Business evaluation can lead to business optimisation

There is something to be said for making the time to investigate, evaluate and think about some critical elements impacting on the success of our businesses.

In this article I will look into (1) Service Experience, (2) Business Premises, (3) Our People and (4) The Image of my Business.

1. Service Experience

This subject matter remains a bugbear of mine; maybe because the general sentiment among consumers in South Africa is that this is an area which is lacking in most businesses.

Here are a couple of pointers to use in benchmarking the service experience of our businesses:

  • Obtain an external point of view
    This can inter alia be done by appointing the services of a mystery shopper to evaluate the level of service and support provided by your staff.

    A point of sale customer feedback facility could also be considered. Compile a short questionnaire (3 or 4 questions), make copies and place these at your service points. Ask your counter assistants to ask every customer they serve to complete the form and to place the completed form in a sealed container. Another possibility is to obtain telephonic feedback similar to the above from customers that make purchases above a certain amount and whose contact information you have.

    There is something to be said about tracking your main competitors – use information in the public domain (website, brochures, events, sales people, articles in the press). Learn from them and also prepare to counter their value proposition in the market place.The last pointer is simple to do, but difficult for some business owners to implement – engage directly with your customers on your business premises, or telephonically, to receive their feedback on and experience of the service levels in your business.

  • What is the minimum expectations you have for:
    • the number of times the phones ring before it is answered?
    • greeting your customers (in person and telephonically)?
    • the dress code of your staff?
    • the discretion allowed for decision making at the point of sale (to compensate for an inferior customer experience, for example)?
    • service output w.r.t. contracting the service levels with staff, rewarding them accordingly and also addressing sub-standard service levels?
  • How do you ensure that the service standards and SLAs are metr.t. all the contact points of the business (phone, website, fax, e-mail and social media)?

Use the valuable insights from your customers to improve the overall customer experience of your business.

Take a hard look at your business premises

What is the current ownership statusr.t. your business premises? Weigh up the sensibility of owning the premises versus a rental arrangement.

Is the locality of the business supporting the requirement for consumer traffic (“feet at the door”)?

Also look at the possible need to revamp your business premises, reconsider the lay-out of the business, consider if you have sufficient room to expand the business, as well as the state of the business signage. Staff feedback can be used as gauge and also as a morale booster if you can accommodate their proposed changes

Our People

Consider evaluating the following elements:

  • Is my payment practices aligned to market trends? Am I paying my staff what they are really worth?
  • Do I have the right people appointed for each job (management and operational staff) I have in the business? Are they fully skilled?
  • Do I have written appointment and SL contracts with all staff in place?
  • What is my staff turnover? If it is not aligned to industry trends, I need to find out why and address it accordingly.
  • Are there “bad apples” in my business and how do I address this in an efficient and a fair way?

The Image of my Business

There are certain “hygiene” elements in our businesses which sometimes speak louder that our physical presence. Make sure these elements are in place and maintained very well.

  • What is the “look and “feel” of our businesses exterior w.r.t. the paint, the neatness of our parking lot, the cleanliness of our premises, the lighting of the building and surrounds, how well the entrance is marked and how welcoming the reception area is to guests and customers?
  • If I have vehicles, how neat and clear is the signwriting on the vehicles and how clean are the
    vehicles?
  • Do I have branded stationary and is it up to date and in pace with current trends?

 

Excellent firms don’t believe in excellence – only in constant improvement and constant change.

Tom Peters

To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy.

Article written by Jannie Rossouw, Head: Sanlam Business Market

Technology can be a business enabler

Article written by Jannie Rossouw, Head: Sanlam Business Market

The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.
Bill Gates

Whenever I think about the application of technology (hardware and software) I follow a specific thinking process – something which might also be of value to other business owners.

1. Assess your needs

It is a good practice to start with the end in mind. This means that you need to understand what business outcome you want to achieve. You can then proceed to evaluate which technology application will support you in achieving the business imperative.

For example:

  • You want to record client information: MS Excel might just do the job for now, but a more robust CRM system might be the ultimate solution.
  • You have shrinkage of stock in your business: Electronic stock control will give you a handle on stock levels and movement of stock into and out of your business.
  • You want to publish a weekly article/newsletter: Depending on the volumes involved and the graphical presentation of the article or newsletter, you can use MS Word, or MS Publisher, or customise the information in HTML (requires programming skills).

2. Take stock of what you have

Do you have a gauge on the hardware and software applications used in your business? I have seen equipment standing around in businesses having no productive use. It is even worse with software applications. Different versions of standardised software applications are used in the same business. Knowing if technology is functional and compatible goes a far way to avoid challenges leading to inefficiencies.

Do you know what the use of each piece of technology in your business is? (E.g. lead management, financial reporting and sign-off, HR admin, safekeeping of information)

3. What is available?

There are infinite solutions available for technology enablement and advancement. If you are not tech-savvy, I propose that you identify someone who is. Pay them a consultation fee, if necessary. It is important to note that you are still the person responsible for verbalising the business outcome

you want to achieve with the application of technology. It is not wise to delegate this responsibility to someone else.

4. The cost of ownership

Sometimes you do not need outright ownership of software or even hardware components. A licencing right, leasing agreement, or “pay as you go” utilisation might be the right option for you. In this way you only pay for usage and always have access to the latest version or development.

If the application is business critical or very unique, it makes sense to consider developing it in-house, or have outright ownership thereof. Bear in mind that the redundancy cycles of technology is short. Most technology applications and equipment have no or little second hand value.

Let me conclude with another statement by the ubiquitous Bill Gates: “Information technology and business are becoming inextricably interwoven. I don’t think anybody can talk meaningfully about one without the talking about the other.”

To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy.

How to meet the expectations of your target market

Article written by Jannie Rossouw, Head: Sanlam Business Market

“Exceed your customer’s expectations. If you do, they’ll come back over and over. Give them what they want – and a little more.” – Sam Walton. (Sam Walton was an American businessman and entrepreneur best known for founding the retailers Walmart and Sam’s Club.)

I am stating the obvious when I say that before we can meet and exceed the expectations of our clients, we first have to determine and re-examine what their real needs are. Once we have a crystal clear and factually-based perspective on this, we can determine if our products and services are meeting the identified needs and wants of our target market.

Client needs and wants are ambiguous, the competitor landscape changes all the time and innovations can make our solutions redundant overnight. For this reason we need to stay on top of our game. Target market, client and competitor insights are core to our future survival and ability to compete for a share of client wallet.

This calls for a market review where current clients are assessed to improve our understanding w.r.t. the following elements (these are only a couple of examples):

  • Their demographics (age, gender, marital status, income etc.)
  • Their purchase motives (price, quality, location, guarantees and warrantees etc.)
  • When they buy
  • The previous purchases from our business which inform their past buying patterns

Once we have an informed understanding of our clients, we can conduct a product/service review. Here are a couple of elements to evaluate:

  • Which products and/or services are our “champion sellers”?
  • Why are these products or services so successful?
  • Can they be improved?
  • Which products sell best and have the highest profit margins?
  • Can you optimise your operations around these products and services (service delivery, upsell opportunities, special deals)?
  • Do you need to change or improve your product pricing, packaging, marketing and service delivery to meet the changing needs of clients?

With this information in hand, we need to match our current product and service offering to client needs and expectations. This might also impact our quality control mechanisms and pricing conventions.

Another crucial element to address, is knowing what your competition is doing. See what they say about themselves (sales material, advertisements, press releases, websites). Your sales staff, customers, www.hellopeter.co.za, newspapers and market research companies can also be good sources of information regarding your competitors.

It is said that “knowledge is power”. This is also true in business where we want to meet and exceed client expectations. Knowledge will enable us to create insights that can assist us in improving our product and service offering to attract more clients and also outperform our competition.

To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy.

The value of reflection to improve business results

Article written by Jannie Rossouw, Head: Sanlam Business Market

“Without reflection, we go blindly on our way, creating more unintended consequences, and failing to achieve anything useful.” (Margaret J. Wheatley – American writer and management consultant who studies organisational behaviour)

These are very sobering words and make us realise that we might be chasing the next deal without giving sufficient thought to the ability of our business and infrastructure to meet and exceed client expectations.

We continuously need to sharpen the proverbial saw. Here is a value chain perspective to consider when reflecting about your business endeavours:

Target market performance

Is there a match between our defined target market, their needs and our product/service as a solution to their needs and requirements?

Suitability of value proposition

Do we know how well our product/service is addressing the target market needs and requirements?

Marketing Mix

Do we have the most optimal marketing mix available to market and promote our product/service to the selected target market?

Sales and distribution

Is our sales and distribution team fully equipped to sell our products/services?

Service delivery

How do clients experience our service delivery and after sales service?

Cash flow management

Do we have an up to date cash flow forecast to plan for to ensure that we can fund operations?

Human resources

Do I have a skills development plan per employee?

Information Technology

Are there technological advances which can support me to operate more effectively and efficient?

Procurement

Am I getting the best possible deals when procuring products and services to operate my business?

Another building block in our endeavours to plan for the future of our businesses is to remember the successes and disappointments in our business over a specific period of time (say the last 12 months). What are your learning experiences from these lists and how can you apply what you have learnt?

To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy.

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Do you know where to allocate business resources?

Article written by Jannie Rossouw, Head: Sanlam Business Market

It is said that something well planned is 50% done. If this holds true, then I wonder why so many of us do not make an effort to plan our business activities in advance. To my mind there are numerous reasons why continuous business planning is advisable or even non-negotiable.

  • It gives you a snapshot of the future state of the business. It creates an image of future possibilities in your mind’s eye.
  • It helps you to develop targets/goals which, if managed to completion, will enable the anticipated future state of the business.
  • When targets/goals are set you can optimally allocate business resources by answering the following questions:
    • What needs to be done?
    • How should it be done?
    • Who should take responsibility to get the task done?
    • When should the task be finished (deadline)?
    • How much funding is required to get the task done?
  • When targets/goals are set, continuous monitoring of progress and the reaching of milestones are very helpful to make adjustments along the way. Priorities and resource allocation can be adjusted to ensure delivery on the target or achievement of the goal. Client feedback and market insights can also serve as elements to inform the optimal implementation of the plan of action.
  • A written plan of action serves as a mechanism to align management and employee actions towards the common target/goal. “Everybody is on the same page.”
  • It also helps you to decide which business alliances or strategic partnerships need to be vested to achieve the anticipated outcomes.

In the 2014 National Small Business Chamber (NSBC) Survey members were requested to indicate the areas in which they require training and development. Seventy-three per cent of the respondents highlighted the need for business and strategic planning.

To support business owners with this important task, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy.

May the following words of author Alan Lakein hold true for you: “Planning is bringing the future into the present so that you can do something about it now.”

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How your product/service guarantee can differentiate your business

Article written by Jannie Rossouw, Head: Sanlam Business Market

A guarantee is a formal assurance (typically written) that certain conditions will be met; specifically that a product will be reinstated or replaced if it does not live up to the specified quality, or that a service will be reviewed if it does not deliver the expected result.

When you consider a product/service guarantee it should be in line with the “best promise that you can deliver on”.

Such a guarantee should:

  • Eliminate any discerned risk for a client
  • Demonstrate full trust in your product
  • Be specific – include all claim particulars and conditions
  • Be measurable

The following guidelines can be considered when you frame guarantees:

  • Learn from your competitors (what do they do?).
  • Focus on what you do excellently (what you do better than your competition).
  • Guarantee results (the outcome that your client can expect).
  • Pay more than 100% of the product/service value when a guarantee is called up and guarantee conditions are met (pay an extra % for a client’s time and trouble).

Tell the world about your guarantees. Include them in your business marketing material, quotations and website information, i.e. feature them in all your marketing elements.

The following are a few examples of phrases that you can consider:

  • “100% on the spot guarantee”
  • “Absolutely no risk for you”
  • “My 110% – I must be crazy” guarantee
  • “Unconditional money back guarantee”

A good guarantee says that you have faith in your product/service. It gives clients that do not know you yet, peace of mind.

Henry Ford once said, “Quality means doing it right when nobody is looking.” If quality is part of the DNA of how we must do business, the honouring of guarantees will be no challenge, because the calling up of a guarantee will then be the exception and not the rule.
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Ask yourself what your service or product is worth

Article written by Jannie Rossouw, Head: Sanlam Business Market

In a competitive market environment business owners are prone to sell themselves short, because they do not take the time to determine a fair and justifiable price for their services and products.

There are so-called “value drivers” that support the charging of a premium for your service or product, if:

  • It solves an expensive problem for the client.
  • It saves the client money.
  • It increases the client’s turnover/profit.
  • The demand for your service/product is high and there are only a few providers.
  • You have a good track record with regard to delivery.
  • You provide good warranties.

 

You can also consider the following pricing alternatives:

  • Per hour.
  • Per project.
  • Per unit.
  • Per solution.
  • Per result.
  • A “freemium” model – provide a basic solution for free, but charge a premium for greater functionality.
  • Based on volume (use a sliding scale for a volume discount).

 

The following factors can also influence your pricing strategy:

  • The price and value offering of your competitors.
  • The market trends within your industry.
  • The value your product/service has for a client.
  • The difficulty of the work that must be done.
  • The resources necessary to complete the work.
  • The expected time frame within which the work must be completed.

 

“Pricing is actually a pretty simple and straightforward thing. Customers will not pay literally a penny more than the true value of the product”.
Ron Johnson (American Businessman)

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Calculate the value of existing and new clients

Article written by Jannie Rossouw, Head: Sanlam Business Market

There are basically three ways in which to grow a business, namely:

  1. by getting new clients;
  2. increasing the share of wallet, and
  3. increasing the frequency of transactions with existing clients.

Determining the value of a client can therefore be very useful. There is definitely a difference in the way we look at a potential client that is worth R50 vs R50 000 to our business.

Below is a formula you can use for such a calculation:

The value of existing client base ($) = N x V x F
N = number of clients (number)
V = average amount spent by clients at your business (value)
F = the number of times a year they spend the above-mentioned amount at your business (frequency).

The value of every new client you add = ($ x Y) / N
$ = the value of existing client base
Y = number of years the client remains with your business
N = number of clients.

This information gives you a better insight into the value of your existing client base and of new clients.

There are a few more questions the answers to which could help you focus your marketing actions for maximum results.

  • What are your clients’ spending patterns? (These provide insight into which products and services sell the best.)
  • How did clients hear of your product or service? (This enables you to determine which marketing elements work best, so you can make more use of them.)
  • List your existing clients (also approach them to buy other products or services from you – make special offers available).

If you are not serving a customer, your job is to be serving someone who is.
Jon Carlson (Swedish businessman, CEO of SAS Group)

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Marketing tips for 2014

Marketing tips that may be implemented immediately: Evaluate the success of your current marketing actions

Article written by Jannie Rossouw, Head: Sanlam Business Market

In order to properly address this question, we should take a moment to consider the definition of marketing.

Simply put, this is everything we do to communicate our business (in respect of our product or service offers) to existing and new clients within our selected target market.

Evaluation is a continuous process of testing to determine how well our selected marketing mix (the elements we selected) performs against the targets that were set and the market trends within our specific industry.

Please complete the evaluation matrix below and award a point of 1 (inadequate performance) to 5 (meets all the selected targets) to evaluate the performance of you selected marketing mix. Choose “N/A” if you do not make use of the specific element(s). However, ask yourself, “Why not?”

Marketing element Point
(mark selected answer with “x”)
Note – this is not a complete list, but includes the most important elements N/A 1 2 3 4 5
Brand identity
Newspaper advertisements
Advertorials
Radio
TV
Public promotions/articles
Direct marketing/mail/e-mail
Sales letter
Network functions/opportunities
Telemarketing
Events/talks
Newsletter
Website marketing (banners)
Referrals/recommendations by satisfied clients
Sales person/staff
Special offers

 

Use the results in order to decide on which elements to use more or less of.

Below are some more tips on how to determine your marketing success.

  • Ask clients where they heard of your business. Weigh the feedback against the above evaluation matrix.
  • Select specific marketing elements through which you want to market selected offers. Record the successes.
  • Test various headings for advertisements and e-mail campaigns. Determine which headings work best and use these in the future.
  • Publish useful articles and offer free reports. Use these to collect clients’ contact information. The number of responses is a good indicator of the subjects that interest your target market. Use these more.
  • Use business opportunities to act as speaker and to thereby establish yourself as an expert on your product or service within your target market. This is one way to widen your business network and to create enquiries about, or interest in your product/service.
  • When you take on brand name positioning projects (e.g. participation in a trade show) it is important that you determine your evaluation criteria before and after the show.
  • There are surely many other ways of testing the success of your marketing mix. See this as a start to objective measurement. Establish the practice of measurement in your business.

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