9 forces you must harness to be a successful C21 marketer

9 forces you must harness to be a successful C21 marketer

The tools of Marketing have changed, not just a bit, but totally, since the century clock ticked over.

The scary thing is that it seems to me that we have seen nothing yet. It is becoming more unpredictable than riding a wild bull every day!

While the tools have changed, and will continue to do so, the foundations remain intact. The successful marketer in the rest of the 21st century must reconcile the complexity and technology of the tools, with the simple and unchanged foundations of marketing success.

Following are the nine macro forces I see that businesses, and their marketing leaders should be considering:

The power of information.

Technology has put the power of information into the hands of the consumer, wherever they are. The tools that have achieved this, social platforms, mobile, the ubiquity of the net, have interacted to destroy  all the rules of marketing beyond the basic principals. We used to say information is power, and that remains true, it is just that the power is now in different hands, and they are not afraid to use it.

Brand building.

Building a brand is not what it used to be.  C19 marketing relied on scale, large ad dollars placed by large companies who could scale distribution, supported by the scale of capital intensive manufacturing. The brand powerhouses of the C19 are in trouble as options pop up everywhere, supported by direct to interested consumer marketing.

However, all is not lost, access direct to consumers has enabled a whole new group of brands to emerge based on the direct digital access.

Advertising in crisis.

Advertising as an industry is in real trouble. This is  not  the divide between the analogue TV, radio and magazine Vs the Gooface digital advertising duopoly, but the opportunity that consumers have to remove advertising from their environment by a combination of ad blockers and subscription based streaming services.   The communication challenge will become harder as consumers avoid more and more advertising to minimise the disruption, in the process, removing the opportunity for advertising serendipity.

Bureaucracies no longer work.

The pace of change has been so fast that the siloed and bureaucratic organisation and management structures of the past no longer move  quickly enough to respond in real time to the requirements of the market place. The businesses that succeed into the future will be those that enable the decision making to be decentralised in meaningful ways such that those in direct contact with the market and customers have the power to make often substantial decisions, This is a really challenging prospect to everything that has been true about organisations for the last 150 years. I see it as an external extension of the Lean manufacturing notion of Takt time, but instead of companies using the rhythms of demand to drive their operational responses, they need to reverse it to be able to be in advance of the market Takt time, to understand and respond to the drivers of demand, to remain competitive.

Consumer power.

The locus of power has moved from those doing the selling to those doing the buying. No longer do sellers have the information needed to make a purchase decision that they can dole out to potential customers in any way that best suits their sales strategies. Now, in most cases, a seller does not know of a buyers interest in a market until their decision is made, or almost made. In these circumstances, getting on customers radar early is essential as a means to be on the short list, which offers the opportunity to at least have a conversation.

Brands are no longer the authorities they once were, that role has been taken by individuals who have managed to build a profile, usually digitally, that attracts attention and offers credibility. There are however some exceptions, and these exceptions are mostly brands that have emerged in the C21

Buyer journey.

The journey of  a buyer is a minefield. Back in the old days, last century, it was pretty simple, there were few choices realistically available, mostly serviced  from the local area, and the sellers had the power. Now  there are a huge range of choices, and often confronted by the range consumers either filter out all but the very few, or decide not to decide, becoming hypnotised by the array of choice, with all the competing claims. Therefore, the first battle is the one for attention. In this situation, you would think that brands have a real role to play, but largely, that hole remains to be filled, which will be I believe the challenge for the 21st century marketer.

Big data oxymoron.

The oxymoron of big data is coming. We have all  this data sourced from an array of places, and cobbled together by algorithms to give us insights and detail never dreamed of just a few years ago. However, big data is all really about going to the level of the individual, so it is in some ways, small data. Market segmentation is moving from broad demographic descriptors that had little to do with actual behaviour, to a segment of one. The implications of this are profound, in that customers can choose to do business not just on an ‘algorithmic’ basis, but on a personal one as well.

Marketing is data driven: with a twist.

Marketing used to be all about people, emotion, supposition, instinct, and experience, mixed with often lethal doses of bullshit. Suddenly all the imformation we marketers had ever dreamed of turned up on our desks as data, and we dove in trying to become data nerds, a role entirely unsuited to most, so the new shiny thing, the tools, became the obsession, rather than the insights that the tools could  deliver. The pendulum swung too far, and it is still swinging, but in my assessment, the pace of  the swing is slowing, and slowly the realisation will again emerge that people really do matter, and you cannot learn that from data, you have to go out to where the people are, and actually talk to them, face to face, one to one, to get a grasp of the humanity behind all  the data.,

Marketers in the C-Suite.

Marketers have never been held in high esteem by the ‘C-Suite’  as the Americans love to call it. To a significant extend to my mind this is for two reasons: first, marketers have not often been the smartest people in the room, as measured by the normal things that are all about the optimisation and continuation of the status quo, they have been flaky. Second, they are the future tellers, talking and speculating about what might happen, and then having a number of bets on the table depending on the variables that show up, so holding marketers to a data driven world has been hard. By contrast, the other functions in the c-suite are all about what has happened, the past, so it is relatively easier to produce hard facts and data to describe it. This difference makes the marketers look by contrast they are having each way bets, and perhaps do not know what they are doing, and neither is healthy.  This has to change, and I believe the change is starting, as what has happened is an increasingly bad indicator of what will happen, and it is the informed, creative but analytically capable flakey ones who can demonstrate value are usually best placed to place the bets on the future.

There are several items above that will generate discussion, which I look forward to hearing.

 

Image credit: Tom Driggers via Flikr

The essential template for profitable management of key, Strategically important customers.

The essential template for profitable management of key, Strategically important customers.

One of the current marketing buzzwords is ‘ABM,’ or Account Based Marketing. It is heralded as the panacea for all B2B sales challenges, generally with the caveat that you buy their software.

What utter Bollocks.

Allocating resources against important, and potentially important customers is about the oldest strategy in sales. I am pretty sure that Cato the grain merchant took Decimus, the biggest baker in Rome to that hot little restaurant in the forum for lunch and a few vinos in 200BC.

Certainly, the whole storyline of that great series ‘Madmen’ is focussed on the acquisition, holding onto and squeezing money out of an ‘Account’. In the early nineties, as a newly minted consultant, I successfully marketed a sales training program I called ‘SKAM’ or Strategic Key Account Management’.

The acronym always got at least a wry grin, and depending on circumstances, I would sometimes substitute ‘Planning’ for ‘Management’

So, to ABM.

The only thing that is new about it is that there is now a slew of software vendors promising to automate and make easy the age-old tasks of sales. There is no doubt that the software can deliver significant productivity benefits, but those benefits are absolutely dependent on doing the basics well, having a solid foundation of sales and marketing disciplines, and that has not changed. After all, if you automate a crap process, all you do is get buried in more crap quicker.

So, to the template.

Define ‘Strategically important’

Pretty obviously the first step is to define just what strategically important means in your context. To many it is those top customers, the 20% that generate the 80% of sales revenue and even more importantly, margin. It is worth remembering however, that each of those top customers were at some point, just a prospect, or a small and therefore easy to ignore customer, that grew. Really smart businesses define clearly a profile of their next group of strategically important customers, and allocate the resources to ensure that they grow to the potential they appear to have.

Have a clear strategy.

This goes hand in hand with the previous point. Without a clear strategy, the result of making often challenging choices about which markets, which types of customers, geographic locations, industry segments, technology base and many others, you will not be in a position to create a definition of what ‘strategically important’ means in your context. The default is almost always the biggest, but as noted, current size is a lagging indicator.

Articulate your value proposition.

Again, this is utterly dependent on the first two steps being done well, as what may be valuable to one customer, will not be to another, and you do  not want to waste precious resources trying to talk to and sell to people who do not care, or have no need for what you can offer.

Create a prioritised prospect hit list.

This is a list of potential customers who fit the general profiles from the first three points. There are many ways to do this, and no one right way, but almost universally it will involve the collection and analysis of publicly available data, from which some conclusions can be drawn.

Progressively execute on, and renew the hit list. 

This is where the rubber hits the sales road, and where most marketing and sales automation cuts in, and often creates significant complication before the benefits can be seen. it is also often the first point of call for many, a huge mistake made by those seduced by the siren song of automation.

Selling is a process based on psychology and understanding the prospective customer in as much detail as possible. We all like to buy, but generally hate to be sold to. Therefore selling is about gaining the attention, and progressively, trust, that you have a solution to the problem the prospect faces, that delivers value, however value is defined in the circumstances that apply to the sale and ongoing relationship.

Rinse and repeat.

As noted, sales is a process, and the more you treat it like a process, a set of steps to be followed that enable feedback loops, learning and improvement at every stage the better.

When you find you need some wisdom gained from extensive experience to be applied, a bespoke program to be developed, or just have some of the gobbledygook and jargon explained, call me.

 

 

 

 

How to make a sale without selling

How to make a sale without selling

Like it or not, we are all in sales.

Not the sales of the aggressive close, but gently, continuously persuasion of those who may have a need for what we can do for them. How many times have you bought something, then wondered, ‘how did that happen?” How did that sales person get me to part with my money, I just came in to have a look.

We live in a complicated world, we need ways to sort out the important stuff from the trivia, we need short-cuts to make decisions, to respond without taking too much intellectual bandwidth, energy and time making up our minds, as we are bombarded with thousands of messages daily, designed to influence our behaviour.

The most effective selling is when you have successfully persuaded someone to buy your product, and they think that not only is it a really good deal, but that it is their idea.

This post is intended to give you a taste of the psychology underpinning some of the tools that a good sales person can use on you, without you even being aware that you are  being manipulated. They are using the auto responses you have against you, or at best, in their own interests, not necessarily yours.

Often these tools they are using are learnt by experience, what has worked for them in the past, but at their core are a function of Evolutionary Biology. These tools can also be learnt, and there is a huge sales training industry, part of which is based on these basic psychological drives.

A really good sales person will use these tools, often several in combination, and unless you recognise them, you will be driven by your automatic responses to a purchase decision.

Human beings are extraordinarily complex, and the complexities all are interdependent, in one way or another, so the tools following will be mostly familiar, although you may not have thought of them as sales tools, simply observe them ‘happening’. It is when a skilled sales person assembles a bunch of  these things, uses them in layers, that they become so potent as you do not need to close any more, people close themselves.

 

An alternative view of the human brain.

We are all human, we evolved over hundreds of millions of years into what we are.

Our brains resemble an iceberg: there is more unseen than there is  to be seen by casual observation.

The part that sticks out of  the water is the part we use to actively think, store language, logic, speech, and all the other things we use every day to engage in everyday life.

The bit that is around the waterline is partly automatic, partly under our control. If we think about it, we can exercise some control,  but there is a huge degree of automation. Breathing, our emotions, attitudes, the cultural stuff we absorb that drives our behaviour.

Finally there is a deeper hidden part, the medulla, or Lizard brain, the part that keeps us safe, and allows us to dream, and improve ourselves. It also manages the insanely complex working of our body. It is the part that enabled our evolution to take place, and it still drives us, automatically, every minute of every day, keeping us safe, enabling those ‘instinctive responses’ we are occasionally aware of.

When our safety is assured, our brains allow us to do other things, consider Maslow’s hierarchy of needs we all saw in High school: Safety, food, shelter, ……….

We are all familiar with the ‘flight or fight’ response, that automatic response when danger appears, and the ‘Pavlov’s dog’ response. They are just two of hundreds of frameworks that happen automatically, without us being aware or being able to control them. They all served an evolutionary purpose, and whilst there are no sabre toothed tigers any more, these automatic responses still drive our instinctive behaviour.

Our only defence against them is to recognise what they are, so when they occur so we can consider and manage our response, still a very difficult thing to do.

Think about it as an auto remote button that can get pushed to deliver a reaction.

These responses all evolved to keep us safe, to enable good choices to be made instinctively, but as there are no sabre toothed tigers any more, play a less essential role,  but are still there, still operating.

If someone understands what those auto responses are, and what triggers them, they are in a position to manipulate you.

So, Let’s look at the 6 headline categories into which all the tools fit in one way or another. These categories were first articulated by Dr Robert Cialdini in his book ‘Influence: The Psychology of Persuasion’ first published in 1984.

 

 

The 6 principals that drive persuasion

These are the 6 headlines, the buckets if you like that all the autoresponses go into in one way or another.

Let’s take a look at each very briefly.

 

 

 

 

Reciprocity.

You do something for me, I will do something for you.

Doing something for another, sets up in the others mind, an obligation to do something in return.

This is a powerful instinctive response, vital to us surviving the depredations of those sabre tooth tigers. It means we stick together, help one another, it builds trust, it is a vital component of the glue that holds small groups together.

It also has many forms, can be used in many ways, and can lead to very unequal outcomes. You do something small and easy, then ask the receiver at some point, for something bigger in return, often you will get it. There is a huge body of psychology testing in all this.

Do something for someone, unasked, and they will trust you more. Do it with no expectation of getting anything in return, and they will trust you more again, do something that is against your own best interests, that benefits you, and they will go over the bags for you.

Reciprocity also works in reverse.

If I make a concession to you, you will respond by making a concession to me. Negotiators use this all the time, in industrial negotiations, it is often called an ‘Ambit claim’. Ask for something you know is too big, and probably will not be accepted, then make a concession when the resistance kicks in. The other party will feel obligated to make a similar concession, going towards you, and you will feel further obligated to move in their direction because they have made a concession  to you.

This is generally called anchoring in the negotiation literature.

In industrial negotiations it is generally called making an ambit claim. You are anchoring the negotiation at a ridiculously high starting point in the hope that they will meet somewhere in the middle.

So, start high.

Here is a tip. When your kids come home with a box of chocolates to sell for school fundraiser, cheap chocolate for a couple  of dollars, hard to sell. Go out and buy them a box of OK chocolates, and ask them to sell  them for $10 to adults. They will get almost 100% rejection, but after the rejection, they then ask if they would buy a bar $2 for the original bar.

The adult will feel bad for having rejected the expensive box, they will feel obligated to buy the $2 bar, not for the kid, but for themselves.

Reciprocity and self image at work.

Another one that works. ‘Free sample’.

Amway built their business on this. They would go around and drop off a box of samples, no obligation, no selling, just for you to try what you might like. They will come back and pick up the leftover product in a few days. Guess what, they usually also picked up an order, even if the person had not tried any, and if they had tried, the sale was almost assured. Once you accept the product into your house, even if you do  not use it, there is an obligation created.

Often untrained sales people start at the low price to increase the chances of getting the sale, they think, and hope that can upsell on the extras, to make a buck.

It is much better to start at the top, over the top, and make concessions in the bargaining process. You will end up with a better price in the end.

If I was a waiter in a restaurant, depending on tips, I would deliver the mints separately to the coffee, with some nice words. Then, after having turned around to go away, I would turn back, and give out some extras, with the words, ‘you have been such nice people tonight, I hope you had a great evening, here are some extra mints for the kids’.

Watch the tips soar.

When you are selling, consider what you might give away, something small that creates the instinctive reaction of reciprocity.

 

 

Committed and Consistent

We like to be seen as committed and consistent, it makes us predictable, reliable, trustworthy, so good to have in the cave when the Sabre tooth tiger is outside, looking for a feed.

We are driven to act as we said we would, and consistency is seen as a measure of moral strength and integrity.

They are powerful pressures on us to conform and be a part of a group, so much so that the need to be consistent overrides  the need to be right.

There is a tsunami of information coming at us, we need ways to sort it out, to make the decisions easy, so we tend to either just repeat earlier decisions that have worked out well.

Look at politics. These dills often put aside reason & common sense, just to be consistent. The stupid voluntary mail plebiscite is an extreme example of this pressure to be consistent, as to be inconsistent  in politics is seen as death, a sign of being indecisive, insensitive, and inconsistent, so they throw away common sense to be consistent.

About 15 years ago, in the foyer of the AICD building in the city I was accosted by  a very attractive young woman who wanted to take a few minutes to ask a few questions about the facilities for business people in the CBD. She asked about restaurants, how often I dined out, if I travelled much, and I answered, perhaps exaggerating a tiny bit, after all, she was very attractive, and it is natural for an old fart like me to be flattered by her attention and want to look good. She then set about using my responses to sell me one of those high end books of vouchers to high end restaurants and hotels in the city.

BBBZZZZ

If you can get a small commitment, no matter how small, then follow up with a larger request, the person will usually accept the larger commitment, to be consistent with their previous position.

There is a huge amount about your self-image tangled up in this.

There was a whole library on this written after US POW’s were released at the end of the Korean war.

The Chinese had not tortured prisoners to get what they wanted, they used psychology, bit by bit, increment by increment, and the result was profound, and many servicemen who had been prisoners when they returned were deemed to have been ‘brainwashed’ . After all, how hard would it be to get a black US infantry POW to agree that there was not complete equality of the races in the US?

This is depicted in the movie ‘Unbroken’, telling the story of US Olympic runner Louis Zamperini  in a Japanese POW camp. The parts where they offer him a better deal, for seemingly minor concessions, offering tiny things in exchange for agreeing obvious things such as that everything in the US was not perfect, obviously this is the case, but having got him to agree to that the next agreement was expected to be easier, he just held out.

The Chinese insisted that the concession be written down, even had them copy them if they were not prepared to write them themselves, but once written down, it was the new starting point.

You must get it written down to create the ‘ownership’ in the subject. Not on a computer, on a piece of paper, with a pencil, which becomes a powerful indicator of commitment, even if the writer at the time does not recognise it as such.

The implications for a sales situation are obvious.

Get a small commitment first, a very easy one, even just getting someone to say ‘Yes’ to a simple question about some aspect of a product is a great start.

This tactic is used a lot in digital sales, give away a free book, all you do is pay for the shipping, but once you have made that small commitment, the next is easier. In the vernacular, this is a ‘tripwire’ technique. Get you to put your hand in your wallet for $3.97 for shipping of the ‘Free gift to you’, the next ask is much easier, it just builds on the commitment already made.

When you buy something these days, there is a cooling off period legislated.

When brought in, this caused some problems, as the cooling off resulted in a high subsequent rejection rate. The very simple solution: get you to fill in the form, that way you are committed because you need to be consistent for  the benefit of your own self-image.

Usually, before the legislation, the salesman would fill it in, quicker, easier, and they can read their own writing, but the simple act of getting you to fill in the paperwork commits you.

The next time you are buying a car, and the salesman gets you to fill in your details, you know what he is doing, getting your ongoing commitment to the sale just made.

Another tactic widely used in digital sales: get you to fill in a survey, Facebook even has a tool that enables marketers to easily send out a survey. ‘No cost, no obligation, we are just interested in your opinion’. Surveys have a high fill in rate, but then, when the pitch comes, they refer back to your survey, and create the need for you to be consistent.

Weight loss clinics, this is all public, you get on the scales, you commit to the group to lose a kilo/week, you have made a public commitment, so it is much harder for you to change it than when you are at home, telling yourself to lose a kilo a week. Usually. You are also encouraged to write it down, and show it to your friends, not at the weight loss clinic, makes the commitment even stronger.

I found giving up smoking very easy. I did it every weekend for a couple of years, and sometimes even got to Wednesday before I cracked. The last time I gave it up, I told everyone I knew, particularly those whose opinion I really valued that I would never have another cigarette, and they should hold me to that. It worked. It would have been even stronger if I had written a note and sent it to every one of them.

There is another factor at work here, way more subtle.

It is the degree to which you can encourage someone to ‘own’ the decision they take.

When a behaviour is dictated externally, by authority, it is easier to walk away from it, than if the behaviour is internal. ‘owned’ by the person.

Back to Korea.

The rewards offered for compliance were very small, of relatively little value, so those that did the writing down, in return for the reward did not have the excuse, to themselves and others, that they only did it for the reward. This is counter intuitive, and works powerfully when you can create the situation. It is the difference between long term commitment and short term compliance driven by an external power inequality.

 

 

Authority

Humans are pack animals, we respond to authority in fairly predictable ways, which are all again, a function of our evolution.

We need to stick together, to be able to rely on the other person to stay awake, keep the fire going at the mouth of the cave so the sabre toothed tiger does not get a feed.

It also removes the need, and intellectual bandwidth required to make a decision every time something comes up, you do as instructed by those in authority, or an established set of rules administered by those in authority.

The scary thing is how we respond to authority, the degree to which we automatically defer.

In 1961, Yale psychology professor Stanley Milgram conducted an experiment that was repeated many times with absolutely consistent results, although the experiment has not been repeated recently, as the ethics that underpinned it are a bit confronting.

The experiments set about determining the extent to which people would go against what they knew to be right, by setting up a situation where the subject was required by an authority figure to administer electric shocks to an anonymous third party.

Originally Milgram, set about answering the question of how it was that so many sensible, educated Germans were prepared to inflict huge pain on others, then later claim it is only because of ‘orders’. The question came up in 1961, again, as a result of the publicity surrounding the capture and trial of the Nazi Adolph Eichmann, who was the architect of the logistics of the ‘final solution’.

The results stunned the researchers.

It proved the deep seated sense of duty to authority in all of us.

Deference to authority confers on communities the ability to conform, to move together, to get things done. All religions and cults rely on the notion of a higher authority in order to impose their will, and their doctrine .

We see the use of authority figures in advertising all  the time, even when we know the figure has nothing to do with the product, we know it is a paid endorsement by an actor, we still confer some level of authority and credibility to it.

There are many sources of authority: titles, clothes, trappings, uniforms, we defer to them.

If you can build authority in the eyes of your potential customer, you can get them to buy from you without a high pressure close.

 

 

What others think.

We had to act together, as a group, to survive, as individually we are the weakest predator around.

Conformity regulates our behaviour in groups, again making the choices easy, unconscious.

Psychologist Solomon Asch did some experiments in 1951, which have been repeated many times with the same results.

Participants, who were all actors, except 1 person were shown the two cards, then asked which of the lines on the second was the same length as on the first, and to write the answer. Almost 100% correct.

When the question was asked, but the answers were spoken, and the actors deliberately all said the wrong answer, the target also changed their minds and gave the wrong answer in most cases.

What others think, what the group thinks is a very strong tool that helps us navigate the multiple decision we would otherwise have to make, sorting through the options.

We take the actions of others as a guide to our own actions. BBBZZZZZ

Social proof acts as an auto pilot, great most of the time, until there is some dodgy data fed in.

Ever heard the term ‘Calque’ or ‘Clacking’?? It started in show Biz in France and Italy, around opera, in the early 1800’s. As a promoter, there were people who were paid to be loud clappers, yelling support for the show, with a sliding scale of charges based on the level of enthusiasm. Everyone knew about it, but it works.

The evidence is everywhere. Canned laughter on TV shows, we all know it is fake and is annoying, so why use it?? Because the research says it works, it tells us when something is funny, or supposed to be funny, it makes the un-funny, just a little funny.

Cults act this way, they remove from the individual the burden of making choices, and taking any responsibility for the consequences, which appeals to a few people.

What this means, use testimonials in your marketing. The more specifically identified is the testimonial giver, the better.

 

Like.

Unfortunately, this word has been hijacked recently, what it really means is that we have some level of positive emotional engagement with another. Dunbar’s number is 150, an evolutionary reality, you can only have an emotional connection to others up to about 150, beyond which, we humans are incapable of maintaining those connections.

Like has a second dimension: people who are similar to us.

Again, this is an evolutionary drive, based on family and close blood relatives, we can trust them, and they look, feel, think and act like us.

It is not a ‘semi-auto’ tick on a website.

None of us like to say no to someone we know like and trust.

When we get invited to a Tupperware party, we know the objective is to sell us stuff, but it is our friends asking, so we go along, and buy more bloody Tupperware. Pretty much all MLM’s work this way, leveraging personal networks.

The most successful car salesman in history, (Guinness book of records) Joe Girard, who sold Chevrolets in Detroit, had a 1:2 rule.

  • Offer a fair price
  • Be someone they like to buy from.

Joe ran a CRM system before anyone had heard of it. He wrote birthday wishes, car anniversary wishes, change of season wishes, when a car he sold was in for service he made sure he saw the owner, and reassured them of his continuing service, he made people like  and trust him. All the cards he sent out simply said. I like you.

Clarence Darrow regarded as Americas greatest trial lawyer said ‘The main work of a trial attorney is to make the jury like his client’. Once they like them, the odds are that they will be found innocent.

We are more likely to like someone similar to ourselves. The oldest sales strategy in the book is to find some trait of the target and take it for yourself. Eg. Walk into an office and see golf memorabilia around, you would likely start talking about golf, how you loved the game, to build some rapport.

We also like people with whom we share a goal and when no party has all the necessary information to reach the goal, so collaboration is essential. People will collaborate, we know this, but is also increases the degree to which they like each other when they are forced to interact by serving their own best interest..

Imagine the car salesman who takes your side and goes in to bat with the sales manager to get you a better price. You will like him.

A part of liking is association. We like to be associated with things that go well, and avoid being associated with things that do not go so well. Nobody would ever volunteer to be the messenger from the generals in the field back to the King in ancient Persia. If the battle was won, the messenger was feted as a hero, but when the battle was lost, he was beheaded.

When you get to like someone, your liking for them rubs off on the value you see in the deal. If you were buying a car, and you found you were really liking the salesman, because he also had kids who loved soccer, and went camping on his holidays, it might pay to think that it will be you driving the car, not him, so look at the merits of the deal on the merits, not on the person communicating them.

 

Scarcity

Who has not played musical chairs as a kid, felt the tension of there being 10 kids and only 9 chairs?

We all want more of what we cannot have, scarcity adds to the value.

Good sales people create scarcity in any way they can. It is usually a combination of numbers and time. This is a tactic used all the in time sales, it is so common the impact is unrecognised, but it is a powerful driver.

Grab it, it is the last one!! Creates tension and a compulsion to buy.

This is another reason why there are cooling off periods in many situations, to work against the tension sales people can generate to buy immediately, not to wait, not to miss the great deal.

Sales people create competition for an item, there is only 1, and when we are in competition, we want it more. This is why all houses in Sydney are auctioned currently, there is  not enough stock to go around, and agent can goose the price by both scarcity and competition at an auction, and why it is illegal to take blind bids.

 

Perceptual contrast

Good cop bad cop

The more expensive it is the better

The fewer the seats at the musical chairs game, the greater the tension.

Creating a contrast between the options open to a buyer works across all of the 6 strategies, highlighting the benefits to be derived from buying. Weight loss products are particularly obvious, and common users.

 

 

A last word

I am not sure where this fits into the headline categories, but I have seen it work.

Try and sneak into a line at a checkout by saying “can I just nip in, I only have a few items’ will get you into some lines.

Add the word Because. ‘can I nip in, because I only have a few items’ and you will roughly double the number of times you are let in.

This has been a skate across the top of the huge range of complexity in the sales environment, and generally does not apply to small sales that are more one off  transactions than a sale requiring some level of human interaction, like picking up a newspaper on your way to the train (does anyone do that any more?). Your choice however on your way to the train, of whatever small item you have just bought has been influenced by all sorts of marketing activity that is also covered by these sales foundations. It is a huge, and deeply complex but engaging area of human activity, vital to our commercial success and standard of living.

 

 

Finding the sweet spot of organisational cadence.

Finding the sweet spot of organisational cadence.

Last week I watched for the first time in many years Stanley Kubrick’s masterpiece, ‘Full Metal Jacket’.

Amongst the many parts of the movie that struck me, were the scenes in the first half where Gunnery Sargent Hartman is calling cadence as the platoon marches and runs.

These scenes sparked a complex series of thoughts about the nature of co-operation, collaboration and authority as it drives performance in our enterprises.

I often talk about ‘Rhythm and Flow’ as being an essential ingredient of any successful organisation, it is one of the three foundations of a successful enterprise I look for when conducting a StrategyAudit.  There has to be a rhythm to the operations in anything bigger than the corner shop, a series of rhythms that together make up the flow that drives the strategic development at the top, down to the daily tactical implementation with customers. In addition every process has a flow, it begins, moves through a set of stages to completion. The less interruption to  the natural flow  the better the process will work, the more efficient it will be.

All manner of things get in the way, and even when working really well, at 100% efficiency, some processes will not be optimised. You can get a flawed process working as well as it can work, peak efficiency,  that does not make it a good or optimised process.

Processes evolved to enable us to scale operations, to do the things that needed doing repeatedly, the same way every time, reducing errors, time taken, and  effectively ‘dumbing down’ the process. While the evolution started the first time someone made any sort of automated tool, it took off when Frederick Winslow Taylor  started developing and testing  his ideas while running the Midvale Steel works in Pennsylvania, first published as a paper called ‘A piece rate system‘  in 1896.

Organizations have almost by definition, a set of procedures, and varying levels of authority, that when bundled together become labelled as a ‘Bureaucracy’. The evolution of bureaucratic processes is what has enabled the scaling of businesses over the last 100 years. Things get organized into silos where there are specialists who can solve problems from the routine to the strategic, and pass the knowledge on in a consistent manner. As a result even the most efficient process had a cycle time as it moved from one level of an organisation up for decision, then back down for execution. That works until the time required to respond to the challenge/problem/opportunity is less than the bureaucratic cycle time, or something out of the ordinary happens, something that has not been prepared for. Then you get the process equivalent of waste, as the opportunities pass by, and problems overwhelm.

This is a reflection of the speed of operation required by the operating environment, in most cases, driven by customers. In Lean thinking terms, is called ‘Takt Time’ which is effectively the cycle time of demand in the market.

Cycle time and Takt time are two ideas from manufacturing whose time has come in organizational development.

The environment in which we operate has been disrupted absolutely by the march of technology. Speed is increasingly the difference between success and failure, so enterprises must find ways to adjust their operating cycle time to less than the decreasing Takt time demanded by the market place.

Optimising a bureaucratic process will not be enough in the future, as it still requires deference to the levels of authority, rather than enabling those at the coal face to use their initiative and intimate knowledge of the situation to be able to play what is in front of them.

At the core you have this paradox of organisation structures being vertical, organised into functional silos for efficiency, while the processes that serve the customer being horizontal and cross functional. As the requirement  for speed increases, the time a vertical structure takes to respond becomes increasingly less satisfactory to customers, they move onto those who meet their time requirements, as they do not give a fig about your  approval processes, they add no value at all to them, but they do suck value away.

The successful  organisations of the future will be more ‘biological’ in nature, with the power to respond in Takt time devolved to the fringes where the intersection with the competitive environment occurs on a daily basis. The challenges of this change to the current management orthodoxy will make most very uncomfortable indeed, and therein lies opportunity for those who can reverse the location of tactical decision making, and put it at the ‘front lines’, where it should  be.

 

 

 

 

8 unfortunate realities facing every small business entrepreneur

8 unfortunate realities facing every small business entrepreneur

Every time I turn around I see another ad touting the ‘laptop lifestyle’. Travel, work occasionally, and have the money rolling in, just because you have invested in yourself and bought a course from a self-styled guru.

Of course it does happen, but very occasionally, and each time it does the person has met a number of key hurdles.

When you think about it the rules of  business apply irrespective of the size or nature of your business.

There has to be a market. Nothing succeeds without customers, and customers do not come to you simply because you are following your passion, which is the usual pitch. I would  love to be able to make lots of money by splitting my time between surfing, tramping through mountain streams in search of that elusive rainbow trout, and drinking lots of expensive wine, but have not found anybody willing to fund me as yet. From time to time, an entrepreneur creates a market, the magic can happen, but if your name is not Steve Jobs, Peter Theil, or Richard Branson, do  not count on it.

You have to create value. Being paid is simply a by-product of creating value for someone else. It does  not matter what the product is, someone will only pay for it when they see that they will get something out of it greater than the cost to them.

You need  to pay the bills. Every business has expenses, some are discretionary, others are overheads, that show up irrespective of any revenue generation. Those bills need to be paid, you need to eat, and the kids need a roof. This reality is the one that stops many from following the whacky advice to ‘follow your dreams’ and luckily so. However, the business management task is to reduce expenses, particularly the fixed expenses as much as possible, while still generating the revenue and absolute margins.

There is a lesson in every set-back. Life is a learning experience, and failing to learn from every situation you find yourself in is short-changing yourself. As a young product manager I also had to cover the sales territories of the NSW reps when they were on leave. Every couple of months I had to take 2-3 weeks out of what I believed was a busy and useful schedule to go around stores and sell to people who really did not want to see me, I hated it, but learnt more in those months than I realised, and now insist that all marketing people I hire have a period ‘on the road’.

Time is your most important asset. Time is our only truly non-renewable resource, and yet it is so easy to waste. Professionals tend to organise their time more productively than amateurs, they spend time practising, honing their skills, so that when the time comes they perform on cue.. We all see ourselves as photographers, as we now all have a camera in our pockets. However you can always tell an amateur shot from a professional one, the pro is better in a whole range of subtle ways, simply because the professional has spent the time to practise, and learn the skills.

Be different and be a master. Success rarely comes to those who are the same as everyone else. It comes to those who are different,  who have a unique take, and who are the masters of  their craft. In the digital world, the mantra I use is ‘pick your niche and own it‘ or as Steve Martin says, ‘be so good they cannot ignore you

Evolve and adapt. For most of human history, the past has been a pretty good indicator of the future, change happened slowly. Not so any more, relying on the past to forecast the future is a sure way to be wrong. Owners of small businesses have the power to move quickly, adapt their processes, learn by trial and error while their larger competitors are still at lunch. Of course, they do not have the depth of resources to be wrong too often, so it is a Darwinian process.

There are no silver bullets. We humans usually look for the easy way, and this is the hook used to sell us the silver bullet that turns out to be lead. You can get lucky, who you know does count, but the old adage that the harder I work the luckier I get holds.

Apart from these challenging realities, being an entrepreneur is really a doddle!

3 foundations for B2B revenue generation.

3 foundations for B2B revenue generation.

Creating a process that delivers consistent and profitable revenue involves a whole range of functional collaboration from the agreement of the strategic objectives to the relationship building that occurs after the early honeymoon of the first sales.

It takes time, effort and commitment from a lot of people, and importantly a process that is sustainable.

The usual metaphor of a ‘Sales Funnel’ is well understood, but flawed in many respects, principally because the behaviour of existing and potential customers is rarely as predictable and linear as a funnel assumes.

However, the sales process can be broken into a series of steps that reasonably represents the sort of activities required to assemble leads and develop them into long term customers.

Prospecting.

To my mind, prospecting has three elements.

  • Building a wider network of relationships within existing customers, focussed on the servicing of existing business, with the objective of increasing the share of wallet
  • Identifying and making contact with those to whom the value proposition has the potential to resonate in the existing market segments
  • Go exploring, seeing where the capabilities you have may be applicable in ways that are not as obvious. I find the 70/25/5 rule applies as much to sales prospecting as it does to the more complicated and holistic challenges of a business turnaround. 70% of a sales prospecting time should be spent finding ways to increase the share of wallet of existing customers, and perhaps chasing those generated who have lapsed, 25% devoted to identifying and engaging with new customers who fit the usual profile of a prospect, and 5% being ‘out there’ exploring.

All three elements recognise the role played by the tools of digital marketing. People are expensive, so it is managements  task to leverage the cost to the maximum extent. Much of the role of the traditional sales rep has been overtaken by digital tools, but it still takes a person to ‘close’ and build a relationship. Such people are not order takers, they are amongst the most important people in your business.

Metrics present challenges, the adage that what you measure gets done is largely true. Therefore prospecting needs to be tasked and measured in meaningful ways that direct the effort made in alignment with the strategy. There is a whole list of elements that are present in a prospecting toolkit, such as: time bound revenue objectives and qualified sales opportunities, conversion rates of leads generated, outbound calls and contacts, Identification and relationship building with new contacts in existing customers, same for prospective customers, understanding  and profiling of a prospects business,

 

Conversion.

Long term revenue generation  requires a mix of repeat business, new business from existing customers, and business from new customers. The mix will be different in each case, and some level of management of these needs to be reflected in the way the metrics are set up. For example, a start-up leveraging new technology will have targets very different from an existing business that operates in a mature industry. Nevertheless, the process of conversion needs to be managed so that there is a steady and predictable as far as possible flow of business. Predictability of  the business coming in is a key to managing a business with as little ‘internal friction’ as possible. When there is predictability, most of the revenue is generated in a semi-automatic way, but when there is little  predictability, everything is a crisis, and crises consume inordinate amounts of management time and attention, leaving the important but not urgent stuff undone.

The sorts off metrics used can be broken into a number of classes:

  • Revenue generated
  • Leads generated and conversion rates necessary to generate the revenue
  • Data base management. This applies to the data on the markets in which you operate, the number and type of prospects in a market, as well as the more common CRM type data that accumulates detail on calls, responses, status of enquiries and what next type information.
  • Quantification of the funnel, how many leads are just ideas, to the hot prospect stage. As noted earlier, customers rarely behave in a linear fashion, but the metaphor often helps to ensure that the right resources are allocated at the right times.

 

Relationship.

Measuring the state of a relationship is never easy, the measures are usually subjective, and only truly evident over time. Like good parenting, we all know it benefits the kids, but the outcomes are really only evident over time.

  • Share of wallet my  personal favorite B2B ,measure  the most useful and often overlooked measure of the effectiveness of a relationship and of the sales personnel involved. How much of the spending of a customer that you could supply, do you actually supply? How much of their available ‘wallet’ comes to you? You can delude yourself in the manner in which you define the wallet, but defining the wallet in accordance to the things you can reasonably supply Vs would  like to supply, is sensible, and leads to the building of capabilities that will get you into other areas of a customers wallet.

How they see you. Are you the supplier of a commodity product, one that relies on price to make the sale, or at the other end of the scale, are you a trusted partner who collaborates for mutual success, and the sales you make are simply an outcomes of receiving an order from a purchasing system. For 30 years, I have used a sliding scale between these two points to measure the state of relationships. You easily create such a scale for yourself, but it does require some objectivity, just asking your sales reps for their assessment on a once off basis usually delivers nonsense.