In this issue:

Marketing
• Creating Real Differentiation 

Trends
• Workers' desire for feedback on the rise 
• Over half of all businesses are home based 
• Law firms forced to lower fees 

News
• Why it pays to apologize 

Tips
• Why it isn't good to speak your prospect's language
• Boost email open rates by including a coupon offer
• Don't "friend" your employees on social networking sites
• Weird marketing technique can double postcard response
• Avoid these mistakes when building business credit 
• Discover the drivers that influence B2B sales 
• Much more... 
 

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MARKETING 

Creating Real Differentiation  

A highly differentiated offering provides value competitors can’t copy because it is unique to the customer.  

TO AVOID THE PITFALLS of competing on price, salespeople are often told they need to “sell the value.” Another strategy is to “value-add,” by offering the customer extra services or product features without charge. While these strategies can be effective short-term, neither of these approaches produces a sustainable advantage. Selling the value implies that the salesperson either truly understands what the customer values, or that the value offered is perceived as significantly different from the competing offerings. All too often, neither one of these is true. At the same time, a value-add strategy has its own drawbacks. While it may sometimes win a sale, it produces customer expectations of “free stuff,” it erodes margins and may be easy for the competitor to match.

Salespeople rely on these strategies because they find it difficult to achieve genuine differentiation based on something the customer values and is hard for the competition to replicate. But suppose a salesperson were able to create a highly differentiated offering that provides real value competitors can’t copy — because it is unique to the customer?

The secret lies in going beyond features and services that are easily commoditized, and developing what Ted Levitt, author of The Marketing Imagination, calls “the potential offering.” Companies can achieve differentiation by looking beyond their product to all aspects of the customer’s experience across the whole process of buying and using a product or service.

The Customer Life Cycle provides a lens for understanding the experience at four critical phases, from buying the solution through the end of its useful life. Each phase offers an opportunity to find sources of differentiation.

The Customer Life Cycle

The following four steps are typical of the customer’s experience with a product or solution:

1. Shopping — identifying the right solution and vendor options, establishing buying criteria, making initial screening decisions.

2. Buying — bringing a product or service through the process of contracting, financing and paying, and receiving supplies and equipment.

3. Using — installing and using the solution.

4. Disposing — upgrading, recycling, discarding, replacing.

By looking at each of these areas from the customer’s perspective, salespeople can identify opportunities to expand the offering. This may involve providing additional services or add-ons as part of the solution, or offering options that add value and generate benefits the customer can’t get elsewhere.

In the Shopping phase, for example, there is great variability in how efficiently companies go about sourcing suppliers and alternative solutions, and how clearly and accurately they are able to define their search criteria. Suppliers can help by making their services and products easy to find and understand, and providing tools and expertise to help the decision makers clarify technology and other requirements, as well as criteria for selecting a vendor.

The Buying phase is usually overlooked by salespeople, who focus on their own company’s policies around contracts and agreements rather than on the needs of the customer. By better understanding how the customer buys, a sales organization can help the customer solve problems — offering leasing and financing options, for example, or helping the customer with elements of the purchase such as taking delivery of equipment or supplies.

Example: A salesperson selling janitorial and sanitation products to a group of hospitals came up with the idea of using a system similar to the one used for reordering pharmaceuticals to automatically reorder the janitorial products as they were being used up.

Although Usage and implementation are where most companies consciously add value to the offering, few look beyond initial installation and conventional service contracts. This is an area where innovation and in-depth understanding of the customer’s priorities and business processes can produce creative ideas for offering benefits unique to the customer.

Example: A salesperson working with a large distribution company helped them increase the efficiency of their warehouse operations by bringing in an expert from her own company to change the way products were being coded.

Depending on the product, the salesperson may be long gone by the time customers reach the Disposing phase of the Life Cycle. Today, there are many new opportunities to differentiate at this point. Companies are beginning to emphasize recycling and reusing as “green” becomes a corporate value and goal. Salespeople can look for ways to help companies that must discard equipment or byproducts, provide options for recycling or reuse of part or all of the product/equipment.

Example: A company that sells paper products developed an innovative way for customers to help their customers recycle used office paper, helping increase sales and customer loyalty.

Uncovering Full Potential Value

In a world where it is very easy for competitors to quickly duplicate even the most unique product features, it is still possible for a supplier to create a differentiated offering through creating individualized customer value competitors can’t easily provide. To help ensure your salespeople are expanding your offering to full potential value for each customer, ask the following questions:

1. Do we make it easy for prospective customers to find us and understand our products and services?

2. Do we have the capability to offer expertise, tools and other assistance to help customers determine their criteria for a good solution and which solutions best fit their situation?

3. Do we offer various approaches for customers to acquire our products and services, such as different payment options, leasing, financing, etc.?

4. Do we help customers with logistics and other issues related to receiving our products and services?

5. Do we provide flexible options for support and assistance to customers in installing, implementing and using our products and services?

6. Do we have a range of options available to help customers recycle, reuse, reduce waste, upgrade and dispose of our products at the end of their useful life?

Explore possibilities with your team, and raise their awareness of the value of looking across all four phases for differentiation opportunities.
 
Tom Roth is President of Global Solutions Group for Wilson Learning Worldwide. He assists executive leadership teams with issues related to employee engagement, leadership development, strategy alignment and business transformation. Roth is the co-author of the book Creating the High Performance Team. To learn more, contact Wilson Learning at 1.800.328.7937 or visit www.wilsonlearning.com. 

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T R E N D S

Workers’ desire for feedback on the rise 

In these stressful times, employees are desperate for feedback and interaction with their boss — and when they don’t get it, their job performance suffers. Recent research by Leadership IQ found that 66% of employees say that they have too little interaction with their boss, up from 53% in May 2008.

Both positive and negative feedback are in demand. While 67% of employees say they get too little positive feedback, 51% say they get too little constructive criticism from their boss. In addition to concerns about the quantity of feedback, employees also said they want high-quality input from their bosses. Over half (53%) of employees say that when their boss does praise excellent performance, the feedback does not provide enough useful information to help them repeat it. And 65% of employees say that when their boss criticizes poor performance, they don’t provide enough useful information to help employees correct the issue.

“When times get tough, managers become avoidant,” says Mark Murphy, chairman of Leadership IQ. “Focusing on spreadsheets seems a lot easier than talking to employees. Not only might you get hit with questions you can’t answer, but when your own stress levels are through the roof, the last thing many managers want is to meet the emotional needs of their employees. But this is precisely the time that employees really need lots of feedback.” 

Source: Workplacemagazine.com, November 3, 2009 



Over half of all businesses are home based 

Home-based businesses are often dismissed as quaint hobbyist ventures, but new research suggests that’s a mistake. An estimated 6.6 million home-based enterprises provide at least half of their owners’ household income. Together these “homepreneurs” employ 1 in 10 private-sector workers, account for over half of all U.S. businesses, and by many measures they’re just as competitive as their counterparts in commercial spaces.

Research conducted by Emergent Research shows that only about 35% have revenue above $125,000, compared to 75% for non-home-based businesses. But they measure up to other small companies on key aspects of doing business, including access to capital, benefits to workers, marketing and innovation. On average they have two employees, including the owners, and together they employ more than 13 million people — more than venture-backed companies.

A few trends are driving the growth of sophisticated home businesses. First, technology has made it easier to start and run a business from anywhere. But just as important, there has been a change of consciousness in the business world to recognize home-based enterprises as legitimate. 

Source: BusinessWeek, October 23, 2009 



Law firms forced to lower fees 

The recession hasn’t been good for the legal profession. Clients are demanding lower fees and new billing procedures. What’s more, it’s unlikely that law firms will be able to return to business as usual even after the recession.

The overhaul in fee structures could include offering flexible payment options such as flat fees, monthly retainers, blended rates, contingency fees and rate caps, according to Jonathan Veale, division director of Robert Half Legal. To offset revenue loss and increase efficiency, many law firms will start outsourcing support services overseas.

Beyond the impact of the recession, one of the biggest changes will be in dealing with the popularity of online legal services. Experts predict that clients will have the option of increasingly sophisticated Web-based legal assistance. These services may end up hurting small law firms more than large firms because small firms traditionally handle document preparation, and most online legal services allow easy access to documents and regulatory expertise on demand. 

Source: Trend Letter, December 2009 

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N E W S

Why it pays to apologize 

What’s the best way to diffuse a disgruntled customer? According to new research at Britain’s Nottingham School of Economics, firms that simply offer an apology fare better than those that offer a cash rebate.

Researchers worked with a firm responsible for around 10,000 sales a month on eBay, controlling its reaction to neutral or negative customer feedback posted online. Some customers were offered an impersonal apology via email, while others were offered a “goodwill gesture” of 2.5 or 5 euros. All emails included a request for the customer to remove the comments.

Some 45% of participants withdrew their evaluation in light of the apology, while only 23% agreed in return for compensation.

Nottingham research fellow Dr. Johannes Abeler, a co-author of the study, said the results prove that apologies are both powerful and cheap. Why are apologies so powerful? According to Abeler, “Saying sorry triggers in the customer an instinct to forgive — an instinct that’s hard to overcome rationally.”

Source: Nottingham School of Economics 

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T I P S

• During sales presentations, it might seem like a good idea to use the same technical terms that your target market uses. However, a recent study suggests that “speaking” your client’s language can delay or deter buying decisions because many prospects don’t fully understand those terms. The study involved the sale of high-tech products. Only 3% of the prospects surveyed said they fully understood most of the terms used in the sales presentations. And the less they knew, the more likely they were to put off the purchase. Instead, try to come up with more understandable terms or avoid them completely.
  
  Source: www.businessbrief.com
  
   
• Boost email open rates by including a coupon offer. When Experian analyzed email campaigns, they found that coupon emails had open rates of around 24% to 25% versus only 16% to 18% for noncoupon campaigns. What’s more, 80% of online coupon mailings saw higher transaction-to-click rates and transactions than noncoupon campaigns. And 78% of that group also earned higher revenues per email.
  
  Source: www.emarketer.com
  
   
• Don’t “friend” your employees on social networking sites, warns employment attorney Michael Schmidt. Doing so can trigger or exacerbate a host of legal claims, including harassment, discrimination or wrongful termination, as well as touch off cries of favoritism if the boss friends only select employees. Given that social networking sites are loaded with personal information, a manager is bound to learn things about an employee that he or she will wish the boss didn’t know. Moreover, the worker now has the opportunity to argue that any later adverse employment decision was based on the personal information.
  
  Source: www.law.com
  
   
• Double response to a postcard marketing campaign by simply placing a dotted line around the offer, according to Kurt Johnson, founder of PostcardBuilder.com. In newspapers, the dotted line signals, “Cut this out.” Consumers have seen this so many times that the dotted line strongly signifies, “Pay attention to this.” Designers and copywriters have discovered many such techniques that lift response but don’t quite make sense, such as: Put quotes around a headline, even if there’s no one who’s purported to have said it. Add colorful handwritten notes in the margin of a letter, such as “Try it!” or “Wow,” although the reader probably won’t think these were personally doodled by the sender. Or, add pictures of people, which improves response even if the people aren’t directly relevant to the message.
  
  Source: The Marketing Minute, www.yudkin.com
  
   
• Avoid these mistakes when building business credit. First, there are certain SIC codes that the business credit bureaus and lenders tend to stay away from. These industries include real estate investing, car sales, adult entertainment, travel, lending, restaurants and dry cleaners. Next, don’t use your home or cell phone as a business phone number because they aren’t listed in the 411 national directories. Finally, make sure you apply for credit from vendors that report to a business credit bureau. Simply doing business with any vendor will not help you establish business credit.
  
  Source: www.allbusiness.com
  
   
• Looking for in-depth feedback from your customers but can’t afford formal focus groups? Try taking a group of them out to dinner. Not only is this an inexpensive way to get in touch with customer perceptions and generate new ideas but often the customer is flattered to be invited. Give serious advance thought to the questions and subject areas you want to explore and include a staff member or outside person who can effectively take on the role of facilitator.
  
  Source: Audience Development, 10 Norden Place, Norwalk, CT 06855
  
   
• Don’t risk being sued by your managers for neglecting to pay overtime wages. Most managers are exempt; however, exemption status depends more on their actual duties than job title or position in a hierarchy. The Fair Labor Standards Act states that to be exempt, managers must: be paid a salary of at least $455 per week, have management as a “primary duty,” direct the work of at least two full-time employees (or an equivalent number of part-timers) and have the authority to hire, fire and promote — or at least have significant influence on those decisions.
  
  Source: www.businessbrief.com
  
   
• For B2B salespeople, it may seem like it would be easier to sell products to consumers. After all, unless the business prospect is the end user, there’s nothing to emotionally drive him to make a purchase. However, there are definitely emotions that influence B2B sales. For example, unless the purchaser feels safe purchasing from you or your firm, a major driver is job security. Other drivers include career advancement, personal achievement, internal relationships (he wants the people he’s buying for to be happy), external relationships (he likes the salesperson and wants to please him), protective laziness (just buy from someone quickly and move on to something more interesting) and simple greed (wanting a financial benefit for buying). Without one or more of these emotions, it’s unlikely a sale will take place.
  
  Source: blogs.bnet.com
  
   
• Having an outside board of directors can be a big plus if the IRS questions practices such as giving yourself salary increases or fringe benefits, renting property to the company or borrowing from or loaning money to the business. Having your board’s written approval doesn’t give you 100% protection, but it is considered by the IRS and the courts, especially if you abstain from the vote.
  
  Source: The Business Owner, 5727 South Lewis, Suite 400, Tulsa, OK 74105

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