Business Growth, Customer Relationships and Profit: How do you Build Valuable Relationships?

My experience of working with small businesses is that sales growth relies on relationship building. This is a skill that you need to employ continuously, with all your business contacts.

Prospects

You are surrounded by prospective customers who do not know you nor do they know what benefits you offer. When you approach cold contacts, the statistics suggest that you get a 1% to 3% response rate whether you use direct mail, telephoning or door knocking.

Warmer contacts develop after you have met a new prospect several times or when a client gives you a direct referral. As you meet the warm contact to build your relationship, listen for what they need, explore their interests, and ask about their purchasing habits.

When you know what they want and you have educated them in what they want to choose, these prospects develop into hot contacts, who are ready to trust you and to buy from you.

Customers

If you have a delivery cycle, you can continue to build your relationships through keeping your customers informed how the delivery process is progressing. No one likes surprises, so if the delivery slips or you find that there are quality issues, help your customers to plan around the delivery issues and they will appreciate the care you invest in communicating with them.

After you complete the sale, continue to track your customers’ needs by maintaining sufficient contact that you can respond ‘just in time’. People value this extra service especially if your competitors think that customers place volume orders in response to cut prices.

When you make a sale well, a customer can often refer you to three new customers so you can draw a good profit from creating long term relationships with customers.

Clients

Generally it costs 30% less to sell a second and third time to a current customer than it does to convert a prospects into a new customer.
Where customers buy from you several times, you can gain useful market intelligence if you ask them what they value about your services and products. Feedback from these repeat customers will point to the benefits that give you a competitive edge.

Where your long term relationship enables you to fit into your client’s purchasing habits, you can relieve stress in their business and ease their life: this makes them keen to work with you again and again. Although deep client relationships take time to build, they create a barrier that can exclude competitors from entering your market.

Supporters

Some regular customers will support you by recommending you to their colleagues. These recommendations can take prospects directly to the stage of being customers with very little of your effort.

So keep these supporters informed about your plans and developments, and introduce them to people who matter in your world. Where you can encourage them to feel involved in the success of your company, they will repay your relationship in growing profits.

Nothing beats doing a good job and if you continue to deliver an excellent service over a long period, your customers will continue support your business growth. So the fastest route to business growth is to take a long term view on growing your relationships.

Continuing Education – Is It Worth the Investment?

There are many factors students consider when going back to school. Affordability is often on top of their list. Many try to determine the risk V. reward. Is a $30,000 master’s degree worth it? Will I get a promotion or land a better job? It is recommended to look at where you are in your career, where you want to be, and how many more years you will be in the workforce. We will give you a couple of examples and help you decide what the individual should do.

John Smith is 35 years old, married with two children. He is currently working as a team leader for Nike. John has a bachelor’s degree from University of Phoenix and he is considering going back to school for an MBA in Project Management. Nike is a very large company and they are constantly hiring and offering their employees advancement opportunities. Taking all of this into consideration, an advanced degree should certainly benefit John. He has about 30 years left in his career and has a lot of growth potential in his current company. An MBA could help him move into a more managerial or director type role.

Mary Moore has a little bit of a different situation. She is 52 years old and COO of Unique Printers. It is a smaller company and she reports directly to the President. She is looking at multiple programs online. She is considering investing $42,000 for her Master’s in Human Resources. Mary has been working 35 years now and wants to retire at the age of 60. Due to her circumstances, we would probably not recommend Mary to continue her education at this time. There is little to no room for advancement and she will only be working another eight years.

As you can see, everyone thinking about going back to school has a different situation. Some are harder than others. Again, it goes back to the risk V. reward. One thing that may sway your decision is if your employer will help fund your education. In the previous example, if the President was willing to pay Mary’s tuition then she would really have to think it over. It would be very tough to turn town a free education. Employers do this often to show how they are investing in their employees. They hope the employee grows in their role and stays committed to their company. The only drawback is if the employee decides to leave for a better opportunity.

It’s All About Focus – Small Business Should Consider Outsourcing

In today’s political environment, we often hear about outsourcing of positions and jobs in the workforce. We are often filled with images of large U.S. Corporation outsourcing to companies in India, China, or around the world, but the reality is that outsourcing does not require vendors in foreign countries. However, sometimes small and midsize business owners feel disconnected from this process, or they do not see how this process is a feasible technique in their lives. The truth is that small and midsize business owners may have just as much if not more benefit from this strategy.

In August 7, 2006, VISA and SCORE (a nonprofit group) released a study that stated that over 62% of sole proprietors (who represent over three fourths of small businesses in the United States) indicated that the main reason that they cannot focus on generating new business or being stretched too thin. Additionally, in this same survey, 52% of respondents stated that they would spend more time generating more revenue if they were given additional time.

The old saying, “Time is money”, reflects a truism which should guide small business owners as they make business decisions, but often this may not be a guiding rationale in their business. In the same study, 45% of sole proprietors stated that the reason for not hiring additional resources stem from lack of trust, time to train staff, and work-style. Why would you potentially sabotage your life dream to be a successful business owner, and not seek out resources to assist growing the business?

The Outsourcing Institute conducted a study in 1998 which explains the top 4 benefits to outsourcing, and they were:

1) Reduce and control operating cost

2) Improve company focus

3) Gain access to world class capabilities

4) Free internal resources for other purposes

The same group also explained the top 10 ways to select a vendor, and they were:

1) Commitment to quality

2) Price

3) References/Reputation

4) Flexible contract terms

5) Scope of resources

6) Additional value-added capability

7) Cultural match

8) Existing relationship

9) Location

10) Other

Finally, this group listed the following 3 reasons why outsourcing relationships work and they include:

1) Understanding company goals and visions

2) Strategic vision and goals

3) Selecting the right vendor

These factors are logical to many business owners, but often times, go unheeded. In our pursuit of savings, we overlook several of the factors listed in selecting a vendor. For example, we may only base a decision on using a CPA/Bookkeeper on price versus reviewing their commitment to you, additional value added capabilities, or commitment to quality. Also, some firms may not have a commitment to marketing or advertising so they may assume that anything works versus finding good vendors or resources to help cultivate the right brand image, advertising look, etc. Do you think McDonald’s or Coke have a monopoly on flavor? No, they do have a monopoly on being a image that we associate to certain feelings or situations. This is the power of advertising and creating an excellent brand. This is why it maybe more cost beneficial to consider using firms that can help you develop those skills if you have never worked on those issues before. Finding the right provider may cost you money initially, but it could create value that goes beyond the initial investment.

Small and midsized business owners find it difficult to succeed; but why are more business owners not trying to focus towards winning more business? Outsourcing resources and focusing may provide you valuable time to build the business and achieve long term success. If you have questions about this article or the concepts that we are discussing, please do not hesitate to let me know.