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 31, 2015 | Branding, Marketing, Small business, Social Media
So, you have a small business and your neighbour tells you Facebook is the place to be, that you can get heaps of likes and sales out of a few dollars.
Not all true, but it can be.
Facebook can be a great way to build a small business into a bigger one, for many types of business, primarily B2C rather than B2B. There are however, some pretty simple hurdles.
Have a clear objective. Facebook visitors do not normally buy off the site, gaining their attention and trust is a process that takes a while. If your objective is to get visitors to click a link in your ad that takes them to your website, the ad copy is likely to be different than one where the objective is to collect likes.
Know your market. Know as much as possible about those you want to attract. Facebook has some really cool filters that allow you to determine who sees your ads, so there is no point in paying for someone who is never going to buy your product seeing an ad. The options cover behavioural, demographic and geographic options.
Don’t boost, promote. Every page has a ‘boost” button on it, which offers a quick and easy way to put your ad in front of eyeballs, but no way to determine which eyeballs. You need to use the Facebook Ads Manager to target your ads, making your dollars work much harder.
Custom audiences. People on Facebook are not generally there to buy, they are there to be social, exchange information, dates, photos, and all the rest. Therefore they may not be interested in your ad, even if it is highly relevant. Facebook addresses that problem by allowing you to upload your own data for use in the campaigns.
Variation. Ads work differently for everyone, so it makes sense to trial a number of versions of your ads, looking for the combinations that work best. You can do this on a small scale if you choose, just to keep the ads fresh for those who see them several times, or if you are spending more, you can systematically split test the differing ads to identify the best options. Some closed groups allow ads only at specific times, and have other criteria that suit the group. In these cases, I usually suggest that the ads change every time. One of my clients places ads in a group that allow them only to be posted on a Thursday, so every Thursday she posts a different ad, carefully targeted at the niche that is a small part of the group membership. Works well.
Be personal. Facebook is at the social end of ‘social media continuum’ so behave accordingly, and choose a tone in the ads that is social rather than sales.
The genius of social media generally, is that it enables a small business to act like a big one, so don’t miss the opportunity.
There is plenty of help out there that will assist you with the detail, Kim Garst, various posts on Social Media Examiner, and many others less well known. Use them.
Aug 24, 2015 | Category, Marketing, retail, Small business
Australia’s Grocery retailers continue the march towards private label range dominance, basing their strategic decision making on two foundations, it would seem to me.
- By controlling a large section of their sales via PL, they manage to both increase their margins at the same time they reduce their transaction costs. Good trick if you can get away with it, and in the short term they certainly can, but in the long term?? Who knows.
- What works in Europe, and particularly the UK will work here. Over 40 years in this industry, this has certainly held true, what works there generally becomes translated here at some point, in some form.
However, when considering the future of PL as a part of the landscape in Australia there are a few other considerations not present in the UK, and elsewhere in Europe.
- We have large distances, and a smaller population, making the economies of scale in manufacturing and distribution that much more elusive, and less attractive. In western Europe you have 350 million, or thereabouts living is far less space than Australia occupies, with a multiplicity of manufacturing options. Just the UK has 65 million in about the space as Victoria.
- Over the last decade, the number of middle sized Australian owned FMCG manufactures has been decimated by a combination of the high $A, the GFC, and the power of the two major retailers, so there is little left. Now the $A is lower, and the opportunities emerging, they are not coming back. Imported private label products now have to carry the added cost burden as well as the substantial costs and risks of the extended supply chain.
- Where is the innovation going to come from? Medium sized suppliers have been the source of much of the innovation that has driven category growth over the last 25 years. While it is relatively easy these days to pick new stuff off the shelves in Europe and set out to copy it, the retailers still need to have the products manufactured, and often massaged to suit local tastes, not so easy any more.
- Retailers in taking their ideas from European retailers, seem hell-bent on segmenting the PL share. No longer the cheap and cheerful substitute, European PL now offers under a range of house brand labels that cover the market from ‘top’ to ‘bottom’ as well as emerging segments like organic and halal are being pushed, further eroding the power of the proprietary brand. As a marketer I ask “for whose benefit?” certainly not the consumer.
- The Private label business model that demands minimum transaction costs on both sides does not sit comfortably with the proprietary model, with its complex trading terms. In most cases, suppliers of PL also supply proprietary products, adding to the complexity of the paperwork and relationships.
- Produce is a bit of an anomaly, as there are almost no proprietary brands. Producers and their representatives have comprehensively failed over 30 years to do any sort of branding job, so consumers do not miss what they never had. However, increasingly consumers seem to be reluctant to buy anything much beyond robust commodity products from supermarkets, believing after 25 years of cricket balls masquerading as peaches, that the specialists do a much better job.
- This last point is really anecdotal. There appears to me to be a backlash coming from consumers. A typical comment made to me last week was ‘if I do not want any choice, I will go to Aldi, but when Woolies denies me a choice, I wonder why I pay the premium over Aldi’. The two majors had better be careful, they do not ‘own’ consumers, who will make their choices independent of a retailers profit considerations.
Private label is now irrevocably a part of our lives, but I doubt if there is too much more room in dry goods for share growth without compromising retailer margins, but I guess they will be very wise with hindsight. Meanwhile, the pressure on the few medium sized manufacturers left intensifies.
Aug 19, 2015 | Branding, Marketing
Small businesses have great opportunities to leverage their skills, but now more than ever, they need a brand as the digital spot on which to double down their marketing investment, to create a wall from which to defend their territory.
Most do not have the skills, and become bogged in the jargon and options, so following are 6 simple guidelines:
Simplicity. You cannot be all things to all people, even in a local area and pretty specific market space. The more targeted the market segment, the simpler the communication and the need to provide more and more to attract clients. One of my clients is a personal trainer, but not one of the toned, buffed 25 year olds we normally see, she is an amazingly fit, middle aged mother of two who specialises in helping immediately post natal women get their pre natal bodies back. Her journey from young Mum with a desk job to successful trainer is a story her clients all relate to exactly.
Differentiation. Even in a narrowly defined niche, there has to be something other than price that makes you different, and the difference must be relevant to the target market. Continuing the story above, a young Mum can come along to the classes, exercise and relax in a very social way with others in the same boat, while their babies are being looked after in a crèche in easy eye-line.
Originality. Being different is great, being original in the manner in which you express your value propositionn is even better, then delivering that value in a differentiated manner is the core of brand building. The value proposition of a business is remarkably important, and remarkably challenging for most to get right.
Disruptive. Doing things in an entirely different way to everyone else gets you noticed, and when the disruption favours your target market, you can be way ahead, although those outside your target will probably not “get it”. My elderly mother lives in a regional town, and has her fair share of medication and mobility challenges, but still lives alone in a terrific spot for an old girl. One of the pharmacists in town packages up her medications into a card that puts each of the meds to be taken at a specific time in the one blister, then delivers the card weekly. Any change in med is immediately reflected in the updated card that will be delivered the day she tells them, and any remainder from the previous card taken away. On top of that, the pharmacist is one of the few licensed to mix his own meds from ingredient, so rather than taking a handful of pills, Mum takes just one or two that have the actives combined in one pill where they are compatible. As another bonus, they are generally smaller than many of the throat stuffers that come from “big pharma” Guess who has the market for the elderly in that town tied up!
Symbolism. Humans are visual animals, we value and put meaning into symbols that come to mean way more than just the illustration, or expression. Think about the Nike logo, 
a powerful symbol of sporting aspiration and achievement, or the Apple logo, a symbol of beautiful, functional original design, or in Australia where I live, 
the Aboriginal flag, that has come to express the need for our aboriginal people to express themselves as part of, but different to the rest of Australians.
Meaning. I struggled here for the right word, a word to convey more than just relevance, more than just delivering on a value proposition, something that has a deeper humanity in it than just a brand. Several businesses have made a commitment of “one for you, one for Africa” as a way of adding meaning to their brand, and it works. My personal trainer mate above achieves this by genuinely caring, and demonstrating that care in a variety of ways, about the health of happiness of her clients, even when they are no longer clients, usually because they go back to work in much better shape than would have otherwise been the case.
Let me know what you have done to build your brand.
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.
