Why Fox Wears Red

I always wear red. It’s the Fox brand. Its a differentiator. Now Harvard agrees.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Read full Harvard Business Review article here.

Read full paper “The Red Sneakers Effect: Inferring Status
and Competence from Signals of
Nonconformity” here. [PDF]

 

 

Don’t let your success hold you back – It’s time to make some marketing resolutions for the year ahead…

Your business has been in operation for a while. You’re frankly rather successful. For an established business of any size, one of marketing’s biggest enemies is lethargy. Clearly there is value in not fixing what isn’t broken, but markets and clients change slowly over time, and if you don’t stop occasionally to take stock, you risk commercial extinction. A new year gives us all an opportunity to look at our businesses with new eyes.

Walk a mile in your customer’s moccasins

This article was first published in
Your Business magazine.

You may have carefully created a differentiating customer experience when you set out the business, but subtle changes and numerous shortcuts later, your customer experience has in all likelihood morphed into something very different. Be your customer for a day. If, for instance, you run a bed and breakfast, go through the booking and reception process from the guest’s perspective. Have breakfast and sleep a night in the room. Be objective. Is the experience what was intended? How can it be improved? How did your staff handle the process (remembering that they are likely to be on their best behaviour given who the customer is – you!) Make comprehensive notes as you go. Are there areas where service has slipped? Is the business doing anything in an old fashioned way that has been outdated by technology, or become inefficient now the business is a reasonable size? The introduction of novel, up-to-date technology might offer staff efficiencies, but also positions your business as being modern and contemporary. Is your business overspending on any part of the process? Perhaps originally intended to differentiate your business, do these “bells and whistles” still delight your customer or are they just an anachronism?

Fire a customer

I learnt in the second week of my career that one of the most important decisions in business is determining who you don’t want to do business with. Businesses in general and small and start-up businesses in particular are inclined to leap on any offer of an order, even if the customer is less than ideal or the product or service is outside of the intended scope of the business. Clients are not all equal – be objective and determine whether there are some you should donate to your competitors.

Customers worth dumping:

• Simply buy on price and see no value in your product differentiators.

• Have a high risk of payment default. Remember a sale is only such once you have received payment. Otherwise it is called a “gift”.

• Freely pass your pricing information straight back to your competitors.

• Use your product incorrectly creating safety or reputational concerns.

• Have inconsistent off-take; yet expect you to hold high stock levels.

Make 2013 the year in which you focus with greater vigour on those customers with high lifetime-value and stop wasting your time and resources on those who frankly cause distraction.

Reconsider your pricing

Have you maximised your financial and competitive opportunity through pricing? Are you for instance undertaking price discounting “because we always do”; without any evidence that the increased business flows justify the margin cut? Do the calculations again, being objective about how much business such discounts really give you. Remember the significant multiplier effect a price reduction has on a low-net-margin business. I spent a decade in the commodity chemical business where net margins were in the region of 4%. So an average price discount of just 2% meant that sales had to more than double to be justifiable. Do the maths! We’re inclined to be desensitised by the high discounts seen in retail settings. But most retail shops have significant margins and high fixed costs. Shoppers attracted by a sale are also supposed to buy a lot more than they normally would. Do you really enjoy the same return on your discounting?

Reconsider your day-to-day pricing. To learn a quick lesson on pricing, next time you fly ask the person next to you how much they paid for their ticket. Airlines have a unique product: a strictly limited number of seats, a virtually fixed cost per flight irrespective of who is aboard, and a product which if still unsold when the doors close, immediately becomes worthless. They have therefore become adept at dynamic pricing – virtually every ticket is sold at a different price depending on when it is booked. Is there opportunity for you to be much cleverer in your pricing strategy in 2013?

Find one new market

This is classic “Ansoff Matrix” stuff from marketing 101. Find a new market for an existing product, or add a new product to a market you are strong in. Ask your customers about how they really use your products. You may be surprised and they may offer clues for diversification. Be creative and open to new ideas, but remain objective – does a new product make sense? Does it fit with the market and brand positioning of your company?

Learn from Colgate – yes, the folk who make toothpaste, who once tried to introduce pre-prepared meals under the same brand. I am sure the clever marketing people saw some synergy, perhaps “increasing share of mouth”. But it was unsurprisingly an unmitigated flop. The greater risk, however, is not looking closely for new opportunities and just accepting the current state of play.

Make 2013 the year of looking for new viable business possibilities.

Do your housekeeping

It’s a new year and time to do a little spring cleaning. Start afresh. Think about the business as though you are the new owner taking over on the first of January. Clean up your client records. Clean out the product catalogue of those old products you haven’t actually sold in years. Relook your signage – is it showing its age? Are those flags you put up out front in pre-World Cup euphoria looking a little tired and faded? Your website – is it still referring to the upcoming event in July 1998? And does the old photo of the founder in your corporate brochure now look alarmingly like his younger brother?

Add the personal touch

Have you become a little distant from your customers as the company has grown? As companies become larger they become more impersonal. But people do business with people. Is it time to reconnect with your customers? It could be as simple as a plan to phone five important clients per week for the year, or perhaps some form of customer hospitality is appropriate. Most of a company’s value resides in its customer/client relationships, rather than in a unique product or business process. But consider where you spend your time – is it on the folk who pay salaries and make you profits, or is it concentrated on internal processes? Make 2013 the year of looking outward rather than inward and treat those who support your business to a little more of your time and attention.

This could mean getting back in touch with your professional association, or the trade association of the industry your business operates within. Business is social and there are many stakeholders other than customers and clients; look to raise your involvement. Successful businesses are usually well connected and give back to the professions and industries in which they operate. Offer to present at an industry conference, or host an association meeting at your business premises. Sponsor an award. More importantly say “yes” to one or two more invitations to events you get invited to but normally just reject as a matter of course. I can’t guarantee you extra business but I am firm believer in business karma – make 2013 the year to “pay it forward”.

This article was first published in Your Business magazine.