This is the second in a series devoted to building business on value and redesigning your business to maximize customer perceived value.

Small business succeeds when it – consciously or unconsciously – provides customer perceived value. This begins with a new understanding of customer loyalty.

Customer loyalty may be the most misunderstood value in commerce. The US economy grew in the ‘50s on the unspoken marketing concept of “built-in obsolescence,” the presumption that, because customers were repeat buyers, their loyalty would keep them buying brand. Quality, not surprisingly, stole these “loyal” customers away from American manufacturers in the ‘70s and thereafter.

Now that American businesses have learned the value of quality – a reasonable demand of local and global customers – we are winning back markets thought lost. American designs, programming, engineers, and craftspeople have regained dominance in automotive, aerospace, and technology.

Small businesses, on the other hand, have always understood and depended on the values of buying local and customer service. Given small business volume, a lost customer is not just “a drop in the bucket.”

• Small business must move away from so-called “customer loyalty” that is really just reluctant allegiance. For example, every Christmas, a dry cleaner I know, bless him, gives out lint brushes. In his mind, he is repaying customers for their loyalty. But, it isn’t the lint brush that keeps them coming back; it is the convenience of the store’s location and the geniality of the counter person. Open another dry cleaner across the street and cut the price by $1.OO per shirt, and he will be overstocked with lint brushes.
• Small business has to learn that customers don’t like having no choice in the matter. They do not like having their loyalty monopolized. This is what tears at the fabric of small town businesses as customers flee to improved perceived value at the newly big box stores. Customers are fickle and whimsical, but they will stick with you if your perceived value gives them a choice. They are able and ready to compute the cost of travel away from town to save a few cents, but if you can’t offer an offsetting experience, they will one-stop shop.
• Small business rewards only matter so much. Big businesses can lure and harness customers with rewards programs. But, studies show this link is tenuous at best. For example, United Airlines’ frequent flyer points are nowhere near to turning people away from the perceived value in flying Southwest. A flyer may keep his/her United frequent flyer plan open because the boss pays for the flights or because United goes to some places that Southwest does not, but all things considered, Southwest has the edge in value – and an attractive travel incentive plan to  boot.
• Small business needs to learn that customer loyalty is not a tangible asset. You cannot trade on it even though it may figure into the price of your goodwill. You are missing the point of loyalty and corrupting the principle if you think of loyalty as leverage, as customer ownership. A goal – not a strategy – loyalty is driven by total customer experience.

When businesses learn to drive this total customer experience – and to price it accordingly, they will define their future success. If they fail to do so – and do so soon, they’ll wonder what they missed.

Ever tried to define the value that you offer your customers?  A price is the dollar sign on a product, the tag on the item for sale, but that is not the same as value.  I’ve been mulling this over lately, and wanted to share some of my thoughts.  While this post is somewhat of a textbook discussion, it lays important groundwork for additional posts. 

Pricing of products and services has traditionally been cost-based, determined by adding a desired profit to a cost determined by cost analysis. That is, the seller/vendor figures out what the product cost is in terms of parts, materials, labor, sales/marketing, packaging, shipping, etc. Then, s/he added the desired profit margin, say 25-35%. Or, the lawyer/doctor/consultant charges hourly fees in an attempt to place an arbitrary price on a service that portends to cover operating costs plus the alleged value on professionalism.

The cost methods are not value based because they don’t clearly and unambiguously determine what value means to the customer.

In traditional costing, the attitude has been: “here’s the price; take it or leave it.” Small businesses hanging onto this tradition may not be serving their customers well – and are leaving money on the table. The tradition does not understand that a customer’s opinion of a product’s value determines the value to him or her. This value differs from the market price which has typically determined by competition and accessibility.  

I find that customers buy from the source that offers the highest perceived value; i.e., “the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives.  Customer perceived value is the exchange a customer would be willing to make before dropping down to the next offer.”

Small business customers do not place the same value on three martini lunches, big promotional items, or glossy marketing efforts. Frankly, they do not care what you paid for the item or how the economic crunch is hurting you.

Customers are more interested in the following:

• Overall, do you convey an image that respects your own self-image?
• Do you communicate frequently and with a caring attitude?
• Are your services offered on a timely and dependable basis?
• Are you available and responsive?
• Can your customer expect fairness and accountability from you?
• Is your work efficient and effective?
• Do customers feel they have learned something about the services/product and about what you have brought to the party?
• Do customers feel they have done the right thing – and that you have done right by them?

Notice that these are criteria separate and distinct from market values. For example, I knew a newly hired marketing manager at a manufacturer who promised to secure customer loyalty by delivering product as soon as possible. Trouble is most of the customers did not want the product until a specific later date because they did not have storage room. So, in this case, prompt delivery was not a value to the customer.

Small businesses can do better if they realize that loyalty is a strategy and not a tactic. Loyalty is not to be presumed. Target loyalty as a goal worth securing and developing – rather than as something you can bank on.

How you move from cost pricing to value-based pricing may be difficult. You may be turning around a big ship. And, the move may be more treacherous in some lines of work than others. I believe there is profit in making the move sooner than later, but here is the big question:  How do we clearly and succinctly identify what it is that our clients value? Stay tuned…

Small Business Saturday is dedicated to supporting small businesses on one of the busiest shopping weekends of the year.  Are you ready?  Start now to include the project language in your signage, marketing materials, and website.

 Small Business Saturday 2011 (November 26, 2011) is the second year for this nation-wide venture. With heavy participation by American Express, FedEx, and Facebook, this is a huge marketing thrust to bring customers to main street shopping opportunities. (Other sponsors include Business Matchmaking, Count Me In for Women’s Economic Independence, National Trust for Historic Preservation’s Main Street Center, National Association of Women Business Owners. SCORE: Counselors to Americas Small Businesses, Women’s Leadership Exchange, and Yelp!)

 These collaborators want to recognize the nation’s small businesses and their importance to the US economy, job creation, and contribution to local communities. This can be a great chance to jump-start your small business at this time of year. This marketing support clearly embraces storefront retail and service businesses, but it can also benefit on-line businesses – if you want to take advantage of it.

You can visit http://smallbusinesssaturday.com to learn more about the project. The website has links to signage, e-Marketing materials, and $100 worth of ads on Facebook.com. This will let you bring some consistency to your advertising and outreach in terms of language and visuals. Those with on-line businesses would be smart to copy the logo, signage, and e-Marketing language to their websites early enough to grab attention by Thanksgiving. The site even lets you share your info with other small businesses and offer Groupon type of coupon opportunities.

If you customers register their American Express card at www.facebook.com/shopsmall, they are eligible for a $25 credit when they use the card on Small Business Saturday. In addition, FedEx will print posters on the FedEx Office Print Online application at a one-time 20% discount.

Last year’s Shop Small Business Saturday campaign saw 100,000 businesses download the marketing materials, 10,000 businesses sign up for free Facebook ads, and 200,000 American Express cardholders registered their cards for the $25 break. Moreover, American Express will donate $1 – for every person who “likes” Small Business Saturday on Facebook – to Girls, Inc. to support young women who want to be the entrepreneurs of tomorrow.

 Here’s some 2010 numbers that should catch your attention:

•  Small Business Saturday was featured in over 3,000 items in national and social media.
• The coverage reached more than half a billion prospective customers.
• Over 40 elected officials endorsed the coalition.
• 1.2 million liked the idea on Facebook and 30,000 tweets were sent.

 This is an exposure you cannot ignore.

 Now, what should you do? Explore the Small Business Saturday website and related materials. Print your flyers and hang your posters. If you’re a Main Street storefront, recruit your neighbor stores to join the initiative. If you’re an on-line business, post a link to your website, make a discount offer, and e-market your customer base and prospect database. Here’s a marketing opportunity on a platter. You still have time to make it work for you!

When the economy is tight, it’s not easy for small businesses to give back to their communities. For the record, 90% of our small businesses give to charities and non-profits in their area. And, 60%+ of them admit that charitable giving brings them success. 

Even when they are have little time or money to spare, small businesses find a way to support a local T-ball team, contribute equipment to schools and libraries, or mentor and coach. We want to share some of the ways our customers in meaningful ways without giving up big bucks or otherwise productive time. 

• Award a prize. Support a charity by donating a prize for a raffle or silent auction. Donate a product or a gift certificate.
• Give them a hand. Provide a service, such as printing, webspace, or window posting. Supply giveaways, such as promotional items, volunteer service, or volunteer hours.
• Put employees to work. Make volunteerism a part of your business pace work culture. Calendar a day when employees can volunteer to work at the local food bank, cook at a homeless shelter, or help local seniors.
• Take a collection. If your situation permits, collect customer spare change for local charities; change it monthly. Or, place a collection bin for used books or non-perishable food.
• Sponsor a scholarship. Contribute as little as $25 to a reading contest at your library or school, and call it a “scholarship.” Children and parents appreciate the support, regardless of the size.
• Join forces. Persuade the stores on your block or in your strip mall to promote a single campaign. It multiplies contributions and maximizes exposure. Partner with another small company in your sector to turn what may have been a small donation into a sizable one.
• Sit on a board. Bring your business and management skills to the board of a non-profit. Take the lead on bringing other businesses into line.
• Scratch a back. Trade your service for a link on the charity’s program or website.
• Hold a lawn sale. Sell used office furniture and electronics to raise money or donate it outright to local schools, churches, and libraries.

 Now, you can only work with what you have. Don’t over commit or spread yourself thin. Weigh your options when you are doing your 2012 budget. For example, you might take that $10/week payment for a tiny ad in your church bulletin and put it towards are larger gift with bigger exposure. It doesn’t lessen your charitable motives to expect community response for your effort. Small businesses serve their communities well, and support them with taxes, rentals, and payroll. There is no reason their loyalty should leave town.

Klout is a real time and relevant benchmark for those who market through social media.  Are you using social media to build and market your small business? You are wasting your time – if you don’t know how big your audience is.

Klout.com is an analytics platform that scores your reach. Klout cross crunches variables in Facebook, Twitter, Foursquare, and other social media. The result is a score based on:

• True Reach reports the size of your audience based on the engagement of your followers, friends, and those who interact with your messages.
• Amplification Probability indicates how likely your posts are to provoke likes, comments, retweets, and the like.
• Network Score measures the influence of your audience. If you know you are reaching the “right” people, it’s all the difference between broadcasting and targeting.

This is a qualitatively stronger index of performance than search optimization scores in the past. Klout’s final score ranges from 1 – 100, but the average score is in the 20s, and 50s and 60s are considered high.

Klout ignores spam and inactive accounts, and it focuses on the content your audience shares. It also counts the lists you have been added to and what happens to your content once you send it. It monitors if your messages spark reactions, conversation threads, forwards, and retweets or texts. It measures inbound and outbound messages to show how probable it is that your content will spread.

This helps you to identify influencers, users who are likely to communicate and promote your product or service. Influence drives action. Influencers suggest you go to a movie, check out a YouTube video, or promote a product. To reward these influencers, you can offer Klout Perks, exclusive, free or discounted products, services, or experiences to your friends and audience.

Klout is important because it measures the depth and breadth of your social media marketplace and quantifies and qualifies their subsequent influence. It is the closest thing you have to an index of your return on investment.

Caution: Still a work-in-progress, Klout can be manipulated. On the other hand, time and motivation spent on gaming the system doesn’t really make sense. PeerIndex, TweetLevel, and Twitalyzer are alternatives. But, Klout.com is easier and more intuitive to navigate. It’s exciting to see a solution to this need in the works! Check it out.

Small business survival depends on creating fresh awareness of your product or service.  A marketing strategy that puts you in front of your prospects is key.  In a supply and demand economy, it’s up to you to press consumer demand.

Here’s a challenge! Implement one new marketing idea – each week. Experts will tell you that your marketing plan does not have to be complicated or expensive, but it does require consistent activity.

You can do this without a huge investment of time or money with simple effective small business marketing ideas:

• Go social. Use social shopping sites to get your products in front of more potential buyers. Start out slow and be selective about the inventory you feature – choose products that create a buzz and reinforce your branding identity.
• Create buzz. Get everyone talking about your business. Launch a marketing campaign that falls outside what’s been done before. Make your campaign memorable and, thus, unforgettable. Distribute an unusual promotional tie-in or invite customers to a sponsored event, such as a ball game.
• Warm up to cold calls. Cold calls can be an effective sales driver for a small business. They don’t necessarily have to happen on the phone because you can drop by local stores, club, or chamber meetings.
• Develop collateral materials. Printed marketing materials still have a place in the modern business world: fliers, brochures, and postcards for direct mail and trade shows. Resist the urge to save by designing the pieces yourself; enlist the services of a skilled designer to create a professional image.
• Start blogging. Make your website visually compatible with your collateral materials. If you don’t have a blog, start to blog now. An inexpensive, high-returning online marketing strategy, a blog gives you presence and credibility while it provides customers with value-adding content. As a bonus, the constant stream of fresh content and strategic keyword usage will boost your site’s rankings in search engine optimization.
• Send regular emails. Contact established leads and customers with predictable regularity. Make sure each message contains a relevant, value-adding benefit to the recipient. To save time and money, consider leveraging the services of an email provider who can assist with template design, email deployment, and list management.
• Consider a newsletter. Customers love information, so become an instant authority. Design and email a monthly or quarterly newsletter, or use it to introduce a new product or service. Make it an e-zine, and you avoid printing and postage costs.
• Hire a copywriter. Your written content – whether it’s an email, brochure, or web page – directly reflects your business. Take the time to find a professional business writer whose style and experience is a good fit for your business.
• Be generous with discounts. With consumers pinching pennies, catering to their budget-minded sensibilities can get you far. Try sending coupons with your next mailer, or include them in a bundled coupon package. If the fit works, advertise on Groupon.

The most important thing is to be authentic. Deliver messages directly relevant to your brand or audience and don’t make promises you don’t keep, or potential buyers will move to a competitor whose campaign rings true.

Remember, small business marketing ideas will be just that – ideas – unless you take action to implement them. Don’t waste time … get started!

Does your website design help your prospects know, like and trust your business? How do you measure the effectiveness of your website?  Traffic?  Sales?  Still, there are other things to watch for when you are your own webmaster. (If you have a webmaster on retainer, quiz him or her on key metrics.)

Much goes into website design and optimization. Yes, much of it involves complex and numbing programming experience, but, there are checks and queries any layperson can pursue.

Purpose and Focus:

Don’t waste ether space with a vanity website. Cover all that stuff on existing social media. A small business website design should inform, sell, and serve  -  in order to encourage your prospects to know, like, and trust you.  Determine a focus and stick with it.

Design and Personality:

Once you have your focus, design a website that looks good. You’ll want this first impression to be professional. Still, search engines do not recognize photos or animated elements - so they offer no benefit for SEO purposes.

However, color, shape, and typeset can relay the business personality: strong, somber, utilitarian, formal, entertaining, etc. Make sure the website design elements match your other business visuals, such as logo, business cards, stationary, brochures, and presentation materials. Seek some input on these design issues.

Content and Function:

Include clear copy about what the business does and what sets it apart from the competition. Include a page describing the management team, business history, and job opportunities – if applicable. Write easy-to-read but comprehensive copy on products and services – a separate page for each product. Show readers how to purchase or order. And, put a live email and snail-mail address and a direct Skype able toll-free phone number on a Contact Us page.  Good website design is as much about functionality as it is about form.

• Functionality makes the website accessible, quick, and easy to find.
• Pick a domain name that captures the business concept: lawnman.com, holidaylites.com, churchsecretary.com.
• Test how quickly the site appears on a mobile device, such as a phone or blackberry.
• Use Keywords to improve search optimization opportunities, but browsers will reject repeated keywords. First, verify the traffic your keywords generate at sites, such as wordtracker.com or adwords.google.com. Also, select keywords specific to each product.
• Build Meta-tags into each page on the website. Seek advice on embedding these tags into the html address for each page. You can also add links to social media to encourage readers to “like” or “share” your info.

Be sure the deal you cut with your web designer includes repeated tests on speed, accessibility, optimization, and code validation. At the price you’re paying, you have the right to assurances that your website design is working and effective.

Chances are good that you have a strategic plan, but what about strategic marketing?  Strategic marketing is a mind-set and blueprint. It is specific, analytic, and motivational in ways that Business Plans are not.   Yes, your marketing strategies must promote your product or service, but they must also outline marketing logistics for identifying your customers, and build the business credibility of your name, experience, and potential.

Strategic marketing spells out your plans for partners, employees, and others interested in your success. To put it simply, it is a way of understanding who and what you are as a business.

• Be able to explain your business in 60 seconds. Refine and reduce your business concept to a mini-commercial that sets your business apart. Be able to explain your value and key selling points. If you are not ready to do this in 60 seconds or five sentences, you are not ready to go on.
• Draw a detailed picture of your target customer. Use internet resources to build a specific profile that includes demographics, socio-economic data, and spending habits. Include specifics that show you know the competition, their products, pricing, and marketing plans. Use software to create a model that updates the data and drives your response.
• Set clear, measurable, short and long-term goals. Target the year’s revenue, the anticipated sales, and the expected profit. Then, benchmark quarterly and monthly expectations. Setting objectives motivates you, your staff, and those with a financial interest in your success.
• Develop a plan of attack. Draw a blueprint of how you plan to meet your objectives. Include staffing and advertising. If your business requires a sales force, you need to engineer a sales performance model that will justify the added expenses that employees bring to the mix. Describe the organization of the sales team, their territories and approaches, and compensation plan. In any case, you need an advertising and communication strategy. You need to target your media – print ads, website sales, radio spots, etc. Be very specific about targets, costs, and justification.
• Prepare a budget. Project your expected gains and costs on a calendar. Make it as finite as you can because this is a living document evolving over the year and, then, over the ensuing years. Cite detail that educates you and everyone with an interest.

Strategies need to be agile and responsive. They require tools and know-how to keep them freshly informed and effective. Strategic marketing is a work-in-progress. This is both its challenge and its value.

Search Engine Optimization (SEO) is part art, part science. And while much of the process can be left to the experts, it’s important for small business owners to know the SEO basics.  Such knowledge informs decision making at many levels of your business.  If nothing else, it helps you distinguish between the SEO “experts” that really understand the process and those that just want to take your money.

Put simply, the more activity you have online, the more likely you are to appear in search engine results. That is what you call SEO.   If your website url is in your social media profiles, or if you blog or post articles, you increase your chances of being “found.” And while anything you do on-line using your business identity can drive traffic to your website, the following considerations can help maximize your efforts.  

• Keywords are important. Chances are, you already know that much.  But wait – there’s more!  The better you know and understand your target market, the easier it is for you to identify keywords and phrases that those consumers are using to search for providers like you.  If you can match your website’s keywords and phrases to the search phrases your target market is entering, you’ve significantly increased your chances of being found by the very consumers you want to reach. 

• Well-written content keeps readers coming back. Once you’ve identified keywords and phrases most relevant to your target market, work them into your copy. Again, no surprise there.  But again, there is more to the story!  Every accountant is using broad search terms like payroll, taxes, accounting, and tax services in their own web copy. How can you further differentiate and refine your own keywords and phrases to make it even more likely that the right prospects will find you?  You might try adding a geographic reference, such as Texas payroll services.  Or perhaps you enjoy working with a particular industry.  Why not use a phrase like accounting for widget makers? 

• Add a blog to your website. Blogging several times each week automatically improves your search engine optimization. For instance, if you own a catering service, you might blog about recipes, menus, and events.  While blogging actually helps you add a large variety of keywords and phrases to your website, it is still important to consider your target market, what those consumers consider important, and how they might search for those solutions.

• Include links to other sites. These hyperlinks generate interest in what you do by associating your site with the internet traffic of others. In fact, it’s not unusual to request a reciprocating link. Blog posts on your site might link to the site of a  business or professional whose products and/or services complement your own.  Be careful though, that you make wise choices about with whom you choose to associate your business.  These types of associations are difficult to undo.

When a consumer goes online to find a business, search engine optimization makes the search easier and faster. Small business owners need to know how this works and what you can do to improve your rankings on major search engines. These are things you can do yourself – for little or no cost. It isn’t hard to learn but the payoffs in increased traffic can be significant!

What does Google+ mean to your small business?  Yes, it’s a networking application to share messages, photos, videos, and so on. But Google+ co-opts Facebook, LinkedIn, and Twitter and introduces elements we haven’t seen before.  Here are some ideas for how your small business might implement features such as Circles, Sparks, Hangout, and Stream.

Circles are groups of friends.

You label each circle. What you share within one circle stays there and does not share with other circles – unless you direct it to. Circles avoid that “share with everyone” problem in Facebook.

Google users might have separate Circles for friends and relatives. However, the small business owner could create one Circle for vendors, another for customers, and another for advisors. In addition to communicating back and forth with members of your Circles, you can instant message, chat live, or video chat. And, you click and drag to add or delete members.

A Google+ icon appears at the top of Google products. It notifies users of Google+ contacts. A drop down reveals conversations in progress, allowing you to observe or join. It also lets you access all your other Google apps: Picasa Web Albums, Google profile, Google+ Stream, Buzz, and Google contacts.

Sparks are similar to Twitter Tweets.

A business owner would enter a list of interests: product lines, customer needs, product applications, business news, etc. Sparks report browsing traffic in these areas.

A Hangout is a Skype-like feature.

You can organize a live video meeting or sales presentation with up to 10 members of a Circle. You could conduct a morning meeting while you are traveling or introduce a product line to a group of customers.

The Stream refers to your conversation threads.

You can post your personal thoughts, likes, or dislikes just as you do on Facebook’s Wall. But, you could also use the Circles to manage your business communication and your privacy.

Despite the hype, Google+ is not yet available. What we know comes from tech media that have enjoyed a preview. You can sign up on a wait list until Google+ is ready. I predict people will continue their social networks, but Google+ will be the way to go for small business operations.