Always Be Professional:  No one has to do business with your company.  Show respect in everything you do.  Make sure all employees act and look like they want to earn your customer’s business.  The business environment is no place  for bad language, off-color jokes or an arrogant attitude.  It is  not a secret that people want to do business with other people they like and respect.  The most expensive advertising campaign can be off set by one  employee needlessly making a prospect feel uncomfortable.
  5. Stay  In Touch:  Don’t be like the insurance agent I once had.  The only time I saw him was when it was time for the renewal.  Especially in business to business relationship,  an occasional phone call asking how sales are going is appreciated.  Even better is if you can refer a prospect to your client that might turn into a sale.  Nurture the relationship.  It will pay big dividends.
  6. Show You Are A Team:  Have you had an experience with a company where you wondered if one department within  a company even knew that another department existed?  Or, someone could not help because “that is not my job.”  A reflection of a well run company that delivers superior customer is a consistency throughout the organization in meeting the needs and wishes of every customer.  Make sure your line of communication and processes are in place and there is a synergistic approach to serving the customer.
  7. Don’t Rationalize:  No one is perfect, especially businesses.  Mistakes happen.  When they do occur, admit it and put in place a solution that will make the customer satisfied.  Most customers are understanding.  They just do not want to battle for a solution when the fault is not theres.
  8. Don’t Prejudge:  Every customer, every client, every prospect should be treated as if it’s the only one the company will ever have.  Some of the finest restaurants in America do a great job of making sure each visitor has an unforgettable experience.  That is why some of these establishments have been around for 50 years or more.  Too often, in some businesses, the way a prospect dresses or the size of the company dictates the quality of service given.  Don’t ever let the culture of your company go in this direction.
  9. Does The Business Give Back To The Community:  Superior service does not stop at the doorstep of the customer.  Contributing to the improvement in the daily life of a customer and its employees is indirectly an example of superior service.  Donating services or dollars to worthy causes that helps the community will be recognized and appreciated by both customers and prospects alike.  Many a business has lost out on a sale because a prospect remembered that a competitor contributed to a local worthy cause.  Think of this as customer service and not a line item called “donation expense” on a financial statement.
  10. Are You There For Your Customer In Tough Times:  As individuals and businesses, we all go through tough periods in our lives.  Only then do we really know who our friends are.  You may have a client who unexpectedly loses their largest customer, has a catastrophic fire or suffers the untimely loss of a key executive.  Helping out may be nothing more than extending payment terms for a period of time to help your customer’s cash flow.  I have even seen a company loan an executive to help the client transition through a loss of management.  Gestures like this are never forgotten.
  11. Is Your Product Or Service Easy To Use:  Was the solution to your customer’s problem created by engineers with no thought given to the end-user?  The problem gets solved but a PhD is required to get through the instruction manual.  Superior customer service dictates that usage of the product should be effortless.  I recently reviewed a new CRM system that was promoted as being the latest and best way to manage the interactions with customers and prospects.  It worked.  I could not understand how to use it, so I passed on buying it.  Keep it simple and your customer will be asking how they can buy more of what you are offering.
  12. Do Something Unexpected:  Sometimes superior customer service happens when someone goes out of their way to satisfy the customer by doing something totally unexpected.  This one event may solidify the customer relationship for life.  I know.  It happened to me.  I took my Lexus into the dealership for a routine service and told them I needed it back that night since we were driving to visit my son at college 700 miles away.  That evening they apologized and said the car was not ready since a part had to be ordered.  All of their loaner cars were being used.  I expressed my concern that I needed my car since we were going to be gone 5 days.  The service manager said, “No problem,” handed the keys to a new Lexus setting in the showroom and said “See you in a week..”  That was superior customer service and totally unexpected.  I don’t know how many cars I have indirectly sold by repeatedly telling that story.  Does your company have similar experiences?  If not, why not?
  13. Take Time To Educate Your Customer:  Your customer is incredibly busy and yet needs to keep up to speed with the changes in their industry.  Your company can perform a valuable service by having an ongoing education program directed to your customer.  It can be in the form of webinars, podcasts or e-newsletters featuring key topics of interest with experts in your specialty.  This is added value to the customer relationship that will be appreciated.       

When your business offers superior customer service you are really telling the customer that you genuinely care about their company and them personally.  It allows your business to better understand your customer and deepen the relationship.  You will find price becomes secondary.  The satisfied customer will become the best marketing tool you have.

Make sure “superior customer service” is more than just words.

Will Telecommuting Increase Business Cash Flow ?

June 24, 2010

by Doug Smith, President, The Woodhaven Group

It seems like business owners and CEOs wake up everyday trying to find a new way to increase business cash flow, productivity and sales.

A tool being used more frequently these days to achieve those goals is telecommuting. 

Telecommuting is the process of an employee working somewhere other than at the office.  Usually this means the employee is working from home.  The increased utilization of the Internet has allowed this alternative workplace to become much more popular.  For many businesses it has turned out to be a win-win situation for both the employer and employee.  The telecommuting employee is typically referred to as a teleworker.

Is it something your company should be doing?

Most researchers and business consultants will advise you that it is the right thing for your company to do.

My answer to that question is that yes, teleworkers are going to become a larger percent of the workforce in the future and your company needs to include them as a part of your employee mix.  However, for the program to be successful, your management team must do their homework first or the concept could fail.  There are benefits and concerns that must be addressed.  Here are just a few of them:

Benefits:

  1. Improved Productivity:  There are university, corporate and government studies that show the teleworker operating out of their home is a more productive employee than the employee in the office.  Reasons often given are fewer interruptions, less stress, and a fresher employee ready to work due to not needing to deal with the issues of commuting  to the office. This may be true but, frankly, I am not sure how much more productive the employee working from home really is. There are distractions at home also.  Laureen Miles Brunelli had interesting comments on this subject in a 2009 blog post on About.com  You can read Laureen’s blog post here.
  2. Less Office  Space Needed:  This can be a real cash flow savings for the company.  Less space needs to be leased, no utility or phone cost, and office and workstations can be eliminated.  Those are all real measurable savings.
  3. Flex Time For the Employee:  A real benefit for the teleworker is the opportunity to utilize flextime in their day.  The day can be broken up allowing the teleworker to take time to address home and family issues and still get the job done.
  4. Can Reach High Quality Candidates:  I have seen individuals with advanced degrees who, due to family commitments, have to stay at home.  Yet they still want to realize their professional ambitions.  If they were required to come to an office this high quality candidate would be lost to the company.
  5. Can Utilize More Part Time Employees:  Depending upon the scope of work, the teleworker may not need to be a full-time employee.  For instance, two 20 hour part-time data entry workers might be the best solution for both the company and the stay at home employee.
  6. Opportunity To Employ Handicapped and Retired Workers:  There are some excellent handicapped workers and retirees who choose not to work in an office environment.  They become a real asset to the company working out of their home office.
  7. Improved Morale:  Studies have shown that teleworkers have  higher morale  than those in the office environment resulting in less turnover.  Not having to commute to and from work would be a morale booster by itself to many workers.
  8. Bad Weather Is a Nonissue:  No problem with snowstorms.  While the regular office may be closed for the day, the telecommuting employee carries on as if nothing happened.
  9. Geographic Location Is Not a Problem:  Working remotely allows the company to hire the best candidate regardless of where they reside.  I once hired a telecommuting employee from 600 miles away because she was the best candidate available.  Also, if the spouse is relocated to another city, your company’s teleworker can follow the spouse and continue on as if no move occurred.  

Concerns:

  1. Lack of Social Interaction:  This might be the biggest concern.  The teleworker operating from home does not participate in the “water cooler” conversations or have the opportunity to have a lively discussion at break time with others about the ball game on TV last night.  There must be a process in place to engage the work at home employee if they are the type that requires a lot of social interaction.  A behavioral analyses of the telecommuting candidate might be a good idea to use during the hiring process.
  2. Can the Worker Stay Focused:  Is the  teleworker self disciplined, organized and have the ability to manage their day?  If not, the productivity issue becomes a concern not a benefit.
  3. Is There Buyin From the Manager:  A work at home employee has to be managed differently than the one down the hall from the manager.  Goal setting with specific measurable results and deadlines is critical.  Managing to results is the way to make the teleworker accountable.
  4. Could There Be a Culture Problem:  Not all jobs are a good fit for the telecommuting program.  If there are employees in the office that perceive the teleworker as a slacker that does not pull their weight, then the productivity concern might shift to those employed in the office.
  5. Promotion May Not Be An Option:  If the employee wants to move quickly up in the organization, then working from home may not give them the opportunity to develop and show off their people management skills.  A manager career path training program might necessitate the employee only being in an office environment.
  6. Security Can Be a Problem:  If the teleworker has access to the company database and confidential documents, it is imperative that steps are in place to protect these valuable assets of the company.  A disgruntled employee working remotely can do serious damage.
  7. Are There Savings In Office Equipment:  If the company reimburses the teleworker for a computer, fax, printer and other office needs then how much savings were actually realized?  In some companies the teleworker uses their own home computer with no reimbursement.
  8. Overtime Can Be An Issue:  A happy productive at home employee can easily surpass 40 hours per week.  While managing to results is good, the company still must be in compliance with all labor laws.  This includes not only overtime but also making sure workmens compensation is paid. 

Incorporating telecommuting into your employee strategy can be a real source of additional business cash flow.

It is just important to do your due diligence to assure yourself that the program will be the success that you expect it to be.

I Quit. Oh No! That Was My Top Customer!

June 23, 2010

by Doug Smith, President, The Woodhaven Group

One of the great “moments of truth” in the history of a business comes when a long time loyal customer quits and decides to take their business to the competition.

It can be like a family member dying.

When this happens, the sales, profit, and business cash flow of the company can take a major hit.

It can and should be a shock to everyone in the company.  I hope it never happens to you.  However, if it does there are 2 basic questions that must be answered immediately:

  1. Why did the customer leave?
  2. How do we get the customer back?

Here are 5 thoughts and questions I have on addressing why a long time customer left:

  1. First, the owner or CEO should personally be the one to analyze what happened.  It is not acceptable to lose an important customer or client and the responsibility falls primarily on the shoulders of the person at the top of the organization.  As a leader, you cannot be in the business of losing your top customers.
  2. If this customer found a reason to leave then it should be assumed that your company might be on the verge of losing other customers due to something you are doing or not doing.  This customer is like the canary in the mine.
  3. The owner or CEO should visit the other owner or CEO and have a heart to heart talk.  Find out exactly what the problem was that caused this decision and ask where the breakdown was occurring.  Chances are it was not one reason only.  Often there was an ongoing issue that was communicated repeatedly to the company, and in the opinion of your client, the issue was ignored or not taken seriously.
  4. Initiate immediately a listening campaign with your other large customers. It should be assumed that if the competitor persuaded one important customer to change then they will leverage that decision to go after your other top accounts.  A senior manager needs to visit your customer’s top management and find out if there are any problems brewing.
  5. The management team should meet back at headquarters and compare notes from all the conversations.  Are there common threads that require an action plan be put in place?  Some issues that may be identified are:
  • Has the processes in place to do business with your company become too complicated?  Has it just become too difficult to do business with your company?  For example, think of a customer service problem where the customer has to speak to numerous people and no decision is made.  Is your company lacking one point of contact for a customer to go to that would simplify the process or has your company become loaded with territorial silos.
  • Are your employees just going through the motions?  Are they taking customers for granted?  Is there a morale problem that impacts the relationship with all customers?  If so, why is there a morale issue?
  • Is there a growing quality problem?  Do finished products have mistakes and have to be remade?  Are shipments not delivered completely?  Are deadlines not met?
  • Do you have competitors now offering the same product or service as your core product and selling it at a lower price?  Has the competitor re-engineered your product to deliver more benefits?  Even a #1 product in the marketplace has to keep evolving to stay ahead of the competition.  

There may be other problems but it is my guess that one or  more of the above will be the cause of your business divorce. 

So, how do you get the customer back?

The reality of the situation is that you may not be able to.  Chances are the other company struggled for a long  time to arrive at this decision and will probably stick with it.

Regardless, here is what I would do:

  • Chances are the problem stemmed from a series of people issues.  I would put in place one point of contact and that person would only be the owner or CEO.  No one else.  If this is the real problem, then this solution will communicate how seriously the owner considers the situation.  
  • Schedule weekly meetings chaired by the CEO to review the status of the account with your lost customer’s management team.
  • Revisit with the customer’s CEO or owner the reasons why they chose to do business with your company to begin with.  Psychologically this allows the customer to resell themselves on what they liked about your company.  It also shifts the conversation from a negative to a positive one.
  • Identify the #1 feature that the customer likes and consider offering it at no  charge or reduced cost for a period of time.  Possibly throw in extended terms.  If you think it is too costly to do this ask yourself the cost of acquiring the new customers needed to replace the volume of this one top revenue generator.
  • If the customer is still reluctant to change back, ask if your company could take a reduced position in serving them instead of losing 100% of the business.  There is a good chance this strategy will work.   

One benefit coming out of this is that the CEO of your company will get a clearer picture of what is working and not working in the company.  That is a positive thing.

The best way to prevent this loss from happening again is to be proactive by making sure your management team is taking the following 4 actions:

  1. Listening to your customers
  2. Managing with timely accurate metrics to find where the company is falling down
  3. Keeping your employees motivated and focused on the customer and not themselves
  4. Making sure your value proposition and core products are in tune with the wants and needs of your target customer as well as the marketplace. 

In my opinion, losing a top customer is a leadership issue.  Sales, cash flow, profit and net worth will suffer.

Don’t let it happen to you.

14 Reasons A Company Should Use Internet Marketing To Increase Sales And Business Cash Flow

June 22, 2010

by Doug Smith, President, The Woodhaven Group

I envy the manager of today that is  just graduating from business school.  They have a tool available to them that I wished that I had for most of my 30 years as a CEO.  That tool is the Internet.  I can only imagine how this productive tool for generating sales will evolve over time.

It is an exciting time to be the Director of Marketing of any organization.  If your mission is to build brand, generate leads, expand a relationship with your customer, or simply surpass a sales plan, then the Internet must be part of an integrated marketing communications strategy.

For you business owners still not sure whether the Internet is worth spending your company’s marketing dollars this way, then here are a few thoughts of mine on why the Internet needs to be a part of your future:

  1. Pay for Performance:  As a CEO nothing gets better than this.  Using pay-per-click advertising that is  correctly executed allows your company to only pay if a prospect clicks on your ad.  Compare that to a TV spot on the evening news.  You pay for that spot whether your prospect is watching or not.  It’s the same with the newspaper.  Regardless of the location of the ad, you will be writing a check to the newspaper gods even if your prospect is on vacation and did not read the paper that day.  By the way, I predict that all digital newspaper sites will eventually go to pay for performance advertising.
  2. 24 Hour Marketing:  With a website, blog or video on YouTube the Internet offers an around the clock opportunity to deliver your message.  The prospect can log on when they want and you know your message will be delivered.  Compare this to event marketing or a showroom with limited hours, or a radio spot that is only for 60 seconds.  You get more bang for your buck.
  3. Results Can Be Measured:  How many readers really saw the newspaper ad?  How many listeners really heard your radio spot?  How many visitors to a trade show really walked down the aisle of your exhibit?  With Google analytics (read more here about Google)  your company can track how many visitors came to your website, how  many seconds or minutes they stayed, what percent were repeat visitors and on and on.  With analytics for the Internet you will know what pages were read and what pages were not visited at all.  You can even determine what part of the page was viewed.  With good timely accurate information, the Marketing Manager can then make the Internet investment more productive than what is happening with your non-Internet marketing today.
  4. Used To Build Database:  By using such tools as white papers and giveaways, your company can build a database of interested prospects from your website  to then establish a relationship with over time.  This beats buying a list tied to some demographic sampling that maybe could care less who your company is.
  5. Email Marketing:  This is possibly the highest return on investment outside of word of mouth.  For pennies a business can send enewsletters to a pre-qualified database that you generated.  The enewsletters can be segmented based upon the information the prospect wanted so only relevant content needs to be delivered.  The Marketing Manager can judge the performance of this tool by measuring how many readers opened the email and read it.  Email analytics can also tell what day of the week and what hour of the day is best to send the enewsletter.  Probably the most important aspect of email marketing is allowing the company to build a relationship with the prospect or existing customer.  An effective email marketing campaign provides information and a solution to problems of the reader.  It is not just used to deliver a call to action for a promotion.  For more information on effective email marketing go to the website of Exacttarget right here.
  6. Can Reach a Younger Customer:  Instead of hoping a younger demographic comes to your website, you can go where they are.  This can be done by advertising on sites most frequently visited by a young prospect group.  For instance, your company might advertise to young males on the ESPN site or to young female entrepreneurs on a women’s business blog.
  7. You Can Target Market to Almost Anyone:  By utilizing keywords in your organic or pay-per-click marketing strategy your company can send your message to a specific segment of customers in almost any defined geographic market for a predetermined price.
  8. Education Based Marketing:  The consumer is getting smarter and now controls the buy-sell relationship.  Before engaging the seller, the consumer will first take time to educate themselves thoroughly about the product or service they are seeking.  This will be done primarily over the Internet.  Those companies that will take the time to help the consumer by answering their questions and providing good information will gain credibility in the  mind of the buyer.  When she finally decides to purchase, the company that took the time to provide the knowledge she desired will be first on her list to be shopped.  The buying funnel or buying decision cycle has been extended by the consumer spending more time gathering information prior to the buying step.  Make sure your company is the one educating her.
  9. Mobile Marketing:  I predict this will be the most dominant marketing channel in the future.  Consumers are already accessing coupons at the checkout counter on their smartphones.  Will you be ready?
  10. Speed of Message:  In the past if sales were horrible and I wanted to execute a quick promotion it necessitated producing and sending a direct mail piece or producing a TV or radio spot.  If we moved fast enough it might happen in 7-10 days.  Now, if the marketing team this morning wanted to communicate a promotion, it can be delivered via email to the customer database before the sun goes down.  Maybe they would follow-up with another promotion in a couple of days.  Not only is it much faster than before but it is also far less expensive.
  11. Use of Video:  If you want to personalize the message there is no better way than the owner of the business looking into the camera and speaking one on one to the prospect or customer.  Some consumers do not want to read copy.  The video can be used to create traffic to your website, educate the consumer, or be part of a strong call to action.  Video on the Internet tends to be very short in duration and much less expensive than producing a TV spot.  Therefore, video marketing needs to become a strategy in itself.
  12. Build Brand thru Social Media:  All forms of social media such as Twitter or Facebook can be used to build a dialogue with prospects and customers.  This can be the first step in building a relationship that will turn into a sale.  Forums and consumer sites on the Internet can work to the benefit of a business or against it.  Social media is the new word of mouth marketing.  Make sure your company knows how to use it to its best advantage.
  13. Test Headlines and Copy:  By combining analytics with pay-per-click, a company can test various headlines, copy and promotions prior to running a newspaper ad or producing a direct mail piece.  For a nominal investment you will know ahead of time which headlines and promotions the consumer will best respond to.
  14. It’s the Future:  Internet marketing is less than 20 years old.  Yet the estimated dollars to be spent annually in online marketing is expected to surpass $30 billion in the next few years.  At the same time advertising on radio, TV and newspaper is struggling to show any increase.  The message is clear.  Online marketing will continue to outpace other methods of advertising.  A major reason is simply the ability to better measure results from the dollars invested through the Internet.

Will the Internet be a part of your company’s future?

It had better be because it definitely will be a part of your customer’s future.

Keep Overhead Expense As A Percent Of Total Sales Low To Save Business Cash Flow

June 21, 2010

by Doug Smith, President, The Woodhaven Group 

Some of the best well run companies in America keep their overhead expense very low.  It becomes a competitive advantage when competing against other businesses.  Your company needs to have the same strategy.

Any available cash from having overhead low can be channelled into marketing and sales to drive marketshare. You never know when the local television or radio station might come to you with a last-minute buy that you do not want to turn down.  If your cash is tied up in fixed overhead costs then that special offer becomes a lost opportunity.  For example, years ago due to a last-minute cancellation our company was offered a Super Bowl Ad by a local network affiliate. Due to having available cash on hand we were able to take advantage of this once in a lifetime opportunity.  Customers talked about seeing that television spot for years afterward. 

Regardless of your industry, one way to monitor growth of overhead is to watch the trend of your actual overhead dollars being spent over time.  You would like overhead dollars to stay the same or decline as sales go up.  Another way to measure the change in overhead is to look at the combined overhead expense as a percent of sales.  As sales increase the percent will decline.  That will  be a good thing. 

What is the takeaway here?  

As owner, when you are managing areas like operations, inventory, and customer service, do not let an increase in overhead prevent you from taking advantage of marketing opportunities that may come up.  In addition, if sales shows an unexpected decline you will already have the overhead expense under control.

Look closely each month at every line item of overhead and constantly challenge the amounts. Overhead expenses can be reduced.

Always have overhead dollars and percent to sales low and trending downward and you will like the strategic flexibility it will give you.

The Personal Value System Of A Salesperson Can Quickly Kill Your Business Cash Flow

June 20, 2010

by Doug Smith, President, The Woodhaven Group

One mistake many sales people make when selling to a consumer is to project their own personal value system into the selling process.

That is a major mistake that can be the difference between closing the sale or being disappointed with the outcome.  The result is no sale and no addition to your business cash flow.  The prospect ends up buying  from the competition and your company needlessly lost revenue.

I have seen many salespersons not want to build the sale because they personally believed the total price would be too much.  In other cases where financing the transaction is an important option, I have seen salespersons not quote monthly payments because they never personally finance any purchases and do not believe anyone else should either.  Others don’t offer the product in a certain color because they personally do not like that color.  One retail salesperson I knew did not present one line of clothing to customers because she personally did not like the designer.

This happens in sales forces of all kinds and can be a cancer that will kill sales and valuable cash flow.

Sales managers need to train their sales forces to ask questions and gather plenty of information from the prospect about what the prospect wants and needs.  Then tailor the product or service offering based upon that information only.

The next time you see the sales volume of a sales person drop consider that one option may be that they are projecting their own personal value system into their selling process. Correct it and  both your sales and cash flow will increase.

Increase Sales And Business Cash Flow by Simply Asking For The Sale

June 19, 2010

by Doug Smith, President, The Woodhaven Group

As CEOs, owners, and senior managers we often spend countless hours analyzing why a sale did not occur. 

Was the price too high?  Is it poor advertising?  Was our product the wrong design? Are we marketing to the wrong customer?

Many times I have found the reason is very simple. 

No one asked for the sale.  You may be thinking that no way does that happen in my company.  You have a selling methodology in place and your sales manager  reviews it weekly in sales meetings.  Well, it happens.  And it can occur in retail stores,  with in home sales persons and in business to business selling situations.

In a business to consumer company I was involved with, we would follow-up the sales visit with a “quality control” phone call to the prospect that did not buy.  Our conversation asked if our sales person was on time, explained the benefits of our product and answered all their questions.  Invariably the feedback was extremely positive on our sales person and many times when we questioned why the prospect did not buy, the feedback would be that they were not asked to buy.  The call would conclude by asking if they were ready to purchase, the prospect often said yes and we would schedule a manager to go write the sale.

Why do sales people fail to ask for the sale?  I have found many sales people do not ask because they are afraid the answer will be “no.”  It is easier to report back that the prospect wanted to “think it over.”

When asking for the sale everyone wants to hear a “yes.”  However, a “no” answer is not bad because now the sales person can identify the objection and overcome it.  If no one asks for the sale then there is no chance to overcome an objection and close the deal.

How can an owner or CEO prevent this problem  from happening?  The best way to identify which sales persons have this problem is for the sales manager to observe the interaction with the prospect at the point of sale.  By doing this the manager can then coach the sales person on what to say the next time he or she is on a sales call.

Failure to ask for the sale is a problem that is never discussed enough with sales forces.

In my opinion, if you don’t ask for the sale then all that took place was a nice conversation. 

That won’t help revenue, cash flow, or profit.

Halt Next Day Delivery And Increase Your Business Cash Flow

June 18, 2010

by Doug Smith, President, The Woodhaven Group

It’s the little things that can blow a hole in your business cash flow.

Take for instance next day delivery.  As much as I like and am impressed by the efficiency of FedEx and UPS to deliver a letter or package overnight, I see too many businesses that still spend extra cash overnighting documents that can be sent using less expensive options. You should take time to identify how much this expense is costing your company annually.  You will be surprised how high it is.  

My suggestion is to establish a written policy of what documents must be overnighted such as a proposal that must meet a deadline in order to get an important sale.  Instead of overnighting a check for the payment of an invoice, use an ACH payment process if it absolutely has to arrive by the next day. 

Other correspondence can be sent by regular mail and should arrive in 3-5 days which, I have found, is sufficient for most business transactions that has to arrive as a hard copy.  In most cases business correspondence can be sent by fax or email attachment.

Don’t underestimate the potential cash savings by doing this.  If your employees still overnight documents instead of the less expensive options available, then you may find there are thousands of dollars that can be put to better use growing your market share.