Dissecting the Business Model of Two Competing Roller Rinks

Growing up just north of Fort Wayne, Indiana, there were two roller rinks that would compete for our business: the Roller Dome North in Fort Wayne, IN and Bell’s in New Haven, Indiana.  We would frequent these two businesses for birthday parties, school functions, and other organizational outings.

As a kid, I really couldn’t see a difference between the two businesses - we went there to skate and have fun.  Now as an adult, I can clearly see two different business models.

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Dissecting the Best Business Hacks of a Membership Site

With so many resources available to help our businesses, it is often difficult to find one that provides a great value at a good price.  Thankfully for me, I have found such a resource in Platform University by Michael Hyatt.

Now, I don’t expect that all of you are going to jump into Platform University - that is not my intention at all.  Frankly, Platform University isn't really designed for many of my readers as it is a resource for those building online businesses, which is something I am doing with this site and my business. 

The reason I am writing this article is that I wanted to take this opportunity to dissect the inner workings of this membership site I have been a part of for nearly two years and break down why it has been so valuable for me.  My hope is that you will be able to take away a few business hacks (summarized at the end of the article) that Michael Hyatt has used in Platform University and be able to apply them to your own business.

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Hacking the Dental Referral

My wife has found a dentist she loves.  She doesn’t appreciate him because he makes her teeth whiter or takes away her pain when she has neglected her teeth.  She loves her dentist because he has given her $150 in gift certificates.

When she first walked into Dr. Painter’s dental office, she was told about a dental referral program offered by the practice.  For every person she referred to the dental office, she would receive a $25 gift card to the merchant of her choice.  Having a family of 5, she quickly got her first $100 in gift certificates.  Add in her parents, and she was up to $150 with very little work.

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How to Create a Sales Process; Workflow in the Service Industry

Every business should have a sales process.  A sales process is a formalized plan to evolve a prospect client into an ideal customer; it is an intentional strategy designed to systemize sales so that each potential client is given an equal opportunity to become an ideal customer.  Without a clearly defined process of how a customer will evolve over time, the lifetime value of a customer will not be as effective as it could be.  In my recent post on How to Design a Sales Process in 3 Steps, I discussed general methods on what should be done to develop such a process.  In this post, however, I am going to specifically focus on designing a sales funnel for a service-based business. 

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Create a Sales Process: 5 Reasons Why You Should

I recently met a friend for coffee.  We were visiting a place that both of us had been to previously, but neither of us were regulars.  We had been chatting when we first walked in, so I wasn't really paying attention to the menu posted on the wall behind the cash register.  No problem.  I always get the same thing; a berry herbal tea.  But when I asked if they had any herbal teas, they handed me a huge book of options.  Some of the teas on the list were highlighted, some were scratched out, and some had no markings.  It was explained that they didn't carry every tea in the book and were out of some that they do carry, but I could tell by the markings in the book.  At this point, I was feeling the pressure of the line of people behind me and couldn't even tell what my options were due to the very complicated process.

This business could greatly benefit from implementing a formalized, intentional sales process.  A sales process is a defined step by step plan on how to help a customer move from being a prospect, to making a decision and purchasing a product or service.  When effectively implemented, a sales process can actually be one of the most valuable assets of an organization.  Therefore, every business should implement a formalized sales process for five reasons.

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Target's Business Model

Walmart leads the world as the largest and most powerful retailer.  Their big box stores offer low prices and a large selection to their customers who line up to take advantage of the savings.  As I explained in a recent post, Walmart has been able to offer such low prices due to their economies of scale. But it has come at an expense; their customer service is often nonexistent.  And this provides an opportunity for other businesses to gain a strong market share in Walmart's shadow.  One of these businesses is Target.

In this article, I am going to dissect Target's business model focus of customer service and how they have found a competitive advantage to compete with Walmart without (completely) slashing their prices.

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Get Angry, Get Good Customer Service

My roots are in customer service.  One of my first jobs was to process loans in an environment where our only interaction with the customer was over the phone.  We would serve clients and assist them through the loan process and our performance was evaluated in a number of ways which included recorded phone conversations.  I don't remember much from my processing days, but the one thing that sticks out are those customers who would yell at me over the phone when I was simply the messenger and had nothing to do with their problem.  While it didn't happen too frequently, people would yell during phone customer service often enough.  Any of you who have worked the phones know what I am referring to.

At the time, I didn't understand why people would get so upset and literally scream into the phone at me.  Over time, I have come to the conclusion that our culture has evolved so that the squeaky wheel gets the grease when it comes to customer service.  The customer service culture in the United States has actually evolved in a way that caters to people who yell and are rude.

I have observed countless incidents where a customer will get his way when he becomes angry.  This is often because a manager will get involved at this point.  What happens in many businesses is that the front line, or the person you talk to first, is not given much authority to resolve issues.  Naturally, the front line does not want to pass issues on to management as this may make them look bad, so the do what they can to keep the problem from being escalated.  This means that if you ask for a fee to be refunded by the first person you talk to, you probably aren't going to get it refunded.  That is, unless you talk to a manager.

While this is the practice at many organizations, more and more companies are starting to empower their front line employees so that they can resolve more issues and reduce the number of escalation items.  The challenge with this is that these employees still have a limit that can only be surpassed by someone with greater authority such as a manager.  

I have experienced this personally when dealing with various companies and have even found that front line employees believe they have the maximum authority while the manager (or an elevated level of customer service) actually has a greater level of authority.   It is unfortunate, but those who conform to the system and play by the rules often miss out because they never actually speak to the person who has the authority to make the decision.  For this reason, I often just ask to speak to a manager before I even begin my conversation.  

While this is the case in many organizations, we can't just blame the customer service structure for this problem - it is human nature to want to resolve conflict.  

Several years ago, I was working with a with a group and we were discussing the company's privacy policies.  As you would expect, this company took privacy extremely seriously and the management at this organization was confident that their staff would not give out a social security number over the phone without properly identifying my information.  To prove my point, I used information found on a statement and called the company while management was in the room.  I gave the name and account number found on the statement and then proceeded to tell them that I needed them to confirm the last numbers of my social security number.  I claimed they had inverted it previously and this was giving me all kinds of issues.   

I acted angry, and guess what?  They gave me the last four numbers of someone else's social security number.  I then hung up and called back and talked to someone else.  I gave the same story and expected that I might get the first three or middle two, but they actually gave me all five of the remaining numbers.  Management was astounded.  Within two phone calls, I had gathered a full social security number.

I don't blame those employees or this organization for their privacy practices.  The truth is, we all tend to put our guard down when it comes to people being angry at us.  The question we should be asking ourselves is, why should the angry person be allowed to get the greatest benefit?  Innovative and creative companies can develop solutions so that the conforming and calm customer doesn't loose out to the angry and rude customer.  I believe that the current trend of empowering the front line is just the first step in bridging this customer service gap.

When have you seen the angry person get what they want?