What matters?

 

www.strategyaudit.com.au

www.strategyaudit.com.au

One of the most common questions I get is how you get away from competing on price.

A couple of things are common in the situation that leads to the question:

  1. Someone else has control of the value chain. This is often the case with an FMCG product. In Australia two chains have 75% market share, the supplier, even to the MNC behemoths can only watch as they set the retail price, shelf position and category definition.
  2. The questioner has not spent the time and brainpower to consider what really matters to the customer. They have therefore failed, or chosen not to to make the hard choices that are central to building a brand.

Back to the Australian FMCG situation, as it relates to produce. Coles and Woolworths do not stock any proprietary brands at all in produce, just store branded product. The producer therefore has no control at all about what happens in store,  but they do have a choice: to build a brand in alternative channels.

In some produce categories, hard vegetables, for example, the chains have close to the FMCG share of 75%. Carrots and onions seem to be pretty commoditised, but other categories like sensitive summer fruit, mangoes, stone fruit, and berries like strawberries and blueberries, have a far larger share in the alternative channels simply because the state of the product really matters to consumers. The 17 year old casual in Coles after school does not care much about the sensitive nature of the strawberries,  but the greengrocer often does, the product matters, so they make decisions based on what matters.

Not every consumer will care enough about their strawberries, but perhaps enough will to make the development of a brand worth the effort, time, risk and cost.

When you accept that it is only price that matters to consumers, you have made a key strategic choice. That choice is that you will not care enough to find out what else may really matter to consumers sufficiently that they will make their purchase choice on a basis other than price.

Things that matter are usually beyond the physical dimensions and capabilities of a product, they are the stories that make the difference.

Why is one toaster worth more than another, they both toast bread, but perhaps one is just a tool, the other a piece of kitchen art based on the stories of the designer.

In simple terms, Focus on what really matters

10 questions for a Customer Value Audit.

courtesy Tom Fishburne. http://tomfishburne.com/2009/04/the-value-proposition.html

courtesy Tom Fishburne. http://tomfishburne.com/2009/04/the-value-proposition.html

Customer Value has almost become a cliché, often trotted out to cover the lack of real marketing insight.

Effective articulation of customer value, and the business model and processes to deliver it remains  at the core of those businesses that find success. It is particularly relevant to SME’s as they must ensure their very limited resources are focussed where they can best deliver outcomes, they do not have the benefit of scale to absorb mistakes.

Following is a list of questions frequently asked in strategy sessions that seek to identify, and give form to this most elusive notion of “Value”.

  1. Why do customers come to us rather than go to the competition?
  2. What customer needs are currently unmet or under met?
  3. How have customer needs changed in the last few years?
  4. If we project forward two years and look back, how have their needs changed now?
  5. What could our competitors do for our customers that we would like to be able to do?
  6. Where are new customers coming from, and why?
  7. Are there new competitors emerging that offer value different to ours?
  8. To what degree does our concerns for customers welfare really drive our =decision making
  9. What else could we do for customers?
  10. What could we do to attract new customers?

Each of these questions can and should generate a great deal of discussion, the quality of that discussion is a measure in itself of how well you understand “Why” you do what you do, rather than just What and How you do it.

The really successful companies do not wait for  strategy session, they ask themselves these question every day, and the answers drive how they behave and interact with customers and prospects.

Do you need a telephone?

telephone

I asked that question a week or so ago of a group of SME’s, most of whom did not have any digital presence.
None said their businesses would survive without a phone. Why is it then that they think they can survive without a website and social media presence? These tools are as integral to success as the phone, but like the phone, need to be used well, as they are just a tool.

Last week (July 19, 2014) the ABS released a report “Summary of IT use and innovation in Australian Business”

web presence by size

web presence by size

Web presence by industry

Web presence by industry

 

Businesses with 4 or less employees 35% penetration, 19 or less employees, 60% penetration, overall about 50% of enterprises have no web presence.

 

 

 

Lowest web penetration is, obviously in industries with many SME’s, agriculture, transport, and distribution.

 

 

 

 

It is a report that highlights the paucity of digital  capability amongst SME’s, which are the backbone of the Australian economy, and back up previous reports by Sensis and others pointing out the shortfall.

The building of digital capability by SME’s is not just necessary to compete, it is vital for survival.

 

Social media use

Social media use

 

The pattern is repeated in social media, but is more pronounced, most SME’s do not even use the simplest forms to market their business. 

 

 

 

I remain “gobbsmacked” that so many still seem not to have got the message,

That is where your customers are!!!

But what opportunities there are for improvement and leverage, it just takes a bit of energy and time.

 

Another bloody meeting

 

meeting cost tobytripp.github.iomeeting-ticker

http://tobytripp.github.io/meeting-ticker/

Meetings are supposed to be a place where work gets done, accountabilities exercised options  articulated and examined, decisions made, and outcomes reported. However, often they become just a reason to have another meeting.

Whilst the public sector comes in for some pretty harsh criticism, they are not alone.

Last week I found myself in a meeting called by a prospective client so I felt it sensible to attend and contribute.

No agenda, minutes of the previous meeting were supplied as we walked into the room, no definitive objective, just another bloody meeting.

To amuse myself, I tried to calculate the cost of the thing, thousands, and found  myself thinking about the waste, and how to fix it, and only came up with the same stuff I have written about before. Serendipitously, later in the day, my inbox “plinked” with a lovely little cartoon from Hugh MacLeod that does his usual great job of nailing the topic   with a few words and lines, and links.

The infographic in one link is terrific, and the  meeting clock is wonderful, I will use it regularly from here on in when I see wasted resources being directed towards massaging someone’s ego, or “busywork” being done by having another bloody meeting.

Scale social one person at a time.

 

not an algorithm

not an algorithm

There are platforms that will automate social for you, do everything, except the one thing that really counts, make a person to person connection.

“Social Media” badly used is a terrible misnomer, it is often anti-social media, an effort to remove people from the process.

Maybe we will develop an app to do that, but I suspect not, we are social animals, it is in our DNA, and you cannot substitute that for some digital metaphor.

Our bullshit detectors are enormously sensitive.

Last week, I got another email, personally addressed , so it passed the first test, but the font of my name was slightly different, Boom! Bullshit detector cuts in.

I guess it was better than the Dear Mr. Allen Roberts, or even Dear Mr Roberts Allen, but really it was only just more obviously a machine that had been poorly set up, a SPAM, or the result of my email address being scraped from somewhere I would rather have had it remain private.

Authenticity matters, and it is hard to scale. The tools will get us part of the way, like all tools, but it is how we use them that really counts. Using tools to get you to the point of eyeballing is sensible, a logical leveraging of technology, but few people are happy to eyeball a device and call it “Sally”, and really mean it.

Technology can get you so far, but usually is still requires people to close the social loop