Friday, December 20, 2013

Science of Business -- Gravity


Gravity is all around us.  It is part of everything we do every day.  So what exactly is this thing called Gravity.

Let’s start with the definition.  Gravity, according to the Collins Junior Dictionary, is “the force that makes things fall when you drop them.”  Now that’s pretty simple.  It doesn’t take being Isaac Newton to realize that apples will always be falling from trees.

So what does falling apples have to do with business?  Glad you asked. 

Think of your business as a very large apple.  That apple is resting in your hand.  Lift up that apple until your arm cannot go any higher.  OK.  What are you now doing to that apple?

I imagine everyone is thinking “holding up the apple”.   You are correct but what are you actually doing to keep that apple up in the air?  Would you believe you are actively pushing the apple upwards? 

Yes, that’s right.  The effort you are expending to hold the apple in the air, assuming the apple is motionless, is just enough effort to counter the force gravity is applying to the apple to make it fall to the ground.  You are literally pushing the apple up continuously in order to keep it from falling.

Your business operates according to the “Laws of Gravity”.  Regardless of whether your business is large or small, it is subject to the same laws of gravity as the apple. 

In business, there are only 2 directions allowed: up and down.  The apple is either lifted in an upward direction or it falls to the ground.  Your business is either being “lifted” up by the efforts of the employees or it is “falling” to the ground.  Nature does not allow for a business to operate at an equilibrium state for any length of time.  In other words, you cannot have sales or production at a flat level for any length of time.  In business, there are no exceptions. 

So what does it mean to “lift” your business?  Active engagement in the growth of the business “lifts” the business up and keeps it growing.  Look at your sales figures.  Are they going up or going down?  How about your revenue numbers?  In fact, if you look at all the various statistics used to measure the success of your business, there are only 2 directions you will see in anything but a shuttered company: up and down. 

The more active the employees are at “lifting” the company, the higher the sales figures and more likely the company becomes successful.  The importance of contributions from every employee are not to be overlooked.  All of us have probably known of employees who loafed about on the job and really did not put forth a great deal of effort in doing the best job they could.  These types of employees effectively add to the overall weight that the balance of the employees must overcome in order to keep the company going up.  Get too many employees riding on the shoulders of others and soon the “shouldered” employees start to get dropped; figuratively and literally.  When a business suffers drops in its sales numbers over a sufficiently long period, staff reductions are inevitable.  Thus, the dropping of employees comes to pass in the form of layoffs; there are not enough “lifters” to compensate for the loafers. 

As a business owner, if you drop a lifter from the company, you have made the problem worse.  It is vital that every business recognize who are the lifters and who are not.  Who are the really heavy lifters and who are the lightweight lifters?  Should it become necessary to reduce the number of employees, it is critical to the business to start with the loafers, then the lightweight lifters and then the heavy lifters.  Look at the statistics for each employee to determine where each employee fits on the scale of “lifters”. 

So what in the business world constitutes gravity?  What is it that all the lifters are lifting against?  In simple terms, competition and noise. 

Every business has competitors.  These competitors are actively seeking customers just like your business.  How much effort you must expend in order to counteract their sales efforts depends upon the overall market size and your company’s size relative to your competitors.  The more competition you face, the more gravity is present working against your lifting efforts.  If the overall market is large and you face a lot of similarly-sized competitors, your lifting efforts will not need to be as large as that of a small business competing against very large competitors.  The key is to recognize what market you can successfully play in given your lifting power and the gravity imposed by your competition. 

Look at what happens when a Wal-Mart, Home Depot or Barnes & Nobel moves into town?  These behemoths can present formidable competition yet the nimble businesses in town - recognizing the “gravity” they present - looks for ways to shrink the target market to a size where their lifting capacity is greater than that of their competition.  Specialty retailers are often unfazed by the introduction of a “big box” retailer.  The really clever retailer takes advantage of the situation and promotes his unique products as “special” and “personalized”.  In other words, the smart business reduces the size of the target market they are trying to “lift” to something of a size that allows their current lifters to continue to overcome competitive gravity. 

Along with competition, the other component of gravity is noise.

Noise is the cumulative distractions that all of us encounter in our daily lives.  The deluge of advertising, radios, televisions, ringing phones and the general status of the economy all contribute to the overall noise level through which a company’s messages must emerge.  How does the right message get to the right person at the right time in order to bring about a realization that whatever you are selling is something needed?  If your prospect is looking for a solution, the task is easier.  If the problem you are trying to solve is not yet known, the task is much harder. 

It used to be that what are considered noises today were once considered sources of valuable information.  TV ads were informative.  Now we TiVo our way through them.  Radio shows were sponsored by a single vendor whom everyone knew.  Now we have subscription radio so we can avoid the ads.  Newspapers were the primary source of news about the world around us and now the Internet allows for easy access to more news than any of us are prepared to digest. 

So how do you combat the noise factor.  Networks.  Social networks, referral networks and business networks.  When ads are generally distrusted, consumers turn to friends and colleagues for insights.  They look to someone they trust to give them guidance.  The Internet provides instant access to thousands of viewpoints about almost everything that is for sale.  Consumer Reports has been replaced by social network sites such as Facebook, Twitter, Yelp and YouTube.  Clever usage of these tools can result in customers becoming advocates and helping in the lifting efforts.  Does that mean traditional advertising does not work?  No.  It means that you need to be asking your customers how they found out about you (survey) and track any changes in behavior.  You may be surprised to find out that a great many of your customers included on-line research in their buying decision process.  If you are not building your “network”, you may be missing a lot of opportunities to secure customers. 

Thus we have the 2 sides in the battle for business success; the lifters and gravity.  The simple fact is that as long as the capacity of the lifters is greater than the forces combining to create gravity, the business will be successful.  Allow gravity to get the better of your company and without immediate action, the business will fold under the weight.

Do you know who are the lifters in your company?

As always, if you would like help implementing these ideas in your business, please call me regarding available consulting services:  602-492-1088

Sunday, December 15, 2013

Science of Business – Vacuums


There are very few things that Mother Nature hates worse than a vacuum.  Look around you and you will see virtually everything is filled with something.  By definition, a vacuum is space that is empty of matter.  Liquids, solids or gases, Mother Nature continually seeks to fill each and every vacuum encountered.

In the world of science, vacuums can be incredible useful.  Vacuums create suction which can help seal containers, attach things together and help us in our daily cleaning chores.  Our cars depend on vacuums for various emissions and throttle controls.  Pumps of all kinds depend upon vacuums in order to work properly.

Interestingly, when you look at how science has applied vacuums to our everyday lives, the purpose behind a vacuum is to create a flow in a desired direction.  Given that a vacuum is static; it has no motion as it is an absence of matter, isn’t it amazing that this static is actually a source of a flow of matter.

In the world of business, there are clear examples of how the laws surrounding vacuums apply. 

Just as nature abhors a vacuum, so does a business.  When a new market is created or identified, there is effectively a vacuum condition which draws entrepreneurs to fill the void and service this new market.  When an employee leaves a company, there is a void left behind that needs to be filled.  Some companies shuffle remaining staff to fill the void and others hire replacements to fill the void.  However addressed, the void gets filled. 

Successful selling is all about filling a void; getting the prospect to recognize the existence of the void (vacuum) and to help fill that void in an ideal manner.  In fact, were it not for the voids and the vacuum it creates, I suggest to you that there would be no motion in any business.  Commerce does not happen from pushing.  Force is not how a booming business is built.  Quite the contrary.  The booming business is built from identifying a void, enlarging it, filling it and continuing to uncover similar voids and filling them.  The larger the void, the more attention the void attracts and the more people there are trying to supply their solution to fill the void.

This is the obvious application of vacuums to the world of business.  It applies to products, markets, people and leadership.  The voids create vacuums and they will be filled.

There is also a less obvious, but no less important, application of vacuums to business; creating business flows. 

The filling of a void involves flows.  The filling of a vacuum involves those same flows.  Just as science uses vacuums to create flows, so too can a business.  Funny thing about flows, they can only go in 1 direction for so long before they must be reversed.  Let me give you an example.

A common camping trick for creating a shower is to suspend a 1 gallon jug of water from a tree.  Poke a small hole in the bottom of the jug and watch the water start to drain out.  Assuming the lid is secured, the water will exit the jug in a small stream for a minute or so and then stop.  The reason the water stopped flowing out was that a vacuum was created in the top of the jug and it eventually grew strong enough to keep the water in the jug.  Allow air to flow into the jug and water can start flowing out again.  Simple physics.

In business, the same flows apply.  Marketing, advertising, promotion or whatever you want to call it, are all examples of outbound flows.  If you put out enough outbound flows, you will create the hanging jug condition; the outflow cannot continue until an inflow occurs.  The simplicity of this model is that nature will supply the inflow. 

Companies that are unaware of this natural law will often decide to squeeze the “jug” in hopes of getting more sales to occur.  Like the plastic jug, squeezing harder does force more outflow but at what effort level relative to inflow?  Essentially, pushing harder and harder on the target audience does not create inflow just as there is a point in which no more water will exit the jug no matter how hard you squeeze.  

The key is to understand how to balance outflow and inflow. 

In our jug example, the pinhole lets out a very small stream of water.  Does not take long before the water stops flowing.  If the target market for your business is small and clearly identified, the amount of promotion to that audience that is needed in order to create an inflow is not very large.  If your market is very large or not well defined, it will take an outflow that is much larger is size and much longer in duration until the natural inflow condition occurs.  This is a physical law of nature. 

Want your promotion efforts to pay off, narrow the focus as much as you can.  The more specific you can be about the target audience, the more effective the efforts will be.  Once clearly defined, outflow to the targets.  Be sure the message reaches the targets without inundating them.  Then stop and wait for the inflow.  If the inflow does not happen, you either did not reach the audience or the volume was too low.  Verify the audience and increase the volume of outflow.  The wise promotions person will accurately track how much went out and how much has come in. 

As you would expect, the effectiveness of the promotion itself plays a role.  Survey your target audience to find the effective messages before spending large sums of money on promotion.  When you get the right message to the right audience, the inflow happens. 

Vacuums are caused by voids in both business and nature.  Flows occur as a result of filling vacuums.  The smart business owner recognizes this condition and makes it work for him.  A void is an opportunity.  Flows of sufficient volume to the right targets create a vacuum that will create an inflow once the outflow is stopped.  Too much outflow and the process stops – the vacuum is too strong.  Too little outflow and the vacuum takes a long, long time to be created.  Someone else may well see the same void and fill it before you do.  The key is recognize the need for balance.  Enough outflow is needed in order to create the vacuum.  Let the inflow happen and then outflow again. 

Apply this simple concept and your business will expand.  It’s just the laws of nature.

Thursday, December 05, 2013

Does Omni-Channel Service Equate to Better Service?

The evolution of customer service delivery channels has sped up in the last few years.  Consumers being connected all the time is having a big impact on the expectations of the consumer and the way in which customer service is delivered.  The real question that needs to be asked; “Are consumers happier with the service they are now receiving?”  Based on the research I am seeing, the answer is NO.  The good news is that service perceptions are not getting worse.

So how is that possible?  Weren’t the new media streams like Facebook, Twitter, on-line chat and browsers supposed to help put an end to unhappiness in the customer base?  Only if you drank the Kool-aid™.

The fact of the matter is that it does not matter whether you call it omni-channel, multi-channel, internet-channel or any other kind of service, if the customers cannot get their answers in a timely way, they are not happy.  If the service model is already a mess, adding more media streams only makes things worse.  Today, the penalties for poor service are very swift and severe. 

So what should companies be doing to avoid these penalties?  Simple.

  1. Recognize that at the end of the day, the agents carry the load when it comes to service.  I have read hundreds of Twitter and FB rants and only rarely is the rant solely about a web page or an IVR script.  Almost always, there is an unskilled agent involved.  Train agents on the knowledge and people skills they need for their job and verify each area on a regular basis. 

  1. Recognize that not all media are created equal.  English is not a simple language.  Neither are a great many other languages.  The ability to write those languages and to know both what to say and how to say it is not a universal skill.  Each new media embraced as part of the customer service model brings along unique skill requirements that must be met.  Agent skill-inventories are the easiest way to identify whom among the existing staff are either qualified or could be quickly qualified to take on the new media.  Skill-inventories have a short shelf life so regular verification is needed.

  1. Silos are the biggest barrier to the customer service process.  Silos reflect a management structure that places politics ahead of service with a few exceptions needed for legal reasons.  Silos are found in data, product and media areas.
  2. >From a data standpoint, there needs to be 1 picture of each customer.  That picture will be a composite, drawing information from multiple systems, but it needs to appear to the agent as a single system. 

    Product silos prevent agents from seeing the breadth of a customer’s involvement with a company.  Is the bank 1 company with 50 different products to offer or 50 small banks each with a single product?  If you want a relationship with your customers, you know the correct answer.

Media decides how the agent and customer interact.  Agent to customer-data should always be comprehensive and agnostic with regard to media.  Do not give the social media agents different information than that which the voice agents access.  With the proper skilling, they may well be the same agent. 

The well-designed customer service system is built on a foundation of comprehensive customer data accessed by properly skilled agents and self-service systems through communication avenues considered appropriate for the industry.  While the underlying communication technologies may change, the basic mandates have been around as long as there have been customers and vendors.