Sep 20, 2023 | Branding, Marketing
Many of my clients are SME’s whose businesses are localised in some way, usually to the boundaries of the city they are in. The budgets they have for marketing are limited, so they must make every dollar count.
A very common and deadly mistake they make is to not be aware of the distinction between ‘Sales activation’ and longer-term branding role of advertising.
They are very different, and impact your business differently.
I am old enough to remember the ‘Pink pages’ business directory. A phone book of all registered businesses in which you could advertise. Local shops, tradies, piano tuners, and hundreds of other types of businesses were listed. When you needed one, that is where you went to find them.
The pink pages is dead, replaced by Google.
You go to Google when you need to find something, today. Google does not sell anything beyond access. Other sites like Shopify and Amazon do sell stuff, but are focussed on the transaction, the immediate sale. You only go there when you are looking to buy, now.
Advertising is the opposite end of the stick.
Most of the times you see an ad, you are not in the market for that product or service. The objective of the ad is to be remembered, to leave a positive impression, so that when you are in the market, the product comes to mind as the saviour. In the jargon, you build up ‘brand salience’, the recall of the brand and the value it delivers when the need arises.
Local businesses cannot afford large scale media, so must be more creative. However, all the disciplines that large advertisers use to get their message across and embedded in the minds of their potential customers can be used. All come from the marketing 101 basics book, and often after a set-up cost, are then free.
Following are some of the advertising ‘media’ that have proved successful over the years in generating revenue for ‘Localised marketing’
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- Vehicle signage.
- Local sponsorships, such as the kids soccer team.
- Local collaborations. The shoe shop and dress shop jointly cross promoting.
- Testimonials from well-known locals, an even unknown ones who are identified as ‘local’
- Local social media.
- Branded collateral, from stickers, to fridge magnets, shopping bags, T-shirts and caps.
- Local signage,
- Participation in, and sponsorship of local events
- A ‘locally optimised’ website, and use of the ‘Google Business Profile‘. The GBP is essential, and free.
- And, the best of all, referrals from locals to other locals.
You do not need to be a large business to be a successful advertiser, but you do need to think about advertising with a different mindset to the usual ‘grab a sale today’ that dominates the thinking of most local businesses.
Header credit: Windows Factory. The branding of Windows Factory vans have paid for themselves many times over, just from people stopping them in the street.
Sep 18, 2023 | Customers, Marketing, Operations
When you want to improve something, find a metric that drives the performance you want.
Pretty obvious, as most of us subscribe to the cliché that you get what you measure, while remembering Einstein’s observation that not all that matters can be measured.
Ultimately, what the customer thinks is crucial to success. Therefore, measuring the performance in meeting the customers’ expectations is always a good place to start measuring your performance.
Amongst my favoured measures is DIFOT.
Delivered In Full On Time.
That means not only the full order delivered on the day it is originally promised, with no errors of any sort, from quality of the product to the delivery time and accuracy of the ‘paperwork’.
DIFOT is a challenging measure, as it requires the collaboration and coordination of all the functional and operational tasks required to deliver in full on time.
As you fail to reach 100% DIFOT, as most do most of the time, at least at first, the failures are used as a source of improvement initiatives.
There is very little more important to the receipt of that next order than your performance on the previous ones. Never forget that, and measure DIFOT.
Hand in hand with DIFOT, you should also measure inventory cover.
The sibling.
You can improve DIFOT by simply increasing inventory when selling a physical product. Demand is inherently difficult to forecast, as it is the future, and entirely out of your hands. The challenge is to prevent your warehouses multiplying, and clogging the operational systems. The ideal situation is ‘make to order’, the ultimate shortening of the order to delivery cycle time.
The most common and very useful measure of inventory is ‘Days cover’. How many days of normal, average, forecast sales, whichever you prefer in your circumstances, do you have on hand to meet demand? This measure is extremely useful on a ‘by product’ basis, but when applied as an average across multiple lines with differing demand levels, can become a dangerous ‘comforter’.
Counter intuitively, the products that cause the most problems are the smaller volume ones, and new products. In both cases, demand is harder to forecast. The swings from out of stock to excess inventory can be erratic, particularly when a production line is geared to the larger volume runs of an established product as a driver of operational efficiency.
To achieve a 100% DIFOT while controlling physical inventory over an extended period is the most difficult operational challenge I have come across. As a result, it is amongst the most valuable to keep ‘front and centre’. The twin measures of DIFOT and ‘Days Cover’ are a vital element in addressing that ultimate challenge of customer service.
Sep 15, 2023 | Branding, Strategy
Qantas is at the centre of a political, legal, and social bunfight.
On Tuesday 13th, (Sept 2023) Qantas lost an appeal in the High Court, being found guilty of sacking almost 1,700 Qantas workers illegally, replacing them with staff from labour hire businesses. This whack across the corporate chops comes behind outrage at Qantas selling tickets on flights they had already cancelled, lost baggage, failure to refund ticketholders, last minute cancellations of flights, and lousy service inflight and on the ground.
Alan Joyce is the prime target of the outrage, having just walked away a few months early with a pile of cash in salary and bonuses. Then there was another pile from the sale of shares at a time when he must have known the ACCC was investigating ticket sales, but the investing public did not. By most definitions, a clear case of insider trading.
Yet, in all this, should he shoulder all the blame?
Throughout his long tenure Joyce has aggressively cut costs by making radical and most ‘unQantas-like’ choices. Always he has had the support of the Qantas board. It is reasonable to assume the board endorsed all the strategies Joyce has implemented to cut costs, as well as waving through his compensation packages over the years. The chairman at least, must have also agreed to the $17 million share sale into a buyback scheme in the first week of June.
The Qantas board have clearly tied Joyce’s package to short term profitability with little regard for much else. It is therefore understandable albeit morally bankrupt, for him to optimise his personal wealth, arguably at the expense of the long-term commercial health of Qantas. As Peter Drucker observed ‘You get what you measure’.
The board is, or should be, the voice of shareholders. Qantas would be held in the portfolios of most superannuation fund managers in Australia. Therefore, we are all shareholders who will benefit from the profitability of Qantas. We have already benefited from the negotiations that squeezed $2.7 billion in various forms of support from the government over the covid period.
The morality of the governance of Qantas can be questioned, and the courts have found them guilty of illegally sacking workers, for which they (and us as shareholders) will pay a large price. There should be accountability and retribution for this sad state of affairs to be handed out. Some should go to Joyce, but a substantial majority of it should be directed to a board that has failed in its governance role as the guardians of the long term health of the business.
Note: I do not know Joyce, although did meet him once at a function, and did not like him at all. Probably because I was of no use to him, so he was abrupt (bloody rude) as he moved on to a juicier target across the room. Good riddance.
Header credit: cartoon by Lewis, from a Pinterest board by Janice Bell
Sep 13, 2023 | Innovation, Marketing, Strategy
Creativity comes from somewhere; the challenge is always to understand and manage the process and the people. This applies equally to every type of creativity, from painting, writing poetry, formulating the mathematical representations of our physical world, to designing a bridge or a house, or imagining something entirely new.
Creativity is never just a Eureka moment under the shower with no pre-work as the catalyst. It requires the frameworks provided by the pre-work to enable the catalyst to emerge.
For the pre-work to be able to provide a solid framework within which the catalyst can emerge requires years of study, experience, and lessons learned from the ideas discarded or failed, on top of the few that might succeed.
Specialise.
This leads to focus, and deep knowledge, and an ability to apply well above commodity pricing. When a service or creative product is in short supply, the price goes up. Creative people seek problems to solve, and ideas to explore, which is great, but counterproductive to finding the price that will optimise your time. Be committed to the niche, and the specialisation this niche requires will open the opportunities for other ideas and new problems to be solved.
Specialisation really only happens with the benefit of experience, which happens over time. Define clearly what are you going to do, and who do you do it for, and being very clear to both yourself and those in the market what you will not do. For SME’s this is always a very difficult series of choices to make.
By specialising, you also end up emasculating competition, as they cannot do what you can. For those who want what you provide, there is no option.
Address questions of money early.
We tend not to talk about money, it makes us uncomfortable, and creativity is very personal, not about money. However, making a living providing a creative product is why you are in business. You must be able to talk about it to make it, and talking about it delivers credibility.
Do not be scared of silence.
Nature abhors a vacuum, so the best way after delivering a ‘price-bomb’ is to embrace silence.
When selling, if you fill the void, you tend to say something that reduces the impact of the bomb.
It is uncomfortable, but you get used to it.
State the number and shut up. You will gain a lot of information from the silence. Often it saves yourself from yourself, while offering an ‘out’ for those potential customers looking for a commodity product and price to remove themselves early, before you invest much of your valuable time.
How to measure value in the conversation.
There is no easy way to measure value in a conversation, but there is no substitute to a conversation that seeks to find ways for people to exchange value, in whatever form that value takes. The answer is to discover sources of irritation, complexity, or desire the client would like to address, and propose ways to achieve that outcome. Therefore, identifying quantitatively the impacts of the problem, and the results of your solution will increase the value of your offer. The larger the problem being faced, the greater the value of the creative process.
Say ‘No’ a lot.
As Warren Buffet notes: the difference between successful people and really successful people is that really successful people say no to almost everything.
We all want more what we do not, or cannot have. Saying No increases the desirability of your offer.
Anchoring against desired guaranteed value.
If I could guarantee you an extra million dollars in profit, would you be prepared to pay half as compensation? This is a closed question, but it is an anchoring question at the high end of the range. You can work backwards from that, in terms of risk and the nature of the guarantee. This strategy is used all the time, often without us noticing. Energy retailers seem to be always guaranteeing savings on your power bills when you buy from them, knowing that few will do the measurement, and it is a hypothetical measurement in any event. This tactic can be used in many ways. For example, usually you cannot guarantee value when selling to a bureaucrat, as they cannot pay for value, they pay for certainty against a budget. Therefore, you can offer guarantees of delivery date, or performance, any factor that is quantitative.
Value is entirely subjective. At the heart of value is the trade, where you are both happy. Your costs have nothing to do with the value. People do not want your time, or your deliverables, they want the solutions to their situation that you can deliver.
To conduct a value conversation, you need to have the right questions, not the answers. Ask the questions, and the answers will evolve.
Header credit: Me. As you can see, graphic art is not part of my creative armoury.
Sep 11, 2023 | Change, Leadership, Lean
If there is a magic ingredient to success, it is captured in two words: ‘Leverage’ and ‘Compounding’.
We all understand the concept of leverage, using a small amount of force to generate a larger outcome.
Compounding is a little more difficult to understand, although if you currently have a mortgage, you are suffering the compounding results of higher interest rates eating away at your growth in equity as you pay the monthly piper.
Question is, how do you find and build on them to generate a sustainable level of profitability?
Our commercial entities are built on the correct assumption that you need leverage to scale. As you build scale, it becomes necessary to add management layers to leverage the capabilities of those the next level down. That is why our organisation structures are always pictured as pyramids, because they are, for the leverage they generate.
Leverage leads to compounding, and compounding leads to greater leverage: a self-sustaining cycle, until the system becomes gummed up with friction.
Friction in management terms ends up being hidden in the layers of authority necessary to act. The transaction costs, which are almost always hidden from easy view, can be commercially fatal.
Leverage also delivers power to those in a position to exercise it, and as we know, power is a drug with many side effects, some of them not so good.
Technology has changed the ratios between leverage and compounding, but not the basic arithmetic. They remain mutually reinforcing, but their management has become significantly more complex.
