Tag: sales

Closed for business

How many businesses left money on the table over the Christmas break?

This post originally appeared in Smart Company.

Many industries hoped this Christmas was going to be their saviour – across the country businesses in the retail, tourism, real estate and many other service sectors hoped they’d see an upbeat end to a tough year.

When you’re doing it tough you don’t turn customers away, yet thousands of businesses did that over the Christmas and New Year break by not updating their website to reflect their holiday trading hours.

Almost every business I encountered over the break had little – if any – information about their Christmas trading hours. In holiday towns where visitors are unfamiliar with the local businesses many cafes, restaurants and service businesses didn’t have a website or a local listing despite customers searching for them on iPads and smartphones.

Smart Company’s sister site Property Observer discussed this problem in the real estate industry where tenants were being left with problems over Christmas because there are no emergency contact numbers shown on websites.

What’s even more amazing about real estate agents in holiday areas is many pack up for a week or two and miss possible vacation rentals or even sales to enthusiastic out of towners. Who would have thought real estate agents would let commissions pass them by?

For me, I found information lacking on sites for both small and big businesses. To check the opening hours of Myer stores for instance required downloading a PDF file, Australia’s biggest retailer surely can spare a few hours of a junior’s time to updating the opening hours in their already inadequate store finder.

Similarly the City of Sydney fell down on their swimming pools, with their fabulous Victoria Park and Boy Charlton complexes both showing the wrong opening hours. This customer took his business to Leichhardt and North Sydney instead.

Most of the local shops did poorly as well – few had any mention of opening hours at all let alone Christmas trading times. Those who did open probably missed business because people assumed they were closed or found another place online.

Not updating a website would have made sense ten years ago when even the smallest change meant a fat bill from your web designer. Today online publishing tools like WordPress and Drupal mean there is no reason for you or your staff not to log on and make minor changes like revised hours or holiday specials.

If you still fear a fat bill each time you ask for a change to the website then it’s time to sit your designer down and discuss making some changes to the way your site works – not to mention some strong words about your billing arrangements.

Having up to date content isn’t just good for helping your customers, it also adds credibility to search engines like Google and Microsoft Bing which like sites that are regularly updated.

Almost every business has something to say during the year, whether it’s a new product line, welcoming a new staff member or having a special offer. There are also seasonal factors like Christmas, back-to-school, end of financial year and whole range of annual events that affect your industry.

The beauty of the web right now is that we aren’t constrained in what we want to say about our businesses, so next Christmas let your customers know great you are and which days and times you open.

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Are KPI’s a business evil?

How misplaced bonuses, incentives & performance indicators can damage a business

One of the cornerstones of 1980s management theories is offering staff incentives for performing to certain benchmarks.

While the theory is good, it can go badly wrong. I encountered this personally when at PC rescue we started selling computers systems and, to encourage sales, offered our technicians a commission on any they sold.

Quickly we started getting negative feedback from customers, some didn’t like what they perceived as a hard sell and some believed technicians were more interested in selling a computer rather than fixing the problems.

In a few cases it turned out the customers’ suspicions were correct; we found some the techs had decided it was quicker and more profitable for them to sell a new system rather than to fix the problem they had been sent out to resolve.

We had to change our KPIs and it taught me a good lesson about assuming how staff will respond to incentives.

Courier companies are good example of what happens when incentives and performance indicators go wrong, all of us have had examples of deliveries going wrong because the drivers are under pressure to meet targets. In the worst case, you might get your computer monitor thrown over the front gate.

The systems that encourage this sort of behaviour can damage entire industries, as we’ve seen with the used car industry. For individual businesses, poorly implemented commission based structures, like ours was, eventually build distrust which is one of the reason why electronic stores like Best Buy are struggling.

Google’s recent changes to search are another illustration of what can go wrong with poorly thought out incentives with CEO Larry Page reported to have tied staff bonuses to “success” in social. As a consequence Google are prepared to damage their core business as employees scramble to meet their targets.

The definition of ‘success’ is part of the problem with performance indicators, a government agency I did some work with defines successful worker as having a hundred meetings a year which has some predictable results in how that department operates.

On the bigger level, badly thought out incentive structures are damaging our economy as senior managers are driven to deliver short term objectives while ignoring the long term growth of their business and sometimes even damaging the wider community in the process.

Probably the ultimate level of damaged performance reward is the political system those of us in the ‘developed world’ have allowed to develop in the last fifty years; by rewarding politicians on being elected, we have a generation of leaders who are very good at winning elections but not terribly good at running governments.

While there’s little we can do about governments beyond being careful with our votes, we can watch our businesses closely to see what indicators and rewards work best for us.

Planned and monitored properly, bonuses and performance indicators can work well for a business blindly using inappropriate ones though often turns out to do more harm than good.

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Fading markets, falling margins

Are we fast enough to recognise when our business is changing?

“They don’t pay for us to go to trade shows anymore,” lamented a journalist at a recent industry PR event. The era of international trips and freebies is over for most technology journalists and its passing is mourned by many of them.

Media junkets, industry conferences in exotic locations and management retreats to exclusive resorts are what businesses with fat profits can afford. Most of the tech industry is past that point as most of the sector becomes commoditised.

Slowly, vendors come to understand what a commoditised market means as Acer have with their announcement they will stop selling cheap systems while others, like Apple, have managed to avoid that trap entirely.

As technology changes, cheaper manufacturing locations appear and consumer preferences change many businesses will find their markets change. Some will identify those changes early and change course while others will wonder what has happened to their fat margins and why they can’t afford management, client or media trips to the Pacific or the South of France anymore.

That’s good for consumers, but a terrible thing for those managers who are little better than corporate bureaucrats and their friends in the media.

Interestingly, it’s the jobsworths and the overfed incumbents who are the slowest to recognise when their businesses are changing which is why there’s so much opportunity for smaller, smarter enterprises.

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The world of smaller margins

Many of us are going to have become used to a less profitable market.

“We never get expensive trips anymore,” lamented the IT journalist, “every year we used to get a trip to Las Vegas, London or Singapore.”

The decline of journalist freebies is one symptom of the world of declining margins. In the case of the IT industry, most vendors have seen their profits shaved and the days of flying the press around the world to product launches and parties is an unaffordable luxury.

A recent Time story, When Whenzhou Sneezes, illustrates the problem on a broader scale.

In Wenzhou, a provincial Chinese city, factory owners found their margins were being squeezed and they could make better money in property speculation, which of course rarely ends well.

For the IT industry, we saw the rise of “crapware”, where computer manufacturers started added trial programs that slowed their systems and detracted from the customer’s experience.

That’s madness but Micheal Dell, the founder of Dell Computer, pointed out adding this rubbish allows them to sell computers $50 cheaper.

Assuming margins will always be fat, and then fighting market trends when those profits start to erode, are two serious management mistakes that are being repeated across industries and by entire nations.

Right now the world is changing and there are few sectors that have been profitable for the last twenty years that won’t be affected in the post-consumer society.

It might be worthwhile considering where your margins are and how they are changing, then resisting the temptation to do silly things. Although cutting back on journo junkets might not be a bad idea.

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The IT industry’s damaged business models

Can the Information Technology industry deal with a radically changed business environment?

JT Wang, Chairman of personal computer manufacturer Acer believes the release of Windows 8, Microsoft’s next operating system, will see a resurgence of sales for Windows based computers. Market trends suggest those hopes are in vain.

Right now the Personal Computer market can be roughly split into two camps; those happily running Windows XP who have no need to upgrade and those who are delighted with Windows 7 who have no need to upgrade.

Short of their computers breaking down, neither group have any good reasons to change to the new operating system as, unlike Windows 3.1, 95 or XP, there is no new technology breakthrough or advance to warrant making the jump.

To make things worse for the PC manufacturers the rise of cloud computing services extends the life of older Windows XP systems and eliminates the biggest driver of new computer purchases in businesses – the software upgrade.

During the PC era one of the banes of business owners were enforced software upgrades where vendors would release a new version of a program every year or two and withdraw support for the older editions.

Frequently the newer software would require the latest hardware, forcing the business into an expensive and disruptive upgrade of all their IT systems.

Today, software companies following the forced upgrade model are finding customers have viable cloud alternatives which destroys the revenue stream behind those frequent releases.

When a customer moves to a cloud service, they also delay buying new desktop or server hardware which is partly driving the steady increase in the age of business computers.

For computer manufacturers the release of Windows 8 could actually be bad news as customers will probably postpone system upgrades until the first service pack of the new operating system is released.

Even if Windows 8 does deliver increased sales as JT Wang hopes, the trend of steadily falling PC prices as smartphones and tablet computers take market share is inevitable.

The PC industry in both laptops and desktops has been a commodity industry for some years and any hope of establishing premium pricing from tablet computers has been dashed by the iPad’s competitive price points.

Regardless of the hopes of the IT industry’s leaders, both the hardware and software sectors are under a lot of stress. It will be interesting to see who adapts to today’s market.

 

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Technology’s magic pills

How a social media or cloud computing ointment won’t solve your business problems

As railways rolled out across the US in the mid 19th Century, the snake oil merchants selling dubious medicines weren’t far behind.

Communities that had never before seen things that were taken for granted in the big cities were easily fooled by miracle treatments that would fix all their ills. By the time the locals discovered the scam, the snake oil salesman and his shills would be well out of town.

Technological change always brings out hype and over the last few decades we’ve seen a similar thing happen with the tech industries, as products and services were sold on the back of claims that could be described as ambitious, if not outrageous.

The Y2K bug was a good example of this as planes were going to fall from the sky and dams collapse if we didn’t hire an expensive consulting firm or buy a widget that would remind our computers they were now in the 21st Century.

A similar thing is at work with Internet names, where the current push to sell Top Level Domains – a bargain with their $385,000 application fee – is being touted as the fix to everything that is wrong with web addresses.

With digital snake oil it’s interesting how often big organisations sometimes act like 19th Century American sharecroppers – all too often we seen ministers and CEOs announce an outsourcing deal that will save taxpayers or shareholders millions only to later find the only winner was the consulting firm that sold the idea.

A similar trend is at work in the PR industry, Sky News presenter John Kerrison has an entertaining look on his personal website on how social media is being sold as an easy fix for a business with far more fundamental problems.

The sad thing is that there are real benefits behind the grandiose claims; Y2K was a real problem, money can be saved through intelligent outsourcing and social media is a great PR tool.

Eventually hype backfires, consumers are rightly dubious about anything that has the slightest hint of PR spin while the IT sector is viewed with well-earned suspicion by business proprietors, executives and managers.

A good example of this was last week’s Digital Readiness report from Optus that found businesses aren’t particularly interested in cloud services. This mirrors similar studies by Sensis, MYOB and MelbourneIT which all find organisations aren’t too fussed about the online world in general.

The danger with this is there is fundamental shift happening in society and technologies like websites, social media and cloud computing  – just like the railroads in the 19th Century – are part of those changes which businesses need to understand.

In an era where snake oil is a commodity there are two challenges for business people; the first is not to be perceived as one of the charlatans and the second is to see the miracle cures for what they are.

Probably the best tool for dealing with the digital snake oil merchants is turn on your own, old-fashioned bullshit detector and treat the shills with the suspicion they deserve.

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Do you have customers or just users?

Are subscribers, visitors and users really supporting your business?

“I was on your mailing list for general info, for spams and scams etc which were helpful. Suddenly it changed and now the business format is not useful to me” said an lady when unsubscribing from one of my newsletter mailing lists.

The lady concerned had been on one of the mailing lists for over ten years and, once upon a time, had been a paying customer for my old business, PC Rescue. Although we’d only earned a $100 off her and that was seven years ago.

While it’s sad to lose a subscriber – you don’t run a service business for twelve years without caring about those who use your services – the question is was the lady really a customer?

This is an important distinction where many of us are giving away much of our knowledge for free; are our users really customers?

For the social media and web2.0 sites, this is easy; users are the raw material for their aggregated and segmented data feeds and audience, the customers are the advertisers. This is just a modern twist on the broadcast model that sustained the radio and TV industries for most of the 20th Century.

Many of those social media platforms aren’t making much money from that data and there’s a good argument those who are have been wildly overvalued by investors.

The value of user data, whether it’s aggregated or identifiable appears to be nowhere as high as most of us think, unless you intend to rob your users’ bank accounts.

Overvaluation of your customer, or user, database is a common problem for smaller businesses too. If you’re the local plumber, computer repair guy or coffee shop then the value of any mailing list is probably way overstated – the only metric that ultimately matters to the business is how much money you’re making from the customer.

If you care about the people that you deal with, this may be a hard reality to face but those who visit your shop, subscribe to your newsletter or download your free e-book aren’t your customers, only those who are prepared to pay are.

This is something we have to understand in this era of abundant free information and online services. The challenge for most of us is how many users we can convert from being window shoppers and freebie seekers into customers.

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