Dec 16

Customer delight

In my last post I talked about business process modeling and how it could help understand the activities in a business prior to cost cutting for survival. In this post I’m going to riff on the concept of delighting your customers so they come back.

The hygiene factor in delighting your customers is not pissing them off in the first place. How easy is to buy your product & service? Does your product & service do what your customers want (when was the last time you asked)? How you handle complaints / faults / genuine cock-ups?

The easy sell

It may sound obvious but there’s a good reason why Amazon went to all that hassle over their ‘One Click‘ purchasing system. If folks give up half-way through a transaction not only have you lost a sale, you’ve now got a dissatisfied individual that will quite happily tell everyone how poor your service is.

Some companies actually make it fun to buy their products. Moo have this absolutely nailed. Not only do they get you to do a lot of the (perceived) hard work in designing your business/greeting card/post card/etc, but its a fun and engaging process. Innocent Drinks have a delightful approach to their products that makes choosing which smoothie to buy more fun than just a straight choice between ingredients lists.

Even if you’re in the B2B market, a human somewhere will make the decision to buy your product & service so at least make it a painless decision. Think about their pain points; at this stage in the econoclapse no one wants to sign off a large order over 3 years, perhaps you can get a rolling contract with stage payments. That’ll help both your cash flow positions. Know what the sign-off limit is for your primary contact and sneak under that for each stage payment.

Does exactly what is says on the tin

Uploaded on March 18, 2008 by David Clow - Maryland

Uploaded on March 18, 2008 by David Clow - Maryland

The simplest form of customer feedback is your sales. If people are prepared to hand over cash then whatever you’re doing has real value to them. If you’re giving the stuff away then it’s a time investment that acts as a proxy for cash (people returning to your app/game/etc and using it over an extended time period).

Our tagline is “advancement through integrating knowledge” which is what we do, work with clients to advance their business / organisation / research through bringing together our own multidisciplinary knowledge base and integrating with the client’s knowledge base to solve whatever problem was chosen. But if that was all we did we’d be competing with every other consultancy that ‘works closely with their clients in unique partnership, blah blah blah”.

We integrate through networking and engaging in the local, regional, national and international communities we’re a part of. We share knowledge through this blog and by publishing research papers. We support the advancement of others through OpenCoffee, offering advice and reviewing journal papers, and generally trying to connect interesting people.

What low-cost but high perceived added-value can you provide to differentiate from everyone else?

Oops, mea culpa

We all make mistakes. Some are large, some small, some public some private (though you should assume everything is public these days). How we deal with these will for many define the character and long term relationship between a client and your business. With all the social media tools at our disposal, there’s no excuse for not knowing if someone’s complaining about a poor experience. Google & twitter searches with RSS feeds for your company / product names will quickly highlight opportunities to directly engage with dissatisfied people.

Carsonified recently had a promotion where they gave away some very cool journals as part of FOWA; they proved so popular they were offered for sale. There was a mix up with the orders (it happens) but rather than brush it under the carpet or get all legal, Ryan sorted it quickly, humbly and openly on Twitter.

The internet is full of people reporting poor perceived customer service and business practice, not being part of those conversations is often seen as an admission of guilt. Are you monitoring your brand online? Are you part of the conversation?

Going Above & Beyond

Delighting the customer isn’t about huge extravagant gestures (especially not in this economic climate). Mostly its about treating customers as people and offering them unexpected delights. If your basic products, services and internal processes don’t function then no amount of customer service will compensate in the long term. But in a competitive market it makes the difference between competing on price and competing on value.

Dec 11

To finish first, first you have to finish

Uploaded on November 26, 2006 by Manzabar

Uploaded on November 26, 2006 by Manzabar

With the econoclapse in full effect, most companies are cutting back, trimming the fat, stopping non-essential spend. Which is good, but what if the budget you’re about to slash is the one that’s keeping you alive?

The trouble with businesses is that once they get bigger than a couple guys with laptops in a Starbucks (and sometimes even before then) they get complex. When you have to do lots of things more than once, you tend to set a routine, because this helps save time and money and ensures consistancy.

The trouble with people is that (with a couple of exceptions, I’m not one) they can only cope with 7±2 ideas at a time. Which means lots of fudging and scribbled notes to remember for next time. Unfortunately, decisions get forgotten and when times change, who knows which of those routines are the ones that are critical and which were the nice-to-haves because someone at a masterclass suggested all well run businesses applied a 15 point check list to Quality Assurance…

Setting up automatic routines/reports/etc on Remember the Milk, or Basecamp doesn’t get away from the problem, it just automates it.

Uploaded on November 5, 2006 by vivisquare

Uploaded on November 5, 2006 by vivisquare

What you need is a picture of how your business works. The series of inter-linked activities that between them represent your unique business. Something that’ll allow you to hack’n’slash at your business in theory and diagrammatically before actually making a change that’ll piss of your best customer.

What you need is a business process model.

What you don’t need is a legion of McKinsey consultants. At the most profound level, process models are diagrammatic representations of the systems that make your business function. Boxes and arrows. Easy.

There are two simple things to remember with process maps (OK, there are a couple more but to get started in a blog post…); 1) the ICOM is your friend; 2) decompose where sensible.

Integration Definition for Function Modeling (IDEF0) Box Format

Integration Definition for Function Modeling (IDEF0) Box Format

There are lots of methods for developing business process models, I quite like IDEF0 (its what I used in my research work, it’s simple and robust, which is handy when developing models ‘on the fly’; there aren’t to many things to remember – back to the 7±2). The basic unit of the IDEF0 method is the ICOM; which stands for Inputs, Controls, Outputs & Mechanisms.

This basic unit forms the basis for modeling the business. As always there are two general approaches to generating a model, top-down or bottom-up. Bottom-up generally involves stapling yourself to an order and recording every activity that happens between the customer placing the order and the end of the cycle (either payment or receipt of goods). In larger companies this is how you find out how things actually work, rather than how the ISO9000:2000 manual says they work.

Top-down is often easier to explain how the method works. At the top level, there a 3 things that all businesses do, Manage, Operate and Support the business. You can decompose the Operate Process into Get Order, Fulfill Order, Develop New Product, and Support Product. Then start with Get Order, what does this involve? What controls how you get orders, what outputs are generated to enable you to fulfil those orders, what mechanisms do you use to make all this happen, what triggers the process in the first place?

Keep breaking these actions down until you get to the smallest unit of actionable work. When you get to ‘pour water into teacup’ you’ve gone too far! 🙂

The idea is to be able to remove, combine, move, change an activity and be confident that there are no unexpected impacts that aren’t captured by the diagram.

Uploaded on July 22, 2006 by jodigreen

Uploaded on July 22, 2006 by jodigreen

It doesn’t have to be a long draw-out process, you can sketch quickly with pen and paper and have a reasonably good set of diagrams after a couple hours. You also don’t need to model every..single…process in the business, just the ones you’re looking at.

Providing every box has an output, control and mechanism and that if you’ve decomposed a box the arrows that touch that box are represented in the child diagram; then you’re good to go.

Now if you cut an activity you’ll be able to see the wider impact. You can see which activities to combine and which are obsolete.

You can have a look at other businesses and see how they handle those processes, and copy them (best practice and all that). Rather than just cut’n’paste’n’hope you can figure out how processes fit together.

Plug the savings into your cash flow forecast, see what effect it has, rinse, repeat until you’ve looked at everything.

Whilst you’re plugging through the accounts, check every line against the business model; where does it fit in, which process does it relate to, does it add value or costs?

Nov 20

Models of leadership

song chart memes

One of the great aspects of working alongside Universities, is the breadth and depth of critical thinking that you get exposed to. Wednesday evening I was a guest at the Bristol Business School’s Distinguished Executive Address Series and the speaker was Karen Dunnell. Since her Wikipedia page was last edited the ONS has merged and become the UK Statistics Authority (UKSA) with Karen as CEO.

In a wide ranging and refreshingly honest talk, Karen covered many of the organisational and structural challenges that she and the civil servants in her charge have faced over the past few upheavals.

The framework for her talk was the departmental model of leadership around four key factors. There are as many models of leadership as there are leaders, this is a particularly interesting one from a small company and social media perspective as I’ll try and indicate below.

Integrity

As an organisation of knowledge professionals there is a delicate balancing act between “pure” mathematical “truth” and the political need for answers to quite specific questions. In providing leadership for the UKSA, Karen ensures that each individual maintains their integrity and thus the organisation remains true to its purpose. This is encapsulated in their Code of Practice, but we demonstrate our integrity (or otherwise) in everything we say, do and (increasingly) are perceived to be saying & doing.

We’re all judged and evaluated on our integrity, the concept of Social Capital or personal brand is an integral part of a wider corporate integrity. Ultimately your integrity is inextricably tied to authority and people’s willingness to be led by you.

Direction

This is the Vision/Mission/Strategy bit that applies equally for UKSA with over 3,000 staff and a wide ranging statutory and agile reactive environment as for new start ups and growth businesses. Do you know where you’re heading and do you have a plan & the resources to get from here to there. Do you have a contingency plan?

No organisation exists in a vacuum and whether it’s Government ministers or tabloid newspapers screaming for yet another set of stats to justify their hobby horse, or economic disruptors throwing a spanner in the works; a well articulated direction provides the framework and context for the other aspects of this leadership model.

There’s a delicate balance between being an intransigent branch of the civil service and a gadfly chasing policy directives. Karen was balancing some pretty tough negotiations on what the UKSA was about and could do, against having to please political masters that control her budget.

Capability

This was more than just the capability to deliver customer expectations. It also covered organisational capabilities. Getting the best from everyone when everyone’s moving around. Although a large organisation (around 3,000 people) Karen highlighted the incredible changes that have taken place as a result of the relocations that are leading to a need to balance capabilities across staff and plan for the future (link talks about changes to legal profession but I think the challenges are identical for any knowledge/professional based business).

Results

It was very telling that this was the last on the list, yet the one that Karen felt the UKSA was strongest at. As a statistics authority you’d expect lots of measurable results. However, even the UKSA operates against Time-Cost-Quality results metrics. The interesting aspect from a senior executive perspective were the wider results matrix. How to measure the impact of an organisation (especially one that is not a profit centre)?

For Karen this was about raising the profile of the statistics service and educating the public in the role and benefit of stats in providing the evidence to inform decision making. A crucial aspect was the presentation of results in the media, not just the hard statistics but the processes and interpretation of those stats.

So what’s in it for me?

Good leadership means demonstrating integrity in everything you do, articulating a clear direction of travel, identifying and building the capability mix needed to get there, and bringing everyone along in delivering the results that stem from the direction you’re headed. This applies to running a start-up, established company, multi-national or nation.

Oct 30

How Many? Part the Second

Uploaded on April 3, 2008 by BottleLeaf

Uploaded on April 3, 2008 by BottleLeaf

I just posted an example where I’d worked up an Addressable Market calculation based on fairly good data. Of course, this data isn’t usually available; or it’s really expensive.

One of the services that jbsh offer is business consultancy, mainly strategic growth plans and help with the business planning activity. So what’s the addressable market for that?

Well according to the Office for National Statistics there were 2.16 million business enterprises registered for VAT and/or PAYE in March 2008, compared to 2.10 million in March 2007, a 3.0 per cent increase. As an aside, the ONS also report a continued move towards incorporation and away from sole proprietor and partnerships, perhaps reducing personal exposure in the downturn?

VAT is only compulsory when the value of your taxable supplies goes over £67,000 which isn’t that high. The ONS also offer us a cut for businesses between 10 and 50 employees, in fact there are 196,560 such businesses. The number of employees isn’t a great measure of which companies that will engage our services, I’m really more interested in those with a strategic growth challenge, and the revenues to pay our fees.

This information is available in the handy pocket-sized 432 page document that ONS produce on UK Business: Activity, Size & Location 2008 (well I can download the pdf to my phone but I’m not sure I’d want to read it there). On page 172 is the data about geographical regions by turnover.

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Turnover in £000’s 0 – 49 50 – 99 100 – 249 250 – 499 500 – 999 1,000 – 4,999 >5000 TOTAL
UNITED KINGDOM 378,930 543,645 600,325 268,540 168,465 155,145 46,505 2,161,555
ENGLAND AND WALES 334,810 494,765 541,430 240,595 151,270 139,560 42,090 1,944,520

Those businesses turning over less that £250k probably can’t afford us. That still leaves 573,515 which is much more attractive than 196,560 so there must be a lot of businesses with under 10 employees and over £250k turnover.

The next 17 pages detail companies by region, so for my local Unitary Authorities:

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Turnover in £000’s 0 – 49 50 – 99 100 – 249 250 – 499 500 – 999 1,000 – 4,999 >5,000 TOTAL
Bath and North East Somerset 1,295 1,885 2,095 880 530 435 140 7,260
Bristol, City of 2,205 3,380 3,670 1,690 1,125 1,145 285 13,500
North Somerset 1,380 1,915 2,005 900 510 450 105 7,265

Using the same criteria as above there are 8.195 businesses with a turnover >£250k in these three regions of the UK. You can do the same thing for Standard Industry Classification codes (SIC codes) within broad regions (North East, South West, etc). SIC codes don’t work for everyone but we’re not trying to identify specific clients at this point, just gather enough data to be able to say if there is a big enough potential market to sustain the enterprise. If you don’t fit one code exactly, pick a couple that make sense and interpolate.

So it turns out that if you’re selling to businesses, there’s quite a lot of data out there on how big your addressable market is. Of course, that doesn’t mean all 8,195 businesses in this area are looking for a business growth consultant, but if we can make a compelling enough case then they could be.

What markets are you in?

Is there good data?

If you think not, leave a comment and I’ll have a go at finding some sources.

Oct 28

How many? Part the First

Jam at the Floating Market

Uploaded on December 2, 2006 by Stuck in Customs

Something that makes an appearance fairly early in a business plan is the addressable market size. This is usually the point where after some mumbo-jumbo you’d end up with something like “…and thus we only need 1% to secure $100m turnover.”

Mark Davies has a good post on the subject from a VC perspective but I thought I’d add some examples from real life. The first benefits from solid data, the second is more speculative.

An enterprise I’m working with have a new game for the education sector (and several others but for the purposes of this example I’m concentrating on the education sector). Education is great (as are most public sectors) because there’s so much great data out there to use. Tt doesn’t mean they’re any easier to sell into but that’s another post.

So this enterprise happens to be in Canada, and one of their markets is Quebec. Helpfully for me, the Ministère de l’Éducation du Québec has most of the data I need. With a bit of digging (and guess work, some of the better data is in French) you can find the 9 English School Boards, and 17 French School Boards. Between them there are 512,515 students in Secondary education (enrolled for Academic Year 2007/2008). Which is nice and big.

Trouble is, we’re not selling to all those students. We’re actually only interested (at the moment) in two of their 5 years at Secondary School, so we need to divide that number by 2/5 to get a more accurate number (371,739) which is still nice and big.

The next bit needs a bit more knowledge about the fundamental business model. The game is sold to a school, or school board, on a tired license model. The more licenses you buy, the cheaper the per student price. So one addressable market is to sell a single license to the whole of Quebec, ka-ching!

However, more likely is that we’ll sell to each school board separately (or even each school). Again, data is our friend here as we can find the enrolled student numbers for each School Board. Time to fire up Excel.

Quebec English Board Central Québec School Board Eastern Shores School Board Eastern Townships School Board English Montreal School Board Lester B. Pearson School Board
Secondary 1,905 653 2,704 10,978 11,842
SecI & SecV 762 261 1,082 4,391 4,737

And so on…

Now I can apply our tiered pricing model to each School Board and see what our ‘true’ addressable market is for Quebec. Of course these numbers include special schools that might not purchase a license; equally, it doesn’t include the private school sector which hopefully will.

I could drill down to individual schools (I have the list of schools, sizes, locations, who the Principal is and contact info) but we don’t really want to cold call each school and try to sell them each a separate license as we’re in bootstrap mode and the cost-benefit just isn’t there. Early conversations have indicated that School Boards are the most likely point of purchase so that’s enough detail.

This means I can say with high confidence that our addressable market for Public Schools in Quebec is $350,250. Shake rinse and repeat for the other Provinces and Territories in Canada and (for this business model) the Public Sector education market is $3,415,300.

How confident are you of the numbers behind your addressable market forecast?

What do you do if you don’t have those numbers? Stay tuned for my next post.