Morgan Marketing Solutions, Inc. - Insightse-LetterMarch2007.htm - enhancing profits through better marketing

INSIGHTS & JOY

A business newsletter with Pizzazz!

"We help leaders become better marketers
using a holistic business approach!"

March 2007

18th Anniversary Issue

April 1st marks the eighteenth anniversary for Morgan Marketing Solutions. The past years produced a wild, exhilarating ride that I hope to continue for some time to come. I have experienced great personal satisfaction by working with a wide variety of business organizations. Each year, I meet other management consultants with outstanding skill sets. Each year, I learn new ways to assist my clients in their quests to enhance results. The work is ever-changing. Referrals from existing clients and my network of friends and colleagues bring new clients with diverse challenges. It is impossible to stand still in this crazy profession and I love it!

This year, I launched the NTX Private Business League. Development of the League's structure took more than eighteen months of planning. The League's objective is to link business owners who need professional services from time to time with a select group of experienced professionals who provide those services. The business owner members elect to become part of a peer group or to schedule quarterly review sessions with me. They gain impartial outside advice on their most pressing issues and they have access to the full array of professional services when, and if needed. I will update you in future letters as the NTX Private Business League gains traction. Contact me if you would like more information about the League.

Feel free to forward Insights & Joy to friends and associates

Subscribe directly by e-mail to rpmorgan@morganmarketingsolutions.com and writing "subscribe" in the subject box.

Check our web site for: $ Million Marketing Tips, Insights & Joy Archive, Speaker's Directory, and our Article Library!

www.morganmarketingsolutions.com

IN THIS ISSUE

Got a handle on customer attrition?

Smiles make the day!

$ Million Marketing Tips

Amazing Facts!

Marketing Facets - The Market Focused Guide to Company Analysis

Got a handle on customer attrition?

Yes, just about every business suffers customer attrition. Some attrition is out of the firm's control. Customer needs change and they no longer buy your type of goods or services. Customers merge or sell out to another firm. Customers simply go out of business. Marginal accounts fail to pay their bill and are cut off. Each year, a percentage of a firm's customer base erodes due to such uncontrollable events. Good sales forecasting and business planning takes the firm's normal level of customer attrition into account when setting future objectives. I have found that a safe 'rule of thumb' is about ten percent, when specific information is unavailable.

Other types of customer attrition might have been prevented. In many cases, price is an excuse for changing suppliers, not the root cause. Customers continue to buy when their overall experience is positive. There is a certain built-in inertia because customers find it easier to return to the same supplier rather than suffer the usual hassles of setting up relationships with a new supplier and changing existing purchasing patterns. In the real world, with consumable products and services, it is so much easier to continue doing what you have been doing than to change to another supplier. The built-in inertia is knocked for a loop, however, when a supplier trips and fails to deliver as expected.

One automotive parts distributor continued to do well until customers began to experience backorders. Management inattention and financial difficulties combined to drop their order fill rate from an acceptable 98% down to 85% over the course of several months. Long-time customers began to drop like flies in a Raid commercial. Customer expectations were high and the firm failed to take steps to maintain deliveries at that level. In this extreme case, the turnaround effort was too late and the firm was sold to a large company with greater capabilities within ninety days.

Other reasons for customer attrition include style changes that are not recognized, services that do not meet expectations, order, billing, and accounting errors, poorly trained sales reps, warranty squabbles, impersonal communications, improvements in competitive offers that are not matched, etc. In many cases, the customer doesn't leave the supplier so much as the supplier, through it's own actions or inaction, leaves the customer!

This month, I am trying to decide whether to stay with Verizon as my cell phone service provider, or to switch to AT&T Cingular. Let me say that Verizon has been a reliable, hassle-free supplier for several years. Their rates are comparable, so price isn't the issue either. Frankly, moving to AT&T will involve some extra time and trouble for me. There are two things that tempt me to switch, now that my Verizon contract has expired. First, two members of my extended family use AT&T. If I switch to AT&T, our frequent calls to them will be free and will not use any monthly minutes. Verizon cannot match that in my case. Second, AT&T will roll over any unused minutes from one period to the next, building up a reservoir of extra cell time available without additional charges. Verizon has not matched AT&T's plan in this important area. The two extra AT&T advantages will probably overcome my normal inertia and Verizon will suffer a small degree of attrition.

How strong are your customer relationships? The best way to find out how customers feel about your company is to ask them. Companies, especially small and mid-size firms, often fail to monitor customer relationships. They figure that their sales people will ensure customer loyalty and repeat business. Unfortunately, even the best representative may not be able to overcome service failures caused by others directly or indirectly involved in the customer experience. The relationship system includes every interaction the company has with a particular customer. It always pays to keep a close eye on how customers perceive you and how well your complete offering meets customer expectations.

Sometimes, it is best to have an independent resource take the pulse of your customer base. Customers are more likely to provide honest feedback to an independent party. Do you have mostly satisfied customers, satisfied customers, or raving fans? Is top management in tune with customer expectations? Does top management consider customer reaction when announcing policy changes? Will short-term actions jeopardize long-term customer relationships?

One final example from a large, well-known firm that is now undertaking radical changes to help recover short-term profitability. Management calls their actions a "transformation." Their recent moves seem more like a "disintegration" to me. I am talking about Circuit City. Their stock took a tumble as the company announced significant losses. Meanwhile, Best Buy is making money and sales are up. Last week, Circuit City top management announced that they were terminating 3,400 of the highest paid (most experienced) sales people and replacing them with lower paid workers. They added that fired employees would have the "opportunity" to apply for their old jobs at a much reduced salary if they chose to do so. How nice. I must admit that reading their press releases and financial results was discouraging. I am still waiting to hear them announce drastic pay cuts and bonus cancellations for top management!

They also announced the closing of more stores in North America. To me, this confirms that Circuit City management failed to meet customer expectations in a number of areas. My suspicion is borne out by hundreds of bloggers, some of whom have worked for Circuit City. They point to badly outdated systems, poor product selection, high markups on accessories, some shoddy product brands with high return rates, and in some cases, unethical management practices; an accumulation of problems and missteps that now beset this $12 billion discount retailer. Will Circuit City's short-term actions transform the company, or simply alienate more customers and cause additional losses? One final note, Circuit City's chief financial officer, Michael Foss has resigned. He departs in April. Are the rats beginning to leave a sinking ship?

Smiles make the day!
Satisfaction

The strange thing is that man is satisfied with so little in himself yet demands so much in others.

Almost anything can be bought at a reduced price except lasting satisfaction.

Satisfaction is the state of mind produced when you witness the discomfort of someone you don't like.

If you are satisfied with yourself, you had better change your ideals.

The greatest reward for serving others is the satisfaction found in your own heart.

Among the things that enable a person to be self-satisfied is a very poor memory.

Satisfaction is the best sort of internal revenue.

Life's greatest satisfactions include getting the last laugh, having the last word, and paying the last installment!

$ Million Marketing Tips

TIP: You're selling a relationship, one person at a time. Each person is buying more than a product to satisfy a need at a price...so you need to understand all that they are buying and all that you are selling! Note: This tip repeated again this month on purpose.

TIP: You need to understand what position you now have in customer's minds. That's your reality. You start your influencing (marketing) effort from where you are and work toward the position you want to occupy in the future.

Amazing Facts!

1. In a dire emergency, Coca-Cola can replace oil in cars.

2. On average, McDonalds feeds 43 million people.

3. Some beaver dams are more than 1,000 years old.

4. President John Adams was so short and fat that his nickname was "His Rotundity."

5. A horse will win a sprint against a camel; a camel will win a marathon against the horse.

6. A typical porcupine has about 30,000 quills.

7. Do you close your eyes when you dive? So does the frog.|

8. According to research: 2 our of 3 times, it's the woman who starts a flirtation.

Marketing Facets - The Market-focused Guide to Company Analysis

Marketing Facets is a practical resource for those involved in determining the current health of a company and gauging its future prospects. I designed my 103-page guidebook to be a supplement to other evaluation procedures and information normally gathered during a thorough due diligence or business valuation process. The workbook takes a holistic approach, assembling facts and management assumptions in key areas to help the analyst form and support conclusions.

Marketing Facets is a valuable resource to private investment fund managers, individual investors, venture capital specialists, investment banks, and valuation specialists. Marketing Facets can also serve as a guide for C-level executives who wish to perform their own company analysis as part of normal business planning, or in advance of efforts to refinance, acquire or divest.

Marketing Facets is available in electronic form via the Internet, on CD/ROM, or in print with a ring binder.
> Electronic in MS Word .doc or Adobe .pdf format via the Internet @ $79.95
> CD/ROM format @ $85.95 including U.S. shipping and handling
> Ring binder version and CD/ROM combo @ $99.95 including U.S. shipping and handling

Consulting is also available. Please contact me for additional information.
Telephone: 972.931.7993 Fax 972.931.0542 rpmorgan@morganmarketingsolutions.com.

P.S. Ninety-five percent of our engagements originate as a referral from helpful people like you! If you know someone who:

> Wants to develop a more productive marketing program, or

> Needs help building and implementing an effective operational business plan,

I would appreciate the opportunity to discuss the situation with you.

Our ideal client is a business owner or CEO between 30 and 60+ years old. Usually with a financial, engineering, or production background. Who is often impatient, and interested in improving company performance. Comes alive when you ask, "How's business?" He, or she, is practical but also enjoys the finer things in life. So, you may see my ideal client driving a Lexus or SUV to Neiman Marcus...and to Sam's Club. Who do you know that fits this description?

A client speaks: "Perhaps this will motivate another business owner. Eighteen years ago, I was under my building and my business was on top of me. Dick took me aside for two days and got us refocused. Since then, our sales have tripled! The company is far more profitable since Dick helped me get through a very rough period. I have referred others to Morgan Marketing Solutions over the years and they, too, received excellent support. I continue to consider Dick Morgan a valuable outside counselor, and I call on him when I ponder a major decision."
Ned Edwards, President, Star Tire, Inc., Dallas, TX

To unsubscribe, e-mail to rpmorgan@morganmarketingsolutions.com and write "unsubscribe" in the subject box.

Richard P. Morgan CMC
Morgan Marketing Solutions, Inc.
Two Galleria Tower, Suite 10008
13455 Noel Road, Dallas, TX 75240-6620

Telephone 972.931.7993 fax 972.931.0542
email rpmorgan@morganmarketingsolutions.com
www.morganmarketingsolutions.com

Author, Marketing Facets - The Market-focused Guide to Company Analysis

"We help leaders become better marketers using a holistic business approach!"

CMC (Certified Management Consultant) is a mark awarded by the Institute of Management Consultants USA, and represents evidence of the highest standards of consulting and adherence to the ethical canons of the profession. Less than 1% of all consultants have achieved this level of performance and dedication. For more information go to: www.imcusa.org