Some Odds & Ends

Clearly its been a while since I've last posted. I wish I could blame it on the holidays or the weather or even Dick Cheney, but alas, its all my fault. Yes, I'm taking the fall for my inability to maintain my blog site - clearly there is a discipline to this that I have not yet grasped. With that being said, I've been busy grabbing some miscellaneous insights into the world of business these days.

Last week I attended a rather enlightening credit union conference in Hawaii (go ahead sneer, the weather wasn't that good) and took along my family. That means Amanda and I took our nearly 1 year old daughter Abigail on a series of flights that covered almost 5,000 miles and 14 hours. At the time, I couldn't decide if I was just dumb or plain stupid! Amazingly enough, Abby is a fantastic traveler (she has already been to 10 states!) and was great on the plane so it was a great trip.

Anyways, I wasn't initially impressed with the conference proceedings, but as they soaked in, I was glad I went as I gleamed a number of insights. First, I should note that the keynote speaker was Charles Fishman of "the Wal-Mart Effect" fame. After hearing him speak and reading the book, I can say that he provided some fresh insights into Wal-Mart but certainly didn't provide the level of analysis on how smaller companies can compete with behemoths who have commoditized industries (paging Jim Collins). During his talk, Mr. Fishman spoke rather passionately about how challenging banking with Wachovia was and how wonderful it was to deal with his credit union. Mr. Fishman, in his discussion made it clear that the key to competing was to provide an unmatched level of customer service. However, it was very clear that despite numerous customer service problems his primary financial institution was Wachovia rather than the CU that served him so well.

During the Q&A I inquired as to why his PFI was Wachovia rather than his CU. His response was extremely enlightening. His CU was far away and despite moving to a new area he chose Wachovia with its many locations, great online banking and very competitive rate structure over finding a CU near his residence. Despite superior customer service, rates and convenience were so important to him that he didn't even bother looking into a credit union! What this proved is that while customers may scream about customer service a significant portion of any of our customers are just like Mr. Fishman - its the speed, convenience and price of the transaction that drives their decision - not customer service.

This clearly doesn't include every potential customer, but based on my reading of his book, I would have to say that it would be safe to assume that at least 1/3 of customers fit this mold. This means that at any given time at least 1/3 of your customers are ready to change their patronage of your business if someone faster, easier and cheaper catches their eye. Unless our plan is to compete in this type of red ocean this reality is extremely discouraging. However, the insight also provides a bit of a direction for building a Blue Ocean Strategy (yes we can help with that) if you desire to break away from servicing this element of the market.

Essentially, if can quickly conclude that at least 1/3 of the market of customers is not your customer you only have to worry about what the other 2/3rd's of the market wants. With some careful and thoughtful analysis you will probably determine that at least another 1/3 of the market is probably not your likely customer as well. This means that perhaps only 1/3 of the potential buyers of your product/service are your likely customer. I know this sounds strange, but take a look at your customer base today - what percentage do you consider truly loyal to you?

Recognizing that your market is a fraction of the size you thought it was can be strangely liberating as it allows you to truly identify who your ideal customer is and what it is that they want and need. With that knowledge you can then match it up against your core competencies to see where the gaps are and take steps to minimize them. In doing so, you will make your company more competitive and therefore more attractive to the customer you truly want as your customer.