Successfully connecting the business to customers and profits
As children, we would all have drawn ’connect the dots’ pictures. They are still often given out in family restaurants to ensure that kids are occupied and are not bored, whilst they are waiting for their food to arrive. In this game, the player is required to connect the numbers which appear to be distributed randomly
on a sheet of paper. Once the numbers are all fully connected, those random dots will reveal an image or picture of something.
Business and life itself are made up of a series of dots that often appear discrete, disparate and disconnected. Very often, instances, cues, actions, suggestions, choices, decisions and others all appear to be so unconnected. But despite the seemingly inconsequential and illusory image it gives, there are significant consequences to each of the choices that we make in business. When a series of actions, words and deeds are connected, they give us a truer picture of our business reality – just as if we were connecting the dots to better visualize a business scenario.
Prima Donnas who make out that the business is dependent solely on them need careful management. Communicate clearly that no one is indispensable.”john lincoln, author
A long time ago, in a distant country, a small business hotel owner was seeking to hire a general manager to run his business. The key qualities needed? Experience in the hospitality industry, good people and communications skills, and the ability to develop and drive new and incremental business to the hotel. There were many candidates to choose from.
There was one particular candidate that stood out from the rest. This candidate had more years of verifiable experience and was a proven high performer. The only problem was that the stronger candidate was not of the owner’s preferred ethnic origin. The owner was in a dilemma. He had another candidate that did not have the same number of years of experience and his entire experience was not verifiable.
This other contending candidate (albeit the weaker one) was the same as the small business owner’s ethnicity. Most folks are comfortable with people having different cultural and social backgrounds. And there are, of course, laws now in place in most countries that ensure that discrimination based on race, creed or gender is outlawed and illegal.
This small business owner called me for my advice. He had a personal dilemma. He felt more comfortable hiring his ‘own kind’ despite admitting the other candidate was far superior than the candidate who had the same ethnicity as the owner.
Just think about the irony of this situation. Here is a man who had invested a considerable amount of his own money, time and effort building a business. This man, who took such a business risk in investing in this hotel, was letting his personal feelings and emotions blur his decision making.
For me, the decision was obvious. I encouraged him to go back to his original objective, as to why he wanted to hire a general manager for his hotel. I further requested him to answer honestly, as to who can deliver his growth ambitions. I asked him to ‘connect the dots’, as to why he would or would not hire any one of the other candidates. The owner did the right thing and he hired the stronger candidate.
If the hiring judgment of an individual business owner can be so clouded in this way, then what does it tell us about all the businesses that have institutional investors run by managers who have neither risks nor personal equity invested in their operation?
The next time we hire or make an offer to a prospective candidate, we need to ensure that we connect the dots! Do not judge the person based on looks, colour, accent, sex, height, weight or the colour of their hair.
Go back to your objectives and connect the dots! If these objectives call for a ‘green, short, fat, one-eyed jack’ then, so be it! Do everything possible to meet the stated objectives and do not blur decisions with non-relevant emotions and issues.
Failure to connect the dots in this way can be to the serious detriment of the business and it is a phenomenon that is more common than people realize. As these few examples illustrate, we need be prudent and economical at all times, but we also need to reflect upon whether an action or a decision is optimal, and whether it is in the best interest of the business to make decisions that are unconnected.
- Hiring too few (or excessively cheap labor) customer-facing staff
One of the biggest mistakes a company can make is to have too few people dedicated to serving customers. To add to this conundrum is the expectation that those employees who are in place should work extra hard to cope with that deficiency. Unhappy employees mean unhappy customers. Those unhappy customers will not come back to buy more. Unhappy customers will tell other potential customers of their dissatisfaction. Meanwhile, unhappy employees will leave the business, taking with them all their experience and the training investments made in them by the business. Over time the business will bleed its professional competency because every company’s core competency (especially in a service business) is derived from the experience and professionalism of its employees.
- Location! Location! Location!
Why do so many small business owners establish their businesses far away from the main business district in which they operate, just to save money on a rental? Getting an optimal location with the lowest rental possible is the right thing to do. Getting into a location just because it is the cheapest, is not the answer. Customers, employees and business associates need access to the business and it has to be conveniently located. If they cannot, they will exit at the earliest opportunity and take with them potential business opportunities.
- Not treating employees with respect and as professionals
It is too easy for business managers and owners to treat their employees as task workers and, at times, with disrespect and disdain. People respond best to empathy, kindness and respect. As employees, they will usually give much more than what is expected of them. They do not need reminding who is boss. This does not mean that they do not need to be coaxed when they slacken in their performance, but as a rule of thumb when employees are respected and treated professionally, they will, in turn, treat customers with respect as professionals.
- Not creating an environment conducive to employee contribution and productivity
Too many business managers and owners are unnecessarily paranoid and secretive of their business development activities. (While it can be beneficial to be slightly paranoid about your competition, this should not be extended to your own employees!) Employees respond best to trust and trusted employees want and can contribute significantly to the growth of the business they are working in. Almost universally, the best employees are those that are empowered, fully trusted and committed to the business.
- Not getting rid of poor-performing employees
The odds are high that there will always be one or two employees who do not perform as well as they need to and the advice must be to get rid of the non-performer. He or she might be even your spouse’s kith and kin, but they need to be removed as the costs incurred employing them are three-fold: From the onset, the business is paying someone for underperforming. Secondly, the business is bearing the opportunity cost of not getting incremental revenue from a potential new employee who could be brought in to replace a non-performer. Thirdly, the business is bearing the opportunity cost of other employees having to chip in to cover for a non-performer, thereby reducing their contribution.
- Not firing a prima donna or a disruptive employee
Similarly, disruptive employees and prima donnas who make out that the business is dependent solely on them, need careful management. Communicate clearly that no one is indispensable. As a famous CEO of one of the largest telecommunication companies in the world once said “We don’t need a team of stars. We need a star team”. Prima donnas and disruptive employees can slowly suck the air out of everyone around them. They affect employee productivity and morale. Make it clear unequivocally, that your business is not and will not be built on one or two people!
- Limiting your marketing investments to save money
Many small business firms try to save money on their marketing spend by budgeting for only very limited or no promotional activities at all. It is not enough to promote a business by just releasing a press release, or participating in some exhibition or event, or blasting social media messages to an untargeted audience. In fact, this can be counter-productive. Investment in promotional activities is needed to create awareness before a proposition becomes relevant to the target customer base. Connect the dots and think about this. For the proposition to be relevant, it has to work and considered to be functional by the target market. Rule number one then is not to take short cuts in the design of the proposition. Rule number two: segment the market and target it appropriately. Blasting a communications campaign to all and sundry is just a sheer waste of money and can be counter-productive to your brand image, as most people are annoyed at being slammed with junk mail.
A business wins customer loyalty and repeat business only once its target market is aware that you exist and once they know that the functionality of the proposition works. Your target market has to connect emotionally to your proposition. Keep in mind that the emotional relevance of your proposition only occurs when the experience works or if it is truly functional. Only then can a business think of repeat business. In other words, the business will not grow without sufficient investment in the brand. Taking short cuts only limits a company’s growth potential and might even not sustain it in the long run.
- Saving money by limiting channel incentives
Why would a growing company want to limit the payouts made to its high-performing sales employees? In one case, sales employee incentives were capped at 110% of their expected target delivery. In most companies, 80% of incremental new sales come from about 20% of the sales folks. These are professionals who are driven by their need to be the top earners. But here most of them kept their new prospects close to their chest, as they were limited to the 110% achievement target. Just imagine the potential if this compensation target was designed around 200% or 300% cap on their variable pay. Why even limit the incentives achieved over and above-given targets? A business is only limiting its own growth with this artificial ceiling, based upon some purported belief that top sales performers are not necessarily motivated by their incentives!
There are many other examples of scenarios where managers fail to connect the dots:
- Not putting in place structures, processes and people with clear empowerment, responsibilities and accountabilities.
- Giving limited or no empowerment to key employees.
- Investing in excessively large numbers of people for non-core and administrative support services.
- Making inadequate investments in information technology and telecommunication systems.
- Keeping prices artificially high, based on fallacious advise from accountants, who do not necessarily have a cross-functional view of the business.
- Setting unrealistic margin expectations and expecting higher levels of commitment from customers year on year.
The ability to reflect on an action or decision to consider the implications of that action or decision is the most critical aspect of business management and something that is achieved by ‘connecting the dots’. So remember that just because you keep doing something, over and over, it might not always be the right thing.
Conversely, just because you are not doing something may not necessarily mean you are doing it because it is the wrong thing. It could just mean that you have not connected the dots! As Mahatma Gandhi once said, “An error does not become truth by reason of multiplied propagation, nor does truth become error because nobody sees it”.
JohnLincoln.one –The business growth hacker