Oct 16, 2015 | Collaboration, Customers, Marketing, Small business
local business is your business
Small business owners seem always struggle to find the ways to build their business. B2B, B2C, does not matter, the challenges are similar.
How do you identify, engage, then build towards a transaction and relationship with people to whom your product or service solves a problem, and adds value too their lives?.
In my local area, there are a significant number of networking groups, ranging from community based ones to expensive franchise operations. I am a member of two groups, plus a local chamber of commerce. It takes work, but they do deliver results. In observing the behaviour in these groups of those who are successful, there are some pretty common things that can most small businesses can learn to do better.
1. Elevator Pitch. It amazes me how few can state in a few words what they do, what problems they solves, what outcomes can be achieved, and why their services are worth consideration. It should not be hard, but it is. Developing a good elevator pitch should be a priority.
2. Think local. Most small businesses find most of their business in the local area. It seems therefore to make sense to invest in the activities of the local area, from being a voice in the community groups such as Rotary, to sponsoring the local kids sporting teams with playing gear. A little bit of time and effort, but very little money can go a long way in a community.
3. Be vocal. Communities offer all sorts of ways to engage and make it clear what you stand for. A builder might be a protector of the architectural heritage of an area, the local sports store agitate to turn the local dump into playing fields, a bike shop might be the lead voice in having some waste land rezoned to enable building a bike track. The list can be as long as your imagination.
4. Collaborate. Locasl can build scale by collaborating, cross promoting, and assisting each other in all sorts of ways. Again, being open to ideas and opportunities can reap large rewards. My local bottle shop holds tastings on a fairly regular basis. They secure the time of the winemaker of a high quality small winery, who then takes a small group through the current releases, a vertical tasting, or whatever is appropriate, and over the course of the evening, the Japanese café next door delivers some terrific ‘nibblies’ Everyone wins.
5. Leverage the network. Local networking groups of various types do deliver value, but like all things of value, success only comes with work. Others need to understand what you do, how you deliver value, why they should use you instead of an alternative, they need to find common ground and build some trust. Going to the meetings is just the start.
6. Referrals. An adjunct to the networking activity, it pays to ask for the job, or referrals. Network theory clearly demonstrates that the networks of those in your network are the most potent source of leads there is. Many people feel that asking for a referral is not good form, remove that notion from your mind. Members of a networking group are all there for the same reason, to build their business, so they will not mind, and so long as you are prepared to reciprocate.
7. Offers. Offering an incentive of some sort always helps. A friend runs a small suburban bistro, open 6 days a week. He is booked solid Friday, Saturday, and Sunday evenings, but has to carry the overheads of being open and able to provide services at other times. He is always creating offers of his slow times, two for one, a bottle of champagne on the table, cakes for birthdays, on and on, in order to get bums in seats in the slow times, and as a result has a thriving business, with many repeat customers across the week.
All this stuff can be done as a part of your general marketing activities, it adds a critical personal dimension very challenging and expensive to achieve with any form of media. The range of options for small businesses has never been wider, and never forget that people buy from people far more than they buy from businesses.
Oct 13, 2015 | Customers, Marketing, retail, Sales, Small business
Innovation in supermarkets
Small business suppliers to supermarket chains are substantially compromised by the lack of resources to innovate.
Peter Drucker stated 50 years ago that innovation is the only really sustainable competitive advantage, and the passage of events have proved him correct.
Commercial survival requires that you are able to continually innovate, or you rapidly find yourself left behind, simply because everybody else is.
Knowing this does not however, make the challenge any less daunting, especially in an environment like FMCG where the retail gorillas stamp on variation as a source of transaction costs, and are actively seeking to reduce SKU numbers by pushing housebrands.
Lets define what we mean by innovation for the purposes of this post.
It does not include business model and process innovation. Both are terrific ways towards commercial sustainability, are paths every business must follow, but have little to do with innovation from the customer perspective, at least in the short to medium term.
By contrast, product innovation is concerned with new stuff that adds value to consumers.
Pretty simple definition, that precludes line extensions, which are just a fact of life, and product changes, which are again a fact of life. We are seeking to talk about the things that really make a difference, and how and why that happens.
Following are some thoughts on the nature of the strategic environment we find ourselves competing.
Innovation Paradox. Big businesses get big by being able to reproduce things without variation, their processes ensure consistency, and reject the outliers. This goes as much for people as it does products, so generally large businesses have more difficulty seeing and acting on something new than small ones. There are obvious exceptions, and large businesses everywhere are seeking ways to overcome the innovative inconvenience of their scale, with greatly differing levels of success. Nevertheless, the generality holds, but the small business end of the FMCG supply chain has been decimated, perhaps almost eradicated by the scale of the supermarkets and the power of their business model. Where is the innovation going to come from I wonder.
Risk. The risk profile of every business is different, but as a generality small businesses have a greater capacity to take risky decisions, but a less capacity to absorb them when they go pear-shaped. Large businesses survive on consistency as noted, and success for individuals in a large business is usually counted by their successes, failures are frowned upon, so the tendency to take risks is reduced, hence, their inability to innovate. Again there are notable exceptions, but they always occur when there is a leader who mandates and lives risk tolerance.
Wide view. Any organisation, no matter how big, only has a small proportion of the people thinking about the categories they compete in, so why do you think you will come up with the great ideas? Those using what I have always called “Environmental Research” always do better. This has nothing to do with hugging trees, and everything to do with understanding the context in which the behaviour of your consumers happens. When you understand the context, and see shifts, the opportunities suddenly become more easily identified.
Habit. Consumers are driven by their own habits, and once formed, it takes a lot of effort to break them. Habits work because they make our lives easier, and we are loathe to risk what we know works, for that for which there may be a question.
Boundaries. Innovation efforts need boundaries, or they tend to wander off into irrelevancy. I have found it far better to provide those boundaries in the pre-workshop, if that is what you are doing, material. It is necessary to encourage people to as the cliché goes, “think outside the box” but it is counter productive to have people thinking outside the municipality. Far better to ground the process in a context that is familiar, where there is market and customer knowledge available to feed the process. Without such grounding you tend to get uncertainty and irrelevancy, and ideas and conversation that skates across the surface rather than digging deep to where the problems and opportunities that provide the fodder of successful innovation are buried. I love the metaphor of Classical music and Jazz in the context of innovation, the score provides the boundaries. To be a good classical music player, you need to be a master of your instrument, and be able to reproduce note perfectly what the composer has written, the allowable variation is very small, the emphasis is on technique. Jazz by contrast requires that you are a master of the instrument, as well as the music to the extent that you can take what a composer has written and innovate around the base rhythm and melody, so you need to be not just a master technician, but a master of the music. Great innovation in a commercial environment has exactly the same characteristics.
Think different. The great 1997 Apple advertisement said it all, but how many corporate entities will tolerate the crazy ones? Very few. If you are to truly be an innovator, somehow you have to accommodate some crazy ones. Generally they are tough going, irreverent, unconcerned with status and the status quo, constantly irritating the nice smooth flow of processes that deliver the consistency that corporates thrive on.
Problem definition. Innovation occurs when a problem is solved. Often it is an old problem solved in a new way, sometimes it is a problem unrecognised until the solution comes along, the classic example being the post-it-note. A huge part of the challenge of innovation is the identification of the problem. Rarely does a problem emerge with a fully-fledged solution, but as Einstein, in my view one of the greatest marketing thinkers who never receives any credit at all once said, “if I had an hour to solve a live changing problem, I would spend the first 55 minutes defining the problem, the rest is just maths.”
Margin maintenance. This is tangled up with risk profile, but is separate. Over the years I have done many proposals for new products killed at the gate by the margin problem. “If we launch this, it will erode our margins” often true, but the standard response I give is “better us than someone else”, but it is often a futile response when the ultimate decision maker is compensated by short term considerations. After all, Kodak managed to survive for 40 years after they invented the digital camera in1975, several generations of CEO had passed through in that time, all taking their packet, it was just the last in the line who had a problem.
Value not just price. Consumers look for “value”, but way too often that is translated by suppliers and the retailer into “price”. Price is just one way of reflecting value, but it is the most obvious, and easiest to articulate.
Barriers. Every industry has its own set of barriers to innovation in addition to the more general ones above. In the case of the Australian packaged goods industry, they are several, all associated with the concentration of power in the retail trade.
Margin squeeze
Speed of house brand copying the successful products
Timing of distribution and advertising
On shelf management of facings, cut in, position, promotional programs and stock weight
13 week “live or die” time
On shelf upfront costs
Category management if you are not the category captain, and few small businesses are, you are at a significant disadvantage
Risk averse retailers
Habit. Everyone is used to doing business in a certain way, so that is the way it is done.
Opportunities for suppliers.
Similarly to barriers, every industry has its own unique set of opportunities that when seen are open for businesses to chase.
Social media. FMCG suppliers have not yet solved the problems of how to best use social media to market their process in supermarkets.
Mobility. Engagement with the web and its tools is now mobile, a majority of net interactions are mobile, and most people have their smart phones with them all the time. Using this capability and the geo-location capability to foster a direct relationship between the brand owner and the consumer with the supermarket playing the distributor role is a real opportunity currently under-recognised and utilised.
Food service and ingredient. These are fragmented markets, where innovation, service and brand can still play a real role, and getting a return on your investment is still up to the quality of your business, not the whim of a buyer in a gorilla suit. Depending on whose numbers you use, sales outside the major chains of ingredient and to food service outlets from fine dining to fast food, is north of 60 $billion.
Digital coupons. Retailers in Australia have ensured that the redeemable coupon, so prevalent in the US does not get a start here, too much transaction cost, but a digital coupon? Why not? There have been several tries of various types, Groupon being the most obvious, but smartphones make it so much easier to collect coupons and redeem them in some way, not necessarily even associated with the retailer.
Range optimisation. Category management as it has evolved has always been data intensive, and from a retailers perspective, the objective has been margin optimisation. The next step I suspect will be range optimisation which is really just margin optimisation with a far greater understanding of consumer behaviour thrown into the mix. We have all operated with the view that our various research tools and their data gave us enough to work with, and they did, but suddenly there is the “big data” behaviour mining opportunity offered by social media and geo location, in addition to the fragmentation of times we shop, and how we place and receive orders. Range optimisation to accommodate all these changes just became in my humble view, the FMCG marketing challenge of the decade.
Innovation from the waste. Until very recently, produce that was outside the specs for appearance was consigned to the waste bin, juicing, and other marginal uses, it was not deemed good enough by retailers to sell, not because it was nutritionally or organolepticly deficient, but because it looked crook. Along came the idea of highlighting the products visual imperfections, “Imperfect pick” is the term Harris Farm have used, Canadian chain Loblaws has successfully rolled out “ugly fruit” in Canada, and both Woolies and Coles appear to be tinkering with the idea currently. There are a myriad of opportunities to utilise undervalued product to build a category, for example, shin bones are the foundation of Osso Bucco, many of us will sample great Osso Bucco at an Italian restaurant, but never cook it at home, when it is an easy, tasty meal with a very low meat cost. Pretty simple marketing I would have thought.
Innovation is tough, but it is also fun and makes the future. Those who just wait for the future to happen will be overwhelmed by it, those who take a role in shaping it will at least have the chance to do well.
This post is the 8th in the series examining the means by which small businesses can deal with the retail gorillas.
The one that started it, back in October 2014, is a summary of the 10 ways to beat the gorillas at their own game, a summary post that generated a lot of interest, so I expanded the individual points in subsequent posts.
The first expanded post was the 3 essential pieces of the business model
The second, 5 ways to compete with data
Third, 6 category management ideas for small business at Christmas
Fourth, 9 imperatives for small businesses to build a brand
Fifth deals with the reality for all supermarket suppliers, that they have two customer types, requiring different approaches.
Sixth, deals with the least understood large cost impact on small businesses: Transaction costs.
Seventh suggested ways for small businesses to collaborate for scale,
Sep 28, 2015 | Branding, Customers, Marketing, Social Media
courtesy: Hugh McLeod Gaping void
Social media presents enormous opportunities for small businesses to connect with their customers in ways not imaginable just a few years ago.
However, like every new tool that comes along, it can be misused and certainly abused, and is certain to be touted by carpetbaggers. Considering the following list may save you some heartache.
- It will not address failings in your band positioning and execution. Get those right, and Social media can be a great addition, but it will not backfill the failures of creative, customer and problem focused strategic thinking.
- It will not make your brand interesting to potential customers who are not interested in what you have to offer.
- It cannot help you when all you talk about is yourself. People are more interested in themselves than in you, and unless you grapple with and answer the “What’s in it for me” question, you will end up talking to yourself.
- It cannot guarantee to go viral. Very few things go viral, it is like winning the lottery, the more tickets, the greater the chance, but each ticket has the same chance as all the others.
- It will not make up for poor content. In fact, poor content can kill any potential success your strategy may have, stone dead.
- It does not operate in an objectiveless world, so cannot deliver on objectives you have failed to articulate and plan for.
- It will not compensate for poor customer service. In fact, one of the great things is that those with poor customer service will be exposed quicker than ever, and go broke, reducing the ‘noise’ in the market.
- It rarely seems to ignore the things you may rather have it ignore, like lousy customer service.
- It will not change the world, although there is evidence that it can make a major contribution in that direction.
- It is not free. Posting of social platforms may be free, but there is considerable effort and many challenges before you will have any chance of being noticed. That effort will incur at least opportunity cost if you do it yourself, or professional costs if you outsource.
- It does not just happen. Being good at leveraging the opportunities of Social media is like anything else, you can only get out after you have put in. Success always takes take considerable effort.
The message is that social media is not the panacea for anything, not a silver bullet for any problem, it is just a tool in the marketing toolbox. It might be new and shiny, and seemingly changing daily, and being touted as the next big thing, which to some extent it is, but it remains just a means to an end, not the end itself.
Sep 9, 2015 | Category, Customers, Marketing, retail, Small business
supermarket buyers hold the power
Respected Australian Food industry journal Australian Food News published a terrific rewrite of a presentation I gave some weeks ago to a group of food industry CEO’s reflecting on the years I have spent in the industry.
After 40 years, I thought there may be something of value to pass on those following, and it was a great opportunity to have some fun.
A copy of the original presentation has been put up on Slideshare. AFN changed the order around, improving what was in effect a brain-dump set of slides accompanying a casual presentation.
Know your business and theirs
- Know more about your business than the buyer does. This seems pretty obvious now, but in an early (late 70’s I guess) encounter with one of the doyens of the industry, Eric Bender of Franklins, he demonstrated what can happen if you are underprepared. Eric took pity, and let me off lightly that day, and I never forgot the lesson.
- In a power imbalance, negotiation is challenging. Whether we like it or not, the buyer has all the power, even the biggest companies have little power to influence them in any way that is inconsistent with their best interests. I remember many years ago Coke had a blue with Coles (I think) believing that Coles needed them on shelf, so they hung tough, for a while. After a period which was a golden age for Pepsi, Coke relented.
- Don’t put your eggs in their basket. People often say that you should never put all your eggs in the one basket, but from time to time, when you control destiny of the basket, it is OK. However, putting all your eggs in the buyers basket has proved fatal for many, particularly small businesses that simply do not have the wherewithal to service the relationship at the margins on offer. Besides, depending on whose numbers you believe, there is somewhere north of $45 billion of sales outside supermarkets, so why do you need to covet the buyers basket.
Know your customer and control your message
- Buyers are lousy at marketing. Over the 40 years this has been proved over and over again. They are good at being retailers, they understand the dynamics of their floor and shelf space, customer traffic, negotiation, and copying quickly, but very little about customer behaviour outside their stores, and the importance of branding and communication that contains a promise other than price, then delivering on it.
- Know the rules well enough to play in the grey areas. There are the written rules, there are the unwritten rules, and between them is a grey area of interpretation. Knowing the rules well enough, and knowing the administrator of the rules well enough to identify the grey areas and play to them is a rare skill learnt over time, with deep experience. I used to work with a field sales manager affectionately known as “Cookie”. She was the best I ever saw in a store, had the planograms in her head, knew all the personnel, what they were like, what they wanted, and how to turn them inside out. She and her team destroyed all our opposition in NSW.
Experience counts
- Dealing with Buyers is a job for your “A Players” The smart people in your businesses should be the ones taking up the challenge of dealing with buyers, as it can be a make or break activity. Many seem to think it is a place to train future product managers, or hide the boss’s nephew. Wrong, nobody should be a product manager without having had the chance to be mauled a few times, but that should not mean buyer training is a pathway. Only allow your smartest, best, most motivated people in front of your biggest customers, who also is paid to extract the maximum from the piece of real estate you covet. I always found professionally trained introverts were best. They instinctively over prepared, and had data driven logical and sequential minds, and were generally smarter than the buyers they faced. Ask yourself “what is someone who looks after 40% of my sales really worth?” and pay them appropriately.
- Corporate memory is absolutely invaluable. Don’t re-learn from your new experience, it is really, really expensive, learn from the past. Learn from others, learn from the experience that the business has had in the past so you avoid repeating mistakes.
- Beware new buyer syndrome. We have all been faced with a new buyer, recently promoted from the baked beans aisle of the store in West Bullamakanka, who is suddenly given the power of “No” over you, and found the feeling seductive. You have little choice but to work with them, so put your best people on them, and there is a chance that when a bit older and wiser, they will remember the effort, and it will pay dividends.
When it’s over it’s over
- Let the horse die. No amount of flogging will get a dead horse to move, no matter how encouraging the vet may be, and you know he has a vested interest to keep you flogging. You must know when to give up and walk. In this case, the Vet needs your promotional money, so keeps encouraging you to stick at it, but you know the product has eroded so it only sells on price discount, which is below your floor, and the buyers keep buying it from promo period to the next, never at full tote. In the end it costs less to lead the horse out to a humane death while it still walks, rather than leave it to suffer, keeping up the strong and expensive medication, then suddenly finding it has died, and you have a warehouse full of horse food to write off.
- Innovation is more than changing the pack colour. Innovation is when you do something that makes the pie bigger, not just add something similar and slice it up in a different way. Besides, flagging “new and improved” leads consumers to conclude you have been selling them second rate stuff up to now. What retailers are selling to you is shelf space, and as such are going to get as much for it as they can, and they do not care if they sell your product or somebody else’s from it. You go in with your whizz bang new pack colour, they will take the promo money, and line fees, and all the rest, their business is selling you retail real estate, and if you offer a good enough price, you get the chocolates, this week.
Work with them not against them
- Be nice to buyers. There is little value in annoying buyers unnecessarily, although it is sometimes pretty easy to do. Remember that buyers like to be liked, just like anyone else, so get them to like you, store up the brownie points when you can, you may need them some day.
- Ensure the Buyer knows you are not afraid. You need to be serious, informed, appropriately acknowledging the power imbalance by being creative, but never afraid. Even when the buyer beats up on you, if you are prepared to push back, they will respect you in the morning, but if you cower and beg, well, there will never be any respect, and there will be no coming back.
- Buyers do not care about you. Retailers are in business to satisfy shareholders, and the individuals buyers have targets to meet that do not have anything to do with you. They care about themselves, and the challenges they are facing, so getting them to do something you want them to do revolves around you solving their problems, not them yours.
- Buyers need you or someone like you. When it comes down to it the shelf space needs to be filled. So if you can articulate the need, they will give you back a bit of the power imbalance that exists.
- Beware the armchair experts. Many of those who claim expertise haven’t actually got any. So listen to all the sensible advice you can find, but make up your own mind, and implement with focus, agility and passion. There really is no better way of knowing about buyer behaviour than by working with them.
So, there it is, almost 40 years of pain and experience in the time it took you to read this article.
Bargain.
Sep 4, 2015 | Customers, Marketing, Small business
So, you managed to get that cold email opened by the recipient.
Well done, past the first hurdle.
The next is to create an environment where the opener does something you want as a result of the opening, your next step in the process of engaging towards a transaction.
If you do not have one, why bother in the first place?
A couple of weeks ago I opened a cold email, simply because the headline promised something I had been actively seeking. A simple CRM system designed for small B2B businesses looking at the opportunities offered by sales and marketing automation to scale their businesses. Exactly the thing I had been looking for to assist one of my clients.
In addition, I could see from the auto-preview that it was directed at me, and that there was a logical connection.
I have reproduced it below:
A review of CRM options for SME’s contemplating a first step.
Dear Allen,
I was in the audience at the recent presentation you gave to small business CEO’s in the AFGC forum. I fully agreed with most of the points you made, and you raised a few I had not considered.
One of them was the difficulty many SME’s have taking that first step into marketing automation, usually a simple CRM implementation. I see from your Linkedin profile and significant number of blog posts that this is the sort of thing you run into regularly.
Attached is a review of a number of systems I completed a short time ago, which I thought might be of value to you.
I will ring you at 8.50 am next Thursday, and if you are available, hopefully take 5 minutes to see what you thought of the systems reviewed.
Kind regards
Stephen
He did ring at 8.50 the following Thursday, we did have a conversation, way longer than 5 minutes, my choice, and it is likely that we will do some business.
Lets look at what he did right:
- The headline of the email promised to deliver a benefit, something that may make my life easier.
- The email had been highly personalised, and was complementary of the work I had done.
- The CTA was crystal clear. He would ring me at a specified time, for a chat that almost required me to have read the attachment to participate. It would almost have been rude of me to have been unavailable and unprepared.
- He promised to take up only 5 minutes. How could I not give 5 minutes to someone who had gone to all that trouble, and who possibly had a solution to a problem in front of me.
Are your email campaigns as targeted?
Do you do the work up front to give yourself the best chance of creating a qualified lead?
Aug 10, 2015 | Customers, Marketing, Sales, Small business
cold calling
Almost everybody I know hates cold phone calling, there is something in the psychology that prevents us putting ourselves in a position where absolute strangers can reject us 99% of the time.
“Cold email calling” is the less confronting and can be a hugely effective option, but unless you follow some simple rules, will still be 99% ineffective. It is just that the email will go to the trash, and you will not have to put up with someone rejecting you verbally.
If you follow these rules, and optimise your emails, their effectiveness will explode.
1. Research the prospect list.
It is easier today than ever before to create and segment your prospect list into finely drawn groups, each having a persona that is likely to respond to specific messaging. Sending an email to a professional chef outlining your Aunt Mabel’s favourite cup cake recipe is unlikely to be read.
Ensure you have a strong value proposition for each persona that you draw, one that feeds into their motivations, problems and fears.
2. Have a compelling subject line.
Your subject line is like a headline in a newspaper, or the cover of a magazine in the newsagent. In a very few words it needs to capture attention and lead you to the next action.
Ask yourself, “would I open this email”
Have a compelling “sub head”
Your first sentence is like the sub headline on that same magazine cover. If you watch what works in your local newsagent, it is often piquing curiosity that works best. Writers of these covers are the cream of direct response writers, so model your emails on the pattern that works for them.
3. It is not about you.
If your email opens with “my name is Fred Nurk from ABC Corp, and we provide the worlds best Blah Blah product” you have probably already lost them. Instead, you need to spell out exactly how you can help them do their job better.
Be conversational. Write like a peer, someone who understand the challenges and opportunities of your target, and who relates to them. Being “needy” is the best way to lose a reader, even if you think your cause is the best in the world. Avoid weak terms like “I hope..” and “I just ….”
4. Establish credibility.
Without credibility, you chances of converting are minimal. Providing social proof, data, of some sort is essential. A testimonial from an existing customer can be very effective, but these days, they have to be video, and the individual has to be clearly identified, and identifiable, otherwise you will be suspected of writing it yourself or getting one of your mates to do a video.
5. Create a process.
A cold email rarely creates a sale, at best it can create a warm reception to the follow up. This is the entry to your sales funnel.
There are three parts to a successful email process that recognise the “moments of truth” that occur. First you need the finely drawn persona noted above, second, you need to map the buying journey to be able to identify the points at which you can create interest, and third, you should have a schedule. It is easier to map out a series of posts around a topic, then write them, than it is to sit facing a blank screen trying to think of something to write today. Believe me, I have tried both.
None of this is easy, and it takes time and expertise, but does work. There is never any substitute for experienced, professional writing. It is not the case that everyone who can write a letter and ensure the spelling and grammar is OK can write a good sales letter, it is an art, so you are probably better off getting an artist.
