Jun 4, 2025 | Category, Customers, Demand chains, Marketing, retail
Mass market retailers all use the same, or very similar metric to measure store performance: Dollars revenue and/or margin per square foot, or linear shelf metre. In addition, they track the size and content of the customer ‘basket’ to optimise product range against those key performance measures.
This leads to a mindset of short term profit maximisation in the buying office, at the expense of everything else. Only senior levels talk about strategy, and then in most cases, they fail to grasp the qualitative reality of ‘strategy’ and fall back on the numbers.
Shoppers do not care about your margins/sq metre, irrespective of how you generate it (price, stock turn, or supplier ‘shelf rentals’) they care about range convenience, on shelf availability, and of course, price.
But price is only one of the considerations, an important one, but only one.
Ignoring the others is asking for trouble in the medium term
Trouble is what the Australian gorillas now have.
Their domestic supplier base has been brutalised, and the leverage they can exert on international suppliers is way more limited, simply because they do not have the scale to apply the pressure. Now in the absence of a high $A, they are suffering, and that suffering is unlikely to ease any time soon as the economy is likely to flatten in the wake of the ‘stupidity blanket’ being thrown over world trade by the US administration.
In addition, they now have become populist targets for a body politic that has no idea of the economics and dynamics of the ‘paddock to plate’ supply chain.
The marketing default has become loyalty cards, an added incentive to shop at the same chain, as they will give you something in return. Trouble is you cannot buy loyalty, you can only earn it. How many do you know with a wallet stuffed with ‘loyalty cards’ who are not in the slightest ‘Loyal’?
Mar 7, 2025 | Customers, Innovation, Marketing, Small business
I have started seven businesses, so I have some entrepreneurial form.
One I sold, one delivered profits over a 5-year period, but circumstances led to its closure, several did the dead cat bounce, and a few more struggled a bit before common sense cut in, and one, StrategyAudit has been going for 30 years. On top of my own gigs, I have been involved, engaged, and accountable for many, many more as a consultant, interim manager, and contractor.
After all that effort, sweat, broken dreams, conflict, disillusionment, and frustration, mixed in with some ‘I told you so’s’ what have I learnt?
Timing is crucial. Two of my dead cats were just timing: I was too early, and others since have done similar stuff and made a killing, proving that a good idea is rarely yours alone. Connected to this, but not in a causal way, is that it always takes longer than you think. Take your worst case time-frame, the one that cannot happen, then double it. If successful, that impossibly long time frame might be close. We never hear of this from the start-up porn inhabiting the web.
You are never too old. Ray Kroc was a 52 year old appliance salesman when he had the brainwave that led to McDonalds. In Australia, the age group most likely to start a business is 35-39 years old, comprising 19% of start-ups. The likelihood of extreme success keeps rising until the mid to late 50’s, so Ray Kroc is not an outlier. This is contrary to the common perception of the hoodie wearing entrepreneur who only needs to shave once a week. In my case, all my efforts except StrategyAudit were born before I was 40, the earliest, not counting my efforts to make a bob while still at school and University, was when I was 22. StrategyAudit was born from necessity when I was 44.
Focus and commitment are mandatory. Entrepreneurs by their nature are curious, perceptive, and usually see things from an uncommon perspective. As a result, they are easily distracted by the new shiny thing, or great idea to bolt onto their baby. Sometimes these great bolt-on ideas come from early users, whose opinions carry considerable weight because they are so important to you. The internal struggle with this fragmented attention and less than absolute commitment is often a real problem. In my case, it probably cost me at least two potentially extremely successful businesses. I have often wondered at the role of ‘necessity’ in the game of unicorn chasing.
Boot-strap or take equity partners. Every start-up is short of two things: cash and capability. It is enormously tempting to address one of both or these by taking in partners by one of the many avenues open. Often this is the right thing to do, it usually makes scaling quicker and easier. The downside is the loss of control. Most entrepreneurs have some level of ‘control-freak’ in their DNA, and struggle when they go from having the final word, and having to take on board the views of others.
Capability shortfall. No entrepreneur can cover all the capability bases required for a successful business. That leave the choice of how, when, and sometimes if, you fill the gaps. Getting this wrong causes all sorts of terminal events. Often these are around cash flow shortages, particularly when the enterprise appears to be rapidly gaining ground and being successful. However, all the other functions that must be executed by a growing business are equally vulnerable. These days it is sometimes little more than finding and keeping the right people who operate at whatever ‘coalface’ you service.
Solve a problem felt by others. Solving a problem only you have will not lead to a business unless others have the same one. Equally solving a problem you think others have, when they do not feel the impact of it, or your solution costs more than the problem costs them, is not useful.
Round pegs and square holes. In most SMEs seeking to scale, or even just survive, the choice of personnel, and the jobs they do is critical. Make a mistake and it can be terminal, as SME’s do not have the cushion of scale to absorb those mistakes. The adage of ‘hire slowly, fire fast’ is especially important for SME’s.
Too little marketing. Marketing is an investment in future cash flow. Often this is really, really hard when current cash flow is in the toilet. It is profoundly different to the conversion to a transaction, usually called sales, which is just the end point of the process. When you just have the end point, with too little or misdirected effort at the wider functions of ‘marketing’ in the revenue generation process, you will have a mix of productivity suck-holes and opportunity costs that will not show up in any standard set of accounts.
Too little attention to the numbers. The ‘numbers’ critically include the financial numbers, but they are not the only ones that should be monitored, managed, and leveraged. While I obsess about cash with those I work with, cash in the bank is an outcome of a wide range of other things that have gone as anticipated, or if the bank is empty, not as expected. The most critical ones fall into two categories:
- Internal numbers. These are the numbers over which you have direct management control. They range from the costs of manufacturing and service input, to the overheads resulting from the costs associated with keeping the doors open every day. Inventories, cash conversion cycle time, capex and the timing and quantum of expected returns, personnel productivity, and many more consume cash and importantly for an SME, time.
- External numbers. Critically, these are the numbers around the behaviour of customers. They will vary depending on the product you are selling, but customer acquisition costs, referral rates, lifetime value, and repeat purchase rates will all directly impact on the cash in your bank account. They also should include some consideration of the market context, trends, competitor assessments, and regulatory considerations.
Importantly, and often overlooked until too late is the most fundamental number of all: Sales revenue. None of the above is the slightest bit relevant un the absence of revenue. Go after it early and hard!!
There you go, 50 years of hard-won wisdom in a 5 minute read. Call me when you need more.
Nov 1, 2024 | Branding, Customers, Marketing
Imagine you’re at a bustling cocktail party.
The room is filled with chatter, each person vying for attention.
Now, picture your company in that room. How do you make sure it’s the one everyone remembers?
That’s where positioning comes in.
What is Positioning?
Positioning is like choosing the perfect spot at that party, and being interesting enough to attract others into your conversation. It’s not about changing who you are, but about how you present yourself to leave a lasting, positive, and compelling impression. In the business world, it’s about carving out a distinct place in your customers’ minds.
Think of it this way: When I say “safety,” you might think “Volvo.” When I say, “overnight delivery,” “FedEx” might pop into your mind. That’s not by accident – it’s careful positioning at work.
Why Does It Matter?
In today’s crowded marketplace, being good isn’t enough. You need to be memorable. Positioning helps you cut through the noise and stick in people’s minds.
Remember, your customers don’t care about all the features your team has painstakingly built. They care about how those features solve their problems or improve their lives. Positioning is about highlighting that connection.
How Does It Work?
Positioning isn’t just a catchy slogan or a clever ad campaign. It’s a strategic framework that guides everything from product development to sales pitches. Here’s how you can make it work for your company:
- Find Your Niche: Even if it’s small, being a leader in a specific category is powerful. It’s better to be a big fish in a small pond than a minnow in the ocean. However, like everything, there is a limit. There may be a niche in the market, but you had better make sure there is a market in the niche.
- Simplify Your Message: In the world of positioning, less is more. Aim to “own” a word or concept in your customers’ minds. Make it easy for them to understand and remember what you stand for.
- Align with Customer Needs: Your positioning should resonate with your target market’s specific needs and expectations. A product that seems irrelevant to one group might be a game-changer for another if positioned correctly.
- Create a Mental ‘Box’: Help customers categorize your product or service. If they can’t quickly grasp what you offer, you’ve already lost them.
- Be Flexible: As markets shift and your company evolves, be ready to adapt your positioning. What worked yesterday might not work tomorrow.
Putting It into Practice
Imagine your company has just developed a new line of double-glazed windows and doors. Instead of listing all the technical specifications, you might position them as the solution to high energy bills in harsh Australian climates. Suddenly, you are not just selling windows and doors, you are selling comfort, savings, and style.
This positioning would then guide everything from how your R&D team refines the product to how your sales team pitches it. Effective positioning creates a coherent story that resonates across all departments and customer touchpoints.
The Bottom Line
As CEO, think of positioning as your strategic compass.
It is not what you say about your product, it is what your customers believe about it that counts.
When done right, positioning:
- Gives customers a clear reason to choose you over competitors.
- Aligns your entire organization towards a common goal.
- Makes your marketing more effective and efficient.
Remember, in the crowded marketplace of ideas and products, it’s not the loudest voice that wins. It is the one that resonates most clearly with its audience.
That’s the power of positioning.
What position do you want your company to occupy in your customers’ minds?
Answer that challenging question, and you will have taken the first step towards market leadership.
Oct 18, 2024 | Communication, Customers, Marketing
The sales funnel, often depicted in materials promising a path to riches, has profound flaws.
It implies two misleading concepts:
Gravity: The notion that business arrives at your door via discrete steps in a gravity-driven funnel is nonsensical.
No customer focus: Until the bottom of the funnel, where deals are signed, the emphasis is on marketing tactics rather than the customer.
Success demands that a customer is willing to pay for a need to be filled, an itch scratched, or an aspiration fulfilled that’s worth more than the price paid. Value must be created for the customer.
Even for everyday consumer goods, not everyone is in the market all the time. For most products, consumers are only occasionally in the market. In B2B sales, buyers may only appear once a decade, and they’re often not the ones who ultimately make the decision to buy and authorise payment.
These factors lead to the conclusion that the standard templated sales funnel is fundamentally flawed.
My alternative, displayed in the header, is more realistic. It shows progression through a sales process powered by the quality of attraction at each point. It starts with the customer being in the market only occasionally. At those times, you must be included on their list of possible solutions, usually weeded down to a shortlist for further investigation.
At each stage, customers face friction, go/no-go decision points, as they move towards a transaction. Your marketing collateral and overall impression contribute to overcoming this friction. For example, a potential car buyer will suddenly notice many shortlisted brands on the roads simply because they’re now aware of them.
This process is called the “frequency illusion” or its formal name: the “Baader-Meinhof phenomenon” (A scary name for those over 65.) It involves two related psychological concepts:
- Selective Attention: Once aware of something, your brain automatically looks for it, making it more likely to be noticed.
- Confirmation Bias: Encountering the thing you’re now aware of, your brain notices it, making it seem more prevalent.
Templated sales funnels tend to oversimplify the complexity of a customer’s journey towards a purchase. They rarely accommodate the differing behaviours of potential customers, lack recognition of the reasons one prospect drops out, and others circulate between stages as they reflect on the purchase. They completely ignore the impact of competitive activity and offers that may emerge, and tend to emphasise quantity over quality of prospects gathered.
By starting at the exact opposite end, where the potential customer lives, you should be much better able to craft marketing collateral and action points that reflect the real position in a purchase journey of a prospective customer.
Sep 27, 2024 | Customers, Marketing
‘Marketing’ is a word used and misused widely. Perhaps that is because there are so many definitions around, including my own: ‘The generation, building, protection and leveraging of competitive advantage’
After 45 years of marketing, I have gained some experience. Often it has been painful, coming from the unexpected. Distilling all those lessons into a few headline statements has been a mission to help others.
Not all you try will work.
Marketing is about the future, trying to shape behaviour of your customers to remain with you, entice others to try you out, or for them to do something new. As a result, not everything you try will work. This is an unchanging truth irrespective of all the resources devoted to any project, or set of initiatives.
The customer is not always right.
Some customers, often many that are chased most seriously, simply do not matter. They will cost to capture and keep more than you can ever make from them. However, the right customers are always right. The challenge is defining who they are, recognising their pain points, gain points, articulating the value you deliver, and focusing resources on them.
Digital marketing and it’s ugly brother social media is not a silver bullet.
More often than not, relying on digital in the absence of other wider strategic considerations will result in you shooting yourself in the foot. Digital marketing in all its forms, is just another tool in the toolbox. Like any tool, it can be used well or badly depending on the context of use, and the skill of the user.
Customers articulate your brand better than you do.
Meaningful conversations around the board table that seek to define what your brand means to customers is nowhere near as effective as getting the meaning straight from the horse’s mouth. Your brand is what your customers say it is, not what you might wish for, believe, or what some consultant says is ideal. It is almost certainly not what your partner says it is.
Trends go both ways.
The positive trend in your market, your sales, customer attitudes and all the other things tracked will at some point turn and become a negative trend. Nothing lasts forever. Relying on a trend to continue driven simply by its own momentum is a dream. It might be OK in the short term, it will never be OK in the long term. Your task as a marketer is to identify the drivers of the trend you can influence, and do so, while acknowledging those you cannot control, and responding to them.
Success comes from being different.
Different requires risk, going against the grain and the crowd, and often internal naysayers. Success rarely comes from just being the same as others but slightly better. Being incremental can result in you holding your place in an ever-increasing pace of change occurring in every market, but it will never allow you to break the mould and build anything remarkable. It is remarkable that creates real success. The forces arrayed against being different are so powerful that it is an extraordinarily difficult path both for an individual and an enterprise. Perhaps that is why we focus attention and eulogise those few who do break through and generate something truly different
Addendum December 31, 2024.
Playing around with some AI tools, I stumbled across one called infography https://app.infography.in/ that turns text into infographics.
For fun, I tried it on this post, originally published some time ago. 30 seconds, and it gave me the infographic below.
Mar 22, 2024 | Customers, retail, Small business
Anyone dealing with Australia’s two supermarket gorillas knows how hard it is.
You know the old adage:
Question: Where does a 400 kg gorilla sleep?
Answer: Anywhere they bloody like!
Over the 45 years I have rubbed up against them, beginning as a young bloke when there were a number of now disappeared alternative retailers, it has only become harder. However, the rules of dealing with them have not changed much, just become clearer and more cut-throat.
Some years ago I did a presentation to the CEO’s of the SME group of companies who were members of the food industry lobby group AFGC. Looking back on that presentation, republished in several places, it is clear little has changed, certainly not for the better for battling SME’s.
My advice to those I work with also has not changed much, and can be summarised as:
- Have a solid commercial foundation before you contemplate the challenges of distribution through supermarkets.
- Never forget that retailers might be your customers, but they are not your consumers. At best they are a massive barrier between you and your consumers.
- Be relentlessly focussed on your long- term strategy, while recognising retailers are only the means to that end, not the end itself.
- Unless you are clearly differentiated from others, particularly in the minds of consumers, you will be a retailers breakfast.
- Know your numbers intimately. This is the barrier upon which most are wrecked, they have insufficient control and understanding of all their costs, margins, risks, and cash flow.
- Be very willing to say ‘No’ and live with the consequences, as they will almost always be better than the consequences of saying ‘Yes’.
These basic rules, and several others were the topics of conversation in a podcast with Chelsea Ford, published yesterday. The links to the podcast on Spotify and Apple are below.
🎧 Spotify: https://lnkd.in/dWzMN5mN
🎧 Apple Podcasts: https://lnkd.in/dq7yWGJZ
