We struggled a little with this at my last workshop so...
What are features and benefits?
- A feature is some distinguishing attribute of a product or service, such as ruggedness, speed, range of stock, payment options
- A benefit is the use or benefit of that feature from the customer’s perspective
- Your marketing and sales should focus on benefits, not features
How do you identify the relevant features and benefits?
- You start by identifying the relevant benefits from the customer’s point of view and then identify the attributes of your product or service that provide those benefits
- If you start with the features and then try to find benefits to match you may not end up with a compelling customer proposition
- A solid product development process starts with the benefits the customer seeks and creates a product with the required features
- Most businesses are the result of a long line of similar businesses and so the product development process here is evolution – but you still need to understand and articulate the benefits to the customer
- Sometimes customers don’t know that they will value the benefits of a particular feature – think SMS messaging or post-it notes – but the benefit is still what sells it
How do you separate and explain features and benefits?
- Use the phrase “...and that means...” as in
o “Product x is lighter than product y AND THAT MEANS you can get it into your carry-on luggage”. Here the benefit is not having to queue at the luggage carousel in arrivals
- Think about the outcome for the customer, not the actual thing you are selling them
o Product x has a 10-year guarantee AND THAT MEANS that you won’t have to worry about replacing it
o We carry all the leading brands AND THAT MEANS that you can be sure that you will find what you need and won’t have a wasted journey
o Service x is available at a time to suit you AND THAT MEANS you won’t have to take time off work to see us.
More straightforward advice here
Wednesday, 26 May 2010
Thursday, 20 May 2010
Customer categories
- Too many companies define their target market too broadly – “consumers” is a common description, as is “SMEs” or even (slightly better) “the construction industry”
- You need to divide that market down further into particular types of customer, for example
o “Owner-managed businesses in the RG postcode with between 5 and 50 employees” or
o “Builders on the local council suppliers list who do not have an internal H&S manager” or
o “Women between 25 and 35 who are fashion-conscious but on a budget.”
- It helps to give them a name – for instance a supermarket chain might categorise some of its customers as “Northern Brand Loyalists” and others as “Sausage-and-mashers”
- A customer category is another way of describing a market niche
Why have customer categories?
- It will help you make decisions about which customers you want – and which you don’t want
o Which customers are more profitable – and which are a nightmare to deal with?
- It will help you understand why those customers choose your product or service – or that of your competitor
o Which benefits are more important to them – and which less?
o How well do you match those desires – and how do you compare with the competition?
- It will help you develop propositions which are tuned to the customers’ requirements – even if the base product or service is the same
- It will help you quickly and easily communicate the type of customer you are looking for
- You should strive to be number 1 or 2 in your market. If you are not big enough to achieve this in the whole market you can focus on a niche (a customer category) where you can be number 1 or 2 and so dominate.
How do you identify customer categories?
- Think through the benefits that your customers are seeking – what is important to them and how does it differ for different customers?
- Think about the different ways they buy – where, when, how often?
- Think about different attributes – age, sex, where they live
- Think about the different things your product or service does for different customers
o What need does it fulfil?
o What does it allow them to deliver to their customers?
o What barriers does it remove?
o How many different uses is it put to?
o Ask them!
- Take the differences that you find most useful and group them into customer categories.
See more advice for business owneres here
See what your business is worth here
- You need to divide that market down further into particular types of customer, for example
o “Owner-managed businesses in the RG postcode with between 5 and 50 employees” or
o “Builders on the local council suppliers list who do not have an internal H&S manager” or
o “Women between 25 and 35 who are fashion-conscious but on a budget.”
- It helps to give them a name – for instance a supermarket chain might categorise some of its customers as “Northern Brand Loyalists” and others as “Sausage-and-mashers”
- A customer category is another way of describing a market niche
Why have customer categories?
- It will help you make decisions about which customers you want – and which you don’t want
o Which customers are more profitable – and which are a nightmare to deal with?
- It will help you understand why those customers choose your product or service – or that of your competitor
o Which benefits are more important to them – and which less?
o How well do you match those desires – and how do you compare with the competition?
- It will help you develop propositions which are tuned to the customers’ requirements – even if the base product or service is the same
- It will help you quickly and easily communicate the type of customer you are looking for
- You should strive to be number 1 or 2 in your market. If you are not big enough to achieve this in the whole market you can focus on a niche (a customer category) where you can be number 1 or 2 and so dominate.
How do you identify customer categories?
- Think through the benefits that your customers are seeking – what is important to them and how does it differ for different customers?
- Think about the different ways they buy – where, when, how often?
- Think about different attributes – age, sex, where they live
- Think about the different things your product or service does for different customers
o What need does it fulfil?
o What does it allow them to deliver to their customers?
o What barriers does it remove?
o How many different uses is it put to?
o Ask them!
- Take the differences that you find most useful and group them into customer categories.
See more advice for business owneres here
See what your business is worth here
Wednesday, 12 May 2010
How much is my business worth?
Even if you don’t plan to sell your business in the near future it’s important that you understand how your business would be valued by a prospective purchaser:
If you want a more specific and detailed valuation with a view to selling soon I recommend you try Plan B Associates
They offer those thinking about selling their business a free, no obligation consultation aimed at answering the initial key questions most owners have – Is it the right time for me to sell? How much is my business worth? How do I find the right buyer? How long will it take to complete a deal? What service does a broker provide? Is using one right for me?
You can email them on info@planbassociates.co.uk or call 01483 440781
- The things that make a business valuable to someone else will make it more controllable, profitable and scalable for you
- Getting a business ready to sell takes years – if you just wake up and decide to sell it you will probably not get what it could be worth. If you know what buyers are looking for then you can start working on those things right now
Assets
Fixed assets like machinery or buildings, current assets like stock and money owing from customers, and amounts owing to the bank (and you)
Cash flow
- Often buyers will use a rule of thumb such as a multiple of turnover or profit to arrive at an initial price. This is simple and is based on a typical business in your industryThis multiple is a way of estimating the actual cash that the business will deliver based on industry norms for margins, stock, debtor and creditor levels and the quality of earnings (see below). However, if your business isn’t very good at turning turnover into profit into cash then the value (and your current lifestyle) will sufferThere will be adjustments for paying someone to replace you and also any expenses you put through the books
- Not all future profit (or cash flow) is the same. The more uncertain it is that current levels will continue into the future, the lower the selling priceIf your income is mainly from projects then there is a high risk that this will not continue indefinitely – or at least, that cash flows will be volatileIf your income is mainly from repeat work or maintenance then this will be seen as more stable and certain and so lower riskIf your income is mainly from long-term contracts then this is the lowest risk of all and the buyer can be confident that it will continue at current levelsIf a large proportion of income comes from a small number of customers then this is also a risk
- If a significant part of the work is done by you, or if key processes rely upon you, then this will seriously reduce the value of your business to a buyer
- If processes are not documented and systemised so that the business can be operated by and with anyone with the appropriate skills then this will reduce the value
- If you can’t go on holiday for 3 months and come back to a working business then it’s probably not worth much to anyone else
- A buyer will not pay for improvements or efficiencies that she herself will have to implement after the sale
- A buyer will not pay for unsubstantiated growth forecasts!
If you want a more specific and detailed valuation with a view to selling soon I recommend you try Plan B Associates
They offer those thinking about selling their business a free, no obligation consultation aimed at answering the initial key questions most owners have – Is it the right time for me to sell? How much is my business worth? How do I find the right buyer? How long will it take to complete a deal? What service does a broker provide? Is using one right for me?
You can email them on info@planbassociates.co.uk or call 01483 440781
Sunday, 2 May 2010
Recruitment interviews
Selecting people is just about the most important thing a business owner or manager does. It should not be left to chance – interviews should be planned.
Preparation
- Prepare or review the job description. This should describe the main tasks to be performed, the desired outputs or results and how this will be measured. It should list the technical knowledge or skills, level of experience and personal attributes required to be successful in the role.
- Prepare a marking scheme for candidates. This should list the requirements of the role and have spaces for positive evidence, negative evidence and a score against each.
- Prepare a structured interview. This is a series of questions designed to establish positive or negative evidence against each of the required attributes. These should be open questions which encourage the candidate to talk, rather than closed questions leading to a simple “Yes” or “No”. The questions should be layered so that you can drill down and get evidence of the previous experience or attitude if this is not volunteered.
- For certain roles you may need to deploy additional selection tests, such as role play, a presentation, psychometric tests or skills tests.
- Prepare a briefing pack for the candidates. This should include the job description, history of the organisation, organisation chart, any mission or value statements you have and so forth. Don’t forget that you are trying to sell the role to them and that good candidates will have a choice. Make sure that reception knows who to expect and how to welcome candidates.
The Interview
- Have more than one interviewer. The panel should include the person who will be the direct supervisor of the new employee and someone with good technical knowledge of the area concerned. Agree who will lead the interview.
- Set aside sufficient time (60-90 minutes) and make sure that there are no interruptions. There is nothing more important than hiring the right people.
- Make introductions and explain why people are there. Set the scene – company background, mission, values. Why the vacancy has arisen and key challenges/expectations for the role. Explain that you are following a structured process so that you will sometimes have to move the interview on.
- Follow the structured interview and stick to the time allowed. Listen actively to responses, encourage the candidate to open up but keep things focused and relevant. Cover all the questions and get evidence for all answers.
- Allow time for their questions at the end.
Post-interview
- Complete your notes and scoring immediately and compare with the other interviewers to reach a consensus.
- Take up all references and check all qualifications.
- Decide and appoint quickly – good candidates will have other options
Click here for more business advice
Preparation
- Prepare or review the job description. This should describe the main tasks to be performed, the desired outputs or results and how this will be measured. It should list the technical knowledge or skills, level of experience and personal attributes required to be successful in the role.
- Prepare a marking scheme for candidates. This should list the requirements of the role and have spaces for positive evidence, negative evidence and a score against each.
- Prepare a structured interview. This is a series of questions designed to establish positive or negative evidence against each of the required attributes. These should be open questions which encourage the candidate to talk, rather than closed questions leading to a simple “Yes” or “No”. The questions should be layered so that you can drill down and get evidence of the previous experience or attitude if this is not volunteered.
- For certain roles you may need to deploy additional selection tests, such as role play, a presentation, psychometric tests or skills tests.
- Prepare a briefing pack for the candidates. This should include the job description, history of the organisation, organisation chart, any mission or value statements you have and so forth. Don’t forget that you are trying to sell the role to them and that good candidates will have a choice. Make sure that reception knows who to expect and how to welcome candidates.
The Interview
- Have more than one interviewer. The panel should include the person who will be the direct supervisor of the new employee and someone with good technical knowledge of the area concerned. Agree who will lead the interview.
- Set aside sufficient time (60-90 minutes) and make sure that there are no interruptions. There is nothing more important than hiring the right people.
- Make introductions and explain why people are there. Set the scene – company background, mission, values. Why the vacancy has arisen and key challenges/expectations for the role. Explain that you are following a structured process so that you will sometimes have to move the interview on.
- Follow the structured interview and stick to the time allowed. Listen actively to responses, encourage the candidate to open up but keep things focused and relevant. Cover all the questions and get evidence for all answers.
- Allow time for their questions at the end.
Post-interview
- Complete your notes and scoring immediately and compare with the other interviewers to reach a consensus.
- Take up all references and check all qualifications.
- Decide and appoint quickly – good candidates will have other options
Click here for more business advice
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