More C's, Part Two...
C is for…
Competitive Advantage – All that we do is to gain competitive advantage by creating clear points of differentiation, cost advantage, value proposition enhancement; and/or by improving product and service quality, and consistency. Being better than our competitors is foundational, and those efforts should never end. This, however, in and of itself is not enough to lead your business to continued growth.
Strategy is what defines the bold direction for your business, a direction that should be aimed at separating you from the pack of hungry competitors. Working hard to gain a couple more bites of the market pie is great, but where the goal needs to be bolder is in the direction of creating a new pie. Marketing is the toolbox that you use for sharing this messaging externally to the world of existing and potential clients.
Customer Experience – This is what it’s all about. No matter how strong your strategy, how great your product, how strong your brand is, if you do not provide a memorable customer experience, you will not have success. The way different companies go about creating a great customer experience varies from industry to industry, segment to segment, and business to business. In short, customer experience is relevant, hard to nail down, and highly subjective. Yet, you must make it the number one motivation of your business.
I’m not much of a bells and whistles, ‘big show’ kind of person, so this does not factor into my thinking of customer experience; but for others, depending on their industry, the flashier approach might be a major component of providing a great customer experience. All I know is that a beautiful, big-budget restaurant with breathtaking design, incredible branding, and highly visible marketing won’t necessarily succeed; whereas a simple Mom & Pop, opened on a low budget, can be highly successful.
Why? Because what leads to success is not the ‘big show’; it’s the focus on providing top-quality products and services, coupled with a highly personalized and deeply caring customer experience. All customers crave to be recognized, to be treated as if they matter, greeted by name and thanked for their patronage – from the bottom of the owner’s heart. The customers will feel your genuine concern for their well-being and appreciate it.
You need to look at the customer experience through the lens of relationship development and management – understanding customer needs and providing the right solution. It is only by listening to your customers that you will know how to reach them.
I wonder if we are in danger of losing touch with the basics of “customer care”: appreciation, courtesy, product knowledge, making recommendations and suggestions, thanking the customer for choosing to part with their hard-earned cash in your business, and following up to ensure the customer remains happy. Building customer loyalty is the best way to grow your top line and provide a strong foundation that is less expensive than winning over new customers.
If you have a brick-and-mortar business, then “yes” to amazing design, noteworthy products and services, great traffic flow, music, vibe, and all those things that represent your passion and creativity. These can help set you apart in the field. Yet, this is not what will sustain your business for the longer haul and provide a return on investment. What will sustain your business is customer relationship building, personal attention and recognition, and most of all, genuine appreciation and follow-up.
Businesses with a sales team in the field understand the importance of relationship management and that it’s the essence of sales success. There are amazing tools available (CRMs) to assist with the sales process and provide structure and accountability to sales and customer relationship management activities. These tools should be used as appropriate. Remember the end of the sales process is not the sale. Too many salespeople are engaged with the client to secure the sale and then disappear. There is no loyalty development to be had there.
If you are an online or service-based enterprise, say “yes” to getting sales and clever digital marketing. These efforts are vital for your success. However, remember that your customers are not simply pieces of data, they require personal recognition, follow-up, and some semblance of human interactions, real or created.
As your business grows, your challenge lies in maintaining the level of effort required to keep customer recognition and relationship, and not losing the qualities that secured your customers’ loyalty in the first place. Sadly, ongoing care for the customer relationship is often forgotten.
Cash Flow – it’s all about cash flow! While this is the key to a healthy, sustainable, and lower-stress business experience, it’s often ignored, or at least little understood by many business owners. We tend to focus on profitability, with zero focus on related measurables. While profitability is important, it does not tell the whole story about financial health and sustainability. It is entirely possible to have a profitable business but go bankrupt due to an inability to meet your payment obligations.
I am not an accountant, so I view cash flow management as understanding and influencing the ebbs and flows of cash in and out of your bank account. This requires diligence, regular reporting, and planning.
Drivers of cash flow health include:
· Sales Revenue – Tracking volume and growth.
· Gross Profit Margin percentage – Pricing strategy, managing cost of goods sold.
· Accounts Receivable Days – Getting paid promptly for work completed.
· Accounts Payable Days – Managing payments to suppliers.
· Overhead Costs – Including people infrastructure and other fixed costs
· Work in Progress Days – Getting jobs completed efficiently so you can get paid.
· Capital Expenditure
· Inventory Levels and Management – Keeping money in the bank and not unnecessarily in storage.
The responsibilities of managing cash, apart from the above, include:
· Cash flow forecasting
· Budgeting and financial planning
· Monitoring and regularly analyzing cash flow
· Managing working capital (inventory, accounts receivable, accounts payables)
· Controlling costs and tracking profitability
· Managing capital expenditure
Other key items include the collection and submission of sales taxes, income tax planning, and submission of payroll taxes.
Until next time!
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