Dec 2, 2015 | Customers, retail, Small business
Small business beating the barriers of FMCG category management
One of the core challenges in category management is simply the way the term has been interpreted operationally.
Let me explain.
Category management is a data intensive game, the numbers count for everything, and the depth that can be plumbed nowadays with the combination of scan data, loyalty cards and increasingly social data is astonishing.
However, this can lead to a sort of blindness.
If it is not in the data, by definition it does not exist.
Right?
Wrong.
Think about where all the great innovations have come from.
“Left field” is the usual term. Few genuine innovations have come from the established orthodoxy of any category, they involve things that currently do not exist or exist in another, unconnected category in a different form.
The disciplines of Category Management, weather we like it or not tend to eliminate these outliers, thus limiting category innovation.
Not the desired outcome.
The challenge of running the data intensive margin maximisation regime by leveraging existing category variables while minimising risk stifles true innovation while encouraging range extension behaviour.
Innovation by its nature is both risky and outside the accepted parameters of category consideration. Successful innovation requires both leadership and wisdom to be displayed before a guernesy is given for the investment required to get a new SKU on shelf, even if it is a replacement for a tired item.
Neither management quality is in great supply.
It is in this space that SME’s can build a competitive position against their larger competitors who may have the advantage of scale as well as category captain status, but are failing to be genuinely innovative. By building a history of innovation in outlier and niche retailers, independents, and direct to customers, smaller suppliers can build the “attraction quotient” with the supermarkets, and have the chance to retain some control.
Become successful in those outliers and the mass retailers will follow, that is their nature, they are followers.
Somehow you have to find a way to manage by both the data, and a product benefit /brand narrative that is entirely from the perspective of the consumer.
Nov 19, 2015 | Branding, Customers, Marketing
The “third leg” of commercial sustainability.
Most are used to looking at Revenues and Profits as the measures of commercial sustainability. However, there is a third and often overlooked leg, that is to my mind more important as it drives both revenues and margins resulting in profits.
Your brands.
The objective of every marketer is to have users that are apostles for their brand, those users who will go out and employ for you that most powerful of marketing tools, word of mouth.
There is nothing as powerful as someone you trust telling you that in situation X, use brand Y, it will never let you down.
In 40 years of observing how the best of the best do it, and being engaged in building some powerful brands for my clients and employers, there are a number of common practices I have observed in the most successful.
Love your greatest fans.
Every successful brand has a core of users who just love the brand, and will not use anything else. This hold true from soap powder to cars, just go to Bathurst in October and try and persuade a “Ford” man that “Holden” is a better car. Identifying this small group of apostles and feeding their love will be the best investment you can make. Your ‘apostles’ will only be a very small percentage of users, but will have an inordinate influence on your success.
Create brand stories.
Humans relate to stories, we remember them and the lessons contained in them. A brand story that resonates with your target audience has the potential to generate way more engagement and ultimately loyalty than a bland recitation of facts and figures.
Encourage customer feedback
Successful companies treat customer feedback, particularly negative feedback as an opportunity to both gather information on how to make their products better, and by addressing a problem turn a product sceptic into an apostle.
Positive feedback enables collection of data that identifies the roles your product fills in peoples lives, often uncovering factors that feed into the users emotional connections not otherwise easily discovered. My often repeated cottage cheese story is a prime example of this.
Anticipate needs
Market research is an enormously powerful tool, it can tell you everything you need to know about what customers are doing currently.
However, asking customers what they might want or need in the future is not a good use of market research resources.
Henry Fords quip that if he asked his potential customers what they wanted, they would answer ‘a faster horse’ remains true. Steve Jobs did not ask if we wanted a music player, and camera incorporated into our phones. Clearly we did not see the need, as the technical capability was there, the then dominant market leader Nokia spent fortunes on market research, and there was no demand for it, but he just went ahead did it, and changed the market forever.
Books are judged by their covers.
Despite being told from a young age that we should ‘never judge a book by its cover’, we all do, in hundreds of ways every day. People will make almost instantaneous judgements about your products by the way they look, the colours, layout, name, how it impacts their sense of order and design. For example, a predominately yellow design for a Chinese audience could be problematic, unless your service is pornographic.
Relationships are becoming virtual
In person, we can hold a maximum of about 150 relationships at any one time, Dunbar’s number. However, many of us have way more digital connections than 150, and those who have figured out how to create an online metaphor for personal relationships, like Amazon with their recommendation algorithms are cleaning up. Your customers are building their own versions of digital relationships, and you should be where your customers are.
Defenders may not lose, but they rarely win.
Brand defence is a necessary component of any successful brand, but it is not enough. To win you need to be on the offensive, take risks, big steps, shake up the status quo with innovation and remapping of markets. Apple over the last decade has had no peer at employing offensive brand building tactics and is now the largest, most profitable company ever seen, from a basket case 20 years ago.
Love your employees and stakeholders.
Just like apostle customers, those with an intimate knowledge of your business because of some level of commercial engagement, have an enormous capacity to influence others. If you knew someone who supplied a component into the Acme computer company, and you were considering a new computer, would you still consider Acme if your mate told you they were rubbish? The converse is equally true. Working with stakeholders will deliver great returns, and can be a source of great value as most businesses fail to recognise the potential so close to home.
Become ‘organic’ and highly adaptable.
Just as organic systems adapt to what is in front of them to maximise their chances of survival, so should your brand development activities and priorities. Adapt, adapt, and continue to adapt.
Nov 16, 2015 | Customers, Governance, Marketing, Small business
Like most interested in this topic, I see a lot of stuff published, and have gone to my share of seminars in an attempt to sort the wheat from the chaff.
Over 40 years marketing experience, and having seen the rise and rise of automation, along with the carpet-baggers flogging get rich quick, and “if I can do it, so can you” schemes that would make a gypsy blush, I am probably just a little sceptical.
Here are the myths I see most often, all flowing from the foundation “it is easy” myth
- Automation solves problems.
Without the basics being right, understanding the markets, your customers and competitors, how your value proposition and service levels resonate, you are still nowhere, automation or not. An early lesson I learnt is that poor problem definition leads to poor decision making and even worse marketing. Crap marketing that is automated just generates a bigger pile of crap, quicker, with a second often larger problem that when it comes from a computer for some reason, it gains credibility, so your pile of marketing crap risks becoming a “truth” that has the potential to send you broke.
2. Automation provides the processes.
Automating anything means that it is done automatically the same way every time. If you have process that deliver rubbish, marketing automation will only enable you to deliver more rubbish, quicker, to more people, Who wants that? Building robust, processes is essential, at every level of the marketing ‘stack’ (sorry about the jargon, the stack is the pile of various digital processes that together make up an automated system). No automation system is “Plug & Play” in isolation.
3. Automation enables a purchase mind-set.
Making a choice is certainly not something that automation can provide. Best it can do is give a rational analysis of the data to hand. The nature of the buying process and associated communication has been transformed in the last decade by digital tools. Buyers now accumulate information independent of sellers, and often make a final choice before a seller knows they are in the market, but the choice is human, subject to all sorts of considerations still way beyond the capability of automation to replicate.
4. Automation cannot respond other than by rote.
Consumers seek all sorts of subjective and referential information when researching even a modest purchase, switching between left and right brain without realising they are doing it. That process cannot be replicated digitally. Best we can do is define the range of personas we see in the market and tailor and continuously improve the communication strings to meet the anticipated and instinctive Q&A sessions happening in purchasers mind as they move through the “funnel” towards a decision.
5. Content is king.
I hear this all the time, “just pump out the content and they will come.” Rubbish. This may have been partially true at the beginning of the digital revolution, but no longer. There is now so much content around that the competition for potential customers attention is now far greater than it has ever been. The challenge is now having the best, most relevant and timely content delivered in a personalised manner, as and when the buyer asks themselves a question. You need to be a marketing mind reader!
6. The number of leads counts.
This is only true when you consider the quality of the leads at the same time. It is easy to generate a lot of response to something, the key is the likelihood of a conversion to a transaction of the initial lead, not the number of leads. Quality wins out over quantity every single time.
7. Automation solves the “don’t know what you do not know” problem.
This goes back too my original point. Experienced, informed and creative marketing thinking cannot be replaced by automation, no matter how much many who call themselves “marketers” would like it to be so.
Automation can be a hugely valuable investment, but it is not easy, not cheap, and does not replace the skills, domain wisdom and experience of those who have been there, done that!
When a dose of ‘fair dinkum’ is required, call me.
Nov 9, 2015 | Customers, Sales
www.customerthink.com
Small and medium businesses usually struggle with the challenge of scaling their sales efforts. Most start with a group or network who know them, and their expertise, and are happy to use their services, but what next?
How do they build from the small base of the founders network?
Often someone on staff is turned into a ‘salesman’ usually reluctantly, or someone is hired who claims to have intimate knowledge of the market niche, and left to their own devices with little direction or discipline. Neither option works very well, and usually comes with a litany of hidden costs and problems.
Following are 6 of the biggest barriers I have encountered over the years that cause the greatest headaches.
- Compensation.
How you pay a salesperson is always front and centre, and is often a witches brew of trouble and unintended consequences. The default is usually a base plus some commission, depending on the business and its circumstances, but is often not the best option.
Within considerations about the compensation plan, there are a number of subsidiary questions that need to be asked.
- What behaviour are you motivating for? Is the objective new customer acquisition, retention of existing customers to reduce churn, increases in share of wallet of existing customers? Whatever it is, it makes sense to manage the compensation towards that objective.
- What are the capabilities of the personnel? Not that are they nice people, but are they able to deliver what is being asked. Sales people like all people have a range of behaviours and capabilities. In my experience an important axis of sales performance is what I call the “hunter/gatherer index”. Very simply, ‘hunters’ get their kicks from the chase, identifying an opportunity and chasing it down, once caught they move on. By contrast the “gatherers” tend to stay close to home and what they are familiar with, nurturing what they know without putting themselves at “risk” by inviting a “No”. Most sales organisations need a mix.
- What is the mix of behaviour drivers in the sales force? Here hides the minefield. People are motivated by different things to different degrees. In general once the basics are covered, and people consider that they are being “fairly” compensated, the absolute amount drops down the list of behaviour drivers. However, some are motivated more by money than others, some react to targets and thresholds differently to others, and some prefer non cash rewards more than others. However, everyone responds to acknowledgement of effort and achievement, this is deep in our DNA. In the absence of acknowledgement, the importance of the absolute amount of money paid increases geometrically.
- How easily understood and ‘gamed’ is the compensation plan? I have yet to see a compensation plan that will not be gamed by at least some sales staff, and that includes senior sales management staff. The answer to this is almost always simplicity and transparency, the simpler the plan is the better, and the more transparent the plan the better.
- Hunter Vs annuity is a common problem. A customer who was sold ages ago, is a loyal and repeat customer, yet the commissions paid for sales to him are the same as commissions on sales to a new customer that took time sweat and tears to prospect, research, engage and convert. Why? One is hard, challenging work, one is akin to babysitting. Flat rate commissions alone rarely work for this reason.
- Alignment.
Unfortunately this word has become a bit of a cliché. “Sales” has an inherently short term meaning for most, conditioned as we are by our experience, and the recognition that sales is about “closing”. Almost every sales training course I have seen has a module about the close and how important it is, which is not in dispute, but the standard tactics to generate a close by any means are inherently about “NOW” and is unfortunate. In most cases thinking beyond the transaction on the table currently pays great dividends. The key is to ensure that the effort is in every case aligned with the objectives and strategies of the organisation. It is surprising to me just how often there is a misalignment between what the board room wants to happen, and what is actually happening at the coal face.
- Induction
How often have I seen a new hire in sales being given a quick tour of the factory, being given a folder with product specs and prices, and a list of customers in the territory, the keys to the car and sent off into the wild blue.
Nowhere near enough. Not even remotely enough, even to be selling paper clips to blind men.
- Direction & governance
Managing a sales function is often like herding cats. It takes a combination of the carrot and stick motivation, as well as directing and mentoring the individuals and the group. The last thing you should allow to happen is “set and forget”.
There are a few things that can help with a bit of consideration.
- Defining the roles of sales people is crucial. Some people are naturally hunters, they want to be out there chasing, the thrill is in the chase, once caught, they get quickly bored. However, we often have these people doing administrative stuff that may be necessary, but that the hunter salesperson does badly. The converse is also true. Why do we think some-one who is a “nurturer” by nature is going to be happy and perform in a role that requires hunting?
- Sales management is not sales. Too often we promote our best salesman to be sales manager, only to find the results are lousy, and neither party is happy. Many valuable sales professionals fail to be managers, they do not make the jump. In my experience the most common cause of the failure of a good sales person to be a good sales manager comes from 3 sources:
(a) The new sales manager wants to “keep his hand in”, so keeps an account or territory so as well as being the manager, he is the sales competitor to the rest of the sales team.
(b) The second reason is the tendency to micro manage the sales force, to get them to do things the way that was successful for them as a sales person, rather than being a coach, mentor and manager.
(c) Inadequate leadership being directed towards the new sales manager. In most growing SME’s this is almost a given, as the “Boss” is usually very functionally oriented, not having had a lot of exposure to sales, so in effect is learning on the job as much as the new sales manager is.
- Customer relationships
Building relationships with customers is like building any other sort of personal relationship. It takes time, effort, and commitment, as well as there being strong mutual benefit as the foundation. However, unlike personal relationships, B2B sales relationships almost always involve multiple people in the customer organisation, and a procurement process that needs to be administered. Mapping out these relationships and processes in some sort of sales plan is essential, and for the small group of strategically important customers, those who will generate the 80% of the profits of the future, it should be an exacting process. I usually call this process ‘SKAP’ for Strategic Key Account Planning, but the importance is in the development of a process by which to manage the allocation of resources across the tasks of paying the bills today, as well as into the future.
- The sales model
The choice of sales model is simply a function of the business model, but differing models require differing selling infrastructure and capabilities and collateral and marketing material.
Selling to distributors is a different animal to selling to end users. The former is usually interested only in margin, and what you as the principal are going to assist them to move stock, whereas selling direct is about delivering value to the end customer. When you identify these challenges in your business, we should have a coffee and come up with a plan.
Don’t ever forget that the success of the business depends on the ability of the sales function to deliver, and everyone in the business makes a contribution to the sale.
Nov 2, 2015 | Customers, Sales
Strategic Key Account Planning
SKAP, or Strategic Key Account Planning will enable general management, sales management and account executives to develop a comprehensive and measurable plan that will facilitate the development of relationships that identify, develop, win and keep business.
Clearly however, the first step is to identify just what characteristics are present in a “strategically important’ customer. Rarely will it be the top 10 customers, you need to look forward and determine who might be your top customers in 3-5 years, and work on them.
There is a fundamental assumption made that has held true of the 20 years I have been working with businesses developing ‘SKAP’, that there are only three ways you can effectively sell a product in B2B situations. You can work with your customer to:
- Increase their sales
- Reduce their costs
- Increase their productivity.
In one way or another, every consideration from IT implementations to OH&S come under one or more of these three headlines.
To sell in the competitive and digitised markets we now compete in, you need to be delivering on at least two of these fronts to be able to win a competitive situation, and three is geometrically better than just two.
The size and nature of the business does not matter much, any B2B oriented business can benefit by an intelligent SKAP process.
There are a number of elements that build on each other, all contributing to the picture of the manner in which you can approach the delivery of your value proposition to a potential and ongoing customer.
Of vital importance is to be able to see the customer’s problems and opportunities through their eyes. To do that you need detailed intelligence of the customers and their competitive environment
There are a number of areas of information; usually it takes an upfront effort followed by an incremental building of intelligence as the relationship develops. The more input the customer has to the process, the better. Developing a SKAP in collaboration with a customer is the ideal situation.
The information needs fall into a number of areas.
Corporate information.
- Ownership
- Key personnel
- Business processes such as purchasing, capital allocation and budgeting
- Organisation structure
- Informal communication and power structures
- Operating mechanisms, such as sites, internal communication systems.
Competitive information
- Primary competitors and relative strengths
- Key markets & profit pools
- Collaborators
- Relative strength of their value proposition
- Trends and regulations impacting the business
- Business model
Operational information
- Mechanics of their business model
- Personnel Capabilities in key areas
- Operational capabilities & processes
- Financial management
- Product development capabilities and processes
Market operations
- Sales and marketing processes
- Key customers
- Share of wallet
- key competitors
Customer SWOT
A SWOT analysis is usually very useful way of identifying and prioritising opportunities and threats faced by the potential customer. Looking at their market from their perspective is a vital ingredient in a successful sales effort.
Account plan
With all the above information in place, you can develop an account plan that details the activities
- Objectives
- Issues
- Actions to be taken, by whom, by when
- Expected outcomes of each action and follow up sequences
None of this is easy, or to be undertaken lightly, as there is an opportunity cost in the allocation of scarce resources. When you need a bit of help, call me.
Oct 19, 2015 | Customers, Marketing, Sales, Small business
Strategic Key Account Planning
Almost every organisation I have dealt with uses some variation of the accepted sales funnel model.
Start by gathering as many leads as possible, then progressively whittle them down through the funnel until you have a customer. The practice is always way more chaotic than the nicely drawn funnel, as leads enter and exit the funnel at various times for various reasons. Chaotic is usually an appropriate expression.
When you think about it, there is a huge amount of waste in the process.
You start with many, and expend considerable resources to turn leads, of which a large majority are unlikely ever to be customers, into prospects, into hot prospects, (or whatever creative name you call them) then create a transaction, then hopefully to build a relationship.
In most B2B situations, this simply does not make sense.
Would it not be far better to spend a fraction of the resources identifying your ideal customer based on your value proposition, then identifying the decision makers and their procurement processes in those ideal customers, then setting out to engage them with personalised marketing?
This is in effect turning the funnel upside down, but recognising that prospect behaviour is unpredictable if not chaotic, it may be that the pyramid, in what ever orientation is the wrong metaphor.
Why not use a cycle of some sort, with the central objective of creating a relationship with the key customers and prospects in your industry.
Digital technology is making this easier by the day to execute, but the foundations of good marketing have not changed. Digital technology cannot change those foundations, the things you simply have to get right to earn the confidence of a prospect to give you their money.
