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July 01, 2008

Smart Business is Simple

It's easy to forget that often the simple, common-sense approach can be the best business strategy. You don't need over the top ad claims, a fancy MBA or a McKinsey consultant.

Seths' experience with customink is a great example of this. Here's what Seth writes, reprinted in its entirety (because there's no fluff to cut out of the story):

I sent in a t-shirt order to customink a few weeks ago. Three days later, I got a note from someone named Lori that said,

"Hi Seth, I noticed that you have designed shirts that appear to be for a charity event. If that's the case, CustomInk would love to make a small donation to your team or to the charity itself on your behalf. Please let me know if your order is for one of these events. If you would like us to pitch in and support your cause, please include information about your charity event, a link if you have one or the organization's name if there is no link to a team web page."

That's it. No policy, no standard operating procedure, no promise in advance. Just plain generosity. It turns out that customink does this as a matter of course, regardless of whether the customer has a blog or not. They don't do it as an inducement, they just do it.

Formula: The value of a perk is inversely related to the expectation of that perk.

What does this have to do with direct response radio advertisng campaigns? Everyone is trying to find the right message, the right offer - to acquire the customer at the lowest possible number. That's important - you can't have a successful business without a strong customer acquisition campaign.

But many people stop there when in fact retaining those customers is also vital. How vital? Well first there's the obvious: retaining the customer means a higher lifetime value. But there's a deeper benefit: a higher lifetime value allows the business to be more aggressive with customer acquisition - to ward off competition and grow faster and more profitably. So this one move has reverberations across the entire business.

Thanks why simple and straightforward is smart business strategy.

Posted by Jeff Small & Brett Astor at 03:35 PM | Permalink