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Customer Relationship Building

Lesson 20 from: Value Pricing & Business Models for Creative Entrepreneurs

Tara McMullin

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Lesson Info

20. Customer Relationship Building

Lesson Info

Customer Relationship Building

As J.K.O. said we are going to part two of our hands on business modeling. This section is gonna look a lot like the last section, but we're gonna consider the next two questions of our business model. So in case you're just joining us, let's go through what all the questions are, it doesn't ever hurt to review. This is our little friend, the business model guy. Because our business model is like our bodies. It's full of different systems, it's full of different layers, that all need to work together to keep our business really healthy. And each layer of your business model, each layer of the offers, of the value that your creating in the world, needs to answer these six questions. The first question which we covered in the last segment is, what will this help my customer accomplish? So if you're putting an offer out into the world you need to know what it's gonna help your customers do. How it's gonna change them. How it's gonna answer a particular question. What function it's going t...

o have in their life. Then you need to know who the heck these customers really are, right. You need to know how they're feeling. You need to know their deepest desires and their greatest fears, you need to know what keeps them up late at night Googling. You need to know what questions their asking, how they're talking to their friends and family, what they're thinking, what they're feeling. So you need to have that really good idea of who you're designing this solution for. You also need to know how you're gonna approach your relationship to them. Is this a transactional thing, is it this for that? Is this an ongoing support relationship? Are you dealing with DIYers, are you dealing with people who really want their hands held? Are you dealing with one time buyers? People who are coming for a quick fix? Or are you dealing with people who wanna have a loyal relationship, want to buy from you over and over and over again because they value the relationship? There's really conscious choices that need to be made there. Finally we get to the point in the model, in the layer, of understanding what the solution actually looks like. We gotta answer these three questions first, before we can ever hope to come up with an innovative, creative solution to our customer's problems. And I really like to make sure people wait this far into figuring out their business model to figure out what their offer is going to look like. Because that helps guarantee that it's gonna be something that works for you, and works for your customers, and works for your business. Really really important. Then we gotta figure out how we're gonna let people know about this thing that we just created. These are your marketing and your sales channels. How are you gonna promote it? How are you gonna have conversations about it? Are you gonna ask for referrals? Are you gonna make cold calls? You need to have an understanding of what the sales process looks like for every single product that you have to offer. And, hint, that sales process should not be the same, for every single product that you have to offer. You wanna look at each product differently, and say what makes sense for this. What makes sense for the solution I've created for this problem? What makes sense for this customer? So, how are we gonna let them know about it? And then finally, we need to know how much is this gonna cost? How much is it gonna cost to us? How much in hard cost does it cost to create it? And how much exhaust cost? Our time, our energy, our reputation, our brand. What's the cost to us there as well? We're gonna unpack those last two questions more tomorrow. But for now, oops, for now, we're gonna focus on how will we approach our relationship to our customers and the important question of, what does the solution actually look like. So I'm gonna break these two questions down, give you lots of food for thought for both of those questions. And we're gonna do an exercise, one for each of these questions, and then, we're also gonna do more hot seats. For this segment as well. So that you can see the examples of our studio audience members working through each of these questions, working through each of these exercises, so you can learn from their example as well. So let's start with this question of relationship. This is a question that I find a lot of micro-business owners don't think about. This is kind of one of those non-decisions that we make. Or non-choices that we make. We assume that cause we're in this business or in that kind of business we're going to have this kind of relationship. We're going to have a transactional relationship. Very quid pro quo, this for that. Give you this much money, you get that thing. And another, in other types of businesses you assume that you have to have these kind of long drawn out supportive hand holding relationships. And that may or may not work for you. So this is another question where I'm asking you to make intentional choices, where you may not have even considered that you had a choice before, alright? Treating all of your customer relationships the same way is a recipe for burnout, and it's also a recipe for missed opportunity. Because when you start treating all of your customer relationships the same way, you forget that different kinds of people like to buy in different kinds of ways. They want to be supported in different kinds of ways, they want to receive in different kinds of ways, they want to be treated differently. Why is it that you make a choice between a two star hotel or a three star hotel or a four star hotel or a five star hotel? I'll tell you. Sometimes, I make the choice to stay at a two star hotel. Case in point, when I'm only gonna be there for six hours and my job is to sleep before I get on an early morning flight. That's when I choose a two star hotel. Why would I spend more than $ on that kind of relationship? That is quid pro quo right there. For $60 I want to be able to sleep, and park close to the airport. Other times, if I'm gonna be some place, for three or four days, I want to spend more money, I want to be treated better, I want to have a different kind of relationship with the hotel that I'm staying at. I want them to know me by name. I want them to open the door for me. I want them to make my bed with amazing sheets. Right? That's the kind of relationship that I want. And your business has the same thing going on. Sometimes customers want to be treated one way, sometimes customers want to be treated a different way, and the trick is sometimes those customers, are the same person, and we're gonna get into this. But different kinds of customers approach buying differently at different times. So what's the airport hotel of your business model? What's the luxury hotel of your business model? And when might people choose to make different kinds of buying decisions? To choose to buy different kinds of relationships with your business, with your business. Another example of this, I mentioned that I'm such an Evernote fan, earlier. Evernote has two main levels of how you can become an Evernote user. There's the free version, which is you download the app, and you use it, and then there's a business version. And that's a different kind of relationship, because it's a paying relationship in this case. There's support involved, there's more features involved, there's access to different things, different opportunities, different kind of relationship. Another company that I love, Mail Chimp, has a very similar kind of thing. It's also a premium model. You can use Mail Chimp, for free forever, if you keep your list under 2,000 people, and you don't care about some certain features. I have a very different relationship with Mail Chimp. Mail Chimp and I are like this. I love me the chimp. And so I pay them $150 a month, to maintain a much larger list, and to maintain a much wider set of features. I also expect for that some extra perks, which they dole out generously, they are amazing. And I also expect some extra support. I also recently upped my relationship with my web hosting company, I changed my web design and realized, this old hosting company is not working anymore. It wasn't the company, it was the package. So I shifted from a very simple relationship with this hosting company where they were only willing to provide me this, this, this, this, and this thing, which has always worked out in the past, and upped it, to a relationship where they're there for me. So when my traffic spikes four times because I'm on Creative Live, they don't shut my website down. Even though I'm using way more CPU power, way more bandwidth, that's what I'm paying for, that's the relationship I need to have from them. I need to know they're there for me no matter how much traffic is going to my website, no matter what happens, I need to know they're there for me, and so that's what I've got with them now. It's a different kind of relationship, it's a different time in my life, in my business, in my needs with this company, and so I choose now to pay for a different kind of relationship with them. If they didn't have that offer, they would've missed out on the opportunity of keeping me as a customer, in fact that happened to me years ago when I had to make a similar decision. Bluehost, fine hosting company, didn't have the solution that I needed at the time. So I needed to jump ship, from where I was, over to Host Gator, and use a solution that they have there. Now at Host Gator, Host Gator has solutions new relationships that I can bump up to that I can upgrade to that I can ask more from them and so I'm able to stick with them longer. And they've always been very supportive, they've always been very helpful, and now, they're even more helpful, which is great. So a different kind of relationship that allowed that company to keep my business, who knows for how long, I'll probably be with them for life. So where is your business missing that opportunity? Maybe your business is missing that opportunity on the higher end, where you could have a longer, fuller, more in depth relationship with your client. Or maybe your business is missing out on an opportunity to have a more transactional, a simpler relationship with your prospects. Make sense? Alright, so this is the question we wanna ask when we're really considering the relationship aspect of our business. What kind of relationship will serve the customer best with this particular need? What kind of relationship will serve the customer best, with this particular need. We all have different needs at different times, and those different needs, tend to be served best in different ways. I mentioned earlier when I laid out kind of how my business model shakes out, that while I provide kind of similar things in 10,000 feet, which is my Mastermind coaching group, and Kickstart Labs, which is just my ongoing support community and resource library, that there are actually different needs going on there. Kickstart Lab's members are looking to accomplish getting the answers to their questions. Simple questions, specific question, I'm doing this, Tera what's the best way to do that, or what do you think of this? What's your feedback on this? And the expectation is, you ask a question on a call, you ask a question on the forum, people weigh in, I weigh in, pretty simple. It's very do it yourself. I wanna be able to figure out how to run my business better myself, but with support. On the other side of things the need is much more transformational, I wanna go from someone in the trenches, to really feeling like, seeing myself, as the CEO of my business. I can have a pretty transactional yet recurring relationship with Kickstart Lab's members, because their need is specifically DIY. They want to be able to figure things out for themselves, they want to know that they can come up with their own solutions. On the flip side of that, the relationship needed to move from in the trenches, maybe struggling a little bit, maybe foundering in that micro-business plateau, and moving into CEO, or moving into that CEO mindset, that takes a much more in depth relationship. It takes more energy from me as a support person, and they want more energy from me as a support person, so that relationship makes a lot of sense. Could I do either of these things without the other? Absolutely. Am I covering more ground and making a bigger impact having both of those relationships in my business model? Absolutely. And each of those play off of each other. So that when people find out, I have this big coaching program and you can do this, this, and this, well that's not really what I'm looking for. That's not the relationship that I'm looking for but I'd still love Tera's support. Boom, they can come over here and they've got that other kind of relationship that they can feed right into. And so having different kinds of relationships in your business model can help your customers make better buying decisions. It can guide them toward the buying decision that's right for them. So they feel better about what they're buying. That's huge. That's just another way your business model is making your life much easier, yes, this is good. We want to be easier. So here's some questions that you can ask yourself to determine what kind of a relationship might serve each need you've identified best. Is this customer in need of ongoing or in-depth support? Or does this customer really preferring a quick fix? Is she looking to dip in and dip back out? Or is she wanting to stick around for the long haul? Remember the coffee analogy yesterday and we mentioned how there's the grab and go coffee customer, and then there's the hang out on the laptop coffee customer or the coffee ritual customer? Those are two different kinds of customer relationships. It's a very different kind of customer relationship between the gas station coffee customer and the high end boutique coffee shop customer. Very different kind of relationship. Both of those, well, the high end coffee shop can kind of serve both of those customers. They've got paper cups to go too. But they're really trying to cater to that longer, more in-depth, more ritualistic kind of customer relationship, and the customers that come there come there for that. Does your customer prefer to DIY, or does she like her hand held? Does she like things executed for her? If what you do is execute for people, if what you do is the service that you offer, is I'm gonna do this for you, but you're mostly attracting a DIY audience, the marketing that you're doing is attracting a DIY audience your web design is attracting a DIY audience, you've got a big relationship problem there. You wanna make sure that if you're an executor, if you're the person delivering a particular service, that you're doing something for someone, you're not attracting a clientele that wants a DIY relationship. Vice versa of course is also true. Is a conversation necessary before your customer buys? Now this is something you can think about proactively or it's something you can think about retroactively too. So if you've got buy now buttons all over your site, and no one ever clicks them, instead they hit up your email address and they shoot you an email and say hey these are my actual problems, this is where I'm at right now, are you the right person for me? Then I'd say, take those buy now buttons off your site, cause that's not the kind of relationship your client is looking for. Instead put a contact me, put a call me button on. And say let's start that conversation. Then you're setting up the expectation that your client really wants to have, which is an ongoing relationship with you. Sasha. The question of does she prefer to DIY, you said something that made me wonder, if you have low production value type things, like say video, that's just kind of a rough video. Mmhmm. Do you think that correlates to someone who wants to DIY it? Do you need to have fancy produced materials to appeal to non-DIY people? I wouldn't say absolutely 100%, but I would say generally speaking, that is true. If you are DIYing everything, you are generally going to attract more DIY minded consumers. And that's fine, but you have to remember that. So you're choosing to DIY things, which means you're choosing to attract a DIY consumer, which means you have the choice, or not so much in this case, of creating DIY solutions. That's what's going to be easiest to sell. If instead you set yourself up so things look polished, they look professional, they look like, whether someone's helping you or not, like someone's helping you, like someone's executing for you you set yourself up to have more of a relationship with people who value getting things done. These are people who really value time for money, right. DIYers have less of a time for money ethic. Instead their value is for the process, it's for the learning, it's for the curiosity. But people who don't have that DIY ethic are thinking more along time for money. It doesn't make sense for me to figure out how to do this myself, it doesn't make sense for me to push through this on my own, I want somebody else. They're going to identify more with something that they see as being the same way. Make sense? Yeah, that's a great question and that brings us back to all those questions about details and story that we covered yesterday and value pricing. Every single decision that we make in the business model reflects back on countless other details. And even in the last segment when we brought the three of you up and we looked at how some of the details in your want ad made other choices more obvious. Like oh yeah well I can choose to position the sales page this way or I can choose to merchandise my photographs that way, it makes those details start to become more consistent, everyone starts to feel more comfortable and that means it's easier to make the sales. Comfort equals sales. Cool? Last question, how does she prefer to buy? How does she prefer to buy? How much time do we actually think about how our customers like buying? One thing that I have always been a real proponent of, is people watching. I've worked with a lot of different makers especially over the years but this absolutely has to do with service providers too, and those makers have not been people historically that shop at say, high end shopping malls, but they're trying to attract a customer base that's used to buying in high end shopping malls or high end downtown boutiques. And so my advice has always been you need to go to these places, and watch your ideal customers making buying decisions. How does she talk to the clerk? What kind of questions is she asking? How much does she want to handle an item before she buys it? Does she try it on? Does she bring her girlfriend along and get some friendly advice on this thing? Learn the buying habits of the people you're trying to attract. What kind of buying processes make the most sense to them? What kind of buying processes make them most comfortable? It kinda goes back to that conversation question. Does she need to have a conversation with you first? That's the kind of customer who's very methodical about the way she buys. She wants to start a relationship with a potential provider before she makes a final decision. Other kinds of customer bases are way more impulsive. Susan I would imagine that where you're entering the market you're gonna have a much more impulsive customer. So what are the kinds of things that get them thinking impulsively? And how can you kind of stoke that desire for them, that instant gratification, that impulse shopping kind of thing? So think about your customer base, think about how they like to buy. Don't think about how you like to buy, think about how they like to buy. I don't care how you like to buy. Susan did you have a question? So I realized, my mindset in answering all these questions has been, retail, me selling direct to the customers, but it popped in my head, wholesale. So do I need to answer these questions for a wholesale buyer and for a retail customer? Absolutely. Or the last questions, since they're buying for that customer that I described, that's one thing, but then, these questions, I'm gonna have a different relationship with wholesale buyers than with retail customers... Yes, so what I would recommend for you, and perfect train of thought here, I was already planning on bringing this up, so I'm glad you brought it up for me, but perfect train of thought here. What I would do is probably, if you're looking at that spreadsheet that I gave you, I'd have two lines, for every product category that you have. One of those lines would be the retail relationship, and one of those lines would be the wholesale relationship. Yes the answers to your questions in the first segment, those are pretty much going to stand now. Cause your wholesale buyer is coming to you to ask those exact kind of questions. Who is your customer? What kind of stories can I tell her to get her to buy this thing? Cause that's what retailers want. They want you to help them with the sales conversation. And if you can, that's a huge plus in your book okay? But the retail versus wholesale relationship is different, so there are different ways then that you can think about the rest of the business model. And if you kind of branch it off here at the relationship piece, then you can approach the marketing and sales piece differently, you can approach the format piece a little bit differently, you can approach the cost piece differently. Obviously cost free is a little bit more set in stone, but that way you do really see how your business model will pan out, and then tomorrow, in segment two when we do the pricing and sales goals, it'll be much easier to figure your goals into your business model cause you can say alright, I have this retail goal, and I have this wholesale goal, and it's based on all this other information that I've got. Great question, thank you. So alright, is this customer in need of ongoing support or a quick fix, does she prefer to DIY, does she prefer to have people do things differently, is she an impulse buyer, is she a sales conversation needer, how does she prefer to buy? And how does she prefer to buy this thing?

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