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.
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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
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
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© 2007 Morgan Marketing
Solutions, Inc. All rights reserved. Other distribution permitted with proper
attribution.
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