Oct 24, 2011 | Management, Personal Rant, Small business
It seems to me that the geniuses making economy wide financial decisions around the world, but particularly in the US and Europe are making the same mistake many of my SME clients make. They are failing to distinguish between the short term, tactical decision making that can reshape a P&L in any given month, whilst ignoring the long term strategic decisions that shape the balance sheet.
What is the difference between giving Woolworths a big discount to enable a deep price cut on your product, then promptly turning around and borrowing to produce more, and the so called “Quantitative Easing” being practiced by the EU & US? Giving Woolies the discount may make the P&L look better for the month, but when the discount is borrowed, all you are doing is loading the balance sheet up with more debt that needs to be repaid at some point, or you go bankrupt.
You do not have to be a brain surgeon to understand that when the credit card is full, and the debt is bigger than the income, some radical spending surgery is required, partnered with an increase in the value extracted from every dollar that is still spent. Most consumers understand this, and manage it, those who do not, have their credit card taken away.
Why is it so hard?
Oct 21, 2011 | Change, Communication, Leadership
Creating a sense of commitment to an outcome is the job of anyone who seeks to lead.
Perhaps the most powerful way of achieving this is to build an understanding in an audience of what the current looks like, and articulating the shape of the future.
This should be far more than a presenter just asking themselves rhetorical questions, done well it creates a rhythm to a presentation, that can be compelling.
Probably the most compelling example, certainly the best known is Dr Kings speech in 1963, most immediately recognise the power of that articulation, relating to the couple of minutes at the end where he articulated his dream, having spent the first 12 minutes or so of the 16 minute speech laying out the present. This speech was so compelling it assembled the momentum for enormous change in the social fabric of the western world, consider what could be done in youir organisation with the use of that simple technique.
Trick is to ensure you live the dream, or it is just words.
Oct 20, 2011 | Branding
Building a brand takes time, resources, and determination, but more importantly, insight. Whilst it is impossible to break insight down into a checklist that is useful for all situations, picking the brains of experts is always useful, and provides if nothing else, a menu to start the thought process.
Finding the right expert is usually a problem, there are many touts, too few experts, and brand building results are cumulative, and often not obvious inside the payment cycle for the touts.
However, there is lots of pretty useful stuff around that can offer thought starters, amongst the best of them is offered by David Aaker. This post of David’s on the ways to create barriers to competition, and this one on the components of a great brand, taken together provide an excellent list of factors that demand some consideration.
Oct 19, 2011 | Customers, Marketing
Peter Drucker often condensed seemingly complicated concepts into pithy quotes of the blindingly obvious.
One I came across the other day is “There is only one profit centre that counts – customers”
It seems this statement of the obvious is often lost in the razzle dazzle of bullshit and self serving, non value adding nonsense that inhabits many organisations.
Next time you are faced with a pile of the aforementioned internal stuff, ask yourself a few simple questions:
“what would a valued customer think about all this?
“Would my customer see this as an activity that they are prepared to pay for?
“How does this impact on my customers experience with the product and organisation?
Pretty simple questions, but answering them and acting accordingly will radically increase the productivity of your marketing expenditure.
Oct 18, 2011 | Change, Customers, Management
One of my clients is in a pretty difficult spot.
Having lost a major contract, simply on price from an offshore based competitive supplier to his supermarket customer, he finds himself in the position where his overheads will eat him alive quickly without very painful commercial surgery.
Over a period of time we have been discussing the Quality of his sales Vs the Quantity of sales, but assembling and allocating the resources to execute a change in the customer base has proven easy to say, very hard to do.
It is fine to obsess about the sales revenue line, but rather than just consider the quantity of sales, the quality is just as, if not more important. Had the volume he did with the supermarket been spread around 3 customers who were less likely to go offshore looking for a better price, even accepting the higher transaction costs, he would today be far better off.
Many businesses, particularly service businesses like insurance and Telcos factor in customer churn, and spend lots of marketing dollars to replace the customers they will lose through poor service, pricing, competitive deals and so on. Directing a small percentage of those dollars to better engaging with and servicing existing customers to reduce churn would be far better.
It is the quality of sales that should be measured, not just the quantity.
