A trap many big companies fall into is losing touch with their customers.  Many executives never talk to customers directly, only learning through statistics and demographics.  As a result, they often make decisions to treat their customers like numbers, not human beings.  Customers dread calling into these sorts of companies, like AOL.

Small businesses have the advantage that the owners and decision-makers are often forced to be on the front lines dealing with customers.  This helps in gaining a deep understanding of what customers want.  In fact, I often prefer buying from small businesses because they usually have a more personal touch.  Ironically, as the business prospers, the folks in charge often throw away this connection with customers by hiring poorly-paid customer service people.

It doesn’t have to be like this.  Some big companies, like Nordstrom, are famous for their customer service.  The key is growing your company intelligently.

Make sure all the decision makers in your company spend at least some time keeping in touch directly with customers by doing customer service, taking orders, or making some calls.  This will help them understand how your offerings can be improved.  They’ll get to hear problems and suggestions right from the customers.  Or if customers are confused, they can think about how to tweak the product or information to clarify.  It’s also an incredible motivational boost when they know exactly whom their work will help.

It may be humbling, and you might hear some complaints that they don’t have time for it, but you can’t afford to let the business be run by people who don’t know your customers inside out.

When you’re making decisions on different marketing or advertising channels, a big question is how much can you afford to pay for each visitor or sales lead.  This can help you make informed and profitable decisions.  All it takes is gathering the right information and some simple math.

If you’re selling things online, you can use an online tool to track how many visitors you’re getting.  Say on average you get 5000 different people visiting each per month.  From your sales statistics, you had 250 customers last month with an average profit of $15.  Then you can estimate that 5% of your visitors turn into customers, so each visitor will contribute on average 5% of $15, or $0.75 to your sales.  This is just a quick estimate - it doesn’t account for things like repeat purchases or the chance that they’ll tell their friends - but it’ll serve as a starting point.

So now you can use this as a quick test to figure out whether you should use certain forms of advertising.  If you pay 50 cents per click for a sponsored search result on Google Adwords, you’re still earning an average profit of 25 cents each time someone clicks, so you should do as much of this as you can.  On the other hand, if you’re paying $200 a month for a banner ad that brings in 100 visitors, you’re paying $2 per visitor, which probably means you’re losing money, unless visitors from that banner are particularly likely to buy.

You can use a similar analysis to find out how much a retail window shopper or sales lead is worth to you.  But after you make your marketing decisions, go back to treating your visitors as human beings, not dollar signs.  This’ll be both more enjoyable and profitable in the long run.

I just finished reading Steve Pavlina’s new book called Personal Development for Smart People.  It boils down the teachings of hundreds of self-help books into one framework based on the idea that an individual should consciously strive to live with the three core principles of truth, love, and power.  The book is full of practical, down-to-earth ideas about how to develop and apply these principles.

There’s no question that in any small business, the personal effectiveness of its core members is hugely important.  However, I find that thinking of an organization like a separate individual can produce helpful insights.  Let’s take a look at how thinking of the principles of truth, love, and power as applied to a small business can give you ideas to improve.

Truth:
- What external sources can you learn from?  e.g. advisors, blogs, books, similar businesses
- Do all the important people in your company regularly talk directly with customers?
- Do you have easy access to the numbers on the trends for your sales and expenses?
- Do you have easy access to find out how much inventory you have and where?
- Do you have checks and balances in place for your decision-making processes?

Love:
- Do your company’s workspace and culture provide a positive working environment?
- Do your employees feel valued and work together well?
- Does your company build a strong enough bond with its customers to make them want to talk about it?
- How can you further build your company’s reputation and exposure to your target market?
- Is your company socially and environmentally responsible?  What contributions can you make in the community?

Power:
- How quickly can you perform common tasks like invoicing customers?
- How is the financial health of your organization?
- Do you have sufficient cash or credit to invest in new initiatives?
- Do your employees have the right tools and skills to be fully productive?
- How powerfully are you able to respond to change from your customers or competitors?

This multi-dimensional way of thinking can help you identify often neglected aspects of your business that could be improved.

Last time, we talked about what is a brand and how it relates your customers to your business. In this post, we will discuss some general guidelines on building your brand.

1) Own One Word
What do you think when you hear Volvo? Safety. How about Toyota? Reliable. How about Mercedes-Benz? Prestige. Even though all three companies build safe cars, use reliable engines, and have more prestigious expensive models, one word stands out for each of them. For your brand, you will want to own one word that sticks in the mind of your customers. If you try to get too many words to stick, then chances are none of them will stick and the identity of your brand will get diluted. Focus is the key.

2) Be Authentic
How many of you came across an internet company claiming their internet service is fast, but the actual speed is slow as snail? How about a car dealership claiming they have the lowest price, but you find another one that gives an even lower price? Whatever the branding image or ideas you are going for, you have to make sure it’s authentic, reflecting what you can deliver. Volvo never claims they make the fastest cars in the world, and Toyota will never try to sell you on the prestigious side of their cars.

3) Own One Color
What color do you think of when you hear about Coca-cola? Red. How about Pepsi? Blue. How about Mountain Dew? Green. Owning one color allows your customers to associate the color with your brand, and differentiate you from your competitors. Pick one that closely relates to what your brand offers, and that it separates you from your competitors.

4) Be Consistent
A brand is never built overnight. If you want your customers to remember your brand, you will need to consistently apply the same theme over and over again for a long time. You need to apply it on everything your customers see, which includes your website, your brochure, your product packaging, your retail store design, and so on. Repeated exposure to the same theme is the key to getting your brand to stick in the minds of your customers.

If you want to learn more on what makes a good branding strategy, read this book.

A lot of small business owners might not give much thought to branding. It seems like an abstract concept that’s only applicable to widely distributed products backed by big marketing budgets from large corporations. But if you want to grow your business over the long term, then you should start seeding your brand into your customers’ minds even when you are still small.

Where should you start? Before we explore ways to build your brand, let’s start by looking at the question, “what is a brand, anyway?”

From Wikipedia, “A brand is a collection of images and ideas representing an economic producer; more specifically, it refers to the descriptive verbal attributes and concrete symbols such as a name, logo, slogan, and design scheme that convey the essence of a company, product or service.” This might be a really good textbook answer, but chances are you won’t remember it in a week.

In essence, a brand is the images and ideas that people remember you by. The images are visual, like your logo, color scheme, mascot, etc. For example, you might remember Nike’s “swoosh” logo. For Fedex, you might remember the purple/orange/white color scheme. The ideas can be as simple as a single word. What do you think when you hear Wal-mart? Cheap! How about a Volvo car? Safety!

If you are able to get those images and ideas into your customers’ heads, everytime they see the images or think about those ideas, they will automatically think about your company and your products. Next time, we’ll look at some general guidelines on building your brand.

Have you ever been told that you work too hard?  If you have, here’s one more reason to ensure that you lead a balanced life:  working too hard can be bad for your business.

We all know the feeling of insight.  You’re stumped on some problem, then in some idle moment when you least expect it, a-ha!, inspiration strikes and you suddenly have a solution.  I’ve solved some of my toughest problems in the shower, or taking a walk.  Archimedes famously cried out “Eureka!” when having an insight while getting into the bathtub.  The Nobel-prize winning physicist Richard Feynman’s favourite spot to relax and seek scientific inspiration was the local strip club.

We’re often taught to focus to solve a problem, but if you get stuck on something, unfocusing and letting your mind wander is the best way to allow inspiration to strike.  A Zen expert trained to focus his mind was having great difficulty solving problems designed by scientists to require insight.  Then, just before giving up, he tried directing his mind to relax, and he surprised everyone by suddenly solving the puzzles faster than anyone else had.

What’s happening up in the brain is that when you’re relaxed, your unconscious brain is still hard at work making all sorts of random connections and associations.  When it comes across something that it recognizes as an insight, it reports back to your conscious brain, and you think, a-ha!

The overworked and overstressed lifestyle typical of small businesses can make it harder to have real insights.  Leading a lifestyle balanced with work and relaxation will allow you to get the day-to-day tasks done, without handicapping your ability to generate ideas that can take your business to the next level.

You can hear Jonah Lehrer talk more about this here.  Next time, we’ll continue this by discussing another way a balanced lifestyle can improve your memory and make you smarter.

Here are 2 options for a 1-year magazine subscription:
A)  Web only subscription - $59
B)  Print & Web subscription - $125

Which one would you pick?  A study shows that 68% of you would pick option A, and 32% would pick option B.

OK, how about if we add in one more option:
A)  Web only subscription - $59
B)  Print only subscription - $125
C)  Print & Web subscription - $125

No, there’s no typo.  Option B and C are the same price, but option B is missing the web access.  Now which one would you pick?

Surprisingly, by adding in a dummy option with the same price, the study says that only 16% of you would pick option A, none of you would pick option B, and a whooping 84% would pick option C.  Want to know why?  In short, because we often judge value relatively.  A choice is good because it is better than the other choices, not because of the intrinsic and objective value of it.  Think you can use this to your business advantage?

Find out more about these sorts of psychological quirks in this book.

You’ve probably heard of Wikipedia, an online encyclopedia and the 8th most popular site on the internet.  The main idea behind it is that anybody can contribute knowledge by adding a new article or editing an existing one.  This idea has allowed Wikipedia to grow enormously quickly, with broader content and faster updates than traditional encyclopedias.

Have you ever thought of setting up a mini-Wikipedia within your company?  This is a great way to organize all sorts of information.  You can share it with other people, especially newcomers, and anybody can update it, so it’s easier to keep complete and accurate.  No more digging up old emails to find information that might be obsolete.

With an internal mini-Wikipedia, you can collaborate and keep information on almost anything:
- A checklist for the order-taking process
- Ideas for new products to carry
- A list of advertising opportunities
- Your quality inspection guidelines when receiving products
- A list of employee expenses to be reimbursed by the company
- A selection of customer testimonials for marketing purposes
- Phone numbers and email addresses for everyone within your company

Here are two websites that allow you to do this for free, while controlling who has access to the information:
- PBwiki
- Google Sites

Try it out, and enjoy improved information sharing within your company!