Controlling Your Costs as a Small Business Tech Strategy

How JetBlue Paved a New Path in an Old Industry

When I'm teaching, I like to tell a story about JetBlue.

In the early 2000's, many of JetBlue's competitors were offshoring customer service. The strategy was effective in reducing the cost associated with delivering customer service, but satisfaction ratings were way down. The customer offshore experience included line condition quality, language barriers, and lots of hassle over relatively small matters. Airline customers weren't happy and they dreaded making the phone call.

JetBlue wanted to offer a different experience. And in 2004, JetBlue did something different. They invested in technology that would allow Customer Service Representatives (CSR's) to work part-time and from home, using their own equipment, their own Internet connection.  Doing so would allow JetBlue to tap into a labor market of fluent English/native speakers, and best yet: they'd be contractors instead of employees, reducing JetBlue's overhead in managing FTE (Full Time Equivalent) employees.

What Did JetBlue Do Differently?

JetBlue employed a cost containment strategy. You guys remember me talking about that stuff in June, right? They spent a little money on IT solutions that'd allow them to grow and be competitive, but in the long run, would be cheaper than, say, owning their own call center and staff.

Small businesses can use technology in just the same way. Think about it: where can tech be applied in your business that'd allow you to increase customer volume yet not introduce additional overhead? Good examples:

• U-Scan machines at grocery marts that push labor back on the consumer;
• Self-ordering technologies at restaurants, bars, and casinos;
• Social media marketing - let others sell your business for you;
• Quick-pay technologies like Near-Field Communication and other standards that'll allow consumers to pay from their cell phones;
• Apps on mobile devices that engage the consumer in everyday functions;
• Telecommuting and VoIP telephony solutions - phones, anywhere, anytime;
• Supply Chain Management (SCM) and routing software for maps using GPS - allowing your delivery vehicles to get exactly where they need to be, and to monitor them;
• Website solutions that allow a customer to answer a question or perform a transaction without calling you;
• Cloud based business solutions that don't require you to purchase software, servers, specialized networking hardware, or systems maintenance;
• Business without physical overhead - no leased space, taxes, or utilities.

Why Don't You Zag Instead of Zig?

The possibilities are truly endless. And the idea is to think different from your competitors. To do something and offer a competitive value that is unique and distinctive. What you want to look at:

• How can an investment in technology today yield a lower commitment to labor, yet, allow you to take on more business volume?
• Where can an opportunity be found to be smarter about a business process? Where greater information could result in better decisions, fewer errors, and less cost?
• Is there a technology that enables the consumer to self-service their needs with you?
• Is there a technology that enables you and your workforce to work from anywhere?

Just a couple of good ideas. Next time: growth and alliances.

R

Time as a Small Business Tech Strategy

What's the Diff?

So what makes you different from your competitors?

This is a concept called strategic differentiation and I've been talking at length about these ideas for a little while now.  Understanding what makes your small business different than anybody else - how your company scratches an itch in some way that nobody else can - is what will make you successful in the marketplace.

Differentiation Guides Spending

If you don't know what makes you different, how do you know how to spend your money? If you're looking to invest in technology, shouldn't that investment complement your competencies, intellectual property, or values? And if you've invested in tech and it's not serving you competitively, why are you investing in technology at all?

Another way that small businesses can differentiate themselves from competitors is through time compression. You can leverage technology to reduce the time it takes to conduct a transaction, receive assistance, cancel an account, run a report, access critical information, or opt-in to a new feature. 

If you compress time for your customer, you're essentially returning money to them, if you believe the old adage that "time is money". You're making it easier to do business with you than a competitor, and it's faster, respecting your time and earning your loyalty.

Consider this:

If your competitor makes it easier to conduct business with them, and in a manner that reduces the complexity or time commitment for the consumer, what is your value proposition? What other key differentiating factors do you have that's keeping that client because - clearly - it's not about minimizing their time.

What You Should Do Now

• Think about ways that technology is compressing time for your customers;
   
• Think about ways that technology is extending time - like, forcing your business to processes that take longer to act upon;
   
• How can technology reduce the amount of time that a client interacts with you?
   
• How can you self-service - put you and your services into the hand of anyone out there - and make it simple, easy to access and use?
   
• How is your existing customer/client base demanding or desiring time compression in working with you? How are complaints and feedback about doing business with you translating into capital investments with tech to improve the situation?
   
• Time is money. How are you compressing the time of your employees to do the same job? Especially when tech changes so rapidly ...? How are you re-evaluating new capabilities offered by newer technologies?

R

Differentiation as a Small Business Tech Strategy

Putting It All Together

Last week, I brought up the ideas of core competencies, intellectual property, and values. These are things that make you different from your competitors. In combination, these things shape how a company uses technology for competitive advantage.

Imagine a World Where ...

Okay, here's how it works:

Company A. Imagine a company that requires their vendors to follow a specific process to do business with them (intellectual property) and a commitment to internal process efficiency (core competency), with a core value of "lowest price always". How would this company use its technology investments?

Company B. This company has a bunch of proprietary software and hardware (intellectual property) used to make reliable and dependable consumer electronics (core competency), with a value system that prides ease-of-use, fun, and effortlessness in everything they make. How would this company use its technology investments?

Company C. Here's a company with 50 years of machining experience (core competency), with a slew of patents on managing materials on an assembly line (intellectual property), that has a history of providing excellent customer service to its customers (values). How would this company spend its money on tech?

Transforming Competency, IP, and Values into Competitive Advantage

Well, you're a smart cookie and you've probably already considered that Company A sounds like a lot like Walmart. They spend money on technology to constantly reduce expenses, but as you've probably already concluded, they can't ever get expenses to zero so they also use tech to contain the cost of their growth (you guys remember my conversations on this stuff, right?). They get bigger, but they're so efficient, it costs them less to do more. Instead of hiring five people, they hire just one person to do the work of five people because they're so automated: fast, accurate, and reliable infrastructure. That's what sets Walmart apart. That's what differentiates them.

Meanwhile Company B probably sounds a lot like Apple. They spend money on Research and Development (R&D) to create products that offer new experiences. Price isn't an immediate consideration - they're more interested in how technology can be used creatively and they've got decades of experience doing it. And those new breakthrough technologies they make become intellectual property that they leverage to create market dominance and generate revenue. That's what sets Apple apart. That's what differentiates them.

And Company C? Well this could be any company, even a mom and pop down the street, and over time, they've leveraged technology to make themselves efficient and speedy, providing a reasonable product at a reasonable price, but their real claim to fame is service. Fast, immediate service. They'll spend money on technology to allow for immediate access to a localized call center with a Customer Relationship Management (CRM) system to immediately know all of the customer's issues, history, purchase background, and warranty status. They pick up the phone on the first ring and greet the customer by name. They might even allow for the customer to self-service what they need from their website - because they are that easy to work with. This company uses its information as an asset. It's what sets that company apart. It's what differentiates them.

Making The Connection

Wow. The last month and a half there of blogging - it's all coming together, isn't it? By this time in the classroom, I'd be bouncing up and down in front of the white board ... do you see the connections that have lead us to real strategic value? Exciting, isn't it?!

Using technology spending to constantly reinforce differentiation is what creates a competitive advantage. What you'd want to consider:

• What makes your company different? What combination of competency, IP, and values sets you apart in the marketplace?
   
• How can technology help you sustain that differentiation?
   
• How does that differentiation tie into brand promise? 
   
• How does differentiation speak to an existing demographic of customers and an emergent demographic? How can technology help you reach both to evangelize your brand promise?
   
• How is technology spending working against your differentiation strategy? Example: is your choice of technology causing poor response times, bad customer service, huge financial loses because of inefficiency? Where is your choice of tech actually hurting you?
   
• How does technology enable your company to do what it does best? Is it doing that? Or is it a distraction, keeping you from doing what should truly separate you in the market?

R