If you continue doing business the same way you have in the past, you’re likely to fail. The world is in the midst of massive change, our economy is affected by a multitude of new factors and our industry has reached maturity. To be successful, it can no longer be business as usual.
If you’ve determined to prosper, the current conditions can make your business stronger. This article outlines the steps necessary to prosper during times of economic uncertainty, periods of rapid change and phases of reasonable stability. In short, this series is a business guidebook covering the next five years.
What to do?
To be prosperous, whether in good times or bad, your firm must have one of these three traits:
1. Be recognized for your superior quality.
2. Be the recognized “specialist.”
3. Be the recognized “high price leader.”
People will pay for quality.
A study performed by the Strategic Planning Institute revealed that companies known for quality service were able to charge approximately 9 percent more than their lower caliber competitors. Quality leaders grew twice as fast and averaged a 6 percent gain in market share a year.
A Gallup survey documented that customers are willing to pay a third more for a better quality car and up to 50 percent more for a better quality dishwasher. Once people have all the facts, there’s no doubt they’ll pay more for your products and services, even during challenging economic times. Most people will realize they can’t afford the high cost of low quality.
Nine steps to providing quality include:
1. People with positive attitudes
2. Constant training
3. Doing the job right the first time
4. Continuous customer communications
5. Professional appearance of everything customers see
6. Rapid response to everything from emergencies to complaints
7. Being reliable
8. Continuously seeking improvement
9. Make dealing with you an event for your customers
Do a host of little things like: rolling out red carpet to protect work areas, sending “quality surveys”, contacting customers by phone twice a year just to say “thanks”, etc.
Quality is never an accident; it is always the result of intelligent effort.
John Ruskin
Specialize
People would rather deal with specialists. People believe specialists know more and are willing to pay for a specialist’s added knowledge and expertise. The opportunities to specialize have never been greater. They include:
• Becoming the first “Environmentally Safe Service Company” in your industry. According to American Demographics Magazine, 76% of American adults consider themselves to be environmentalists.
• Monitoring customers’ system performance and offer suggestions to improve their current solution.
• Increasing your customers’ cash flow.
• Offer customized preventative maintenance programs.
• Becoming an “Expert” in your field and offer the very latest technology.
Even after others follow, the original “specialist” will have a distinct advantage because they will be known as the originator, the leader, the expert.
What we need is more people who specialize in the impossible.
Theodore Roethke
To make what you are currently doing a recognized specialty:
1. Analyze what your company does best.
2. Determine areas where you make the most profit.
3. Analyze the amount of training needed.
4. Let people who need your specialty know It.
5. Focus your attentions in your area of specialization.
For example: say you’ve decided to become the recognized residential HVAC equipment replacement specialists. You’ll need to: train your service technicians to recognize and communicate opportunities. Collect everything possible on residential replacement products, processes and procedures. Train installers to be meticulous while working with a sense of urgency. Provide the best suited tools and equipment. Hire only those people who would rather deal with residential replacements. Make sure that everything from your business cards, website advertising and truck signs reflects your area of specialization. Don’t mix signals by doing a large portion of work outside your area of specialization.
Become the high price leader
Surveys show when people don’t understand your solution the largest group will go with the lowest price, but, the second largest group will buy the highest price. For many, higher price means higher value. For others, higher price helps eliminate risk. Most people remember paying too little and regretting it.
During tough economic times, many of your competitors will cut their prices. This forces them to the lower end of the market. This leaves even less competition in the area where people are willing to pay more. With high prices, there is room for discounts and promotions. With low prices, there is only room for failure.
Price is what you pay. Value is what you get.
Warren Buffett
The steps to becoming a high-price leader include:
1. Target those willing to pay for the benefits you offer (focus on business owners instead of managers, locate residential customers in more exclusive neighborhoods.)
2. Train all of your employees to communicate value instead of price.
3. Develop a professional image.
4. Advertise the reasons for your higher prices.
5. Hire only the best and pay them what they’re worth.
If you believe the factors affecting your business are changing, then you must change the way you do business.
Be willing to change
The biggest barrier to change is people. Most people are afraid change will undermine their security. Getting them to change the way they do things requires that you:
• Provide as much information as possible
• Help people understand the reasons for change
• Solicit your peoples’ input and ideas
• Let people visualize the benefits of change
• When possible, give ample notice of changes
• Make training an on-going process
The five steps in teaching an employee new skills are preparation, explanation, showing, observation and supervision. If there is any question as to the need to change, video game rule #1 applies equally well to your business: “Standing still is the quickest way to get killed.”
