"Counter-Productive" Day

We've just lived through "Black Friday," "Cyber-Monday," "Thanksgiving Day Specials, " etc. As retailers begin their sales earlier and earlier, I see a death-spiral forming. 

Yes, I understand that a great percentage of retail revenue is generated during this next four to six weeks. But I am adamantly opposed to fighting this battle based on price.  

On the positive side of the ledger is revenue clawed away from the competition. On the negative side of the ledger are:

--Consumer stress and confusion.

--Substantially reduced profit margins based on lower prices and higher operating and advertising costs.

--Strong reinforcement of the "wait for the sale" consumer mentality.  

--Degradation of perceived value. ("If you can discount the product 50% today, then you are obviously grossly over-pricing it during the rest of the year.")

--Sympathy for employees forced to work ridiculous hours and holidays (which translates into negative publicity for the employers).  

The answer? It's straight out of Marketing 101.

--Steer away from commodity items and services.

--Develop a reputation for service or quality.

--Price your product competitively throughout the year.

If a disproportionate percentage of sales come from the holiday period, then the answer is not to kill your profitability trying to ride that trend; the answer is to change the trend!    

"Kobayashi Maru" is a phrase familiar to Star Trek fans.  It describes an impossible-to-win Starfleet Academy  test.  In the show, future captain James T. Kirk beats the system by re-programming the rules.   

As long as companies buy into the assumption that they must have "X" share of the holiday sales, they will continue to move up the start of their sales and to discount their products more deeply. It's time for a "Kobayashi Maru" solution, before the death-spiral becomes irreversible.

Networking--Wait your turn!

Networking is the most effective way to attract new business.  But relatively few people do it, and most of them aren’t very good at it.

How come?  Mostly it is a mindset problem.  People hear ‘networking’ and they immediately go into sales mode.  Instead of “listening and learning,” they’re “telling and selling.”

Think about how we react when someone is trying to “sell” us.   Our first reaction is to tighten up and go into the “no” mode, lest we get fast-talked into doing something we don’t really want to.  Now think about how we react when someone is trying to help us.  We open up and get more cooperative.  Isn’t this latter attitude more likely to help you create a relationship that can lead to sales?

I approach networking situations by suggesting that I would like to know more about my conversational partner in order to find out if there’s a way I can be of assistance to them.  (This must be a real offer by the way—people will know instantly if you’re being insincere.)

Three things happen when you do this:

1) You make a positive impression on them, because you’re perceptive enough to see how interesting they are.

2) The more they talk, the more (most people) feel that they have built up a conversational “debt” that requires them to spend some time listening to you.  That puts you into a “pull” rather than a “push” situation when it becomes your turn.

3) You develop a better understanding of their wants, needs, and “hot buttons” that will facilitate an eventual sales pitch if one is appropriate.

There is one additional benefit.  When you use “listening and learning,” you will stand out from the crowd” of bad networkers and become more memorable.

So when you’re in a networking situation, remember Archie Bunker’s advice and “stifle.”  You won’t regret waiting your turn!

Ready…Shoot…Aim?

It’s a clever way to describe all too common a problem.  (Obviously not a new problem, or we wouldn’t have grown up hearing “look before you leap.”)

I know we’re a more frenetic, action-oriented society today.  Whether you call it Attention Deficit Disorder or something else, we seem to have trouble taking the time to just think.  We want to be “doing” all the time.  That’s not all bad—it’s hard to “accomplish” without action.  But unless you’re exceptionally lucky, it’s hard to accomplish the right things without at least a little thinking… 

The trick is to incorporate thinking into your planning.  The process certainly isn’t going to come as a revelation, but we all need an occasional kick in the rear to remind us to follow it:

1) Define your goal--specific, measurable, attainable, relevant, timely, etc.

2) Develop a plan to achieve that goal

3) Execute the plan

4) Evaluate the result

The question I’m addressing here is whether we spend enough time on the first step.  I’d argue that we don’t.  (Or else we do, but fail to adequately communicate the goal to those involved in the subsequent steps.  But that’s a subject for another column.)

So however you want to go about it, make sure you take the time to think about what it is you are trying to accomplish.  The goal statement is your target. Without a target, your team has got nothing to shoot at.  And if they don’t have anything specific to shoot at, things are going to get pretty exciting when the guns start going off.

So enforce the process.  And start off your planning process with a definitive GOAL statement.  At least that way you’ll know that if things go awry, it’s because of poor “shooting,” and not poor “aiming.” 

Pretend you’re dating

Salespeople and marketers routinely make mistakes in business which they would never make in dating.  For instance, on a first date, most of us wouldn’t  think of putting our arm around someone and saying “Let’s go steady.”  Because we know that the other person doesn’t know enough about us yet.  It’s too soon to ask for that level of commitment.  But how often does a salesperson ask for a prospect’s business at their first meeting?  How often do you get blind letters soliciting an order?

If you are interested in only dating people with a college degree, or people who like to dance, you’ll quickly figure out where people in your target population congregate, and you’ll develop an approach to determine if they meet your criteria.  But how often have you been approached by a salesman who’s cold-calling, or going door-to-door?  And how often have you received an email advertisement for a totally irrelevant product (such as cat food for a dog owner)?

Most of us wouldn’t try and win someone’s affection by reciting a list of our accomplishments and capabilities, or, worse yet, by listing all the other people we’ve dated.  But we’ve all been on the receiving end of sales pitches which focus solely on a company’s accomplishments and capabilities and a list of their customers, with no interest shown in you, the prospect.  If you were dating, you’d consider someone who did this to be insensitive and ego-centric.  Is a company any different?

Most of us recognize that an interactive approach aimed at identifying commonalities of interest is more likely than a hard sell to lead to a long-term relationship.  It’s too bad so many marketers and salespeople haven’t learned that lesson.

Conclusion:  If you think of each prospect or customer interaction as a date, and react accordingly, you are likely to leverage your personal experience to make your sales and marketing efforts more successful.

Get’EmOutaHere!

A couple months ago, I talked about the cost of losing a good customer.  The flip side of this is the benefit of firing a bad customer.

 “The customer is always right” is a phrase most of us imbibed with our mother’s milk.  But it is patently not true.  The phrase should be “When the customer is wrong, put up with it until they become more trouble than they are worth.” 

So how do you determine that tipping point?  You can judge it subjectively, but it is easier and more profitable to periodically assess the following in some sort of quantitative manner:

1) What amount of sales and service time does the customer require?  You should have a certain

ratio of sales and service to revenue priced into your business model. (If not, this is a problem you need to address.)   

You need to periodically rate each customer via a scorecard so you know when a customer is exceeding that ratio.  You can put up with an imbalance in the short term, or as an investment in a company which offers significantly higher future revenues.  But those should be conscious decisions.

2) What kind of pricing satisfies the customer?  There is a big difference between someone paying list, and someone demanding significant discounting. The latter doesn’t just hurt that customer’s contribution to your bottom line—it also contributes to erosion in your overall pricing. 

3) How do the bad customers’ demands affect employee morale?  Having to smile at, and agree with, flaming jerks puts a strain on anyone’s day.  Over time, it makes your company a less desirable place to work!

4) How does the customer affect your brand?  Do they provide good word of mouth, or are they bad-mouthing you to other customers and potential prospects?

Finally, once you’ve identified a bad customer, how do you deal with them?  The first step is to try and fix the relationship by aligning expectations (which roughly translates to “Things are going to change.  If you don’t want to change, then we’re going to part ways.”  If that works, great.  But most of the time, the bad customer will quit you.  That’s GOOD!  It will improve your bottom line and cheer up your employees.  Just make sure that (1) you collect your money before they leave, and that (2) you are very professional about it, to minimize the inevitable complaining about how badly they were treated by your company.  Oh, and one other benefit—the bad customer will move to one of your competitors, and cause them the same problems they were causing you.  And that’s a win-win 

If you’d like to talk about cleaning up your customer list, give me a call!