Using Science to Make Business Decisions

Many small business owners base decisions on their gut feelings which are comprised of their intuition and experience. However, using gut feelings to make business decisions may not be the best decision-making technique. Many companies are now using analytics and science to make judgment calls. With modern electronics and online tracking, analytics are often available to gather metrics on a myriad of topics. However, you can take business decision-making a step further and design scientific experiments to discover answers to your questions. Here are some suggestions on how you can use the scientific method to learn what decision to make.

Why Use Trial and Error?

Even in our current modern age of computers and mobile technology, too many businesses use trial and error or other decision-making techniques without any evidence of potential results before they get started. Keeping in mind the adage of what happens to people who make assumptions, there are better ways to decide on business matters.

Using the Scientific Method

If you think back to your high school days, you may remember learning about the scientific method. Like many high school students, if you didn't pursue a career in science, it is likely that you have not thought about the scientific method in recent years. However, business is more like science than you might expect. You can prove and disprove many theories with factual evidence before risking time and money on a new project or campaign. Why should you risk your company income and employees' paychecks when you can test theories before you take the plunge? If you could predict behavior, you would be able to achieve much more reliable results.

Let's see how much you remember about the scientific method. The basic method is to create a theory and then set up a scientific experiment to test your theory. You need a test group equally divided into control and experimental subjects.

Setting Up the Experiment

Google is a prime example of a company that tests its theories on a regular basis. They are constantly running tests to see how people react to various changes in their search engine. When they find a particular change that nets the results they want, they then implement the successful change over a larger group of search parameters.

Tests have been run by various companies to answer questions such as these:

Do lobster tanks increase lobster sales at Food Lion supermarkets?

Do eBay users bid higher in auctions when they can pay by credit card?

Do Subway promotions on low-fat sandwiches increase sandwich sales?

Does a Toronto-Dominion branch get significantly more deposits when open 60 hours a week compared with 40? (from https://hbr.org/2009/02/how-to-design-smart-business-experiments)

When Tests Do Not Work

Testing does not work in all situations. You have to have a large enough collection of data to learn anything significant. However, when you do have enough data to create a test, testing will give you measurable and repeatable results. According to the Harvard Business Review,

"Whether in marketing, store or branch location analysis, or website design, the most reliable insights relate to the potential impact and value of tactical changes: a new store format, for example, or marketing promotion or service process."

If you have a situation with specific, measurable results, instead of guessing the outcome and taking the risk, create a test that will give you a valid answer and confidence in your investment.

3 Tips to Communicate with All Types of Clients

When it comes to reaching your audience, a lot comes down to communicating with them in the language they will understand. We can learn a lot from Julia, a Pasadena ten-year-old. Julia is deaf; her new puppy, Walter, is as well. But, the two have found the ability to communicate with one another with ease. Julia has begun training the seven-month-old puppy by teaching him sign language. The dog knows the signs for sit, water, food and several others.

Julia's mother, Chrissy, said that when her Julia was born, she couldn't hear her mom and would smell Chrissy's neck for comfort instead. The moment Chrissy picked up Walter, he did the same thing. "I remember just looking at him, and I knew that he was meant to be ours," she said in a Humane Society video. Walter was the last puppy of his litter to be adopted, but the Humane Society did not give up hope.

The Pasadena Humane Society, which introduced the two, posted a video of Julia and Walter on their page. The reaction was immediate and positive. "Amazing!!" said one commenter. "This is my dog, Wyatt. He is also deaf, and he has no idea he is different."

When we are communicating with our prospects and our customers, we can take some valuable lessons from Julia and Walter:

1. Different customers will respond to different communication.

Customers are not all the same. You will deal with Millennials and Boomers, urban and rural folks, and people from different income brackets and areas of the country. It is important to segment your marketing lists and create materials for each individual group.

2. Remember that each group does not think of itself as a segment.

Just like the dog Wyatt who thinks himself like any other dog, your customers just think of themselves as ordinary people. Talk to them directly and respectfully. Never talk down to a group. Don't use slang that is not in keeping with your brand. This can feel false and off-putting.

3. Remember that consistent marketing is key.

Don't just reach out to each segment once. Create follow-up emails and other remarketing opportunities. If you do direct mail, send a follow-up postcard to go out to people who did not respond to your initial offer. Just like raising puppies requires a long-term commitment, nurturing a prospect from initial contact to conversion takes patience, time and effort.

Marketing segmentation takes more time and attention than a shotgun approach. But, over time, you will find that it consistently increases your return on your marketing investment and helps you build stronger relationships with your clients.

Managing Change Effectively

There is no question that people do not like change (https://hbr.org/2012/09/ten-reasons-people-resist-chang). Although some people can adjust more readily than others, it is inherent in our nature that managing change on any level is difficult.

When it comes to business, change is inevitable. As the world changes, so do our businesses in order to stay up-to-date and competitive. However, with each change, it becomes necessary to follow a transition process to acclimate both employees and customers. A transition can be the cause for issues to crop up in any area of your business. At a minimum, it can cause whining, grumbling and potential mistakes from your staff.

Changing Attitudes

When managing change in your business, keep this quote in mind.

"Without change, there is no innovation, creativity, or incentive for improvement. Those who initiate change will have a better opportunity to manage the change that is inevitable." ~ William Pollard

The Need for Innovation

Innovation and creativity are two of the most important factors that make your business a premier vendor for your customers. How you and your staff interact with customers and how you provide the best products and services to them will nurture loyal customers and make their lives better. While your techniques and results may change, your values do not, and that is what your customers will come to expect from you.

Creativity is Evergreen

Your ability to create, or to help your customers create, is a valuable talent. Managing change offers you an opportunity to find new ways to develop and display your "wares." Since change requires learning and developing new skills, people that go through any transition can stimulate their creative centers at the same time they are learning.

How to Manage Change Effectively

To help your employees, customers, and yourself manage change in a positive manner, look for ways to reward people who make the transition effectively.

1. Use change to retrain staff on necessary skills and review their knowledge.
2. Offer incentives for staff to display their new knowledge and expertise to customers.
3. Offer discounts to customers who try your newest innovation.
4. Take the change in stages that make sense for the involved participants.
5. Explain why you are making the change and how it will improve your product, your operations, or grow your business.
6. Give staff and customers a forum to voice their opinions and complaints.
7. Thank people for trusting you and making the effort to try something new.
8. Express your understanding of resistance to change.

As you ask your people to take the steps to change, remind them of how far your business and industry has come and where you would be if you never made any changes.

Out of the Mouths of Babes

Customer service is sometimes the part of the job that we dread due to the range of customer complaints that ensue. However, if we look at customer service as an opportunity, we can create a lot of positive energy from it. While not all stories are as entertaining as this one, the fact that the customer service response became a boon for the company is evident.

Giraffe Bread

Lily Robinson, 3 and 1/2 years old, wanted to know why the Tiger Bread from Sainsbury's (a British convenience store) wasn't called Giraffe Bread. After all, it looked like giraffe skin. She wrote a letter to Sainsbury's and her mother mailed it to their customer service department. (https://www.helpscout.net/10-customer-service-stories/)

In an incredible customer service response, Chris King, 27 and 1/3 years old, responded to Lily with another letter and a gift card. That response in itself would have been an incredible customer service moment, but the story continues.

Sainsbury's decided to change the name of the bread to Giraffe Bread and created signage explaining the story. Lily's mom was so impressed that she wrote about the story on her blog. (https://jamandgiraffes.com/2011/06/15/our-careline/) The story then got picked up by BBC News (http://www.bbc.com/news/business-16812545) and became a marketing tale that has returned goodwill to Sainsbury's many times more than what the first gesture from Chris King cost them. While this return doesn't happen every time you offer excellent customer service, your actions and response to customer complaints are opportunities to cement relationships with customers. Often, it is the customer service assistance that creates the most indelible mark in a customer's memory.

Customer Service as an Opportunity

There are many similar instances that companies never find out about that affect their bottom line. Not every customer calls or writes to a company because of a good or bad customer service experience. However, they may tell all of their friends about it. Positive or negative, word of mouth goes far and can create a bundle of good or bad press for a company.

Because most of us are dealing with automated phone systems and customer service reps that speak other languages and barely know English, a lot us have become numb to the massive amount of poor customer service. When we do come across good customer service, sometimes it is a shock to our system. We crave good customer service, and most people will return and refer others to any company that treats them well.

Examples of good customer service opportunities abound:

*The mechanic that takes the time to explain what is wrong and why it needs to be fixed, but won't fix anything that is unnecessary.
*The patio furniture sales person who brings out a ladder to get the last display model from the ceiling-high display shelf.
*The jeweler who walks the customer through the options of repair for their cherished, but cheap, pearl necklace.

These types of customer service experiences are appreciated by the customer and remembered.

By treating every customer service issue as an opportunity to strengthen your relationship with a customer, you can build the loyalty that every business needs. Loyal customers are your bread and butter, the customers who pay your monthly bills month in and month out.
Being a small business can give you more of these opportunities because you know your customers personally, so use these moments as a chance to shine.

The Art of the Learning Opportunity: How to Recover From a Public Relations Nightmare

Perhaps the most important thing to keep in mind when operating a business in today's digital age is that EVERY interaction you have with a customer, regardless of how private you think it may be, is a public relations disaster waiting to happen. The internet has brought us together as a society like never before, and this brings with it both its positives and its negatives for organizations everywhere. If someone has a great interaction with your business on the internet, they can easily tell all their friends and family members about it with a quick tweet or Facebook post. Unfortunately, the reverse is also true - even a negative interaction with your customer service department on the telephone can quickly balloon into a PR nightmare in a matter of hours if you're not careful.

Because of this, it's best just to assume that EVERY conversation you have with a customer is under public scrutiny at all times (because it probably is). Even responding to what you believe to be an invalid negative review of your business has the potential to turn quickly into a lightning rod of controversy depending on where it falls in the news cycle.

The Lessons Learned

For the sake of argument, let's say you've found yourself in the middle of a PR nightmare due to a conversation with a client that quickly went south. Maybe one of your customer service reps let emotions get the best of them and what started as a routine call quickly turned hostile, Now, the whole world seems to know about it. You can't take back what has already happened, but you CAN use the lessons that you're about to learn as the foundation of every decision you make moving forward.

For starters, examine the situation to find out what you did right and, most importantly, what you did wrong. The fact that you're in the midst of a public relations crisis itself is not something you did "wrong" since popular opinion isn't necessarily something you can control. However, look at the steps you had to take as a group to get there. What problem did the customer call about in the first place? Why did the conversation with your rep turn so negative so quickly? Why does this single interaction seem to be capturing the attention of so many people at this particular moment?

Once you have the answers to these questions, you can then get started making it right. Note that this does not mean "fix the problem" as in "make it go away." It means to do what you can to course correct and get back on the path you want to be. Take the steps to educate your reps on how to avoid these situations in the future. Take a look at the original problem that the customer had with your product or service and, if valid, do something to fix it. If the client took the conversation public on Facebook or Twitter, respond the same way. Remember - all eyes are on you and customers who see a business that is willing to own up to its "mistakes" and make them right are more likely to show sympathy and compassion than if you try to take care of everything behind closed doors.

For many businesses, a public relations nightmare is not a question of "if" but "when." The key thing to take away from this situation is that you have a unique opportunity that you can use to improve your operations across the board. Even if you think you're in the right, there are likely things that you could have done better, or you wouldn't be in this situation in the first place. If you DON'T take this as a chance to learn some very valuable lessons, you're wasting an opportunity to turn lemons into lemonade from a business perspective.

Know When to Hold 'em and When to Fold 'em

"You've got to know when to hold 'em, know when to fold 'em, know when to walk away, know when to run." This iconic hook from the song "The Gambler" is about more than just playing cards. It's also a metaphor for many circumstances that we encounter in life and business. Knowing when to end a dead-end job or a toxic relationship is critical to maintaining a happy life.

Likewise, understanding when it's time to quit a product you love, but that is not providing you with the gains you want, can mean the difference between success and failure, or even fulfillment and frustration.

In 1976, 23-year-old Don Schlitz wrote "The Gambler." After pushing it around for a few years, eventually, it was picked up by Bobby Bare and later, Johnny Cash. Despite the talent behind the lyrics and performers, the song never really took off. That is until Kenny Rogers picked it up and launched it to the top of the charts. Schlitz knew he had a song worth pushing and didn't give up. That perseverance paid off in spades (pun intended).

Knowing when to keep going with a product or service is not always so straight-forward, though. It's a difficult decision to give up on your "business baby" that you created and nurtured, especially when revenues are "ok." Sometimes, though, it's necessary to give up an "ok" thing to make room for an extraordinary thing. So, hear from some of the top founders in the country about how they know when to hold em' and when to fold em'.

Is It Profitable?
This question is probably the easiest to answer when you take into account: (1) revenue, (2) time and money investment, (3) emotional investment and (4) company goals. For Elisa Doucett, Founder of CraftYourContent, it's a no-brainer - "if it costs more fiscally and mentally to maintain than it makes, then it is no bueno."

For Matthew Newton, Founder of TourismTiger, his approach is similar - "if the return on time or money invested isn't worth it and you can't find a clear solution, it's time to kill the product."

Is It Providing Value?
Just creating a product because you want to make money or achieve a personal goal may not be the best for your product's success. Likewise, if your product is too similar to your competition or doesn't add more value than a competing product, it's time to move on to something else.

Micheal Ericsson, Founder of Search Scientists, looks to the founder's mindset in determining when to kill a product: "Everyone I know with a truly successful product...[is] not creating a product to create a product, they're moving forward with the goal to change a piece of the world."

Is It Feeding Your Passion?
While passion may not be the best reason for creating a product, it certainly should be a factor in keeping it going. According to Brandon King, Founder of SmartInternChina, "You should kill a product when it is killing you. If you go through an extended period of time working on a product you hate...that drains your energy, that is a good sign that it is time to move on."

Continually working on a product that you hate will erode your ability to put your best efforts into it. Nobody wants to put their name on a mediocre product.

Phil Ivey, (a.k.a. Gambler) always quits for the night when he's no longer at his best. The same holds true for running a business.

There Are No Pointless Meetings, Only Wasted Opportunities

If you ask any business professional what they dread on their calendar the most, many of them would tell you the same thing: all of those pointless meetings. You'd be hard pressed to find someone who hasn't been pulled away from their desk at the most inopportune time, only to sit in a room and hear people convey information that they either already knew or that they didn't need to know in the first place.

The dirty little secret here is that there are NO pointless meetings in the world of business - only wasted opportunities to get things done. If you want to make sure your meetings are justifying their existence, you'll want to keep a few key things in mind.

Know When to Schedule a Meeting and When Not To

The first step on your road to a more productive meeting schedule involves coming to an understanding of what type of information should be conveyed in a meeting and what would be better left for some other delivery mechanism. One of the reasons why meetings tend to fall into the "pointless" category for many people is that they don't require input or collaboration. If a team leader wants to draw everyone together to talk about updates to a project, but they don't want the advice of anyone else, what they're scheduling is not a meeting at all. It is an email at best.

Collaboration and the input of everyone involved should be a requirement for any meeting to justify its existence. If a particular problem has cropped up with a project and everyone needs to come together to solve it, that's one thing. However, if the purpose of the meeting can be accomplished by just sending a memo or some other form of communication, don't waste everyone's time by gathering the entire team together to talk about the work they are already doing. Instead, let the team just get on with doing their jobs.

It's All About Solutions and Focus

Another one of the reasons why more meetings tend to be less than productive is because people come with ideas, not solutions. One sure-fire way to make sure that nothing gets done is to allow people to come to a meeting and say off the top of their heads whatever is on their minds, firing off ideas that may or may not work.

In a perfect world, everyone at the meeting would know that you have a problem and would come prepared with X, Y, and Z suggestions for how to feasibly solve it. You wouldn't waste the meeting time searching for an answer to your problem. Instead, you would be able to pick the best solution available to you from what the team members came prepared with and brought to the meeting. Far too many meetings lack this type of targeted focus, which is why so many of us can walk out of a meeting and feel like it accomplished nothing.

At the end of the day, there are no pointless meetings in the world of business or, at least, there shouldn't be. Getting everyone together for a meeting can be a great thing. Everyone is in a room together, feeding off of everyone else's energy and building a solid foundation of creativity that will carry your business forward. Meetings that are little more than lectures (or worse, freestyle sessions) have no place in a productive organization. If you want to have a meeting, by all means, do so - just make sure it has a clear focus before you schedule it.