Friday, September 25, 2009

The customer is NOT always right

Being a business owner has many ups and downs. A "down" may be a difficult customer that requires more attention than others. But is it OK to "fire" a customer?

John Chisholm, a writer for a customer relationship management website (CustomerThink.com), has some guidelines as to when a customer should be "let go". You should "fire" a customer when "the tangible and intangible costs of serving the customer outweigh the cash and any good will received from the customer.”

How do you, the business owner, "fire" a customer? Tracy Fredrychowski, a writer for a search engine optimization website (www.searchengineacademysc.com), has developed a how-to guide on axing a customer.

1. Be professional. “Customers should always be spoken to personally, not by letter or phone. Only when the customer is at a distance, is it appropriate to speak with them about the matter on the telephone. But in no circumstances should the contact be other than verbal. E-mails simply will not do in this case.”

2. Keep emotions out of it. Odds are the customer made you extremely frustrated or angry, but now is not the time to vent. Customers often will take being fired personally, “so it is important that you explain your reasons rationally and clearly.”

3. Offer suggestions. Remember after you have fired them, customers will still need someone to provide the product or perform the service you did. Help them if you can.

4. “Stay polite but firm. It is time to move on.”

Firing a customer article

As a business owner, how have you dealt with difficult customers? Have you ever given a customer "the boot"? Do you have any other suggestions on ending the relationship amicably?

Friday, September 18, 2009

Understanding Disagreement on Local Foods

Yesterday, I saw a bit of activity on Twitter about the brand spankin' new farmers' market located a block away from the White House. Some tweets had photos or URLs attached. (As two examples of online reports, see http://bit.ly/TWhWI and http://bit.ly/oowWZ.) The tweets generated some particularly negative responses from farmers that I follow. I'm trying to understand some of the issues. Below, I've thrown out some of my thoughts. However, I'd really like to hear from others on this. Those of you with more of a stake in the game would be great to hear from.


I saw one exchange in which one individual blasted the prices at the WH FM, saying that they reinforced negative stereotypes of local foods being for the "elite." One example cited was $11/lb pork chops. (I saw little discussion of quality-related issues.) Based on this, I wonder what prices the critics would say is fair. Is the $2.49 pork chops advertised in my local grocery store's circular too little? How about double or triple that number? It seems to me that a fair price is whatever the farmer selling it can get for the product. Who among that group wouldn't love to get $11.00? One of the sources listed above indicates that little product was moving. If true, seems like the items were indeed overpriced. In a competitive market, as this one's in, consumers, not bloggers and reporters, get to decide what is overpriced and what isn't.


I also don't understand the notion of this one market giving all others a black eye. This one has something that all others don't have... proximity to the White House. The story embodied in that fact has value to some target consumers. In addition, there's only one opening day. Some customers will tell the story for years about how they bought ag products on the opening day of the White House farmers' market. What's the value of that story? We won't know until Day 2. But this market is unique and has received so much publicity that it seems obvious to me that vendors are going to try to capitalize on that fact. Consumers also seem to understand that products cost more in some areas than in others. I suspect most won't hold it against vendors in other markets.


The other factor is that they aren't selling to the "everyperson" in this venue. Chefs from upscale restaurants nearby will buy products from this market if it's competitive. There's also a lot of people with a lot of money working in those big buildings in DC. Average income is probably higher than most other farmers' market locations. It's no surprise that prices are higher given that fact alone. So, more money is added to the price beyond what might be seen at a "typical" market.


Finally, is the notion that some hold of local foods being only for the "elite" an accurate one? In a June 24, 2009 post, I wrote about the need for a balanced approach to local foods if it is going to become more mainstream. To become mainstream, it's got to be able to compete on price, quality, and convenience with WalMart and other major food retailers. That's a tough battle if local food sellers want to reach the masses. But is there any other way to make it happen?

Response Questions

1. How should we determine "fair" prices for direct marketers?

2. Does the uniqueness of the setting have value separate from the products being sold?

3. Are local foods for the elite/wealthy? If so, can that be changed?

Thursday, September 17, 2009

Some budget cuts can do more bad than good

In a recession, businesses of all types are fighting to stay afloat by reducing overhead costs, but what cuts are actually harming your business?

Many businesses reduce costs by cutting marketing and laying off employees. Is this the answer? The article "Basic Mistakes Retailers Make When Times are Tough" by Elizabeth Walker (seen on www.openforum.com) describes how a furniture store in Canada (The Brick) dealt with tough economic times.

To "save" money, The Brick severely reduced advertising and laid off hundreds of employees. Less customers visited the store and the ones that did stop in couldn't find an employee to ring up their purchase. Revenues dropped even lower until their new CEO, Bill Gregson, led the company in the right direction.

Gregson felt that very little of the company's problems were actually a result of the recession. He decided to hire back the employees, advertise more, and developed an agreement with the manufacturer to hold inventory instead of Brick warehouses to help prevent excess inventory sitting around. For the month of August, sales were up.

This is not to say that these practices will absolutely save you during a recession. As the author states, "We are saying that it's easy to 'cut off your nose in spite of your face' when you cut the very services that bring business in the door. Bottom line is: when the economy is bad is the time to increase your marketing and upgrade your service. Do so and you'll be way ahead when the good times are back."

Budget cuts article

Thursday, September 10, 2009

Exploring Your Small Farm Dream

If you have thought seriously about turning a profit off of a few acres or already have a small agricultural operation and would like to change strategies then Exploring Your Small Farm Dream can help. This course, offered by several Penn State Cooperative Extension Offices in the Southeast Region, is designed to help guide beginning farmers through the initial exploratory decision making process and bridge the gap between ideas and action. Whether your vision includes making goat cheese, selling cut flowers, or growing rare tomato varieties, this course will give you the tools to start making that dream come true.

Participants will discuss current opportunities in small-scale agriculture, explore objectives, assess personal and financial resources, conduct preliminary market research, and develop an action plan for pursuing their interests in food and farming. This interactive course will include creative exercises, research, and class discussions that will allow you to accurately assess your skills and resources. Interviews with local agricultural business owners will also be included to give you firsthand knowledge on what to expect when starting your business. For information about course availability in your area, please refer to the course website: www.pasmallfarmdream.info

Healthier kids' meals

In the recession, most businesses are suffering, especially restaurants. To entice customers, some restaurants are offering family deals by advertising free kids’ meals. Is the free kids’ meal really the draw for a family? The article “Could Healthier Kids’ Menus be Stronger Family Draws” by www.supermarketguru.com explains why the content of the kids’ meal as compared to the price is what brings families into the restaurant.

Remembering my days as I child, it seems that most kids’ menus haven’t changed much (chicken fingers, mac & cheese, grilled cheese, etc). Why are these same few meals the standard for kids? Mintel Menu Insights (a data collection agency with data from 350 of the largest US chain restaurants and 150 independent restaurants) reports that 77% of children are willing to order meals include vegetables and 86% would order meals that include fruit. Mintel also reports that only 30% of parents think their children eat healthfully in restaurants. “Our research shows parents want more nutritious options for their kids, and children are open to fruits, veggies and healthier versions of standard fare. The generic kids’ menu really doesn’t meet the needs and desires of today’s families,” says Maria Caranfa, a registered dietitian and director of Mintel Menu Insights.

Healthier kids’ meals article

As a restauranteur, do you think adding healthier kids’ meals will bring more families into your restaurant (and subsequently increasing sales)?

Tuesday, September 1, 2009

Managing in Tough Times Begins in Good Times

At Ag Progress Days, I had a discussion with a colleague about the state of the dairy industry. Most readers know that many (or maybe all) dairy farmers are operating at losses right now because of very low milk prices. It really is a horrible situation for farm businesses and families in Pennsylvania and beyond. I can't take anything away from that at all! Careers and family well-being are absolutely on the line! A sad situation, as many in ag or other industries have faced over the past several months.


In the dairy industry, this historic low comes on the heels of a period of high milk prices. My colleague and I argued that it was during that period that dairy owners should have been preparing for now. (Although I use the dairy industry as an example, the principles apply to all businesses.) Being flush with cash, as many were, allows the owner to do some critical things for success in a commodity business.


1. Save your money - There's nothing like cash reserves to help an owner get through unprofitable periods. Although it might not have been advised at the time, some investments would have netted big gains over the past few months. Major stock indexes, for example, are up around 50% since spring.

2. Pay down debt - This isn't quite as good as having cash reserves, but the farmer may be in a position to tap into farm equity in the form of loans. While it may seem contradictory to pay down debt so that you have access to more if needed, that option may not have been available had past debt not been paid down.

3. Invest in cost-cutting production technologies - In all businesses, but particularly in commodities, profitability follows efficient production. If you can't control your price, you have to control your production costs. If you can lower that through technology, then invest after a very careful analysis.

4. Go out on top - For most folks, it's never easy to exit a business or industry that they love; one that's in their blood. But all should have a long-term plan that includes eventual exit. The best time to exit is when there aren't liquidity concerns, when solvency isn't an issue, and when profitability is positive and high. For most in the dairy world, that doesn't describe the current environment. Exiting at the bottom leaves little or no cash left over to start the next phase of one's career.

We in Extension have resources and expertise to bring to bear on owners and managers during these rough times. Despite our best efforts, and the efforts of many legislators, industry players (including lenders), and others, some have exited and others will exit during this period. For few will it be on their own terms. Those still standing after this downturn really need to take time to establish a plan that incorporates one or more of the strategies highlighted above, or others that will position the operation for the next downturn. Getting help then, from Extension, a consultant, or other source, will be more beneficial than anything we or others can provide at this time. Much of Extension exists because these businesses exist. We need them to be healthy and growing.

How have you (or farms that you're working with) weathered the storm? How did you prepare for this? What do you think Extension could do now and in better times to help?