Category Archives: Consulting

Vendors And Partners

President Reagan has been quoted as saying “I’m from the government and I’m here to help” are the most terrifying words in the English language. One phrase I used to hear a lot that was just as terrifying to me was “we want to be your (fill in the blank) partner.” That could be a tech partner or a marketing partner or whatever. The thing was that most people have a tremendous amount of difficulty distinguishing between a partner and a vendor. The sad truth is that very few people or organizations that you’re in business with want to be the former and that’s a shame. Vendors are a dime a dozen while good partners are rare.

How do I distinguish between the two? Vendors send you bills while you usually end up sending a partner their share of your joint profits. Vendors come into your office and tell you how great their product or service is, even if you’re using it or them. They tell you their story and ignore yours.  Instead of telling you what they are doing for you specifically, they tell you about the latest success story they’ve had, usually with some other “partner” of theirs.

It’s always easy to spot the vendors and the potential partners almost from the second they walk in the door. Partners will talk about you and your situation and tell you specifically how they can help. They’ll ask for reasonable compensation but also volunteer to share in the upside because they believe in their product and its ability to help you. Vendors come in with a canned, generic pitch. Their rates are fixed in stone and they don’t share the risk and so don’t have any interest in sharing the rewards.

I’ve always felt that my goals and those of my business partners were very much aligned. I can’t say the same of many of the vendors I’ve worked with over the years. I’ve also always tried to do business with my consulting clients and franchise candidates in that way – as a good partner and resource rather than as a vendor. Is that a difference without a distinction? Not in my book. How about in yours?

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Filed under Consulting, Thinking Aloud

Shared Interests

You can call shared interests believing your own BS or you can call them eating your own dog food. I like to think of it as having skin in the game, a phrase coined by Warren Buffet referring to a situation in which high-ranking insiders use their own money to buy stock in the company they are running. I use it in a much broader context and it’s something you should be looking for at every turn.

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I can’t tell you how many companies paraded into my office when I was in corporate life promising to solve issues we might be having with revenue generation, audience measurement, or dozens of other common problems. Many of the offerings were actually quite interesting although not yet deployed in the real world to any extent. If I was interested but skeptical, I’d usually make an offer somewhat akin to this:

I like your product but it’s awfully difficult for me to stroke out a check on something that is promising but unproven. So let’s do this. You provide the product and service as you say and I will pay you a much lower fee (or nothing!). However, if you deliver the results you say you will deliver, we’ll set up a success fee that will pay you more than you’re currently asking. In fact, if your numbers are right, you’ll earn double what you are charging.

In other words, I wanted them to have skin in the game. I wanted our interests to be perfectly aligned and I wanted there to be consequences for us both if we didn’t achieve what we set out to do. The reality is that you should always ask yourself who has what skin where because most businesses do their damnedest to avoid any sort of risk by putting in some skin. Sure, they pay lip-service to the notion of entrepreneurship but there are few who have put their money where their mouth is and invested into the tech ecosystem or directly into startups. Pay attention – much of the time the investment comes only after the product has proven itself or is a direct ripoff of something that’s already successful. I call this the second penguin strategy (you don’t want to be the first penguin that jumps in the water since there may be predators lurking).

If you’ve ever played cards, inevitably there is a kibitzer around. You know – the person who looks on and often offers unwanted advice or comment. They have no skin in the game. There are kibitzers in business too – you can find them writing for many trade publications – and you might even have some in your company as partners or clients or even employees. Not many companies took me up on my offer to make them more money. The few that did were fantastic partners and I still speak with some of the executives from those firms almost 20 years later. Having skin in the game made all the difference. What do you think?

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Filed under Consulting, Helpful Hints

You’re Missing The Target

Many of my friends are over 65. Most of them don’t act like it. Sometimes they – and I  – contemplate being younger but I’m always of the mindset that the only way I’d take back 30 or 40 years would be if I could keep the bank accounts and credit cards I have now. While it’s true it used to be a lot easier to get out of bed in the morning, it’s also a lot easier now once I’m out of it to pretty much engage in consumer behavior with a lot less care than I did all those years ago.

It’s baffling to me, then, why most marketing budgets ignore those of us over 55. In fact, according to U.S. News & World Report, we baby boomers control 70% of the country’s disposable income and spend $3.2 trillion a year. We provide over 50% of consumption and yet we are targeted by 10% of the dollars. My kids are millennials and while they’re both gainfully employed they don’t spend nearly what I do. Most millennials don’t spend like boomers yet they’re the target audience for a lot of marketers.

I don’t get it.  Not only is my generation spending more, but I think we’re also more available to be marketed to. We’re heavy digital users (got to keep up with those reunions!) and use Facebook and Instagram quite a bit. We also are still watching “traditional” tv and news. We read our email too. It’s like we’re begging to be sold.

Millennials tend to rent. That means traveling light – who wants to move a ton of stuff when the lease is up? And unfortunately, they’re also the first generation that entered adulthood in worse financial shape than their parents. They spend every dollar carefully.

Marketing has always been “square peg, square hole” to me. Unless your product can’t be used by older folks (pregnancy tests is about the only thing I can think of), the reality is that you should be targeting older folks. Yes, we’ve built up many years of brand preferences but hey, I just switched to a new toothpaste so you never know!

So why aren’t you marketing to boomers? Seems like an opportunity, no?

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Filed under Consulting, Helpful Hints, Thinking Aloud

Masking The Message

Chase Bank did something really dumb the other day while they were actually doing something smart and necessary. It’s a good lesson for any business that how you communicate is every bit as important as what that communication entails.

Chase tweets out something on Mondays hashtagged #MondayMotivation. This week they attempted to inject a little humor into something that really isn’t humorous for the folks who face it: a depleted bank account. Chase tweeted out a fantasy dialogue between a consumer and their bank account. The customer wonders why their bank account is so low and the bank account replies, and I’m paraphrasing, because you spend money on things like buying expensive coffee and dining out and taking taxis when you could walk. The customer replies “I guess we’ll never know”. It came across as snarky and patronizing, especially coming from a bank that makes millions in profits on the fees charged to their customers for ATM use and overdrafts (not to mention a multi-billion dollar bailout from taxpayers).

Politicians jumped in, as did a lot of pundits. Frankly, when I heard about it and the responses to it, I thought it was too bad that a good, important message got lost in a bad presentation. Many younger consumers (and quite a few older ones) don’t realize that making coffee at home can save them hundreds or thousands of dollars a year, as can walking and bringing lunch to the office or learning to cook at night. Those $4 lattes add up and many younger people never learned the financial management skills as they matured that one needs to cope with the money demands that adult life makes. While I don’t discount the effect that stagnating wages and creeping inflation have, having the skills to think through the bigger picture can help.

Any business needs to ask itself “what baggage do I carry” before they message their customer base. Are they angry about anything? Smart businesses constantly have their ears to the ground to listen for any disruption in the force. They monitor social media, their own customer service reps, and the news media generally. Money, or the lack thereof, is one of the most sensitive topics the bank could have addressed. Snark, condescension, and arrogance are rarely the right approach, even when the message is spot on.

Chase was smart enough to delete the tweet and replace it with something humble – “Our #MondayMotivation is to get better at #MondayMotivation tweets. Thanks for the feedback Twitter world”. That’s something every business should constantly try to do – get better – don’t you think?

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Filed under Consulting, digital media, Huh?

Your Ideas Suck

One thing I’ve done over my decade in consulting is to go to tech events. Many of these attract dozens of budding entrepreneurs as well as we consultant types who are always on the lookout for a new client. Inevitably, as you’re making small talk and new connections, someone will tell you about their earth-shattering, world-changing brilliant idea. All they need is some seed money. Most of the time, their ideas…well…suck. Let me explain why.

First of all, they can’t explain the problem that they’re solving. They have a vague idea of who might have the problem but they can’t really explain what the problem is since they’re not the customer. Then they can’t exactly explain how they’ll scale – how they will attract a large enough customer base to get them to positive cash-flow and profitability. Lastly, they can’t explain the revenue model – how they will monetize the enterprise.

Major suckitude, in other words.

If you can’t explain how your idea takes in someone’s money – an investor’s or a customer’s – and spits profit out the other end, you’re in big trouble. An idea isn’t a business, you see.

One thing I’ve learned in consulting on franchises is that a lot of food franchises want you to have some food experience. While specific industry experience is less of a requirement in other categories, having relevant experience is a huge help everywhere, even if it’s just demonstrating skills that can help in your new business. If you don’t have the basic skills you need to germinate your idea – leadership skills, sales skills among them – or relevant industry experience, you are going to fail. Was that mean? OK, it was mean, but your idea still sucks because you are hanging it out there all on its own with nothing to support it. No money. No experience. No skills.

By the way. Most people who have been around for a while (your potential investors and others) can figure out very quickly if your buzzword-laden pitch is BS. Dressing up your sucky idea with a fancy presentation laden with jargon is lipstick on a pig.

What ideas don’t suck? The best businesses come from someone trying to solve their own problem and having the business acumen to grow that solution into something that can benefit others if the problem is a big enough one. There is a plan to make money, acquire customers, and generate a profit. Got an idea with those things? THAT doesn’t suck!

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Filed under Reality checks, Consulting

Good Caddies, Great Business

I like walking the golf course with a caddie. I really don’t get to do so much anymore since not a lot of places employ caddies. Even rarer are the places that employ professional caddies (as opposed to some kid who will carry your bag but knows less about the course and golf than you do).

I was thinking about the differences a professional caddie can make and it dawned on me that some of the things I appreciate most about good caddies are the same things that can help transform a good business into a great business. Ironically, those things don’t include what is often cited as the caddie’s three jobs: show up, keep up and shut up. There are, however, a number of other things I’d like to point out.

First, great caddies are available. What I mean by that is that they keep up with you and are by your side when you need them to be. They also leave you alone when you don’t need them, as you chat with your golfing companions. Great businesses are available as well. You can reach someone 24/7, even if it’s only to get told “we hear you and someone will get back to you by 9am” and their website information is up to date and complete. Great businesses let you know they are available and they hear you.

A caddie is an epitome of combining service and convenience. That’s what your business needs to do as well. The convenience of someone buying online and the service of going to pick up the order at a special desk at your local retail outlet does that (and saves shipping charges as well as time).

Caddies are proactive. They have the right yardage figured out when you get to the ball and they hand you the right club for the shot. By the way, great caddies give you the club you need, not necessarily the club you want. After a few shots, they’re pretty good at assessing your game and understanding the best way to help you have a great round. Great businesses are the same – they’re proactive. They know their customers and have what they want before they ask for it.

Finally, the best caddies are fun people. They’re great to talk with, generally have a decent joke or two to tell, and help you to focus on your task at hand. They make it easy to have the best experience possible. Isn’t that exactly what great businesses do as well?

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Filed under Consulting, Thinking Aloud

Let Me Call You Back

One thing I deal with constantly these days is getting people on the telephone. I will often make 20 calls in an hour or two and only get a few people – all of whom have requested that someone call them – to answer the phone. Sometimes when I reach them they’re at work or driving and they ask if they can call me back. They hardly ever do, even when we set up a specific time. They don’t call me so I’ll call them at the appointed hour. They rarely answer.

It sounds awful, right? They claim to want information about new opportunities yet they won’t answer when opportunity comes knocking. My question to you concerns your business doing the same thing. No, not having customers hang up on you, but the opposite. Are you hanging up on them?

When was the last time you looked at your inbound customer service metrics? Do you even have such things? Research shows that consumers value efficient service and knowledgeable staff when they call a business. They find being kept on hold, rude service, and automated phone menus frustrating. You can measure on-hold time and you can test the customer service reps to be sure they’re knowledgeable and personable.  You can check when call volume peaks and schedule more reps during that time.

One thing I’ve come to like quite a bit is the “let me call you back” option when there is going to be an on-hold time of more than a few minutes. You know what I mean – “press 5 to get a call back when there is an available representative or press 6 to schedule a time to be called back.” That’s customer-friendly and shows them that you respect their time and have empathy for their problem. When I hear “your call is important to us,” I always think “if it’s so damn important, why aren’t you answering?” Calling back shows it really is important.

It’s the little things we do in business that say a lot about how we run our firms. What messages are you sending? Are they the kind that will get customers to return?

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Filed under Consulting, Helpful Hints