Is Amazon about to hunt the Aussie retail gorillas?

Is Amazon about to hunt the Aussie retail gorillas?

Amazon has bought Whole Foods in a deal worth $13.7 Billion, around $18 billion Australian. The gorilla of the digital retail troupe has invested in an old fashioned, albeit trendy, bricks and mortar retailer.

This Whole Foods purchase makes it very clear that Amazon is setting out to be a significant player in grocery, and you would be brave to bet against Jeff Bezos.

In the US, listed retailers shares took a real dump, while here, Woollies and Coles shares dropped a bit on the announcement of the purchase, but seem to have largely recovered. Perhaps this is because share punters considered the considerable time frame of an impact by Amazon on the profitability of  Woollies and Coles, and the shorter term ‘Aldi effect’ is already priced in.

Amazon sells some grocery staples, and is experimenting with delivery options, including the Amazon Go store in Seattle, but this is a step further. What does this purchase gives them, beyond the small market share estimated at 1.7% ?

  • A footprint they would have found hard to replicate from scratch in a reasonable time,
  • A well known and liked brand that fits comfortably with the heavy users of their on-line services,
  • 20 years of experience in the creating of fresh supply chains from farm to the consumers plate.

I suspect this last one, not mentioned by the financial analysis that has happened in the last few days,  would have been a significant factor in the considerations. Being able to put Amazons tech capabilities alongside that experience could just be the game changer that grocery  home delivery  has been looking for.

Add this purchase to Amazon’s other activities and extensive list of experiments like Amazon Go, and you have the dynamic pricing capability of  Amazon being deployed into the centralised and rigid pricing system that drives the supermarket model.

Isn’t this what taxis used to look like?

In Australia Amazon are pretty well known to be recruiting, and they will not be doing that without some sort of  plan. Retail of any colour requires trade-offs between speed, variety, convenience and price. Home delivery has ‘taken off’ according to some pundits who have a horse in the race, but still has no more than 3 – 5% market share, depending on whose numbers you use. Whatever share it may be, it is heavily skewed towards shelf stable commodities.

These numbers do not seem to have dented the enthusiasm of Coles and Woolworths for store expansions. Their business model serves the last retail step better than  any home delivery has to date, albeit becoming a bit frayed at the edges. The combination of order size, delivery density, and labour and freight infrastructure costs has been toxic for home delivery to date.

Of particular concern to both sides of the equation are the perishable lines, fresh and frozen,  now a significant part of any households consumption. The cold chain requires very close management, and there is no room for error.   At some point I guess someone will ‘Uber’ it by enlisting the crowd in some way to pick up and deliver a packed order at a specific times for a small fee.

Perhaps history will repeat itself.

As a very small boy I remember Mum shopping at a small store in Avalon beach. There was one man in the shop who served from behind the counter, and pretty much knew what Mum bought, so assembled an order from memory as she walked into the store. These days the ranges of SKU’s has exploded, but that can be fixed with a data base on your phone and perhaps the supermarkets of the future will go the way of other capital intensive infrastructure and decentralise.

Amazon has picked on the retailer who does fresh best in the US. In Australia, there may be a couple of options for  them to do the same thing. I wonder if the Harris family is prepared to sell out this time?

Online also misses the impulse sale, the one made as you wait in the queue, although Amazon has a pretty good handle on the personal preferences of their customers. My wife of 35 years ‘never knows’ what to buy me for Xmas and birthdays, but Amazon sends me invitations to buy stuff several times a week, some of which I would genuinely like. The irony of that!

The challenge of traditional retail is the very high fixed costs involved. Retailers seek to convert as much of those fixed costs to variable ones so at least  they can match their costs to activity to some extent. They do this by casualising the workforce, and deploying technology. In contrast, the on line retailers have way lower fixed costs, but their variable costs in the order construction and delivery are much higher.

Even that may not be the major hurdle faced by the established retailers. That hurdle is the capacity Amazon brings to the table for innovation, at high speed. While Woolies and Coles are contemplating a new store layout to trial somewhere, Amazon has trialled, optimised and dumped or implemented several iterations of the best ideas they have at any one time.

Retailers seem to me to have thought that merging their legacy operations with some level of ‘digital transformation’ is something they can do over an extended period, with all the risk modelling that has evolved to supp0rt their existing business model. However, that assumption now seems to have gone out the window.

I do  not know the percentage of revenue that Coles or Woolies spends on anything genuinely new, but suspect it will go nowhere even in sight of the 11.8 % Amazon spends on ‘technology and content’ on their revenue of $135billion.  The major part of that massive amount will not be directed at FMCG, but the lessons will be directly applicable.

I may  not be around to see this all finally play out, but I know for sure that grocery retailing will  not look anything like it does now when my baby granddaughter is buying for her family.

 

10 point leadership framework for reviving SME manufacturing businesses.

10 point leadership framework for reviving SME manufacturing businesses.

The Modest sized manufacturing sector in Australia has  a huge problem. It is being wiped out like an insect  pest at your backyard barbie. The problem with that is that they provide the bulk of employment and training in the economy, and without them, we will become a nation of baristas.

Perhaps it is not that gloomy, there are some exceptional little businesses out there, intensely competitive on the world stage, aggressive, and innovative, but they are a rarity.

For the average manufacturer, the task of just surviving is daunting.

In 20 years of advising these sorts of businesses on change and improvement there are some leadership lessons that seem to crop up time after time, in one form or another.

The survivors learn them, rarely an easy path, the others just go the way of the Dodo.

Management of people and their capabilities.

Successful leaders manage their people and their capabilities on an individual basis. When you have a bunch of people performing well and growing individually, you get  groups of them doing the same as the group, and then the enterprise benefits. For the person at the top of an enterprise, even if it is a small one, this aspect of managing cannot be left to chance. This is first on my list, as it is the most important by a long way.

Identifying the molehills early.

Every enterprise has more than its fair share of molehills that need attention, The challenge is to address them, smooth them out before they become mountains, or even little hills that get in the way of performance. The impact of even a tiny molehill on the performance of an enterprise is like the ripples in a pool when a rock is thrown in. They radiate out, and when meeting up with ripples from elsewhere, there is rough water. The job of everyone in a business  is to remove the molehills as they emerge, before any ripples can be sent out.

Get it right first time.

The fundamental lesson of ‘Lean’ can be summarised as getting it right first time, every time. While this is hard to achieve, but every corner that is cut, every expedient decision and compromise that is made, will come back to bite you hard, some time, in some way. Never settle for less than the absolute best that can be done, every time, and improve the processes that deliver that  outcome to increasingly demanding specifications, relentlessly.

Focus, Focus, Focus.

The 80/20 rule works every time in every circumstance I have ever seen. Do a limited range of things for those who really care, and do it better than anyone else. Anything else means you are compromising the things you do by spreading them too widely, and as a medium business, you simply cannot afford to do that. Be opportunistic only if it can be done from within the existing narrow definition of  what you are great at doing.

Team alignment.

Alignment has unfortunately become a bit of a consulting cliché, which must be some indication that it is right. Having everyone pulling on the same direction is essential, but you never get there without hard training and robust debate on the way through. The metaphor I always like is of a rowing eight. The best team always wins, but to get the best team in the boat on race day, and working in that absolutely coordinated way that seems so fluid and natural, is really hard, the result of training, mutual respect, and the subordination of the individual to the performance of the team.

Right, not popular.

It often happens that the right decision is not always the popular one. That is why business is  not a democracy, someone always holds the right of veto. It is the responsibility of that person to make the right decision, best made after robust debate amongst those affected, what I call ‘Due Process’. At the end of the debate, the leader has to make the call, and those who may not have agreed with the decision need to line up behind it and support it in every way. Any ongoing dissent needs to be behind closed doors, and between the parties involved only.

Humility and Agility.

Having made the point about right not popular, not every decision taken will be the right one, so the really good leaders amongst us moderate their right to the veto by  being able to acknowledge mistakes, change course and get on with it. Managers are usually loathe to admit they are wrong, as they consider that it shows weakness, the leaders amongst us know  that being able to admit they were wrong shows strength of character, which is what we follow.

Balance the competition between today and tomorrow.

Taking the short term easy route at the expense of the longer term good rarely pays off. The urgency of the immediate often outweighs the importance of getting the foundations right for tomorrow, and while doing so may make for an easier weekend, it usually makes for a crap year.

Write it down, and create a rhythm.

Documenting your plans makes them available to everyone else who needs to know, and provides the framework for decision making, without which, there can be no chance that everyone will be working off the same hymn sheet, another worthwhile cliché.

A really effective plan is a combination of a number of elements that add to the clarity of the plan, which makes it something that can be effectively implemented, managed and improved.

Your ‘why’ or business purpose, or Mission, however you choose to describe it will only evolve slowly over time.

Your strategy also evolves, but over a shorter period, a few years. it used to be that 5 years was a reasonable evolutionary period, but the speed and aggression of competitive pressures have shortened that to three in most cases.

Operating plans, usually called budgets are the financial expression of what you will and will not do over the next 12 months. Allowing the numbers to determine the activities is a common mistake. It is way better to manage activities by the objectives that need to be achieved and then measure the outcomes and adjust as necessary by the numbers. Having your sales, marketing, and operational plans in place that have been derived from a combination of the objectives and zero based budgeting , rather than fitting the activities to some vague notion of the acceptable cost, is the way it should be done.

Unless you measure the outcomes of what you are doing, you will have no idea of the effectiveness of your activities and investments. Having said that, you cannot measure everything, and trying to do so will tie you up in administration, and compromise the learning that comes from having a few key metrics where you understand clearly the cause and effect chains in place.

Learn and adjust. Plans that do not change in the face of contrary outcomes are worse than  no plans at all. Therefore your metrics need to drive adjustments in your activities and costs as you cycle through the year.

Someone is the driver.

That leader, the one with the veto, is the one doing the directing, the cox if you like in the  rowing eight metaphor. They are the ones with the overall view of the progress, both in the scull and across the competitive arena, and should be the one most sensitive to the changes necessary to achieve  the optimum return from the assets, financial and otherwise, invested.

When you, as the leader get all that stuff right, or close to it, the performance improvement will be considerable.

9 places to dig for great ideas

9 places to dig for great ideas

Ideas are the fodder of our lives these days. Gone are the days of physical labour, even in the professions where labour is necessary, construction, agriculture, and others, the application of technology, the result of ideas is everywhere.

So how do you come up with the ideas that make your life more productive and  comfortable .

Look at it the other way, rather than just hoping that a great idea comes in a flash in the shower, think about the habits and practises that you need to undertake in order to improve the probability that  the ideas will emerge.

Feed your subconscious with the fodder it needs to consume in order that it is able to grow  the ideas.

Curiosity.

Questions are the source of most ideas, and we do  not ask enough of them, I suspect because we have been trained from an early age to think that asking questions is a signpost to  ignorance. Think about how your kids learnt, they asked endless questions, just because they were curious.

What if? why? How does that work? When?

Be a kid again, and ask questions, and from the answers, you will  not only learn, you will have the opportunity to have ideas presented to you on a plate.

Brain-dumping and re-ordering.

Consumption of the idea fodder is half the battle, the other half is to find ways to fit it all together in different ways, apply it to a variety of contexts, and problems. In other words, forcing yourself to regurgitate what we see in other forms really works. The story of the development of the post it note is a classic in re-ordering.

Have an idea corral.

Ideas come when they come, and not necessarily when you want them to come. In fact, I have often found that they come at the most awkward times, stimulated by something I see, hear or read, not when I am sitting down trying to bring it on. As a result you need some sort of corral in which to capture these fragments, and ideas before they disappear. There are now many digital tools, but you can still use the old fashioned notebook. I use both, a notebook, and OneNote on my computer to capture the stuff that pops into my head, almost never when I expect and want it to.

Conspicuous consumption.

Ideas are the result of what you consume, the more volume and variety of consumption, the more likely that something useful will emerge. This is not to encourage you to watch more cooking or renovation shows on TV, although they do count, it is to encourage you to widen the reach and increase the quality of that consumption. With the wealth of information at your fingertips, there is no longer any excuse not to scratch the curiosity itch.

Articulate your ideas.

Listening to an idea in your head, is different somehow to speaking it out loud. Saying them out loud, particularly to an audience, even if it is your dog, but even better a few friends, a small network group,  those at the pub, whatever it is, speaking out loud helps order the ideas, and subjects them to the discipline of the crowd. As a kid I was a reasonable tennis player, a modicum of talent that was well coached, and combined with a competitive attitude, I was OK. However, when I started coaching, it made me a better player, as I had to articulate all that I had learnt from my coach, and from competition to those I was coaching. In the process, my own game improved considerably, as I applied the lessons articulated.

Devils advocate.

The most productive commercial relationship I ever had was with a bloke to whom I reported for quite a long time, in two different companies. The course of our debates was always coloured by the presence of the devil. Even if we agreed, one of us would take the contrary point and argue it, and the inevitability was that the outcome  was better than the starting point.  The point is not to win the argument, but to use the different points of view and perspectives productively to arrive at better outcomes.

Think backwards.

Ideas are only any good when they do something useful. Normally that is to solve a problem for someone, so rather than beating your head against a wall trying to come up with ideas, try and identify problems, then think backwards to  the solution. I suspect Uber did not emerge as an idea, it evolved as a solution to the problems associated with the taxi industry as it was in most of the  developed  world. Thinking about the solutions to a problem will always generate ideas. When running a workshop, I would never go in and ask for ideas, you go in and spend some time defining the nature of a problem, and only then go looking for solutions.

Randomise.

Routine is the enemy of ideas, routine allows you to go through the motions without thought, by rote, and it is in the disruption of routine that ideas may emerge. Go to lunch in different places, exercise at different times and in different manners, seek a variety of physical and emotional environments to spark a variety of different thoughts.

Be a changeling

Never believe that the best idea is the first one you have , be prepared to be wrong, to include new information or elements that adjust the original. Do not however, mistake the agility of accepting new information with being unable to make up your mind. Those who get great ideas are in my experience the most disciplined of people despite the sometimes chaotic appearance.

Never forget that ideas come from our ability as human beings to make connections all sorts, in all sorts of ways. Imagination, the creation of ideas, then being able to do something with them, is what makes us human.

 

How leaders lead

How leaders lead

Human beings are attracted to those who are prepared to lead, to be vulnerable, and sometimes alone. Those who truly lead inevitably have a set of beliefs that  are the foundation of why others are prepared to trust them, and be led by them. People relate to and engage with the beliefs of others.

It is not that the beliefs themselves in another are attractive, but that the beliefs resonate with their personal worldview, creating respect and admiration, so they are prepared to be led.

It therefore seems sensible when building a business to be specific about what you believe as a means to attract those who hold similar views, and sometimes do business with them.

Clearly, the other side of the coin is that you also repel those who do not share the beliefs, and while a challenging idea for most businesses, being strongly attractive to a core group because you are explicit about your beliefs, and therefore business model, is way better than being neutral to a wider group, which then leads to competition based on price, as it becomes the prime differentiator.

A mate of mine is a financial adviser, one who believes that his industry is fundamentally flawed. He believes that financial advice should be absolutely free of the self-interest of the adviser, and as a result does not take the sales and trailing commissions that are the way things are done in the financial services industry. This might make finding clients challenging, as referrals from those wanting commissions will not be forthcoming, but when clients , who value the absolute transparency of his advice find their way to him, they are extremely loyal, and prepared to pay well for his advice.

I recommend often that everyone should watch Simon Sinek’s TED talk, and consider the implications in their business. Working on your ‘Why’ is essential, but not an excuse for lots of fluffy talk that fails to come to grips with the competitive realities. It is a foundation, and like most foundations well hidden.  As Sinek noted, Martin Luther King did not have a 10 point plan to remove racial prejudice in the US, he had a set of beliefs about what was right and wrong, and what good people should do.

Image credit: Scott Adams and Dilbert.

The 7 mental Models for successful marketing

The 7 mental Models for successful marketing

Creating a successful marketing program is like putting together a 10,000 piece jigsaw, with two significant differences.

  • A jigsaw only goes together one way, every piece fits into its neighbours in a unique way, whereas a marketing program has an infinite number of ways of being put together.
  • When doing a jigsaw, you have the box it came in to give you a very clear and absolute picture of the outcome. Not so in marketing, and while we work hard at clarifying objectives, they are never as clear, and rich with detail as a picture.

Some weeks ago, I found myself in a huge toy store in western Sydney, doing the right grandfatherly thing on my way to get some ‘grandpappy’ time with my granddaughter, who is absolutely the most gorgeous thing God ever put breath into. I was confronted by isle after isle of toys, a vast array of options, no idea of what any of it was, all attractively packaged in adult proof packaging, each with claims to greatness and testimonials from auspicious sounding bodies.

This is not my area of expertise.

I asked a young woman looking after some stock who appeared knowledgeable for advice. She recommended a couple of things, one of which she personally guaranteed because her now 6 year old daughter had had the same one, and loved it absolutely, without reservation, and still played with it.

So I shelled out the required for this fancy looking thing with lots of colours, of course requiring a steady diet of batteries stored in a kid safe unit welded to the bottom, and wrapped it up for my  granddaughter.

A bit later after her mother had wielded the knife required to free this revelation from its adult proof packaging, Georgia was presented with this wonder toy.

She turned it over in her hands a few times, whacked it on the top, which did turn something on, that played a series of flashing lights, and a little tune, which enchanted her, for about 10 seconds. She then turned and toddled over to her seat in the corner mumbling mmmbbbbaaa, mmmbbbaa, which is code for ‘Blue Bear’, a tattered old blue of her fathers that had been rescued from a box in the roof of our place and cleaned up. She took ‘Blue Bear’ over to play with her new fancy, expensive shiny toy, then proceeded to fill her pants.

This experience struck me as an absolutely true metaphor for what we all do when confronted by all the tools, smoke mirrors  and bullshit that is sold as marketing by all sorts of shysters.

We chase the newest shiny thing, forgetting the old fashioned, basic building blocks that have worked for the last 100 years. We abandon them, in favour of the junk that delivers a short term buzz, but is long term just a waste of time and money in almost every case.

In an earlier post, I articulated my views of the 4 foundations of a brand, and used the metaphor of a jigsaw puzzle to make my point. To follow up, I thought I would  give you some thoughts perhaps tools to help you sort the jigsaw pieces as you go about building your own marketing programs.

Let me put a stake in the ground.

Nothing about the strategic framework of marketing has changed in the last 100 years. We are still finding customers for our products, solving their problems, adding value to them, and trying to make a profit on the way through. Peter Drucker was right, ‘The sole purpose of a business is to find customers’

So, the strategic foundations of marketing have not changed, but the tactical end of marketing has changed radically.

To quote that well known marketing guru, Albert Einstein,  Everything should be made as simple as possible, no simpler’.

My goal is to give you a few Mental Models’ that might help sort out and simplify the enormous array of choices you face when building a marketing program that enable you to make better choices.

I have spoken about these 4 foundations in the past, so there is little point in repeating myself, apart from reminding you that foundations are just that, foundations, without which the building will fall, and that they are largely invisible from the outside.

Briefly, the foundations are:

Business Purpose. The Why, the story of the business. This drives everything else. The foundation of the foundations if you like.

Customers. Who is it you are seeking to engage to sell. This implies that you have said ‘No’ to a lot of potential but casual customers on whom you will not spend any resources.

Value proposition. What is it that you are doing for them that delivers value. What can you deliver that makes you different, and for them, the only choice.

Leverage. What enables you to leverage, amplify and deliver the value proposition. This is in effect your brand building  toolbox, and the exercise of the leverage comes from your revenue generation infrastructure, from which you will have to make a lot of choices.

Following are 7 models I use in the marketing planning process.

In addition there is a tube of glue, the stuff that holds it all together, and you must have the tube of glue to optimise all the effort put into the rest, irrespective of how much money you spend, how smart you are, or how good your product.

There are thousands of tools, the choice is mindboggling, and all claim in one way or another to make your life easier, more successful, and ultimately, make you rich.

However, beware the vendor who tries to sell you a solution that covers everything, there is  no such animal.

The toolbox is where the huge changes have come. From a few years ago where you had a limited number of choices and the times at which you interacted were also limited, the 6.30 news on TV, driving the car on the way home from work, to an infinite number of choices, all available 24/7.

How we reach and engage customers has changed radically, the fight to the death is now for our attention.

How do you choose your poison?

A year ago, Scott Brinker’s Martech landscape had 3,874 digital tools.

A staggering number, dwarfed by the 5,381 in the just released 2017 version, which I am sure was a redundant number the moment after he drew the line under the data.

When you consider this is only the digital tools available to the marketer, the size and complexity of the jigsaw we are dealing with is immense, and there is no silver bullet, so often promised, in sight.

Sorting the options is a complex task, made easier by using a few ‘Mental Models’, tools that make the sorting easier, or at least a bit more manageable.

The process.

A process is a series of steps that are repeatable, and able to be continuously improved.

You should have worked this process in this order, the why, followed by the value proposition, then the ideal customer profile, and then, it is time for the rubber to hit the road, enough of the nice words, how do you leverage the outcomes, how do you implement?

The point here is that most of the impact comes from the strategy development you do, that is 75% of the work, and is make or break. It is the important but not urgent stuff you have to do well, but often gets passed over in favour of the urgent but not important things that happen every day to distract you.

Responding to that Facebook notification makes little sense when your strategy is unclear. The only risk there is that you might miss a really interesting cat photo, get your strategy wrong, and you might lose your business.

The tactical decisions should take less time, are less critical, but usually consume all the money, and are more easily reversible.

The strategic decisions made should always, without exception, drive the tactical choices you make.

Take heed of Einstein’s words: , ‘If I had 1 hour to solve a life defining problem, the first 55 minutes I would spend defining the problem, the rest is just maths”

Play the Options game

Revenue generation, which is the term I now use to describe what used to be Marketing and Sales, on a limited budget, indeed any budget, is an options game.

When you look at it like an options game, you do the research, collect information, and only make a choice when you have to, when the option to delay the choice is no longer open.

This is not procrastination, quite the opposite, this is the process of actively making choices to achieve a specific outcome, using the best information you have to hand.

It is an active process, the decisions will not make themselves, it will not happen by osmosis, you must choose!

There is never enough budget to do all that you would like to do, therefore you have to make choices between a range of options.

While creating a plan, and picking the right tools is all about having a picture of the outcome you want, the completed jigsaw, it is also important not to be locked irrevocably into a course of action in the face of new data, changes in the market, or just common sense.

Therefore, play the options to achieve the outcomes you want. Do not rely on others to tell you what to do.

Do the research, seek information and intelligence, make sure you know enough to ask intelligent questions, and be able to see and smell bullshit when it is in front of you, as this part of commercial life is knee deep in it, and often it is made to smell remarkably fragrant, and sounds like the siren song, so it is buyer beware.

Acknowledge the ‘Journey’

Every purchase requires that the purchaser go through some sort of ‘journey’, from the point of recognition that a  purchase is necessary or desirable, to the transaction, and beyond. In a consumer purchase, this process may take a few milliseconds, but in a major purchase, and most particularly in a B2B purchase where others need to be involved, it can be a very long process, depending on the nature of the purchase.

A customers journey begins with some awareness of a problem, followed by some level of research, it may be looking at supplier sites, forums, checking your friends, seeking ideas and specifications.

A short list will be prepared, even if it is casual, then more research will happen, web rooming, demonstration, followed by a decision to buy, then the transaction and after sales services and expectations.

This will vary in every case, the point is that in the past, the only access to the information was either the advertising or the retailers, so very early on the seller knew you were in the market, they could feed you the information, not necessarily for your best interests, but for theirs.

Not so now, you can be at the point of ordering before the seller has any idea you are there.

At the time the potential customer is moving through the process, the potential supplier, not knowing who they are, or where they are, needs to be able to engage in some way, to provide the information and advice they need, answer their questions, get onto the short list, become the chosen supplier.

The buyer has all the power, they no longer need the seller for anything other than the final transaction, everything else they may need is available to them, so the challenge of the marketer is to be in the place where the buyer goes looking for information, reassurance, and answers the questions they have progressively in a manner that reflects the buyers journey.

Usually you will see this in some sort of pyramid, with lead, prospect, hot prospect, customer, or words to that effect. This can be misleading unless seen in the context of the parallel processes.

Customers do not move down the traditional sales funnel by osmosis, or gravity, they move down because you lead them down, even when in most cases you will not be aware of their journey.

Communication choices.

Bringing this all together is communication, by whichever means you choose from the huge menu available.

Communication is the means by which everything happens.

It is where you decide just how you are going to interact with this ideal customer as they move through their considerations.

There are 4 types of communication channel, Owned, Rented, Paid and Earned media.

You can pick any combination and ratio of the four, there are no other options, but within each there are multitudes of options, both digital and analogue.

  • Owned is yours, your website, newsletter, you own it, you can do with it what you like.
  • Paid media is pretty obviously advertising, digital and/or analogue, with a huge number of options.
  • Rented is your space on social media platforms, you are renting the space in return for your information that the platform owner uses to sell advertising.
  • Earned media is the good stuff, the referrals, links and backlinks. I do not include likes, as it is just too easy, there is no skin in the game, but to write a comment or explicitly share takes some effort.

There are multitudes of options, clearly understanding the habits and behaviour of your ideal customer is essential to be able to mix the communication so that it is seen at the right time in the customers journey.

Focus only on the bits that deliver the value

The genius of Vilfredo Pareto, the 15th century Italian mathematician who first articulated what we call the 80/20 rule is working all over the place if we care to look.

Focussing attention on the few things that deliver results and ignoring the rest is a hugely sensible but usually a very difficult thing to achieve.

You will absolutely find that 20% of your customers deliver 80% of your sales and profits.

That does not mean you do not need the other 80%,  but it does mean that resources you allocate to them would be better used elsewhere.

It works everywhere.

This mental model should feed your deliberations in every decision you make, every action you take.

Differentiation

When all else is equal, all you have is price, and then it is a race to the bottom, and the greatest risk in a race to the bottom is that you might win.

Seth Godin’s metaphor of the Purple cow is well known, but the Zebra’s arse makes a better picture to make the point.

Differentiate on every parameter that is valuable to your ideal customer.

However, differentiation for the sake of being different, that adds no value to a customer is just a waste of money and effort, but make that differentiation valuable, and the investment will deliver handsome rewards.

 

Correlation does not mean Causation

I would never own a Labrador.

They are lovely, friendly, trainable dogs, great with kids, but they send you blind.

It is obvious, how many times have you seen a blind person with a Labrador? Obviously there is a very high chance that labs cause blindness.

Oh!! Perhaps it is our old mate correlation, not cause and effect.

A while ago a client launched a new FMCG product, and it worked pretty well on a limited budget, which was largely directed to digital advertising.

The agency crowed about how great their creative was, how effective the ad placement had been, obviously it had been, as the product was a success, despite me being very sceptical about the value of many forms of digital advertising.

However, I did point out that the efforts of the marketing people to identify a hole in the current offerings that left a group of consumers underserviced, the sales force in getting good distribution against the odds had helped, as had the promotional program, and the in store tasting programs that got the stuff onto people’s mouths, pretty important with a food product. Nevertheless, the cocks crowed loudly and often, claiming cause and effect where only correlation existed.

So, there are the 7 mental models I wanted to share. That just leaves the glue that holds it all together.

The Glue!

Human beings relate to stories.

They do  not absorb written information very well, visual information is much better, but stories are the core of everything.

We evolved as a species telling stories, to keep safe, remember generationally where the food was, what to look out for, and so on.

What is your story?

You need to tell one, but tell it with a point.

Telling a story without a context, without a point, is not memorable, but tell a story well, that has a point, and you have them.

All the tools around, the thousands of them are no more than leverage for your story, your purpose, your why.

So, figure out the story of your brand, your business, and tell it consistently, and well, with the point.

Your elevator pitch is a story in 20 seconds, your logo encompasses the story, somehow, every piece of marketing collateral must communicate a part of the story, so that eventually, the parts add up to greater than the sum of all those parts.

Ever heard the parable of the frog and the scorpion?

The tortoise and the hare, the three little pigs, Adam & Eve, and so on.

They are all stories with a point, we remember the stories, so we remember the point.

When you want to know how to deliver a story, watch great comedians, they are the modern story telling masters.

 

For a verbal version of this post, recorded live to an industry group, Click here.