The Consumer Power Shift

Businesses are waking up to a new reality in terms of a power shift that has taken place in the market place. Gone are the days where business can dictate terms to their clients. It seems that many small businesses and some large ones are battling to come to terms with this reality.

Recently I penned a letter to 16 000 odd people in HouseCheck's database where I tried to illustrate this shift by using a complaint that was posted onto Hello Peter a few years back. A large portion of these people are estate agents and judging by the various reactions it is obvious that some people are more attuned to these shift changes than others.
 
HouseCheck is a national home inspection company (disclaimer - in which I have a small  interest) which supplies comprehensive and snag inspections to buyers and sellers. Because of the way the consumer protection act excludes private sellers and buyers from the act, the only way a buyer can protect themselves from the Voetstoots clause which is common in all sales, is by verifying the true condition of the property upfront.
 
Although some estate agents are all for home inspections, quite a few are discouraging inspections, because they are scared that they may disrupt the sale. HouseCheck's argument is that this is an unfair practice because buyers could be prejudiced. I suggested in my article "that in the court of public opinion" this attitude could go against estate agents who were against this practice. The jury is out in terms of what may happen.
 
Three other incidents recently have reinforced the power of the small man.
 
In a  much shared post on Facebook, a woman’s claim against Old Mutual for a life policy on her late husbands life was denied on the basis that the man had not disclosed all pre existing conditions. Sadly the pre existing conditions had not killed him, but he was murdered. The wife faced a bleak future as she worked for her late husband in an administrative capacity and now, not only did she loose her income but was also facing a situation where the life policy was denied. Naturally Facebook users agreed with her that the decision by the insurance company was unjust and the post went viral. Old Mutual became aware of this and quickly changed their minds and agreed to make the payout. Their reputation was saved. The destitute policy holder won in the court of public opinion.
 
Ford Motor Corporation in South Africa and elsewhere took longer to learn their lesson with their reactions to Ford Kuga’s burning. This resulted in the value of thousands of Kuga owners cars being decimated with immediate effect. Ford will not even give a decent trade in value on their own product.
 
And in another victory for the small man, average South Africans took to Twitter and other social media to take on mega PR agency Bell Pottinger over their racially divisive campaign conducted in South Africa. The DA, feeling the mood of the people grabbed the opportunity and cleverly reported Bell Pottinger to the Public relations and Communications Association (PRCA) and they had their membership terminated for five years.
At the time of writing, the Bell Pottinger CEO has resigned and clients are jumping ship according to media reports. Bell Pottinger have  announced that they are declaring bankruptcy. David has played Goliath. Imagine one of the worlds most respected PR agencies misread this power shift. 
Managing your social media reputation is now a key aspect of your business and one not to be taken lightly. Remember your clients are potentially in the driving seat, and it matters not too much what you think, if they are able to whip up some measure of injustice in social media.
 
Google and Facebook are also considering reviews before making recommendations for your business in their respective search engines.
 
At The Online Marketer we have strategies to handle these aspects of your business.


The Numbers Game to Profitability

The numbers game to profitabilityThere are certain marketing metrics you need to follow in your business to ensure continued growth and profitability. It is within every business persons reach to do this. Following the numbers game will dramatically improve your bottom line.

Here are the seven numbers you should be watching:

  1. Foot traffic.
  2. Opt ins.
  3. Conversions.
  4. Average item sale value.
  5. No. items in the basket.
  6. No. of times the customer returns.
  7. Gross profit.

A 10% increase in foot traffic followed by a 10% increase in opt ins, followed by a 10% increase in conversions, followed by a 10% increase in the average sale value, followed by an extra 10% no items in the basket, followed by a 10% increase in the number of times your customers return, followed by a 10% increase in gross profit will result in a 97% increase in your profits.

If this interests you then read on...

So what is a ten % increase in foot traffic?

Well if you have 10 clients walking in your door each day, then you need 11. If you have 100 clients walking in your door each day you need 110. So how many people visited you this month?

So what is a 10% increase in Opt-ins? 

Well let’s define an opt in first. An opt in is when a potential client takes a demonstrable action towards a sale. In a clothing store they may try on the shirt or jacket, In the service industry they may ask for a quote. In the restaurant trade they may ask for a menu or request a price or description of the item. In the online environment they may sign up for a free give away on your website. So if you have 20 people trying on an article of clothing each day, you need 22 to have affected a 10% increase. Not a big ask. So how many new opt ins did you get this month?

So what is a 10% increase in conversions?

Conversions are when the plastic hits the card machine, when the cash hits the till or when the deposit is made in your bank account. If out of the 20 people who opt in with you each day, ten normally result in a sale then your target is to get 11 to convert. So how many new clients did you get this month?

So what is a ten percent increase in average item sale value?

Lets take a mans belt as an example. You can get a cheap one for R50. However a genuine Levy belt will cost upwards of R400. Both hold your pants up. The perception of value is better with the Levi product. So within your business is there an opportunity to upset to a deluxe item, one with a perceived higher value. Your target is to get enough people to take the better option to increase your average item value by 10%. In the restaurant game that may be selling the 400g rump instead of the 200g sirloin.

So what is a 10% increase in number of items per sale?

What product or service can you add to the clients basket of goods he gets from you? Can you interest them in an add on service, a warranty, extra chips or a cool drink in addition. How often have you stood at a fast food outlet and being asked if you want to upsize your order, or would you like that with a jumbo coke or a side salad. A 10% increase is not difficult to achieve.

So what is a ten percent in the number of times a client comes to you business?

If he shops once a month then you need them to come twice in one month of the year. If he dines with you five times a month then you need to get him to dine with 11 times in two months. If he has coffee in your coffee shop every weekday then you have to entice him to come twice on Saturdays.

So what is a 10% increase in gross profit?

Gross profit is defined as your turnover divided by your cost of sales and is often expressed as a percentage. There are many ways to increase your gross profit. You can reduce shrinkage or stock losses due to damage or theft, you can negotiate better supplier prices or you can raise selected prices in your store. Most people can achieve this by using a combination of the three.

So, by watching the numbers and focussing on these areas of your business you can double your profit if you increase each of the metrics by just ten percent.

But by now you’re raising a hundred different reasons why this can’t be achieved. The reason you don’t play the numbers game is that you don’t know the numbers.

But what if I can show you how to get these numbers, with very little effort and that you have the ability to turn your business around?

Pop me an email if you are interested.

The Numbers Game

The Numbers GameI’m often confronted with business owners who are concerned about their profitability or the sustainability of their business.  Small business owners in particular are bogged down with legal requirements, staff management and allocation of scarce resources that they find themselves becoming task mangers rather than being the visionary entrepreneurs that they set out to be when becoming a business owner.

Here are the figures that every business owners needs to know but the majority do not.

What is the lifetime value of my average client?

It’s amazing how this question can change the focus of an entrepreneur. Add up what an average client will spend with you in a day, a week, a year and multiply that by five years or ten years or even twenty years. Really? Is that what one client is worth to me if I can retain him for that period. Well the answer is NO. They are worth much more because you haven’t factored in to the equation the affects of inflation, new product lines, new technology solutions, new services that you may offer in future.

What does it cost me to get a new client?

This is a straight forward question that every businessperson can answer. Take the total cost of marketing including the cost to company of sales reps (Unless these reps only service existing clients), database management, PR efforts and dedicated time to customer acquisition and divide that cost by the number of new clients or customers. At The Online Marketer that cost is around R1000 for a website and at www.housecheck.co.za it was sitting at R525 per sale. So what is the figure for your business? very often the cost of acquiring a new customer exceeds the value of the first sales.

If you are one of the lucky few that don’t advertise and just wait for the people to phone you, then be grateful, but ask yourself if that is sustainable if someone else opens up in opposition to you?

The final contextual question you need to ask is...

What do my clients think of my products and service to them?

I’m not asking you to assume anything here. I want hard facts. Not a thumb suck. Do you ask customers for this feedback via a questionnaire or via a comments book. Are you asking them if they would like something different? Would they like anything in addition to the services you offer?

Armed with the information above you can play the numbers game. The Numbers game is just a focus on seven aspects of your business that can dramatically change the bottom line in your business. In fact if you can increase each of the seven factors by just ten percent you can almost double your gross profit.

The Numbers Game

There are certain numbers you need to follow in your business to ensure continued growth and additional profitability. It is within every business mans reach to do this. Following the numbers game will dramatically improve your bottom line.

Here are the seven numbers you should be watching:

  1. Foot traffic
  2. Opt ins
  3. Conversions
  4. Average item sale value
  5. No items in the basket
  6. No of times the customer returns
  7. Gross profit.

A 10% increase in foot traffic followed by a 10% increase in opt ins, followed by a 10% increase in conversions, followed by a 10% increase in the average sale value, followed by an extra 10% no items in the basket, followed by a 10% increase in the number of times your customers return, followed by a 10% increase in gross profit will result in a 97% increase in your profits. If this interests you then read on...

So what is a ten % increase in foot traffic?

Well if you have 10 clients walking in your door each day, then you need 11. If you have 100 clients walking in your door each day you need 110.

So what is a 10% increase in Opt-ins?

Well lets define an opt in first. An opt in is when a potential client takes a demonstrable action towards a sale. In a clothing store they may try on the shirt or jacket, In the service industry they may ask for a quote. In the restaurant trade they may ask for a menu or request a price or description of the item. In the online environment they may sign up for a free give away on your website. So if you have 20 people trying on an article of clothing each day, you need 22 to have affected a 10% increase. Not a big ask.

So what is a 10% increase in conversions?

Conversions are when the plastic hits the card machine, when the cash hits the till or when the deposit is made in your bank account. If out of the 20 people who opt in with you each day, ten normally result in a sale then your target is to get 11 to convert.

So what is a ten percent increase in average item sale value?

Lets take a mans belt as an example. You can get a cheap one for R50. However a genuine Levy belt will cost upwards of R400. Both hold your pants up. The perception of value is better with the Levi product. So within your business is there an opportunity to upset to a deluxe item, one with a perceived higher value. Your target is to get enough people to take the better option to increase your average item value by 10%. In the restaurant game that may be selling the 400g rump instead of the 200g sirloin.

So what is a 10% increase in number of items per sale?

What product or service can you add to the clients basket of goods he gets from you? Can you interest them in an add on service, a warranty, extra chips or a cool drink in addition. How often have you stood at a fast food outlet and being asked if you want to upsize your order, or would you like that with a jumbo coke or a side salad. A 10% increase is not difficult to achieve.

So what is a ten percent in the number of times a client comes to you business?

If he shops once a month then you need them to come twice in one month of the year. If he dines with you five times a month then you need to get him to dine with 11 times in two months. If he has coffee in your coffee shop every weekday then you have to entice him to come twice on Saturdays.

So what is a 10% increase in gross profit?

Gross profit is defined as your turnover divided by your cost of sales and is often expressed as a percentage. There are many ways to increase your gross profit. You can reduce shrinkage or stock losses due to damage or theft, you can negotiate better supplier prices or you can raise selected prices in your store. Most people can achieve this by using a combination of the three.

So, by watching the numbers and focussing on these areas of your business you can double your profit.

But by now you’re raising a hundred different reasons why this can’t be achieved. My answer to you is that you are wrong. The reason you don’t play the numbers game is that you don’t know the numbers.

But what if I can show you how to get these numbers, with very little effort and that you have the ability to turn your business around?

Pop me an email if you are interested.

Why do small businesses feel strange about asking for money?

At our Online Marketing Agency we work hard for our clients. We are meticulous about our research which adds enormous value to the effectiveness of our clients websites and online marketing campaigns. We compete with graphic designers who produce visually appealing sites but who never stand a chance in hell of being found on Google.

Some of our clients actually even understand the difference. Some even appreciate our efforts and so they should.

We are generous with our time. We are always on hand to assist our clients with their computer problems. We regularly take calls to assist our clients with their email problems (mostly to with their outlook or email client), their inability to use certain software and are patient when they have forgotten how to make an adjustment to a page on their site. This time that we give freely in an effort to build relationships robs us of the opportunity to do more work but we accept it as part of the game and give freely in good grace.

But there is one area of our business where we fail. We fail to insist that clients pay us on time.

I've spoken to many small businesses about this problem and most of them fall into the same trap.
Somehow, despite offering great service we get all shy about asking for money and insisting it gets paid on time.

I think it's a form of masochism. After all try not pay your electricity account or you Vodacom account and see how shy these people are about cutting you off. Vodacom has millions of cash reserves. As small businesses we have to pay our overheads such as salaries, lights, water, telephone and internet bandwidth. In our case we pay our service providers for hosting, domain registrations and God help us somewhere amongst the endless list of expenses we have to keep a bit for ourselves.

So why do small businesses devalue themselves so much by feeling shy to ask for payment for services delivered. It's demeaning and it shouldn't be.

The accounts department that has closed for the holidays wouldn't dare not have paid the directors Vodacom accounts. Why should we be treated any different.

My advice is "don't demean yourself". Feel free to ask what is due. If not received then cut off. Vodafone does- why not you? Your clients will soon learn to take you seriously.

If you fear loosing customers because you are asking them to pay what's due then you're being a masochist. If your clients get offended - then ask yourself "do you really need them as a client"? Probably not.

The advantages of taking action

Take actionYesterday was an interesting day for me. I'd been asked to address a guest house forum on tackling social media. As this is such a broad topic I didn't want it to become another "how to" and chose to focus on the power shift from business to consumer as a result of the new ways we communicate since the advent of the Internet.I thought the short talk was well received and I certainly saw a number of people writing down a number of points I made.At the end of my talk one of the delegates started a new discussion. She was expressing her frustration at the local authorities lack of commitment to deliver basic services to the city. This, she claimed was adversely impacting on tourism. She was citing things like, cleanliness of the streets, pot hole repairs, the apparent lack of caring about the area in which her establishment operates and berating the city for not promoting her area.I thought about it for a bit.In life I have discovered that in order to tackle a problem one needs to take action. In fact I always break down projects into the next steps one needs to take or next actions. There's nothing like inspired action to move something forward.Our delegate had identified the problem, she however clearly was at a a loss to know what to do next and spent quite a lot of time introducing negative energy into the room by deflecting the problem and solutions onto someone else. In this case she wanted the forum to take up her cause. A typical case of putting the monkey on someone else's back.Some things are out of our control. Wasting time and effort to try control what we can't is a problem. It's far better to analyse what we can do. The question I tend to ask myself is "what is the next step or action I can take in his regard?" Knowing this is the key to move forward. Big audacious outcomes or goals are essential to keep us focused. But without giving them some thought and breaking them down into next actions we will never achieve the desired outcome.Some possible actions may be.
  1. Make an appointment with my ward councillor to express my point of view.
  2. Identify the steps that need to be taken to remedy the situation.
  3. Identify the people to engage with.
  4. Call for a meeting with affected people.
  5. Plan my vote in next years elections to reflect my discontent.
I wouldn't know what to do, but by not taking action or assuming somebody is going to do so on your behalf is ridiculous.In this case I think the lady in question was hoping that the forum would take up her quest. Now as a founding member of that forum I think we need to define our roles quite clearly.Enjoy breaking your projects and tasks into next actions and see the benefit you get.Dave Allen wrote an excellent book that many of you know defines my productivity. It's called "Getting Things Done". It's well worth buying a copy. You won't regret it.

Drive Traffic | Websites that deliver leads