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In this episode, Jeff Kofman and I discuss his journey from journalism to tech startup CEO. Jeff describes how he originally came up with the idea for Trint.com, an AI (artificial intelligence) transcription service. He also shares insight into how they price their SaaS (software as a service) product. [Read more…]
Joe Woodard is the Founder and CEO of the Woodard Companies, a preferred training partner for Intuit. Woodard is the creator of Scaling New Heights, the annual conference for QuickBooks ProAdvisors. Joe has trained over 100,000 accountants and bookkeepers. He was recently selected one of the Top 100 Most Influential People by Accounting Today.
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Tom Lewis is Financial Director at the Institute of Practitioners in Advertising (IPA) in the United Kingdom. He is also the leader of the Commerce “pillar” at the IPA. Although he is a Chartered Accountant, he has over 15 years experience in advertising.
In this episode, Tom and I discuss the state of value pricing within advertising in the UK. Our conversation focuses on having an effective conversation with procurement. He also shares insights from the keynote speakers at the recent IPA conference in London.
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Lee Cockerell was a guest a previous episode of the Art of Value Show. At the end of that show, Lee suggested we do another interview to discuss the rules of customer services from his book The Customer Rules. While we will not cover all 39 rules, we will cover a dozen or so during this episode.
Lee is a former Senior Vice President of Operations at Walt Disney World Resort. He is the author of three books, with a fourth due in late 2016. He is a teacher at Thrive15 and Sports Mind Institute. His website is LeeCockerell.com.
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What is the most important thing you can share about pricing?
Is the customer getting good value for the price? When a customer questions Lee's speaking fee, he reminds them: Price is what you pay, value is what you get. Value can be expensive and is worth it. Lee recently experienced great customer service from a flooring contractor at his home.
In The Customer Rules, Lee says he is a student of customer service wherever he goes. He learned the art of great customer service by working at Hilton Hotels, Marriott Hotels and Disney World. Lee shared a story of receiving outstanding service while applying for the SAM program to do business with the federal government.
What did your grandchildren say is the most important rule in customer service?
Lee's 12-year-old granddaughter said, “Be nice.” And his 10-year-old grandson said, “When you serve, you are always the giving one.” Sometimes the simplest answers come from children.
How could the political parties in the United States apply The Customer Rules?
Focus on having integrity by not denigrating the character of others. Your reputation is defined by who you are and what you say. Are you helping people? Are you making a difference? Set an example of high integrity.
What is the significance of Rule #8: Always act like a professional?
At Disney World, Lee told his team, “You don't have to be happy to work at Disney. You have to act happy for 8 hours.” Professionals stay professional. Never raise your voice to a customer or employee. The US military is an outstanding example of being a professional on the job. Being professional is not a title. It is a behavior. Everyone can act professionally.
What is the meaning of Rule #4: Don't get bored with the basics?
The basics are manners, courtesy, honesty, trustworthiness, being a gentleman or a lady. Walt Disney said, “Keep it clean and friendly, and everything will be fine.” No matter how good someone is, how good are they?
What is the significance of Rule #7: Look sharp?
Even though times have changed, there are certain things about your appearance that will either enhance or hurt your income. Human Resources will not tell you, but you will not get promoted. First impressions are everything. If you do not look sharp, you are taking a chance. Your image affects how people perceive your judgment.
What is the story behind Rule #15: Be like a bee?
A young girl at Disney World once asked Mr. Disney, what do you do? His response was, “I am like a bee. I buzz around the whole company looking for good ideas. When I find one, I share it with another department. I am the pollen and the pollinator. I make sure the best ideas are pollinated around the company.”
What is the significance of Rule #17: Listen up?
Due to our mobile devices, we have lost the ability to concentrate on the current task. Therefore, when we are with people, we have trouble looking them in the eye and paying attention. To listen actively, you must figure out what the customer is not saying. What is the hidden meaning? It is very annoying to the customer when they can tell you are not listening.
What is the meaning of Rule #20: Be a wordsmith?
Think about the words you use. No one likes to be called a subordinate, the girl at the office or my employee. Use “Yes sir,” “Yes ma'am,” “Mister” and “Misses” when appropriate. Avoid profanity in the workplace because it also affects how people perceive your judgment.
What is the story behind Rule #23: If they say they want a horse, give them a motorcar?
Henry Ford said, “If I ask the customer what he wants, he would say a faster horse.” The customer does not always know what the possibilities are. No one knew they wanted an iPhone until Apple created it. No one knew they wanted free transportation from the airport until Disney offered it. In other words, what are you not doing for the customer that you could be doing?
What is the significance of Rule #28: Know the difference between needs and wants?
One person says, “I need a car,” and he wants a Volkswagen. Another person says, “I need a car,” and she wants a Mercedes Ask questions to understand the “why” behind the need/want. The first person wants economical, reliable transportation. The second person wants to portray a successful image.
The restroom is probably the best indicator of the quality of customer service. In fact, when Lee's family goes to a restaurant, his grandson first checks out the restroom and gives it a rating on a scale of 1-10. Bill Marriott, the founder of Marriott Hotels, would first check out the kitchen at a restaurant before agreeing to eat there.
What is the meaning of Rule #26: Server to WIN?
WIN stands for What's Important Now. You win in life by doing what is important now. If a customer walks in your store, what is important is serving them immediately. Make the customer feel special.
What is the significance of Rule #27: Make ASAP your standard deadline?
Of course, ASAP means As Soon As Possible. In the age of real-time communication–texting, tweeting, chatting–the guest expects a response quickly. Lees says, “You need to get better faster and get faster faster.” Starbucks allows you to order and pay for your coffee from a mobile app. It is ready when you walk in the door. 30 seconds is a long time when you are the customer.
What is one of your favorite rules from The Customer Rules?
Professionalism and personal appearance. Can you image if Cinderella was not dressed properly? What if a policeman showed up at your house with his shirttail out and his hat missing? How you look is part of who you are. If you question their self-judgement, how can you trust them to have good judgment with your customers?
What is one of your best stories about creating value for a customer?
When Lee quotes a speaking fee for an event, it is for the day, not just the speech? He wants to deliver as much value to his customer as possible. He will have lunch with your sponsors or host a break group for VIPs as part of the same fee. He also shows up to the event early to learn about the audience and atmosphere.
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Aaron Vidas is the founder of StrategyBox, a marketing consultancy for $50M companies. In this episode, we discuss realigning your value proposition with a new target market. In the first segment, Aaron explains how he realized he was not aligned and the steps he took to change it. In the next segment, we explore how to research a new target market through interviews and conferences. He concludes with a couple of pricing stories from his experience.
What is the most important thing you can share about pricing?
You have to have alignment with the customer, not simply agreement. Agreement is when someone nods their head during a conversation. Alignment is when they take action to support the course of action to which they agreed.
How did you discover you had an alignment/pricing problem in your business?
During a run, Aaron had a realization that his customers loved the marketing plan he created but they had trouble executing on it. He then asked the question, “Am I doing the right thing for the wrong audience?” He created a new business plan and then interviewed a couple of CEOs in the new target market to verify his hypothesis.
Was the decision process more emotional or analytical?
It was both. From an emotional standpoint, it felt like a monumental decision. It was a slow crescendo in frustration over time. Then the final straw that broke the camel's back.
For the analysis, Aaron asked two questions, “Do I need to create different value for the same customers?” or “Do I need to create the same value for different customers?” Then he went to a cabin for the weekend and crunched the numbers.
His coach helped with the emotional and analytical aspects. The value of an outside perspective is that without objectivity there is no innovation. Aaron suggests the book From Darwin to Monger to learn about cognitive bias in decision-making.
How did you make the shift to serving a different customer?
His first challenge was age-bias. Would the CEO of a $50-million company listen to a twenty-something consultant? Aaron overcame it by interviewing potential customers. He also learned he would have to change the form of the offering.
Next, Aaron took steps to position himself as an authority for his target market. He wrote a couple of white papers and booked speaking opportunities at conferences attended by his new customers.
How did you overcome the intimidation of interviewing potential customers?
It is OK to be uncomfortable. Have the courage to ask, “Would this be helpful to your company? If not, why not?” Learn who they are and what is the problem you can help solve.
The conversation is not a zero-sum game. Not only do you receive valuable feedback, you can help the interviewee generate new ideas. You serve the customer by asking how to create value for them.
How do you research how the customer creates, captures and communicates value?
Aaron recommends the book The Business Model Canvas. It provides a framework to understand how a business operates. It teaches you how to ask questions to understand the cost of a problem and the value to solve it.
How do you find the conferences your target customers are attending?
Once you have your foot in the door at one conference, it is easier to book the second, third, etc. Use video to prove you can speak with confidence to the event organizer. If you receive a no, ask why it was a no. Positioning yourself as an authority is the foundation of your outreach.
What did you learn from Thomas Nagle, co-author of The Strategy and Tactics of Pricing?
You can charge for value. You do not have to use cost-plus pricing or match your competitors. There are tools to evaluate the economic benefit of your product or service to the customer.
What is one of your best stories about creating value for a customer?
Aaron is a fan Principles by Ray Dalio. He learned that one of his customers was also a fan. He introduced his customer to a contact of Ray's which led to the customer meeting Ray in person. The customer purchased two around-the-world tickets for Aaron to say thank you.
Kurt Elster is an e-commerce consultant who specializes in the Shopify platform. He is a founder and partner at EtherCycle, and host of the Unofficial Shopify Podcast. He earned his MBA from Illinois Institute of Technology. Kurt is a newlywed, and the theme for his wedding was “Day of the Dead,” the Mexican version of Halloween.
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What is the most important thing you can share about pricing?
Charge more. In the e-commerce space, businesses regularly undercharge and then go straight to discounting to move product. People tend to undervalue themselves and their brand. It is rooted in misunderstanding their value proposition.
Because it is so easy to comparison shop on the internet, price shoppers will usually go directly to Amazon, assuming it is the lowest price. This means customers for smaller brands maybe value, rather than price, shoppers by default.
Who is a customer you have helped develop a premium position?
Everest Bands sells replacement bands for Rolex watches. They incorrectly assumed their customer wanted to customize their Rolex. After conducting a survey, they learned their customers had an active lifestyle and wanted to avoid scratching the original band.
They asked their customer two questions. 1) Would you recommend this product to a friend? 2) To what kind of person would you recommend it and why? Ironically, the customer wound up describing how they see themselves and the reason they bought.
How was Everest Bands able to leverage their premium position?
They changed the message of their marketing to “preserve your Rolex's bracelet by buying an aftermarket one.” The value proposition became an insurance policy for an $8,000 watch. A year later they added a bracelet-preserving case to their products.
What is the most common mistake you see in e-commerce?
Not focusing on a single pain, single product, and single message. When you have a singular focus, you can really understand who the customer is, why they buy and the lifecycle of the product. Then you can scale the product line or move sideways into companion products.
You cannot experiment with your pricing until you understand your positioning. Then you can use anchor pricing and bundling to your advantage.
How did you transition to become an e-commerce consultant?
Ethercycle started by narrowing once, and then again and again. They went from generalist to e-commerce to Shopify to revenue generation for Shopify stores. Kurt asked his best customers what he did best to learn their perspective.
How did you choose the five criteria on your Why Ethercycle page?
Kurt actively disqualifies leads because he only wants to work with his best customers. This allows him to work with customers he really enjoys and quote premium prices. Being picky about your customers allows you to charge more and attract more quality customers.
What is revenue generation?
The common strategy is conversion rate optimization. Remove the friction in the buying process to increase the percentage of customers who purchase. However, other strategies include increasing customer lifetime value, increasing average order value, or creating subscription revenue.
For example, increasing customer lifetime value. It is easier to sell to the same customer twice than to two different customers once. Kurt worked with a custom mouthguard supplier to create a Facebook campaign to sell the second mouthguard at a 25% discount.
Do you recommend offering options for e-commerce?
Yes. You can do anchor pricing against your own products. Or you can offer a bundle of a product with some accessories. Then you can create a premium bundle. The result is often more revenue than sales of the product alone.
Do you leverage A/B testing with e-commerce stores?
It is difficult for small stores to have a large enough sample size for split testing. However, Kurt does experiment with ideas that have worked for other customers. Customer mindset and tendencies can vary widely by industry.
What is your experience with charm pricing, prices ending in 7 or 9?
Kurt has done some limited experimentation and prices ending in 9 usually sell better. However, this is not a one-size-fits-all rule. You must consider the context of your customer and your value proposition. For example, charm pricing makes very little sense when selling professional services (accounting, legal, etc.).
What other strategies are effective in the e-commerce space?
Part of what the customer is buying when shopping online is convenience–not going to a brick-and-mortar store. Groceries are generally more expensive from Amazon. You can charge slightly more for convenience. This is an example of challenging customer assumptions.
What is your favorite assumption to challenge for your customers?
You are not your customer. Especially if you started your business to solve your own pain. Your positioning is not the same as the reason you started your business.
How much of your consulting involves Black Friday?
The shopper mindset in the holiday season is different from the rest of the year. How they use your e-commerce site does not change; however, the reasons they buy do change. It is dangerous to base your marketing solely on the fourth quarter. Successful businesses are planning the holiday season at least one quarter in advance.
How can you influence the average order size on an e-commerce site?
Use product upsells. For example, if a customer adds a camera to the shopping cart, display a popup window suggesting a tripod as an accessory. Usually, 40% of customers will take advantage of an upsell with a strong value proposition.
Another way is to use bundles. For example, if you sell a drone on your website, create a starter bundle that includes the drone plus the other accessories the customer will likely need for one price.
How much does Amazon influence the expectations of online shoppers?
Regarding usability, Amazon trains most shoppers what to expect, even if it is not the most user-friendly option. Free two-day shipping was not the standard five years ago. Now, it is.
At the same time, a smaller business can offer a more personal experience than Amazon. For example, you can provide live chat to answer questions, personalized follow-up and exclusive educational content to your customers.
Is productized consulting your only business or a gateway to customized services?
Productized services are the main line of business at Ethercyle. There are several advantages. First, they do not require writing a proposal. Second, the customer already knows the value they will receive before they call. Third, they eliminate the risk of buying because the customer knows the price up front.
What is your most popular productized service?
Website Rescues is conversion rate optimization for an existing Shopify store. For a fixed price, Kurt will go through the website and make the most valuable changes possible, often correcting the result of a DYI deployment.
What is one of your best stories about creating value for a customer?
Kurt created a website, RainyCafe, to play background sounds to help him concentrate while working. It was mentioned on Lifehacker and would up generating enough Google AdSense revenue to pay his rent for several months.
Philip Morgan helps custom software shops get more leads without hiring a salesperson. He does this by helping refine their positioning and create effective content marketing systems. He is the author of two books, The Positioning Manual for Technical Firms, and The Positioning Strategy Guide. Philip describes himself as an introvert who specializes in marketing for introverts.
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[clickToTweet tweet=”Your ability to increase your prices is your ability to deliver more value to your customers.” quote=”The foundation of your ability to increase your prices is your ability to deliver more value to your customers.”]
[clickToTweet tweet=”You offer a weak value proposition when you are an undifferentiated specialist.” quote=”You offer a weak value proposition when you are an undifferentiated specialist and are seen as a commodity.”]
Jeffrey Shaw is the go-to portrait photographer for exclusive clientele. His portraits have been featured on The Oprah Winfrey Show, in O Magazine and People, and on CBS News. He is a business coach who serves massively talented creatives who struggle with the business side. He lives on an island just off Manhattan, New York, and gets to work by cable car.
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[clickToTweet tweet=”Building a business is determining who you are serving, and focusing on serving them.” quote=”Building a business is determining who you are serving, and focusing on serving them.”]
[clickToTweet tweet=”The best thing for your customer is to charge the maximum amount and get paid upfront.” quote=”The best thing for your customer is to charge the maximum amount and get paid upfront.”]
Josh Elledge is the Founder and Chief Executive Angel at SavingsAngel.com, whose mission is to help families save money and build wealth. He has appeared on radio and TV over 1000 times and has a syndicated news column with 1.5 million readers. As a result of his media experience, he created UpendPR.com where he shares how to use PR to your advantage.
The references in Kirk's intro are:
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Michael Port is the author of six books and a New York Times best-selling author. The Boston Globe commented, “He is an uncommonly honest author.” He has been called a marketing guru by the Wall Street Journal and a sales guru by The Financial Times. His seventh book, Steal the Show, is due this fall.
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