Small Business Marketing Book Review – People and Your Business

What if somebody told you one critical key to business success was to practice the principle of the Golden Rule in your business? The idea seems to somehow run counter to so much of what we’ve been taught about business, doesn’t it? Yet, what if that same source convinced you through case-study after case-study that application of the Golden Rule in business actually leads to success?

Let us introduce Frederick Reichheld and his book The Loyalty Effect. While not a small business marketer, but rather an expert business consultant, what Reichheld teaches us about loyalty is worthwhile reading for any small business owner or manager.

Did we say “worthwhile”? Scratch that; pencil in the phrase “urgently essential”, instead. This book is that vital to a small company.

The Loyalty Effect focuses on three groups of people critical to business success: Customers, Employees, and Investors. For most small business, the investor is the owner, so for our brief review in this article we will focus on Customers and Employees.

Reichheld is a definite advocate of customer retention. He convincingly demonstrates time and again that small percentage increases in customer retention have huge impacts on profits. This read will be a just-right fit for those of you having problems focusing on the right customers. If you will take the time to trudge through this book, and really understand most of its principles (we found Chapter 8 to be the toughest) then not only will the marketing of your business improve, but so will your profits.

Isn’t that the reason for all this focus on marketing, anyway?

And Reichheld really opened our eyes to how important employees are in retaining customers. If a company treats their employees right, those employees become more efficient and productive in their daily tasks. Profits go up, retention increases.

Reichheld stresses again and again that a company’s prime mission needs to be creating customer value. Most of you in small business realize this, but it’s reaffirming to see hard-and-fast facts to back up what many of us intuitively know. Customers don’t come to a small business looking to boost our profits; they arrive seeking value. If we consistently create value, profit will come.

Another key point for small business owners is the importance of leadership. If you need to go down to the bookstore and browse through The Loyalty Effect before you buy it, flip over to page 246. Reichheld has studied several large and successful businesses, and concludes here that most of them had leaders with an “intuitive grasp” of how important loyalty is. This is critical for business success, regardless of business size. While not written to be a rah-rah inspirational book, Reichheld’s arguments and his examination of the role strong leaders play in forming great companies reinforces just how important to the bottom line it is for a small business owner to be a good leader.

So much of Reichheld’s book seemed familiar; akin to common sense…after we read it. Treat employees well and they’ll perform well for you; we’ll that’s pretty basic, now isn’t it? But we tend to forget, we tend to think we need to cut corners or just “improve efficiency” and that’ll lead to greater profits. In the short term it very well may, but Reichheld argues effectively that in the long run it’s only by creating value for our customer that we build profitable businesses.

Remember, People is the third element–along with Brand and Package–of any small business marketing success story. Taking a week or so and reading Frederick Reichheld over lunch or before lights out at night is a great way to hone your “people productivity”.

© 2006 Marketing Hawks

Business Solutions – The Business Owner and the Internet

Small medium sized business owners and directors always seek quick and cost effective solutions to their problems; however, from time to time some problems are encountered in achieving this goal.

Some issues may be easy to fix and may be a ‘pleasant’ experience, such as addressing business growth, where to invest excess cash and so on. Others cause much concern, perhaps because of their complexity, urgency or their potential long term adverse impact on the business.

Understandably it is not uncommon to find that small business owners are technically capable in their area of expertise, but when challenged to find solutions to business related problems outside of that area they must turn to experts or professionals in other fields.

Particularly in a start up company the accountant, solicitor or bank manager may be a source of help. However, it may be found that not all answers are available from that source. So to whom does the business owner turn? It may be trade associations, chambers of commerce, network groups, other entrepreneurs, friends and so on.

All may offer some advice but this may be an uncoordinated approach and costly in terms of time. This source of knowledge may be of significant value and should not be totally overlooked. However, start-up companies and small and medium sized business owners usually seek business solutions immediately. After all they do wish to succeed in their business venture and issues that jeopardize that success require resolution at the earliest opportunity.

Consequently any delay in securing help from independent bodies or friends may be perceived as aggravating the problem to be overcome.

Unfortunately not all problems can be resolved quickly.

Some, perhaps many, business problems may be caused through a lack of planning or maybe lack of knowledge and understanding on the part of the small medium business owner. This may require investigation into the root causes of the problem in question, before action can be taken rather than develop a solution only to counter the ‘effect’ of the problem.

Also in the business world, the level of government ‘red tape’ may be burdensome to the business owner or director, and adherence to all aspects of their legal obligations is usually mandatory. However, governmental influence may delay resolution of problems, and ignorance of the law is not be an excuse should serious consequences arise through non-compliance.

In addition should cash constraints exist within the business, it may not be possible to ‘buy in’ the required level of expertise. This may burden the small medium sized business owner with gaining knowledge or learning skills alien to himself.

Today the business owner without adequate or reliable access to, knowledge of leadership, business management, business development, marketing, accounting, financial management, IT, business planning, ecommerce, employee relations and so on is seriously disadvantaged.

What alternative sources of business advice are available?

The internet may provide the help needed to overcome some if not all of these gaps in the business owners’ knowledge. This solution may not be satisfactory to everyone; the fear, uncertainty, reluctance in using the internet may still be an overwhelming barrier to some, but without doubt access to knowledge is much easier using this medium.

Understandably the early content based websites were dedicated to providing knowledge much biased towards sharing internet technology with others. This situation continues to change with many webmasters now committed to providing content for all niche areas, including those applicable to the small business owner.

Whether the business owner is in ‘fire fighting’ mode or being proactive in planning to avoid problems help and advice can now be found on the internet.

Up to date, easy to read newsletters on specific matters of interest, such as general business matters, taxation, are freely available; together with articles and e-books are available to help solve or prevent business problems.

This fount of knowledge continues to expand and many experts and entrepreneurs within the business sector continue to offer visitors to their websites valued help and assistance.

How should the business owner react to this plethora of knowledge?

Be positive.

The owner should continually research for sites that offer the business content that is being sought and is presented in an acceptable style. Actively participate in forums if available; this will raise awareness of your concern and afford the opportunity to other site participants to offer their advice freely in the matter.

Use the content on the internet as a valued tool in resourcing solutions to your business problems. Remember it is available at all times, easy to access and very cost effective.

Small Business Marketing – The Power of a Market Review

Conducting a market review is one of the most important steps in the small business marketing process as it provides together with a business review the information you need to create a dynamic marketing plan. All big businesses conduct these reviews as they know it can save time and money for their business.

A market review does not have to be complicated and a lot will depend on what information you can source. The important factor regarding a market review is to understand the key elements of your market and how these elements can affect your business now and in the future.

The key elements you need to look at when conducting a market review for your small business include:

Size of Market
Your market is simply the overall industry in which you compete. For example if you sell juice then you compete in the Beverage Market. If you sell holidays as a travel agent then you compete in the Tourism Market. Analyzing the size of your market can tell you whether it is growing or declining, help you to identify growth opportunities and for a new small business can determine if the market is large enough to compete in and operate a profitable business. There are many sources you can use to gather information on the size of your market and these include trade magazines, industry associations, search engines and local government websites and resources.

Market Segment Analysis

Segmentation is a process that looks at the total market and then divides the products or services into broad groups that have similar characteristics. In the examples above, whilst the total market is beverages, the segment that is the most important to a juice manufacturer is the Juice Segment. Looking at the total beverage market today throughout the world the leading soft drink manufacturers have entered many of the market segments such as bottled water to expand their business. Market segment analysis also helps you to determine where your small business marketing efforts should be concentrated.

Distribution Channel Analysis
A distribution channel is the way in which your product or service is made available to your customers so they can purchase it. Examples are supermarkets, personal selling (face to face selling), distributors and the internet. Analyzing the sales of each distribution channel in your market enables you to identify which channels are the most important for you to compete in to grow your business.

Market Trends
A trend is any significant change to your market that your business may need to respond to. Examples of market trends include changes to the economy, changing customer demographics, social and global factors (to name a few). If you conduct business in the USA at the moment or are intending to compete in the USA then the concerns about a possible recession and how it could affect your small business needs to be identified so action plans can be put in place to minimize the impact.

Market Seasonality
If a product or service is seasonal it means that the majority of the sales occur at one or a few times a year. Tax accountants obviously have increased sales when the end of the financial year occurs and tax returns and other government reporting are required. Understanding market seasonality factors can lead to your small business maximizing sales through this period and also may highlight opportunities to spread your sales throughout the year.

Competitor Analysis
Your key competitors need to be analyzed in order for you to identify their key strengths and weaknesses and how they compare to your own small business. Reviewing this area means that you can be smarter with your marketing efforts and be proactive against their weaknesses and of course defend against their strengths. One tip that all big businesses do is to have a competitor file with examples of their marketing activities, products or services.

Big businesses know the value of reviewing the market in which they compete and you can to. Remember you can start slowly and just review one section at a time and then put in place activities or make business decisions based on the review to grow your small business.

© Marketing for Business Success Pty Ltd 2008

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