Steve Kaplan's Blog

June 17, 2011

Why Customers Buy

Filed under: Steve Insight — stevekaplan @ 7:02 am

By identifying the real reasons your customers buy what they buy, you’ll be able to tailor your selling proposition (the “why” they should buy) to each customer base.

First, of course, you need to know which category your customers fit in. Say you’ve never even thought of categorizing your customers. Well, what are you waiting for?

I divide customers into 4 categories. Remember that no category is inherently superior and that customers can shift from one category to another: A quality seeker at Macy’s might be a price seeker at Blockbuster and a satisfaction seeker at Joe’s Pizza Parlor. When customers decide whether to buy something, they are often motivated by more than one need.

To discover what motivates your customers:

Know your categories. Read and understand each category definition (in the next  post), especially the buzzwords and what each type of category is thinking.

Gather intelligence. Ask your customers why they buy. Develop a simple two-or three- question survey your sales or customer service personnel can use. Depending on your type of business, ask customers to rank their priorities: price? quality? style? selection? safety? If yours is a B2B, ask your salespeople to fill out the information based on their knowledge of customers and their purchases.

Get out and observe. There’s no substitute for your own eyes and ears. Walk your retail space; talk with customers; join a company call. Ask for opinions on how you’re doing and how you can improve. You’ll be surprised at how much people want to help you.

Once you know what they’re buying and why, you can generalize by putting customers into the four basic categories of need.  Next post: the Four Categories of Customer.

May 27, 2011

The Ten Second-Rule

Filed under: Tips — stevekaplan @ 1:16 pm

…Not just a food-safety strategy, but a way to keep your cool.

Make it a practice to pause for ten long seconds before you react to new information, whether positive or negative- employee complaints, unhappy clients, potential big contracts, or anything else.  This grace period helps ensure that your responses are well considered.  It also trickles down to the employee, who may emulate your behavior and respect you for assessing the news carefully rather than flying off the handle.

Not long ago I was sitting in my office after a three-hour client negotiation, my head threatening to explode and my patience worn thin enough to see through. Suddenly, an employee burst in to announce that she had a brilliant idea: Turn off all the office lights for 15 minutes twice a day. She thought it would be a great way to relieve stress; I thought it was a great way to make us the laughingstock of the industry.  Still, I resisted the urge to reject her idea as ludicrous, and, most likely, offend her in the process.  Instead, I left the room to compose myself- for a whole series of ten-second pauses. When I returned, she proceeded to elaborate on the theory behind the lights-out proposal, I politely suggested that as intriguing as her idea might be, we just couldn’t risk losing thirty minutes of productivity a day, especially since we were growing like crazy and could barely handle things in the time available. Rather than leaving in a huff feeling berated or belittled, she saw my point and left feeling good about herself and  her role in the company. She also appreciated having face time with the person in charge.

May 18, 2011

Excel During Adversity

Filed under: Tips — stevekaplan @ 11:36 am

This is my fifth of my five keys to leadership.

Excel during adversity. It’s easy to be a strong leader when everything’s growing according to plan, but what do you do when the business environment hands you a lemon? Do you head for the door? Scream at your employees? Or do you roll up your sleeves? When handled properly, adversity can bring your team together in ways that winning never could.

For instance, suppose you’ve just learned than an employee stole from you or your biggest client took a walk. Here’s how you should handle it:

Remain calm. The entire company is watching you and will take its cues from your initial reaction. Keep a cool head.

Stall. Whatever the bad news , you need time to craft an appropriate response. Make clear that you’re troubled by the news and intend to make the matter your top priority. Then act.

Dig. In all crises I’ve faced, the bearer of the bad news rarely knew the whole story. If a client is bailing on your company, for example, find out exactly why. Perhaps the client is merely flexing his muscles over a disagreement with one of your employees and can still be saved. If not, you’ll still need to explain the situation to your employees.

Analyze. After you have all the facts, consider them from as many angles as possible. Put yourself in the shoes of whoever is unhappy or causing your trouble.

Plan. Now develop a plan of action. Is the client truly thinking of leaving? Suppose you learn that this client ran roughshod over your employees. If you still need the business, then find a way for the client to save face without disciplining employees who may have done nothing wrong.

Execute. After choosing a course of action, implement your plan.  When you call the client back, be deferential.  Let her know that you looked into the problem and removed the employee in question from the account.  That will make the client feel valued.

Communicate. Once you’ve decided what you’re going to do, inform everyone who needs to know.

May 17, 2011

Maintain the Homefront

Filed under: Tips — stevekaplan @ 11:30 am

This is the fourth of my five keys to leadership.

Maintain the homefront. Nurture and support employees’ personal lives. No, I’m not suggesting that you run a dating service- just share the wealth a little and do what you can do to make your employees’ home and social lives easier. Once in a while, spring for an inexpensive lunch. Plan for an open house for employees, suppliers, even clients. Let your employees bring a spouse or date to holiday parties; excluding significant others can generate animosity toward the company and stress in the home.  When in doubt or under budget constraints, opt for less extravagant but no less inclusive celebrations.

May 16, 2011

Be Approachable

Filed under: Tips — stevekaplan @ 3:25 pm

This is the third of my five keys to leadership.

Be approachable. Whether you have one employee or one thousand, it’s a huge mistake to isolate yourself. Every Monday, I would wander down to the mail room and strike up a conversation with Phil, the mail room clerk, about sports, weather or current events- just small talk. Phil’s job took him to all departments, all employees. He was very social, turned into the pulse of the company; everybody liked him and enjoyed chatting with him.  I enjoyed Phil’s company too, but aside from that, I learned more about my employees’ concerns during those impromptu five minute sitdowns than I ever could from an hour-long meeting with my managers. What Phil knew about the concerns of the rank and file simply would not have filtered up the management chain on its own.

I once asked a renowned Chicago surgeon the secret to his success. His answer: great pizza. He knows that even the best  surgeon in the world wouldn’t get far without a crack team in the operating room, particularly first-rate nurses. So every month, he orders pizza for his entire staff. In December, he throws them a lavish holiday lunch. The rewards come back in spades. Nurses claw over one another to work with him, and he’s the one surgeon who has no trouble getting overtime help.

A little goes a long way. I’m always amazed at how much mileage you can get from a dozen doughnuts, a five-dollar box of chocolates, or letting an employee go home early once in a while.

May 5, 2011

Be Consistent

Filed under: Tips — stevekaplan @ 11:47 am

This is the second of my five keys to leadership.

Be consistent. Your employees need to know what to expect from you. If you’re rational one day and volatile the next, or if you change the rules of the game without warning or apparent reason, those you’re trying to lead may become confused and ineffective. Being consistent calms the anxiety that builds up under pressure of growth. If they know how you’re going to react, they can adjust their actions to meet your expectations.

How are you consistent? Or better yet, what have been the consequences you’ve faced for being inconsistent?

May 4, 2011

Lead by Example

Filed under: Tips — stevekaplan @ 12:45 pm

This is one of my five keys to leadership.

Lead by example: Your employees will take their cues from what you do, not what you say. If you demand long hours, yet walk out the door at noon, how seriously will people take you? When I was running my businesses hands-on, I often left e-mails or voicemails for employees after midnight and on weekends. I also let it be known that when I wasn’t at work, I spent plenty of time with my family. They got the message- and soon followed my lead. The result was a culture of hard work in a family environment.

Leading by example goes far beyond the hours you keep; it defines your company’s personality. Do you treat your employees with respect or suspicion?  Do your employees hear you working out how to best serve your customers or how to chisel a few extra bucks out of them?  Do you make fun of employees behind their backs or praise them to their peers? Do you follow up on your plans and orders or issue and forget? Do you keep your promises or look for loopholes? Your employees, for their part, will mirror your tone and demeanor when interacting with other employees, clients, suppliers, and customers.

How do you lead by example?

May 3, 2011

Five Keys to Leadership in a Growing Company

Filed under: Tips — stevekaplan @ 9:19 am

Entrepreneurs, almost by definition, are driven, but the truly successful are those who motivate and inspire others to push beyond their limits. From my own experience and that of other successful leaders I’ve known, I’ve distilled the following keys to effective leadership during times of company growth. Although leadership styles may vary, following these precepts will keep your train on the tracks.

1. Lead by Example

2. Be Consistent

3. Be Approachable

4. Maintain the Home Front

5. Excel During Adversity

Over the next few days, I will elaborate on each of the five keys to leadership. These 5 leadership precepts are CRUCIAL to running a company, and I hope you find these tips helpful.

Anything you think I’m missing? How do you lead effectively?

April 19, 2011

Effective Business Proposals

Filed under: Tips — stevekaplan @ 2:42 pm

The Business Proposal. A crucial part of landing the deal you want. This is not something you want to  brush off. A few tips for effective business proposals:

To maximize your chances of preselling your product or service:

  • Submit your proposal in the format your prospect prefers. If the prospect prefers a certain way- and takes the time to specify it- take the hint, and do it that way.
  • Use the prospect’s terms and language. This will position you as an insider. Listen to everything that’s said when inside the prospect’s business.
  • Submit your proposal without delay.
  • Archive successful proposals electronically as templates for future proposals.
Include the following essential information that must always be included:
  • Strategic Fit. Why is your product or service the right fit for the customer? Ideally, use information gleaned from the prospect.
  • Products or services to be provided. What do you want the prospect to buy from you?
  • Pricing. What will you charge? Include cost analysis or other information, if relevant, to justify the price.
  • Timing.  Which crucial items are needed, and when?
  • Contact Information. Who is the contact at your company in case the proposal is passed to others?
Good luck.

April 11, 2011

Growth Strategies: keep it simple

Filed under: Steve Insight — stevekaplan @ 11:48 am

When thinking about growth, many businesspeople equate “complicated” with “powerful.” This is a beginner’s mistake. Over the years, I’ve heard, seen and studied many plans for growth, and the best plans are usually the simplest ones. Complexity in planning is often unnecessary, sometimes even counterproductive.

In my direct experience- which includes tons of business growth and, yes, a few disasters as well- there are two, and only two, possible growth strategies:

1. Vertical Growth. Focusing on your current customers and getting them to buy new products or services.

2.  Horizontal Growth. Finding new customers to buy existing products and services.

Below is a bit more information about each strategy. If you want to learn more about these strategies, check out Be the Elephant, here.

Vertical Growth Strategy: these tactics will help you identify new offerings for your business:

1. Sell more of the same products or services to existing customers. Consider hiring more salespeople or changing your sales policy or commision structure to motiavate your sales team.

2.  Extend your line to offer current customers a new product or service that either complements or upgrades a product or service you’ve already been offering.

3.  Develop entirely new products or services to appeal to your existing customers’ demographic and psychographic profiles.

Horizontal Growth Strategy: These are two manu options available. Keep in mind: you must be prepared to modify your product line to suit your new target customer’s needs.

1. Expand the geographic reach of your business, but sell the same product. In other words, you’re looking for the same sort of people, but in a new neighborhood, state or region.

2. Sell to different types of customers in the same geographical area.

That’s all for now.

 

 

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