The formula for success in small business is very simple – keep the promises you make to your customers. The relationship between customers and business owner is like an unwritten contract. Both parties expect the other to honor their side of the contract. In it, the business owner promises to sell his products or services at the advertised price with the best possible customer service. In return, the customer promises to keep giving business to you as long as you keep your side of the bargain.
As long as both sides continue to honor their sides of promises the cycle continues. The problem arises when there is a breakdown in the promise that businesses are supposed to keep – you increase the price of your product or service to an unreasonable level, you do not provide the service that customers have come to expect, the quality deteriorates and so on. The customer will forgive you once or twice for breaking the promise, however when they see the pattern being repeated for some time they will move on and stop giving you the business. As we all know very well, there are number of the other businesses willing to make similar promises and establish contract with them.
Broadly speaking, you are making promises in two different ways – explicitly and implicitly. When you advertise your products and services with the words like “Best”, “Prompt”, “Guaranteed” you are making explicit promises. You are also making a promise when selling them for a specific price. These explicit promises are somewhat easier to deal with. After all, you have thought about them before advertising.
The implicit promises are different. These are the promises you may not even realize you have made. They are the result of your everyday transactions with customers. When you provide excellent customer service day-in and day-out you have made an implicit promise to your customers. They have come to expect this from you every day. If you start to cut corners by hiring less qualified employees or not spending enough in business operations the customers will notice the change and feel cheated. If the pattern continues beyond one or two episodes they will start thinking about moving to your competitors.
The breakdown in promises hurt small business owners more than the larger enterprises. This is because your pool of customers is small to begin with. You cannot afford to lose many customers before it starts affecting your sales and bottom line in a significant manner. In addition, you are doing business with a relatively small, local demographic. The word about your breakdown in promise will spread quickly. Remember, an unhappy customer is likely to tell 10 others. You do not have the luxury of time when it comes to making amends with your customers.
As we all know the best way to keep your promises is to under promise and over deliver. I will show some practical examples of how to do it in the next post. In the meantime, let me know your thoughts in the comments below.