Aug 6, 2021 | Communication, Marketing
Hindsight planning is a process of putting yourself as realistically as possible into the ‘headspace’ where you have achieved the goals you set, and then ‘plan backwards’. It sounds like a semantic game, but it is not. It is rooted in Psychology.
As Daniel Kahneman put it: ‘Once you adopt a new view of the world, or a part of it, you immediately lose much of your ability to recall what you used to believe before your mind changed’
Having agreed the shape and size of the business in 1, 3, or 5 years, whatever horizon you have agreed on, the task now is to ‘put yourself there’.
The difficult choices that are needed become more obvious when you can better see the challenging questions you need to ask.
Imagine the outcome has been achieved, and then articulate the steps you have taken in that journey. This is an exercise in perspective. Working backwards enables you to test ideas, assumptions, and choices, against an outcome you have agreed has already occurred, albeit in your collective minds. In that way, a ‘reality filter’ of sorts has been applied.
Some of the obvious questions that need to be answered may be:
- Where did the revenue come from? Growth is not possible in the absence of revenue, so list the sources. Current customers, new customers, channels, business models, products, technical achievements, geographies, and so on. However, do not just list them, articulate in some detail how it has happened. Again, that past perspective adds real ‘grunt’ to the conversations.
- Where did the capital come from? Growth is a veracious consumer of resources, particularly capital. How did you fund that growth? Reinvestment of retained earnings, capital raising from friends and family, or from the markets, public and private, debt finance considering the necessity for assets as collateral?
- What is the dominant business model? Are you a middleman, retailer, on-line item sales, subscription sales, did you achieve a position to monetise arbitrage opportunities? Digital has delivered a host of new and emerging business models to us over the last decade, but one thing that has become clear, if it was not already, is that differing business models do not live comfortably in the same house. Therefore, if your revenue streams come from different business models, the structure of your resulting business needs to be decentralised by those differing business models.
- What is the ideal corporate structure? Have you remained private, are you publicly owned, a partnership, Joint venture, franchise system? There are many options, and as in the previous question, potential siblings rarely successfully live in the same house.
- What capabilities were required to succeed, and where did you find them? This is a question in two parts. Firstly, what capabilities were required from individuals, technical, strategic, financial, and all the other factors that make human beings able to contribute? Secondly, what were the organisational, leadership and cultural factors that enabled the organisation to leverage the capabilities the individuals brought in each morning as they turned up to work.
- Which customers, markets, products, technologies, relationships, were critical to the success? The answers to these questions are a ‘must know’ level. Why did those customers come to you, choosing not to go to a competitor? What is the factor that differentiated you from the others?
- Which competitors proved to be the most potent? Anticipating competitive action, and planning to accommodate the impact is a necessary part of every plan, as noted previously.
- Where did the new competitors come from? New competition almost always comes from the fringes, and often outside the normal scope of most extrapolative planning. Looking widely at what is happening in other markets, and other technologies may offer insights to where new, and more potent competition may come from. Honda started in motor bikes with the Honda 50, selling it to students in California as cheap local transport. None of the incumbents, Triumph, Norton, Harley, saw them coming, they thought they were toys, being bought by people who would never buy a big bike. Blockbuster ‘owned’ video, and could have bought Netfliks for $50 million, but thought them irrelevant, not even an irritation. 5 years later Blockbuster was broke.
- What is the emerging source of customer value in the market? Nothing new will be bought in the absence of a reason to switch from the incumbents, which always means new value has been created, somehow. How did you create yours?
- What did we do wrong, and what did we learn? You learn more from your mistakes than you do from the things you got right. Make sure ‘learning’ is part of the cultural DNA of your business.
When you have the answers to all these questions, and probably many others, found with the benefit of the virtual hindsight, you will be in a powerful marketing position, able to write the plans that double-down on the things that will deliver the objectives and success.
Normally, especially when things go wrong, we conduct a post-mortem to understand why they went pear-shaped.
Hindsight planning is in effect a pre-mortem.
It looks at all the things that could have gone wrong, all the problems that emerged, workable solutions considered, and what works and what did not.
When you have done that well, the chances of being surprised by something are significantly reduces, while your ability to respond is increased.
Header cartoon credit: Tom Gauld at www.tomgauld.com
Jul 26, 2021 | Communication, Customers
Contrary to much advice, sales is not just a pure numbers game, the quality of the numbers make more difference than the numbers themselves.
Throw the net widely to attract prospects, the more the better, is the common mantra. It implies anyone who shows the slightest interest is automatically in the net, and so becomes a consumer of resources as efforts are made to lead them down the ‘funnel’ to a transaction.
Sound about right?
What nonsense.
If you had 1,000 people and a 1% conversion rate, you would make 10 sales. if you had 100 good prospects and converted 10%, you would make 10 sales. The transaction numbers are the same, but the latter would be far superior, as rather than spend resources chasing the 990 that would not convert, you have cut down to 90, leaving a lot of sales resource to be off doing something useful.
You do need to fish where the fish are, but it helps to make sure that the species around is what you are looking for, and that the bait is right, otherwise, you will just catch a cold.
The lesson is to focus your efforts on your ideal customer, where you will get the most leverage for your resources. This means you do some work up front to identify the characteristics of your ideal customer, then qualify early and hard to husband sales resources and direct them to the point of greatest impact.
Yes, sales is a numbers game, but the quality of the numbers makes the difference between productive and broke.
It reminds me of the legendary copywriter Gary Halbert’s advice when he’d ask an audience for the best way to sell a hamburger.
At seminars, Gary would throw out that question and people would respond:
… Make the juiciest burger…
… Have the best location…
… Provide the quickest service…
… Create a killer sauce…
And so on.
Gary would then give the correct answer, which was…
Find a starving crowd!
When you need a sounding board to find your starving crowd, give me a call, I’ve been finding them for 40 years..
May 11, 2021 | Communication, Customers, Marketing, Sales
The old cliché that a picture is worth 1,000 words is disproved again and again, by all the pretty websites and dumb marketing collateral material out there, that is useless.
While pictures have a valuable role in grabbing attention, the real commercial value is delivered by the words that express the value proposition and call to action to the potential customers who turn up.
We are in a competition to gain and keep attention, then to move the reader to a decision. That decision may be that your product deserves a place on the ‘maybe’ list, or to the next point in the sales process. A successful sales process is always moving the potential customer towards the transaction.
Human beings scan their environment, instinctively leveraging their mental frameworks to filter out the stuff that does not matter. Our subconscious organises and filters information, leaving cognitive capacity to deal with the threats and opportunities that emerge. We do not see anything that does not have to do with survival, love, relationships, doing better, some sort of challenge, danger, unless for some reason, it is specifically relevant to us at that moment.
When someone sees our website or collateral material, their brain on autopilot filters out the stuff that is not directly relevant. Somehow, we need to cut through those automatic barriers that exist.
Story is the best way of doing so.
They are the evolved format that can deliver the information that reflects ambition, challenges, a plan to conquer the challenges, unexpected hurdles, and last-minute success. This is the standard format of every story, if you do not use it, or some derivation, the reader will skim over your site and not take in anything at all, effectively not ‘seeing’ it.
Formulas are the assembly of best practise; we use them because they work.
That is why stories work, it is the formula that feeds into the cognitive patterns used by our brains.
The key to a story is clarity. Who is the hero, what he/she must do to win, what happens if he/she does not win, what happens when they do?
What problem do they have, what does the outcome look like when the problem is solved?
Noise kills, the noise from inside and outside our business.
From inside, the clutter we spray around, the ambiguity of what we are saying confuses what others hear.
We need to clarify the message.
How many potential customers go elsewhere because they do not understand how you can help them?
When you need someone to help cut through your clutter, give me a call. It will be a worthwhile investment in clarity.
Mar 22, 2021 | Communication, Marketing
Several of the advertisers who bought large packages of advertising in association with the recent Australian Open did themselves a massive disservice.
The ‘Exposure Effect’ is a double-edged sword.
We are more likely to be positively impacted by things with which we are familiar and comfortable. That is how advertising works. However, the flip side is that we also become bored and potentially contemptuous of those things with which we are extremely familiar and dismiss them.
Colloquially, we refer to this as ‘Familiarity breeds contempt’.
The marketing wallies at ANZ ignored, or perhaps more likely did not understand, this flip side of the ‘exposure effect’. They were persuaded to spend up big on ad spots by channel 9 sales executives in the mistaken understanding that ‘more is better’.
Those who watched the Open were probably at least sports fans if not specifically tennis fans, and they probably watched a lot of the tennis.
The negative impact of the exposure effect can come into play as early as after 5-7 exposures to an advertisement. Most of the viewers would have got that in the first hour or so of watching, after which, the familiarity desired by the advertiser, risked becoming something else entirely.
Diminishing returns from the advertising investment.
The ANZ advertising was grossly overexposed. The use of Dylan Alcott being introduced by the hosts ‘mucking around’ with his phone, seemed to be in almost every ad break.
Clearly the ANZ made a significant investment. It would have been much better used if some of that investment had been directed towards a variety of creative executions of their brand, rather than being all the same quickly boring, becoming really annoying, execution.
Personally, I became so annoyed, had I an account with the ANZ, I might have run down to the branch and closed it, as doing business with a bank that wasted so much money does not seem to be a good idea.
Not the impact I assume their naive marketing people were hoping for.
Mar 16, 2021 | Branding, Communication, Marketing
Is it wider distribution, provocative headline on a Facebook ad, play with price, or find a celebrity to endorse it for free???
It is not any of these, or many other options that probably sprang to mind.
The answer is both simpler, and way harder than any of these, and very few do it well
It is defining the problem you are solving in a way that adds value for a customer.
Unless you define the problem, how can you propose/define a solution that someone is prepared to pay for?
People buy solutions to the problems they see and feel, but often go unrecognised before they are pointed out. Those solutions to unrecognised consumer problems are always the outcome of deep research, creativity, and usually experimentation by the marketer.
Who knew we needed a better MP3 player before Apple produced one?
Often the challenges we face as marketers are hidden deep in our psychology
There are the functional problems we solve, which is where most of us stop.
Then there are the deeper psychological needs that are met in some way by the stuff we buy, that do not receive the same consideration, but they are the real drivers.
It is in that intersection of the functional and psychological that the gold lies hidden.
Who really needs a Rolls Royce to get from point A to point B?
Nobody.
Functionally we do not need the Roller, a battered up Hyundai will do the job. However, arriving in a Roller says something about us, it sets a frame by which many others will judge us, which fulfils deep psychological needs.
Food, shelter, community, reproduction, safety, status, these things all play a role in the things we surround ourselves with.
You go out and buy a Harley Davidson, you are making a statement, not buying a bike for transport.
Does the person who joins Weight watchers join just to lose weight, to fit into last year’s dress, or to feel better about themselves, to attract a mate, impress their friends and peers with the great new bod?
Untangling this can lead you to your value proposition, but it is a tough road, and not often travelled well.
How do you define the hidden problem that has your product as the only solution?
Combine the ideal customer profiling, the typical ‘who, what, where, and why’ analysis, with a ‘Pains, Gains, Jobs to be done’ analysis.
Then work, test, research, iterate, and with patience, you may end up with the profile of a customer that when they hear your pitch immediately thinks: ‘they are talking to me’.
2 examples from my personal experience.
Meadow Lea margarine. Meadow Lea was one of many margarine brands launched after the regulations dictating what could and could not be added to vegetable oils to make a spread, and production quotas, were finally removed in 1975. Initially the brands concentrated on the obvious benefits of margarine: spread-ability, price, and a healthy low cholesterol alternative to butter, and the market expanded rapidly. Meadow Lea marketing management spent a lot of time and effort really understanding the drivers of the choice of brand, while competing with everyone else. In the mid 70’s, women were entering the workforce in large numbers for the first time, combining the paid work with the traditional roles of housewife, cook, cleaner and mother. The result was an exhausted and frustrated cohort of younger women wanting their effort to be recognised. ‘You ought to be congratulated’ expressed that psychological need exactly. It resulted in Meadow Lea rapidly going to market leadership by a very wide margin at premium prices.
Local bookkeeper. An acquaintance who ran a local bookkeeping service for small businesses was having real trouble gaining clients. He tried all sorts of tactics from local advertising, networking at every opportunity, to bashing the shoe leather door to door. Nothing worked. Over a coffee one day reflecting on this, we arrived at the conclusion that his service was not about book-keeping, but about saving the owners of small businesses the time and frustration they were expending on their books, that could be better used elsewhere. To him, this seemed like a revelation. The next time I saw him was at a local networking event, at which, when his turn came to spend 30 seconds spruiking his business, his opening line was ‘My job as a book keeper is to help my clients get more sex’. Once the laughter died down, he explained that owners of SME’s had much better things to do with their time than book-keeping, so why not let him do that for them while they spent their time in other ways. He remains successful, although, sensibly, there is no reference to sex on his website.
When you need assistance digging down to the real motivators of activity, call someone who has done it before, successfully.
Feb 11, 2021 | Change, Communication
Pretty obviously, ‘Free’ is the most powerful word in marketing. It is the best way to get people to trial a product, make the trial free, no risk, no commitment, no money. However, it is hard to make ‘free’ commercially sustainable.
The second most powerful word is ‘because’
‘Because’ gives people permission to do something they would not normally do, it provides the reason to change behaviour, it removes the discomfort of the change, we can always revert, we just did it this once ‘because…’
Next time you want to go to the front of the line in a supermarket, try asking politely, and using ‘because’ when you ask. The addition of some emotive reason after the because will increase the likelihood of an ‘OK’ even more.
E.g. ‘would you mind if I go in front of you‘ success rate about 20%
‘Would you mind if I go in front of you because I only have a few things” success rate about 40%
‘Would you mind if I went in front of you, because I only have a few things and my sick mother is waiting in the car‘ success rate about 80%.
Try it the next time you want someone to do something for you.
Header cartoon courtesy of Scott Adams, and Dilbert.
