Tag Archives: Business model

How Your Dog Food Tastes

I saw something in an article this morning that had me nodding my head in agreement and I thought it was something that all of us should think about. It was a piece about how the growth of marketing technology companies has stalled and it gave as a reason this:

There is a long list of sales and marketing tech vendors that have had their growth stalled for a number of reasons: failure to find a use case with broad market appeal, product based on a feature, or quite simply couldn’t execute.While these companies might have received more funding two or three years ago, in today’s climate VCs are not replenishing their offers. Today, there are big rounds for those with momentum and a big story, or no funding for those that don’t.

In other words, many of these companies have been able to attract a client base but the results those clients were expecting haven’t been there. That’s a critical thought when you’re making promises, isn’t it? I can’t begin to count the number of tech companies I’ve spoken with over the years that made huge promises but failed to deliver.

I wrote about this several years ago. Way back in 2011, I wrote:

I can’t tell you how many presentations I’ve sat through for companies that were going to grow my revenues 10x but wouldn’t take 90% of the first year’s incremental revenues as a fee.  Big red flag.  Then there were the companies who promised great service but wouldn’t sign service level agreements that legally obligated them to provide that great service.

So at the risk of repeating myself, I’m going to repeat myself (this time from 2016):

Nothing like eating your own dog food, right? But that’s a critical part of serving our customers well and each of us needs to do that on a regular basis. When was the last time you tried to go through checkout on your own online store? How was the experience? How about trying to return what you purchased or put in a call to your customer service department? My guess is that none of your top managers have done any of those things in a while.

You can only grow so big if the results aren’t there. If you haven’t explored those results with your customers along with the time, effort, and expense it took them to achieve those results, you’re not doing your job. More importantly, you’re setting your growth curve on a downward course because nothing in business happens in a vacuum these days. People talk.

One thing I’ve learned in consulting on franchises is the importance of what we call validating the franchise. It’s when a prospective owner speaks with current owners to find out if the representations made by the franchisor are accurate and complete. It’s kind of like checking references when you hire except the FTC requires the franchisors to disclose the names and phone numbers of all their current franchisees so you can’t control with whom a candidate speaks. That means the results have to be there, pretty much across the board.

When was the last time you spoke to your customers about their results from using your product or service? If you have to think about it, it has probably been too long. Food for thought?

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When You Don’t Know What Business You’re In

I started 2019 by buying a new home. When I say new, I mean brand spanking new as in “just built.” As I’m preparing to move in, I did what most folks would do first these days and called my local Cable TV/ISP to come set up the house. The builder did a good job of preparing the house for both cable TV and for wired internet and phone. There is a large junction box in a closet with both coax and Cat 6 wire running to most rooms. The living room and master bedroom both have conduit running into the crawl space for wires to be run easily. Frankly, I thought the hardest part of getting everything set up would be joining the coax and network wires that were hanging out of the side of the house to the main feeder lines. I was so wrong, and the reason why I was is quite instructional for any of us in business.

Hooking the house to the main lines was easy. Then, the tech set up the cable modem and router for my high speed (400MB+) wifi network. So far, so good, The problem came when I asked about connecting the wires that were in the closet to a switch or the router. None of them have caps – the little plugs – on them. “I don’t do that,” he said. But how can I connect the rooms to the network? What about putting the coax wires into a splitter for cable in the various rooms? At least that would help me identify which wires ran to which rooms. No help there either, even though he is the cable installer.

The final bit of laziness came when he informed me that he couldn’t run any cable through the conduits. He said he couldn’t find the conduit opening in the crawl space even though he pushed a long rod down the conduit and then went to look for it in the crawl space. I went down the next morning and found the openings in about 2 minutes. Yes, it was late (4p) on a Friday afternoon and I’m sure he wanted to get out of there, but still.

So here are some things we can all take away. First, the fact that the tech had no idea how to run wired internet tells me that the cable TV companies still think they’re in the cable TV business. Any look at the numbers will show you that people care far more about broadband and their ability to stream than they do traditional cable TV. If you are an Internet Service Provider, that you need to provide the damn service, and that includes wiring houses. I want my smart TV’s wired in, along with my game console. It’s a much better experience than via wifi, even high-speed wifi.

Second, the techs are customer service people along with being technicians. This guy was very nice but did nothing to solve my problem. To make matters worse he never left any paperwork so I have no way to know what exactly he did do. I can’t even tell you what my VOIP phone number is. Any company representative that deals with customers in any way should be trained to do so properly. They must have a focus on solving problems, not on creating them. And they certainly should never lie.

My ISP doesn’t know what business it’s in. They still think they are proving cable TV. They also still don’t understand how the power in all businesses has shifted to the customer. Let’s all agree to start 2019 by rethinking what businesses we’re really in and how we provide it to our customers, shall we?

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My Top Post Of 2018

It’s New Year’s Eve, and we’ll end the year with the most-read post I wrote this past year. I’m not sure many of you read all 65, 532 words I wrote in 2108, but even if you only read a few, thank you. If you did read a few posts, the odds are that you saw this one from early in October. It’s the day I wrote about how I added a new line of consulting to my 10-year-old practice. Since then, I’ve worked with dozens of people on changing their lives as they explore opportunities with franchised businesses. If 2019 is the year when you’re looking to do something different with your business life and own your own business, please reach out.  Happy New Year to you all!

A little self-indulgence today, and I promise not to make it a habit.

As you probably know if you’ve read this blog over the years, much of my consulting has evolved to a focus on startup businesses. That’s why, in addition to running my own practice, I’m a partner in a global venture catalyst that helps commercialization of startups post the idea validation stage through to sustainable profitability or a liquidity event. I also advise startups through my work at the First Flight Venture Center.

Two of the things I’ve noticed as I worked with some folks who thought they wanted to build and run a startup were that their as yet unvalidated ideas were often not really scalable businesses nor did they have a clue as to how running a startup business was different from life in the corporate world where many of them had spent their careers thus far. Quite a few of the budding entrepreneurs I’ve met were in their late 40’s to late 50’s. They had some money to invest in their startup but not enough to retire on. Besides, they were too young to play golf all day, as lovely as that sounds.

OK, so what’s the big announcement? What I realized is that rather than doing a startup many of these people needed a business in a box – something into which they could buy and, if they followed the plan, be successful. In short, a franchise. Because of this insight, I’ve expanded my consulting practice into franchise consulting. I will operate under the name of Franchise-Source and I’ve linked to the website (this is a temporary site – a newer, nicer one will be up soon). I’ve hooked up with a wonderful organization that represents over 500 different brands in over 70 different industries. My new entity has pages on Facebook and LinkedIn (those are direct links) as well. I hope you’ll check them out.

I’ll be continuing my other consulting as well and of course, the screed will continue although I’ll veer into the franchising world from time to time. I hope if you’re considering owning your own business or franchise and aren’t sure where to start that you’ll call or email me. As with a realtor, the buyers don’t pay for my services. The sellers – or franchisors – do. The work has been gratifying so far in that I’ve already spoken with a number of people who are looking to change their lives and rather than taking a chance on an unproven idea they’ve worked with me to investigate a solution that works for their goals, their budgets, and their lifestyle.

Thanks for reading. I’d appreciate you letting anyone you know who might have an interest in a franchise that I’m here to help. Back to our regularly scheduled blog programming next time.

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How Did We Get So Far Off Track?

I started working in the digital world in the mid-’90s. While I wasn’t exactly there for the dawn of the digital age, I was a relatively early member of the group of executives that began building businesses on the internet and on walled gardens like AOL used to be. A couple of things that have happened recently have me shaking my head, wondering how it’s all gone sideways.

First, I asked Twitter to send me something:

Keith Ritter, your advertiser list is ready! The list attached includes the advertisers that have included you in a tailored audience. These advertisers have included you in one or more tailored audiences. Tailored audiences are often built from email lists or browsing behaviors. They help advertisers reach prospective customers or people who have already expressed interest in their business.

I figured since I do a fair amount of cookie-blocking and other means to prevent tracking that I’d turn up in a handful of audiences and I was right. I appear in exactly 9 audiences. However, the rest of the 57-page document (not a typo) listed the similar audiences Twitter has decided I fit. They market me as a part of these audiences and I have no control over it. I can opt out and it will change the ads I see on Twitter. It won’t however, remove me from these audiences. I am included in over 1,000 of them, my data used and sold quite unwillingly.

Then there are the constantly apologizing folks at Facebook. This article in the NY Times is both frightening and disappointing. It talks about how Facebook “gave some of the world’s largest technology companies more intrusive access to users’ personal data than it has disclosed, effectively exempting those business partners from its usual privacy rules, according to internal records and interviews.”  Their privacy track record is abominable and every week it seems there is another apology and a promise to do better. Fool me once…

It’s taken years for the marketers and publishers to push back on the rampant fraud and abuse of programmatic ads. Social media is rife with “influencers” who buy fake followers and regularly violate FTC regulations on advertising. It seems that everyone under 30 is either a ninja or a guru. Fake reviews for products that are complete rip-offs are everywhere (run a link to an Amazon review through Fakespot if you don’t believe me).

All of this leaves one question: what the hell happened? How did the digital business world get so screwed up? At some point, Facebook and many other digital businesses decided that making money is way more important than serving their users is, I think, the basic answer. I’m all for making money, as my business track record shows. There are limits, however, and I have a fundamental belief that making money can only happen over the long term when you respect the customer. As the great David Ogilvy once said, “The customer is not a moron. She’s your wife.” Because most of the people who use digital have no concept about how they are tracked and marketed, most businesses treat them as morons and therein lies the problem.

I could rant on but I’ll end it here with a plea. To any of you who are in the digital world, please resolve to get back on track. Way back when in 1995, all we wanted to do was to amuse a few people and keep them engaged. Yes, we sold ads but we also didn’t track people once they left our domain. We didn’t treat them as numbers or rubes. You shouldn’t either. I get that the tools are more sophisticated and more powerful and that the world has changed. Basic business principles and human decency haven’t, have they?

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How About A Bowl Of Sugar?

Foodie Friday, and this week I’m revved up about a food issue which also raises an issue with every business. You are probably aware that there is an epidemic of diabetes in this country. According to the Centers For Disease Control, 1 in 3 adults in this country has pre-diabetes (elevated blood sugar) and over 9% actually have the disease. This incidence is much higher here in the South with some states having well over 11% of the population affected. Having spent a few years here I can tell you that there is a lot of sweet tea and other sugar-added foods sold everywhere.

What’s got me off on this rant today is what I would call yet another nail in the coffin of those who will contract the disease. Apparently, some genius at Post Cereals felt it would be a good idea to make a cereal named after Sour Patch Kids, a candy. I guess we can commend them for dropping all pretense for most breakfast cereals being anything other than candy and just calling it what it is. You think I’m hyperbolizing? You can literally pour a bowl of some breakfast cereals and half of what you pour is pure sugar. Golden Crips cereal (called Sugar Crisp when I was a kid) is almost 52% sugar. Honey Smacks (formerly Sugar Smacks) is over 55%. You would be better off feeding your kid a Snickers bar – it’s only 45% sugar.

There is a greater question here for anyone in business. Post isn’t the only company doing this. General Mills sells cereal with Reese’s Peanut Butter Cups on the front. I refuse to believe that the folks at Post or General Mills don’t have an understanding that what they’re selling is fostering an epidemic. It’s easy for them to shrug their shoulders and say “well, responsible parents will let their kids eat this only in moderation.” So why change the names of the aforementioned cereals to delete “sugar? Why isn’t the nutritional information for Reese’s Puffs on the General Mills website? These are dangerous products, folks, and they raise the greater business question. Should we make products that we know are doing great harm? Just because we can do something, should we? Isn’t it possible to sell the healthier alternatives you already make to kids and stop pushing something that you know puts these kids on the road to diabetes?

It doesn’t have to be that way. When scientists discovered a hole in the ozone layer and attributed it to the use of CFC’s, many companies that used CFC’s as the propellant in their spray products changed to something else. The products are less dangerous and the hole is healing. Having a conscience to go along with having a bottom line isn’t inconsistent nor bad business. It’s quite the opposite. Selling kids bowls of sugar under the guise of “making your day better” really is a sad way to make a buck, don’t you think?

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Filed under food, Huh?, Reality checks, Thinking Aloud

Woebuck

Sad news about Sears today. An American institution, they filed for bankruptcy in order to restructure the company. They will close 142 unprofitable stores near the end of the year. Liquidation sales at these stores are expected to begin shortly. This is in addition to the previously announced closure of 46 unprofitable stores that is expected to be completed by next month.

The press release says that “The Chapter 11 process will give Holdings the flexibility to strengthen its balance sheet, enabling the Company to accelerate its strategic transformation, continue right-sizing its operating model, and return to profitability.” I guess the question I’d ask is what the heck has taken so long? When I was a kid, the Sears catalog was a 500-page wish book. Everything from clothing to tools to appliances and damn near anything else was in the catalog or the store. At one point you could even buy a prefabricated house kit. They sold great appliances (built by Whirlpool) and even better tools (also built by others). They did very smart things like label grades of product “good” “better” and “best” using brand names.  They were Amazon long before Amazon was a gleam in Jeff Bezos’ eye.

So what happened? Well, technology did but that’s only part of the story. This is a perfect example of what can happen when any of us fail to recognize the fundamental changes happening in business – all business. Obviously, online commerce happened but Sears was in decline in the early 1990’s as Walmart took over the title of largest US retailer. Then the little wave became a tsunami, as consumers fundamentally changed their behavior, becoming more price sensitive, doing more research and shopping online, and the shift away from the mall sped up.

You might not remember this, but Sears was an investor in Prodigy, one of the original online services. They jumped out of the digital service in 1996, however. One can only wonder what might have been had they stuck with it and learned from it. Even though walled-garden services died as the internet grew, there was a lot to learn. Remember that Amazon didn’t begin to sell beyond books until around 2000. Why did they bail? To get back to what they knew best – retail (they also sold off their interest in brokerages and real estate companies they owned).

This is an excellent summary from Investopedia:

It would be easy to read this story as a triumph of e-commerce, or to reflect on the irony that Sears was a first-mover when it came to online shopping, with its proto-internet joint venture Prodigy. But even recently, Sears has been ahead of the curve in that area. According to Bloomberg, Lampert “showered” the online division with resources while the rest meleed over a shrinking pie.

Nor did competition with Amazon alone precipitate Sears’ decline. When sales and profits began to fade, in the mid-2000s, other big box retailers—particularly Walmart—were thriving. In 2011, the year Sears lost over $3.1 billion, Walmart made $17.1 billion.

Perhaps the might-have-been next Warren Buffett should have listened to the original, who told University of Kansas students in 2005, “Eddie is a very smart guy, but putting Kmart and Sears together is a tough hand. Turning around a retailer that has been slipping for a long time would be very difficult. Can you think of an example of a retailer that was successfully turned around?”

This is a story of a series of failures. It’s also a cautionary tale to any of us who live and work in these changing times. Brick and mortar stores still make up the vast majority of retail sales in this country yet the country’s largest retailers failed. Greed? Ignorance? Stupidity? What are your thoughts?

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Filed under Huh?, Thinking Aloud, What's Going On

Big Announcement – Please Read

A little self-indulgence today, and I promise not to make it a habit.

As you probably know if you’ve read this blog over the years, much of my consulting has evolved to a focus on startup businesses. That’s why, in addition to running my own practice, I’m a partner in a global venture catalyst that helps commercialization of startups post the idea validation stage through to sustainable profitability or a liquidity event. I also advise startups through my work at the First Flight Venture Center.

Two of the things I’ve noticed as I worked with some folks who thought they wanted to build and run a startup were that their as yet unvalidated ideas were often not really scalable businesses nor did they have a clue as to how running a startup business was different from life in the corporate world where many of them had spent their careers thus far. Quite a few of the budding entrepreneurs I’ve met were in their late 40’s to late 50’s. They had some money to invest in their startup but not enough to retire on. Besides, they were too young to play golf all day, as lovely as that sounds.

OK, so what’s the big announcement? What I realized is that rather than doing a startup many of these people needed a business in a box – something into which they could buy and, if they followed the plan, be successful. In short, a franchise. Because of this insight, I’ve expanded my consulting practice into franchise consulting. I will operate under the name of Franchise-Source and I’ve linked to the website (this is a temporary site – a newer, nicer one will be up soon). I’ve hooked up with a wonderful organization that represents over 500 different brands in over 70 different industries. My new entity has pages on Facebook and LinkedIn (those are direct links) as well. I hope you’ll check them out.

I’ll be continuing my other consulting as well and of course, the screed will continue although I’ll veer into the franchising world from time to time. I hope if you’re considering owning your own business or franchise and aren’t sure where to start that you’ll call or email me. As with a realtor, the buyers don’t pay for my services. The sellers – or franchisors – do. The work has been gratifying so far in that I’ve already spoken with a number of people who are looking to change their lives and rather than taking a chance on an unproven idea they’ve worked with me to investigate a solution that works for their goals, their budgets, and their lifestyle.

Thanks for reading. I’d appreciate you letting anyone you know who might have an interest in a franchise that I’m here to help. Back to our regularly scheduled blog programming next time.

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