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Performance & Growth

Delight Your Customers

Want more feet through your store? Give your customers an experience that keeps them coming back for more.

Aki Kalliatakis

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Delight Your Customers

Can you think of a recent shopping experience which really surprised and delighted you? Just before a training workshop I was running recently, I rushed into one of my favourite grocery retailers to see if they had a pile of Post- It pads that I needed.

As I went through the aisles and found the stationery, I couldn’t find what I was looking for, and went to the front to the owner/manager to see if they had any in the store. He told me that they didn’t actually stock Post-Its – they are, after all, a grocery retailer – but a couple of seconds later he took me to his office and gave me everything he had. I asked what I owed, and he looked me straight in the eye and insisted that it was free.

I was most grateful to Max, but not in any way surprised. This chain has a reputation for responsive service in all 900 branches, and the fact that just about all of them are individually owned and managed in partnership with the central office means there is a sense of “family” involved.

That was without a doubt a “Wow!” shopping experience to be added to the collection of others in the chain.

Why customers return to buy more

Research in the UK published by Professor Moira Clark and the Henley Centre for Customer Management points out that retailers must deliver on as many as ten different elements of the shopping experience simultaneously to hit the mark.

Unlike my experience at Max’s store, it’s not about just an occasional fantastic experience that occurs every once in a while.

It’s rather a combination of consistent events that make all the difference, and there are many possible actions and characteristics that will lead to customers returning to buy more, being open to cross-sales and up-sales, and telling others about their experience.

Max also does other things for his customers. Apart from making the retail experience fun and easy, it’s also a social event. My kids love Max because he occasionally gives them a gingerbread man. My wife loves him because she can occasionally ask him to deliver groceries.

Of course, in today’s crazy world, customers’ expectations are pretty high, and it’s easy to fall short. Even worse it’s very hard to recover from bad experiences, even with something that’s over-the-top. Spend a few minutes on the internet, twitter or any social media site and you’ll see that moaning is more common than praise.

Get the basics right

So what can you do to create an extraordinary experience for shoppers? There are probably two levels that you have to look to. First, you have to make sure that you get the basics incredibly right. Is the parking safe and available?

Is everything nicely signposted and easy to reach? Are the queues manageable? Is the store hygienic and safe? These, and dozens of other factors form the foundation on which everything else rests.

But at the second level is where the magic lies. It’s about the little surprises that bowl over customers, the little things that they have never seen before, or that they know probably won’t happen elsewhere. Perhaps you recognised them and asked about their holiday, or paid them a compliment.

Maybe you made them smile or laugh. It could be that you noticed they were struggling with something and went out of your way to help them. Or you may even take five minutes to explain something to them that they never knew before.

There are five major areas that contribute to a great shopping experience:

  1. Engagement: being polite, genuinely caring and interested in helping, acknowledging and listening. Connecting with people in a short conversation, paying them compliments, asking about their families or past-times, even just talking about the weather really helps, and is also motivating for your staff because they break the routine.
  2. Executional excellence: patiently explaining and advising, checking stock, helping to find products, having product knowledge and providing unexpected product quality makes a big difference. This is where getting the basics right mentioned above can create a solid foundation. Max’s staff spray all vegetable with a fine mist to make them appear fresher, and there are rarely gaps in the shelves because of stock running out.
  3. Brand experience: exciting store design and atmosphere, consistently great product quality, making customers feel they’re special and that they always get a deal. I don’t think I’ve ever walked into Max’s store without smelling something delicious. Sometimes it’s freshly baked bread or cakes, at other times is a curry or a stew. The lights are bright, they aisles are broad, and there’s also a “Kid Zone” to give mom a bit of peace.
  4. Expediting: being sensitive to customers’ time on long check-out lines, being proactive in helping speed the shopping process. Sure, there are busy times, but when all the tills are open, and you see managers packing bags, you know they are doing their best to get you out of there as quickly as they can.
  5. Problem Recovery: helping resolve and compensate for problems, upgrading quality and ensuring complete satisfaction. It wasn’t just the Post-Its for me that did the trick, but the creative responsiveness to my need as a customer. I heard that on another occasion one of his clients left a birthday cake in the car, so he sent his staff to her home to re-decorate it! On another occasion a little old lady broke her walking stick in his store, so they went out and bought her a brand new and beautiful walking stick, and even sawed it to the right length while she waited. These things make the shopping experience very special.

I’d like to suggest that you start by looking out for things that make it easy for your customers to do business with you – physically, intellectually, emotionally, and in terms of time effort. But then you also need to look out for opportunities to create surprises for them.

Aki Kalliatakis is the Managing Partner of The Leadership LaunchPad, a business focused on customer loyalty and radical marketing. Their work has broadened to include all aspects of service, marketing and sales, which are aimed at creating the highest levels of customer loyalty. Aki Kalliatakis assists companies to implement customised service and loyalty strategies, and is often invited to talk to various groups, and conduct seminars, workshops and training courses for his clients. They focus on better customer service and delighting your customers. They do this by delivering a credible consulting service in all aspects of customer relationships, customer management, customer loyalty and customer retention in a manner which delights and thrills clients and delegates.

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Performance & Growth

Alan Knott-Craig Answers: How To Build A Debt-Free Business

It’s tempting to go the debt route when building your business or asset base, but be careful — debt can kill your business just as quickly.

Alan Knott-Craig

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I’ve been offered debt secured against my shares. I can use the debt to buy a house or buy more shares in my company. I really believe in my company, it’s growing fast. What should I do? — Bob

There’s no such thing as free debt. It always has a catch. In this case, the catch is that if you don’t pay back the debt, then you lose all the shares in your company that you’ve worked so hard to build.

In other words, if your share value doesn’t go up, then you will lose the shares you have.

Maybe you don’t think that’s possible, and maybe you’re right. But you never know what black swan is swanning your way. The president could be assassinated. Russia could declare war on America. North Korea could send a nuclear missile to Japan. There could be another credit crisis.

All of these things would have massively negative impacts on the economy and sentiment.

The economy affects your profits (sales drop). Sentiment affects your ability to sell your shares (no confidence = no buyers).

Suddenly you find yourself staring down the barrel of a debt repayment deadline, and BOOM! You’ve lost your company and your wealth.

That’s not to say you should never take risks. When you’re young you have to gamble a bit. Roll the dice. Just beware of debt. Debt kills.

Related: Dealing With Debt As An Entrepreneur

The only legitimate reason for taking debt to buy shares is if your partner wants to exit the business. Maybe she’s met the love of her life and wants to move to Tahiti, and if you don’t buy her shares then someone else will and you’ll find yourself in bed with a stranger.

If you don’t have the cash then you need debt. Fair enough. But be very careful. Debt kills. I can’t emphasise this enough.

It’s best to live life imagining the shares in your company are worth nothing. That way you won’t live beyond your cashflow. And you won’t take debt against your shares.

If you’re still tempted to get debt, ask yourself, “Do I love what I do?” If the answer is “No,” then definitely do not take any debt. Debt will simply yoke you to something you don’t love. Debt will make you a slave.

Generally speaking, debt is driven by greed. Greed, greed, greed.

And greed always ends in tears.

I want to build a property empire, but every time I buy a new property I’m forced to sell my existing property because the bank refuses to give me two bonds. At the moment I’m struggling to cover my bond repayments with rental income. Advice? — Phumlani

First thing first, read Rich Dad Poor Dad by Robert Kiyosaki. This book will tell you everything you need to know.

In summary, it’s about using the bank’s money to make you rich. Borrow money, buy property, use rental income to pay off mortgage, you’re left with asset and income stream. Boom! What could possibly go wrong?

Here are some rules of thumb:

  • Buy commercial property. A tenant that relies on his premises to generate income will look after those premises more than a simple residential tenant. In other words, you’ll spend more money maintaining your residential property.
  • Location, location, location. Pick an area with low risk of property prices failing. It might be more expensive but your first priority is always “Don’t lose money.”
  • Yield is everything. Divide the annual rental income by the property value. If more than 7%, go for it. If less, don’t. You want the yield to be close to prime rate.
  • Don’t take more than 50% debt. You never know what will happen. If the tenant misses her rent for a few months you want to have a safety cushion so you don’t get caught short of cash when your monthly mortgage repayments are due.
  • Never sell. The transaction costs for buying and selling properties will eat away your profits. Buy to hold. Never sell.

Remember, there’s nothing wrong with growing without debt. Many property moguls never ever used debt to grow their empire. It’s slower, but safer.

Debt is a shortcut. Sometimes it works, but most times it ends in tears.

Related: 7 Ways To Be Debt Free For The Rest Of Your Life


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13-rules-for-being-an-entrepreneur-coverAlan Knott-Craig’s latest book, 13 Rules for being an Entrepreneur is now available.

What it’s about

It’s easy to be an entrepreneur. It’s also easy to fail. What’s hard is being a successful entrepreneur.

For an entrepreneur, there is only one important metric of success: Money. But life is not only about making money. It’s about being happy.

This book is a collection of tips and wisdom that will help you make money without forgoing happiness.

Get it now

To download the free eBook or purchase a hard copy, go to www.13rules.co.za.  To browse Alan’s other books, visit bigalmanack.com/books/ 

Ask  Al

Do you have a burning start-up question?

Email: alan@herotel.com

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Performance & Growth

South African Investors And Entrepreneurs, The World Needs You

With governments and corporations across the globe constantly on the lookout for innovators and entrepreneurs, time is most certainly against those who remain constricted by their limited citizenship portfolio.

Amanda Smit

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Citizenship-by-investment (CBI) was once seen as something only reserved for the ultra-wealthy, but it is now also becoming the new normal for business investors and entrepreneurs wanting to expand their reach. We live in a highly globalised world where the flow of goods, people, and ideas means that the freedom to move and do business internationally has never been more important. With governments and corporations across the globe constantly on the lookout for innovators and entrepreneurs, time is most certainly against those who remain constricted by their limited citizenship portfolio.

How can citizenship-by-investment benefit South African investors?

First of all, entrepreneurs with multiple passports or residence permits are able to take advantage of the benefits and best practices of all the countries to whose jurisdictions they belong, while also being less vulnerable to a single country’s risks, shortcomings, and unexpected changing fortunes. The more jurisdictions an investor can access, the more diversified their assets will be and the lower their exposure to both country-specific sovereign risk and global volatility. By acquiring a higher quality nationality, one obtains greater global access and is better prepared for an uncertain future.

Nations within the EU, for example, offer citizens and residents access to all 28 member states, as well as to a number of other countries associated with the EU’s freedom of movement charter. In addition to expanded global mobility and a reduction in sovereign risk, alternative residence and citizenship also offer individuals access to career, educational, and cultural opportunities on a global scale.

Related: Funny Thing Happened On The Way To Global Expansion: We Met Our Doppelgänger

The benefits to governments and citizens of host nations

st-kitts-and-nevis

It would, however, be misguided to think that the advantages presented by citizenship-by-investment are for investors alone: for the governments and citizens of host nations the benefits are substantial. For governments, the inflow of extra capital reduces pressure on the treasury and protects national sovereignty by helping to mitigate the need for loans. Indeed, the establishment of a transparent, well-managed CBI program is not dissimilar to discovering a sustainable source of oil within the confines of a country’s national borders. Both scenarios create an immediate injection of new funds into the national treasury, which ultimately leads to greater long-term prosperity for the country and its people.

Successful applicants also bring intangible benefits to receiving countries, such as scarce skills and rich global networks. They add diversity and they uplift host nations through their demands for improved and novel services, which can create new opportunities for local communities. In Malta, for example, the establishment of a CBI program was as much about attracting rare talent as it was about generating much-needed capital in the aftermath of the 2008 financial crisis. Four years after the launch of the Malta Individual Investor Program (MIIP), Malta has one of the highest GDP growth rates — and one of the lowest unemployment rates — of any EU member state. In 2017, the country also reported a record-high budget surplus, with 90% of the gains attributable to the MIIP.

For smaller economies that face increasing trade and industry competition on the global stage, such an outcome can be transformative. Take the Caribbean nation of St. Kitts and Nevis, for example. Three years after relaunching its CBI program in 2007, the program accounted for around 5% of the country’s GDP. A year later, this figure had doubled, and after the sixth year, the figure had doubled again to 20%. By 2014, the St. Kitts and Nevis CBI program was responsible for approximately 25% of the nation’s GDP.

Related: From Local To Global – How To Expand Your Business Internationally

Moreover, other projects made possible through Caribbean CBI programs have had the knock-on effect of boosting employment and contributing to the greening of their economies. For instance, in Antigua and Barbuda an award-winning 10 MW clean-energy project cluster was realised within two years of launching its program. In addition to large-scale installations, over 50 schools and other government-owned buildings have been equipped with sustainable solar-energy systems in order to benefit from the new clean-energy supply. Such innovations were only made possible through the funds conferred by the country’s CBI program.

Thus, the inflows of funds from citizenship programs can be considerable, and the macro-economic implications for most sectors can be extensive. Just as traditional foreign direct investment (FDI) increases the value of the receiving state, bringing in capital to both the public sector and the private sector, so the benefits proffered by CBI — a form of FDI — rapidly turn the fate of a country away from debt and dependency and towards independence and stability.

Conclusion

In short, citizenship-by-investment is a boon to both host nations and investors alike. For South African entrepreneurs and investors who find themselves burdened by visa restrictions and red tape, acquiring a second citizenship is a simple means of expanding global reach, getting ahead of competitors, and giving something back to host nations that are only too grateful to have these talented individuals as part of their community.

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Performance & Growth

First Rule Of Securing Growth Capital: It’s Not About The Product

Paragon CEO, Gary Palmer, discusses the pitfalls facing business owners searching for capital to fund expansion.

Gary Palmer

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A common mistake made by entrepreneurs looking for growth capital is fixating on which product they should choose. When looking to finance growth in your business, the decision process should be focused on longer-term strategic priorities and then finding a partner to help you access the right product to deliver on those goals.

Let’s get real

At the outset business owners need to look at their business realities and decide whether they should be looking for debt or equity financing. For example, if a business can only support debt of 2.5 times EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation), and they are already at that limit, then they will need to look for equity financing to achieve their growth goals. In many instances, a combination of both debt and equity financing will hold the key, allowing the organisation to benefit from cheaper debt funding, but ensuring that it is not overextended.

Related: Dragon’s Den Polo Leteka Gives Her Top Tips To Attract Growth Capital

Even if the growth project can be funded through debt alone, business owners face the challenge of dealing with a multitude of institutions, each of which puts emphasis on different aspects of the deal. No business owner can know the minutia of their requirements, and so working with a partner who can help you prepare your presentations is a must.

The challenge becomes all the greater when companies may be looking to finance a non-traditional project. We have a client who is looking for finance to build roads leading to his development. This is not something traditional lenders usually deal with, and so in this instance he will need to access more creative funding options not offered by the banks. Another example is when a founder is looking to buy out other partners, this too may need to go to a lending institution which is able to structure deals for out-of-the-box requirements.

Square pegs, round holes

A common frustration faced by business owners is that some lending institutions sell products rather than solutions. Too little time is spent understanding the needs of the client and designing an appropriate solution, tailored to the client’s unique requirements. These lenders are literally forcing the client’s needs into the limited number of financial products they offer.

It’s going to get more complex

Another challenge for business owners is the sheer number of institutions out there. New funds, new lenders and the plethora of fintech offerings are making it harder for growth companies to find the best offer available. In the US and Canada, more than half of the big property deals are now funded by non-banks. We believe South Africa is headed the same way. The added competition, is of course great for the market and will encourage better service and more creative options, but it does make it difficult for business leaders to keep track of everything available.

Don’t fall prey to borrower’s remorse

In so many cases, companies are in a rush to secure funding and often end up choosing a product which is not suited to their longer-term strategy. Getting out of a transaction can be exceptionally difficult. Far too often companies wake up to better options too far down the line. If more appropriate finance is found, companies will be left carrying the settlement fees attached to their previous funding, not to mention the administrative pain of changing lenders.

Related: Funding Growth

Paragon has over 150 lenders on its books and a network of angel investors which we can access to find the right deal. It’s our job to know exactly what is available and more importantly, to work with business owners to ensure they access lending which is not going to result in borrower’s remorse. The only way to ensure good results is to start the lending hunt with a partner who can help you first determine the right lending strategy, based on your business reality. The alternative could prove both expensive and painful.

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