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50 Ways to Grow a Business – Part 3

Welcome back to our ’50 Ways to Grow a Business’ series. If you missed part two, which discusses outsourcing, customer surveys, technology and more, click here.

This installment covers managing complaints, the 80/20 rule, focus groups and more. Let’s get into it:

11)    Resolve complaints

grow a business

If your customers have complaints that are appropriately resolved, they can become better customers than those who haven’t complained.

Authorise your people to fix problems without any “run around”, just as they do at Ritz Carlton Hotels. Give your people the authority to send a customer a bottle of wine, flowers or whatever is appropriate – this becomes part of your company’s “WOW” factor.

Outline here your plan to implement the “WOW” factor:

12) Applying the 80/20 rule to grow a business

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The 80/20 rule (also known as the Pareto Principle) says that 20% of your activities generate 80% of your results.

From this, we derive principles such as 20% of your customers generate 80% of your revenue. Do an analysis – group your customers together by “family” and related entities and see how closely this applies to your business.

Then it’s time to assess whether you keep serving all of the remaining 80%; you are probably losing money on many of them!

Here’s an exercise to apply the Pareto Principle to grow a business. It’s called the Biggest Check Exercise. Here’s how it works:

  1. On the chart, list your 5 best customers (however you define that term)
  2. In column A, enter the total revenue you generate annually from each customer and calculate the total of the column
  3. In column B, enter the total revenue you could generate if you sold each customer your complete range of goods and services. Now calculate the total
  4. Compare the column A total with the column B total and ask yourself, “How should we change the allocation of our marketing and other resources?”

Here’s another exercise to help identify customers who should be sacked:

Twice a year, get your team together and ask each person to nominate one, two or three customers for expulsion.

These “bad” customers tend to have certain common characteristics that work against you as you try to grow a business. They are:

  1. Are unprofitable or marginally profitable
  2. Argumentative about prices
  3. Slow to pay
  4. High-risk
  5. Complainers
  6. Slow to respond to requests
  7. Reluctant to refer new customers
  8. Unrealistic
  9. Abusive to team members
  10. Rude

Once you’ve decided which customers need to go, you can decide on the best approach to fire them:

  • In person
  • Over the phone
  • By letter or email

If you decide to do it by letter or email, here’s an example of suggested wording:

  Dear John,
This letter is to advise you that due to changes in our practice, we will not be available to provide dental care to you and your family in the future and recommend that you engage another dentist. Upon your instruction, we will forward your dental records to your new professional.  
Yours sincerely  

13) Conduct a focus group meeting

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Your business may benefit from convening a focus group. This will require you to gather a group of customers together in order to discuss your business.

Here’s how it works:

  1. Schedule a meeting at a desirable location, such as a restaurant or a hotel, with either lunch or dinner provided
  2. Contact a group of customers and ask for their help. Tell them that you would like to get their opinions and that this will be an opportunity to meet other successful business people
  3. Welcome your guests at the outset and introduce the facilitator, an experienced, neutral individual and then leave
  4. Here are questions we want the facilitator to pose to the group:

A. What does your business get right?

B. What does your business get wrong?

C. What could you do to produce a better overall customer experience?

D. How do your best customers rate you on a scale of 1 to 10?

From the facilitator’s report, you will gain insight into what your customers are REALLY thinking. Based on that information, you can build an even better business.

14) Analyse your value differential

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Remember, it is important to be different to your competitors. Use the information you’re gathering from your customers to establish what they value and what they don’t value.

Here’s how you do it. List all the key attributes of your products and services, such as:

  1. Speed of delivery
  2. Pricing policies
  3. Range of products
  4. Showroom
  5. Website
  6. Staff product knowledge
  7. Staff responsiveness
  8. Handling of complaints
  9. Handling of product returns
  10. Payment policy
  11. Ordering system
  12. Guarantees
  13. Product catalogue
  14. Regular communications

Then ask your customers to tell you how important each of these attributes is to them on a scale of 1 – 10, with 10 being the most important and 1 the least. Next, ask your customers to tell you how they rate your company on these same attributes. From this information, you can develop a value differential for each attribute to grow a business. Here’s an example of what one might look like for a hotel:

AttributeHow important is this to you?How do you rate our business?Value differential
1. Room size  79+2
2. Bed quality  10100
3. Furniture & amenities in rooms  510+5
4. Friendliness  770
5. Hygiene  108-2
6. Meeting area  550
7. Architectural aesthetics  59+4
8. Late-opening restaurant / bar  102-8
9. Room service  10100
10. Breakfast quality  92-7
11. Free internet  100-10
12. Child friendly  000
13. Pet friendly  000
14. Early check-in  105-5
15. Free parking  510+5
16. Automatic check-out  550
17. Coffee maker in room   
AttributeHow important is this to you?How do you rate our business?Value differential
18. Price  78+1
19. Refrigerator & microwave in room  210+8
20. Gift shop  550

In our example, number 10, “breakfast quality” is rated a 9 in importance and the hotel only gets a 2 rating, the value differential is -7. Adding hot food and fresh fruit might be a wise move.

Number 11, “free internet” is rated a 10 and the hotel gets a 0. It may be time to include this service in the room price as they do in some hotels.

Number 17, “coffee maker in room” is rated very important, yet many hotels like this one do not provide one. It would be a relatively minor investment to satisfy customers.

The response to number 19, “refrigerator and microwave”, on the other hand, suggests that this is not a must-have item – therefore, an opportunity for savings.

From your own value differential analysis, you may discover that there are areas where you are giving your customers either more or less than what they really want or care about.

Take a look at these options:

A. Analyse your products and services and decide which must be offered as standard and which can be offered as options to grow a business

B. Create a “naked” solution where all extras are optional

C. Introduce new products and services as options to see if they are valued

Grow a business the right way with Cardens

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