Software pricing scams hurt small business

I’m in a competitive situation in one of the marketplaces my company serves in which is most frustrating. A competitor says their software is, say, $1,400 and points at ours costing three times that amount. The fine print reveals that they have a mandatory annual access fee if you want to keep using the software. In our case there is no mandatory fee – the software keeps working regardless of whether you take up our support service. Even including our software fee our solution is cheaper over a four year period.

The problem is that the marketplace this is being pitched to is so not tech and contract savvy that some will take the bait and not discover the higher cost until they are locked in.

While we can go to the ACCC about the matter I have no faith in their interest in such things.

Transitions in small business

Being a small business (around 40 employees) we get to participate in our fair share of transitions. Employees coming and going, engagements, marriages, births, deaths, divorces, holidays and the other changes to lives. Being a small business we get to notice these transitions more than in bigger companies. I guess it’s a reason I like being part of a small business.

The transitions of employees departing can be bittersweet. There is the loss of the asset yet the joy of watching someone move on and the hope that they have something valuable to take elsewhere which they have learned from their time with you.

Small business plays an important role in giving people a break in their first position in the workforce. More important than that is the opportunity for people to step up into roles which extend their skills and confidence. My sense is that small business provides these opportunities more than big business. We certainly see this as our responsibility. Often the faith in the person stepping up is justified.

While departures unlock a raft of emotions, hindsight, more often than not, leaves me with a sense of pride at what the time with our business has meant to the individual and a sense of thankfulness for the contributions they have made to the company and its community.

The arrogance of Qantas and how they would go running my software company

I’ve been thinking about my post a couple of days ago about the new $27.00 charge by Qantas for telephone bookings and our journey toward a CRM purchase decision.

If Qantas were running my software company they would charge my customers for using our help desk service in addition to the annual software support fee. The additional charge would be for human contact.

Think about it. I want to fly from Melbourne to Sydney and back and the flights will cost, say, around $600.00. That includes the various government taxes and multiple fuel levies imposed by Qantas. Since they have an online booking service they seem to have the view that I can use that without cost or that I can use their human booking service for $27.00. I find that a human booking can be done in less than 2 minutes. $27.00 for 2 minutes plus their various other surcharges and you see the money which can be made.

If Qantas ran my software company and given that most of the support we provide is available in a self help form, Qantas would be charging my customers at least $135.00 per call since an average call runs for ten minutes. The annual support fee would be the knowledge and the per human call fee would be for those accessing the knowledge using a human.

If Qantas ran my software company they would be out of business in no time. Their arrogant pricing policies would not be acceptable to the small businesses I deal with.

I think we’ll be taking the CRM plunge without any additional charge to our clients and with maintenance of all current human contact for no charge. It’s the way small business operates.

CRM or not CRM

We are in the final stages of assessing whether to replace several in house developed technologies with an all singing all dancing CRM system.

For the CRM investment to generate a positive return we need to achieve revenue growth directly attributable to this investment or a cost reduction. However, given the nature of our client base it is unlikely that our clients will want a self serve help desk experience – that is, they like speaking with a human compared to navigating the technology to find an answer for themselves. Also, we’re not the type of business which will cut positions with a technology solution. (I’m glad I wasn’t around during the start of the industrial revolution.)

I want the consistency of service, management reporting, duplicated effort elimination and goal focus of a good CRM yet I am wary of where the financial benefits will come from given my aforementioned reluctance to use this to replace people.

My frustration is that the sales people we have spoken with are not clear about the business case other than vague comments. We’re a small business software company and they are used to selling to big companies. They wouldn’t survive down here in the rough and tumble of small business territory.

For CRM to work in my business I need to understand the cost benefit equation (without losing employees) and to see this reflected in the experiences of our customers.

How Qantas is focusing on customer service

Call Qantas to book a flight and they will tell you that there is now a $27.00 charge for using their telephone booking service. That’s right! This airline has decided to demonstrate its focus on customer service by charging a fee for human interaction as opposed to no fee for online interaction. Now that might be okay if their online booking service was not so useless.

This $27.00 is a tipping point for me. Now I will check out Virgin Blue and compare.

Charging a fee to book (and spend money with Qantas) is nuts.

Social responsibility

We want to demonstrate as practically as possible that a corporation, albeit this small corporation, can demonstrate a social responsibility. We want to show that by supporting our small and independent business the community is better served than by supporting Microsoft or the other national and international brands which compete with us.

We have appointed someone to the position of what we will call social responsibility officer.

Their job is to audit decisions and challenge them when they feel we may be outside good social responsibility. They will consider our decisions and actions in the context of our social responsibility in the areas of:

  • Environment
  • Individual rights
  • Local community
  • Australian economy
  • Ethics
  • Responsible consumerism
  • Culture
  • I recognise that it is one thing to write a few blog entries bemoaning the clonisation of our shopping malls and high streets and to criticise the might of big business against small independent operators and another thing altogether to demonstrate the value of such small businesses.

    Independent and small businesses should not be protected for the sake of it. They have to offer something of value to the community. Hence our effort in terms of social responsibility. While I would suggest we have always been responsible, we now have someone else who is not a shareholder (in the strict sense of that term) making the assessment.

    I expect the result will be debate and some changes along the way.

    Podcasting frustration

    Our plans to release training via a podcasting platform are being frustrated by poor access here in Melbourne (Australia) to good advice and products. From the outset our goal has been to create podcasts of a high audio quality. We created a shopping list based on advice from professionals and we’re heading back to their shop now for the four time for the extra device or cable they say we will need to get this working.

    Sure this is an area outside our technical realm. However, it should be easier than this, especially given the interest in podcasting now.

    We should be up and running within a week. We have two programs ready to go content wise and while we could have had them available by now we did not want to fall into the trap of poor production standards.

    More SMS (text) frustration

    There was a time when I’d receive a call to confirm an appointment with a particular service provider. Now I receive an SMS. Poor software design by their software supplier means there is confusion as to whether I have confirmed and I have to then call to confirm or they have to call me.

    If software developers and businesses are going to embrace SMS as a means of interacting with customers it has to be within the context of such communication. It has to be relevant, efficient and something I want. That the software I am frustrated with did not allow me to opt out adds to a bad experience.

    Personally, I don’t want SMS messages to be the new junk mail. Ugh!

    In my retail business, where we use the software developed by my software company, we’ve been using SMS for 2 years and opt out options were there from the outset. We have significant new business achieved as a result of offering the SMS facilities. If we had botched like these other folks the success would not have been achieved.

    Unsolicited SMS marketing is as annoying as the telemarketing call

    We’ve had SMS (text) messaging facilities within our software for a couple of years now. It’s used by our users to remind customers of appointments; the arrival in store of special orders; employees of their roster for the coming week; and, the owner of end of shift cash balancing accuracy and sales turnover by department. Practical stuff.

    Now I don’t know if I am alone in this but this week I have received four marketing messages on my mobile phone, each from a different business. In one case it was from business I shop with while the rest were from businesses I have never shopped with.

    These messages are unwanted and an intrusion. They clog the inbox. One message, from the business I knew, offered an opt-out facility – which I assume I have to pay for, while the others did not.

    This advertising noise will put me off these companies.

    At least the messaging facilities integrated in our software have a practical use and are only used if the recipient requests such contact.

    Newsagents should be participants in the cross media changes conversation

    The Australian newsagent channel was created by publishers to serve their needs back in the 1880s. With many price and operational aspects of our model still controlled by publishers it is appropriate that the Federal Government include newsagents in the conversation about changes to the cross media laws.

    If a more open media ownership landscape is to be allowed, newsagents should lose some of the non competitive yet non negotiable aspects of their operational model as negotiated back in 1999 under the auspices of the ACCC and the Federal Government.

    Woolworths goes for self checkout, small business should focus on human contact

    Retail is a contact business. Human contact. Consumers are tired of navigating technology when calling a help centre, doing banking or ordering pizza. Consumers want human contact. Or so I think.

    Yesterday’s Australian newspaper carries a story about Woolworths forging ahead with its plans to introduce self checkout technology beyond its current pilot stores.

    While it may suit Woolworths’ desire to drive down the cost of processing each sale, it takes something away from the retail experience.

    Retail is not only about the commercial transaction, it is an opportunity to connect with another human, to share a story or a smile. There is cultural interaction behind the counter, a quip about a news story, a comment on the weather. This is all part of the tapestry of life. These automated NCR self checkout machines have no comment to make or a smile to deliver. They do nothing to serve our need for social interaction.

    What a tragedy if the Woolworths trend takes off. Where will high school students get valuable work experience? Who says g’day to those for whom shopping is their only social interaction for the day? What creativity is subliminally stifled by the consistently mundane automated checkout experience?

    Woolworths has a social responsibility to interact with its consumers and this move to retreat from human contact sneers at that social responsibility.

    Old ladies do not want to be helped across the road every time

    We’ve been investing considerable time in making free visits to client businesses to answer questions and check the status and performance of their system. We had one visit yesterday where the client asked us to leave. They said if they wanted something they would contact us. The reaction from them was as if we had thrust junk mail into a letterbox marked “no junk mail”. It’s the first time we have received this reaction and it took us aback. We assumed everyone would want a free onsite visit and while the vast majority do, we need to allow for the occasional client who would rather us not there.

    I should note that their concern was not to do with my company as such but more to do with controlling the information employees receive.

    Dell Hell: how a snowflake became an avalanche

    While it is premature to write off Dell yet, the negative stories being told by Dell customers in blogs and forums has spiked dramatically since Jeff Jarvis started blogging about his own problems at BuzzMachine.

    Dell’s customer service problems have now hit the pages of Business Week.

    Key to good customer service is having communication lines in place which ensure you are informed about any real or imagined problems. Next you need to actually respond to this information. This, to me, seems to be where Dell has failed. They seem to have ignored people shouting from the rooftops about poor customer service. Where it will end for Dell is open to speculation. They will certainly need drastic and expensive action if they are to make the smell go away.

    All of us in the service business can learn from this Dell mess.

    I had a client of my Australian software company comment to me about rumors about poor Dell customer service. Such is the power of word of mouth.

    The Dell mess has prompted us to look again at our contact mechanisms to ensure that we are as open and responsive as possible.

    Free on site visits make for an exceptional relationship

    We’re in the middle of trade show season. Four weeks of trade shows in three cities. It’s great to catch up face to face with clients.

    We met someone yesterday whose business is located four hours from our nearest office. He was thrilled that we’d made a courtesy visit (without request from him) a few weeks earlier to see how he was going and answer any questions he had.

    We have been making more of these visits this year as part of our oasis strategy. We’re trying to provide experiences for clients with our company akin to time in an oasis. So good you look forward to it and you keep thinking about it after it is over.

    In the last month we have had face to face visits with over 150 clients at no cost to them. Each visit providing free training, a free system check, a backup check and a solid Q&A session – usually taking a couple of hours.

    While the feedback during the visit is good, the reaction at the trade show yesterday demonstrated the value – well after the visit. It showed that our clients are getting value and that the relationship is more than supplier/client. It also gave us important recognition to encourage more visits.

    Copy cat marketing in loyalty programs – enough already!

    First Woolworths (Safeway) introduced fuel discounts for shoppers who spend above a certain amount in their stores.

    Next Coles bought our the Shell retail network and offered the same think.

    Now IGA has done a deal and is making the same offering.

    Finally, many small businesses are offering fuel discounts in return for a spend above a certain level.

    Yeah, creative marketing is alive and well. Not!

    The fuel discounts are a crock! Give customers good service, good prices and a good experience in your store and you have the best ever loyalty program. Simple.

    This copy cat approach to marketing is nuts.

    How big will the chain stores be allowed to get before government, suppliers and the community realises that they are too big?

    In the UK and the US there are movements now seriously and openly questioning the economic and social impact of national and global retail brands while here in Australia we cheer on their continued growth.

    We have watched our butchers, greengrocers, milk bars, delicatessens and petrol outlets be taken over by the two national retail giants in their pursuit of growth.

    Besides occasional comments from the Labor Party and consistent comments from Senator Andrew Murray of the Democrats, little is said by politicians about what will be a problem.

    Our towns and cities cannot afford any more independently owned retail businesses to close yet the small business lobby seem ineffective in gaining media and public focus on the problem. While the lobbyists are busy, their efforts do not seem to be addressing the issues which need to be addressed.

    We need an organisation in Australia like the New Economics Foundation in the UK – they are a well funded independent group which researches these and other matters and publishes reports which gain media and political attention. It is their research into clone towns in Britain which helped facilitate the Parliamentary enquiry into the problem of clone retail.

    Talk to any supplier involved with our two major retailers in this country and they will (if they are honest) express frustration and anger at the control exerted by having two so strong retailers. Everyone else in retail deals with the crumbs they leave behind.

    As a community we won’t realise they are too big until there are many more small businesses closed along the way.

    Why Australia Post should be sold

    Tower Systems is a small business. We serve independently owned small businesses. We also own a newsagency. It’s for those reasons that I re publish below a blog entry I have made in another place about the comments yesterday by Federal Finance Minister Nick Minchin that the Government does not have the sale of Australia Post on it’s agenda. This is bad news for small business and further supports my view that this government does not genuinely care about small business. Here’s the blog entry:

    The Sydney Morning Herald carries an AAP report that Federal Government Finance Minister, Nick Minchin, was asked yesterday at the National Press Club whether Australia Post would be privatised. He listed the various government businesses which are for sale or being readied for sale and commented: “There are a few other smaller business that could be considered but we’ve not turned our mind to Australia Post and we have no policy to do so.”

    That the government owns a retail network that competes directly with independently owned small business newsagents is appalling. Australia Post is a tough competitor. They target newsagents with their promotions. They have only commenced this competition in fairly recent years. They are leveraging the goodwill of the postal service to hurt this already challenged small business channel.

    While the mail delivery and stamp production should be controlled by the government, the retail network should be completely sold off. Some have been but not all.

    Nick Minchin and the Government are wrong on this. Their refusal to even consider the sale of the retail network is proof of a lack of commitment to small business. Here they are profiting from exacting commercial success in a competition with newsagents.

    A true free enterprise government would allow free enterprise to operate rather than allowing its own retail stores to profit from the customer traffic which MUST go to their retail outlets because of draconian controls on the sale of postage stamps.

    Nick Minchin and the Federal Government ought to sell the retail network to individuals or to small businesses. This would demonstrate support for the small business sector.

    My own newsagency is directly opposite a government owned Australia Post shop. They compete aggressively for stationery, greeting cards, phone recharge, Western Union and bill payment. They do so on unfair terms. They get better landlord treatment. They have guaranteed traffic. They control how their store is laid out. They leverage their government protected monopoly traffic so they can sell products which are crucial to my success.

    No means no and it’s time suppliers started listening to small business

    It frustrates me to see the oversupply by major suppliers to small businesses – the overloading of stock way beyond what could be reasonably sold. Over supply in terms of range and in terms of quantity of an item.

    I see it across several retail channels. I see it happening to the independents and not the national and international chains. And the independent retailers let it happen time and again. They say no and then don’t fight hard to prove that no actually means no.

    The result is over stocked stores and under performing businesses.

    My theory is that some national and global suppliers have a strategy of oversupplying their small business retail outlets because they can get away with it. And they can because these small business owners are too tired from struggling through each day to actually do the measurement necessary to know they are being ripped off.

    Is it illegal? Maybe. Is such over supply unethical? Absolutely.

    Even with software like that from my company it takes time to read the reports and then guts to act and with some of these suppliers also providing working capital for the business the challenge is made all the more difficult.

    I don’t know what the answer is, however, the more small businesses owners who stand by a no I don’t want any more of this or that the better. Training in getting to no would be invaluable!

    If I see it in the data for any business I analyse I tell them and offer to speak to the supplier involved. In most cases they want to back off and find another way to balance the business. It’s sad to see people making decisions which are not businesslike and which will only serve to further harm the business in the long term.

    Blogging hell for Dell continues

    The noise in the blogosphere about poor customer service from Dell Computers has reached a new peak in the last week. This report from Online Media Daily shows that Dell is starting to listen. Maybe too late she cried.

    Jeff Jarvis, who started telling his story about Dell Hell a couple of months ago on his BuzzMachine blog, wrote an open letter to Dell last week in a post which was the third most linked blog post in the world that day.

    The mighty power of the blog.

    Our podcast experiment is moving slowly

    This is a one step forward and two steps back project as we learn our way through making and publishing podcasts.

    We’ve spent a lot of time listening to other podcasts and working our what we like and don’t like.

    Quality of content and the recording is the key. We’re taking our time getting that right. We know from client feedback that they will listen to the podcasts so we have to make sure we deliver.

    First up we’re going to be using the podcasts for training and motivation. This is where we see the most value – taking our training series out to places we cannot get to.

    We record our first podcast later this week and hope to have it on the site by Friday.

    24 years of trade shows

    We’ve been doing newsagent trade shows since I started this company in 1981. (Australian newsagents being our key vertical market.) We usually do three each year, sometimes four or five – depending on whether there are national events.

    I reckon we’ve done at least 130 newsagent trade shows over twenty four years.

    That’s a lot of trade shows.

    I like trade shows not only for the sales opportunity but also to see what our customers think about us. In our marketplace customers will tell you if they are unhappy – often after they have told others. By presenting at trade shows you invite comment on all manner of things. It’s an ideal temperature check and the challenge is to be honest and thorough in analysing the feedback.

    I can recall a couple of trade shows some years back when we spent more time resolving problems than selling. There were few smiles and our tiredness at the end of the shows was more to do with what we were doing wrong than the sales success of the show.

    In recent years, this weekend included, the trade show floor feedback has been excellent. Most encouraging for our unrelenting focus on customer service.

    You know you’re doing something right when existing customers bring their colleagues to your stand and point them at your product and urge their colleague to dump their existing technology and go with our system.

    We overstaff our trade show stand so that we can give everyone enough time and so that we can get the feedback we need. We see the trade shows as an opportunity to ask questions and learn. It works. We come away with plenty of suggestions – well thought out suggestions which we have been able to discuss face to face and therefore finesse prior to putting them to our development team.

    We see our relationship with our customers as one of collaboration in pursuit of better business outcomes for our customers. The trade shows are a key element in pursuit of that goal.

    The arrogance of big business and the con of discounting

    I was looking through a catalog from a competitor (of my retail business) yesterday and found some items at a price which surprised me as they were considerably lower than our cost price. Same brand and model. The low prices were wrapped in text suggesting that everything is the store was just as keenly priced.

    I checked the store and the savings were genuine. But on those items only.

    Okay I understand the concept of loss leadership.

    I doubt this is loss leadership. My understanding is that this is big business arrogance – demanding rebates and special offers from suppliers in order for their brand to continue to be carried in the national chain of stores. In return for continued stocking they provide an exceptional price which allows the store to offer the price.

    Okay, that’s business.

    If you price compared this store every day of the year I bet you’d find the products in my small independent retail store and the independent retail stores my software company serves loiwer overall. This group does not “SELL FOR LESS” as they claim.

    Sure I don’t match their exceptional deals. What I do match is the day in day out pricing and service obligation.

    Sadly, independent small retailers don’t have the money to advertise this message to consumers.

    Why this independent software company owns a retail (non software) business in its vertical marketplace

    For almost 25 years we have been developing software for Australian newsagents. Nine years ago we bought one of these newsagent businesses. We still own it today. It’s a busy business in a shopping centre here in Melbourne. I bought the newsagency so we could put into practice what we tell our 1,300 newsagent clients to do. I also bought it to get close to what our users experience.

    This week we have been experiencing the benefit of being a user of our software even more so than usual.

    One of the challenges newsagents face is lack of stock. With supply quantities for magazines tightly controlled it is not uncommon for newsagents to sell out of the top 10 or 15 titles well in advance of the next issue arriving.

    This has bothered me for some time … primarily because of the frustration I experience in my own newsagency when we’re out of stock. I estimate this lack of stock in my business is costing us around $25,000 in lost sales a year.

    Our suppliers have sales data but not the day by day data necessary to measure the likely impact of an increase in supply. So I needed to build a business case, one so compelling that the increase in sales was proved by the data I could present.

    While our software has good reporting tools, it was missing the ability to report on what is called sales decay in the magazine sales world. That is, the rapid fall off of sales from the on sale date through to the off sale date. We created the report, checked with the magazine companies to ensure it would suit their needs and then released in for trial to our user community with a background to the business case they can make with the results achieved by the report.

    The report has uncovered sales patterns which challenge convention in the case of a couple of magazine titles. This is important new data which will help the small business newsagents. It’s helping in my business.

    Had I not owned a newsagency I would not have seen the need for this report. Newsagents certainly have not asked for it. Nor have magazine distributors. Both sides talk (too much some say) about the need for certain business outcomes. It’s only when we sat down and deeply analysed this specific situation of sell outs that we uncovered a patch of turn which was not covered by existing newsagent reporting tools.

    The Magazine Decay Report is now an important tool in my business both in terms of understanding sales patterns and leveraging more equitable supply from by magazine distributors.

    This new report gives us a competitive advantage for a while.

    Corporate social responsibility in this small business

    We have appointed a Social Responsibility Officer, someone to be an additional conscience as we try and pursue a more socially responsible road in all we do here. It’s a tough road and we’re feeling our way – not that we were irresponsible in the past.

    I have been searching the Net for advice from others talking about social responsibility. It bothers me that social responsibility has become systemised like the Total Quality movement of the 1980s. It’s like: do this course, sit this exam and you have the social responsibility seal of approval; or, sit on this community committee, give a reasonable amount publicly, get the certificate and you get the seal of approval.

    What we are trying to do goes beyond such a systemised, dare I say, corporate, approach. Since this business has one shareholder and is relatively small (40 employees) we have the luxury of being able to make decisions from a personal, human, perspective. So when we consider social responsibility this is the perspective which matters to us: how we judge the decisions in the context of our social, justice and related beliefs.

    A good (small) example is the treatment of people. In big business the production line approach is common in pursuit of the common customer experience. Their attitude is that you determine the customer experience through regulation and discipline. In my business the approach is flexible, allowing individuals to be themselves. We encourage creativity. Sure we maintain a clear focus on the customer experience, however, each person has flexibility in how that is delivered. Rules and regulations are kept to a minimum. I’d suggest that in big business you are more likely to see the stifling of creativity and individuality.

    I don’t want to be responsible for stifling creativity. The personal individual experience is better for our people and for our customers. It is also better for the community. There is more likely to be a passing on of stories and experiences than in a clone like regulated big business experience.

    So, part of our social responsibility is to allow people to be themselves with a watchful eye on the goals of the business.

    We’re working on a social responsibility manifesto so that we can better explain what it means to us and those we interact with.

    Dell Hell … the power of the (Jeff Jarvis) blog

    Jeff Jarvis writes to Michael Dell, via Jarvis’ blog, and strongly makes his case for Dell to fix their now serious customer service issues.

    Had Dell responded to Jarvis’ please for help through the usual dell channels none of the blog entries would have been necessary. The people at Dell have made this problem far more public and far more serious for their company than they needed to. All they had to do was to deliver on their customer service promise. Duh!

    Once Jarvis did blog about it Dell could have jumped in then. But, no.

    The lesson for all companies, not just hardware companies or software companies like mine is use the processes you have in place for customer contact and customer service, listen to the complaints and respond. Denial achieves nothing.

    Well done Jeff Jarvis. There is a lesson for consumers on speaking up and a lesson for us in business to listen!

    If you’re in business read all of Jarvis’ blog entries on this. Learn. In a few minutes yet get a semester of business learning.