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41. Tom Peters searching for small business excellence in tough times No 3

Tom Peters’ and Robert Waterman’s second precept for successful US businesses was: Stay Close to the Customer. Rocket-science it definitely is not, but it is very important and quite easy for large businesses to lose sight of, as Peters well knew. In large and mid-size businesses sometimes the senior executives insulate themselves from the customer. In the best retailers the boss walks the store, talks to customers, does his own mystery shopping; in product and services the boss should be on the exhibition stand, talk to the unhappy clients as well as the delighted ones. But small businesses that should be very close to the customer, often fail to take advantage of this closeness. They often also avoid the personal contact – as if not hearing that your customers do not think you are wonderful will make that go away! For business gurus every behaviour has to have a catchy name, so I term it ‘ostrich management’ and it NEVER works.

Even one-man bands are often so busy getting on with the activity side of the business that they forget the best market research they could do and some of the best customer-service activity is staring them literally in the face. Talk to those customers! Find out more about what they are doing and thinking – and what they think of you. And what about talking to the former customers about why they are not buying any more, and the potential customers about why they have not bought yet?

This is now more important than ever when the economy is no longer booming. Lots of adequate but not excellent businesses will fail in this harsh climate. I read a nice jibe recently, that the definition of a bull stock market is when every broker and trader thinks he’s a genius; the same is true of booming economies – you can get away with a lot when demand is high. But when things get tough and getting an order takes a lot more effort, which businesses will still be busy? The excellent businesses will be those that stay close to the client and deliver against the client’s perceived needs, and they will be the ones that survive and prosper (they will have to do a few other things well too!).

The businesses that fail in the downturn will mostly be those that are poor or average rather than excellent. Of course, an excellent business can fail if gets too ambitious and takes too much risk, and then runs out of cash/finance. But all these failures will also clear the ground and open the market for emerging new businesses with something more to offer, with a new vigour and focus on their segment of the market.

Those businesses that want to survive and develop during difficult times need to think consciously about how they are going to stay close to the customer. Do you have a system for staying in touch – a contact strategy? A system for recording and noting those who do contact you and why, those who have not contacted you, and you have not contacted for a while? For identifying who refers business to you, for networking and meeting with them regularly; and identify who else could could be a source of business for you? If not, why not?

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