Sep 18, 2023 | Customers, Marketing, Operations
When you want to improve something, find a metric that drives the performance you want.
Pretty obvious, as most of us subscribe to the cliché that you get what you measure, while remembering Einstein’s observation that not all that matters can be measured.
Ultimately, what the customer thinks is crucial to success. Therefore, measuring the performance in meeting the customers’ expectations is always a good place to start measuring your performance.
Amongst my favoured measures is DIFOT.
Delivered In Full On Time.
That means not only the full order delivered on the day it is originally promised, with no errors of any sort, from quality of the product to the delivery time and accuracy of the ‘paperwork’.
DIFOT is a challenging measure, as it requires the collaboration and coordination of all the functional and operational tasks required to deliver in full on time.
As you fail to reach 100% DIFOT, as most do most of the time, at least at first, the failures are used as a source of improvement initiatives.
There is very little more important to the receipt of that next order than your performance on the previous ones. Never forget that, and measure DIFOT.
Hand in hand with DIFOT, you should also measure inventory cover.
The sibling.
You can improve DIFOT by simply increasing inventory when selling a physical product. Demand is inherently difficult to forecast, as it is the future, and entirely out of your hands. The challenge is to prevent your warehouses multiplying, and clogging the operational systems. The ideal situation is ‘make to order’, the ultimate shortening of the order to delivery cycle time.
The most common and very useful measure of inventory is ‘Days cover’. How many days of normal, average, forecast sales, whichever you prefer in your circumstances, do you have on hand to meet demand? This measure is extremely useful on a ‘by product’ basis, but when applied as an average across multiple lines with differing demand levels, can become a dangerous ‘comforter’.
Counter intuitively, the products that cause the most problems are the smaller volume ones, and new products. In both cases, demand is harder to forecast. The swings from out of stock to excess inventory can be erratic, particularly when a production line is geared to the larger volume runs of an established product as a driver of operational efficiency.
To achieve a 100% DIFOT while controlling physical inventory over an extended period is the most difficult operational challenge I have come across. As a result, it is amongst the most valuable to keep ‘front and centre’. The twin measures of DIFOT and ‘Days Cover’ are a vital element in addressing that ultimate challenge of customer service.
Aug 14, 2023 | Communication, Customers, Marketing, Small business, Social Media
When my kids dropped a piece of toast, or bread on the floor (almost always spread side down) we used to invoke the ‘3 second test’. This was simply that the bugs took three seconds to wake up and realise there was a feed nearby, so if it was retrieved inside that time, it was OK to eat.
Same with a website, almost.
We are all busy, our attention is stretched beyond reasonable limits, and we have no time to waste. So, when your potential customer is researching, or just loitering on the web, you have perhaps 3 seconds to engage them, such that they have a closer look.
In those 3 seconds, you must communicate three things if you are to get them to pay you any of their scarce attention:
- What problem you solve.
- Who do you solve it for. In effect, a written ‘elevator speech’, what you do and why they should listen.
- Call to action. What you want them to do next.
Pretty obvious?
Give yourself 3 seconds to look at most websites, and ask yourself those three simple questions.
How does yours fare?
PS. For my readers outside Australia, ‘Vegemite’ is a spread for bread and toast we Aussies are brought up on, which the rest of the world thinks looks and tastes like old axle grease.
I bet every ‘Matilda’ has it almost every day!
Jul 20, 2023 | Change, Customers, Innovation
Contrary to the myth, the customer is not always right.
However, the customer should always be heard.
You learn a lot from customers, particularly the ones who leave, are dissatisfied and complain, or who exist at the fringes of your market, or even in a market you had not considered.
As a marketer I have always advocated the notion that the good stuff happens on the fringes. As the saying goes, ‘every good idea starts as a heresy’, so hearing the heresy is a core part of being able to respond to new stuff.
There are a lot of tools the hear what is being said on the fringes, tools to track every interaction with your brands, good and bad, and everyone should be heard.
Years ago, I tried to persuade the people in the pork industry’s peak body that they should be spending some time and marketing resources engaging with those growing organic, and heritage breeds of pigs, and got laughed out of the place. They noted that 99.9% of the pork grown was the result of intensive farming, where cost was the absolute driver.
The real competition to the domestic industry was located in those well-known cheap labour countries of Denmark and Canada, and these fringe Australian organic and heritage growers were irrelevant. Besides, the existing major Australian producers were contributing most of the industry marketing funding via matched levy.
Those few loonies with different ideas out on the fringes with tiny volumes only contributed a dribble to the kitty funding advertising and a nice lifestyle for employees in Canberra. This is close to the sources of part of their funding, and political power, but totally removed from growers and the markets they served, but very comfortable.
As a result, an opportunity for growth and profitability has been missed.
Or has it?
Jun 19, 2023 | Customers, Sales
Optimising a sales process is not just about the conversion rate, as that is an outcome, a function of many things that come before and contribute to that outcome. The challenge is more about optimising each stage in the process that leads to a maximised conversion rate.
Over the years there have been many tools that assist the process, BANT being one of the best known. All of them in one way or another recognise a progression through a process that should be simple, but which consultants and others have overcomplicated.
The following 3 part qualification process should play a role.
Basic criteria for qualification.
Does the prospect fit the picture of your ideal customer?
Basic criteria + Fit.
Does the prospect have a need for what you have, do they have a problem you can solve better than anyone else? How compelling to them is your value proposition?
Basic criteria + Fit + Intent.
Is the prospect aware of the problem, are they searching for a solution, have they engaged with you in some way? Are they willing and able to pay for your solution? What elements will drive the timing of their decision to buy now, delay, or decide not to buy?
While this may seem too simple, often the best is also the simplest.
Feb 22, 2023 | Customers, Marketing
Few would disagree that the very best way to find a new customer, to build a business, is to have existing happy customers refer you to their networks.
Even anonymous referrals are better than nothing. How often have you looked up a service provider on social media, and looked at the ratings? Recognising they may be from friends, fools, and their mother, they are still a guide.
Happy customers will refer automatically.
Sadly this is not the case in a proactive sense. Happy customers may give you a wrap when they happen to be talking about whatever problem you solved for them with their friends and colleagues. That is not the same as proactively being an advocate for your product. You have to ask them to refer you, and the manner of asking is crucial.
Customers do not like referring.
In my experience, happy customers do like referring you, but as noted, they have to be asked. The psychological drive of reciprocity comes in here. When you have met and hopefully exceeded the expectations of a customer, they will feel obliged to at least be nice to you. Asking for a referral is a very easy way for them to be nice.
It is OK to pay for a referral.
No, it is not. Paying for a referral is almost an insult. Most people do not like to benefit personally from a referral where there is a friend or acquaintance involved, as it is their credibility at stake.
Potential customers do not believe in referred products.
Yes, they do. When someone who is trusted delivers a referral, that referral takes on an element of the trust that is in the relationship. Both parties know that trust will be damaged if a referral does not ‘pan out’ as promised, so they are careful. This is entirely different to the so called ‘influencer marketing’ that infests digital platforms. These influencers are no different to the talking heads we used to see all the time in ads in earlier times.
Assuming a referral will lead to a sale.
Many things must be aligned for a sale to eventuate, all a referral does is give you a credible foot in the door, the right to have that first conversation in the sales process. You still need to do the hard yards. You still need the sales process.
In a world where the first and must win commercial battle is for the attention of your potential customer, the presence of a credible referral is like getting a 20 metre start in a 100metre race.
Jan 5, 2023 | Customers, Management, Sales
In almost every situation I have ever seen, ‘Sales’ includes all sales, and salespeople are often rewarded via commissions on the total of all those sales.
In many categories of B2B sales, the only time a person does a ‘Sales’ job is to gain that first transaction, after which it is all about retention, a different set of skills.
Assuming the first transaction goes well, the product was delivered on time, in specification, and did the job promised, the chances of a repeat at the appropriate interval is higher, and may not require the ‘sales’ skills of the original salesperson. Rather, it requires the interaction of operational and logistics personnel to manage the relationship, and the transactions that occur within that relationship.
If that is the case, why do we habitually reward salespeople on the total of all sales?
Salespeople are as different as any other group of people. The archetypal ‘Always be Closing’ salesman of the past has now almost disappeared, replaced by a range of people covering differing tasks. This reflects the changed role of sales with the move of information from the hands of the seller to those of the buyer.
Almost every salesperson also sees customers as ‘their’ customers.
Again, if the hypothesis is that they are only necessary for the first transaction holds, this is a mistake.
The logistics and operations people should hold the relationship, assisted by an internal ‘customer service’ person, while the salesperson goes off ‘hunting’ for the next new customer, or indeed, sales in an adjacent product or market area of a current customer not currently serviced. This would be a far better use of the time available to a salesperson than running around at the factory trying to wrangle a preferred spot in the production schedule.
A business I ran as a contractor some years ago had a specialist sales force made up of highly trained technologists. When tracking their activity, it became obvious that most of their time was consumed by tasks other than ‘sales’. These involved interaction with the customers technologists, their operational, marketing and planning personnel. Significant time was also spent at their desks dealing with the complexity of our planning and operational processes in order to meet sometimes impossible delivery promises made under pressure from customers.
This blurred the line between the tasks best undertaken by a specialist technical salesperson, dealing directly with generating more sales, and the tasks that were better done by internal customer service people. The ambiguity of responsibility for specific tasks, and our very malleable processes was hamstringing the productivity of the investment in sales.
The communication tools we have today really mean that we are now able to direct the activities of sales personnel towards where their value lies, identifying and solving customer problems. They do not have to be in the office apart from training and progress sessions. The logistics of providing the products are best managed by those who are hands on in the factory, warehouse and admin functions.
After some changes, sales went up significantly, as did the margins, as the salespeople had more time to spend identifying and solving difficult challenges that naturally brought higher margins.
As you consider the structures necessary for success as the new year opens, you might give some thought to the priorities set for the salespeople, and their support functions in your business.
Header credit: Scott Adams via Dilbert
