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Three pricing rules to keep it fair

July 04, 2011 by Mark Stiving

If you set pricing strategy and want to maximise profits (or at least increase them), then you must use some sort of price segmentation. After all, not all customers have the same willingness to pay. You make more money when you let people who are willing to pay more actually pay more.

But is this fair? Is it fair that we charge some people one price and other people a lower price? Do you like it when you pay a price, and find out that someone else bought it cheaper?

What is fair? It turns out that fair is in the mind of the beholder. Every individual determines whether or not he or she has been cheated. Every person has their own sense of fairness. However, there are many examples where it appears we have consensus on what is fair. Let’s look at some examples:

  • Students getting into cinemas at a lower price — fair
  • Old-aged pensioners getting cheaper bus travel — fair
  • Holiday-makers paying less for flights than businessmen — fair
  • Paying more for cans of drinks on hot days than on cold days — unfair
  • Paying more to check your bags on an airline — unfair

As we think about these and other examples, there seem to be three criteria which make something “fair.”

  1. The segmented price is a discount to one group, not a surcharge to the other group.
  2. The pricing rules are known to the customers. The customers have learned to play by them.
  3. The rules do not change. If they do change, they had better change in the customers’ favour.

I’m still amazed that people are so upset when the airlines charge more to check a bag, but they do not complain when they now have to buy a meal. It is to your benefit to segment your customers and charge them different prices, but if you want to avoid customer protests, pay attention to these three rules.

Mark Stiving, Ph.D. is a pricing strategist, runs Pragmatic Pricing and is author of Impact Pricing (due out Autumn 2011).

Read more in our dedicated section on pricing.

The customer is king!

July 01, 2011 by Robert Craven

Golden crownProfessional advisers still need to learn that customer is king.

Some accountants, lawyers, architects, bankers and financial advisers can let opportunities and profits slip through their fingers because they don't understand the basics of customer care.

They see themselves as technicians and just don’t get the basics of running a business.

First, I want my adviser to understand me. I am a person and I have very specific issues. Show an interest in me.

Second, I want my adviser to understand business.

Third, I want my adviser to understand my business. I have specific problems – problems that are specific to my industry, to my market and to the way that I run my business.

Fourth, I want swift action. The systems used by most competing advisers appear to be relatively similar, so I will accept whatever calculations or recommendations are made.

I want swift actions or, at a minimum, I want the answers to be there when promised… or to be offered a date when work will be completed.  A little courtesy is all that I ask.

Fifth, I want to understand what I am paying for and I want to know how much I am going to pay, and when. Even better, let’s go for payment by results.

If an accountant or lawyer charges by the hour, then there's no incentive to work quickly.

Other professional service firms (architects, dentists, doctors) work to a price, so what’s the problem? Surely fixed price agreements would incentivise them to work more efficiently!

All I want is an adviser that understands me, understands my business, gives me decisions when promised and explains how they charge. Not much to ask, surely!


Robert Craven is an expert contributor to Marketing Donut. He runs The Directors' Centre and is the author of business best-sellers Kick-Start Your Business and Bright Marketing.

Read more in our dedicated section on customer service.

Posted in Customer care | 1 comment

Is your homepage as welcoming as an entrance hall?

June 30, 2011 by Fiona Humberstone

Imagine arriving at a stately home or (my favourite) a boutique hotel. You walk in through the front door and instantly feel at ease. The beautiful decor, fresh flowers and welcoming receptionist ready to look after you. You’re welcomed and guided to your room, shown to the bar or the spa. It’s a great start to a wonderful stay.

I always think that a website’s homepage should be just like an entrance hall to a stately home. Warm, welcoming and easy to navigate to where you want to go next.

Some websites give you too many options on the homepage and it becomes overwhelming (imagine the receptionist saying – I can show you to your room, the spa, the bar, the restaurant, the golf club, the tennis courts, the croquet lawn, the beach – you get the picture – you forget what she said at the beginning!).

Other websites leave you standing there – leaving you to find your own way through the “house”. That’s why we’ll almost always use navigational buttons on the homepage to guide people around a site.

Worst of all, imagine after a long drive arriving at the stately home. Rather than asking how you are and showing you what you need to find, the owner shakes you by the hand and starts telling you his life history. Yawn!

Are you with me so far on this analogy? Your homepage isn’t the place to tell people about your business – save that for your about page. Sure – they need to know what you do – they need to be sure they’ve come to the right place. After that, talk to them about their challenges and how you help, you’ll find you get a much better response.

Your homepage should welcome, guide and show visitors on to the meatier parts of your site. A bit like an entrance hall!

Fiona Humberstone is an expert contributor to Marketing Donut and runs her own creative consultancy.

More articles on website design:

Cashier number three please - why queue systems can improve customer service

June 29, 2011 by Terry Green

Customer waiting time and queues are an arithmetic certainty of service delivery. In the real world, even when you have extra staff available just in case demand builds up, queues will occur. It’s normal for shoppers to arrive in bunches and not in a steady flow.

Well-planned and well-managed queues are a healthy thing. They indicate a vibrant business that is successfully controlling the cost of delivering service to its customers and at the same time managing shoppers’ perceptions of their wait.

Whether there are only two people waiting or 42, the right mathematical methodology has to be used to determine how to serve customers as efficiently as possible and how to allocate service fairly.

You can see the impact of a well-managed queue on the faces of the customers and servers. They are relaxed, unstressed. Waiting customers look around them and take an interest in merchandise. The store receives fewer complaints and suffers lower staff absenteeism. A business without queues is either overmanned or lacking customers – or worse, both.

Every store has a strategic decision to make. Is operating cost more important than customer service? Cutting costs can mean that customers wait longer.  On the other hand, if stores decide that service times are more important to their brand proposition than cost or if they know that because of the nature of their business customers will be less tolerant of waiting times, they will ensure that fewer customers have to wait, but they will also increase the cost of their operation and risk more times when staff are standing idle.

This dilemma can be resolved through lean queue management. By making wait times more acceptable, and by organising service allocation systems they can help to lower costs and reduce waste in the process.

Research by Professor Edward Anderson, “A Note on Managing Waiting Lines,” has shown that queue times are affected by many factors:

  • If all servers are constantly busy, the queue quickly exceeds acceptable levels.
  • The “lumpier” the arrival rate, the longer the queue. So in smaller stores with lighter traffic – where arrival rate is less predictable – the waits are likely to be longer.
  • The more the staff keep their service times consistent, the shorter the wait for customers.
  • There is a limit to the number of servers it makes sense to have in a store, as at some point the cost of an additional server will not be repaid by shorter wait times for customers.

The voice of “cashier number three please”, Terry Green is heard over 30 million times every month in post offices, shops and banks throughout the UK.  His voice and ideas have transformed the way the world queues.

Terry Green - You're NextCompetition results

We asked, what percentage of our lives do we spend waiting? The answer is 17 per cent. Congratulations to Tim Latham and Clare Evans (who got the answer spot on) who both win a copy of Terry Green's book.

Why does spelling matter?

June 28, 2011 by Ceri-Jane Hackling

Spelling. Does it matter? It's a question that provokes very different opinions and can cause serious arguments. Believe me, I know!

Personally, I believe that spelling and grammar do matter and I'm particularly worried about the proliferation of text talk and bad grammar in the modern world.

PR is all about communication, but I am always surprised by the amount of job applications we receive with spelling and grammatical mistakes. Even personal profiles on networking sites such as LinkedIn are filled with errors and yet these are intended to show you at your best.

At Cerub PR, we know that spelling mistakes in press releases mean that we're headed straight for the journalist's “no” pile.

Well, you could argue, “That's PR, it doesn't matter in other jobs, does it?” I would argue that it does matter and here's why.

For one thing, it shows a lack of care and attention: if you can't be bothered to spend the time checking your writing, there's a very good chance you won't be bothered about attention to detail in other areas either. This means that as a potential employee I'm not inclined to hire you and as a potential supplier, I'm not convinced of your ability to do a good job for my company.

Bad grammar and bad spelling make you look unprofessional and, if I'm being honest, childish. The people who can't spell properly tend to be children and if by the age of 20 you still haven't mastered spelling or sentence structure, then maybe it's time to go back to school!

Top tips for good grammar

Check, check and check again. Don't rely only on spell check. It won't pick up on mistakes like “I went to they're party”, or “I bought some flours”. Once you've checked it, give it to someone else and ask them to check it too. Then leave it overnight and check it again. Then send it off.

Write concisely. Go through your text and take out any extraneous words. Anything that doesn't add to your message can be taken out. Clear, concise and easy to read is what you're aiming for.

Don't repeat yourself — make sure that each paragraph says something new. No-one wants to read the same thing over and over again and you'll lose your audience.

Find out more

There are some links to useful guides below.  And if you find any mistakes in this piece...well done! (Just testing!)

Ceri-Jane Hackling is the managing director of Cerub PR.

Read more on writing press releases:

A complete guide to writing an effective press release

How to write a press release

Press release template

Spring cleaning your home page

June 23, 2011 by Sharon Tanton

Spring cleaning your homepage - feather duster

When you’re trying to sell your home, estate agents recommend clearing out the clutter to show off your best features. I think the same applies to your home page. It’s the first place new visitors land, so you want to make a good impression.

Here’s some things I’d expect to see:

1. Clarity of purpose. Your home page should tell me very clearly and simply how you and your services can help me, so share your mission in a few well chosen words. I’m talking a paragraph at most. About Us will go into more detail about you and your ethos, so you don’t need to say lots here. Keep this page very clear and straightforward.

2. Navigation. I want to know exactly where to go next. Your home page should set the agenda, so your choice of words and destinations is important. Being too clever here can be a mistake. I see an awful lot of websites, and am a fan of the ones with the easiest navigation. The home page isn’t the place to surprise me, or to be oblique. Help me find my way around.

3. Call to action. What do you want me to do now I’m here? Call you? Read more? Look at this? Think about that? Don’t go overboard with your demands, but do try and get me to engage. The right words can pull me further into your site.

4. Evidence of life. Empty houses are harder to sell, and so are empty websites. I’d like to know you’re around, hard at work, helping people like me. Twitter feeds, blogs, video content. Have something on the home page that shows me you’re in business, right now. We’re talking tasters — headlines, logos, boxes — not the whole thing. Use your up-to-date content to lead me deeper into your website, and to reinforce your expertise.

5. Room to breathe. Sometimes I use home pages as a reference point, somewhere to go back to and orientate myself. In a large website, packed with valuable content, it’s good to have somewhere clear and simple to take a breath. (It’s a bit like returning to the blurb on the back of a book you’re reading.  That clear reminder of the story that grabbed your attention is useful.) So don’t overload it. Less is more.

Sharon Tanton is an expert contributor to Marketing Donut, a freelance copywriter and marketing consultant and a Valuable Content associate.

Read more on improving your website:

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