• Visit this week's edition of Carnival of the Capitalists over at Casey Software, where KC did a fine job as host. Carnival of the Capitalists (more info here) is a weekly roundup of economics and business blog posts from a variety of different blogs. Don't miss Kevin Brancato's post at Always Low Prices about how a small community actually wanted a Wal-Mart to move in, belying the negative press Wal-Mart seems to be getting these days. (And, by the way, Always Low Prices is a superb source of information about the impact of Wal-Mart on small businesses and local communities.)



• And while you are at it, check out this week's edition of the Blawg Review over at My Shingle. The Blawg Review is a weekly roundup of legal blog posts, and many of them touch upon business issues in some way. Be sure to check out host Carolyn Elefant's post about the benefits of small law firms blogging, and also David Giacalone's post about Canadian lawyers, who as it turns out are just as worried about competition as their American counterparts.

• There were over half a million more businesses than in 1997.
• The increase in the number of businesses is spread across the majority of industries.
• The proportion of national employment generated by SMEs has increased from last year to its highest level in nine years.
• At least 95 per cent of businesses in all industry sectors were SMEs.
  

Almost all of these enterprises (99.3 per cent) were small (0 to 49 employees). Only 26,000 (0.6 per cent) were medium-sized (50 to 249 employees) and 6,000 (0.1 per cent) were large (250 or more employees).

At the start of 2004, UK enterprises employed an estimated 22.0 million people, and had an estimated combined annual turnover of £2,400 billion.

Small and medium-sized enterprises (SMEs) together accounted for more than half of the employment (58.5 per cent) and turnover (51.3 per cent) in the UK.

Small enterprises alone (0 to 49 employees) accounted for 46.8 per cent of employment and 37.0 per cent of turnover.

"To be successful getting into big companies, you need to think small. Take a look at all the products or services you offer and determine which one(s):


• Solve the company's most urgent problems,


• Are the most differentiated from your competition,


• Are in greatest demand, and


• Create the best results the quickest.


Your job is to figure out which subset of your own offering will give you the highest likelihood of getting your foot in the door of that company."

My problem was that I was always the one cracking a joke and getting one of those looks from my boss. You know the one. It says, "Hesh this is serious stuff. You can't joke about it, even though we all know how boring the meeting really is."

Whether at a replacement window manufacturer or a biotech start-up, I found the same behavior. The only difference was that people used a slightly different vocabulary.

My column, with its skewed perspective on business, got its start with the readers of the Central New York Business Journal (Syracuse). And they liked it. Over time, additional publications and web sites continue to sign me on and carry my column. I even went international when the Bermudian Business started publishing my columns.

"Unpublished government data obtained by Challenger researchers show that the number of Americans 55 and older categorized as self-employed in non-agricultural industries has increased 22 percent from 2,136,000 in May, 2000 to 2,598,000 as of May, 2005.

These senior entrepreneurs now represent nearly 27 percent of all self-employed workers, which is second only to 45- to 54-year-olds who make up more than 27 percent of the self-employed."

"It goes to the issue of credibility. While it would be easy to set up a series of spam blogs as a way to increase page rank, why resort to less than credible marketing ploys? Also, who would a customer rather do business with, a company that uses any means it can to drive traffic no matter how spurious, or a company that has integrity in its dealings?"

• About one-third of all insurance clients are looking around.
• Over half of all cell phone customers are on the edge (the same is true in financial services).
• Four of five apparel buyers are ready to switch.
• And 94 out of every 100 diners who bought a burger last week may not come back this week.

And the stats are no better in professional services and B2B.

• 55 per cent of enterprise software buyers are real antsy
• 61 per cent of executives who outsourced something say, "Going forward, we'd love to find someone else to outsource with."

Some think this is a trend ... a sign of the times. "People aren't as loyal as they used to be," one businessman said. "And Wal-Mart has taught consumers all that matters is the lowest price."

There's certainly some truth in those observations. Competition is crazy, customers are fickle, and everybody is too busy to think about the long term value of a good relationship.

But in my research for my book "It's Not What You Say... It's What You Do: How Following Through at Every Level Can Make or Break Your Company" I uncovered a deeper reason, what I think is the root cause for the rising tide of customer defection (and potential defections) across all sectors.

A lot of customers just don't like their suppliers!

40% of Yellow's clients didn't like them

When Bill Zollars took charge at Yellow Trucking he asked the folks at headquarters, "What do our customers think of us?"

"They like us," Yellow's top managers assured him.

But Zollars wasn't so sure. He knew from his years at Kodak that head office executives can often be way off in their assessments of what customers are actually thinking. Zollars needed a fact-based, accurate benchmark of Yellow's customer sentiments so he could quickly make the right moves and radically improve Yellow's revenues.

Bill Zollars is one of the few big company CEOs who still thinks like an entrepreneur. So instead hiring an outside consultant firm to conduct a 12 month customer satisfaction survey, Zollars suggested his executive team roll up their sleeves and dig into several boxes of customer invoices.

"Find out," he told them,

1. "Did we pick everything up on-time?"

2. "Did we deliver everything on-time?"

3. "Did we keep everything in-tact (no scratches, dents or breakage)?" and

4. "Did we send the customer an accurate invoice?"

Zollars' thinking was simple. "Those are the four basic expectations a customer has when they hire a trucking company," he explained. "And if you fail to follow through on what customers expect they can't possibly like you."

Needless to say the results of this simple study were like a cold slap in the face. In 4 out of ten cases Yellow had failed to follow through on one or more of the fundamental things their customers expect.

"How can they say 'our customers like us,'" Zollars thought. "We let them down 40 per cent of the time."

Zollars knew what he had to do. He engaged executives and employees at every level, from headquarters to the loading docks and everywhere in-between, to implement an aggressive initiative to fix their follow through.

1. He made sure everyone was crystal clear about "just what was expected."

2. He took steps to make sure Yellow had the "right people" at every point of contact.

3. Zollars and his top managers got "enough buy-in" from everyone to overcome the law of inertia.

4. And Yellow reorganized their management to generate more "individual initiative" from every driver and at every depot.

Using those four building blocks Yellow soon reduced that 40 per cent of dropped balls and unforced errors to under 4 per cent. Revenues and profits shot up and Zollars set a new goal, to take the 96 per cent of customers who now "liked" Yellow to the point where they "liked Yellow a lot."

Is customer defection a trend?

Is customer defection a megatrend, caused by circumstances beyond any businessperson's control? Definitely not.

As Bill Zollars told the teams at Yellow, "...if you fail to follow through on what customers expect they can't possibly like you." And (as nobody should need to tell any businessperson) customers who don't like you are more likely to defect.

* * * * *

Prior to becoming a bestselling business writer, Laurence Haughton worked as a management strategist, researcher, and consultant -- advising clients in media, technology, distribution, and professional services. Find out more at www.laurencehaughton.com. Please be sure to read our accompanying review of Laurence's book. Also read Rob the BusinessPundit's review.

businesses are successful not because of what they say they are going to do (their strategy), but because of what they actually do (how well they execute)

• First, he tends to use real-life case studies to illustrate points. But these are not dry academic case studies -- they're colorful stories and vignettes. They involve companies and even people you may have read about in the news. They frequently include dialogue by the managers, as if they are characters in a screenplay. That's what makes the case studies so memorable.



• Second, he writes in a staccato style, with short sentences and short paragraphs. A number of paragraphs consist of one or two sentences. This gives the writing a crisp cadence that makes the book easy to digest.

At a little over 200 pages the book can be read in a few evenings -- a virtue in our time-starved lives. Of course, you will want to refer back to the book at various points to put the lessons into place.

"Late last year I was unceremoniously dropped from a list server sponsored by the Lehigh Valley, Pennsylvania, Association of Realtors. My posts and opinions often do not reflect the party line and political posture of the National Association of Realtors. I decided to look for another venue that was less restrictive, and a blog is the perfect vehicle for me."

"My blog contains practical knowledge important in a real estate transaction, as well as an unfiltered look at legislative initiatives, with links to such things as forms, contracts, inspection issues and document viewers. I blog without the hyperbole that's attached to so many issues, such as the National Association of Realtors category, fair housing and predatory lending."

• China still is not as innovative a culture as it needs to be or some would like it to be, although it is improving steadily.



• Venture capital money is flowing from the West (especially Silicon Valley) and although foreign investment is welcome, "China still struggles with a comprehensive legal and regulatory structure for the growth-oriented venture capital sector."



• China's domestic venture capital industry is not very robust but is growing at a rapid pace.

• Denali Flavors: Behind-the-scenes information from one of America's top ice cream flavor developers.



• Moosetopia: Entertaining. The only blog written by a moose!



• Team Moose Tracks: Information about the company's cycling team that raises money for a variety of local charities.

"What's real are the millions of side-businesses out there. Independent freelancers, people who work for their employer during the day and then run their own side business at night, passionate hobbyists that generate some income (and even those that don't). It seems everyone has one these days. A little something here, a little something there. Something they love to do, or something they have to do, but the trend is clear: Many people are building their own side-businesses. And they need software (just not too much).

The big office suites aren't for them. The big project management apps aren't for them. The big heavy spreadsheets aren't for them. The bloated accounting and payroll apps aren't for them. What they crave are low/no-learning curve, simple focused tools that let them get their work done quickly and then get out of their way. And I believe they'll increasingly prefer that these apps will be hosted by someone else -- who has time for IT, or installs, or update patches, or....?"