“Getting Real is staying small and being agile” from the Getting Real book by 37 Signals

Back in 2005, the 37Signals team wrote about the need for simple and powerful applications for the small business market, in their excellent Signal vs. Noise blog. They coined the term “Fortune 5,000,000” to describe this hugely undeserved business niche.

We are big promoters of 37Signals, love their simple products and straightforward approach to product development and business. From my experience both working for, and consulting with leaders of small businesses, it is abundantly clear that they need more effective systems for managing and enhancing the performance of their ventures. They can’t be bothered to build every system they need from scratch, there simply is not enough time. It is also very clear that they do not need the complicated, clunky, and expensive apps used in large business, the time and expense required just to use these bloated systems eliminates any net gain the system provides.

In designing the PF Referral System and building this business, we intend on remaining vigilantly focused on the primary result of the system: to significantly increase the flow and effectiveness of referrals to clients.
It is very easy to hear a good idea or suggestion and want to incorporate it into the app. There are so many cool things to be done in relation to the goal, but we firmly believe that until we nail the core functionality of the system, anything else is merely a distraction.

This doesn’t mean we sit with our fingers covering our ears, repeating “I cant hear you, na, na, na, nanan-a”, but we do wait until something gets repeated a few times before even considering making any changes.

As one of the Fortune 5,000,000, we understand the importance of focus and the razr thin margin of error we are allowed at this early stage. We think this lean environment is an advantage and are intent on leveraging the fact that while we can’t do everything for everyone, we can do is one important thing for a lot of people.

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In my work consulting with leaders of small to medium sized firms, I often hear clients describe their dealings with customers in terms like, “they’re bleeding our margins dry”, or “customer service costs are killing us”, or “I’m battling to keep this account.” It is always alarming to me to hear business owners and managers talk about customers in such adversarial terms. I usually ask if they are running a business or fighting a war? And I’m amazed by the long pause that usually occurs as the client contemplates this seemingly straight-forward question.

Are You At War?

Being a bit of a strategy buff, I read the great warrior Sun Tzu’s classic book, The Art of War. While I recommend this book as essential reading for the business strategist, and see the benefit of it’s application in a multi-national conglomerate or BSchools case study environment, I do not recommend adopting a battle field approach to building a high-growth new business.

“The purpose of business is to create and keep a customer.” — Peter F. Drucker, management author, teacher and consultant.

Designing a business from top to bottom with the single purpose of fulfilling a unique customer need is at a strategic advantage against companies that exist for the primary purpose of returning value to a shareholder. Positioning your core purpose in alignment with your customer’s needs, and then continually innovating to better and better meet those needs is a more holistic strategy for growing a business.

Follow the Leaders

The leaders at net companies like SalesForce.com, Google, and eBay put the needs of their customers at the absolute forefront of their business strategies. Each of these infamous web apps were designed to fulfill a unique need in a better way then what was currently available. Each of these firms are leaders in customer satisfaction (net promoter scores), and each has delivered huge return to shareholders.

The wild growth of these businesses is highly correlated to the raving evangelism their services inspire in their customers. Are customer service costs and net margins important to these companies? Absolutely. But delivering an amazing customer experience is more important, because by delivering on priority #1, they are able to cost effectively grow their user bases, increase net margins, lower support costs, and ultimately increase profits.

So…Friend or Foe?

It’s quite obvious that no business will survive if they treat customers poorly, but we are not concerned with mere survival, we are concerned with creating avid Promoters out of customers, growing the business, and increasing returns to our stakeholders.

If you are ready to start focusing on driving growth with your best target market, existing customers, we would love to have you experience the Power of PromoterForce.

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Yesterday I posted a short note on the forum section of GoBig Network about a story I read on TechChrunch.com, about the business social networking site LinkedIn adding a feature that allows members to rate and recommend service providers. Read the post and the reply from Wil Shroter, CEO of GoBig below.

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This is the latest PF logo. I feel it still needs a bit of work but I really like the colors and overall style. I would decribe it as Professional Web 2.0. Any thoughts?

We have all heard the mantra of customer service is king, we all know how important it is to deliver a superior customer experience in relation to our competitors. Well here is another reason to start acting upon this commonly understood but widely ignored fact of business; the big companies that you are competing against are dropping the ball when it comes to delivering exceptional service.

Your Opportunity Madame?

They are so worried about their stock price and scrambling to drive down costs in order to keep their shareholders happy, that they are unintentionally shooting themselves in the foot when it comes to service.

Think about how you feel when you call a company to discuss a billing issue, or request a replacement part, and suddenly you’re talking to a service rep somewhere in Eastern Europe or Southern India, after doing battle for the last 20 minutes with a phone system that was designed to keep you from speaking with that person. Understand that we are not knocking people from other countries; we are however knocking large companies that fail to trail their low-cost serivce employees, and in turn end up frustrating their customers to the point of anger.

Make Them Pay

As an entrepreneurial leader of a small(er) business, you are faced with the constant challenge of competing against these large companies in an environment where they have more marketing money, more political power, and more technology then you.

What do you have? You have service! You have the opportunity to help customers solve their problems fast. You have the opportunity to make people feel good about working with the local business instead of the multi-national. You have the power to deliver a superior customer experience, which builds loyalty within you customer base, and can (with the right systems in place) lead to high-value referrals to people just like themselves.

Essentially by being local, customer focused and smart, you can beat the pants of the big companies.

PromoterForce can help you leverage your efforts to deliver an exceptional customer service into a stream of highly target customer initiated referrals. It enables you to empower your satisfied customers to reach out to their frustrated friends and family when they are complaining about being treated like dirt by a telephone system, and not being able to talk to a trained service rep, by saying, “hey friend, there is a better way, I’ve been using company X to complete task Y, and they are great, I’ll send you some more info about them so you can check them out for yourself. Done Deal. No amount of advertising could deliver a message as powerful as that.

That is your business to the power of PromoterForce.

There are two great articles I recently read on this topic.

1) Lousy Service Often Will Send Customers Away by S.F Chronicle writer David Lazarus

2) Customer Experience Key to Competitive Advantage, Research Notes from the London Business School

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Ambassadors of the Entrepreneurial Economy

Angel Investors are the new Ambassadors of the Entrepreneurial Economy. These wealthy and risk adverse individuals are creating and participating in a hugely important niche in the investment community. The Venture Capitalist’s are flush with mega cash but are increasingly focused on second and third rounds of funding. The few VC’s that are looking at early stage investments want to see proven entrepreneurs on the team.

But what about all the rest of the entrepreneurs? As we know, the next big thing isn’t likely to happen within the inner circle of Sand Hill Road. As entrepreneurs in the early stages of the startup process, with sadly, very little personal funds to throw at the opportunity we are pursuing, we are narrowing our focus for raising seed capital on the Angel Investor crowd.

Encouraging News

In this week’s (Oct 2-8) edition of the National Dialogue on Entrepreneurship, they highlight a new report released by University of New Hampshire (UNH) on trends in angel investing that shows that this niche is growing fast and producing a lot of new ventures.

Here are a few highlights for the report:

• The growth rate of these investments was 15% higher than occurred in the first half of 2005.
• The average size of investments grew (up 22%) as angels backed 24,500 firms in the first half of 2006 - representing a 6% drop from the first half of 2005.
• Health care and medical devices’ is the hottest sector for angels, accounting for 27% of total deals.
• Other hot sectors include software, biotechnology, and retail.

The data of this report shows that there are many good reasons for entrepreneurs to be confident and excited about the funding opportunities for their early stage ventures.

Local Interest

PromoterForce is most likely to launch in the North Bay Area (north of SF), and were are very exited about the North Bay Growth, Innovation and Venture Forum, which is organized by the Santa Rosa Chamber of Commerce. This full day event features panel discussions for prospective angel investors, and a pitch event for startups seeking angel funds.

We are hoping the event has an more Entrepreneurial Miracle in store for the folks at PromoterForce, but most importantly we are very encouraged by the recent surge in angel investing and the great opportunity it holds for startups all across the country.

photo credit: flickr photo credit: http://www.flickr.com/photos/mjillla/49693366/

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