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Managing Customer Perception for Profit

You are driving in the rain and experience a flat tire. Pulling over and whipping out your cell phone to call emergency, you notice two tire repair locations within easy walking distance. The one on the left looks clean with proper landscaping, well-lit signage, and a covered entrance. The one to the right has weeds growing in the asphalt of the parking lot, missing lights in the main sign, and dirty windows. Which one will you choose? When will price and brand selection come into your decision? The short answer, after you decide on appearance. Does it really matter if one or the other is advertising a special or offers to pick you up on their parking lot signage? A little bit but not enough to sway your decision. It is common knowledge that people want to obtain the best “service”  in the cleanest environment possible. This creates value.

Customer perception is key

Profits build from customer experience

Restaurant mishaps

Taking the idea of outside maintenance inside, let’s look at the effect of a “clean and properly maintained” bathroom in your favorite restaurant. Even with the choice of several locations, your favorite eatery keeps competition at bay through a clean bathroom. Ask yourself how often do you go into a restaurant and head for the bathroom to wash your hands or freshen up prior to eating (hopefully, regularly). After the outside visuals, greeting staff and bathrooms are critical to customer experience. Dirty bathrooms mean dirty food habits in my book. Just saying… Along the same lines, visiting a restaurant to “just” use the bathroom because it’s clean puts pressure on the customer to buy something or at least look at the menu. Everyone knows that nothing is truly for free.

Strip mall shenanigans

Going to the mall can be a ritual for the weekend and often entails selecting where to go over what to buy. The selection process starts with availability of parking and products but also rests on adequate displayed directions, properly maintained grounds, and ambiance. How many times do you go back to places that appear grungy and unkempt with peeling paint, weeds, filthy signs, or poor parking lot directions? Not often is my guess. Business owners maintain competitive advantage by being part of well-oiled retail machines not pushing clunkers. All aspects of the buying experience have to be addressed regularly including maintenance, cleanliness, and organization to truly impact customer service. If they are not, people will simply not show up anymore.

Power of contracts

As leasees, small business owners have the  power to make demands right up until the leasing agreement is signed. After that, they are at the mercy of their landlords or leasors. Signage, environmental upkeep, security services, parking services, utilities, policies and fees can be defined or challenged during negotiation and are the responsibility of the business owner. They all can cost either party money and personnel but should not be the sole responsibility of the tenant.  Contracts should be the basis for a successful relationship defining roles and responsibilities to ensure that potential customers always see small businesses in their best light.

 

What is the Pulse in Small Business?

pulse ProductivityEvery successful business creates a tempo or pulse. Changes come in the form of highs, lows and plateaus within sales, marketing, operations, or staff. Understanding the next change is critical to success. Looking at your business as a series of systems that have to work together to remain healthy and grow, drives a holistic viewpoint. Focusing on one area only, like financials will lead to neglect in other critical areas of the business.

See the whole picture

It is possible for business owners to make changes in productivity strictly by reviewing the bottom line. This is somewhat true. The adage, “everyone knows that sales heals all” indicates that with enough money thrown at a particular problem, success is inevitable. The problem with such a practice relates to long-term value and sustainability. Companies will not survive and begin to experience diminishing returns through management by cash flow only. Management has to carefully  review each area of their business and make changes to improve efficiency or enhance value.

Understanding business drivers

Strictly looking at productivity as gross sales, negative change in revenue production is really a byproduct of hidden underlying problems. Perhaps the calculated list price of a good or service is based on raw costs and minimum margins rather than consideration of market maturity and competition. This becomes a problem when cash flow is inadequate to purchase inventory or demand is directly linked to discounting. Companies can fail merely because effective net margin is unattainable. Another example concerns individual sales efforts. Sales personnel depend on a blend of targeted product mix, product knowledge, brand awareness, competitive pricing, and distribution to sustain their efforts. Their compensation plans should drive attention to corporate initiatives and goals. If they don’t, confusion and poor performance results.

How to prepare against the flat line

In many small businesses performance and growth stagnates as operational costs eclipse net profit. A company will basically flat line with no revenue growth and perhaps no loss of market share. The best strategy is to be a forward thinker leveraging historical trends in performance with expectation of future need. When rising raw costs or increasing competition threaten growth, management has to look at potential change to ward off lulls in production. This is where business planning and strategy begin to shine. Without specific planning a company will begin to flounder and start the knee jerk reaction of cost cutting versus leveraging core competencies.

Where to begin

Just thinking about implementing new policies and procedures to develop a holistic view of your company can be daunting. The first step is a preliminary assessment by identified core functionality of the business. The assessment will uncover relational issues between departments, weaknesses in infrastructure, and other potential areas of concern. We advise a third party approach rather than an internal audit because results are unbiased and based on diagnostic skill sets that are not normally a part of small business. Either method will yield results and begin the process of restructuring.

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