Costco Connection - July 2012

FRESHviews

sampling tables at a supermarket. On some occasions, 24 different flavors of jam were available for tasting. Other times, only six flavors were offered. The result? Offering 24 flavors enticed more people to taste the jams, but far fewer people actually made purchases. Those with a more limited choice were far more likely to buy. Customers expect businesses to curate choices. Some smart companies have figured this out. When you shop at a Costco, you aren’t faced with an overwhelming selection of toothpaste—or peanut butter or paper towels. Instead, Costco buyers carefully select a few high-quality options. When Steve Jobs returned to run Apple, one of the very first things he did was drastically reduce the number of computers offered. At the time, Apple had ozens of product lines; Jobs slashed Apple’s products to just four. Walk into an Apple store today and you’ll find a very limited number of Apple products, but they’re highly coveted. Having too many choices is confusing, and when you’re confused, you feel stupid. When you feel stupid, you don’t act. So whether you’re offering products to customers or have a decision of your own to make, reduce choice overload and you’re likely to be happier with the results. C

RHONDA ABRAMS:STRATEGIES

Rhonda Abrams is the author of Successful Business Plan: Secrets and Strategies. Register for her free business-tips newsletter at www.

planningshop.com.

Making
a million
Fewer options,
better outcomes

DICK CROSS CALLS himself a “serial CEO.” The Concord, Massachusetts, Costco member has converted eight marginal mainstream businesses into successes and has advised more than 100 other business owners to make successes of themselves. In his book, Just Run It! Running an Exceptional Business Is Easier Than You

Think (Bibliomotion, 2012), he explains why 56 percent of businesses fail within the first five years and how to avoid the pitfalls.

While many of Cross’ tips may seem pointed more toward retail store owners, much of the advice can be utilized by all business owners. Here is his list of the top five mistakes made by small-business owners.

Not knowing why customers buy. It’s no longer enough to provide convenience and competitive prices. The route to loyalty is paved these days with other things customers seek in addition to the tangibles they pay for.

Offering a transaction rather than an experience. The experience of buying, rather than just the transaction, is rising as

CAN GOVERNMENT contracting help your bottom line? A late 2011 survey of 740 active small-business contractors by American Express OPEN shows that it certainly can, at least for women and minority business owners. The survey looked at 2010 data, compared to 2009.

Women and minority contractors took different routes to procurement success, but were more likely to own larger firms than non-contracting peers: 42 percent of women and 41 percent of minority business owners have business revenues in excess of $1 million, just under the average among all small-business contractors ( 47 percent). Other interesting findings:

• Certification and designation can open procurement doors. Those who have them say the most useful are 8(a) status, service-disabled veteran status, veteran status (for minorities) and getting on the General Services Administration schedule (for women).

• Peers play a major role in procurement success. While the majority of active small-business contractors cannot point to a single turning point to procurement success, fellow business owners have been more helpful than average to minorities; outside consultants are cited more frequently than average by women.

• Investments were up for
minorities and women. The
annual investment made by
minority business owners
actively seeking federal con-
tracts was 35 percent higher
than the average of surveyed
small firms and up 29 percent
from their 2009 investments.
Women business owners
invested 17 percent less than
For more information on
government contracting—what it
can do for you, how to go about
it—go to www.openforum.com/
governmentcontracting. C

a driver of consumer choice. Studies show a 90 percent preference for vendors who sponsor causes consumers care about. Others cite overwhelming correlations between how a business makes customers feel and loyalty to that business.

Being the answer man. Once owners decide
on the experience they want their business to
provide, they should engage and empower
employees to fulfill it. When all employees are
working toward creating the same experience,
they’ll be able to make decisions and come up
with their own answers toward the end result.
Allegiance to how it’s done. Owners
need to declare all cows unsacred. Reevaluate
long-standing processes and systems
against their contributions to the experi-
ence promise.

One-dimensional thinking.

Owners need to put on “trifocal lenses”
that maintain continuous alignment
between vision (what they want their
business to stand for in three to five
years), strategy (the handful of big
initiatives they need to achieve to get
there) and execution (deploying resources
every day to accomplish those initiatives).

For more information on running a business, go to dickcross.com. C

I HAVE A TERRIBLE time buying toothpaste. I stand in the toothpaste aisle, feeling overwhelmed. In front of me are dozens of choices, many with just slight differences: bright white, brightest white, whitest white. Why is making a decision about something so simple so complicated?

When we’re confronted with too many choices in life, we often experience what experts call “choice overload.” Having too many choices paralyzes and frustrates us. It may seem counterintuitive, but often when we have fewer options, we’re actually happier.

If you run a small business, keep the concept of choice overload in mind when figuring out how many products or services to offer customers. The inclination, if you want to sell as much as you can, is to think “More choices, more sales.” Research and experience say that’s wrong.