May 1, 2014 | Change, Innovation, Strategy
There is plenty in the press about the role agriculture will play in the post mining boom era. “Asia’s foodbowl” and other such optimistic clichés get front page coverage.
I have been sitting in Armidale (NSW) for a few days, I have a bit of long term business up here, and I like the people, so come up fairly regularly, but the sense of optimism I normally find despite the difficulties is being squeezed by the realities:
- Communication. Armidale benefited from the presence of independent member Tony Windsor holding the balance of power in the last Parliament, it became one of the poster children of the NBN. It will eventually be a huge boon, but the implementation has a “pink batts” aura about it. A client lives 13 kilometres out of town, running a small property as an adjunct to other activities. She is unable to download a video from youtube, the NBN does not come out to her, she is on the end of the copper “pipe” and this will not change for many years. 13k, this is not the middle of the Simpson desert, it is almost an urban outskirt of a major regional centre. By contrast, a building in the CBD with a number of SME tenants of various types has been wired for the NBN, and the copper is about to he turned off. Problem is there is something wrong in the wiring, and the new stuff does not work for parts of the building, and fixing it seems to be a bit hard. Somebody wake me!
- Transport. We have vast distances in this country. To compete internationally and service those hungry mouths in Asia, we need to be able to cover the distances efficiently, and get our stuff onto boats and planes reliably, quickly and cost effectively. Road transport is dying, literally. The average age of truckies increasing, as young blokes find more financially rewarding and less physically challenging ways of earning a living. Those retiring are not being replaced even as the demand for freight providers increases. Rail is a joke. What is left of the regional rail network is unreliable, and deteriorating.
- Climate change. Nobody in Canberra, or any other cosy clime can do anything about the weather, but for heavens sake why can’t we recognise that there is change happening that will impact on our lifestyles and livelihoods over the next 200 years and recognise that politics and ideology have nothing to do with dealing with the problems in a logical and economically sustainable manner. The people in rural communities like Armidale are like the canaries in the mine, they see and feel the subtle changes as they occur way before the boffins in laboratories and caucus rooms are even aware of them. Listen.
- Immigration and human capital. This is a university town, as well as a centre of rural innovation. The diversity emerging is evident as you walk around the town, and particularly around the university. However, lets be fair dunkum about the capabilities we need for the long term and be sensible about scoring these items as components of the immigration intake. This bit is personal. My brother in law lives in Armidale, obviously with my sister. He is a globally experienced IT guru, and Pommie. His skills are in great demand, but we do not let him work, while we go through an extensive, detailed bureaucratic process projected to take another 6 months on top of the year to date, assuming all the crap necessitated by the form fillers turns up without delay from all the places in the world he has worked at advanced, leading edge IT applications. He is sitting on his hands as my sister tries to make ends meet, because they decided to settle here after 25 years of globetrotting. How many degree qualified hairdressers and chefs do we need on 457 visas? Armidale is a town that desperately needs his skills if the NBN (assuming it is rolled out successfully) is to deliver he economic benefits projected.
If we are to have the post mining agricultural boom, we need to work for it, not just hope if arrives by some osmotic process.
Apr 29, 2014 | Communication, Customers, Sales, Small business
Successful selling
Regularly I find myself on the receiving end of a pitch of some sort, as do all in business. We all buy and sell on a daily basis, and whilst there are easily recognisable and specialised functions that buy and sell on behalf of our organisations, we nevertheless are “pitchers”, and “pitchees” every day.
It seems that one of the impacts of digital communication has been to help us forget, or perhaps brush over some of the foundation sales skills honed over the millennia of human activity, so here they are again:
- Listen rather than speak. Asking questions, listening to the responses, and then asking the follow up questions has always been, and will always be the best sales strategy.
- Benefits not features. When you are speaking, talk about the benefits of your offering to the “pitchee” rather than reciting the features. Customers are really only interested in what value a product is to them, not what the range of features may be, so focus on value to them by demonstrating how your product makes their life easier, more efficient, and more productive.
- Deliver useful insights, knowledge, and intelligence. Being of value to a customer is more than just flogging product, it is also about articulating the context in which the product will be used to add value. Clearly however, there is a line here with confidentiality, any potential customer who hears what their competitors may be doing from you will never trust you again to keep their confidence, but the best sales people are always able to deliver solutions to problems they have collaborated to articulate.
Easy to say, often hard to do.
Apr 28, 2014 | Change, Innovation, Social Media
A/B testing
As a marketer, I am fairly left brain oriented, some may say flakey and opinionated, and I have done well with that for many years.
Here is the paradox.
You can now test just about everything if you try hard enough. All sorts of ads, headlines, copy size, placement, colour, the best mix of paid and organic media, channel A Vs channel B, and so on. There is no longer any excuse not to test, to quantitatively know what works best, to be able to calculate with a pretty good level of confidence the outcomes of some marketing activity.
There are also some great resources to help think about the topic, Avinash Kaushiks blog being gold, as well as books like “A/B testing: The most powerful way to turn clicks into customers”.
There is a trap here however.
Reliance on data to inform decision making can become a crutch that stifles the left brain driven capacity to connect logically unconnected dots in some new way.
Years ago I was faced with a dilemma.
I just “knew” that rectangular 1kg yoghurt tubs would be better than the existing round ones, better for the retailers, better for consumers, just lousy for us as the producer, as margins were at risk from the higher costs, or volumes at risk from higher prices had we chosen to recover all the incremental costs.
Problem was that the round ones were industry standard, and were so for a reason, they were substantially cheaper, easier to print, and all the filling and collation equipment was designed for round tubs. I had to wait 6 years to do an A/B test by subverting a capex process of an equipment upgrade in a factory by substituting rectangular tubs for round. Not a simple proposition when you consider all the supply and distribution angles that had to be covered.
Outcome: rectangular was vastly preferred by consumers (I somehow “knew” that) and retailers as they achieved better shelf utilisation, which we were able to calculate and demonstrate to them. It turned out the cost premium was easily recovered in the incremental sales, and the dynamics of the market were changed in a fundamental way.
I could have, probably should have, lost my job for that piece of subversion, and had it tanked, I am sure I would have, but it would not have gone ahead with full disclosure in the capex process.
Some things are still really hard to digitally A/B test, you still need the market instinct and market risk taking mentality to have a go, but the personal cost has the potential to blow out in the wrong environment, but without the risk, there is no progress
Apr 24, 2014 | Branding, Category, Customers, Marketing, retail
Businesses spend many millions trying to understand the way consumers consider the choices confronting them in a supermarket. With up to 30,000 items on shelf, and some categories having hundreds of choices, it is a key consideration.
A mix of psychology, data science, habitual behaviour, discretionary spending dollars available, and individual preferences all play a role.
A complicated mix.
However, there is a way to at least clarify part of the mix.
Consumers use decision trees, usually without thinking about them when they are in a supermarket making their purchases.
Some purchases are automatic, a habitual choice, others are made after a considered set of choices on a range of factors important to the individual are made, and there are, obviously, many shades of this continuum that apply to a highly personal process.
Imagine a consumer approaching the dairy case looking for fruited yoghurt. Some may just buy their usual brand, flavour and size irrespective of everything else. Others will make a series of choices that will vary for every person, and may look something like the decision tree below.
It will differ for each individual, some will choose the brand first, others the flavour, or the size and price, and a whole range of variations on these factors, but based on the total sales, supermarkets will range products, and give them shelf positions and space based on sales, gross margins, delivered margins, and various promotional strategies. They also use a decision tree.
Retailers and suppliers spend huge amounts of effort, and resources. on this category management exercise, trying to read the consumers mind, and anticipate their reactions to various combinations that are available to them.
It is a data intensive exercise, well suited to the “big data” techniques that are evolving around us. Combining checkout data with store loyalty cards is now becoming commonplace, what is emerging currently is the integration of mobile and social media data into the mix.
As you walk into the store to buy something, there has already been lots of effort gone into reading your mind, and there will be lots of effort and money expended in store in an effort to manage your purchase decisions.
Apr 23, 2014 | Branding, Marketing, Strategy
My early days of marketing were as a minor part of the team that created Meadow Lea, the brand that completely changed then dominated the margarine markets for the following 25 years. I was really just a young gopher, but the lessons that came with those successes, and the trials in between, were scorched onto my brain.
10 years later I joined a major dairy company as marketing manager, and the first thing on my list was to do to ourselves in the milk business what Meadow Lea had done to the butter market.
Shock, horror, Sacrilege!!.
It was even illegal.
Pulling the dairy fat out of milk and replacing it with vegetable fat had been enshrined as illegal in legislation, which was not about to change because some marketing bloke thought it was stupid, and could see a commercial opportunity.
Even the technical staff of the business thought I had gone stark mad, or at least drunk too much at lunch with the agency (it was the eighties after all) and refused point blank to do any development.
It took eight years, but eventually Farmers Best was launched, and whilst not becoming anything like the Meadow Lea blockbuster I had envisaged, certainly prevented anyone else having a go.
My point, not all the good ideas come from the domain you inhabit, from your people, or even your branch of technology.
Looking outside for ideas, technology, and innovation in all its forms, is not just sensible, but in these days of homogeneity and rapid dispersion of ideas and techniques, it is essential.
And the law? well, it was quietly changed as it had became obvious that consumers did not give a fig what sort of fat it was, they wanted the benefit of lower cholesterol and resulting longer life.
