Red Zebra Business Centre - Management Memos
February 2011 Making Measurably More For Your Business Since 1985!
MaxProfile
Where Do You Fit into This Two Speed Economy?

Max Williams, Principal Consultant

The first week of the corporate profit season shows a growing optimism among the big end of town.

That's a very positive sign, but smaller players results are looking down as they are being hurt by continuing consumer caution.

Three major players dominated the early stages of the reporting season and set a mostly positive tone for the remainder of February.

Commonwealth Bank of Australia Ltd (CBA) and Rio Tinto Ltd beat market expectations with multi-billion dollar profits. Disappointing results were posted by the likes of online travel agency Webjet, furniture retailer Nick Scali and mining and rail equipment supplier Bradken.

The retail sector continued to show weakness, with a shock profit downgrade from Myer and profit growth by JB Hi-Fi described as poor by some analysts.  Interim results so far had showed weak consumer confidence was affecting corporate Australia, making the year ahead uncertain.

Queensland's disastrous floods were also expected to be a theme of the reporting season, but so far financial impacts have been lower than initially feared. CBA said the rebuilding could provide a boost to the predicted return of business credit demand.

But then along came Valentine's Day. Love is all around us on Valentines Day, and so is money.  Small businesses enjoyed one of their busiest times of the year. The romantic day is set to bring a $300 million boost to the NSW economy alone, according to that state government.

Florists, restaurants, newsagents and chocolate and gift shops right across Australia saw the biggest Valentines Day on record with strong sales growth.  The sale of flowers for loved ones, while normally triple usual weekly sale rates at the magic day, increased a further 9.3 per cent this year.  Well over 300,000 roses were sold across NSW.

This growth comes even though the price for a dozen long stemmed roses was up $30 on last year's price. Sales on Valentines Day cards are up seven per cent and jewellery and chocolates sales are also up.

Valentines Day has already surpassed Fathers Day and Easter in terms of business turnover, and now it's closing in on Mothers Day.  All very good for romantic retailers, but what about your business?

It is absolutely certain that Australia's legendary shortage of skilled tradespeople will worsen with the demand for rebuilding in response to the summer floods and cyclones.  Labour rates will rise ahead of inflation, unless there are a lot of non-cash payment made which will help obscure the real cost of labour.

We know and understand that fuel and energy prices will be rising as a result of world unrest pushing up oil, and governments pushing up oil, gas and water charges.  We also know and understand that food prices are already responding to shortages caused by crop losses this summer.

That leaves us with some enterprises able to capitalise on the high demand for commodities and bid up prices for labour and supplies, while other enterprises will see escalating costs and declining margins.  Add in the margin-squashing effects of on-line sales, and we have almost the perfect storm.

Not every business will find the same confluence of adverse pressures. But all will find some adverse pressures.  The key is to work out early what are the most significant influences on your operation.

When input prices rise, the immediate response is to cut other purchases to compensate. On the other hand, there have been numerous recent articles and speeches decrying the lack of innovation amongst Australian industries.

That criticism is harsh, unfair, and uninformed. WE have some very good examples of innovation. But it is time like the pone we will face in 2011 that really drive us to innovate. This will give us the cost reductions we need, and still allow us to do more,

All of which suggests that there are opportunities to get ahead - if we make every post a winning post!.




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Loyalty

B

usiness is no longer only in business hours.  Manufacturers, service organisations, and retailers are now on show all day, every day.  Ignore this, and you'll slip behind.  Then it's hard to catch up!



Today We Need to be Constantly Available


Be a 24/7 Business

In earlier times, when we shut up  shop' (or factory or workshop) and went home, day was done. Customers knew that they could get us anytime we were at work.   After hours' service numbers and special service rates were a major support service many suppliers provided.  Things have changed!

It's no longer about opening the shutter door at 9am and closing at 5pm. Your customer needs to be in touch with you 24/7 from any point in the world and that is a dramatic change that many business people are only now starting to understand.

One in three people are using the internet for clothing and entertainment, one in two for beauty and skin care, two in three for computers and retail merchandise. There is a strong trend for money to seep away as customers find it easy to buy from around the world - thanks to increasing online access to overseas suppliers.


Be unique

Doesn't it drive you mad - every one saying "Be Unique"?  Whatever business you're in, there are others
doing pretty much the same thing.  In many cases, the differences between suppliers or service providers are small.  Often the differences are not noticeable to any but the most discerning buyer. Sometimes, not even then.  It is so damnably hard to be truly  unique'!

As a business person, though, you must think every day, "How is my offer unique?" What you did yesterday is not going to stack up tomorrow, times are changing and your offer must be strong enough to survive these changes.

With a heightened sense of what economic collapse looks like thanks to the global recession, a renewed emphasis on disaster prevention is driving buyers to think defensively.

In the UK, 43 per cent of consumers say "trying to add to my rainy day savings/emergency fund" is a priority for this year, up 15 per cent from last year. In the US, a third of consumers say they're using debit cards rather than credit cards. Debit transactions are forecast to rise nearly 60 per cent between 2000 and 2010. .

2011 may see an opportunity for you to enhance a product or service to deliver more long term benefits, reduce risk, or prevent a problem.

And be up to date

The notion of  continuous improvement' is a popular one, and it gets a lot of  airplay'. But what are you
really doing to improve continuously?

To keep yourself in front of the field, your product or service offer must keep evolving!  Things keep changing all the time. Your competitors, market conditions, technology.  You have to be changing all the time too.  Change takes time and effort, and often that effort appears to be worth very little. Unless you don't make the effort.  Then you wake up one day - left behind!

What is your list of  "must-do's" to keep your enterprise evolving, so that it's claim to being unique and different and better is always true?



Climbing the Ladder of Loyalty

Give your customers a reason to be loyal

A term we often talk about is the Ladder of Loyalty'.

Once someone buys from you, they have the choice of continuing to buy from you - or elsewhere. Give them a reason to stay loyal, and they'll be your advocate and tell others.

Loyalty comes about by having the right product or service to fit the need, the right reason to buy now, and having the right people to service the customers, and support your offer. All of these elements go to produce customer loyalty.
Keep Safe at Free WiFi Hotspots

Free Wi-Fi is incredibly convenient for business people on the move - but is it safe?

Free wireless public networks located in airports, hotels, cafés and other public places are ripe for exploitation by the bad guys. Data transmitted in a wireless network is more susceptible to being tampered with than data in a wired Internet connection.

Operating systems like Windows XP/Vista/7 automatically prompt you to accept or decline connections to available wireless networks. Naturally, most users will choose to connect to the 'Free Wi-Fi' access point. 

This can connect you to a hacker's  rather than an official airport wireless access hub.  To make matters worse, the names, of wireless networks you've joined before are saved on your system, and your laptop will automatically log on to any network with that saved name.  If a cyber-criminal offers a name familiar to you, it's free entry to your machine.

Five tips for using public Wi-Fi connections

Here are five tips to help you stay safe when using public Wi-Fi connections on their travels:

  1. Before connecting, locate a sign that advertises the official name of the legitimate network you want.
  2. Don't activate your wireless connection if you're not planning to connect to the web. This will save your battery life, as well as protect you from intrusion. 
  3. Turn off shared folders if you unwittingly connect to a malicious network, it can easily transfer malicious spyware onto your laptop. 
  4. Be very careful what information you share in public locations. Even seemingly innocuous log-ins to web email or social networking accounts can give cyber-criminals access to important data
  5. .Ensure that your security software, operating system, utilities and applications are always up to date.

In short, Be Alert - Not Alarmed!




Constantly Available

(from previous column)

But there is more!

If you have a good CRM (Customer Relationship Management) scheme, your continuing communications in support of your excellent value and strong customer support, will build that loyalty.

If you skip the regular, informative, helpful, and personal communication, all your good work on the product and service front will be seriously less effective. You need a good program to promote loyalty - because, when you get right down to it, customers don't really care!

You need to give them a reason to care. One of our loyalty programs means holding on to a customer benefit until next time. That makes them care!

Such programs aside, keeping constantly in touch with your customers by delivering useful and appealing information can keep people thinking about you in a positive, and encouraging way.


Be an "In Line Business"

We need to be better, sharper, fitter and faster in our physical environment to make our business a compelling visiting point for our customers.

No longer do we comparison shop two or three suppliers or stores, or two or three departments. The world is changing, we get less chance to maximise that Moment of Truth'.

We have to make so much more of every opportunity we have to interact with, and respond to, our customers. We can maximize these opportunities by combining our physical and our online presence in a successful way.

To be sure that we are successful, we need to line up the presence we project in the physical world with the presence we project in the on-line world. Keeping these two aspects in-line' makes us an in- line' trader.

We are a seamless multi-channel operation that communicates with our customers in all the channels available; our website, social media, our shops and showrooms, the list goes on and on.

Taking these steps will make sure that we grow customer loyalty, and along with it, our share of their of their total spend.





If you'd like to find out more about how to make measurably more in your business right now, talk to us, or ask us a question here! Remember, there's no charge or obligation.




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McNicol Williams Management & Marketing Services is a Small Business Advisor listed with the Small Business Victoria, and has presented The Red Zebra program under its auspices. This listing requires that the first hour's consultation is always free. So when we say "No charge or obligation", we mean it!