Are we coming to the end of the great Australian FMCG Duopoly?

Are we coming to the end of the great Australian FMCG Duopoly?

Jan 3, 2017 | Marketing, Sales

Supermarkets in Australia have had it good for some years, having the protection of a duopoly, which is almost a licence to print money in most circumstances. Woolworths certainly did for quite a while, and the fact that Coles did not is a reflection of poor management rather than a competitive market.

Perhaps I am being overly conspiratorial, but why you should ask, did Woolworths not at least, stick a toe into the burgeoning markets to our immediate north when they were so awash with cash a few years ago? They left it to the European retailers, so presumably they did the numbers and determined that  the margins were not up to their standards, the competitive nature of those markets was beyond their ability to survive. Interestingly and perhaps tellingly, the 4 major Australian banks, now a very comfortable oligopoly have made forays into foreign markets, with a stunning 100% failure rate, and are now hunkering back down to squeeze more margin from the domestic mulch cow.  Perhaps Woolies came to the same conclusion, so opted instead for a skirmish into domestic hardware.

Look how well that worked.

Business models evolve, sometimes quickly and we appear to be in a period of extreme evolution. It may not be obvious on a day to day basis,  but I bet you will be able to look back in 5 years, and see that the changes will have been significant.  I predict that general wholesalers will be almost a museum piece, as business is done directly, enabled by digital technology. The choke hold they have held on the supply chains for the last 75 years is about to end.

Added competition has further complicated the happy duopoly. Aldi has taken a big chunk of share, and in the process changed the dominating retail model, increasing the focus on price to the detriment of proprietary brands and margin extraction by the ‘rental’ of  retail shelf space to suppliers. By another means, Cosco has also made a dent, although nowhere as marked as Aldi, and there are pointers that Aldi’s German rival Lidl, owned by Kaufland is eying an entry to the Australian market. In addition, AFN,  reporting on the Woolworths AGM is highlighting the rumoured entry of Amazon Fresh into the Australian market.

Changing consumer habits. The trip into the supermarket is just one point in the process of urban dwellers feeding themselves.  Not only are there many alternate sources of products they can cook themselves now available, but eating food prepared for you is increasing, from a high priced restaurant to the lunch van that turns up in the area at 12.30 every day and sells you a sandwich.

Fragmenting consumer lives. Eating together as families has been a part of the human DNA since we came out of the trees. It plays a social role as well as one that delivers safety and acts as a medium to pass on the knowledge and experience  gathered that day, and from a lifetime, but that habit is fragmenting rapidly, along with all other aspects of our work and social lives.

Technology is the enabler and often cause of all that is going on above, and the one thing we know for sure about tech, is that the pace of development is always  accelerating, and that if for no other reason is the reason that the FMCG landscape will be very different in 5 years. For evidence, look no further than the Amazon Go  test in Seattle, just one store, accessible by Amazon staff only at this stage, but perhaps the way of the future.

My conclusion to the opening question therefore is ‘Yes’ we are coming to  the end of the duopoly, and not just in FMCG.

 

How do you build a truly successful sales foundation

How do you build a truly successful sales foundation

Nov 28, 2016 | Customers, Sales

Selling is a tough gig, but it is one that every business has to master or fail.

The days of waiting for the next customer to walk through the door and place an order are over. These days you have to be out there hunting for new customers at the same time you are building relationships with existing customers to optimise your repeat purchase and share of wallet metrics.

So how do you go about this?

There are a few common practises of truly successful sales people that I have seen over my long career. These practises form what I call a ‘foundation’ for successful sales activity.

Always be positive.

When was the last time you bought anything from someone who clearly did not care if you bought or not, who had a take it or leave it attitude?

People like to buy from enthusiastic and helpful people, so being ‘up’ all day, every day, is vital. The sales leadership plays a huge role in the development of this sort of positive and proactive culture.

See yourself through the customers eyes.

When the sales effort is just all about the numbers, sales people tend to focus on making the sale now in order to make those numbers. Customers do not really care if you make your numbers or not, they care only about the value they can derive from buying something from you. Seeing yourself in this way is an unfortunately rare skill, but those who have it sell multiples of those who do not. However, luckily it is a skill that can be learnt.

Manage time proactively.

It is so easy to waste time, not to maximise the productivity of that most precious of resources. In selling, this approach demands that you plan your day and sales approaches, anticipate the needs of customers, and plan the conversations to focus on the value your solution delivers to them.

Treat your prospects and customers time as  being more important than yours, as to them, that is the way it is.

Balance your activities such that there is a flow of leads that are in various stages of conversion so you have a steady flow, which is always more productive than a flood/drought situation.

You only get one chance to make a first impression. When you meet someone, they generally make their minds up in the first few seconds about whether you are someone they would like to engage with, or would rather move on. Making that good first impression is absolutely vital to having any chance of building a relationship.

Listen, then listen some more.

As the old saying goes, ‘god gave us two ears and one mouth for a reason’. The best sales people I have met are always great listeners, they keep conversation going, steering it by asking key questions at key times based on the feedback they are getting from the other person.

Follow up regularly but sympathetically.  Continuous follow up is a key skill, but there is a line between following up in a friendly and sympathetic and stalking.

Model your behaviour on the masters.

Joe Girard is seen as one of the best, if not the best salesman ever. Taking lessons from the masters is always a good idea, those who both practise what they preach and have profited from the practise. The best sales book I have ever seen is now decades old, “Spin Selling’ by Neil Rackham, but the same rules still apply.

As a final point, from my own experience running sales and marketing in FMCG, one of the most common mistakes I have seen is businesses treating sales as a training ground for other functions. Every trainee, particularly marketing and management trainees have to ‘do their time in sales‘. This is a huge mistake, when sales success is so important to survival, it makes sense to only have the best representing you and your products, and if they become the highest paid people in the organisation, great!

Cartoon credit www.tedgoff.com

 

Should we be rethinking our Unique Selling Proposition?

Should we be rethinking our Unique Selling Proposition?

Nov 15, 2016 | Marketing, Sales

From the dawn of marketing time, the Unique Selling Proposition has been a foundation idea. I wonder if it holds the same attraction now, post the digital reconstruction of marketing, or should we be rethinking our approach.

The USP was intended to communicate what you did that nobody else could, or would. That was fine in the days before the marketing world was global, as in your local area you could pretty easily be unique, but that is no longer the case.

Any idea that emerges that generates traction with customers will be copied very quickly by competitors, making it no longer unique. Anyway, just because an idea or claim may be true, there is no compulsion that customers should believe it.

Perhaps this boils down to making an appeal to people’s hearts rather than their minds. This has always been the case, but in a homogenised world, takes on even more importance.

When I think about my own behaviour critically, there are a few things I notice that presumably are pretty common. If so, why are we not using them more in place of claims of bigger, faster, better?

Choice. In most cases, there is more than one product that solves whatever challenge I am facing. In making a choice, being sure of the ability of the product to deliver the solution is worth money to me.

Top of mind. TOM is even more relevant than at any time in the past. We are blasted with thousands of messages every day, so being Tom when the appropriate occasion arises is gold!. A good enough solution that is there, easy to access, and offers reasonable value will get a vote.

Experience is never forgotten. Good or bad, the past influences the way we behave today. There are now a number of café’s in easy walking distance of my office. Some time ago I got a lousy coffee in one of them, probably a ‘trainee barista’ but when I pointed out politely the coffee was crap, all I got was a shrug, and explanation that the boss was  not there. No second chance will be given, perhaps irrational, as it was a while ago, and almost certainly a one-off, but  that is their problem, not mine, I have plenty of choice.

Heart. What it says about us. Sometimes we make purchase choices simply on the basis of what the choice we make says about us, and this is usually almost unconscious. I drive an old Mercedes, it is a great car, but much to my surprise, it is what that car says about me that makes it so comfortable for me. Similarly, in the days we all smoked, Marlborough was a big brand, not because there was any USP, it was just a fag, but because of what it said about the smoker. (Lucky that has changed a bit over time).

Value is always a combination of all sorts of little things, some not obvious. Convenience, availability, branding, packaging, exclusivity, design, and yes, price, as well as many other often highly personal factors.  In an increasingly busy life, changing just a little of any one of the factors can considerably enhance value.  When we compute value, again often unconsciously, it is rarely the USP that pops into our minds, there is a mental wrangle of all the foregoing, that sometimes ends up being expressed as a number relative to some other number for an alternative, called price, and sometimes as just a feeling.

Back to the question, should we rethink our USP?

To my mind the changes that have occurred in the last 20 years demand that we do so.

We used to be able to sell products, so the USP was a useful tool, but that time has passed. The power in the buying relationship has moved from the seller to the buyer, completely altering the nature of a sales process. We can no longer deliver a product and charge a price, now what we deliver is an increasingly personalised value package, for which we are paid. We need therefore to be considering a Unique Value Proposition, UVP.

It might seem just a semantic difference, but it is a huge behavioural one

 

Are you Ready to Buy?

Are you Ready to Buy?

Nov 4, 2016 | Marketing, Sales

Reality TV is about as far from Reality as you can get, but sometimes something useful emerges.

Just for the record, I do not watch this stuff, there are thousands of better ways I can think of to waste an hour. However, judging by the ratings and water cooler conversations, many do.

Sales happen when a potential customer encounters some sort of situation that requires a solution. They go seeking that solution firstly from those with whom they have a pre-existing relationship of some type. For a consumer product it is often represented by a brand they know and trust, in a B2B situation, it is those with whom they have successfully done business before, followed  by those they know have the solution they need, and in whom they have some level of confidence.

Back to the reality shows.

Expecting to make a significant sale without some sort of relationship being in existence just never happens, irrespective of how ready to buy the potential customer may be.

That  ‘Married at first sight’ show, throws two people together and expects them to make a successful marriage, while the world (or some small part of it) watches. You may as well turn up at a random hens night and ask the bride to be to marry you. She might be ready to get married, just not to you.  The ‘Batchelor’ series, of both persuasions, at least gives the protagonist a choice, but it is a limited and superficial choice, and as we have seen, also doomed to failure.

Making a sale is like building a relationship that ends in a marriage. It is a process that takes time, consumes resources, requires a great degree of mutuality, and even then does not always work.

Being ‘ready to buy” is not enough, they need to be ready to buy from you before consummation.

 

How to tell if you are selling to the right person.

How to tell if you are selling to the right person.

Oct 13, 2016 | Sales

The early stages of a B2B sales process can be tricky. Few people are happy to admit that they do  not hold the power implied in their role, and those in a corporate purchasing role are particularly reluctant. Rarely will they admit that they are not able to sign a purchase order, or that they are just tyre kicking, price checking, or otherwise filling their time and wasting yours.

How do you know?

That question arose a short while ago while working  with a medium sized business struggling with a wealth of so called leads but a very poor conversion rate.

One of the frameworks that  used to be deployed quite a bit, but seems to have been forgotten is “B.A.N.T.”

Budget: The ability to buy.

Authority: The authority to sign a contract.

Need: The capabilities of the offer matched the clients requirements, and/or solved a problem.

Timeframe: Articulated a sales timeline that accommodated the selection, transaction and implementation of the solution.

It was a simple and pragmatic way of sorting the real leads from the chaff, and enabled simple metrics to be applied.

It was most famously used by IBM in the 80’s who required a documentation of BANT variables , and a positive on three dimension before any significant development resources could be allocated.

The world has moved on a bit since I first saw BANT applied. Sales funnel automation, online selling, relocation of the power of information from the seller to the buyer, consensus decision making, and all the rest, but the foundations of success have not changed at all.

The simple application of the BANT parameters to the prospect list of this business, and the subsequent prioritisation of effort and resources delivered a very quick return.

The world is a more complicated place, but sometimes the simplest ideas are still the best.

Why do customers buy from you?

Why do customers buy from you?

Sep 9, 2016 | Sales

Last week I found myself in another conversation trying to make the case to the owner of a medium sized manufacturer that his best shot at survival was to focus obsessively on a niche where he could add value in some way to customers that his competitors could not match, where he had a competitive advantage.

As often happens, the need to deliberately choose to ignore a possible ‘walk in’ was winning the day, the  desire to be all things to all people ‘just in case’.

It is a common challenge for all businesses, not just small ones.

In the course of the conversation, I recalled a sense of confusion that occurred last Christmas.

My wife bought me a couple of shirts. I needed them, but hardly inspiring.

As ‘Santa’ handed the wrapped pack to me, she said “I did not know what to buy you”.

In that moment, I realised that while the woman I had been married to for 35 years did not know what to buy me, I got emails every day from Amazon offering me stuff that I would really like!

A bloody algorithm knows me better than my wife!

Go figure that one out if you can.

Jeff Besoz has made a huge dent in the world, and one of the quotes attributed to him is: ‘Amazon  does not sell to customers, we help them to buy”

Pretty good advice, and to do that, you must know them intimately, at least as intimately as possible.

Bezos insists that there is an empty chair in every meeting at Amazon representing the customer, to continually remind all and sundry of why they are there.

Simple really. Customers will buy from those who know  them well enough to anticipate and deliver on their needs.  Customers are not interested in us, they are interested in them. The extent to which we can help them, they will be prepared to buy from us rather than someone else who exhibits less interest in them.