Know Your Customer Archives - Page 4 of 4 - BioZyme Online Dealer Center

Help Your Customers Understand How to Properly Compare Tags

Helping your customers properly analyze tags is important when comparing products. Here is some helpful information to help you ensure your customers are comparing apples to apples!

When analyzing feed tags, you must adjust for feeding rate in order to properly compare products. See example charts below.

Protein, Fat, Fiber and Macro Minerals
(calcium, phosphorus, magnesium and potassium) are listed as a % minimum or maximum.

A supplement that is 20% protein would contain 0.20 lb. of protein in each 1 lb. of feed.

Trace Minerals
(copper, zinc, manganese and selenium) are expressed as “ppm” or parts per million.

One part per million is the same as one milligram per kilogram
1 kilogram = 2.2 pounds
Must know feeding rate in pounds to truly compare ppm

Vitamins A, D and E
are expressed in IU/lb.

An IU is an International Unit and is based on the effectiveness of a particular vitamin.
A supplement that lists 100 IU/lb. of Vitamin E, fed at 5 lbs. per day, provides 500 IU’s per day.
A supplement that lists 800 IU/lb. of Vitamin E, fed at 4 oz. per day, provides 200 IU’s per day (4 oz./16 oz. = .25 times 800 IU/lb.)

You Can Only Pick Two

As a marketer and designer, I have always quietly laughed at this diagram that is often shared online by seemingly frustrated freelancers or business owners who are fed up with the expectation of their customers.

A simple Google search of this “good, fast, cheap diagram” will show that not only does the marketing and design industry share these feelings, but that modifications of these little circles show up everywhere in nearly every profession from construction to investment banking to the food industry.

While there may be much truth to these circles, I have learned over time that frustration diminishes quickly for both service provider and customer when you identify where you both fit within the diagram. If you occupy different circles, it simply means that maybe you don’t have to offer what your customer expects and what your customer expects is not possible based on what you can provide. But when you do exist in the same circles, the relationship can be pretty perfect.

We have taken it upon ourselves to modify a diagram for you as dealers. BioZyme dealers most definitely represent the QUALITY PRODUCTS circle as you carry the best products in the business as indicated by the ingredients and proven record of their ability to create performance that pays. There are other circles you may represent as well. Now it is up to you to identify which level of expectation your customers have and what circle(s) they fit. It’s ok that some customers might not fit perfectly. They merely need to be educated on why “quality” is important or how the service you offer directly impacts the value they place on time or having a consultant at their door to help make important decisions for their operation. Sometimes it is ok to just know that they have no interest crossing over into overlapping portions of the circle, and you don’t have to waste each other’s time or resources marketing to that type of customer.

The sooner you begin existing in the same circle(s) so that the product and service you are providing matches your customers’ expectation, the sooner you will create an environment of known expectation and synergistic goals in which everyone involved is satisfied with the end result.

Forecasting Sales Seasonality

Inventory management is an art that can elevate your business to new heights if done well. It is highly variable, and the optimal system is different for each dealer. There are many tools that can be implemented to improve your inventory management – and cash flow!

Techniques such as First-In First-Out (FIFO), setting par levels, having a contingency plan to address unforeseen issues should they occur, auditing regularly and classifying inventory so you have a system to prioritize the most important stock are all vital parts of inventory management.

Successful inventory management involves balancing the costs of inventory with the benefits of inventory. Many dealers fail to fully appreciate the true costs of carrying inventory, which includes not only direct costs of storage, insurance and taxes, but also the cost of money tied up in inventory. This fine line between keeping too much inventory and not enough is not the only concern. Others include:

Maintaining a wide assortment of stock — but not spreading the rapidly moving ones too thin;
Increasing inventory turnover — but not sacrificing the service level;
Keeping stock low — but not sacrificing service or performance;
Obtaining lower prices by making volume purchases — but not ending up with slow-moving inventory; and
Having an adequate inventory on hand — but not getting caught with obsolete items.

Perhaps one of the most important elements to finding this balance is accurate forecasting.

A huge part of good inventory management comes down to accurately predicting demand. Make no mistake, this is incredibly hard to do. There are so many variables involved and you’ll never know for sure exactly what’s coming, but you can get pretty close. Here are a few things to look at when projecting your future sales:

Trends in the market
Last year’s sales during the same week/month
This year’s growth rate
Guaranteed sales from contracts and subscriptions
Seasonality and the overall economy
Upcoming promotions
Planned ad spending

If there’s something else that will help you create a more accurate forecast, be sure to include it.

A helpful planning tool would be to graph product sales from last year by month so you have a picture that serves as a rough forecasting tool to help stay ahead of ordering and marketing.

Accurate inventory management incorporates what you know about customer and product demand from the past and present to (ideally) predict your best course of action in the future.

Optimize the value of such information by coupling your inventory management and marketing promotions to work together (More on page 10). For example, such insights can reveal potential opportunities to leverage quantity-based pricing suppliers may offer, while at the same time empowering you to offset times of lower demand with promotions or ‘packaged’ deals that strategically drive sales.

It is always best practice to ensure you have product on the floor at least 2 weeks prior to the beginning of selling season for each product and then use the forecasting tools above to prepare for restocking throughout the season.

A Real, Genuine Relationship

While many of our “Know Your Customer” articles focus on gathering data or technology that effectively helps you stay in front of your audience, we never want to undermine the value of a genuine customer relationship. Our animal nutrition industry tends to be more relationship driven as many of the people who own, manage or support businesses, like your dealership, are also in the business. This results in easy conversation, a real understanding of customer needs and a true comfort level between the business and customer. While we may be preaching to the choir on this one, we want to offer a few techniques to ensure your customer relationship is genuine and true.

Be patient in building new relationships.
Relationships take time. Resist indulging in disingenuous schmoozing, as it can be a severe put-off. Instead, take the time to get to know your customer, and share a little bit of yourself. Most importantly, remember that the product and service you provide is paramount in building a relationship. At the end of the day, no amount of personal connection can substitute for great product and service.

Understand the business.
We have a vast amount of segments within animal nutrition. While you may be an expert in the cattle business, equine or rabbits may not be your forte. You don’t have to be a professional, but learn to speak the same language as your customer, understand what keeps them up at night, and cater your interaction and products accordingly.

Go the extra mile.
As you grow your business and your customer relationships, there will be times that you’ll have to make a decision on when to adjust or expand your products and services to cater to the needs of a customer. The benefits of offering customized solutions are two-fold: 1) customers remember the times you came through for them and 2) it may open up additional revenue streams and new product offerings you had not previously considered.

Treat every client as your most important one.
Simply put, happy customers are more likely to make referrals. Provide all customers with your best service, regardless of whether they are a large ranch that run thousands of head or a family just getting started showing. You never know whom your customers may know or to whom they will refer you.

Respond promptly.
When a customer calls, emails or messages you on a social channel, acknowledge the receipt of the communication as quickly as possible, even if you do not have the answer they are looking for. You will give them comfort by simply acknowledging the receipt of their request and by communicating that you’re on it. This may seem like a no-brainer, but we often see dealers worry about having the right answer, and as a result, they forget to acknowledge they are looking for a solution.

Be more than a contact.
Despite the importance of collecting an email address, cell phone number for text messaging services, a social handle etc., these types of communication can often be misconstrued, especially during stressful situations. Consider a phone call or an in-person meeting to put a face (or voice) to a name. Often the phone gets a bad reputation when using it to ‘get on the same page’, but if used for good news, a phone call is a great way to build a better relationship with your customer.

Show up.
Every customer segment in your business has events they attend. Your show audience gather at the county fair or local 4-H or FFA events, your equine customers at rodeos and your cattlemen at field days. Seeing your face and knowing you care enough to attend these events to show your support or learn more about their involvement will not go unnoticed. Consider participating in those events, offering your time or sponsorship. With every new technological advance in communication, there is nothing more important or powerful than face-to-face interaction.

Pricing 101: your pricing strategy

Pricing is the most important aspect of your business. No other factor has a higher impact on improving profits. A 1 percent improvement in price optimization results in an average boost of 11.1 percent in profits. That’s no small change.

The following are methods commonly used when determining how to price inventory. Read through these pricing options and compare them to how you currently price items in your dealership. Keep in mind the services your dealership provides when trying to match the best method for you moving forward.

Value based pricing: It’s all about the customer

To consumers, price is a number of how much they value what you are selling. For example, if I needed a new winter hat, I could get one from the local Goodwill store for a dollar, or I could go to Macy’s and buy one for $25. If I only cared about covering my head, Goodwill would win, but since I care about my fashion sense, Macy’s wins. A customer’s willingness to pay is contingent upon the value he or she places on the product desired. Essentially, value based pricing cuts through the red tape of this scenario to determine the true willingness of a customer to pay for a particular product.

Unfortunately, the most common pricing strategies and methodologies forget about the customer. Instead, people in charge of pricing justify price points based on internal reasons or simply adopting existing market prices. Newsflash: customers don’t care how much something costs you or your competitors to make. Customers want to know how much value they are receiving at a particular price.

Value based pricing requires a lot of research. But it allows more interaction between you and your customer. Plus, unlike pricing done by market norms, this method focuses on isolating qualities that distinguish your product from a dozen similar products on the market.

Value based pricing models utilizes customer data, as well as breakdowns of the relative value of different features within your offering. You’ll also need to conduct an analysis of competing goods, because once you have the data, you’ll want to know the other options consumers have open to them. In the end though, you have the greatest amount of data to make an informed decision about your profit maximizing price.

Pros of value based pricing

1. It helps you develop higher quality products.

Value based pricing not only determines a more accurate price for the end product, but the process will also benefit your business. Taking on a consumer perspective will also help you discover what customers are really looking for. Products and features will be driven by consumer demand, which raises perceived value, thereby resulting in a higher price.

2. It allows you to provide phenomenal customer service.

Much of the customer data in value based pricing is collected through customer surveys or interviews. In past newsletters, we have stressed the importance of building relationships with customers and providing them quality customer service. Your customers will perceive that you are providing the best service available and building repeat business instead of a one-time customer. The customer will trust that you are providing the most bang for his or her buck.

Cons of value based pricing

1. It takes time and resources.

The method takes time; both while building relationships with customers and researching competitors’ prices and services.

2. It’s a science, just not an exact science.

Value based pricing is more of a process that requires consistent dedication, not just a “set it and forget it” mentality. Think about it, willingness to pay differs between different customers, regions and even offers. A 100 percent accurate prediction is impossible, but we can get pretty darn close.

Summary: Value based pricing should be a part of almost everyone’s pricing strategy. When done right, value based pricing provides increased opportunities to provide customer service and motivates you to provide a higher quality product.

Cost plus pricing: The oldest and simplest method of setting prices

Cost plus pricing is the simplest method of determining price, and embodies the basic idea behind doing business. You buy something, sell it for more than you spent buying it (because you’ve added value by providing the product), and the difference between your price and costs equals profit.

A lot of companies calculate their cost, determine their desired profit margin by pulling a number out of thin air, slap the two numbers together and then stick it on a couple thousand widgets. It’s really that simple. This method involves very little market research, and also doesn’t take into consideration consumer demands and competitor strategies.

Pros of cost plus pricing

1. It takes few resources.

Cost plus pricing doesn’t require a lot of additional market research. Cost of product is something businesses are mostly aware of by adding up different invoices, labor costs, etc. Businesses can then take the total costs and place a margin on top of them that they believe the market will bear. Cost plus pricing is especially helpful when you have no information about a customer’s willingness to pay and there aren’t direct competitors in the marketplace.

2. It provides full coverage of cost and a consistent rate of return.

As long as whomever is calculating the costs per item is adding everything up correctly, cost plus pricing ensures that the full cost of the product is covered, allowing the mark-up to generate a positive rate of return.

Cons of cost plus pricing

1. It’s horribly inefficient.

The guarantee of a target rate of return creates little incentive for cutting cost or for increasing profitability through price differentiation. This inward facing approach discourages market research, including watching your competitor’s prices. Plus with no research, you have minimal data on your customers’ perceived value of your product.

2. It doesn’t take into account consumers.

Perhaps the biggest downfall of cost plus pricing is that it completely disregards the customer’s willingness to pay. To make money, a customer must be involved. They’re the most important part of selling anything, so any pricing strategy that doesn’t take customer value into account is creating a vacuum that’s sucking all of the profit out of the business.

Furthermore to be blunt, customers don’t care about how much something cost you. They understand there are costs associated with doing business, but consumers care more about how much value you’re providing.

In summary, cost plus pricing isn’t ideal for most businesses, unless you truly cannot spend some extra time on the most important aspect of your business – your customers.

Competitor based pricing: logical, but ineffective

Competitor based pricing is a lot like a bad case of plagiarism in a college class. Because you don’t want to do the work yourself, you look at your competitors’ prices for similar products, and set your prices similarly.

Imagine stacking all of your competitors on a totem pole with the most premium or luxury brand on top and the bargain brand on the bottom. You then decide where on the pole you fit, place yourself in there and set your price accordingly. This is not the way to do business.

Pros of competitor based pricing

1. It’s fairly simple.

If you’re in an industry with even one or two direct competitors, you can implement a reasonable competitor based pricing strategy. In most industries, marketing and product managers will then have to do relatively little research to find a price.

2. It’s low risk.

It’s rare to royally screw up using this form of pricing, and chances are if your competitor has never filed bankruptcy, neither should you.

Cons of competitor based pricing

1. It leads to large missed opportunities.

You will miss the opportunity to work closely with your customers and provide them true customer service if you just sell a product without any extra perceived value. You will likely lose profits and not take advantage of improving your product or business. Maintaining a lower price than your competitors isn’t always the best way to attract consumers, and as Lisa’s chart on page 2 showed, prices are not a priority like customer service and communication.

2. Formed by group consensus and lacks personal responsibility.

Competitor based pricing operates off the assumption that businesses already in the market have the correct answer and that every decision competitors’ make is intelligent. However, if a large portion of companies all use this tactic, then with time, competitor based pricing can lead to the entire industry losing touch with demand.

Summary: Competitor based pricing should be a part of everyone’s pricing process, but not the central pillar. As we alluded to before, competitor based pricing also gives you too much of a “set it and forget it” mentality. Pricing is a process that requires data and attention. If you’re not changing your prices and differentiating your product over time, you’re not sustainable. Yes, you should know what your competitors’ prices are, but knowing your customers and their demands is more important. If you take elements of all three of these pricing strategies, you should see increased business and an increase in your profits.

Digital Punch Card

Technology has come a long way. It’s great when it works, but more importantly, to work it must be easy. Retail outlets have used promotions and customer loyalty programs for ages to drive sales and repeat business, but often these programs are difficult to manage for both the store staff and the customer. However, there is an innovative program available that automates the management of rewards points and makes communicating with your customers easy!

Here are some examples:

Buy 10 bags of Sure Champ^® and earn a show stick, pig whip or brush.
For every 10th visit to the store where you purchase $50 or more, earn a free gift.
Come in on your birthday and receive $10 off your purchase.
Earn double loyalty points on Tuesdays.

These types of incentives are appealing to those customers who enjoy a bonus, and if done strategically, can be an effective way to ramp up business on specific days that may normally be slow or to promote slower moving products. Additionally, it’s a great way to stay in front of your clients and market in a fun way.

OptSpot (www.optspot.com) combines customer loyalty and text message marketing to increase customer frequency, connect with customers and drive instant revenue. Customers simply sign-up & check-in using their mobile phone number. Points are automatically tracked & rewards are earned based on points. Re-connection is automated and done through text messaging.

Some Cool Features
Customer Loyalty: Using a mobile number to track points and rewards is easy. Customers either enter their number into the tablet or you do it on your point of sale checkout system for them. Points are tracked and rewards are earned automatically.

Auto-Engage: Reconnecting with your customers automatically based on frequency is nearly impossible without innovative solutions. This text program will send a text message to those customers who have not visited in 30, 60 or 90 days inviting them back more often.

Text Message Blasts: Being able to get your message in your customer’s pockets can drive instant revenue. Send limited time offers, promotions, etc. and watch your business grow.

Collect More Data: Collect important customer data and add them to your own
customer relationship management (CRM) software through an automated text call to action.

Who Are Your Customer Advocates?

Are you generating new business from existing customers? Customer advocates are the heart of any successful, growing business because they help send you referral leads – for free.

Referrals are warm leads that convert better than leads using other marketing initiatives. Creating customer advocates and harnessing their passion to drive more referrals is a key component to all successful, growing businesses.

According to a study by Wharton School of Business, 83 percent of satisfied customers are willing to refer products and services. But, only 29 percent actually do. So, let’s amp up that 29 percent and create some real growth from customers who share passion about the products and services you provide!

Why is customer advocacy so important?

A referral customer costs a lot less to acquire and has a higher potential for retention and loyalty. In fact, a referred customer has a 16 percent higher lifetime value. (Wharton School of Business, 2012)
Word of mouth is a primary factor behind 20 to 50 percent of all purchasing decisions. Its influence is greater when the products or services being bought are relatively expensive or need people to conduct detailed research. (Mckinsey, 2010)
People trust friends and family more than other information sources; they pay twice the attention to recommendations from friends than other sources. (Mckinsey, 2010)

It’s easy to understand why creating customer advocates is important in driving success. Here are four ways you can turn passionate customers into advocates.

1. Build stronger customer relationships

Building relationships is important in showing that you value your customers’ business. Stronger relationships increase trust between you and your potential customer advocate.

When it comes to referrals, your customer’s reputation is on the line. If someone recommends your products and/or services, and you don’t deliver, guess who loses? Yes, you might take a hit, but more importantly, your customer will have their reputation damaged. Through stronger customer relationships, you can build trust with customers and earn their referral.

2. Use customer satisfaction surveys to identify potential advocates

Identifying potential customer advocates is a challenge. Customer satisfaction surveys can serve as a tool to identify advocates.

As discussed in previous newsletters, these surveys give you the opportunity to ask customers what they really think of your service. To determine if a customer is a potential advocate, ask this question in your survey:

How likely would you be to recommend us to your friends or colleagues?

I would go out of my way to recommend <dealer name>
I would recommend < dealer name >
I wouldn’t recommend < dealer name >

If someone would ‘go out of their way to recommend your services’, you could assume they were very satisfied with your service or product. Leverage this insight to reach out to specific customers and identify potential advocates.

3. ‘WOW’ your customers by focusing on the experience

Zappos CEO Tony Hsieh demonstrates this best when he says, “We really don’t think that customer service is an expense that you should try to minimize, it’s really an investment in your brand. The telephone is one of the best branding devices out there. If you wow [customers] during that interaction, that’s something they’re going to remember for a very long time and tell their friends about.”

Creating an experience that WOWs your customers is something money can’t buy. People value service that goes above and beyond their expectations, and they tell others about those experiences. In order to WOW your customers, first think about what your customers expect from your product or service. Then, exceed those expectations. Think about some initiatives you can implement today that will make your customers say, “Whoa, that was great.”

4. Don’t be scared to just ask for referrals

Asking for a referral can be intimidating. Even with all the strategies in the world, some of you will still sit back and not identify your advocates and ask them for referrals.

Pick five loyal customers you feel might have some peers interested in your services. Next time you have a scheduled call or are delivering product, challenge yourself to simply ask for the referral.

Use this line if you’re stuck for words:“Hey Bob, do you know anyone or any operations that would find our products or services valuable?”

Turning customers into advocates doesn’t have to be hard. Studies show that customers want to send you referrals but just don’t know how. Your passion for this industry is contagious, and you have customers who want to help you grow your business. It is up to you to leverage that passion to create more opportunity!

Know Your Customer :: Target Their Interest

Diversity is all around us. And with the diversity available within the BioZyme^® product line, your customer base could include a family who feeds lambs and goats for a seasonal show circuit, someone else who is a fifth-generation purebred cattle producer and another who breeds prize-winning show dogs.

Obviously, with such a broad spectrum of potential customers, your marketing plan can’t be a one-size-fits-all. Just as it is essential to know details about your customer, it is just as important to know how to provide a unique marketing approach to fit each customer’s needs.

According to a University of Kansas “Community Tool Box” website
(http://ctb.ku.edu), market segmentation enhances your ability to best use the four P’s of marketing: product, price, place, and promotion.

PRICE: Price comes in different forms. A customer may be willing to pay a premium for quality if that is something you know is important to them (see page 8 for an example of how CJ Feed & Supply obtains this information). At the same time, a customer may be willing to pick up product versus having it delivered if they desire a lower cost.

PRODUCT: Knowing and understanding customers need different products for their various species and goals will allow you to have a more personal conversation, whether that be in person or through marketing efforts.

PLACE: Different customers can be reached in different places. Perhaps you have a customer who wants you to call them on a regular basis, while another appreciates a personal visit to his or her operation. A group of customers might benefit from an email that highlights upcoming price changes for products you know they use regularly, and another group might appreciate the
opportunity to attend a producer meeting.

PROMOTION: Each customer responds differently to
marketing and advertising. As mentioned in previous
newsletters, the BioZyme marketing staff has tools
(email, direct mail, texting, signage, etc.) and resources
available to help you reach these customer groups.
Contact Katie Vaz, Marketing and Communications
Manager, at kvaz@biozymeinc.com or 816-596-8782 for more information about which marketing tools are available and best suited for you.

Since you know your customers best and their specific needs, it is important to be able to relate to their needs. Is breeding season approaching in your particular region? Perhaps you begin heavier promotion and offer education on the benefits of Concept•Aid^®. Do you have several customers who show pigs during a summer jackpot series? It might benefit you and those customers to attend the first show of the season to promote Vita Charge^®.

Targeted marketing quickly shows each customer segment that you care about their specific needs and have the products to meet those needs. This type of marketing positions you as a specialist in the eyes of your customer and encourages them to seek you out when they have a question, problem or product request. This relationship-building marketing strategy will draw your customers closer to you and make them more willing to invest in you and your products instead of your competitors.