Archive for the ‘Transportation’ Category

Less Is Definitely Not More

In the latest Marketing magazine e-newsletter, bringing us up to date with the top marketing stories from the U.K. and around the world, two stories caught the eye.  They focused on two very different industries – food & drink and airlines respectively – but shared a common theme.

In the first article, we were told that Mars and Snickers have reduced the size of their chocolate bars, while retaining the same prices.  Both have shrunk 7.2% (from 62.5g to 58g), but a Mars bar will still retail for 37p and a Snickers remains at 41p.
The second story, coming after months of press speculation, is the news that budget airline Ryanair has confirmed that it plans to charge for the use of toilets on its aeroplanes.

Nobody is denying that many major corporations are under pressure at the moment.  In fact, Ryanair last week reported its first loss for 20 years.  But this low-cost airline could easily have decided to increase the price of all its tickets by just a couple of pounds without most customers noticing; instead it has chosen a controversial move which has caused uproar, will deter some customers from even considering flying with the airline in future, and does not position the company particularly favourably.  Similarly, the Mars/Snickers strategy is being put in place to help these brands absorb the rising commodity costs they are facing, but their competitors are facing the same challenges and, as yet, have not resorted to such seemingly drastic measures.

Never forget how important your customers are.  However tough the environment might be for you, things will be just as bad – if not worse – for your customers.

Certainly nobody wants to feel they are getting less for more – or even less for the same price – especially at the present time.  The most successful companies when this recession ends will be those who have continued to research, understand and satisfy the needs of their customers.  This may not mean offering your product at a cut price, but it almost certainly will mean offering value for money.

Posted in Aviation, Credit Crunch, Food, Marketing, Recession, Reducing Costs, Transportation, UK |
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Getting More From Your Existing Customers

Even though the Ansoff Matrix model is over 50 years old it still is the most commonly used model for analysing the possible strategic direction that a business should take.

How many times have you asked yourself the questions in business – How saturated is the market in which we do business and is there an opportunity to sell more of my product/service to existing customers?

In the fast moving world we live in today we are often preoccupied with looking to where the next big customer will come from with all our attention placed on acquiring new customers rather than looking under our noses at our current customers to see how we can encourage them to buy more of the same product or purchase a different product/service that they don’t currently know about ..

The following article by Jonathan Moules highlights this exact issue and begs the question – are you squeezing your customers for all you can?

Squeezing the lemon can be fruitful
Financial Times January 16 2009

In these straitened times, it is more important than ever to get more out of your existing customers. However, understanding how to do this is not straightforward.

Gerard Burke, who runs the Business Growth and Development Programme (BGP) at Cranfield University, has coined the phrase “squeezing the lemon” to explain where most entrepreneurs go wrong.

His theory is based on the observation that lemons used in home cooking often end up only half used because the recipe only calls for the juice of half the fruit. The remainder is left in the fridge.

Many business owners, he claims, act the same way with their customers, even in the good times.

“One of the advantages of just keeping on talking to your customers is that they will tell you about things you don’t otherwise know about,” Burke says.

He gives the example of Hotel Chocolat, the retailer of luxury treats, whose founder Angus Thirlwell is a BGP graduate.

Hotel Chocolat takes the view that each gift of chocolates comes with two customers, the person who places the order and the recipient. So it makes sure that the latter knows all about where their box of goodies has come from, Burke notes.

Squeezing the lemon could also mean something as simple as reminding your existing customers of other products or serves that you can supply.

This was the case for Tony Simpson, owner and chief executive of Clough Smith Rail, which builds signalling systems.

It was not his sales staff who squeezed the lemon, but a junior operations manager, who had heard Simpson talking about getting more from existing customers

When the operation manager’s counterpart at Network Rail started talking about other work the public body was planning, the manager asked if Clough Smith Rail could do the work for it.

The Network Rail executive had not even considered Clough Smith Rail would be interested. But, as a result, Simpson’s company landed a contract worth £2.4m.

Some organisations might have promoted such an employee to a sales position. But Simpson, who notes that you need these people all around the business, has been happy to allow the manager to remain in his operations role. “He just feels great about the fact that he recognised the opportunity,” Simpson says.

Clough Rail Smith is less desperate than many companies for new business at the moment.

Major transport infrastructure investments in recent years, such as the West Coast Mainline project, have generated plenty of work and the York-based company currently has a full order book.

“I am not being smug, but we are OK,” Simpson says.

Back at Cranfield, Burke claims that one of the reasons that companies fail to get more out of their existing customers is that their sales staff are trained as hunters, gathering new leads. What they need to be, he claims, is farmers, nurturing contacts to produce a regular harvest of work.

Changing behaviour could be as simple as drilling the sales force in the advantages of pumping current customers for new business leads, although the incentive structure might also have to be changed to achieve maximum effect, Burke admits.

Until about 18 months ago, Dave Abraham thought his IT security business, Signify, was doing a pretty good job of serving its clients.

The Cambridge-based company was generating a little over £1m in turnover providing the random password generator devices used by mobile workers to access their employers’ IT networks away from the office.

Customers ranged from small businesses that lacked the resources to run such a system themselves to multinationals that preferred to outsource security services.

“We already knew that managing existing customers well was important… and we were pretty good at it,” Abraham says. “However, we didn’t realise how much better we could be.”

Abraham started by redeploying his customer account manager, who had previously handled all client relations, to focus on the relatively small number of customers that supplied the top 80 per cent of revenues. He then appointed a new starter, who was relatively inexperienced in sales, to manage the remainder of the client list. This enabled the more experienced account manager to devote more of her time to managing the best customers.

Abraham and his team created a simple web-based survey for the top customers and set its now senior account manager the target of getting 20 per cent of them to complete all the questions.

This provided good pointers about what Signify could do better, and lifted staff morale with some great testimonials from the people buying the technology, according to Abraham. “The survey has helped completely change the perception of our employees,” he says.

From the survey, 10 customers came forward to take part in a forum organised by Signify to help improve the service to them. Although these were mid-level IT people, they knew a lot about their business strategies.

“It gave a good snapshot of the economy at the time,” Abraham notes. “There was an interesting mixture of companies suffering in the downturn and others growing stunningly.”

The real benefit from this came when Signify’s staff visited the customers, according to Abraham.

“Rather than just discussing what new things we’ve got coming up, and would they like to buy them, we now have them telling us what’s important to them.”

He adds that, in the last year, Signify’s revenues and profit have risen 30 per cent, primarily by selling more to existing customers. “I’ve realised that squeezing the lemon is not about selling them anything – it’s about helping to solve customers’ problems for them, and about customers trusting us to share their requirements. If we can provide value, they will pay us for our services.”

Posted in Ansoff Matrix model, Communication, Customer Satisfaction, Market Assesment, Sales, Transportation |
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Far From A Fair Fare

In her first Thursday Night Insight contribution, Tanja Kach compares two public transport systems, wondering why one can get it right time and time again, whilst the other seems unable to fulfil its core offering and satisfy even its customers’ most basic requirements.

On my recent visit to Switzerland over the Christmas period, I was fondly reminded of just how efficient and reliable the Swiss public transport system is. The intricate and complex system of trains, buses, mountain funiculars and even boats all link up and offer passengers an unrivalled transportation service. All the timetables have been synchronised, with Swiss precision, to allow efficient connections between the various modes of public transport.

As an example of how customer satisfaction can be achieved within the public transport sector, I’d like to recount my positive experience of a trip into the Swiss Alps.

Knowing that I could fully rely on the public transport system to get me there, I wasn’t worried in the least that I would have to change modes of transport – from bus to train and then to mountain funicular – during my journey.

The bus arrived right on time to take me to the train station where I had seven minutes to get from the bus stop to the train. The train was due to depart at exactly two minutes past the hour and, as I sat near the window and watched the clock on the platform, I heard the whistle blow and the doors close the second the minute hand struck two.

As the train departed the station I settled into my seat ready to enjoy the scenic journey, fully confident that the train would arrive just as punctually as it had departed. Sure enough, I got to my destination on the minute exactly and within four minutes I had changed platforms and boarded the funicular that had been ready waiting to take the train load of passengers into the mountains.

It may seem amazing that an intricate and complex transport system can be run in such an efficient manner, where trains, buses, funiculars and even boats are all interlinked and connect seamlessly, yet the Swiss public has come to expect this level of service and relies on it.

Back in the UK, however, my experiences of using the public transport system couldn’t be more different. Ever since returning back to work after the New Year I have been subjected to delayed trains and cancelled services on my daily commute.

Over the past week there have actually been a number of articles published in Manchester’s Metro newspaper on an almost daily basis all about the latest issues concerning delayed train services: “Misery as key rail line shuts”, “The (very) late train robbery…”, “Rail upgrade launch is hitch-free (…in Italy)”. Even after recent changes have been made to the train timetables in a bid to improve the service offering, there have been massive disruptions to rail services across the country.

In addition to all these changes and disruptions, the fares for rail passengers have increased as well, leaving commuters with a worse service offering at an increased price! Needless to say this has left commuters fuming. A recent poll in the Metro on whether New Year rail fare increases are justified showed that an overwhelming 87% of passengers voted “No”.

The majority of passengers would accept fare increases if they could see a marked improvement in the service. A higher ticket price would be justified if rail companies were delivering on their core service offering as promised: to get passengers from point A to point B for an agreed price and, most importantly, at an agreed time.

And this is what it boils down to: focussing on meeting the key needs of the customer. In order to achieve customer satisfaction a company must understand its customer’s needs and then satisfy those needs with its core offering.

When it comes to public transport the key requirements are punctuality and reliability. Passengers expect a train service that consistently runs on time, so they can rely on it. Only once these key requirements have been met, will passengers be satisfied with the core offering of rail service providers. And perhaps in future, rail companies may even achieve to delight their customers.

Posted in Customer Satisfaction, Tanja Kach, Thursday Night Insight, Transportation |
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