Posts Tagged ‘A good business A great life’

A Good Business A Great Life #9: Preferable to all Others

by Jack Hayhow on September 26, 2011

Peter Drucker famously said the purpose of a business is to create and keep a customer.  In order to do that, of course, your business must provide a product, service or experience the customer judges to be preferable to all of the other products, services or experiences currently available.  In other words, you must create a compelling offer for the customer to buy what it is you sell.

A compelling offer has four primary characteristics.  It is:

  1. Meaningful to the customer
  2. Divergent from the competition
  3. Intensely focused
  4. Concisely communicated

Let’s consider each of these characteristics…

Meaningful to the Customer

Since Edward Chamberlin first coined the term “product differentiation” in his 1933 book, The Theory of Monopolistic Competition, marketing gurus have beat the drum of differentiation.  And differentiation is critically important.  But not all differentiation is created equal.  Some differentiating qualities matter to the customer, others don’t.  For example, you might be the only bank in town that has horse in your logo.  That probably doesn’t matter to very many people.  On the other hand, if your bank is open 24 hours a day, that might be meaningful – especially in a community with a large number of night shift workers.

Divergent from the Competition

The second characteristic of a compelling offer is that it is divergent from the competition.  It’s unlikely that what you sell can be completely divergent from your competitors.  But if your product, service or experience isn’t divergent is some significant way, it simply doesn’t provide the customer with a compelling reason to buy from you.

Intensely Focused

The third characteristic of a compelling offer is that it must be intensely focused.  In their wonderful book, Made to Stick, the Heath brothers lobby for focus with this quote from a defense lawyer,

“If you argue ten points, even if each is a good point, when they get back to the jury room they won’t remember any.”

Customers and prospects simply don’t have room in their heads for all of the wonderfulness of your product.  So focus.  Tell them what matters most – emphasize the one thing that is most likely to compel them to buy from you.

Concisely Communicated

Finally, the fourth characteristic – your offer must be concisely communicated.  In the screenwriting trade, this is called the logline, or more commonly, the one-line.  The one-line tells potential viewers what the movie is about.  In his book, Save the Cat, Blake Snyder uses these examples of a one-line:

A cop comes to L.A. to visit his estranged wife and her office building is taken over by terrorists (Die Hard)

A businessman falls in love with a hooker he hires to be his date for the weekend (Pretty Woman)

Your one-line must explain to the customer what he or she gets, and it must do so in a heck of a hurry.  If your customers and prospects can’t easily remember and repeat your one-line, you probably need to keep editing.

If your offer contains these four components, it is likely to be compelling and your company is exceedingly likely to grow… leading to… A Good Business, A Great Life!

I was visiting with one of my friends on the phone this morning.  He told me about a former client, Jill, who had won the lottery.  The after tax payment to Jill was a lump sum of $13,000,000.  Where I grew up, that’s a sizeable lump.

Before I could say, “Yeah, but you know most lottery winners are worse off two years after they win the lottery than they were before,” my friend said Jill had told him the lottery curse was complete nonsense.  Almost 10 years after winning the lottery, Jill and her husband were living fun and fulfilling lives.  They didn’t buy mansions and they didn’t adopt any bad habits.  Each year they harvested 6% income from the $13,000,000 (which according to my math is closing in on $800,000), they traveled and they did pretty much what they damn well pleased.

That story got my friend and I talking about the question:  How much is enough?  How we answer that question has a profound impact on the joy and satisfaction we experience, and perhaps even on the level of success we attain.  My friend also shared some advice from a source he didn’t name (or that I don’t remember).  It went like this:

“Give away the first 10% you earn.  Save the next 10%.  Pay taxes and live on the balance.  If you do this, you’ll never be sorry and you’ll never be broke.”

That simple suggestion and its remarkable promise took my breath away.  Of course, many religions teach the practice of tithing and charity toward others.  And we’ve all, no doubt, received the admonition from one of the many financial gurus to save, save, save.  Both of which are sound ideas to my mind.  But when you add the promise, you’ll never be sorry and you’ll never be broke – somehow that ramps the power of these ideas up exponentially.

What if we followed this practice in our businesses?  What if we donated the first 10% – to the church or school of our choice, to the many wonderful private agencies that serve the disadvantaged, to an incubator for new business start-ups, or to the arts?  And then, what if we saved the next 10%?  What would it be like, after a time, to be sitting on a stack of cash?  Wouldn’t that allow us to weather the inevitable storms?  Wouldn’t that allow us to make decisions based on what was really best for our business – without feeling like there was a gun to our head?  Wouldn’t we feel better about ourselves and sleep a bit more soundly at night?

But then I wonder, what would it take to give away the first 10%save the next 10%?  Do we have the will, the generosity, the courage?  If not 10%, how about 5%?  If not 5%, how about 2%?  Could it be this idea is better than winning the lottery?  I’m not sure.  But I am 100% convinced it is more likely than winning the lottery and that the payoff could be huge!

In 1971 I was 19 years old and freshly promoted into my first management job – assistant manager of the band and orchestra department at Jenkins Music Company.  To this day, I’m not sure exactly what it was I was supposed to manage, because I was clearly the lowest ranking employee in the building.

No Trouble

On the first day of my management career I was called into Jess Coulson’s office.  Jess was my boss’s boss.  He was a compelling, charismatic guy.  He had a huge mane of silver hair and a twinkle in his eye that told you he knew the secret and he just might let you in on it.  Jess smoked cigarettes nonstop, he drank bourbon and milk pretty much all day long and he told the greatest musician stories a kid like me had ever heard.  I was in awe.  So when he called me into his office I was nervous and excited.  Here’s what happened:

He was on the phone when I walked in and his chair was swung around so he was looking out the window.  All I could see was a cloud of smoke swirling around the top of his head.  He spun around, stood up and shook my hand and said,

“Congratulations, Kid – you’re in management now!”

He grinned and his eyes sparkled and I’m sure I stood up just a little straighter.  He looked away for a moment like he was lost in thought and then he turned and locked in on me like I was the only person in the world.  He said,

“Kid, the big guy wants three things and only three things.”

I wasn’t exactly sure who the big guy was but it didn’t seem like a good time to ask so I just stood there.

“The big guy wants high productivity, low costs and No Trouble.  You got that?”

High productivity, low costs and No Trouble.  I got it.

“That’s good, Kid.  Now get out of here.”

I was in Jess Coulson’s office for a total of about 60 seconds.  But in that 60 seconds he outlined the essence of HR.  High Productivity, Low Cost and No Trouble.  For business owners, that’s what HR is all about.

In the 40 years since I stood in Jess’s office, the No Trouble part has become increasingly difficult for employers.  Employment laws are more onerous and courts are significantly more sympathetic to employees’ claims than ever before.  For business owners, legal attacks by employees or former employees have become a serious concern.

The bad news is, there is no foolproof way to protect your business.  No matter what you do, there is still some risk associated with having employees.  But you can minimize that risk by creating an employee handbook.  An employee handbook is the centerpiece of an effective HR program.  It explains your company’s policies and procedures and it communicates your expectations to employees.  A good handbook also helps protect your company in the event of a dispute.

Now the good news – there is a quick and free way for you to create an employee handbook.

In less than 10 minutes and at absolutely no cost, you’ll have an employee handbook with the policies most small businesses need.  And that’s a huge step toward No Trouble!