The second phase of growth for an SME, after it has become established and survived, is one of the trickiest. In a service business, this early period between £1m and £2m turnover, can still be a problem because the sales pipeline has not yet become predictable and cash fluctuates significantly. For some owner managers it might be the first time they have been able to pay themselves properly and so what little cash they have has been impacted through a dividend payment.

At this stage, a proper sales function has not normally been established and it would appear that for many owner managers this is the next natural step. But this is riddled with problems:

• The hit rate for hiring a sales person is pretty low, because most posess the “gift of the gab” and so come across really well. That does not necessarily mean they will be any good. Equally, the hiring organisation may not have the hiring skills to differentiate between the good and the bad.
• Really good sales people are difficult to attract when you are a small business. This creates a bit of a “beggars can’t be choosers” dynamic and causes hiring errors.
• Sales people can be really expensive. Not least because of the basic pay of the really good ones, but also because of the bonus plan. I haven’t met many SME’s that have created a fincially viable bonus plan and frequently accelerators strip out significant levels of profits.

The most important issue that I have come across, and I believe is widely present, is that owner managers are unclear about why they are hiring a sales person. The confusion comes between understanding whether it is demand generation, deal getting or account management that is required. Not all of these exist in every sales person so it is important to be clear. My advice to most of the SME’s I meet is not to hire a sales person until they have answered this question.

In most cases, SME’s have also not exploited the potential of the clients they have worked with and this can also put off the need to establish a sales team. More on that soon.

I plan to blog a little more (I am not sure doing much less would be possible) and change the content I write about to include some of the areas I am working in that are not user and customer experience. Twitter will no doubt continue to be my channel of preference however. (@pblunden by the way)

I am grateful to the clients who have already engaged me, and my thanks to you all; it has made the transition from full time CEO to independent consultant so much easier to cope with. I can of course fit a couple more in and so if you feel you can benefit from my particular brand of advice, please do get in touch.

I looked at seven companies in the sector and evaluated their use of LinkedIn, Facebook, Twitter, YouTube and Wikipedia. The following table sets out what I found:

Top Level Audit findings

The difference between Company 6 and Company 1 is dramatic. Both are successful businesses but only one uses Social Media channels in a meaningful way. It is no surprise that Company 6 also has the best natural search performance and also engages with PPC – one of only two of the companies reviewed to do so.

Clearly not all buyers are engaged with digital marketing channels and so companies can still be successful without engaging in the space. All the companies I looked at had a website and although some were better than others I suspect all are supporting the sales cycle. However, it is clear that the Internet is becoming increasingly important in generating leads in the majority of sectors and so there is catching up to be done.

Trade between individuals, companies and even countries is as a result of networks, and networks exist both on and offline. Just because companies are not engaged with digital networks doesn’t mean they are disconnected entirely. However, throughout history human beings have migrated to faster, simpler, sexier means of communication and the social media channels reviewed above fit that criteria.

If you drive down the M5 between Bristol and Exeter you will see one reason why, in Morrisons case the website is not currently the centre of attention. They are investing £95million in a new regional distribution centre and the project is slightly behind. However, it is a very important project in support of allowing Morrisons to distribute nationally.

The group is also only half-way through an IT infrastructure roll out at an estimated cost of £310m. The project, called “Evolve” will be completed in 2013 and is a five year upgrade of virtually every system and process the business has. The upgrade will support the groups planned expansion to 600 stores whilst saving support costs and providing operational benefits and efficiencies. Back in 2004 Morrisons also paid £3.35bn to acquire Safeway and has some problems integrating the 327 stores and IT systems into its own.

Also, Morrisons only announced that it would have a go at online sales in 2010 and even then was cautious because of keeping costs under control. Recent news compared Morrisons to the sales Tesco and Sainsburys are achieving online but that hardly seems fair given Tesco’s was the worlds first online grocer and Sainsbury started online in 1998. Having said that, the recent acquisition of a 10% stake in FreshDirect is designed to accelerate the groups knowledge of how to run an online business. They will actually get a seat on the board and the ability to learn about the systems and processes FreshDirect has. They also announced the acquisition of Kiddicare back in February who is an online retailer of cots, nappies and push-chairs.

8th September, Morrisons announced its interim results for the half year to 31st July 2011. Although Morrisons financial performance is good, they can only do so much. Revenue is up as was PBT (to £449m for the period) and cashflow was £667m, £97m up on the previous period but with higher outflows due to capital expenditure. They have also initiated the first phase of the planned £1bn equity retirement. As a result debt grew £238m to £1,055m but they do have a £1.26bn revolving credit facility available until 2016 and with £494m not drawn down.

Can they also invest in a major multi-channel, integrated customer experience programme? I would argue they already are by getting solid building blocks in place both in terms of systems and knowledge. This will put them in a very good position to accelerate development of mobile channels and possibly even overtake some of the competition.

• Amex is 85% certain of who will divorce based on transaction data
• Twitter is 97.3% accurate in reporting box office takings and more accurate than the film organisation responsible for making these forecasts
• Google’s data predicting flu (influenza) trends is more accurate than The Centre for Disease Control

There was another statistic about Facebook being more accurate than Gallup weekly polls in predicting a political outcome (I think from mid-terms) but the pace was so fast I missed it. After a quick Google search I only found less accurate claims such as this: click link.

Another amazing stat., although not from this session is that 90% of all the data in the world was created in the last two years.

So “Big Data” is hot and a term that will grow in use.

With the rise of the Internet human beings have never been more connected and each day, as technology advances, social behaviour adapts and connections increase. This increases our ability to trade goods and ideas and innovation is enhanced. This got me thinking about “Crowd Sourcing” and how genuinely innovated this is.

I noticed that over the summer, First Direct launched the “First Direct Lab” – described as “crowdsourcing platform that will give customers a stake in the online and telephone bank’s digital marketing efforts”. I have a bit of a problem with this definition as I think it gives customers a voice, not a stake. There are no consequences for them offering poor advice. However, I can see it makes sense to engage more with customers and isn’t that just the point?

Crowdsourcing is simply another way to engage with customers in the same way that surveys and customer panels can. They facilitate a conversation rather than listen to the results of marketing efforts. There is significant evidence that they work and Gary Hamel, business guru, provided various evidence in his book “The future of management”.

So to my question about how genuinely innovative crowdsourcing is. My conclusion is that the technique is innovative based on the new technology available now and its ability to facilitate wider conversations. But ultimately, the idea is as innovative as the first person who said – “gather round you guys, what do you think about this?”.

Sadly, I am also leaving npower with nothing to do with the cost of supply and have a customer service tail of woe to tell that reveals broken systems and processes that cannot support the good intentions of the staff. I promised to write to the member of staff that was dealing with me and summarise what had happened and thought I’d share it here:

Dear Diane,

We spoke recently about problems I have been having with npower and despite the fact I have made the decision to switch providers I did promise to send a letter setting out why and so here it is.

You will see from your system various communications and I will first point to my letter to Julie Jaglowski, Customer Services Director of 6^th May 2011. This letter explained that the property was a holiday home and asked that all correspondence was sent to my home address (shown above). The letter was sent after numerous phone calls had failed to result in a change and I hoped at Julie’s lofty position she would have the power (see what I did there) to enforce the change.

I received a reply to this letter 12^th May 2011 from Sarah Harrison, Customer Service Advisor (presumably Julie was too busy making sure letters were sent to the correct address to actually write back to me), apologising and confirming that all correspondence would now be sent to my home address and acknowledging the property is a holiday home.

13^th May 2011, Brian Watson, Customer Care Team Manager wrote to me thanking me for contacting npower and asking if I was happy with the resolution and explanation given. He wrote to me at the holiday home address (obviously Julie had not yet got to Brian).

In July 2011, friends used the holiday home and brought back a number of items of post from npower all relating to the gas meter safety inspection. The letters had an increasingly threatening and urgent tone until the final one was a “Warrant of Entry to Enter Your Home”. Apparently Julie’s influence had not extended to the courts either.

I had first sight of this pile of correspondence 31^st July and called npower 1^st August and was told that the premises was being entered 2^nd August. As this was happening I would be on my way to Spain for a holiday so it wasn’t ideal and I had visions of my holiday home being left open all summer. I offered the 7/8/9 September as alternative dates but was told that was not possible – it was simply too urgent and too dangerous for me to not have this gas meter safety inspection sooner.

After approximately two hours of phone calls and no doubt endless hard work by your colleagues I was told the appointment could be postponed and when would I like it scheduled for.  Once again suggested 8^th September when I would guarantee to be at the holiday home.

I received three phone messages from you between the 1^st August and 7^th September. All left voicemails with no detail of the reason for the call. The number to call was an 0845 number so I would be returning the call at my expense. Because of the problems I had experienced the first time I received a message, despite being in Spain, I called and spoke to one of your colleagues who explained the reason for the call was to confirm the 8^th September.

That call was 22^nd August. I then received a call 1^st September again leaving a message, which I returned, again at my expense and was told the call concerned confirming the 8^th September appointment. I politely explained that I had already received a call, returned it from Spain and was happy that the 8^th was in my diary. You then called me on the 7^th September and left a message, which I again responded to at my expense also asking to confirm the 8^th September and that was when we spoke at greater length.

But it gets even better!

I arrived at my holiday home 6^th September to find letters from npower as follows:

• 2^nd August from Brian Watson ref: CT/COMPACK
  • Apologising and telling me my complaint has been assigned to an advisor in the complaints team
• 2^nd August from Brian Watson ref: CT/COMPES2
  • Apologising and telling me my complaint has been assigned to the Executive complaints team
• 25^th August from Diane Scott ref: 98270688
  • Explaining you had been having difficulty getting hold of me by phone and confirming the appointment on the 8^th September

 Despite all the calls and letters, npower had still failed to amend my correspondence address.

 To add insult to injury I was in attendance during the “Gas & Electricity Meter Safety Inspection” and it was nothing more than meter readings. The lady turned up with a digital recorder and nothing else. Presumably she is equipped with an acute sense of smell and x-ray vision!

I hope you will agree this is a fiasco, but even if you do I will probably never hear from you for ages as you will no doubt write to me at my Devon address

 

In fact credit where to Diane at npower, I did receive a letter from her to my home address and also the offer of compensation which was paid even though they know I am switching.

I was judging the utilities category and by all accounts got lucky, as my fellow judges in other categories had not enjoyed the high quality and interesting submissions I reviewed. The winner in this category was Ovo, an energy supplier that only has 40,000 customers, but this far exceeded their target of 8,000 and although they were honest enough to admit that competitive pricing had played it’s part, it was easy to see why customers would flock to this brand.

Ovo’s business is built upon a principle of being trusted by customers, something the founder believed was missing in the industry. It was interesting listening to the special investigations unit at EON talking about the issues the industry faces that are not of the current owners making. I hadn’t realised that before privatisation, different regions installed different meters. This meant that only one company would have engineers familiar with a specific meter and so now that we can choose our energy provider, it is possible that they do not have the skills to support the equipment in our homes and businesses. buying skills in from a competitor is not a recipe for good customer experience.

In spite of the difficulties in the industry, what set Ovo apart was that customer centricity drives the entire business. They are not about one department, with exceptional individuals delivering a great service, they are about customer insight driven decision making and empowered employees from top to bottom. This distinction is what separated the category I judged, and came through throughout the day.

The UK Customer Experience Awards are only two years old and are trying to establish a wider picture than just customer service awards. However, the room was dominated by customer service people, so much so that even our host, Don Hales had to correct himself after uttering “service” after “customer” instead of experience. But the motivation is right and if organisations Can be encouraged to consider how service supports the experience customers have then the transition period is worthwhile.

The secret to sustainability by consumers comes from a change in habits because of your product or service and The Times iPad addition has definitely achieved that. My morning routine has now been adapted to ensure that my daily “paper” has been downloaded and the pictures are available for my commute.