The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.
I LOVE this quote. I love it because I have LIVED this scenario many times throughout my career.
Customers often come to us in one of three states:
1. They have an existing business or business process and they want some sort of website or online functionality created for it.
2. They have an idea for a business or business process and want some sort of website or online functionality created for it.
3. They have an idea for an “app” but no real business model to support it.
Regardless of which category the customer falls in to, the technical solution they are seeking most likely will not transform their business UNLESS they have a sound business model to begin with. When a customer comes with one of these scenarios, the first thing we do is to help them think through the process BEFORE we sign on to build an application. This often overlooked but crucial planning phase is some of our favorite work to do and sometimes results in the customer realizing that they need a different solution entirely.
Let’s take a look at a fictional scenario.
SCENARIO: JACOB’S BIKE SHOP
SCENARIO: JACOB’S BIKE SHOP
Jacob owns a bike-shop in a large market with an abundance of competitors. His customer support has received several bad reviews online and his business has been struggling lately. He has a high-employee turnover rate and typically hires under qualified workers so that he can pay a lower rate. His largest competitor is a local bike shop that is also a national online retailer and has been for over a decade. Because of their bulk purchasing arrangements with their suppliers, Jacob can’t compete with their prices.
Jacob comes to us asking for an e-commerce site. He comments that “there is no way I can compete with the big shops unless I’m selling online.” He also wants to rank higher on search engines for San Antonio bike shops.
While Jacob’s desire for an e-commerce solution is not a bad idea, it is not going to bring the instant competitiveness that he desires for a few reasons:
1. His competitor has been at this for years. They sell to a national market and in bulk. He still won’t be able to compete with their prices. He does not have a big enough budget to purchase in bulk.
2. He has not thought through the infrastrucutre involved in running an e-commerce site.
3. He does not have a digital inventory.
4. He does not have enough employees to handle the inventory and shipping demands that come from selling online.
5. His current bank account does not have an option for an online payment gateway.
WHAT SHOULD HE DO?
After discussing all of these problems with Jacob he asks, “then what should I do?”
In my opinion Jacob has given up on the local market and set his sites on a goal that will take a significant amount of time and capital to achieve. My first recommendation would be to focus locally. What does that mean?
Do something about his customer service problem:
Customer service KILLS businesses, especially in sports with communities like cycling. He needs to make every customer that walks through his door feel special. They should leave his store feeling like the employees were more interested in helping them make an informed decision rather than being sold a $3000 bike. He should encourage his employees to get to know the customers by name. He might also look at paying higher wages to attract more a knowledgeable and stable staff.
Become a local hub of information:
In a community rich sport such as cycling, he should leverage and build his website and social network as an information source becoming a local hub for cycling activities. This will not only provide a service to the customer, it will drive traffic to his website and increase his rankings with search engines.
Offer free in-store educational events:
As part of his community outreach he could hold free educational seminars and events at his shop covering cycling, health, and wellness topics. This draws customers into the stores and engages them in an activity that they are going to want to share with their community.
Customers will often pay higher prices from retailers who pay attention to their needs and offer other valuable services.
WHAT ABOUT HIS E-COMMERCE SITE?
The local engagement as outlined above is just the “low-hanging fruit” which should show him fast results and build trust in his brand. We would still help him develop an e-commerce solution but would suggest starting small and focusing on items that might be hard to get from other retailers. As his business (local and online) grows and he can purchase stock in bigger bulk, his online prices can start to become more competitive.
BACK TO BILL GATES
At nearsky our goal is to make our customer’s businesses the best that they can be. We don’t want to build technical solutions for “inefficient operations.” We want to help them transform into more efficient organizations so that the solutions we build will give them the best “bang for their buck.”
What do you think? We would love to hear from you!