… In which we examine how our customers search for value while avoiding risk and how we manage their expectations whilst avoiding the guidance of idiots.

GOOD VALUE

I have done a lot of work into why people buy things and what they buy, and while this book is in no way a business or sales grimoire, it may not be a bad idea to understand what might provoke people into giving us money. What people buy is value. They will not part with their hard-earned cash until they perceive value.

You may decide to become a business expert and offer to improve the sales performance of your potential client. The offer may be that on a turnover of £500,000 you could guarantee a twenty percent increase after training the sales team. That would be an increase year on year of £100,000 and your fee for the programme would be a mere £20,000. Surely then, on the face of it that represents excellent value? But here’s the rub: most of my sad “it just didn’t work out” and “I couldn’t find any work” people had very similar propositions and failed to make anything of them.

Let us return once again to Cyril Spoggins: what held you back from signing up for the services of the Reading Amateur Surgery Club? Let me define here exactly what value is. The secret cabal of global business gurus put forward this formula:

Possibly the value-containing product may be a new car so let’s replace value in the formula with a Ford:

Maybe the benefits are all the things you would expect from a Ford car:

The cost may be £20,000 but a garage may offer it to you for £19,000 so now we have:

This, if everything else is the same, is a better deal. The customer loses nothing and saves £1000.

Same car, same price, but an extra benefit.

Now the benefits are becoming emotional and are getting tricky.

Before we look at that we could also have:

Same price, same benefits, but a higher perceived value car – therefore a better deal.

They Just Don’t Want to Risk It

There may be a car the customer’s heart likes better. The problem for us a little way down the line may be that we have identified our potential customers; we have identified a need (surely everyone can see the logic of improved sales); we have approached them and quite frankly they have firmly decided that they don’t want to do business with us. They don’t want to give us their money and they want nothing further to do with us. Well, for you to succeed WE HAVE GOT TO PUT A STOP TO THAT. The old cliché is that our customers are voting with their feet and they are voting not to do business with us. Let us then throw another formula into the pot for us to consider. What customers actually want is: MAXIMUM BENEFIT WITH MINIMUM RISKS

In other words no matter how much Cyril Spoggins piles on the benefits of his surgery, the perceived risk is too great. What risk is it that your potential customers can see that is keeping them from doing business with you? More to the point for us is what perceived risk, real or imaginary, is it that your potential customers can see? Maybe you make wedding cakes. I am sure you believe that the key is to make deliciously unforgettable and beautiful wedding cakes. The problem is that until the customer’s wedding day has come and gone they do not discover the truth of your brilliant excellence. All they can see is risk, the risk that you will clear off with their money; the risk that you will fail to have the cake ready for the big day; the risk that the cake will look awful; the risk that the cake will taste awful and give everyone food poisoning.

LET THEM SEE THE EVIDENCE

Reflect for a while, forget your current plans, and imagine you are starting the wittily named ‘Ends in Tiers’ cake company – remember ‘starting’. What will the happy couple think when they find you or you approach them? Address all of those perceived risks and deal with them.

Here is a little bit of help: it is no good making promises or giving verbal assurances because they won’t believe you. Even money-back guarantees can be a bit dodgy – a bit of cash back for a cake disaster does not save a ruined special day. You have to convince with evidence and it must be the evidence of the customer’s own eyes. In just the same way no one wants a cheap surgeon, no one wants a cheap special day. That doesn’t mean that as a one-person band we can’t offer fantastic value. Great value is not the same as cheap.

Marketing is going to be something we are going to have to deal with, but for now I would like to disassemble a couple of marketing clichés. One is ‘exceeding the customer’s expectations’, and the other is ‘under promise and over deliver’. Actually they are both pretty stupid or, in truth, pretty sinister because they are phrases that are not meant for the big lumps in management or even the customer, but are a bit of whip cracking for the poor old wage slaves. If you are a disengaged, bored bit of cannon fodder on the minimum wage, the big lumps believe that nailing posters about the place with phrases like, ‘The customer is King’, ‘Passionate about underwear solutions’, ‘Going that extra mile’, will somehow make the dismal soul-destroying job have meaning and you will work harder, with no extra reward. Actually, thinking about it, the middle ranking, office-based person is even more susceptible to this crap, with the added misery of appraisals.

Well now, the world has changed, because for us, when ‘The customer is King’, ‘We are passionate and we go the extra mile’, a big fat reward drops into our pockets, not our bosses’. What amazes me is when one-person enterprises succeed in being slipshod, rude, unreliable, grubby and unprofessional (talk about shooting yourself in the foot)!

Fairly Low Expectations

So what have I got against exceeding the customer’s expectation? Well, it’s not going to be difficult for the Reading Amateur Surgery Club, or ‘Ends in Tiers’ to do that because the customer actually expects sod all. We win customers by creating great expectations, assurances and promises of great things to come. I am sure that people who survive Cyril’s scalpel are delighted to have saved thousands of pounds and the happy couple who gaze in awe at the towering pink and white confection are thrilled. Of course they are thrilled and of course their expectations are exceeded.

I often get irate small enterprises, that I have been a little critical of, flap bits of paper in my face showing me testimonials from happy customers. I usually fuel the fire further by suggesting that they are happy and relieved customers. Worse than that, these particular customers must be nutters as who else but a nutter would risk Cyril or ‘Ends in Tiers’. This jaundiced theory is often borne out when I meet these much vaunted ‘customers’, stark staring bonkers every one of them You do not want these people as customers. You want the middle and top end customers, the people who buy Ford and GM to Porsche and Aston Martin.

In Communist East Germany they made cars from compressed cardboard that were propelled in a cacophony of noises and noxious smoke by a two-stroke engine. There are people who still delight in driving those things, they declare themselves delighted. They probably drink their own wee and sing folk songs. YOU DO NOT WANT THEM AS CUSTOMERS.

We have to create expectations that are high and then deliver those spot on with precisely what is expected. (Just maybe a little unexpected bonus of a tiny bit of over delivery but don’t go mad). Maybe the next cliché should be ‘over promise and over deliver’. Remember, for the new enterprise, the potential customer’s default position is to expect trouble. If just looking at you reinforces that belief then we are going to struggle to succeed.

IT DOES WHAT IT SAYS ON THE TIN

Please indulge me by coming back to the previously-mentioned taxi rank for a moment where we all wait for business. Imagine that this is now unregulated and we can put forward any offer to attract the customers. I put this exercise together using the examples below and showed it to my colleagues. After a bit of discussion we ended up with a weird conclusion. But anyway, read on and see what you think.

There is the taxi rank; leading it up is a Rolls Royce with a liveried chauffeur and on the back seat is a small wicker hamper of goodies and a miniature bottle of good champagne. The delicately embossed cards suggest that a ride to town will cost around £50. I would suggest this guy would get regular work from high tipping wealthy customers.

Next, there is a clean and modern family saloon driven by a clean and tidy person. The price for a trip into town is £10.

There is also a very ancient, very rusty, big old car, with one missing window that has plastic taped over it, multicoloured and patched paintwork, and the door tied with string. The driver looks like a biker, and painted on the side with a big brush and whitewash it says, ‘Into town for £1’.

I set these descriptions up with the intention of showing that no matter how cheap you are, if you are unprofessional and scary, people won’t do business with you.

A Surprising Reply

However, this scenario was put to my colleagues and I asked for comments. Everyone agreed the attraction of the Rolls Royce. Then I said, “Who on earth would get into the scruffy car?”

The replies came thick and fast: “Students would”, “I might give it a go in daylight!”

I had a think and decided that if I was in jeans and maybe not alone, I might ‘give it a go’. The situation would be further exaggerated by the quantities of taxis – one Rolls Royce, one old clunker, and maybe twenty clean saloon cars. In other words, the smart saloon cars form the herd and the Rolls Royce and the clunker capture the niche at either end of the market.

I invented Cyril Spoggins a few years ago and since then the world has changed in every way, in wealth, in tax, in status, and it is the middle that are taking the bashing. Maybe the clunker does not conflict with my concept of professionalism. The fare is just 2% of the Rolls Royce, but you can see why – what you see is what you get. They can cram six or seven students into a car that cost nothing, that’s £7 per trip. If the smart saloon was £1 then you would be suspicious. The old banger is precisely right for its market. It delivers what is expected – a very rough, uncomfortable but cheap ride into town.

Only the Best Will Do

This new world order seems to suggest that firstly to be the ‘est’ is very beneficial. The b-est, the cheap-est, the clear-est. In these ghastly TV talent shows where they show the crowd of ‘one million hopefuls’, something that must be borne in mind is most people can actually sing quite well. So, when they get the fifty or so to show on TV, they only show the brilliant ones or the truly awful ones. They never ever show the quite good ones. Be the best or the worst but don’t ever be ‘quite good’. There are too many scrambling for the crumbs.

For every hundred philosophy graduates, there is one person who knows how to unblock a drain. I have needed that person so much more often than I have lusted after an explanation of Descartes. That also suggests that niches are a good place to be. If you can seize a niche for yourself you stand a so much better chance.

AN EXCELLENT IDEA

There has been a lot of talk about excellence, and in fact Tom Peters wrote the business book for the 20th century, called In Pursuit of Excellence. Every company back then jumped on the bandwagon of excellence. They started using the word in their strap lines, mission statements, and even on their headed notepaper. One idiot even rang me up and said they wanted me to set up a programme of uncompromising dedication to excellence for his company … and then added that this would obviously have to be done within the confines of a very tight budget. Cheap excellence, then?

That’s Remarkable

For the 21st century I have seen a very much better idea. I can’t remember which great business thinker came up with this one, so apologies in advance for not giving credit. The thing they came up with was not being excellent but being remarkable. That means that people remark about us. If you are a one-legged tap dancer then you are probably remarkable. If you are a beige taxi in a rank of twenty other beige taxis, you are not remarkable.

Stop right here and have a think about what you offer that is remarkable. What is it about your offer that will get people talking about you? Beige is the new black, or in other words, the colour of doom. The middle ground is the dangerous ground. It may feel safe to be one of the 20,000 people in vest and shorts at the start of the marathon but I only notice the Ethiopian who is one hour ahead of everyone else, the wheelchair athletes, and the huge purple chicken – the rest are just scenery and not remarkable.

LOOKING FOR WORK

The advantage of being a taxi-type business is that your potential customers can reject you before you get to do any meaningful, or in any event costly, activity. The key question that we must ask the taxi-type business before we move on is why haven’t you got any work? Mrs Johanna Trembly, tomato blight consultant (sorry, expert), sits by her phone. The leaflets are distributed, the presentation made, and nothing has happened. No work for months. Firstly, if you read this book carefully you should not have got into this situation but, OK, so supposing you have. What options are there? What happened? What went wrong? It always amazes me that people can sit and watch themselves slowly die.

Why Tomatoes?

Let’s take this situation apart very carefully and see what’s happening. What provoked Johanna into tomato consultancy? Is it because all she knows is tomatoes, or is it because careful research has told her there is a clear-cut demand for tomato consultants? I think it might be the former, in which case if there is no demand Johanna may have to consider doing something different. Doomed activity is still doomed even if the level of that activity is increased.

Because of my built-in dismalness I can smell trouble. In a premises where restaurants always fail, I saw yet another new one: ‘Family run Eastern European Cuisine’. “Doomed,” I thought. And guess what? I wasn’t wrong. It crashed and burned in less than six months. What research, what public opinion, what professional assessment of demand was undertaken? Or was it knobbly stick time: “What this town needs is a restaurant serving Eastern European cuisine!”?

THE WINNING TICKET

Is that how successful businesses are started? Yes! Did I just say “Yes”? I did, but now let’s examine this statement; did all lottery winners buy a lottery ticket? Well of course they did. If you want to win the grand jackpot should you buy a ticket? Yep. Will you win? No. When companies like Wal-Mart or Tesco open a new store, they are not buying a lottery ticket, but by following the elements of their careful plans they win every time. Your future prosperity is not something to gamble with. The problem is that the media idolizes the commercial successes of the people who have climbed from poverty to billionairedom – but these are lottery winners. When you ask them how they did it, they can’t tell you. Sure they can pile on the platitudes and clichés – “I believe in myself”, “I wouldn’t be beaten”, “I kept my nose to the grindstone and shoulder to the wheel” – but if you ask whether they could write a one to ten point instruction sheet on the practical aspects, they can’t do it. They try: “Um, point one, believe in yourself, point two, shoulder to the wheel.” “No, I want to improve the success of tomato growers. Who should I contact, where should I start, should I have an office, is there enough money to be made just from tomatoes?”

“Well, as long as you believe in yourself …”

It is about as much use as asking a lottery winner how to win the lottery. The cards fell right for them and that’s it.

THE IDIOT’S GUIDE TO THE TOP

People close to me (and not so close to me) accuse me of making outrageous statements with no evidence, one of which is that idiots become CEOs by default. I am often challenged on this assertion, and to support it I have come up with what I call the sperm theory of management, a route to the top that is about as much use to us as talking to ‘successful entrepreneurs’.

Imagine that you are team leader in a big organization and one day HR phone to tell you they have a fast track management programme. Can you send a candidate from your team, your hard, finely honed team of brilliant individuals who work as one? You look from earnest face to earnest face, their craggy jaws illuminated by the glare of their computer screens. Can you spare any of them? Then, in a corner, you spy the desk with a rubber spider hanging over it, the hilarious bullshit alarm button, and the sign that says, ‘You don’t have to be mad to work here but if you are it helps’. You pause and then, “I’ve got just the person for you!”

“And that,” I say smugly “is how idiots get to the top.”

An Endless Supply of Idiots

This is not enough for my audience; psychometric testing, fatal accidents, appraisals, disastrous mistakes – the idiots can’t survive, but don’t you see, they don’t all have to. In any large organization there are millions of idiots and only one needs to survive. If you speak to the sperm which fertilized the egg it will say things like, “All that matters is being first”, “Second is the first loser”, “Believe in yourself”, “Keep your nose to the grindstone and shoulder to the wheel” (do sperms have shoulders?). In an organization there is a huge ejaculation of idiots and just one makes it.

The problem for us is that we have a complete reversal of that situation; there is just one of us and millions of things that could go wrong. We don’t need to know what went right; we have to predict accurately what might go wrong. Don’t speak to your aspirational hero about your future plans but instead speak to the guy with the hairy dog, the one that buttonholes you at street corners and says, “Spare any change, please?” If you ask “How did you get here”, unlike the successful person they will have a very clear idea. “It was the drinking what done for me”, “I went into partnership with someone who ran off with my money”, “We used to make radio valves and laughed at the idea of microchips”. Go to the bankruptcy courts and trace an enterprise’s dive to destruction. Was it avoidable? Should they have started in the first place? If you were in their place, would you have ended up in the same situation? Hindsight? Hindsight is possible when you use other peoples’ troubles.

NEVER MAKE THE SAME MISTAKE TWICE

Our burglar is a very dangerous individual because, however stupid, he doesn’t make the same mistake twice. Sure he will end up in jail over and over again, but he won’t go down for fingerprints again or for trying to sell a nicked TV to a cop, or trusting his ex wife to keep quiet, plus in jail they share tales of woe so the mistake avoidance is multiplied severalfold. If your enterprise goes painfully bust, your next one might go, too, but not for the same reasons. Even better, it’s a good idea to talk to dozens of people who have failed for dozens of reasons and learn from all of them.