Using social media to create desire.

Social media is here and more prevalent than ever. Everyday more and more businesses make the decision to go “social. If your planning on going social ask yourself and your business a few questions:

What do my customers want? Do they want to learn more about the services I offer, or do they want to be updated on weekly deals etc.

How can talking to them through social media help solve problems? Can they be used to help improve your business. Starbucks uses crowdsourcing (more on this next week) in the form of an independent website.

What venue of social media do I use?  Foursquare? Twitter? Facebook? Blogging?

If I communicate through social media am I building loyalty or destroying it?

Make sure your aware of the responsibility that comes with going social. Seth Godin talks about permission marketing for when people join your facebook group or give you their email to use – they are giving you permission to talk to them. Don’t waste it and don’t overdo it. Over-spamming someone’s email with non-relevant information will ultimately result in your customers unsubscribing. Not updating or providing relevant information weekly/ bi weekly results in wasted potential.

Lastly as a small business owner with limited resources – choose to start with one venue. Don’t do them all, do one of them really well. If you blog – know what you’re blogging about and how it’s relevant to your customers. If you’re using foursquare set up a scavenger hunt to build loyalty etc. Just stay committed to doing one of them really well and once you own one platform, then spread among the other social media platforms.

Question of the day. What social media platform do you personally use?

Always keep asking questions

Of all people, from all walks of life – it’s the entrepreneurs who question things and take action to improve them. Entrepreneurs are the employees and self-employed who constantly question if there are more efficient ways of doing things, they are those who challenge the impossible with action: like this guy, and this guy. Look at an entrepreneur and you’ll see someone with a passion for the unknown and a need to question and improve it.

The reason we choose to build great companies is because we want to achieve the impossible. To build on earlier models, to make them greater and more efficient, to leave our mark on society (hopefully in a good way). So we create things like the razor-blade model of business or a chain of highly successful discount stores.

Once a business forgets to ask questions it falls towards mediocrity, and mediocrity has an infallible force. Businesses start with a vision from the founder(s) to build the impossible and to turn the impossible into reality. Unfortunately many companies continue to do what worked really well for them in the past, sometimes they realize their mistake and sometimes they don’t. It’s why IBM wasn’t the first to build personal computers, or why Henry Ford lost market share to GM and Chevrolet - “Any customer can have a car painted any colour that he wants so long as it is black”.  Customers clearly wanted more variety.

Never forgot to ask questions. The moment you and your company forgets to ask questions is the moment you begin to be mediocre. It’s why many of the fortune 500 companies from 1955 are no longer fortune 500 companies today.

Ask questions. Never settle with mediocre.

You’ll find there’s money in complimentary goods

King Camp Gillette is widely credited for innovating the razor-blade model, in which he would give drastically reduced razors in order to sell the highly profitable blades. Other businesses like Microsoft and Sony have recently adopted this in giving away their gaming consoles at a loss in order to gain money from loyal customers in the form of future online subscriptions.

Small business owners should be forced to think about the razor-blade model, and should be asking themselves how can they create new services or offer complimenting products that improve their current business model?

Do free consultations bring in more customers?

Does giving tonic away for free with the sale of gin – sell more gin?

Does creating a story behind artisan jewellery, and giving it away for free increase sales? 

Take a good look at Gillette and ask yourself how the razor-blade model can help you.

What your customers will tell you

In continuation to my last post I want to give an example of what your customers can teach you.

In 2002 McDonalds reported its first quarterly loss (347.8million) in 47 years. The board wasn’t impressed – so they brought in Jim Cantalupo, a recently retired McDonalds Exec. Jim understood his customers values and interests and more importantly, he understood that they constantly changed. He needed to know who his consistent and heavy users were and why they chose McDonalds.

For a long time – McDonalds was focused mainly on children. Advertising happy meals with cool toys inside. Hell I remember getting my first toy, a cool character out of Aladdin.  Parents went to McDonalds because they could relax and connect with their children. Mothers would generally choose not to eat very much, maybe pick a fry here and there – but often chose to go hungry because connecting with their children outweighed the cost of not eating.

In 2002 children were still essential to the success of McDonalds but now there was more to it. Under Jim’s direction McDonalds decided to learn more about their customers by sitting down and getting to know them, by interviewing them while they ate and by asking them questions. Jim and his team found out moms hold the power of choice. In fact, mom’s were more likely to exercise their veto vote in 2002 because of the growing number of food options available. A family that was going to McDonalds twice a week was now only going twice a month.

Why? Well McDonalds didn’t really offer any food that wasn’t for lack of better term “dirty”. With growing concern of health and wellness in society and among the minds of mothers – one can understand why McDonalds would start to take loses. Under Jim’s direction McDonalds started to introduce their healthier eating options – the salads. In the 12 months Jim acted as CEO McDonalds saw tremendous results – all because he chose to learn more about his customers.

What can you do to learn more from your customers?

The secret to customers

Listen to your customers. Interview your customers to find out why they buy what they buy. What are they giving up to buy your product or service? Are they trading up or down?

Understand that many of your customers will be buying from you for different reasons. But it’s impossible to know this until you reach out and talk to them. Reach out and ask your customers and maybe you’ll discover a thing or two your business can improve on.  

Give your business personality.

Ask yourself - How much personality does my business have? If your answer is matching shirts and stylized name tags – there is a lot of work to be done. Personality is important and it is what stands between your business and potential customers. Whether your on a main street or competing with 100’s of other online businesses – personality is essential.

BookPeople is a small bookstore that does just this – they have tons of personality. They use their website to communicate that they’re a small business and can be trusted. It works for them because they aren’t trying to be huge. Dig a little deeper and you’ll find that store itself has so much personality to it. The children sections have collages of “I’m Bored” put up on walls with puppet hats and masks hanging around.

They have an old antique stove where the cooking section is, and old barber chairs to sit in if your looking around in sports or technology. They’re competing with bigger book stores because they’ve developed themselves into a landmark. Book enthusiasts all around Texas flock to BookPeople for readings and autographs. Customers are encouraged to stay, read and spend entire days looking around – and it all comes from their personality.

 

 

Use the success of Bookpeople as an example, and question the personality of your business, ask yourself what are you trying to communicate? Why are you in this business?

Being boring and mediocre is easy. Giving your business a personality and keeping it is difficult. You need to be committed to your position and the personality of your business, but the moment you start doing this – customers will think of you first.

Be conscious of the prices you set. Don’t Discount.

We live in an age of discounts. There are herds of people who call themselves thrifty and wait until things go on sale. Thrifty does exist, but a majority – if not all of the things we buy discounted are cheap. And this is ok for many of us, we expect inexpensive things to fall victim to holes, or inefficiencies – but it was cheap so we buy a new one.

This is one big problem. Our society is causing the the destruction of small businesses in the pursuit of bigger mega conglomerates like Wal-Mart or Target. Cheap is best we say. Here’s why we don’t win with lower discounted prices.

Wal-Mart currently employs 2.1 million people worldwide, and that’s not even mentioning the people who rely indirectly on Wal-Mart – like the manufactures. That’s nearly 2.1 million people who make minimum wage and/or just above it. These people have no where to shop other than Wal-Mart. The manufacturers that rely on Wal-Mart pay less than $4 a day to their employees. Wal-Mart is directly responsible for putting millions of people into poverty. Now lets see how in the 2008 recession – Wal-Mart won. Emek Basker found that for every 1 percent decrease in personal disposable income, Wal-Mart revenues increased by 0.5 percent. During the recession Wal-Mart announced a 6.1 percent rise in sales.  

Because of our societal tendency to buy the cheap, we love Wal-Mart for what they offer, but they are actually destroying expertise. We’re losing small-business expertise because it is impossible to compete with those deep discounts. We’re trading in expensive well-made expertise for highly discounted junk.

And the worst part is. Only about 1-2 percent of items that the public knows the prices of are discounted heavily. 1/3rd of the stock Wal-Mart carries is higher than average prices. And the average savings on the rest of the stock is 37 cents. With 1/3rd of those items carrying a savings of no more than 2 cents.

Here is the distinction I want to make. If your a small business – recognize your expertise. Own it and position yourself this way. Use your superior customer service skills to get ahead. Don’t discount it. High quality services and products are rarely discounted – so show people that you are in a different league. Do not try and compete with Wal-Mart’s low rates.

As a small business you need ways to promote yourself in your local community. All it takes is a little experimentation.