509 Expanding your Business Potential

MODULE 509EXPANDING YOUR BUSINESS

POTENTIAL Contact Person

Dr. Mario Denton

Crown Financial Ministries Marketplace Programme Director for Africa

Africa Director for FCCI (The Fellowship for Companies for Christ International)

CEO STRONG MESSAGE BUSINESS CONSULTANT

Let's keep the good marketplace vibes alive. Let's network. Tel (w) + 27(0) 82 88 29903. E-mail address: [email protected] Website: www.crown.org.za and click on

marketplace

E-mail address: [email protected] website: www. strongmessage.co.za

Skype: mario.denton

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Table of Contents1. Effectively setting goals

2. Focus energy on opportunities

3. Developing and understanding your competitive advantage

4. Developing customer loyalty

5. Plan for tomorrow, but take action for today

6. Success in sales

7. pricing your product or service right

8. Forming strategic partnerships

9. How technology impacts outsourcing and service business

Introduction—Benefits from reading this book!• Learn how to effectively set goals!

• Discover the SMART method of goal setting and understand how to count the

cost in every area of your business!

• See how to really focus your leadership on business strategy rather than on

continually fighting fires!

• Get away from problem-focused thinking!

• Take advantage of unanticipated opportunities!

• Learn how to uncover opportunities!

• Better understand your business advantage!

• Learn how to further develop your business advantage!

• Understand how to use your business advantage to gain customers!

• Learn your business from the customers’ point of view!

• Discover how to develop customer loyalty!

• Distinguish between true customer loyalty and repeat use!

• Learn how to solicit effective customer feedback!

• Know how to take action today that meets your goals for tomorrow!

• Learn how to analyze current market trends for future predictions!

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• Know how to respond to shifts in the current business environment and take

advantage of new opportunities!

• Be successful in sales!

• Discover how to price your product for maximum volume sales and maximum

profit!

• Know how to well-form partnerships that will maximize your business potential!

• Understand how technology impacts outsourcing and service!

• Learn how to keep technology an asset and not a weakness!

• Understand how to adapt to technology and allow your business to change with

it!

1. Effectively setting goalsEvery year, millions of businessmen and women make New Year’s resolutions,

often covering the very same issues they resolved to correct last year. Despite

their best intentions, what is often lacking is a specific plan for how these

resolutions can be accomplished. Are these goals even achievable? “For which

one of you,” Jesus asked, “when he wants to build a tower, does not first sit down

and calculate the cost, to see if he has enough to complete it?” (Luke 14:28).

The only way that a business can solve its problems, achieve its objectives, and

move itself to a higher level is to devise a plan and develop a process for

accomplishing its goals. The answer is the same for any size business, from

multinational conglomerate down to the humblest one-person operation. King

Solomon, the wisest man who ever lived, wrote, “The plans of the diligent lead

surely to advantage, but everyone who is hasty comes surely to poverty”

(Proverbs 21:5). Effective planning and goal setting is required to achieve the

maximum success possible. Many businesses stumble along without planning,

but effective planning always improves results.

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Start by objectively assessing where your business is today, and then determine

where you would like to be by this time next year. Set realistic goals that match

your expectations and will move your business up to the next level.

Effective goals are SMART goals: Specific, Measurable, Accomplishment focused, Realistic, and Timed or Tied to the business.

Specific and Measurable go hand in hand: If you can’t define your target, you’ll

never hit it. If the target can’t be measured, it isn’t specific enough. It’s not

enough to say that you want to increase sales, reduce customerbilling errors, or

open a new store. General statements may sound good in January, but how will

you measure your results in December? If sales increase by one percent, will you

be happy? Examples of specific goals would be to increase sales by nine

percent, reduce customer-billing errors from six per month to zero, and open a

new store in a specific location by the end of June.

“Accomplishment focused” means to build some stretch into your goals, without

overreaching. For example, if the population of your town is growing by 15

percent per year, to increase your business by only 15 percent might actually be

disappointing, since you would have only grown commensurate with the

population. An accomplishment-focused goal would be to achieve a rate of

growth higher than the increase in population. On the other hand, if your

customer base is decreasing, due to a drop in population in your area, it might

not be realistic to expect a 15 percent rate of growth, but a ten percent increase

in sales might be great. Know your market and set your plans accordingly, but

don’t forget to stretch.

Goals, in order to be useful, must be realistic. The optimism you feel in January

will give way to depression by the third week in March if your goals are clearly

out of reach. Carefully evaluate each objective, and the resources required for

achievement, then set your goals within the range of realistic. Reducing your

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billing errors to zero or increasing sales by 75 percent may just not be possible.

Again, SMART goals will be a stretch, but achievable.

Additionally, your goals must be tied to your business in order to be effective.

Some goals sound nice, but if they’re not tied to your overall business

performance, they won’t make a lick of difference. For example, adding a new

line of soda pop in a convenience store wouldn’t make much sense unless you

can show how it will increase your overall sales and improve your profit margin.

There’s no point in changing merely for the sake of change. Smart goals will

always be tied to the success of your business.

Timing is also essential to your success. Setting a goal to increase sales by 15

percent is all well and good, but it must be timed to fit the rhythms and cycles of

your overall business strategy. Will sales be flat until December, then rocket

through the holidays, or will they grow steadily throughout the year? Establishing

reasonable expectations for timing helps you to allocate your resources wisely

and become accountable for your results.

Once your goals have been established, you must formulate a strategy for

accomplishing your objectives. A strategy is simply the method you will use to

reach your goal. Effective strategies will include a clear and concise statement of

the goal, a series of action steps required to achieve the goal, and a timeline that

describes when each step must occur in order to achieve success.

Smart goals and effective strategies will always be written down. When Samuel

the prophet was instructing the people, he “wrote them in the book...” (1 Samuel

10:25). If you want your plans to be effective, write them down. Once you have

recorded your goals and plans, add due dates for each step in your action plan.

Allow sufficient time in your year-long schedule to accomplish each key task.

Break down large projects into bite-size pieces. Small steps are more easily

accomplished in the course of a week or a month, and the satisfaction that

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comes from “finishing something” builds momentum into the larger process and

avoids discouragement.

The final piece of the planning puzzle is accountability. If you don’t already have

established reporting relationships, ask a fellow businessperson to hold you

accountable for your progress toward achievement of your goals. If you work

within an organization, share your plans and goals with your supervisor. Effective

change comes when we plan, strategize, and then follow through to success.

Asking and allowing someone to hold you accountable for results is an exercise

in humility, and also a profitable strategy.

As you approach the new year, establish SMART goals, implement a strategy for

achieving your objectives, and allow yourself to be held accountable. Then watch

your business grow!

2. Focus energy on opportunities

Business leaders can tend to get dragged down fighting fires and dealing with

problems at the expense of having the time and energy to pursue opportunities.

These opportunities come and go; if they’re missed, they will keep a business

from growing. King Solomon wrote, “The wise look ahead to see what is coming,

but fools deceive themselves” (Proverbs 14:8, NLT). Problems focus our

attention on the past, whereas opportunities focus our actions on the future.

When we make problems our focus, we may fail to take advantage of

opportunities. We all face problems, which must be identified and addressed

effectively— but then we need to move on. Otherwise, dealing with problems can

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overwhelm our time and energy. Often, when difficulties arise, we do just enough

to get by, without fixing the root cause of the problem. Instead, we should find a

solution that will stop the problem from coming back again.

Bill’s company manufactures automotive stamping parts and operates on a

narrow profit margin. He bought the least-expensive steel available, which often

failed to meet specifications. Although the supplier always replaced the sub-par

steel, the time and energy required to return the defective raw material took 30

percent of Bill’s time. When Bill changed suppliers, he received better quality

steel at a slightly higher cost, and it freed up 30 percent of his time, which he

then devoted to calling on existing customers and new prospects. The net result

was growth in his business.

Joe was a brilliant landscape architect who did award-winning design work.

However, he supervised most jobs himself and struggled with managing crews

and contractors to get the work done on time. As a result, he spent 65 percent of

his time managing projects, rather than creating landscape designs and

developing new business. He also turned away many jobs because he didn’t

have time to follow up with inquiries. When he hired an experienced crew boss to

supervise the installations and manage most of the follow-up details with the

contractors, Joe was able to focus most of his own energy on working with clients

and designing new landscapes. Within eighteen months, his business more than

doubled, and he had two new crews working regularly.

Effective leaders ask key questions to uncover new opportunities. For example,

what is the biggest unexpected success that has affected your business? Often,

building on an unanticipated success can be more effective than starting from

scratch. One independent pizza restaurant started receiving orders from a large

new apartment complex near the store. The apartment building catered to young

single adults. When the pizza shop started to market specifically to those

apartment dwellers, business grew by 20 percent as a result.

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Changes in demographics may signal an opportunity. When the owner of a small

chain of auto parts stores noticed that one of his seven locations was

experiencing a decline in sales and was losing money, he asked his best

manager to take over the store. Over the next several months, the decline in

sales slowed but the trend continued. The manager worked night and day, but

nothing seemed to turn the store around. A study of the surrounding

neighborhood revealed that a demographic shift was underway, with a large

increase in Spanish-speaking residents.

I suggested to the owner that he treat the situation as an opportunity rather than

a problem. First, he transferred his star manager to another location, where he

did his customary great job and improved sales. Meanwhile, the owner hired a

bilingual manager and several bilingual customer service representatives for the

failing location, and they immediately added some signs in Spanish. Virtually

overnight, the store’s sales increased by 50 percent and it once again became

profitable.

The apostle Paul warns us not to be like children, “tossed here and there by

waves” (Ephesians 4:14, NASB). In business, if we focus only on problems, we’ll

be “tossed here and there” as we try to react day-by-day to changing

circumstances. If we’re not careful, our problems will manage us, rather than us

managing them, and the result will be missed opportunities.

3. Developing and Understanding your competitive advantage

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Every business has—or had at some time in the past—a competitive advantage

that attracted customers. In order to be successful in today’s marketplace,

business leaders must strive to understand their competitive advantages and

then strengthen them.

One nursery decided to build its business around selling herbs. When the

company began to advertise its extensive selection and the expertise of the

owner, customers were attracted to buy these plants—and they also bought

other garden plants and products. The nursery was able to leverage its

competitive advantage in herbs into more sales across the board.

For some companies, size and strength are competitive advantages, but smaller

companies often have to rely on skill and creativity. When David fought Goliath

(see 1 Samuel 17:40-48), he understood that a direct assault would be fatal—for

him! Even though David had previously demonstrated courage and effectiveness

in fighting and defeating bears and lions, he knew that his competitive advantage

against Goliath would be his skill in using a slingshot. By targeting his strength,

with God’s help, David defeated the much larger and stronger Goliath.

How can you, as a business leader, understand your competitive advantage and

utilize that advantage to gain customers?

First, identify and write down three major strengths that you believe give your

business a competitive edge. What are your core competencies—what do you do

best as a company? Take time to validate these strengths with your staff and

customers. Be open to discovering that your competitive advantage is different

than you think. A riding stable in Michigan prided itself on having the highest-

quality horses, which they believed was the key to attracting more customers.

However, after completing a customer survey, they found that being the closest

stable to Detroit and having great beginning riding instructors were the most

important factors, not the quality of their mounts. When they changed the focus

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of their advertising to highlight their location and tout the quality of their

instruction for beginners, they increased their business. Don’t assume that you

know what your competitive advantage is. Test and verify.

After identifying your true competitive advantages, be bluntly honest in evaluating

how you stack up in the marketplace. One of Wal-Mart’s competitive advantages

is low prices, and they constantly use comparison shoppers to maintain their low-

price advantage. Establish benchmarks to validate how you compare with your

competitors, and find a way to get honest feedback from your customers. You

may believe, for example, that you provide top-flight service, but validate your

perceived advantage to make sure it’s real.

One cable television company believed that its service was great, but in reality

their customers were generally dissatisfied. When satellite TV became available,

many customers switched to the new service. What was perceived to be an

advantage was actually a disadvantage. As it turned out, the only advantage the

cable operator had enjoyed was a monopoly. Honest, direct feedback is the only

way to avoid a similar mistake.

Identifying your advantage is only the first step. You then need to validate that

your customers will be motivated to buy based on that advantage. One company

that has succeeded in this is Orvis, makers of top-quality—and expensive—

fishing equipment. The quality of Orvis’s equipment entices serious fishermen to

part with up to $1,000 for a fishing pole. Because their customers continue to

respond, Orvis continues to market the advantages of its top-quality

merchandise.

After assessing your strengths, determine whether those advantages need to be

strengthened. The first banks that offered Saturday service developed a

competitive advantage based on customer convenience. However, as other

banks began to offer Saturday service, these institutions needed to further

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expand their hours and establish more convenient locations to maintain their

advantage. I know of a law firm that built a competitive advantage around their

expertise in tax law cases. However, when other firms in town began to

strengthen themselves with excellent tax attorneys, the advantage enjoyed by

the first firm was diminished. Realizing they were losing their edge, the firm hired

a top IRS official to join the team to help reestablish their advantage.

Finally, focus your advertising and marketing campaigns to highlight your

competitive advantages. When you build a better mousetrap, people will buy it,

but only if you share the information about your product’s superiority.

A plumbing contractor offered true 24-hour service, with immediate response to

major emergencies. However, most homeowners were unaware of the first-rate

service and response time. The plumber was bearing the high cost maintaining

his staffing levels around the clock, but he was not attracting many new

customers. When he launched an effective advertising campaign, highlighting the

service, he increased the number of emergency calls and established many new

long-term customers. As your business determines, validates, strengthens, and

then acts on its competitive advantages, it will grow and prosper.

4. Developing customer loyalty

True customer loyalty is perhaps the greatest asset a company can develop.

Loyal customers provide repeat business and—equally important—referrals of

new customers. Word-of-mouth advertising may be one of the oldest and most

effective methods of developing new customers.

Customer loyalty is difficult to build and measure. Some business owners

assume that all repeat customers are loyal customers, but that may not be the

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case. Other factors—such as pricing or convenience—may contribute to repeat

sales. The deeper and more important issue is to determine why customers

come back before you conclude that they are truly loyal.

For example, I fly regularly with one particular airline, based entirely on schedule

and pricing. The airline might conclude that I am a loyal customer, but I am not. If

a competitor offered a lower price or better schedule to a destination where I was

traveling, I would switch. I used to shop at a pharmacy near my home based

strictly on location. Service was sloppy and frustrating, but I remained a customer

for seven years before dissatisfaction drove me away. Based on my repeat

business over several years, the pharmacist could have wrongly concluded that I

was a loyal customer.

Wise business owners develop ways to build true loyalty that not only holds

customers but also turns those same customers into a word-of-mouth marketing

department. Several simple steps will help you get started.

Any time your product or service falls short and a customer wants a refund or

adjustment, act quickly. King Solomon observed, “Fools mock at making amends

for sin, but goodwill is found in the upright” (Proverbs 14:9 NIV). Solomon also

understood that “Hope deferred makes the heart sick” (Proverbs 12:13 NASB).

Acting quickly to correct problems, with a cheerful spirit, strengthens customer

relations.

A customer that needs to pull teeth to receive satisfaction won’t tell many good

stories about your business, whereas those who receive prompt and easy

corrections will become sold on your business. Look at every customer complaint

as an opportunity to build a stronger relationship.

Consistent follow-through in every aspect of service is the key to success. Jesus

said, “He who is faithful in a very little thing is faithful also in much” (Luke 6:10

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NASB). A distributor of promotional items gave less attention to smaller orders,

and often shipped these orders after the promised delivery date. Customers

continued to order, but only because the price was the lowest in town. Others,

who were fed up with late deliveries, sought new suppliers for future orders.

Referrals, if any, were always prefaced with the caveat: “The price is good, but

the service stinks.”

One question will determine if you have been successful in developing true

customer loyalty. Ask your regular customers, “Would you recommend our

product or service to others wholeheartedly?” A good follow-up question would

be, “Have you ever recommended us to others?” Focus on these two key

questions, and avoid the temptation to develop a longer questionnaire. A

sandwich shop offered a free drink for a week to customers willing to answer the

questions. Responses were received in a closed container to encourage candor.

The best way to evaluate responses to your two-question survey is with blunt

honesty. If more than one-third of respondents would not endorse your business,

you need to dig below the surface, understand the reasons, and take immediate

corrective action.

Consider rewarding customers who make referrals. A health club might offer a

free membership month; a carpet cleaner might clean one room for free; and a

pizza store might give a $5-off coupon for each new customer referral. Your

business will benefit in two ways: You’ll obtain new customers, and you’ll have a

convenient way to measure the effect of word-of-mouth advertising.

A loyal customer is one who is willing to invest in the relationship by sticking with

your business even if your price is not always the best, because they believe

that, over time, you offer the best value for the money. These same customers

will become the most effective sales team you could ever build, spreading the

good news about your business to everyone in their network.

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5. Plan for tomorrow, but take action for todayForward-thinking business leaders spend considerable time, energy, and

financial resources determining which emerging trends and future developments

will shape the business landscape. Looking to the future is both wise and

necessary to keep a business on track and avoid disaster. As Jeremiah wrote

regarding Jerusalem, “She did not consider her future, therefore she has fallen

astonishingly” (Lamentations 1:9, NASB). However, the bigger questions for most

businesses are how to assess, understand, and respond to changes that have

already occurred in the marketplace, and how to take effective action.

According to an old investing axiom, a shrewd investor buys on rumor and sells

on news. In business, we need to plan for the future (which amounts to buying on

rumor because we cannot guarantee the future), but we must sell our products

and services today based on events that have already happened. When we

focus on responding to the changes that have occurred in our marketplace, we

can take advantage of current opportunities that over time will create our

business future.

The cities of Phoenix and Tucson, Arizona, grew dramatically throughout the

1970s, 1980s, and 1990s. The key catalyst for that rapid growth was the

development of effective and affordable air conditioning during the 1950s. Some

real-estate developers who understood that affordable air conditioning would

make the 100-degree summer days bearable for more and more people began

developing properties early. However, most developers reacted to the rapid

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growth only after the ball started rolling, but they were still able to capitalize on

the expanding population trend.

During the 1960s, a significant increase in households with both spouses working

outside the home, the rise in single-parent households, and increasing numbers

of teenagers with disposable income fueled tremendous growth in the fast food

industry. Companies such as McDonald’s and Burger King tapped into a market

that was there for the taking. They did not create the market; they simply filled it.

Other companies such as A & W Root Beer and Dairy Queen, two fast-food

pioneers, missed the trend. They failed to see the significance of the changing

marketplace and continued to promote themselves as snack places, rather than

as regular dining destinations. As a result, McDonalds, Burger King, and others

passed them by.

Today, in many parts of the United States, Spanish-speaking customers have

become a sizable segment of the market—and a marketing niche that is likely to

continue to grow. What steps should prudent businesspeople take in order to

develop this market? A large auto repair shop in the Southwest began to

advertise in Spanish-language newspapers and radio, added bilingual customer-

service staff, and printed customer information in Spanish. Their non-Hispanic

customer base has continued to grow at a rate of 5–10 percent per year, but their

overall business is growing at a 30 percent rate, fueled by the growth in their

Hispanic customer base.

Many businesses do a good job of being customer driven. They understand their

customers’ needs very well, and they respond quickly to their customers’

demands. However, focusing too narrowly on one’s existing customers can

cause a business to lose sight of the broader market. To be market-driven rather

than only customer-driven, a business must strive to understand the entire

market rather than just its own customer base.

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A generation ago, for example, many department stores failed to spot the

societal trend toward more two-wage-earner families. As families began to have

more disposable income, time became more important than selection. Mass

retailers such as Wal-Mart and others began to take market share away from the

department stores. The department stores had done a good job of understanding

their own customers, but they had failed to understand the changing

marketplace.

Innovation often occurs first with non-customers. For example, four years ago,

Larry Taylor, president of Desert Pacific Printing in Tucson, began receiving calls

from non-customers asking if he could print from a computer disk. Responding to

this new trend, Taylor quickly learned how to move from disk to finished product,

gaining many new customers in the process. Now Desert Pacific employs a full-

time electronic-printing specialist and most of their business is accomplished by

electronic means. Identifying and then acting on this opportunity was a key to

growing in a shrinking market.

Forty percent of the adults in the United States today are not married. That

equates to 82 million people—and 50 million of these singles have never been

married. What business opportunities can be generated to serve this © 2005

Steve Marr. www.businessbuildertraining.com 15 emerging market? One group

that might respond is the many dentists who are struggling to maintain their

practices. Perhaps by establishing evening and Saturday hours while reducing

their weekday hours they could build practices based on serving these single

working adults.

Every business is different, but you can effectively shape your business future by

identifying key trends that have already occurred, and then take action.

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6. Success in sales

Successful selling is the lifeblood of any business. Every salesperson and

business owner wants to close as many sales as possible. By developing five

key habits, you can dramatically improve your closure rate.

To succeed in sales, you must first learn how to present strong, compelling

arguments quickly to your customers. “‘Present your case,’ the Lord says, ‘bring

forward your strong arguments’” (Isaiah 41:21, NASB). A salesperson has one or

two minutes to connect with a customer.

If you miss that window of opportunity, the prospect is often lost. Develop a one

or two-sentence opening statement designed to establish rapport with your

customer. Be prepared to state what you and your company do well. Know your

competitive advantage and hit it solidly. As you make your statement, watch the

customer’s reaction. Experiment to see which phrases connect the best in your

client’s understanding.

Sue knew her product line well, but she could see that prospects lost focus after

a few minutes. When she developed an effective opening, she was able to hold

her customers’ attention, present her products, and close more sales. Ben had

developed what he thought was a good opening, but he became frustrated as

sales continued to elude him. “I seem to get customers on the hook,” he said,

“but then I lose them at the last minute.”

What Ben needed to do was develop the habit of effective listening, the second

key to closing more sales. Your customer is often your best source of

information, but to get that information, you have to listen. Often, even when

we’re trying to listen, we spend more than half our “listening time” thinking about

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what we’re going to say next. As a result, we miss the clues and cues that the

customer gives us.

King Solomon wrote, “He who gives an answer before he hears, it is folly and

shame to him” (Proverbs 18:13, NASB). Develop questions designed to draw out

information that you can use to offer the best possible service or product. If the

prospect hesitates, ask, “What do you think?” The more questions you are able

to get answered, the better information you can develop.

Another key principle is to keep the conversation on target. King Solomon said,

“The fool multiplies his words” (Ecclesiastes 10:14, NASB). Fewer, well-focused

words hit the mark far better than endless chatter. Practice making your key

points clearly and concisely in one or two sentences. After you’ve made your

point, stop. Better to allow a moment of silence than to start rambling. Don’t let

your key points get lost in the clutter of too many words.

Develop several key questions designed to get a “yes” from your customer.

Often, the process of closing a sale involves getting the customer to agree to

several preliminary or intermediate points. Ask questions such as these: “If I can

deliver the product and save you money, would you be interested?” “If I can

improve delivery times, would that improve your operation?”

“Since quality is an issue, if I can show you how we can improve quality, would

you be interested?” “If I establish that our new press will reduce your labor time

by 20 percent and pay for itself in eighteen months, would that help your bottom

line?” Develop your own set of questions, but remember that the best path to

closing a sale is often to bring the customer along one step at a time.

Finally, ask for the sale. Jesus said, “Ask and it shall be given to you” (Mathew

7:7, NASB). Though Jesus was speaking about spiritual matters, the same

principle applies to closing sales. Most often, sales are lost by an ineffective

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introduction or by failing to ask for the business. Kindly, gently, but directly, ask

for the sale, and then be quiet and wait for an answer. If the answer is

noncommittal, determine what additional information is needed to help the

customer make a decision. If the answer is no, endeavor to find out why. The

more information you can gather about lost sales, the more effective you can be

in the future.

7. Pricing your product or service right

A convenience store raised the price on a single can of pop from $1.09 to $1.19.

One block away, another retailer was holding the line at $.99 each. One pizza

shop continued to offer free delivery, even though his competitors had instituted

a $1.00 to $1.50 charge per order. Establishing the best pricing strategy is

always challenging, but considering a few guidelines may help.

First, know your customers. King Solomon wrote, “Know well the condition of

your flocks and pay attention to your herds” (Proverbs 27:23 NASB). In business,

your customers are your flock. A gas station that thrives on repeat customers

may want to keep prices lower on bellwether products like candy and pop to

encourage more stops for gas. Increasing sales of those extra items will enhance

revenues and build up the bottom line. A station that caters to mostly transit

customers may not lose business by charging a few extra cents—in return for

convenience—and the higher prices may bring in extra dollars without affecting

volume.

A second principle is to know your competitors well. Be keenly aware of how your

products, customer service, and prices stack up against the competition. Moses

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sent out spies to check out the opposition (Numbers 13:2), and so should you. If

your prices are too low, you may be leaving money on the table and struggling to

cover your expenses. At the same time, high prices will often drive customers

away. Determine realistically how your service or product is different from the

competition, and then determine if you can and should charge more for superior

service, or if you need to cut prices to attract more business.

Matching a competitor’s price is wise only when there is little difference to the

customer in location, quality, or service. Starbucks offers specialty coffees and

lattés at a higher price than, say, McDonalds. If Starbucks were to try to match

prices with McDonalds, the result would be little gain in business but a large loss

in revenue. Customers are willing to pay more when they perceive that they are

receiving something more of value. In the gasoline business, price and location

are the key factors. Regardless of appearance, a gas station will attract few

customers if their price is a nickel higher than the place across the street.

Many retailers use a standard markup approach to setting prices, adding the

same percentage to every item. Although this is an easy approach, it often fails

to yield the best results. Consider keeping prices lower on items that customers

buy regularly, and take a higher margin on products that are likely to be an

impulse buy. You will keep your volume moving with sharp pricing on the faster-

moving products, but you’ll also increase your profit margin on slower moving

merchandise.

Some companies add surcharges to boost revenue. For example, airlines charge

more for paper tickets and checking overweight baggage. Many hotels charge

extra for Internet connections, room safes, and room service. That way,

customers who desire added services pay more, instead of everyone. Based on

the additional work or overhead invested in customers who require more service

and attention, businesses can justify charging different prices. But charging

different prices to different customers for the same product or level of service is

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wrong. Moses wrote, “You shall not have in your house differing measures, large

and small” (Deuteronomy 25:14 NASB).

A rug-cleaning business charged by the square foot. Pickup and delivery was

included in the price. The owner soon discovered that he was losing money on

jobs with only one or two rugs. In response, he adopted a two-part pricing

strategy. First, he added a delivery charge for smaller orders to offset his cost of

providing the service. Second, he offered a discount to customers who sent in

four or more rugs. As a result, smaller orders became profitable and customers

who had more rugs were given an incentive to provide more business.

Working through a well-crafted pricing strategy will help you maximize your

business potential.

8. Forming strategic partnershipsIn today’s complex business environment, relationships between customers and

suppliers are ever changing. Outsourcing has become more prevalent as

businesses seek to control costs, but effective outsourcing often requires a

company to train its vendors to ensure quality of service and on-time delivery.

When outsourcing is handled well, both the buyer and seller benefit.

The key is for managers to clearly establish the type of training needed, who will

pay for it, and how training will strengthen vendor relationships, increase sales,

and improve customer service. With cooperative training, vendors are better able

to meet their customer’s requirements and customers often see improvement in

quality and productivity. Clear communication between customer and vendor is

essential, because “through presumption comes nothing but strife” (Proverbs

13:10, NASB).

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Celeste Medina manages a telephone center in Phoenix that employs English

and Spanish-speaking telephone operators. The call center represents many

companies—taking orders, answering customer questions, and handling

complaints. “When customers call, they often have questions about the

products,” says Medina. “Many of our customers provide training material to

answer the most common questions. We also have several customers that send

representatives to our facility to provide onsite training for our operators. Our

customers pay their own traveling expenses, and we cover the cost of our staff

while in training.”

The training curriculum is determined by the customer, and Medina has learned

to appreciate King Solomon’s advice: “Take my instruction, and not silver, and

knowledge rather the than the choicest gold” (Proverbs 8:10, NASB). As a result

of the training they have received, call center business has increased rapidly

over the past three years.

Medina’s call center provides customer service that may include accepting

merchandise returns.

However, before a product is accepted for return, the operator works through a

troubleshooting list with the caller (based on training received from the

manufacturer). Each time a problem is resolved without requiring a return, both

the operator and the call center earn a small bonus. Medina says that “over time,

sales have increased and customer relationships have been strengthened. Both

parties achieve winning results when we collaborate on training, and we both

experience a great return on the time and money invested in mutual training.”

Bill Baxter manages a temporary employment agency in Houston focusing on

clients that require seasonal, temporary, or sporadic office assistance. In a tight

labor market, Baxter works to balance current and future customer needs with

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the available workforce. “I often do not have people on call whose skills match

those demanded by my customers. Customers expect to receive a person with

all the skills necessary to become effective immediately on the job.”

Baxter arranges for specialized training to prepare his pool of temporary workers

to meet future requirements. Some receive generalized training in software

programs such as Quick Books, Microsoft Word, or computer graphics design.

Others require specialized training. “One customer that does Web page design

needs people with specific skills in graphic design to work 20-40 hours per

month,” says Baxter. “At my own expense, I have trained three people in that

specialty to meet the demand. No competitor of mine has people with those

skills, so I have a regular customer.”

Baxter covers the cost of training, but he expects the prospective employees to

learn the skills on their own time in order to share the cost of the investment.

Baxter believes that each dollar invested in training has paid handsome

dividends, proving that “he who sows sparingly shall also reap sparingly; and he

who sows bountifully shall also reap bountifully” (2 Corinthians 9:6 NASB).

Anthony Bell’s company in Detroit assembles overseas components into finished

products. When he heard about an automotive product that was assembled in

Germany using many U. S. parts, he approached the German manufacturer and

offered to assemble the components in Detroit.

At first, the German firm was reluctant to relinquish control of the assembly

process, due to concerns over final quality. To allay their fears, Bell agreed to fly

a team of German experts to Michigan to train his entire staff and ensure that

product quality would meet the company’s standards. In return for absorbing

these expenses, Bell received a long-term contract, established a new customer,

and increased the German supplier’s profit margin.

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Embracing opportunities to form strategic partnerships can help companies

develop new business lines and strengthen old relationships. The prophet Amos

wrote, “Can two walk together, except they be agreed?” (Amos 3:3 KJV). Wise

business managers understand that finding strategic partners and forging

effective training agreements will pay future dividends.

9. How technology impacts outsourcing and service partnershipsMany people are alarmed by the increasing number of American service sector

jobs that have been outsourced in recent years, and they complain that

“someone should do something” to stop the trend. Individuals who call for some

type of restriction or government intervention, however, miss the key point: Most

outsourcing is driven by the rapid rate of change in the marketplace. Instead of

complaining, we must assume responsibility for managing change in our

businesses. As the prophet Ezra told the nation of Israel, “Arise! For this matter is

your responsibilitybe courageous and act” (Ezra 10:4,).

I would define outsourcing as any time a company transfers work to another firm

—inside the U.S. or internationally—or shifts the work to “technology.” When you

consider that many more jobs are outsourced to technology than are transferred

overseas, businesses owners ignore these trends at their own peril.

In a fluid, ever-changing economy, some jobs simply disappear while others are

radically changed and others are transferred. For example, consider the workings

of a gasoline station. Those of us old enough to remember “service stations”

recall driving up to the pump and waiting for the attendant to pump the gas, wash

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our windows, check the oil and tire pressure, and take our payment. Today, most

people pump their own gas, using a credit or debit card in the automatic gas

pump to fill up and go. The entire process takes a minute or two, compared to the

old system that could drag on for five or ten minutes.

As a result of these changes, tens of thousands of gas station jobs were lost and

are gone forever. These jobs were outsourced to technology. Gas station owners

benefited by lower costs and fewer employees to manage, and customers

benefited through lower prices (this was before the recent run-up in the price of

oil) and faster service, but at a cost of thousands of jobs.

A similar change took place in the airline industry with the introduction of

automated check-in terminals, ticketless travel, and online reservations.

Checking in for a flight used to require standing in line waiting for a ticket agent to

shuffle your paperwork. Today, many of us go straight to the gate, increasing our

convenience and decreasing the number of airline employees required to staff

the terminal.

Given a chance, should the government have tried to “save” these jobs by

mandating the use of gasoline service attendants and airline ticket agents?

Clearly not. Technological advances—and their results—are part of the ebb and

flow of a healthy economy. Business owners and employees must accept these

changes as a fact of life, and adapt rather than complain.

Technology has made many services into commodities that are very difficult to

differentiate from the competition. Many services that used to require specialized

knowledge and skill have been transformed by advances in technology. For

example, mortgage brokers used to manage countless details before a mortgage

could be approved. Today, a few clicks on the Internet can bring together several

financing offers, and some loans are even closed by mail. Given that most

consumers see little difference between one mortgage company and another,

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speed, convenience, and competitive interest rates have become the determining

factors. Once again, technology and automation have increased the convenience

for consumers and kept prices down.

In the field of medicine, Dr. Paul Sangster the Northern Arizona Radiology sees

many changes that affect the practice of radiology. “Today, images are captured

electronically, and those images can be read anywhere,” he says. Consequently,

much of this work can easily be transferred between companies or outsourced

overseas. Dr. Sangster foresees that insurance carriers may start requiring

patients to use lower-cost imaging centers that have X-rays read by interns or

even by overseas radiologists. Procedures such that require hands-on treatment

are not at risk, but other elements of radiology are.

Technological changes can be beneficial when utilized effectively. For example,

according to Dr. Sangster, one of the challenges in radiology is the need to

provide service around-the-clock to cover emergencies. In the past, a radiologist

would be on call to meet this need, creating increased costs and a strain on

staffing. Paying a doctor to work an overnight shift to read maybe two X-rays is

not productive or cost-effective. Dr. Sangster knows of a practice in an Arizona

small town, that sources the reading of images taken at night to Australia, rather

than keep a staff member on duty.

Just as manufacturers have been forced to get lean and mean by examining

every step in the manufacturing process and implementing efficiencies to remain

sensitive and responsive to price competition, service providers today must

realize that price and efficiency have become very important factors. To remain

competitive, service providers must break down their processes step by step,

and standardize wherever possible.

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Analyzing services in the same way as manufacturing may seem difficult, but in

today’s competitive marketplace, efficiency is king. Understanding this principle

allows a business to keep its competitive edge.

Aside from maintaining your business, look at where you have a definite

competitive edge, and exploit that advantage to build more business. For

example, a large general medical practice developed a very effective system of

submitting and managing insurance claims for patients. The practice used that

expertise to set up an insurance submission and management service for other

doctors, thereby increasing revenue.

A goad is a strong, sharp stick used to prod along an animal, such as an ox. In a

business sense, goads are those “sharp sticks” that prompt us to action. As

Jesus told Saul, “It is hard for you to kick against the goads” (Acts 26:14, NASB).

Likewise, fighting technology changes in today’s economy is like kicking against

the goads. Far better to adapt, change, and continue to grow your business.

Dig deeper and learn more (Optional)

This section includes various support material for further inspiration and

encouragement and relates to the material covered in this section

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23456. 7.

Progress Report

James 1:22-25 “Do not merely listen to the word, and so deceive yourselves. Do what it says. Anyone who listens to the word but does not do what it says is like a man who looks at his face in a mirror and, after looking at himself, goes away and immediately forgets what he looks like. But the man who looks intently into the perfect law that gives freedom, and continues to do this, not forgetting what he has heard, but doing it-- he will be blessed in what he does.” (NIV)

Name and Number of Module ________________________________________

Participant’s Name: ________________________________________

The Biblical Truths (Principles) I learned from this module:

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I intend to apply this Truth (Principle) in my business by:

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Acknowledgement

Steve Marr consults with business and organizations bringing a national and

international perspective to achieve improved vision, focus, quality, and

management effectiveness in today’s competitive environment. Effective practical

assistance is provided to the business person or ministry leader. Steve’s radio

feature “Business Proverbs is heard on worldwide, including armed Forces

Service radio

For more information visit www.stevemarr.org

Material adapted by Dr. Mario DentonMario is the International Field Continental Programme Director – Market-place

for Crown Africa, the Africa Director for FCCI (The Fellowship for Companies for

Christ International) and the CEO of Strong Message Business Consultancy. He

is an international teacher and industrial psychologist and uses his strong

academic and corporate background and his uniquely effective coaching to help

people tap into their inner being; to utilise their strengths and expand their skills

to make a difference in the workplace. He and his wife, Mariene, are based in

Cape Town, South Africa, and are blessed with three grown sons.

Servant29

Copyright. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by an information storage and retrieval system without permission. Regarding permission to reprint material from this material, please write to Dr Mario Denton:

Unless otherwise noted, Scripture quotations are from The Holy Bible, English Standard Version, copyright © 2001 by Crossway Bibles, a division of Good News Publishers. Used by permission. All rights reserved

and a lot of it.

We can help you through:

Educating your leaders.

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Starting and sustaining a High Performance organisation

requires time and money …

But … serving as the Leader of God’s business requires much more

Assisting with small groups in establishing direction for your organisation.

Doing workshops on your purpose for being in business, ownership, avoiding financial bondage and integrity in the workplace.

Delivering seminars on improving performance and achieving higher levels of significance.

Biblical teaching and prayer support.

Let's keep the good marketplace vibes alive. Let's network. Contact Dr Mario Denton today to become a member of the

Crown Companies Marketplace Coaching TEAM.

Crown Companies Legacy Leaders

Providing mature business leaders an opportunity to continue to use their skills

productively for the Glory of God.

Do you desire to pass on the baton to business leaders to transform their

business?

Legacy leaders are business leaders who have a desire to continue to use their

skills productively to mentor, coach and train the other business leaders, as well

as train the next generation of business leaders for the glory of God.

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Crown Companies exists to equip and encourage business leaders to operate

their business and conduct their personal lives in accordance with Biblical

principles.

Legacy leaders Are experienced in business

Understand and are committed to the vision of CROWN Companies

Have implemented biblical principles in their own personal life and

business

Are mature in the Christian faith and are of proven character

Have a passion to see other business leaders succeed as determined by

God’s standards

Legacy leaders may possess: The capability to be an encourager, coach, mentor and disciple.

The ability to provide wise business counsel to other business leaders

The time and or resources to come alongside other business leaders

"Teach us to number our days that we may present to you a heart of wisdom.”

Psalm 90:1.

Legacy leaders serve in a wide variety of capacities, including:

Mentoring individual business leaders

Working with groups of business leaders

Serving as an ambassador for CROWN Companies in your church and

community

Travelling abroad to assist business leaders in other countries

Do you want to make a difference in the lives of others for eternity?

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How can you serve the Lord as a legacy leader and begin sharing all that the

Lord has entrusted to you?

1. Pray now where the Lord will use you in the lives of other business

leaders to impact the Kingdom of God for His glory.

2. Contact Crown Companies at [email protected] or the Crown

companies office at +27 21 975 0226

3. Visit our website at www.crown.org.za for more information, tools and

resources and become a member to enjoy the support, counsel and

fellowship of other members and the extensive material available.

Crown Companies: Reclaim the workplace for Christ

Is the vision of your church also to bring the people of your community into a life-

transforming encounter with the Kingdom of God?

The workplace is a key battle ground for achieving the above vision. Mature and

equipped believers should live their faith in the workplace. But many need help in

understanding what that means, as well as support in carrying it out. If you want

to live your faith in the workplace, helping to make it more effective of God’s

Kingdom on earth, then we at Crown Companies want to come alongside you to

support and equip you.

Our mission and intention are to develop flexible training programmes and

processes to assist you in this regard.

Imagine a workplace where …..

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There were biblically based, explicitly defined values Ethics and integrity are paramount Love and servant leadership governed relationships Pursuit of excellence was the norm Collaboration was sought but obedience and commitment to final

decisions were followed Selfish ambition was non-existent Accountability was enforced – in a supportive manner

START WITH A WORKPLACE MINISTRY IN YOUR CHURCHEquip your workplace leaders to become ministers.

Help them to become sensitive to the lost.

Help the workplace leaders of your church get a vision for joining God in the

workplace ministry.

Crown Companies: Become the business leaders God intended

you to be

Sometimes it is a matter of survival, but you have to become the business

leaders God intended you to be.

The purpose of Crown Companies is to help business leaders:

Draw closer to God

Establish a committed and vibrant relationship with the Lord

Develop deep, meaningful relationships with like-minded peers

Learn what it means to run a company for Christ

Help other workplace leaders to do the same

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This is accomplished through

Monthly leadership groups

Workplace conferences

Materials, resources and training on our website

"Love the Lord your God with all your heart and with all your soul and with all

your mind and with all your strength. The second is this: Love your neighbour as

yourself. There is no commandment greater than these." Mark 12:30-31.

Search the untold riches of the Bible to find scriptural perspective for operating a

company as a steward of Christ with like-minded peers and colleagues. Join a

small group and facilitate discussions relevant to:

Sales and marketing strategies

Effective time management

Cash flow and profit

Planning goals and implementation

Motivating people

Problems solving

"For my thought are not your thoughts, neither are your ways my ways, declares

the LORD. As the heavens are higher than the earth, so are my ways higher than

your ways and my thoughts than your thoughts." Isaiah 55: 8-9.

START WITH A SMALL GROUP DISCUSSION IN YOU AREADo you need someone to pray with you – someone who understands the pressures of running a company, someone who cares?

Do you desire to integrate your Christian faith into the daily operations of the business God has entrusted to you?

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For more information on a small group in you area contact Dr Mario Denton at [email protected].

"And I say unto you, Ask, and it shall be given to you; seek and ye shall find;

knock, and it shall be opened unto you. For every one that asketh receiveth; and

he that seeketh findeth; and to him that knocketh it shall be opened.". Luke 11: 9-

10.

Crown Companies: Every believer a minister in the

workplace

Common dilemmas in the workplace Isolation: Feeling the pressure of being responsible for many people

Need encouragement but rarely receive it

Need people with whom they can communicate honestly

Equipping the workplaceYou have an opportunity to make a difference in the workplace to which God has

called you. Meet monthly with other business leaders to receive instruction and

training from other top business speakers on how to integrate your Christian life

into your business.

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Form a small group of leaders who serve one another in a well-informed, support

group where burning issues like the following can be discussed:

Develop a strategic plan tailored for each member’s business Developing an action plan for ministry Developing your company’s mission and vision Product and service excellence Giving back to the Lord Long-term financial planning Building a high-performance team Hiring smart Sharing your faith in the workplace Problem solving Customer service

START WITH A LIFE-CHANGING SMALL GROUP DISCUSSION IN YOU AREA.

Do you desire to integrate your Christian faith into the daily operations of the business God has entrusted to you?

For more information on a small group in you area contact Dr Mario Denton at [email protected].

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