3 factors creating an existential crisis.

Jan 19, 2020 | Change, Governance, Leadership

 

I recently found myself in the position of refereeing a ‘debate’ over lunch on climate change between 2 zealots, one from either side.

One who was a passionate advocate of the argument that it was real, and would kill us unless we did some challenging things, the science was in 30 years ago, and we have barely moved. Our public institutions have displayed, and continue to display, criminal negligence in that inaction.

The other, was a passionate advocate of the ‘why bother’ story. As Australia is a tiny contributor to global warming, unless the rest of the world did something, destroying our way of life was an irrelevant act of self -immolation. 

Thinking about it later, three things came to mind, that reflect the barriers to any major change in the way we work and live.

Denial. It is not happening, we cross our fingers and hope it goes away. Through history this has never worked, it is the ‘peace in our time’ solution.

Money.  Making the change will  not make any money, just impose unnecessary and unrecoverable costs. This assumes that tomorrow looks just the same as today, which is always wrong, we just cannot see the potential. Steve Ballmer dismissed the first iPhone as an expensive toy that would  never work,  Blockbuster did not see the potential in Netfliks, and Kodak, who invented digital photography, failed to commercialise it. With the short term  dominant in our institutional and public governance, the immediacy of money being generated  is a powerful argument for inaction, despite the evidence to the contrary.

Optimisation. We have optimised our current organisations, they are good at running exactly what it is now, and change is messy, expensive, risky, and dangerous to the personal advancement of those who advocate for it. In addition, the short term prospect of generating a return on investment is low, so our institutional risk aversion kicks in, often on steroids. Both time frames have their costs and benefits, quantifiable with significantly variable degrees of certainty. On balance, my money is on the ‘do something’ button, as history suggests those who do not change in the face of undeniable  change around them,  get run over by those who take the prizes. IBM and Olivetti used to own the typewriter business, Kodak owned photography, Hoover owned vacuum cleaners, all optimised businesses for the maintenance of the status quo, and none survived.

As I write this, the east coast of Australia, gripped by drought, has been on fire. We are only in the early part of what is usually called the  ‘fire season’, so things could easily get worse, although there may not be much left to burn. I suspect the views of both sides of the debate my lunch colleagues had will not have changed much as a result, a microcosm of the policy problem facing us.

However, every problem is accompanied by opportunity.

Climate change is a problem for everyone, a challenge for policy makers faced with the reality of short term populism to keep their jobs, and an opportunity for the few who see the problems as challenges to be solved.

 

 

 

3 questions to juice up your sales productivity

Jan 16, 2020 | Sales

Word of mouth, the endorsement of a happy customer, is the best marketing you can have. We all know that, ‘Word of mouth‘ is the gold standard, the original social media.

Why then do we spend so much time and energy focussed on the next customer?

Finding, engaging and converting a new customer is way more expensive than working with an existing customer, one who has already experienced what you have to offer, and unless you screwed up, is usually more willing to talk to you than they are to someone with whom they have no relationship at all.

My preferred sales metric is share of wallet. How much of a customers business that you could supply, do you supply? The challenge in this metric is the definition of the wallet.

My second favourite metric is the likelihood that an existing customer will refer you to those in their networks that you may be able to assist. Sometimes this is expressed as a Net Promoter Score.

A ‘warm’ lead in the parlance, is a nascent relationship to be nurtured until such time as there is a need. It will not always  lead to a sale,  but it does get your foot in the door with the opportunity to be on the list when and if the products you have may be useful.

Making your current customers successful is the best marketing you can have, as they will talk about your contribution.

How much of your investment in revenue generation is aimed at leveraging the success of your current and past customers, Vs finding new ones?

Many businesses rely on what I call ‘reactive marketing’.

They respond to the phone call, enquiry from their websites, generic email blasts, even cold calling. When you calculate the conversion rates for  these sorts of leads, they are not great, but always chew up considerable resources. Moving to a pro-active, customer centric strategy in almost all cases increases revenues while reducing costs.

Three simple questions.

  • What more can I do to assist my current  customers?
  • Who do they know that you might be able to assist?
  • How much of my revenue generation investment is aimed at customer retention?

 

Need help thinking your way through this maze, let me assist.

 

Header photo courtesy Lars Menken via Flikr

 

 

 

What is the core KPI of Marketing?

Jan 13, 2020 | Branding, Marketing

 

The answer just has to be ‘Sustainable Margin’.

An enterprise can only do three things to increase margin, however you choose to define that term.

  1. Lift prices.
  2. Expand sales.
  3. Decrease production and operating costs.

Options 1 and 2 are often seen as mutually exclusive, but truly successful marketers prove the opposite. The gold standard here is the Apple iPhone, 15% market share of volume, 85% market share of industry profitability.

Marketing has at least some control over the prices and sales efforts, but usually little over the operating costs.

None of these strategies are easy, neither are they short term.

It would seem that a focus on the drivers of margin will pay big dividends

What is the biggest driver of margin?

Brands.

The greatest store of economic value we have ever seen.

Would Apple have  been the first trillion dollar business without the premium held by the Apple brand?

No. It would be in the gutters scrapping with Samsung, that also happens to be one of its key suppliers from whom they buy screens. I bet that Apple headquarters is looking for an alternative supplier for some price competition, and that Samsung is investing in the tech in order to hold and enhance the margins they would be making from their wealthiest customer.

In a homogenising world where it is getting harder and harder to build a brand, a long term intangible asset it is becoming ever more crucial that you do so in order to protect margins and remain competitive.

Like Rome, brands are not built in a day, and you need experts doing the building.

 

Header photo courtesy Tom Shockey via Flikr.

Very rarely am I embarrassed to be Australian

Jan 8, 2020 | Leadership, rant

 

Craig Kelly created such a moment this week, spouting idiotic nonsense on British morning TV.

Kelly is the MP for Hughes, at the southern end of Sydney’s metropolitan area, which he won in 2010, succeeding well respected liberal  Dana Vale when she retired.  The electorate includes a lot of bushland, some of it national park. As such, it is bushfire country.

 Kelly has been a continuing goose, making statements that range from dumb and ill informed, to just plain stupid for the whole time he has been an MP.   Despite this, Scomo intervened to save his pre selection prior to the last election when he was almost certain to lose it to a more moderate candidate who seems to accept that facts do have a place in public debate.  

I am no scientist, but after Kelly’s interview, thought I would relate a few facts about climate change undisputed by the vast majority of scientists around the world. The exceptions being only those who know the holocaust is a figment of Zionist propaganda.   It is however realistic to acknowledge the contradictions and paradoxes littering the climate change landscape (pardon the poor pun) that can be grabbed selectively to make a contrary case, should you be so stupid as to do so.

Hello Craig!

  • The human impact on the environment is increasing: there are simply more of us, consuming increasing amounts of finite resources every day, and producing accelerating amounts of waste.
  • A key waste is CO2, which has the effect  of warming the earths atmosphere. Scientists used  basic physics to work that out in the mid 1800’s, it is not new information. CO2 in the atmosphere is transparent to the radiation from the sun, so it lets it through, warming the earths surface, but unfortunately, when the warming earth radiates the energy back, the wavelength is different, and the atmospheric CO2 does not allow it to pass through. Therefore, it bounces back, further warming the earth. Anyone who has stood in a glasshouse understands the impact, it is exactly the same, hence the term, ‘greenhouse gas’
  • While every one of that increasing population exhales CO2, as do the animals we grow to feed us, the effect we have had is dwarfed by the impact of the burning of fossil fuels. Starting with the coal that powered the industrial revolution, and progressing to oil, and gas, we are now pumping billions of tonnes of carbon dioxide into the atmosphere every year. 
  • Some of the CO2 produced gets captured by the earths oceans, stored as carbonic acid. This increasing acidity of the seas has the impact of dissolving coral, which acts as the nursery for sea life, the main source of protein for much of the worlds population, as well as protecting low lying tropical and sub tropical areas from the impact of cyclones.
  • The warming of the atmosphere tends to suggest, even should I say, to Craig, that this leads to an increased ‘dryness’ of the earth, sometimes called drought. Could this increased dryness  lead to fires? Perhaps even Craig can catch the logic of that one. It also, logically, leads to ice melting. take some cubes out of the freezer Craig, and see what happens. It is unarguable that the ice at both poles, and on mountain ranges is melting. Given the amount of fresh water tied up in ice across the planet, the progressive melting  has a range of nasty consequences. For example, there will be new locations for seaside resorts created, although the price will be paid by some places from small islands around the world, to mainland locations from the Bay of Bengal to Florida, for which snorkels and fins will be required to get to the front fence. This should cause a few very emotional arguments in parts of the world not renowned as friendly, accommodating negotiators.
  • While the average temperature of the planet is unarguably warming, averages do tend to be misleading. The incidence of extreme weather is increasing, at both ends. Extreme heat, and extreme cold, and the time between these extremes is decreasing. The locations of these extremes are also scattered, impacted by the melting ice affecting the weather patterns so dependent on sea temperatures, and more specifically, the temperature of the major currents that flow around the world. 
  • The sad fact is that the lag between cause and effect is long. Were we to totally stop emitting CO2 today, it would be years before there was any measurable impact on the climate. This is like the dilemma faced by obese people. It is really easy to keep doing what you are doing, and getting fatter, very hard to change habits sufficiently to stop the increasing weight, and even harder again to reverse the trend, and it takes time for the impact to be seen. However, the longer you leave it, the harder it gets.

Enough of this, point made.

However, it is also a good place to point out, if you have read this far, that politicians whine that we, the great unwashed who vote, do  not trust them any more. Even ambulance chasing lawyers rate higher on the popularity scale, as Scomo found out trying to find a hand to shake amongst the ruins of Cobargo last week.

Climate change is not Scomo’s fault. However, his failure, and that of his predecessors to reconstruct the broken processes that catapult an idiot like Kelly into a position to make me feel embarrassed to be an Aussie, is his fault.

 

My thanks to David Rowe for the header, who as usual, manages to draw the most disturbing cartoons that make a statement.

Is marketing losing its humanity?

Jan 8, 2020 | Marketing

Marketing, when I first started was a mind-set that had at its core, the customer.

The information we had was by todays standards in the dark ages, and we had to work really hard for it. We pored over sales and basic market research reports by hand, working with others in the supply chain, and most importantly, talking to customers, real ones, over a coffee, lunch, or even on the golf course.  In the process we learned about their problems and aspirations, and once in a while, came up with something good.

In the meantime, we  got to know in some detail what they were seeking, and how we might best address that quest. Yes, it was an expensive and time consuming process, and yes, it was subject to being less of a commercial exercise than it was a tonic for the ego, but it was effective.

Now all we do is pore over the deluge of data generated by algorithms driven by marketing technology: Martech.

We delude ourselves that in doing so we  are not missing anything,  but the reality is that we are so deluged that we risk missing what should be the obvious, and more importantly, the less obvious connections visible to the experienced and informed human eye, invisible to an algorithm.

The central objective of marketing is to solve a customers problem, add value to their lives in some way, and have them come back for more.

I am unsure of how this end is achieved by constant automated updates, unsolicited sales offers, chasing them around the net with ads for stuff they do not want, and making them click away a detested pop up.  So called marketing people, those who have emerged in the last 15 years, seem to think that actually engaging with a customer, talking to them, asking questions to which they might  not like the answer, is akin to walking on stage to deliver a presentation to a crowd: to be avoided at all costs!

Marketing is at its core, all about human interaction.

Martech has its place, but is not a silver bullet, or replacement for the insight that comes from humanity.

 

Header cartoon courtesy Tom Gauld at www.tomgauld.com