Taking Care of Your Most Important Customers & Employees Stan Phelps, JD/MBA PurpleGoldfish.com

GOLDEN GOLDFISH

The setting is Paris 1848. A boy is born of an exiled noble Genoese family.

His father, Raffaele was an Italian civil engineer who had fled Italy like other Italian nationalists. His mother, Marie was French. Enthusiastic about the German revolution that year, Raffaele and Marie named their son Fritz Wilfried.

Fritz would become Vilfredo Federico upon his family’s move back to Italy at age 10. He would grow up to become an engineer, sociologist, economist, political scientist, and philosopher. During his life he would make several important contributions to the field of economics.

Partly because of his work, the field of economics evolved from a branch of moral philosophy, as practiced by Adam Smith, into a data intensive field. Vilfredo is credited with helping to develop the field of microeconomics and was also the first to discover that income follows a distribution.

Over a century ago Vilfredo would stumble across an idea that would change the course of history. This revelation would come from a simple observation in his vegetable garden. Vilfredo noticed something peculiar about his pea pods.

This insight turned into action. He decided to pluck all of the pods off the plant. He opened each and made an interesting discovery. Vilfredo found that 80% of his peas came from a mere 20% of his pods. This intrigued the 59 year-old Italian economist.

Soon he was applying this ratio to other socioeconomic scenarios. You may now recognize his last name. His full name was Vilfredo Federico Damaso Pareto and his most famous finding was that 80% of the land in Italy was owned by just 20% of the people.

Pareto’s discovery and contribution was largely unheralded until two decades after

his death. During World War II, social scientist Dr. Joseph Juran uncovered his

work while streamlining shipment processes for the Lend-Lease

Administration.

  “The law of the vital few… and the trivial many.”

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Juran was the first to coin the phrases, “Pareto’s Law of Unequal Distribution”

and the “80/20 rule”

Of all the applications of Pareto’s law, here’s three of the most important in the context of the Golden Goldfish: 80% of your profits come from 20% of your customers 80% of a company’s sales are made by 20% of its sales staff 80% of new business comes from 20% of your existing customer base

GOLDEN GOLDFISH LESSON:

You don’t treat every customer and employee the same…

GOLDEN GOLDFISH LESSON:

A Cheesy Case Study:

Authors Yoon, Carlotti and Moore bring Pareto to life with Kraft’s Velveeta cheese.

In 2012, sales of Velveeta cheese were

on a downward trajectory

What to do… Get lapsed consumers to buy Velveeta again? Get occasional purchasers to buy more frequently?

INSIGHT: The top 10% of Velveeta buyers account for over 50% of profit. Kraft decided to focused on this key segment of 2.4 million consumers

“The previous thinking was that the

quickest, easiest path to growth was to identify light users or lapsed users.

But when we talked to superconsumers, we learned that in

fact they wanted to use Velveeta more—they were starving for it.”

- Greg Gallagher, Marketing Director

Velveeta Extensions $100 MM

The results are anything but cheesy. New product spin-offs totaling over $100 million in

additional sales has been game changing.

Do more for your best ones. In the words of Yoon, Carlotti, and Moore:

GOLDEN GOLDFISH LESSON:

WHY GOLD AND WHY A GOLDFISH?

WHY GOLD?

WHY GOLD? Gold is an ode to New Orleans. Specifically a tribute to its most famous event…

Gold is one of three official Mardi Gras colors

with Purple and Green

The “additional gift”or “to give more”

LAGNIAPPE It’s an ode to New Orleans because of one word…

Mark Twain came to appreciate this one word and its meaning during his time in New

Orleans. He wrote that it was “a word worth traveling to New Orleans to get.”

That one word is…

LAGNIAPPE

means the “additional gift”or “to give more”

LAGNIAPPE

WHY A GOLDFISH?

The Goldfish represents something small, but it was directly inspired Kimpton Hotels. A chain of boutique hotels, Kimpton embodies the doing the little something extra. Stay at any of the Kimpton properties and you’ll find:

•  free gourmet coffee and fresh fruit in the lobby •  complimentary wine tasting in the afternoon •  pet-friendly accommodations

My favorite perk is something a select number of the properties do for guests. Perhaps you are staying at a Kimpton for a few days, and you are getting lonely…

GIVE A LITTLE UNEXPECTED EXTRA

Guppy Love

Kimpton will give you a pet goldfish for your stay. They call it “Guppy Love.”

Average Goldfish = 3 inches

A goldfish also represents something small. But all goldfish are not created equal.

The world’s largest is…

Nearly 20 inches or 50 centimeters

That’s nearly six times larger! How can there be such a difference. It turns out the growth of a goldfish is determined by five factors. The growth of your business is also affected by the same five things.

1

1. The size of the bowl or pond will determine how big a goldfish with grow. The bigger the pond or bowl, the more a goldfish can grow.

SIZE OF THE BOWL = _____

1

1. SIZE OF THE BOWL = MARKET

1

2

2. The number of other goldfish in the bowl will also impact the growth. The more goldfish, the more difficult it is to grow.

THE OTHER IN GOLDFISH IN BUSINESS = ________

1

2

2. AMOUNT OF OTHER GOLDFISH = COMPETITION

NUTRIENTS / CLARITY OF THE WATER IN BUSINESS = _______

3. The nutrients in the water and clarity of the water will also determine how large the goldfish will grow.

3. QUALITY OF THE WATER = ECONOMY

4

24. The first 120 days of a goldfish life will be a factor on its growth. The better the start, the bigger it can get.

= _______ FIRST 120 DAYS OF LIFE IN BUSINESS

4. FIRST 12O DAYS = START-UP

2

5. The genetic makeup of a goldfish will also determine how big it will grow. The more it stand outs, the better.

= ___________ WHAT’S GENETIC MAKE-UP IN BUSINESS

5. GENETIC MAKE-UP = DIFFERENTIATION

Five Factors #1. MARKET #2. COMPETITION #3. ECONOMY #4. FIRST 120 DAYS #5. DIFFERENTIATION Assuming you’ve already been in business for four months, what’s the only thing you have control over?

Five Factors #1. MARKET #2. COMPETITION #3. ECONOMY #4. FIRST 120 DAYS #5. DIFFERENTIATION

The only thing you can have control over is how you differentiate.

How you purposely stand out in a sea of sameness?

Golden Goldfish Strategy is about differentiation via added value.

Giving little unexpected extras that drive loyalty and word of mouth for your best customers and employees. Your “Vital Few.”

Employees!

I crowdsourced over 200 examples in

It was clear that there was:

9 Types of Golden Goldfish

1. Throw In’s 2. Added Service 3. Follow Up 4. Convenience 5. Handling Mistakes

Employees!

Customers 6. Flexibility 7. Recognition 8. Training & Development 9. Empowerment

Employees

I crowdsourced over 200 examples in

It was clear that there was:

The entire idea of Golden Goldfish is explained through the acronym of

G.L.U.E.

G stands for Give The entire idea of Purple Goldfish is explained through the acronym of G.L.U.E.

G = Give

The best customers for the Tampa Bay Lightning are Season Ticket Holders or as the Lightning call them “Season Ticket Members.” STM’s received a complimentary customer jersey at the beginning of the season equipped with a special chip. The chip when scanned gives STM’s discounts on merchandise and concessions.

Give L stands for Little

Give L = Little

Tory Burch does a little extra for its best customers. It’s called Clientbook. It allows store associates to track and manage both online and offline behavior. Customers using Clientbook spend 62% more than ordinary customers.

Give Little U stands for Unexpected

Chapter 20Give Little U = Unexpected

Virginia based Decision Lens recognizes top employees by creating custom action figures personalized down to hobbies and interests.

Give Little Unexpected E stands for Extras

Give Little Unexpected E = Extras

Disney’s “vital few” are resort guests. To do a little extra, Disney will designate one park a day that will open earlier or stay open later exclusively for resort guests.

READY TO THINK OUTSIDE THE BOWL? WHAT’S YOUR GOLDEN GOLDFISH?