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Loaay’s Two Cents 
Got business problems or challenges at work? With his Two Cents column, Loaay Ahmed shares his expertise in strategic management consulting to help management, employees and entrepreneurs thrive.

By Loaay Ahmed, April (2011) edition of bazaar
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Loaay's Two Cents
Loaay's Two Cents
 

In a recent seminar the instructor said, “Don’t be connected emotionally to your business. If it’s not working out, shut it down and walk away.” Isn’t passion an important ingredient to success? If I’m not emotionally engaged with my business I won’t enjoy or be able to grow it. How do you see it?

 

LA: Desire for what one does is an essential ingredient for any successful project. Desire can make you go the distance and push boundaries that others don’t see possible to move. Desire keeps that spark in your eyes alive. However, desire has an evil sister that has the power to make you not see a broken bone in the x-ray so you go and play that game to only end up badly hurt and never play again. The seductive and wild Ms. Desire usually hangs with her two loyal friends, the lovely and rare Ms. Opportunity and the powerful and mighty Mr. Ability. Usually, when the three are having fun it’s a good. The problem happens when one of trio is sick or decides to quit the band.

 

Ask yourself this: what’s good about having desire if there’s no market (i.e. opportunity) that allows you to sell and grow? What if you’re passionate about something and there’s big demand for it, but you don’t have the knowhow to produce it or manage the ones who can? Desire has to be viewed in perspective to the availability of strong opportunity and ability. With desire alone you might end up beating a dead horse thinking it will eventually get up; while in reality, it’s simply dead and you’re too blind to see it…and that’s just my two cents.

 

 

I can tell that some of our customers are lying to replace some pieces or get freebies. How can we stop this abuse without breaking “the customer is always right” philosophy?

 

LA: To start with, it’s refreshing to see that you and your company are committed to customers. Some customers will always take advantage of flexible policies; it’s a fact. However, that doesn’t mean your company should punish all customers because of the acts of a few. So, let’s talk options. Assuming that there’s nothing wrong with your products, it’s possible that they’re returning them because they don’t suit their needs anymore. Putting good intentions aside, you need first to examine the incidents. Are the same customers repeating this behavior over and over? Or is it that many customers are returning their purchases once?

 

If it’s the same customers, let them know through direct marketing tools or upon their next purchase that due to their repeated exchanges a fee will be applied for the next exchange. If they don’t like it and walk away, you got rid of bad customers. If they stop the abuse to avoid the fees, it’s a win-win. It could be that many customers exchange pieces for whatever reason and they’re doing it only once, but it’s the large volume of returns that’s giving you the kind of headache that Panadol can’t cure. In this case, ask your customers about the reasons behind the returns. What might seem as abuse could be an indication for something more important like wrong product selection, poor customer assistance at the time of purchase, lack of clear product information or something even more dramatic…and that’s just my two cents.

 

 

Consequences of the natural disasters in Japan found their way to our market. Our company sells Japanese electronics and the factory told us they are stopping production for about two months for safety reasons. Our losses in the coming months will be devastating. Is there anything we can do?

 

LA: Go on sale. No, hold your horses, I’m just kidding. Actually, make sure to avoid any sale or discount-based promos under any circumstances until stock is back up again by the manufacturer. Discounts eat profit margins alive like a Grizzly gobbling up a fresh and kicking trout. You need all the profit you can collect to sustain yourself in the coming period. Having said this, you might want to consider going on promo. This time, I’m talking about a Future Sales. Picture this: “Buy your dream TV in interest-free installments over five months for just 20% a month!” The catch is that customers will receive their TV only after paying for it in full. Meanwhile, you’re collecting cash upfront for products you don’t have in stock yet. This promo will work only if customers prefer your brand to others and really want it but can’t afford it in one chunk.

 

If your brand is average among competition from the consumer perspective, a sale might be in order, but again only for future orders as in the explained promo. This time, you’ll have to give above market discounts against delivering in five or six months from now. You might also want to consider an after-sales direct campaign with existing customers where you can fix their old units or visit their homes for a performance check against a small fee. If all fails, turn to your cash reserve to weather the storm. But whatever you do, don’t commit Seppuku, a form of stomach-cutting suicide. The Japanese are notorious for landing on their feet. This dark cloud will pass…and that’s just my two cents.

 

For Loaay Ahmed’s advice on business or work matters, send a short email to  loaay@knightscapital.com. Please note that only the questions chosen for publishing will be answered.

 

Loaay Ahmed is a management consultant and strategic expert. To learn more about Loaay and his consulting service, strategic business therapy, visit www.knightscapital.com. 

 
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