Where is the gap to be filled in retail?

Where is the gap to be filled in retail?

The range of retail format options is huge and multifaceted.

At one end of the continuum you have pure on-line retailers,  to full service bricks and mortar retail at the other, and everything in between.

It is the ‘everything in between’ where the development is happening, and the opportunity lies.

Apple ‘Zigged’ when everyone else was ‘Zagging’ and spent a decade and billions of dollars opening retail stores. While they are now the most successful retailer in the world on a turnover/square foot basis, the reason was more about brand building over the long term than just retail revenue. Brilliant.

Amazon has been the catalyst to the on-line gold-rush, but you have to ask yourself are they are retailer, or a data business first? They started as a retailer, simply using a different channel, but to enhance their position they have evolved into a data company that uses on line channels to sell and deliver product.  With Amazon Go, they have combined bricks and mortar retail with their data capabilities, which can only become more important as they evolve their purchase of Whole Foods.

Meanwhile, B&M retail is either hunkering down, cutting costs, and generally moaning about how on-line sales are cutting their margins, or investing in their businesses, some by increasing service levels, others by setting about ‘digitising’ to compete.

Any way you look at it, the gap is in the middle.

That gap will be rapidly filled by deploying digital tools already available, or in development, based it seems on two rapidly converging technologies:

  • Facial recognition, powered by our on line profiles and pattern recognition software, and
  • Location definition powered by our devices and GPS.

Amazon Go is able to recognise and record stock movements from the shelf to your shopping basket, and back, as it happens, and debit your card with the purchase. It is a small step to use facial recognition as you approach a store, or product category while inside the store, and match that with your previous purchase patterns to make exclusive, and immediate offers to you tailored to your history.   You do not need to be Amazon go to deploy the second part of that scenario, you just need the facial recognition and location data connected to your purchase history, and perhaps purchase intent identified by browsing history.

This combination of location, facial recognition, purchase history and browsing patterns will be the game changer in the current gap.

The question to be answered is how we as members of the public and consumers feel about this complete exposure of what has been to date private. On the one hand we seem to want the convenience and immediacy it can deliver, but on the other, remain very wary of offering up our privacy to the unknown forces that can tap the data in ways never expected or sanctioned.

However, I suspect the horse has bolted, and the gap will rapidly  be filled!

Photo credit: Kristian Dye via Flikr

What is the difference between an Elevator Pitch and a Value Proposition, and when to use them?

What is the difference between an Elevator Pitch and a Value Proposition, and when to use them?

Good question, but the challenge seems to be overwhelming for some of those who most need to be clear on the differences, and when and how to use them.

I spent most of Thursday and Friday last week at the ‘Emergence‘ conference in Sydney, an event designed to boost the start-up scene in Sydney by bringing together investors, start-ups and industry experts. A similar event was held in Brisbane on Monday and Tuesday.

A terrific couple of days, with one significant blemish.

Most of the founders who had the opportunity to present to an audience of several hundred investors, and service providers of many types, blew it! Completely blew it.

Has nobody told these talented engineers and designers that you only get one chance to make a first impression?

The elevator pitch.

This is a very simple, compelling to your ideal customer, one sentence distillation of why  they should buy from you, or more often, just keep talking to you. It is not easy to craft, largely because in one sentence, you have to leave out a lot. Every stakeholder should be able to recite this in their sleep, and should do so at every opportunity when meeting people.  The purpose is to pique interest, and to extract the follow up questions, that can be answered by the delivery of the value proposition, which may lead to a further and deeper conversation.

I did not hear one compelling elevator pitch in the two days. Not one!

Use the elevator pitch when you have 30 seconds, any extra time you may be given is just a huge bonus not to be wasted.

The Value Proposition.

Your Value proposition is a more detailed articulation of why someone would engage in business with you. Still concise, focused, but designed to get to the core of who the product is designed to help,  how that will happen, and what results can be expected. You know the delivery has been successful when there are follow up questions that enable you to go into a bit more detail about the problem you are solving, and the beneficial outcomes of use.

Again, last week, there was an almost complete absence of a Value Proposition. In its place, we were given lists of names of notable people who were involved, how many degrees they had, what the technology entailed,  and some detailed project plans and milestones. In most cases, little that would encourage further engagement, although for a few, there was considerable value hidden amongst the verbiage, poor delivery, and technical jargon.

Use it when you have 15 minutes, along with a pitch deck that leaves the listener with no option but to be engaged. The best outcome to be achieved from such a line-up of consecutive pitches is that the audience remembers nothing but yours, and the individuals feel compelled to follow up!

If I was the organiser, it would be mandatory for those pitching to spend a bit of time with someone who could help them assemble their deck, and then get their message across. Either that, or hide the ego, and get someone with presentation expertise to do the preparation and delivery.

For all of that, the exercise was a great success, and warrants support from those with an interest in nurturing a successful start-up ecosystem, and that should be everybody.

Time can only be productive, or wasted. Which will it be?

Time can only be productive, or wasted. Which will it be?

Time is our only truly non renewable asset, and it is absolutely finite. Therefore it makes sense to use it as wisely as possible.

In a management context, in measuring a process, time has two dimensions.

  • Clock time. Start to finish, how long does a task take to go from one end of the process to another.
  • Event time. How long does it take to go through the activities necessary to complete the process.

It might take a bank 3 days to process your loan application, clock time, but the event time may only be the few minutes it takes to check your credit history, current income and automatically calculate your ability to repay the loan. Event time.

In most cases, customers are only aware of the clock time, and when it extends beyond what they think is reasonable, they become cranky with you.

The difference between the two is the opportunity for improvement, and to ensure customers only get cranky with your competitors.

 

‘Brand Conversations’ are usually just a marketers wet dream.

‘Brand Conversations’ are usually just a marketers wet dream.

 

Brand loyalty and frequency of purchase,  are not the same thing, although we seem to act most often as if they were.

Sometimes we marketers believe our own bullshit, not recognising we are usually delusional, or at least subject to a severe case of confirmation bias.

When was the last time you actually came across a customer who was so loyal, they wanted to ‘have a conversation’ with your brand?

Perhaps they were just shopping around and wanted a ‘conversation’?

Never, right?

Yet the term is used often as we indulge ourselves in developing marketing collateral.

Frequency of purchase, read loyalty, can be the result of many things, awareness, market share, delivering better distribution, price, shelf position in a supermarket, big advertising budgets, and so on.

Only when you significantly increase the price, and some customers stick like glue, or  go from retailer A to retailer B for the single reason of being able to buy your product, do you have real loyalty. Even then, it is likely that rare, wonderful customer could not be bothered having a conversation with your brand, at the risk of the men in white coats carrying them off.

Even the exceptional brands, Apple is one, IBM used to be another, a deli in Flemington, Sydney, is another, known to a relative few who simply would  not go anywhere else, do not have conversations. 

Nobody in their right mind tries to have conversations with these brands.

They do have conversations with employees of the companies that own them, as they seek information, pricing, availability of spares, after sales service, and all the rest of the things we need, but nobody has a conversation with the brand.

Except in the mind of marketing dreamers.

They have conversations with people, your employees, their friends, and friends of their friends, people they meet in supermarkets and service facilities, the list goes on.

The real key is to ensure that when your brand is spoken about, in whatever context, people are telling others of the value delivered, the problems solved, and that it ‘delivers’.

Forget the frills, jargon, and self delusion, it is a tough world out there, and your product needs to perform as promised, then people will talk about you.

Header cartoon credit: Tom Gauld New Scientist.

Finding victory over the deceptive demons of the marketing mind

Finding victory over the deceptive demons of the marketing mind

 

Years ago I heard the great social researcher and author Hugh McKay describe every persons view of the world as the sight they see from behind the bars of their own experience, background, training and ideas.

The more developed are all these barriers, the more and thicker the bars between you and the outside world.

For marketers setting out to engage those who are most unlikely to be like them, this creates a dilemma.

How do you remove the bars, and see the world as your prospective customer would?

The demons in your mind will try and convince you that the world is as you see it, and at the very least, they will allow only a modest number of modifications without a significant level of discomfort to you.

Human beings connect easily to those who are most like  them. This is a unifying factor of evolutionary biology. It ensures that as we evolved, the small communities in which we evolved could be secure, or at least as secure as possible from the beasties lurking in the undergrowth.

While we may understand at a logical level the nature of those we are setting out to influence, at a primal level, we struggle to align our thoughts and words to theirs, we remain wedded to our own instinctive patterns and prejudices.

We all value truth, love, and life, but the means of expressing those values will be different. In understanding and relating to the differences, despite our own deeply held views, lies the marketing gold of true empathy. It all comes down to the language you use. Not just the verbal one, which is  the default, but the whole range of non-verbal channels, which according to many studies contributes more than 50% to the interpretation the receiver makes of the message.

Trying to sell renewable energy technology to someone who believes fossil fuel is the only answer to the consistent delivery of baseload power is challenging, as is trying to convince a conservative Christian that same sex marriage is OK.  

Overpowering that lurking demon that demands you see the world of your customer in a particular way is fundamental to being successful.

 

Photo credit: Sculptures lurking the shadows collection

 

 

 

The four crucial cornerstones of a successful marketing plan

The four crucial cornerstones of a successful marketing plan

 

It is February, budget time again, that time of the year when planning comes to the fore, usually as an added job that is just a pain in the rear.

A common question at this time, facing this challenge, is ‘How do I write a marketing plan’?.

I am not going to tell you ‘how’ to do it, as it will change every time, instead, I am going to give you some signposts, cornerstones, parameters, that I have seen over my 40 years of experience.

There is an easy way, and a hard way.

The easy way is to download a template and get the intern to spend a day filling in the gaps. About as useful as an umbrella in a cyclone.

Better than nothing, but only just.

Then there is the hard way, because it takes time, and requires you to use your brain, and the collective brains of others, and can be an emotional as much as analytical exercise, requiring time, energy, critical thinking, and collaboration, and making really challenging choices.

Let’s define what we mean by marketing, useful if you are going to plan for it.

My definition of marketing is the ‘generation, development, leveraging and protection of competitive advantage’.

Not a definition you will find in any textbook, but mine, evolved over 40 years of practical marketing. None of the others are wrong, they just, to my mind, do not reflect the whole task.

Competitive advantage evolves, and comes in many forms, but without it, you are in a commodity, price driven market, and you cannot win in that. The pace of evolution is these days frenetic, so writing a plan, and leaving to an occasional reference before the next budget session is useless, it has to be an evolving document.

If you can find a template that helps you do that, let me know.

Marketing is about the future, you are trying to shape it, so you are dealing with unknowns that can be sometimes qualified…. not quantified, by the use of mental models, cause and effect, domain knowledge, customer intimacy, competitive understanding, tactical agility, and a whole range of other things.

It is a jigsaw puzzle, to which you do not have the picture, and many of the pieces you do have are wrong, and many are missing, so you have to experiment, make up your own, use someone else’s cast-offs, try making your own pieces to fit.

At the end it is about making choices with imperfect information.

That is hard.

When faced with a choice that appears to be between two sub optimal outcomes, step back, and find another way. That is in itself a valid choice, and often a very good one, as it makes you think.

The greatest two problems most corporates have in planning marketing are extrapolation and confirmation bias. Add 3% to last year, and only seeing what they want to see.

That is what you get when you use a downloaded template in place of using your brain to critically assess options, information resources and market and trend sensitive antennae.

To develop a successful marketing plan, you need to find the 18th horse!

A contract drover west of Bourke, with 17 horses, his only asset, dies, and leaves them to his sons.

1/2 to the eldest, who wants to carry on the family business,

1/3 to the second, who is a great son, but has other ambitions,

1/9 to the third son, whose life revolves around the Royal Hotel in Bourke.

Think about it: None of these goes into 17.

The lawyer at the will reading sees the problem, and lends them one of his horses. Now they have 18.

9, and 6 and 2 to each son.

9 + 6 + 2 = 17, so the lawyer takes back his horse, and everyone is happy.

Your task planning marketing is to find the 18th horse

Successful Marketing is like having a great hand of cards.

Each card has a value by itself, but in isolation, that is very limited, the value of a hand is in the combination of cards you have, and in particular the combination you have compared to the combination your opponent, and how you leverage that combination. Sometimes as in bridge, the combination of your hand with that of your partner is crucial.

 

Context of a marketing plan

Every business will be different, the point is that a marketing plan does not, ever, evolve in isolation, it is a part of the overall strategy, and must be aligned with all the other functional responsibilities to deliver on the strategic priorities

The marketing component will also look different in each case. It may be product based, geography, market segment, and many others. These choices should be driven by strategy!

Trying to build a worthwhile marketing plan without clear, unambiguous and understood strategy with the appropriate strategic foundation in place is destined to be nothing more than a useless file stored somewhere, for no particular reason.

 

Cornerstones of a marketing plan

Some of the specifics within the perimeters of a marketing plan are always determined by the strategic choices that should have been made.

However, the cornerstones will generically remain the same:

Your Objective, Current position, Customer Value Proposition, and your Ideal customer.

Once you have these four, the rest of the plan becomes easier, to some extent, a matter of mechanics, trial and error, choices between the options that will best deliver the outcome.

Each is mutually reinforcing, making a mistake with one, either in the formulation or execution of the marketing plan will have implications beyond the immediate.

However, overriding the mechanics, you need leadership, the whole process requires leadership, as difficult choices will always be necessary.

In the absence of genuine marketing leadership, just go back to the template, and save yourself a lot of time and effort.

You will find at the intersection of the four perimeters is a little pot of gold!!

Very hard to find, very valuable when you do.

 

Current situation: the marketing audit

You have to have a starting point, and it is worth remembering at all times that you are not the only one in the race.

You have to have done some sort of marketing audit to determine the manner in which you can best deploy the limited resources available.

Who is currently buying your product, why, how, instead of what, are they happy with it, and what about those customers who have left you, why did they leave, what can you learn from the leaving, and so on.

In most cases, what others do will have some impact on you, some you can anticipate and accommodate, but you cannot control what others do, just your reaction to it.  However insufficient consideration of the impact of competitive activity is perhaps the most common mistake I see across all the marketing plans I have ever seen, and to be fair, those I wrote going back 30 or 40 years.

A long time ago I was with Cerebos, one of the brands I managed was Cerola muesli, at that time a successful brand, and I was keen to expand the brand footprint. I saw a gap in the market between muesli and corn flakes, this was 35 years ago, and there was not the wide choice we have now. We developed a half way product we called ‘Cerola Light and Crunchy’  and launched a test market in Adelaide.

At first we did remarkably well. The logic we employed was well accepted, the retailer sell in easily achieved targets, and consumer off-take was strong after the initial burst of advertising.

Then in came Kellogg’s with a look-a-like product, ‘Just Right’, and their resources just blew us away, Light &Crunchy never had a chance in the face of the weight of the competitive reaction by Kellogg’s.

That is a lesson I did not forget. With the benefit of hindsight, it was obvious, poke a bear in the arse and he is going to turn around and give you a whack, and I did not anticipate the power of it, and I should have. Never made that mistake again.

 

What success looks like

Unless you know where you are going, how can you plan to get there?

Are you setting out to build a brand, expand product range, geography, actively evolve your business model, whatever it is, unless it is articulated, you have no hope of making the right choices along the way, that build cumulatively to the planned outcome.

The strategic choices that need to be made to deliver the outcomes will be different depending on the desired outcome.

Describing what success looks like as if you were already there is a way more powerful way of articulating an objective that just extrapolating it from your current position. 

By putting yourself in the position of describing what it looks like, you generate an emotional commitment to achieving it much greater that if you had just extrapolated.

I am going to get myself in trouble here by shooting a sacred marketing cow.

Building a brand, or ‘branding’ used as a verb is bullshit.

Build my brand’ is a response I hear a lot when I ask the question ‘what is your objective, what does success look like?  

It usually is associated with a significant advertising expenditure. More often than not these days it is also tied to a digital platform. ‘I am going to build my brand on Instagram’  and some general babbling about ‘content’.  

I hate them both equally. If I walk past a lump of dogshit on the pavement, it is a lump of dogshit. If I take a photo of it and upload it to the web, it suddenly, miraculously becomes content.  To my mind it remains a photo of a pile of dogshit.

Using ‘Branding’ as a verb is a fallacy foisted on businesses by those who do not understand the process.  

Building a brand is not like building a wall, where you just put one brick on top of another.

Building a brand is a little like building a church.

A church is just a building until it becomes a place for people to come for reassurance, solace, and to encounter the rituals that make us human, then they might come back, they might bring their friends. You do not need a building for that!

The brand is the outcome, not the building. 

 

Tomb of the unknown customer

More money is thrown at the tomb of the unknown customer than any other source of marketing waste.

Unless you can define very well indeed who your customer is, you will be wasting most of any time, effort, and money you spend.

Defining who your ideal customer is involves choices, as you also  have to determine who is not, and therefore you will not spend resources trying to reach and influence them. This is really difficult for most, especially smaller businesses, to whom turning away a potential customer is an appalling thought.

Over 35 years ago I took over as Marketing Manager of the newly formed General Products Division of Dairy farmers.

The brand of yoghurt we had was Ski, and Yoplait had just launched, and the market exploded. Ski’s volumes remained about the same, but share was reduced to single figures as Yoplait had taken all the growth for itself.

During a qualitative research project aimed at understanding who was buying yoghurt, which brands they preferred and why, the researcher asked the respondents to describe each of the major brands in human terms.

Yoplait was an educated, hip, self-reliant, confident young woman, who had her life in order the way she wanted it.

Ski was a reliable 50 year old farmer in wellies.

The advertising plan that was in place when I arrived was just more of the same old stuff, trying to convince ‘Miss Yoplait’ that the wellie wearing farmer was a good choice for her.

Might not have worked very well, so it was changed.

 

Customer value proposition

Peter Drucker said many things, amongst which was ‘The only purpose of an enterprise is to create a customer’

And he was right.

To create a customer you must offer them value they cannot get anywhere else.

How you define value is a key part of the game here, and once everyone else is offering the same set of things, the only discriminator becomes price, and then everyone loses.

The value you add has to be differentiated, and differentiated in a way that adds value to the customer.

The ideal differentiator is one that stimulates a customer to buy something they can only get from you.

Differentiation also allows you to innovate where you will get the most value for the investment. Innovate where you are differentiated!!

If I go back to  the Ski example, we focused on the fact that Ski had discrete pieces of fruit in it, rather than fruit mashed up into a homogeneous mix that was the offer of Yoplait. We knew Yoplait could not offer pieces of fruit, their processing would not allow it, and neither would the brand rules inherited from the French franchisor. Not everyone in our target market wanted fruit pieces, but those who did, came to us. While it was only 1 piece of the puzzle, Ski was the market leader in a hugely expanded market 4 years later.

The key question to ask yourself about your value proposition is: ‘How likely is it to convert a potential customer’?

Putting a number against this is challenging, but an extremely useful exercise.

 

A few final words

First: How do you measure it?

Anyone who knows me knows I am a bit of a measurement Nazi, who subscribes to the cliché that you get what you measure.

You don’t always, at least as an entirety, you don’t. Some things like ‘Leadership’ and ‘Culture’ are vital but very hard to measure except over time and in hindsight.

A marketing plan is a set of predictions about the future. The only thing you know for sure is that you will be wrong, question is by how much, and how much you can learn and adjust as you go to mitigate the errors and leverage the unexpected.

Feedback loops are essential at every stage, for every activity, as implementation proceeds.

It is simply a Continuous Improvement cycle, and every CI tool that is used in factories is applicable to  marketing.

Ensure you are measuring each of the components of the plan that compound to deliver what you set out to achieve, but always remember that the marketing plan is a compass, not a roadmap to be followed in detail at all times in defiance of new and localised information.

If your marketing objective was to extend your geographic footprint, then  that is the right measure. secondary measures may be margin and customer acquisition costs, but if they become the primary ones, you will not extend your footprint because it takes investment.

Second: Marketing Investment.

Let me give a hobby horse a run………..

Marketing is an investment in telling the future, but is treated in the books as an expense, incurred in a period, reflected in the P&L.

Therefore short term thinking absolutely dominates the manner in which marketing is considered in the corner office.

This is the single greatest institutional barrier to sensible marketing, after finding people in marketing who know what they are talking about, and can do so without the jargon and cliché so beloved because they cover their basic ignorance, or perhaps  the ignorance of the basics.

Third: Success is a Pareto distribution, not a normal curve.

I noted that Drucker observed that the sole job of an enterprise was to create a customer, and he was right.

Therefore, marketing is essential.

Commercial success does not come in the normal curve we are all familiar with, where most of the outcomes are within 1 standard deviation from the mean.

Great success comes to a very few, moderate success to a few more, and most enterprises are distributed across a ‘long tail’. It is a Pareto distribution, where 5% of firms take 95% of the outcomes.

Therefore, if you are to be in the 5%, you had better get your marketing in order, and to do that, you need the four cornerstones in place.  

This is a link to a verbal version of this post delivered to a group of SME owners.