Category Archives: Service

How Do You Expand Your Customer Base? Six Solutions

Situation: A company produces a consumable product which provides its primary revenue stream. They have developed a new delivery system for the consumable that potentially competes with products sold by its largest distributor. As a defensive move, the CEO wants to expand its customer base. How do you expand your customer base?

Advice from the CEOs:

  • Take a lesson from Hewlett-Packard. HP’s primary revenue stream comes from ink, not the printers. They assume that their cartridges will be copied but design a new cartridge for each generation of equipment, with rapid equipment upgrades. By focusing on upgrades to the latest equipment, HP understands that if customers keep equipment for 3 years, they will likely use cloned cartridges.
  • If the company is going to alienate a key customer by selling the new technology, then they are going to be alienated. Don’t let them know in advance until the new technology is ready for launch.
  • There is no reason to alienate the large customer. Once the new technology is ready for the market, ask if they want to carry it. If the equipment is good, they may well say yes!
  • Given the concern about alienating this one large customer, start to develop other customers NOW, not later.
  • Currently the company does not serve the “mom and pop” market. Could money be made here? If they require technical support, charge for this. Use the software market model and sell single hours or bundles of hours of support.
    • Most questions will likely be elementary, as smaller customers will not be sophisticated users. Use current staff to handle service needs at one price. If higher levels are support are required, warn customers that this is more expensive.
  • The work that has been put into the new technology should qualify for the R&D Tax Credit.
    • This credit can be used against taxes payable. This may defer tax liability until the company starts to make money on the new technology.

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Do You Diversify or Stay the Course? Five Thoughts

Situation: A CEO seeks advice on the direction of her company. Her objective is to build a lasting company which is a wonderful place to work. She has a creative group of employees who have suggested options to expand the scope of the company. Should she maintain the current direction or entertain exploration of these options? Do you diversify or stay the course?

Advice from the CEOs:

  • With a solid, sustainable business model and the current level of revenue, diversification is not as important as it was when the company was a fraction of its current size. Current objectives could well be reached by just doing more of what the company does now.
  • The most important question to ask is: “What do we want from this or that option?”
  • Concerning the top opportunity under consideration, the group felt that:
    • It’s not the company’s core business and doesn’t play to the company’s strengths.
    • However, there are aspects of the opportunity that fit both the company and the existing client base. These represent an opportunity that fit’s the company’s culture.
    • Explore these aspects in small steps that do not detract from the current business.
  • If culture is a key ingredient of the company’s offering, how scalable is this, particularly into new markets? Look for ways to grow that are consistent with the strong culture that already exists.
  • Improve selling the full breadth of the company’s offering. The company offers many services that may be of interest to clients, but which are not mentioning in initial sales calls.
    • In sales presentations focus on the client, rather than a detailed description of the service offering. Offer clients a small brochure that covers the range of the company’s services.
    • By focusing on clients’ needs it is easier to selectively mention options that will serve these needs.

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How Do You Keep Your Culture in the Face of Rapid Growth? Ten Points

Situation: A CEO’s company is facing rapid growth. The CEO is concerned that the cordial team culture that he has carefully nurtured will be strained as the company adapts to this growth. The present culture is characterized by lack of politics and truthful, frank communications. How do you keep your culture in the face of rapid growth?

Advice from the CEOs:

  • The company currently markets its culture, complemented by a solid history of performance. Clients receive highly personalized service at a competitive cost. This combination attracts and retains clients.
  • The company’s employees are a happy, competent group that enjoys what they are doing. This differentiates the company from other firms all by itself.
  • Identify the key attributes of the company’s culture. This will simplify internal and external communication when discussing what makes the culture special.
  • Use one several tools available to develop behavioral profiles of the current employees. This will help to understand how team members interact with each other. It will also help to build profiles for ideal additional employees as the team expands.
  • Hire an expert do a formal evaluation of the team around individual and group dynamics, as well as bottlenecks in the current structure and culture. This will help determine how scalable the company’s current culture is.
  • Grow at the rate the company’s culture allows, not at the rate that salespeople bring in new business. With gradual, careful growth size will less of an issue as it would be if the company were to simply grow as fast as possible.
  • The more the company grows organically – through additional business from existing clients – the fewer additional clients the company needs to meet growth objectives. This means adding fewer new employees to maintain target client/employee ratios.
  • If the plan is to grow larger, consider growing around core groups of 9-12 employees, perhaps in distinct locations with good communication between the groups. In the military, operating groups are 9 to 12 soldiers; the more specialized and highly trained the group the more it tends toward 9 soldiers instead of 12.
  • There is a Zen saying that a healthy tree grows as tall as it can. Use this as your guide.
  • The key role of the CEO is as CCO – Chief Culture Officer!

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How Do You Best Test a New App Online? Five Perspectives

Situation: A CEO has a new app that her company wants to test online. The principal challenge is avoiding a “catastrophic success” – success that ramps so quickly that the company is unable to deliver the quality or responsiveness expected by users. How do you best test a new app online?

Advice from the CEOs:

  • The challenge is similar to that faced in the massively multiplayer game space.
    • Creators target a small number of known enthusiasts (sneezers) with the message that they are special. The creators ask them to preview a new game and provide feedback that will help the creators produce the best game possible.
    • Never apologize for an Alpha or Beta test. Let enthusiasts know that they are getting the first peek at what will be the greatest thing since sliced bread. Enthusiasts will tolerate Alpha conditions – as long as the company responds quickly to their suggestions for service or performance improvement.
  • For initial live tests hype the coolness and uniqueness of early availability and adoption.
    • Don’t lower expectations – manage them by responding very rapidly and fixing any glitches. This is why Web companies are 24-hour, eat and sleep in the office affairs during launch and for as long post-launch as needed to assure success.
    • Continually hype the coolness of being involved early.
    • Use the current version as the early test. When the company is ready to spread beyond the very first users, reward them for sneezing the app to other users.
      • For example, as a Beta Testers, users get 10 free 1-year plug-ins to give to their friends. For each additional user that they bring on-board, they get an additional 10 free 1-year plug-ins.
      • This technique supports the coolness of having been a Test participant because it makes the participants cooler with their close circle of contacts. The really smart ones will give free plug-ins to other sneezers and influencers. Reward this latter group for bringing on additional users.
  • Using lessons from the gaming market:
    • Shake out all issues pre-Alpha Test.
    • Conduct automated testing of the software via server farms that are set up for this.
    • Be prepared for upgrades – both in the software and in the server farms. Typically upgrades are conducted while the software and systems are live.
    • Create test localities to pre-test any upgrades to assess the impact on performance and service prior to deployment. This minimizes disruption to the broader audience.
    • Recruit, alert, and reward those who assist with these tests.
  • It is possible to conduct an unsophisticated Alpha Test, but this can’t be risked in Beta Tests.
    • Alpha testing is usually conducted as an internal exercise and lasts until all of the bugs have been identified and worked out.
    • The Beta test is then planned, with a known number of sites or users.
  • Concerning IP Protection:
    • Threats will come from two sources:
      • The iTunes types who may perceive the new offering as a threat to their markets – ones with deep pockets to keep the company busy defending its legal position.
      • International teams who rapidly clone any new technology that they find for a variety of motives. These groups tend to work from locales where IP protection is difficult to impossible.
    • IP is not secure until tested in courts. Often this involves the most innocuous aspects of the IP or software offering. In addition, big players may seek injunctions to halt service until courts resolve claimed IP conflicts.

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How Do You Establish the Company’s Brand? Four Approaches

Situation: A company has developed a leading local position in an important new technology. The CEO is concerned that the company’s suppliers may try to move into their market and replace them. What’s the best strategy to counter this threat? How do you establish the company’s brand?

Advice from the CEOs:

  • Exhibiting high growth is the company’s best shot – whether to preserve exclusivity in the company’s geographic area or to build the company’s brand. Aggressively build the company’s service presence to build a sustainable advantage.
  • The primary question is – What is the objective? The objective is to build the company’s own presence and brand.
    • What would happen if another, better technology was launched? Wouldn’t the company want to offer this?
    • Think Web 2.0+. Build the company’s website as the place to go to discuss the technology, share thoughts, designs and software, and easily source prototypes – provided by the company. Let users define the site and the market for the company.
    • The bottom line: exclusivity may not be in the company’s best interest if it inhibits access to the best technology. Strive to build the company’s brand instead and be opportunistic on the exclusivity issue.
  • What markets have gone through similar development? What can you learn from them?
    • Document other rapidly changing markets. Hire a current undergraduate or MBA student to research how these markets have developed.
    • Select a target vendor with multiple locations and do a deal with them to locate your technology and service in their locations.
    • Look at a franchise for which the company’s technology is a compliment and see whether franchise owners are open to adding the company’s technology in their locations.
  • Does the company have a partnership strategy? How can they accelerate strategic development?
    • Where is the place to focus?
    • Who is the perfect partner for this focus?
    • Identify the most promising markets and use partnerships to accelerate penetration of those markets. Write partnership agreements so that once an area is developed the company has the option to take it over. This is a classic market development strategy.
    • Give away some of the company’s margin to partners in lieu of salaries or commissions to support market development.
    • Look for partners in key locations in the company’s territory. Do a demo at a Starbucks where engineers like to hang out.
    • Hire a sales or business development person to work on partnership development.

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What Are Good Metrics for a Service Company? Four Recommendations

Situation: A service company has been debating internally about which metrics they should use to evaluate company performance. This is important because it ties both to strategy, marketing, and bonus compensation. The CEO seeks advice based on the experience of others. What are good metrics for a service company?

Advice from the CEOs:

  • For a service company the key goal is delivery of a consistent quality product/service to the customer – as a company rather than as individual performers.
    • Instituting regular activities or meetings to infuse the company’s “special sauce” to projects will help assure consistent quality of service delivery.
  • To generate support and consensus within the company, ask employees what they would do to develop metrics to assure delivery of quality.
    • Have a clear view in mind of what the metrics should achieve – the result rather than the fully detailed process – before initiating this exercise and articulate this result as the desired objective.
    • Remain open to ideas from the group.
    • Use the exercise to establish a shared vision and to generate the best possible set of metrics to support the desired result.
  • Once both the metrics and a methodology for delivering the result have been selected – for example, weekly performance review meetings if this is the answer – then institutionalize these. It may be best to start with a “trial process” to refine details of the process.
    • An efficient regular process review meeting may save the company more than the 3 hours that it takes (preparation + travel + meeting) for this process.
    • If there are many “islands” of employees working at different company locations, consider organizing meetings into geographically convenient archipelagos.
    • Establish, within the service review process a “patented” company process that focuses on quality delivery. Publicize the existence of this process (not the details) when speaking with existing or potential clients. This is a key part of the company’s essential differentiation and “value add”.
  • Establish a definition of quality for the company.
    • Develop this as the company’s vision.
    • Develop the methodologies to consistently deliver this quality.
    • Long-term, drive this to professional training systems to consistently produce this quality.

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How Do You Expand Your Large Client Base? Six Strategies

Situation: The CEO of a service company sees that 20% of their business is serving large corporate customers. These accounts have proven to be more profitable than smaller clients. Their objective is to increase the large corporate client base from 20% to 60% of their business. How do you expand your large client base?

Advice from the CEOs:

  • Emphasize the differences and unique talents of the firm in comparison with the competition. Trust in the company’s abilities and act like a big-league firm.
  • Top shelf prices for services are not an issue for large clients; in fact, they expect quality firms to have high prices. Find the “clinch” price – where the client says, “you’re expensive, but because of your special talents you’re the firm that we will choose.” Compliment this with the firm’s ability to utilize lower cost outsourced services to offer an appealing overall cost of services. Clients will pay a premium for top shelf when they need it but will like the fact that routine needs can be met within their budgets.
  • Use the lessons from Blue Ocean Strategy to create advantages for the company’s services that existing firms don’t or can’t offer because of their structures and cultures.
  • Highlight the company’s high-touch culture, with great personal service. This provides a welcomed relief from the typical client experience with service firms.
  • Create buzz around the company’s leadership. Focus on speaking opportunities. Enhance the references to the company’s leadership on the company web site, including a listing of upcoming speaking engagements that are open to potential clients or individuals interested in the company’s expertise.
    • During speaking engagements to local groups on topics of high interest, build an educational library of edited flash content that hits the high points of the talks – not the full talk, but the most important 2-3 minutes on a given topic.
    • Add a library of these short videos on the company website.
  • By charging premium prices for select services, while sourcing research and expertise from personnel in lower cost geographies, the company will generate additional profit. Allocate some of these profits to community outreach to further enhance the company’s reputation and buzz. Be the firm that gives back.

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What is the Best Way to Roll out a Business Opportunity? Six Suggestions

Situation: A CEO is reviewing options for introducing a new offering. The target customers are small companies or projects within larger companies. The offering includes both an initial product and follow-on services. Education or training will be a component of the offering. What is the best way to roll out a business opportunity?

Advice from the CEOs:

  • It is best to position the offering as a straightforward proposition at launch and develop proof of concept. This will provide experience and an income stream to fund more complex offerings based on the initial model.
    • It will also provide insight on how to sell the product and service in different markets – manufacturing, service, and software.
    • Leverage this experience to pursue more complex models.
  • Build a portfolio of case studies before pitching to paying companies.
    • Use companies with whom relationships already exist as the proving base. These will become references for new clients.
    • Develop data to show actual cost savings from the use of the product and services.
  • Establish a relationship with an existing company for which the offering is complimentary and cross-offer products and services on an ad hoc basis.
    • Trial the product and service with one of their clients in return for a royalty or share of the profit.
    • Ask that company to make the introduction.
  • Target start-ups – offer an initial package for a low price. Offer the product to start-ups for free and get them hooked as long-term customers.
  • What would be needed to roll the offering through growth equity firms or venture capitalists?
    • This will require some proof that the offering increases the ROI to growth equity and VC portfolio companies and funds.
    • Note that the portfolio companies of growth equity firms are larger and farther up the growth curve
  • In current economy the key message to prospects may be that the offering will help them to “right size” their company.
    • Take a closer look at the offering and determine whether it is configured appropriately for the current environment.

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How Do You Optimize Your Sales Organization? Seven Points

Situation: A company currently has inside and outside sales teams, and coordinates efforts with SalesForce.com software. Their strategic initiatives are to double inbound leads, create a triage approach to new leads and to lower the cost of sales. How do you optimize your sales organization?

Advice from the CEOs:

  • When outside sales claims that they have limited band width, it is necessary to find how they are spending their time.
    • If they are not spending most of their time developing and closing sales, adjust the system so that they are concentrating their efforts in these two areas.
  • Decide what the sales teams are selling – set up the organization so that it complements the sales goals and objectives. Below are alternatives used by others.
  • One company has evolved “product managers” who are like sales engineers but more experienced. They are highly paid and highly skilled. They are business oriented, with good communication skills, well rounded, and have successfully closed sales.
    • In contrast, the role of this company’s “salespeople” is to follow up. Lower level salespeople are tasked with generating leads for the product managers
  • Another CEO observed that what the company has done up until now all has worked well. The question now is how to mature their system?
    • This company’s solution has been to use outsourced Inside Sales Support (ISS) based abroad to find prospects.
    • ISS personnel are teamed with and managed by the company’s salespeople. Salespeople develop their own system. The ratio is  1/1, but outside personnel are ½ time for each salesperson.
    • This allows the company to reduce services quickly if they become overwhelmed.
  • A third company uses a 3-tier system:
    • Prospect development.
    • Inside sales for lead evaluation.
    • Outside sales – get hot leads from inside sales, develop, close.
  • Consider this alternative: instead of a shotgun approach, target three accounts – Elephants. One company did this with an intense 6-month focus. The President and CEO drive these sales. The result: they have closed one, one is pending, and a third is likely to close.
  • Another CEO observed that the essential issue appears to be an efficiency problem.
    • Too much of the outside sales time adds limited value to marketing or the company.
    • Redirect their efforts to hunting.
    • Once an account is closed, sales is out of the picture. The customer transitions to the customer service organization for additional sales and service.

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How Do You Price a Product and Service? Five Approaches

Situation: A company offers a product combined with a service. Small companies can’t afford the combined price, but don’t need the full functionality of the combined product plus service. An option is to create an offering on a per-seat basis. In this option, how do you price seat utilization? How do you price a product and service?

Advice from the CEOs:

  • Pricing needs to follow value. For large companies, functionality and seamless operation are key. Small companies have different challenges – they have less money and don’t need all the features required by large companies. Configure a limited product for this market.
  • Don’t de-feature the product – create a different use / pricing model. Consider a model that prices based on the user company’s revenue, with periodic review of their revenue and fees paid. As they grow and increase utilization, they increase their ability to pay for, and their need for full utilization.
  • Use a cloud model and create a “pay per amount of use” option. Limit this offering to X number of users or X number of projects to create a different product from the full license option. While this will require monitoring, it will differentiate the partial license option from the full license option.
  • Develop an alternative to what is offered by the chief competitor and create an offering that this competitor can’t compete with.
  • Before making a final decision, institute a formal process for collecting ongoing feedback from customers. This will help to clarify alternatives going forward.

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