How Small Businesses Become Big Businesses – Part 2


According to PIMS Studies at Harvard University, companies that are recognized as the highest quality providers in their markets are also the companies that sell the most and sell the easiest. They can charge more than their competitors, and they earn the highest profit margins.

The highest rated companies in terms of quality also grow the most rapidly, attract and keep the best people, and pay the best salaries. The “quality ranking” of a company is the most important single determining factor in the success of a company, and in the success of the individuals who sell and work for that company.

Thousands of consumers have been interviewed over the years and asked for their definitions of “quality.” Their responses show that the quality of a company is measured and determined by two factors. The first factor is the quality of the product itself. The second is the manner in which the product was sold and delivered.

It is not only the product or service that the company offers, but the temperament, mood, and personality of the people who deliver the product or service that, combined, give a company its quality ranking in a given industry. The company needs a great product or service, but more important, it needs to follow through with good marketing, service, and delivery.

Here is a good question for you, then: What is your quality ranking in your marketplace? Imagine that your company is one of ten major companies offering the same product or service in your marketplace. Intuitively, what do you think your quality ranking would be if customers were surveyed and asked to rank your company on a scale of one to ten against your competitors? This ranking largely determines your levels of sales and profitability.

Determine How Your Customers Define Quality.

Before you can exploit an advantage you have over the competition, you need to first determine whether your customers value that particular advantage. Ask your customers how they define the word “quality.” What words do they use? How do they deter- mine that one product or service is of higher or lower quality than another? The greater clarity you have about how your customers define quality as it relates to your offerings, the more capable you will become of improving in those areas that your customers consider important.

According to Phil Crosby in his book Quality Is Free, the general meaning of quality is that, “Your product or service does what you say it will do and continues to do it.” The percentage of the time that your product or service delivers on the promises that you make to sell it is the quality rating. “Zero defects” means that your product or service fulfills its promises 100 percent of the time. This is what every customer is looking for.

Once you know how your customers define quality and you have decided to improve your quality ranking, you then develop a strategy and make a plan to improve in those areas that are important to your customers. You decide what you are going to do to improve your customer’s perception of your organization and of the products and services you sell.

For example, do customers consider speed of delivery a factor in quality? If they do, commit yourself to delivering your products faster than they are being delivered today. Do your customers consider convenience of use a quality factor? What about speed of responsiveness or politeness on the telephone? Do your customers value the importance of accurate billing and quick replies to questions with regard to cost and price? Do your customers value follow-up service and support? Focus on improving in those areas that are most likely to determine a buying decision.

Remember the 80/20 Rule. Twenty percent of the things you do will account for 80 percent of the reasons your customers buy from you. Twenty percent of your features and benefits will determine whether they continue to buy from you and recommend you to their friends. You must know for sure what items are in the top 20 percent.

There is a danger here, though. You could make the mistake of concentrating on becoming extremely good and efficient in an area related to your product or service that your customers don’t care about at all. You could be draining vital time and resources away from improving in the one or two areas that could make an enormous difference in the perception of your customers.

Once you find out what your customers want and need and are willing to pay for, you should exploit this to the full. You should take every opportunity to not only improve in those critical areas but also to advertise, promote, and sell to other customers by emphasizing how good you really are in those areas that mean so much to them.