Tag Archives: business thinking

October 9, 2013 · 10:42 am

Faulty Instrument Readings

I’m not a pilot (although I’ve played Flight Simulator a bunch). One of the things pilots are told is to trust their instruments because sometimes our eyes or other senses deceive us while flying. Things such as graveyard spins or spirals result, and I’m very sure that anything with the word “graveyard” is bad when using in conjunction with flying.

X-Plane 10 Flight Simulator Zero panel

(Photo credit: Wanderlinse)

Business analytics today are exactly the opposite of flying.  You see, there are so many things that can go wrong  – a misplaced space, code missing or in the wrong place – that going by what the “instruments” tell us alone can be fatal.  I’ll go back to a point I’ve stated before – we need to figure out what we’re trying to investigate and why before we ever look at the numbers.  That lets us process the information we’re going to receive in context so we can make decisions.  Knowing your web traffic is up is relatively useless.  What it should prompt is a response into both “why” and “what of it?”  That requires using your eyes and your common sense.  Let me give you an example.

You launch a campaign to increase sales using Search Engine Marketing – pay-per-click ads to use a less-fancy term.  You’re smart enough to make sure you have conversion tracking installed – a method through which you can assess how many people who come to your store via your fancy new campaign actually buy something.  Your developers check the code and make sure it’s in the right place and that the beacon fires when the appropriate action is taken.  However, no one ever does what a real-world user would do – click an ad and place an order – to make sure that the “instruments” are picking up the action properly.  As a result, you think, based on the reporting, that the campaign was a tremendous waste of money since it resulted in no sales.  Your instruments just crashed the plane.

Had you used your eyes and common sense, you’d have seen that the ads generated a lot of traffic and based on your history, some percentage of that traffic that stayed on the site (non-bounced visits in tech speak) does convert to sales.  Since that didn’t happen here, maybe something is wrong.  Click an ad and place an order – did it register?

There is a tendency to trust the instruments but unlike the gauges on airplanes, the gauges we use in business are relatively new and far more prone to error.  We can’t let faulty instruments over ride the business acumen we’ve developed over the years.  That can be a fatal error.  You with me?

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October 4, 2013 · 10:23 am

The Name On The Door

Today’s Foodie Friday Fun is about the business side of food, a restaurant, so if you’re here today for cooking tips I apologize. You probably know chef Gordon Ramsay from his incessant TV appearances and, if so, you’re aware of his obsession with quality and high standards. What’s happened here in New York to his Gordon Ramsay at The London restaurant is a great lesson for any business.

Ramsay at BBC Gardeners' World Live 2008

(Photo credit: Wikipedia)

The restaurant opened in 2006 and soon thereafter won two Michelin stars. For any of you non-foodies, suffice it to say that there are currently only 14 places in NY that are two or three stars – they’re hard to win.  Unlike the Zagat ratings, these are all done by professional inspectors who are totally anonymous.  That was 2008.  In 2009 Ramsay sold the restaurant to the hotel (he needed the money – that’s another story) and licensed his name as part of the deal.

Fast forward.  The new guide came out and both stars are gone.  In a year (he had the two stars last year).  That’s pretty unheard of and shows a significant decline in quality and standards.  The chef’s response (via Eater)?

“Gordon Ramsay is not involved in the day-to-day running of the restaurants or kitchens, as this is a licensing agreement, but is in communication regarding updates and changes at the restaurant.”

In other words, although my name is on the door I’m not involved.   We heard something similar out of Donald Trump when the Trump casinos went bankrupt (how the heck do you lose money running a casino?!?!):

“Other than the fact that it has my name on it – which I’m not thrilled about – I have nothing to do with the company.”

I’ve done licensing agreements and one thing that is always a part of them are the product standards.  Since it’s your name, you always have the right to examine the product and if it’s not up to your standards, to demand that it’s fixed or not sold.  You might shrug and say well, that’s the restaurant business but it’s your business as well.  If the quality of whatever product or service you’re providing – even through a third party – isn’t up to snuff, it’s your name and reputation, not the third party’s.  Given that many of Ramsay’s other places – where he is more hands-on apparently – have held on to their stars – his place in London has three! – it’s clearly not that the chef has lost his touch.  It that he was out of touch with the New York place.

If your name is on the product, you need to be involved and maintain the standards that warranted your name on it in the first place.  When people knock on your door, they see you, not the landlord, not the builder, not the cleaning crew, not even the people who actually do the work.  You.  I’m all for meeting the customer expectations that my name engenders.  Aren’t we all?

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October 3, 2013 · 8:52 am

Cell Phones And Car Keys

I did a dumb thing a little while ago. I lost my car key. I had another one at home but having only one is a bad idea because apparently one can lose them (ahem). It’s one of those “smart” keys – as long as it’s in (or on, which is how I lost it) the car, the vehicle will start. Since I was due for a regular service anyway (which is where I’m writing this post) I asked the dealer to replace the lost key with another. Want to guess the price to do so?

$275.

I don’t know about you, but I didn’t pay $275 for my top of the line mobile phone. “But your phone is subsidized”, you say. “The cell companies do that to get you to pay for the service.” Exactly the business point and it applies to your business as well.

I don’t know what the key costs to manufacture – it’s a chip, a battery, and a case, basically.  Let’s be generous and say $50.  The woman at the service desk said “it takes an hour to program” as if there’s a coder in the back frantically assembling the software.  My guess is they plop the fob into a holder attached to a computer and it’s done pretty quickly.   But I understand the cost/value equation.  Why do they charge that much?  Because they can.  It’s not as if you can go on Craigslist and find a cheap key.  The issue isn’t can they, but should they?

I bought the car for $31,000 a few years ago.  I’ve spent a fair amount in regular service with them (the car has been worry-free otherwise!) although I could have gone anywhere to get an oil change and new filters.  And now, when I do have an issue, they’re choosing to maximize their profits instead of saying “let’s forego the easy $100 because this guy is a loyal customer and he’s going to have to replace that car in a year or two.”  Their short-term thinking is influencing my long-term thinking.

I know we’re all in business to make a profit.  My job is to help companies to do so.  One model – the cell model – is to tie you to the company by making it easy to become a customer and to make sure you’ll buy highly profitable services through subsidies.  I’m not sure that’s right for a car company – I don’t see them subsidizing your purchase so you’ll buy services.  However, doing the little things that build loyalty do that as well, and there is nothing that feels better when you do something totally stupid than a brand that lifts you up, dusts you off, and helps you fix it in a way that makes you feel good.  I realize the dealer didn’t lose the key.  The question is are they going to lose the customer?

Does that make sense?

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