Are you solving the customers real problem?

Are you solving the customers real problem?

Marketers spend huge amounts of effort and money trying to define the problems they solve for their customers and potential customers. Often they fail simply because they do not understand their customers motivations sufficiently well, or they are overwhelmed by the great, world beating features the engineers have built in.

Customers do not care about your features, they only care about the outcomes for them that come with use.

There is a process that leads from the prospect being identified through to the initial transaction, then the development of a mutually beneficial relationship

At each point in that journey, in order to build the relationship, marketers have learnt that stories are by far the best way to go about it.

There appears to be three types of stories, and these are prevalent not just in marketing, but everywhere we look that stories are told. Books, movies, the theatre, and even advertisements.

External: These are the superficial obvious pieces of the narrative, but do not go to the heart of  the reasons why things are happening. The role the external story plays is that it provides the context for the real messages being delivered.

Internal: The internal parts of a story is usually all about how the protagonists feel about themselves, and those with whom they interact, how they behave under different circumstances.

Philosophical: This about the basic motivators of human behaviour, and the roles being played. Good vs Evil, Envy vs generosity,  Us vs Them, and Right Vs Wrong.

Consider the original Star Wars movie. The external story is about the development of Luke from a boy to a trainee Jedi, and the trials that are encountered as he and his acquired companions try to keep out of the clutches of the Empire.

The Internal story is about the angst and confusion felt by a boy suddenly thrust into a strange world that is trying to kill him and his companions.

The philosophical story is about the battle between good and evil, which comes to a head in the climatic fight scene.

When considering the elements that make up your brand story, remember that customers buy solutions to internal and philosophical problems, not the external ones, as they do not really matter beyond a question of price.

In other words, do not bother selling the features, sell the beneficial outcomes of use.

This works for simple products as well as it does for a complex one.

One of my clients provides a specialist engineering service to large scale manufacturing plants and infrastructure. The external story is that they do a really great job in a potentially dangerous and  highly regulated area. The internal story is about the absolute confidence that clients can have in the technical and project management skills they deliver. The philosophical story is about the need to retain some of these key skills in Australia, as once gone, like the Tassie tiger, will not come back, and the impact of that is long term and painful to us all.

 

Why the accepted notion of ‘Brand Loyalty’ is rubbish

Why the accepted notion of ‘Brand Loyalty’ is rubbish

Brand loyalty, and one step further, finding those few  users of the brand who will use no other, and demand their networks do the same, is the holy grail of most marketing. It comes up in almost every marketing brief ever written.

However, there is almost always a flaw in the logic I see used.

Heavy and exclusive use of a brand is interpreted as brand loyalty, and occasional users are disregarded except as a possible opportunity to increase usage, if they are even picked up in the data. Consumers usually have a small pool of acceptable brands, and expect to be satisfied by the product they buy, whatever the usage, or they do not return. The brand is just one of the the filtering mechanisms of varying strength they use to make the choice easier.

While loyalty and heavy usage may be in a very few cases generated by the brand, it may also be that the heavy usage is just habit, availability, convenience, the shape of the package, or many other factors other than a behaviour changing loyalty to the brand.

Heavy usage and brand loyalty do not always have a cause and effect relationship. There is certainly a strong correlation, not necessarily causation.

My father would only use one brand of mustard powder, a blindingly hot concoction he used sparingly on an occasional sandwich. The stuff was only purchased once every blue moon, as he was the only one in the household who would go near it. Far from heavy use, but very loyal.

Conversely, if you look in my sisters fridge, there is only ever one brand of natural yogurt, and she consumes a kilo or more a week, in a number of ways. However, the choice is driven not by  the brand, although it is entirely satisfactory, but by the fact that the small supermarket she stops at every couple of days on the way home because  of the easy parking and friendly environment, to buy her milk, and a few other staples, only carries that one brand. Convenience drives the purchase, not loyalty.

Anyway, the nonsense that gets touted around by snake-oil sellers about consumers wanting to have a relationship with their brand is just so much crap it makes me sick. Brand loyalty is a rare thing, and is always, always given as a part of a whole package of value that is delivered consistently by the product to the consumer.

Consumers want a lot of things from  their favoured brands, but only a very few with some sort of emotional incapacity see a brand as a substitute for a human relationship, so lets stop talking about it as if it were.

My thanks again to Tom Fishburne.https://marketoonist.com/ When I went looking for a visual for this post, this cartoon says it perfectly.

 

Case study: The pros and cons of PR in a B2B market.

Case study: The pros and cons of PR in a B2B market.

PR can be a remarkably effective tool in the marketing arsenal, but most of it is just wasted, simply because it is not delivering any message of value to anyone who cares.

What can you expect when you have a combination of PR agencies who get paid by the word, various supposedly credentialed dills with a barrow to push who like to see their names in print, and politicians who will respond to the smallest of pressure groups who make a big noise?

The latest target of the word churners is sugar, specifically sugar in soft drinks,  but more broadly, sugar in everything.

Tax it and the problem will go away.

Nonsense.

While it is true that in economics 101 I learned that when you increase the price of anything, you sell less of it, this is a logical outcome based on an assumption of rational behaviour.

If I have learnt anything about consumer behaviour in the 45 years I have been in the marketing game, it is that it is rarely just rational, and unlikely to be altered by well meaning press releases, full of adjectives and promises of better days, written by those with a dog in the fight.

I was recently asked by a former client who supplies high value but very low usage ingredients that have the  potential to replace some of the functionality of sugar in food products for an opinion on a couple of different PR approaches they were considering in response to the discussion about a sugar tax.

Following is the reasoning I offered on PR as a marketing tool in this situation, sanitised for more general consumption.

  • There is a political problem, we are all too fat, therefore there is pressure on governments to regulate. Some of this regulation is warranted, such as the disclosure of the calorific value of products, in this case soft drinks, some is just nonsense.
  • We all (should by now) know that soft drinks are full of sugar, and drinking them to excess makes you fat, as well as having other health impacts. Therefore ensuring that label regulations are clear and understandable to laymen is a good thing, resisted by the beverage companies, as they do not want to scare the horses.
  • We cannot expect (in my view) governments to regulate for our behaviour, to be the gate keepers on our fridges. However, the tendency seems to be to seek to regulate to protect people from themselves. This is the guts of the move to have a tax on sugar, but underneath, there is a revenue measure for government that they will not talk about, but remains.

For a business to successfully leverage the public discussion for their commercial purposes requires some sort of strategy, and what I often see is a strategic vacuum, into which a PR release is sent. Some thoughts on the value of PR in these circumstances to a business that has some sort of vested interest in product formulation in the beverage market :

  • The target market for information is the marketing and technical people in beverage manufacturers, and they require different messages entirely. If it was me, I would have a plan with a few simple elements, and execute on the plan.
  • Create a list of the beverage manufacturers in each market, along with the relevant information about their ownership, location of factories, brands, strategies, etc, all you can reasonably glean from the combination of public documents and what your sales force knows. This is part of what marketing departments in businesses  with these sorts of interests should be doing.
  • As part of the above, ensure there was a list of the personnel in each business, their role in an organisation chart, and more importantly their role in the marketing, procurement, and product formulation decision making.
  • Develop ‘content’ with credibility to support all sides of the debate, and make all the data available, not just the bits that may support your commercial objectives. Research by the likes of Tate and Lyal, and CSR will be viewed with suspicion, irrespective of the science of it, because they have a vested interest, unless they discuss all the data and both sides of the debate.
  • Use the lists developed above to target selectively the people you need to speak to with the commercially agnostic data (content) you have developed. Do this digitally to create MQL’s (marketing qualified Leads) which are then passed to Sales and Technical services to follow up in person to make your formulation and commercial arguments.
  • Pick a small number of real target companies and devote resources specifically to the task of selling to them.  I would pick the challenger brands in each market, the ones you can sell to without the regional head office being involved, those who do not  have the big marketing budgets and brands, so they have less to risk. Once you convert a small number, and they have success in the market, the rest will follow.

This is pretty basic marketing 101.

Recognise that your target market is specific, and sales intensive, not marketing intensive. You are not selling toothpaste to a consumer with a low transaction value and regular small transactions, where marketing is vital. You are selling high value ingredient to customers where there is a high degree of specification, complication, and a long term relationship at stake. The challenge is different. Wasting time and effort, as well as money on consumer PR is useless in this context except as a strategy for keeping the wallies who do not understand the basics of the sales and marketing of their businesses quiet.

 

How do you price for services.

How do you price for services.

A common question from all those in consulting, and one I ask myself regularly, as it becomes really easy to under-price in order to get the job.

From time to time in the past I have done jobs for various bodies that I believe in, pro bono. I always thought it was my way of making a contribution, and that the effort was understood and appreciated.

Not so. In most people’s minds, things are worth what they pay, so a free consulting is worth exactly nothing, particularly if the recommendations are challenging and uncomfortable to implement. It is then very easy to just walk away as there is no skin in the game.

So, how do you go about setting your price?

Determine your hourly rate. Generally you can get a handle on the amounts that are the ‘going rate’ in the market, not just for your service, but for the range of services a business may need. For example, book-keeping is around $60/hour, a virtual CFO will be around $160/hour and a partner in a large accounting firm $400 plus. If you are selling accounting services, at least that gives you a context. More qualitative services like marketing have a similar range from the kid who can run your Facebook account for you, (not the copywriting, that should cost way more than a base rate) to the virtual  marketing manager with all  the skills of implementation at $160, to the widely experienced guru who will be $400 plus. Most shudder when that number is quoted, but why would a highly qualified accountant who looks in the rear vision mirror most of the time be worth more than a highly qualified marketing and strategic thinker who is looking forward, to the things that will sustain the success of your business?

Estimate the hours of a project. This always involves breaking a project down into its component parts, and making a judgement about the time each will take. The complication is always ensuring that the goal posts do not move. Agreeing the exact scope of the work up front is essential, and always hard, but scope creep adds enormously to the risks you face, and is present in almost every project I have ever done.

Provide the quote. Pretty obviously a multiplication of the rate by the hours, in most cases, perhaps plus a bit for scope creep and complications you did not anticipate. These are some of the considerations that play into the quote process:

  • A fixed price will always be appreciated by the client, as it removes risk, so long as there are also guarantees of performance in place. A fixed price also enables budgeting, which is usually very welcome.
  • Will the job lead to ongoing work? Often a key question in providing a quote, particularly for small firm like mine where a lot of time is spent prospecting. A flow of work that generates reliable revenue is enormously valuable as a means to keep the beast fed.
  • Who will be doing the work? Often the system is that the really important and highly compensated partner or rain maker sales person does the selling and negotiation, then hands the job over to the gophers, whose time gets charged at the high rate. Clients are not stupid, they understand this process, and have differing attitudes to it, usually depending on the confidence the gophers create in the first meeting. In my case, I do all the work, bits where some specialist advice is needed, I provide some referrals, and my clients make the choice. I do not clip the ticket for the referral, unless I am involved in the project management, and then the added cost is absolutely transparent.

Actively manage and communicate the project progress. Managing expectations is a key success necessity, and to do this communication is essential. Usually about the time you are tired of the communication is about the time that it is sinking in. Mutually agreed KPI’s are important, they act as milestones, but often the qualitative understanding of progress being made is as, or more important than, the pre agreed KPI’s.

Tracking your time is a key activity, you need to know how you are going compared to your expectations, and while this is not for the clients sake, it is vital for yours and the long term profitability of your business. There are many tools around to track time, pick one that suits you, even if it is a simple note in a diary.

Know who your ideal client is. Maybe not the name, but the characteristics they display, the market they are in, the problems they face to which you have a unique set of solutions and relevant experience. Having this piece of thinking done will enable polite removal of tyre kickers and those who are not really ideally suited to benefit from the experience and knowledge you have.

‘Embrace’ your pricing. This may be the hardest part of the equation for most. Charge what you are really worth, name the number with confidence. Usually for services that is hard, and is based on the outcomes, not the cost. An expensive consultant that gets results is far better value than a cheap one that does not. At some point, the question of what success means to your potential clients business comes into play, as does the ability to pay.

It is inevitable  that you will not get every job, and that you will need to keep a straight face as potential clients over-act a response your prices. You will also have to believe in yourself to the point where you can look people in the eye as you deliver the price and they over-react, and you need to be a good negotiator. Most people respond positively to a high price delivered with clarity and certainty about the outcomes that will be delivered. The first person, who has to be convinced that you are worth the price, is you. The second one is easier.

Guarantee an outcome. This takes a level of confidence that is pretty rare to be able to build as there are simply so many variables at play. However, if you are sure that by employing your services you can guarantee an outcome, you can charge almost anything you like up to that outcome, and most will see it as money well spent. Few will walk away from swapping 10 cents for  20. There is a lot of services marketing that involves an implied outcome, justifying a high price, but the explicit guarantee of success is not something I see much.

Leave it to them. This is a risky strategy, but one I use a bit on short term projects such as a workshop, where the investment of time is understood, there is a clear problem to be addressed that is right in your ‘hitting zone’, but they do not really know you. Giving them a ‘list price’ with the undertaking that you will leave it to them to assess the value of the time to them, and tell you the invoice amount. It removes risk from them, and underscores your own confidence in your ability to deliver value.

Your best marketing tool. We all know that satisfied, even delighted clients are the best advertising you can have. Referral business is the best business, and the easiest to get, as happy clients refer you to their networks as someone who really delivers value. When that value is delivered at a high price, so much the better.

As a final thought. Increasingly in a complicated world, we value simplicity in all things, and the response to your prices will be enhanced by simplicity.

Cartoon credit: Scott Adams and his alter ego Dilbert.

When the cheapest quote is not the best price.

When the cheapest quote is not the best price.

A quote carries the implication of a low price, only price, little room for the value that may be delivered, and that your ‘nose’ is only just out of the water.

What would happen if you  called it an offer for service?

Perhaps it is just a semantic difference, but it may also bring into better focus the value being offered irrespective of price.

Many companies I work with operate on the basis of quoting for jobs, and those seeking quotes are often doing so in the expectation of taking the lowest price.

This is good if you are buying paper, or some basic commodity, but buying something of value, that is mixed up with some expected level of expertise and service, is an absolute shocker.

One of my clients provides a specialised engineering service that has stringent regulatory requirements covering safety and engineering integrity. One of their biggest long term customers, the local arm of a multinational,  has recently moved their procurement function away from the domestic business unit to  a centralised offshore global procurement system based almost entirely on price.

The choice facing them was to compete on an uneven global playing field on price, and have their existing thin margins further eroded, or walk away and utilise the capacity and skills elsewhere.

A difficult choice, particularly against a background of uneven and difficult to forecast cash inflow was made, but after 6 months, they are  way better off, and their former customer is struggling with trying to manage a complicated plant with offshore contractors who quoted the lowest price to get the jobs and are intent on doing as little as possible to get the money.

The lowest quote is rarely the best total  price, and it is easy to drown when there is no room for error.

 

How do you build a truly successful sales foundation

How do you build a truly successful sales foundation

Selling is a tough gig, but it is one that every business has to master or fail.

The days of waiting for the next customer to walk through the door and place an order are over. These days you have to be out there hunting for new customers at the same time you are building relationships with existing customers to optimise your repeat purchase and share of wallet metrics.

So how do you go about this?

There are a few common practises of truly successful sales people that I have seen over my long career. These practises form what I call a ‘foundation’ for successful sales activity.

Always be positive.

When was the last time you bought anything from someone who clearly did not care if you bought or not, who had a take it or leave it attitude?

People like to buy from enthusiastic and helpful people, so being ‘up’ all day, every day, is vital. The sales leadership plays a huge role in the development of this sort of positive and proactive culture.

See yourself through the customers eyes.

When the sales effort is just all about the numbers, sales people tend to focus on making the sale now in order to make those numbers. Customers do not really care if you make your numbers or not, they care only about the value they can derive from buying something from you. Seeing yourself in this way is an unfortunately rare skill, but those who have it sell multiples of those who do not. However, luckily it is a skill that can be learnt.

Manage time proactively.

It is so easy to waste time, not to maximise the productivity of that most precious of resources. In selling, this approach demands that you plan your day and sales approaches, anticipate the needs of customers, and plan the conversations to focus on the value your solution delivers to them.

Treat your prospects and customers time as  being more important than yours, as to them, that is the way it is.

Balance your activities such that there is a flow of leads that are in various stages of conversion so you have a steady flow, which is always more productive than a flood/drought situation.

You only get one chance to make a first impression. When you meet someone, they generally make their minds up in the first few seconds about whether you are someone they would like to engage with, or would rather move on. Making that good first impression is absolutely vital to having any chance of building a relationship.

Listen, then listen some more.

As the old saying goes, ‘god gave us two ears and one mouth for a reason’. The best sales people I have met are always great listeners, they keep conversation going, steering it by asking key questions at key times based on the feedback they are getting from the other person.

Follow up regularly but sympathetically.  Continuous follow up is a key skill, but there is a line between following up in a friendly and sympathetic and stalking.

Model your behaviour on the masters.

Joe Girard is seen as one of the best, if not the best salesman ever. Taking lessons from the masters is always a good idea, those who both practise what they preach and have profited from the practise. The best sales book I have ever seen is now decades old, “Spin Selling’ by Neil Rackham, but the same rules still apply.

As a final point, from my own experience running sales and marketing in FMCG, one of the most common mistakes I have seen is businesses treating sales as a training ground for other functions. Every trainee, particularly marketing and management trainees have to ‘do their time in sales‘. This is a huge mistake, when sales success is so important to survival, it makes sense to only have the best representing you and your products, and if they become the highest paid people in the organisation, great!

Cartoon credit www.tedgoff.com