Aug 18, 2021 | Customers, Marketing
Your unique value proposition is the reason people will consider engaging with you, and when there is a choice, you, rather than the other options.
The clearer you are about the focus of your expertise, and the value it delivers, the easier it will be to attract customers/clients, and therefore, monetise it.
What single thing do you deliver to customers for which they will pay?
Complete this sentence: I use my expertise to assist people to ……………………………….
This forces you to distil your expertise down into one simple sentence that defines your value proposition.
You must be specific, avoid cliches and generalities such as ‘improve performance’, ‘be better’ and ‘deliver value’
In my case, the sentence is not ‘I use my expertise to improve business performance’. Instead, my sentence is; ‘I use my expertise to help people grow and build profitability.’ Depending on who I am talking to, I substitute the word ‘people’ with ‘SME manufacturers’ or even more specifically ‘suppliers of widgets’.
What differentiates you from other experts in the field?
What you deliver, and the manner of delivery must be different in some way from alternatives. The differentiator is what engages potential customers to you rather than to someone else. Therefore, ‘Better’ or ‘Bigger’ is not sufficient, they are generic claims that anyone can make.
These points of difference do not make you the right choice for everybody, it makes you the perfect choice for a very few, or at any point in time, just one person. When you are their only choice, where else will they go?
In my case, the differentiator is long experience, and success across corporate, government, and SME businesses. I have an unusual combination of expertise across strategy development and implementation, marketing, accounting, and operations management. While I am primarily a strategic marketer, having run manufacturing businesses, and having deep knowledge of ‘the numbers’ and how to interpret and use them, makes me unusual. This can be valuable to modest sized businesses that tend to have areas of weakness in management expertise outside their core skill.
Who needs what you deliver?
Those that are actively seeking it. There are often many people who might need what you deliver, but those who are actively seeking it are the only ones who will see it when it is presented to them. For example, a tax accountant can help anyone who needs an accountant, but their ideal customer is someone actively seeking advice on tax, today.
How will your expertise benefit your customers?
When you buy something, you expect a beneficial outcome, something that eases the pain, scratches the itch, solves a problem, or just makes you feel better.
Another sentence to be completed from the perspective of the ideal customer.
Those who use my expertise go from …… to…..
Again, in my case, the sentence is ‘Those who use my expertise go from frenetic activity that seems to go nowhere, to developing and deploying strategies that deliver sustainable profitability’
How do you best connect with, and deliver value to your potential customers?
This is the million-dollar question, and one that should be always left until all the above has been done, at least in some sort of draft. The answer to the question is hiding in the answers to the previous ones you have asked yourself, and the choices you have made as a result.
The choices about how you do this are myriad, which is what makes it so tough. There are many ways to set about communicating and engaging with potential customers. You must make choices, which will miss many potential customers, but will optimise the expenditure of your resources of time and money in connecting with those who are most likely to value and pay for your expertise.
Aug 13, 2021 | Communication, Marketing, Social Media
There are a huge number of choices to be made when considering how to best reach and communicate with your ideal customer.
None are disconnected from the others, but like anything, all have their ‘sweet spots’.
Each has its place, and the better you know the habits and motivations of your ideal customer the better able you will be to make informed choices about when and how to reach them. You also must choose how much of your limited budget should be allocated to the various options, and what resources are required to optimise the choices.
Referral.
The original and still by far the best way to engage with a customer is to have someone they trust refer you to them.
Referral is the gold standard, leading to the challenge of how you make yourself ‘referrable’.
Website.
These days not having a website is like not having a phone in earlier times. You must have one even if it is just to capture the opportunities that emerge. However, not all websites are created equal. Many I see are next to useless. You can spend a lot of money on a site, and get little or no traction. However, done well, it is your digital ‘Home base’, the place where people find you and see if you might be an option for them, usually before you even know they are in the market.
Content creation & marketing.
This is everything from a comment on a Facebook or LinkedIn post to long form e-books, webinars, and courses. The objective of this material is to drive people back to your website, or directly to you, and to establish your position as an ‘authority’ in your field. Those looking for information, reassurance, or just a bit of help would usually prefer it came from someone with the authority derived from knowledge and experience, rather than cliches and blather. Your website is your digital home, you own it, you make the rules. The ‘rented’ platforms, Facebook, LinkedIn and all the rest, are not yours, you do not own the relationships built there, and the platforms can change the rules any time they like. These changes are made in their interests, not yours.
It is also true that the ease of posting to these rented platforms ,means they are filled with stuff that is fed back to you by algorithms, rather than by your choice. They record every click, measure the time spent on every page, and capture what you do with it, so they can sell it to people who want to reach you. It is a two-edged sword. It is too easy to load up rubbish: a dog crap on the footpath is just a pile of dog crap, but somehow, once someone photographs it and uploads it, that pile of crap becomes ‘Content’.
Analogue.
Never forget the power of analogue tools. TV is still a hugely potent means to reach customers, despite the claims that TV is dead, it is not. Neither is radio, magazines, books, catalogues, and all the rest of the analogue communication channels. Too often analogue communication is dismissed as no longer useful, usually by those who have never used them to know. How often would you not open a personally addressed ‘snail mail’? Never I suspect, which compares well to a personally addressed e-mail coming from a source you do not recognise. The e-mail open rate hovers around low single figures, testament to the power of analogue, when used well.
Social Media.
Social can be enormously powerful, which is another double-edged sword. It is often the ‘glue’ that holds the other pieces of the puzzle together. The downside of course is that it can chew up resources faster than a plague of locusts will consume a field of wheat, and have about the same impact on the unwary.
Imagine you sell engineering services to renewable energy suppliers. You are unlikely to be able to communicate what you offer to the buyers you need to speak to on Tik Tok.
However, that same person may watch Tik Tok over the shoulder of their 16 year old kids, but when they do, they will not be looking for engineering information.
It is called ‘Social Media’ for a reason.
None of these work independently, all have their own ‘sweet spot’ all cross fertilise and compound, but are next to useless in the absence of a specific target. Your media choices must come after the work to build a strategy, the assessment of your current situation, and the plan that defines your message, and who you need to reach and engage in order for you to be commercially successful.
Aug 11, 2021 | Customers, Marketing
I like the word ‘Sticky’ it resonates somehow, and says, ‘hard to get rid of’.
As a kid, we had a ‘sticky’ dog in the family.
I remember we once left the dog by accident at a relative’s place across Sydney after a visit. When we realised we had left the mutt, Dad had to drive all the way back, and; no dog. About a week later, ‘Sticky’ turned up home, hungry, bedraggled, and obviously on the losing end of a fight somewhere, but the tail was wagging madly as he stumbled through the gate. Sticky. Don’t you wish customers were similar?
What makes a “sticky” customer?
How can you measure ‘stickiness’?
Customer loyalty, repeat business, lifetime value, brand building, all sorts of cliches refer to the central notion of a “sticky” customer.
A ‘sticky’ customer is someone who for one, or a range of reasons, strongly prefers to buy your product over alternatives.
We all know it is more expensive to find a new customer than it is to sell to an existing one, so it is paradoxical that many businesses spend more on finding new customers than they do on retaining existing ones.
So, what makes a sticky customer should be a subject of some consideration.
Some ideas.
Barriers to exit.
Once you have a customer, create high barriers to exit. Love them to death, remove friction, ensure that you are anticipating their needs.
Amazon is an exemplar.
I am a customer, I buy lots of books, and other odds and ends from them.
What I look at, then buy, and at what price is all recorded, and based on the history, they recommend other things to me, that are often very good recommendations.
Last Christmas, my wife was moaning that she had no idea what to get me, and while I was saying a good business shirt would be nice, my mind was recalling the recommendations I had just received from Amazon. It occurred to me that, holy cow, Amazon knows what I would like better than my wife of 40 years!
High barriers to entry for competitors.
The music industry has been disrupted by digital, the old model no longer works, as the barriers to entry that were high, became low. Anyone could publish their music online. Lady Gaga created new barriers to entry by building a “personal” relationship with a highly targeted audience, “live” on digital platforms. She has replaced one high barrier, the cost of creating and marketing a record with another, the cost of creating a ‘sticky” fan, who shows the “stickiness” by buying, online.
The further from commodity you can take your product, the better. Price does not play a role in the purchase decision, so long as it is in the bounds of the customers’ expectations.
Technical excellence on some key parameter.
Porsche has consistently demonstrated engineering excellence, but was going broke in the 80’s relying on the 911 exclusively. They took the strategic decision to leverage that technical excellence into adjacent areas. The entry level Boxster, then the Cayman, less entry but not the 911, then the 4 X 4 Cayenne, then the four door Panamera, and now is flooded with money.
Reducing customer churn usually offers huge benefits, and now Porsche is delivering a range that meets the preferences of all those who valued the engineering excellence and power of the Porsche brand, across a range of life stages and styles.
KPI Index
It is in this context that I use “the KPI Index.’ This is not your usual key performance indicator, of which customer churn and cost of new customer acquisition should be key ones, but ‘Kept Promise Index.’ The main reason an existing customer will move elsewhere is because you failed to meet their expectations in some way.
The product was not to specifications, delivery was slow or not to promise, there was damage, the price crept up, or the communication was messed up somehow. There are many reasons businesses fail to keep their promises, explicit and implicit to customers, and eliminating them will increase ‘stickiness’.
Detailed understanding of customers.
Some years ago, I worked with an insurance broker on this very topic.
Insurance is not a happy purchase, it is purchased reluctantly, grudgingly. Almost all the brokers marketing effort to retain clients, which on first glance should have been effective, was in the last few months of a contract, but his churn rate remained stubbornly high, squeezing profitability. I spoke to several former clients who had not renewed to try and figure out why, and the picture became clear very quickly.
After they had signed up, often after the broker had made a significant effort, they were left alone until the renewal was becoming imminent, unless they had a claim. They felt they were being ‘used’ by the broker, rather than being delivered a service, and the effort put in just prior to renewal was just a hard sell job, which was resented. We took a portion of the marketing budget and reallocated it to communication in the first 3 months or so of the contract, as well as instituting a regular newsletter type communication which offered all clients a means to stay on top of trends and instances that might affect them and their business. We also amended the renewal communications and spread them out over a longer period. The churn rate dropped rapidly, and the satisfaction scores went up, along with profitability. None of this was rocket science, it was just looking at the problem with a set of outside eyes based on customer experience.
Continually improve your customer interaction processes.
Based on customer feedback and understanding, focus on customer retention, every day.
NPS, and feedback from customers, and former customers, are ways to identify points of potential ‘friction’ in the customer retention processes, and progressively eliminate them.
All the tools trotted out as improvement tools in a factory: Lean, six sigma, and their toolboxes are very useful in diagnosing the customer experience, and improving it.
Generally, these are simple tools, not requiring any sophisticated maths or software, just a bit of simple observation, data collection and analysis.
The very best data source is to ask former customers why they left. That information can give you a wealth of insight into sources of improvement to reduce churn and increase Share of Wallet.
In business, we are faced by the same dilemma every day.
We only have so much resource, time, skill, the question is what do we spend them on?
We can only do so much, way short of everything we can think of, so we all recognise that the trick is to focus on what is important.
The distraction of what is urgent but not important is the greatest threat we have, successful people focus on what is important, but not necessarily urgent, recognising that in doing so they are making choices about what not to do, to the longer-term benefit.
Why would it be any different as we consider how best to retain customers?
Aug 6, 2021 | Communication, Marketing
Hindsight planning is a process of putting yourself as realistically as possible into the ‘headspace’ where you have achieved the goals you set, and then ‘plan backwards’. It sounds like a semantic game, but it is not. It is rooted in Psychology.
As Daniel Kahneman put it: ‘Once you adopt a new view of the world, or a part of it, you immediately lose much of your ability to recall what you used to believe before your mind changed’
Having agreed the shape and size of the business in 1, 3, or 5 years, whatever horizon you have agreed on, the task now is to ‘put yourself there’.
The difficult choices that are needed become more obvious when you can better see the challenging questions you need to ask.
Imagine the outcome has been achieved, and then articulate the steps you have taken in that journey. This is an exercise in perspective. Working backwards enables you to test ideas, assumptions, and choices, against an outcome you have agreed has already occurred, albeit in your collective minds. In that way, a ‘reality filter’ of sorts has been applied.
Some of the obvious questions that need to be answered may be:
- Where did the revenue come from? Growth is not possible in the absence of revenue, so list the sources. Current customers, new customers, channels, business models, products, technical achievements, geographies, and so on. However, do not just list them, articulate in some detail how it has happened. Again, that past perspective adds real ‘grunt’ to the conversations.
- Where did the capital come from? Growth is a veracious consumer of resources, particularly capital. How did you fund that growth? Reinvestment of retained earnings, capital raising from friends and family, or from the markets, public and private, debt finance considering the necessity for assets as collateral?
- What is the dominant business model? Are you a middleman, retailer, on-line item sales, subscription sales, did you achieve a position to monetise arbitrage opportunities? Digital has delivered a host of new and emerging business models to us over the last decade, but one thing that has become clear, if it was not already, is that differing business models do not live comfortably in the same house. Therefore, if your revenue streams come from different business models, the structure of your resulting business needs to be decentralised by those differing business models.
- What is the ideal corporate structure? Have you remained private, are you publicly owned, a partnership, Joint venture, franchise system? There are many options, and as in the previous question, potential siblings rarely successfully live in the same house.
- What capabilities were required to succeed, and where did you find them? This is a question in two parts. Firstly, what capabilities were required from individuals, technical, strategic, financial, and all the other factors that make human beings able to contribute? Secondly, what were the organisational, leadership and cultural factors that enabled the organisation to leverage the capabilities the individuals brought in each morning as they turned up to work.
- Which customers, markets, products, technologies, relationships, were critical to the success? The answers to these questions are a ‘must know’ level. Why did those customers come to you, choosing not to go to a competitor? What is the factor that differentiated you from the others?
- Which competitors proved to be the most potent? Anticipating competitive action, and planning to accommodate the impact is a necessary part of every plan, as noted previously.
- Where did the new competitors come from? New competition almost always comes from the fringes, and often outside the normal scope of most extrapolative planning. Looking widely at what is happening in other markets, and other technologies may offer insights to where new, and more potent competition may come from. Honda started in motor bikes with the Honda 50, selling it to students in California as cheap local transport. None of the incumbents, Triumph, Norton, Harley, saw them coming, they thought they were toys, being bought by people who would never buy a big bike. Blockbuster ‘owned’ video, and could have bought Netfliks for $50 million, but thought them irrelevant, not even an irritation. 5 years later Blockbuster was broke.
- What is the emerging source of customer value in the market? Nothing new will be bought in the absence of a reason to switch from the incumbents, which always means new value has been created, somehow. How did you create yours?
- What did we do wrong, and what did we learn? You learn more from your mistakes than you do from the things you got right. Make sure ‘learning’ is part of the cultural DNA of your business.
When you have the answers to all these questions, and probably many others, found with the benefit of the virtual hindsight, you will be in a powerful marketing position, able to write the plans that double-down on the things that will deliver the objectives and success.
Normally, especially when things go wrong, we conduct a post-mortem to understand why they went pear-shaped.
Hindsight planning is in effect a pre-mortem.
It looks at all the things that could have gone wrong, all the problems that emerged, workable solutions considered, and what works and what did not.
When you have done that well, the chances of being surprised by something are significantly reduces, while your ability to respond is increased.
Header cartoon credit: Tom Gauld at www.tomgauld.com
Jul 26, 2021 | Communication, Customers
Contrary to much advice, sales is not just a pure numbers game, the quality of the numbers make more difference than the numbers themselves.
Throw the net widely to attract prospects, the more the better, is the common mantra. It implies anyone who shows the slightest interest is automatically in the net, and so becomes a consumer of resources as efforts are made to lead them down the ‘funnel’ to a transaction.
Sound about right?
What nonsense.
If you had 1,000 people and a 1% conversion rate, you would make 10 sales. if you had 100 good prospects and converted 10%, you would make 10 sales. The transaction numbers are the same, but the latter would be far superior, as rather than spend resources chasing the 990 that would not convert, you have cut down to 90, leaving a lot of sales resource to be off doing something useful.
You do need to fish where the fish are, but it helps to make sure that the species around is what you are looking for, and that the bait is right, otherwise, you will just catch a cold.
The lesson is to focus your efforts on your ideal customer, where you will get the most leverage for your resources. This means you do some work up front to identify the characteristics of your ideal customer, then qualify early and hard to husband sales resources and direct them to the point of greatest impact.
Yes, sales is a numbers game, but the quality of the numbers makes the difference between productive and broke.
It reminds me of the legendary copywriter Gary Halbert’s advice when he’d ask an audience for the best way to sell a hamburger.
At seminars, Gary would throw out that question and people would respond:
… Make the juiciest burger…
… Have the best location…
… Provide the quickest service…
… Create a killer sauce…
And so on.
Gary would then give the correct answer, which was…
Find a starving crowd!
When you need a sounding board to find your starving crowd, give me a call, I’ve been finding them for 40 years..
Jul 12, 2021 | Analytics, Management, Marketing
Marketers often hear the term ‘Standard Deviation’ during research debriefs, and conversations with operational personnel managing quality. Many do not know what the term means, and in what context to use it.
Standard Deviation is a statistical term that measures the variation in a set of values from the mean, or average of that set of values. The greater the standard deviation, the greater will be the spread of the data from its mean. In effect, it gives you a level of confidence in the conclusions drawn from the data.
Those values can be anything, from the time it takes for you to travel to work each day, to the variation in the size or weight of a widget coming off a production line, or indeed, from any individual part of that production line.
Take your pre-covid commute as an example. You live in Artarmon, 10km’s from your Sydney CBD office. The drive can take anything from 15 minutes to 110 minutes. If you recorded the time taken for a period, say 3 months, assuming you worked every weekday, you would have 130 data points of the time it took to make the commute, to and from work. Assume you took an average of those times, and it was 30 minutes. The Standard Deviation calculation ‘translated’ means that in 68.2% of the commutes, your travel time would be within one standard deviation of the mean of 30 minutes, and 95.4% of the commutes would be within two standard deviations of the mean of 30 minutes.
Let us assume the distribution of the data points led to a calculation of one standard deviation being 7 minutes. In other words, 68.2% of the time you would complete the trip between 23 and 37 minutes. That calculation also results in 2 standard deviations being 17 minutes, meaning that 95.4% of the time you made the commute between 47 and 13 minutes.
Those ‘outliers’ falling outside two standard deviations will be unusual situations. You went into work at 2.00am for a conference call overseas, and you got to the office in 10 minutes, and one morning, there was a ‘prang’ on the bridge, and it took over 2 hours to make the journey. These would be the journeys that made up the very unusual data points in the set, out at 3 standard deviations, within which 99.7% of journeys fell, or further.
This might seem a bit quantitative for many marketers, but if you are to be taken seriously in the boardroom, you need to be able to speak ‘Data’ the language of the boardroom. The typical marketing type assurances based on opinion and theory must be at least partly replaced by the quantitative language of the boardroom.
For those looking for a bit more, there are plenty of resources on the web, and there is a SD formula in Excel which leads you through the steps to do the calculation. However, in principle, the calculation has a few steps:
- Calculate the square of the differences between all the data points, and the mean, then add them up.
- Divide that sum by the sample size minus1, which gives you the variance. The variance is a statistical picture of how spread out the data points in the set are.
- Calculate the square root of the variance, to give the Standard deviation.
As a marketer, you do not have to know the formula, but you absolutely must understand what the term ‘standard deviation’ means, and where it is best used. It might be useful to ‘fiddle’ with the formula in Excel.
Header graph from Wikipedia.
