Will This Year's Sales Assumptions Work in 2009?
By Andrew Rudin, Outside Technologies, Inc.
In the last two weeks, has anyone swaggered up to you and said “Yeah, 2008 played out the way I thought it would.”? I certainly can’t brag! So, how well did your sales assumptions work in 2008?
The good news: compared to this time last year, you have 365 more days of hard-won experience to guide your upcoming decisions. The bad news? The future appears ever more uncertain. Just one year ago, it was hard to imagine that the words “credit crunch,” “financial bailout,” “GM bankruptcy,” and “President-elect Obama” would become woven into popular discourse—a reflection of a changed country in a changed world.
Considering that there are constant forces that affect business, the calendar point 1/1/09 seems an arbitrary moment to focus thought on the relationships between assumptions, past events, and future strategies. But beginning a new year presents an opportunity for all of us to pause and think about how old assumptions will work in the near future.
The question isn’t whether assumptions are bad—they’re a decision-making fact of life. The problem is that people who assume things (all of us) are judged harshly when decisions don’t produce the required results, or when things don’t proceed according to plan. If you’re like me and have made a few poor assumptions recently, you’re in good company. Just look at 2008’s Bad Assumption rogue’s gallery:
Alan Greenspan, who said "I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms, " He added “. . . I have been going for 40 years or more with very considerable evidence that it was working exceptionally well."
Yahoo’s management, for assuming that an even better opportunity awaited the company’s shareholders following their rejection of Microsoft’s offer to purchase the company in February.
Big-3 CEO’s Wagoner, Lally, and Nardelli, for assuming that boundless arrogance didn’t matter when making a sales pitch before Congress to secure $25 billion in taxpayer-funded financial aid.
In an unstable world buffeted by unpredictable economic, social, political, environmental, and technological forces, which sales assumptions merit scrutiny? Here are my picks:
“Assuming our prospects and channel business partners are trustworthy . . . " An editorial in The Wall Street Journal, (December 15, 2008) said it best: “Capitalism runs on trust . . .” If we learned anything from this year’s financial market debacle, it’s that trust can’t be assumed, and that if trust is broken in financial markets, we’re all affected.
“Assuming that the economics of our industry follow the trend of . . . " Radical reductions in credit availability debunk many assumptions, including how to forecast sales, how to segment markets, how to price products and services, and how to interpret financial calculations for deciding on capital goods purchases.
“Assuming our business model will work . . . " Technology convergence and other forces call this idea into question, even in the most well-established industries. Just ask any newspaper publisher or domestic car manufacturer.
“Assuming we can communicate our message. . . " Emerging web applications and Social media have irreversibly changed the communication balance of power. Product consumers now produce the most valuable product and brand information. That change alone invalidates many long-held assumptions about how to reach prospects and how to create and manage marketing and sales campaigns.
“Assuming our sales process is efficient . . .” Do legacy interpretations of sales efficiency matter when technology and other forces call into question the very definitions of buying and selling? And how important is sales efficiency anyway if there’s incongruence between selling and buying processes?
“Assuming that our CRM tools will help our employees perform their jobs . . . " According to Rob Preston of InformationWeek (November 17, 2008) citing a 2008 survey, “only 30% (of companies in the InformationWeek 500 ranking) say their companies encourage employees to use consumer (applications) they find useful, down from 33% last year. So it appears companies are becoming more stringent . . . not a positive trend . . . If those issues always ruled the day, instant messaging, a staple of today’s knowledge professional, never would have made it into the enterprise.”
“Assuming that our Key Performance Indicators predict the results we require . . . " Correlation doesn’t mean causation, and many selling organizations measure (and reward) behaviors that don’t produce value for the company, as Michael Webb of SalesPerformance.com points out: “The senior executive of a large software company observed that most prospects who went through the expensive ‘proof of concept’ stage of their sales process became customers. So, he ordered a sales contest where salespeople were rewarded for getting more prospects to conduct a proof of concept. Salespeople complied, and the results were disastrous: costs went way up, and revenues didn't. (The manager’s) assumptions about what caused customers to buy created enormous waste . . .”
Challenging previously-held assumptions will rock the corporate boat, but survival in 2009 and beyond requires a fresh approach. Start asking at the top: “Which assumptions are we making that must be true for our strategy to work?” The answer might uncover 2009’s greatest risks and opportunities.
Wednesday, December 17, 2008
Tuesday, November 25, 2008
Is There "White Space" in Your Customer Relationships?
When managing sales relationships with major accounts, is it better to have more points of contact between vendor and customer—or fewer?
The answer depends on whether those interactions add value to or subtract value from the customer relationship, according to Rob Cross, an author and expert in social networking, who led a symposium I attended last week, “Leading in a Connected World.”
More than "fuzzwords," social network value added and value subtracted are measurable and meaningful in financial terms. Yet C-Level executives don’t think that way when creating CRM processes, account teams, and collaborative sales models. Oddly, the same companies that routinely scrutinize the cost of airline tickets don’t track efficiency of collaborative activities—a potentially far greater expense. That irony was underscored when the majority of the symposium attendees indicated that well over half of their time was undocumented, and spent in internal meetings, on the phone, or answering email.
Ever since the words “social” and “networking” were joined to mean informal channels of communication, CRM practitioners have offered conflicting ideas about how to make collaboration more effective. One Symposium insight: sometimes, “less is more.” This is because not every interaction produces value. Which interactions are the most valuable? According to Professor Cross, the best opportunities for value-producing collaboration are best-practice knowledge transfers, innovation, and revenue generation activities. The absence of those value-producing activities might be considered “white space” in the customer relationship. In Professor Cross’s words, effective collaboration doesn’t mean “everyone in the woods singing Cum By Ya to each other.” By uncovering where value is added or subtracted in collaboration, companies can garner the right resources, manage staffing, and organize teams.
So where is collaborative value added and where is it subtracted? Value is added when tacit knowledge for best practices, innovation, and revenue generation is exchanged between individuals. As for subtraction, there are two major sources. If the outcome of collaborative activities provides neither productivity improvements nor cost reductions, then those activities are value-subtracting to an organization. Second, consistent negativity from even one employee can have a measurable, cascading impact on the value an organization produces. And the impact is magnified in organizations that depend on collaboration for executing strategy.
In a PowerPoint slide, Professor Cross illustrated a basic social network. When individuals in a large, multinational company were asked “who do you receive information from and provide information to,” the network’s visual similarity to a giant hairball was stunning. It's easy to get the impression that everybody talks to everybody. I would be challenged to explain to a CFO how that picture portends to drive value for his or her company.
But underneath that picture, communication silos exist. These silos are losing favor, particularly for business development operations. One symposium panelist, Tracy Cox, Director of Performance Consulting for Raytheon Corporation, debunked the idea that selling activities should be the exclusive domain of the sales department. He recommended that companies consider different collaborative routes to engage with high-potential prospects, noting that it’s important to “understand the key influencers and reputation holders in the customer community and how to leverage those connections for new business.” It’s myopic to think of the Account Executive as the focal point for facilitating those connections.
When more specific relationship questions are asked to produce the social network model, the lines in the amorphous hairball social network strip away, yielding valuable insight. Who energizes you in your business activities? Who do you go to in order to generate revenue? Who gives you a sense of purpose? When these connections are mapped, patterns emerge that are highly predictive in how real value is transferred within and between companies. Not surprisingly, for these questions, the best performing account teams not only had strong client connections, but also better networks into their own organizations.
In addition to the Raytheon panelist, two other panelists, Lisa Vertucci, Managing Director, Global Head of Talent Development of Lehman Brothers; and John Helferich, former Vice President of Masterfoods USA shared how their organizations have used social network modeling to create value through collaboration. The operational decisions they made began with asking these questions:
How can we make invisible value visible to our customers?
How can we create the most effective cross-boundary relationships?
How can we identify key new business opportunities?
How do we uncover which people provide greater than average value in cross-selling products and services?
What is the most expedient way to “grow the conversation” about an important topic?
As with forensic sleuthing for suspicious financial transactions, following the money path in a social network context provides a good starting point for figuring out what’s valuable—and what’s white space—in your customer relationships.
The answer depends on whether those interactions add value to or subtract value from the customer relationship, according to Rob Cross, an author and expert in social networking, who led a symposium I attended last week, “Leading in a Connected World.”
More than "fuzzwords," social network value added and value subtracted are measurable and meaningful in financial terms. Yet C-Level executives don’t think that way when creating CRM processes, account teams, and collaborative sales models. Oddly, the same companies that routinely scrutinize the cost of airline tickets don’t track efficiency of collaborative activities—a potentially far greater expense. That irony was underscored when the majority of the symposium attendees indicated that well over half of their time was undocumented, and spent in internal meetings, on the phone, or answering email.
Ever since the words “social” and “networking” were joined to mean informal channels of communication, CRM practitioners have offered conflicting ideas about how to make collaboration more effective. One Symposium insight: sometimes, “less is more.” This is because not every interaction produces value. Which interactions are the most valuable? According to Professor Cross, the best opportunities for value-producing collaboration are best-practice knowledge transfers, innovation, and revenue generation activities. The absence of those value-producing activities might be considered “white space” in the customer relationship. In Professor Cross’s words, effective collaboration doesn’t mean “everyone in the woods singing Cum By Ya to each other.” By uncovering where value is added or subtracted in collaboration, companies can garner the right resources, manage staffing, and organize teams.
So where is collaborative value added and where is it subtracted? Value is added when tacit knowledge for best practices, innovation, and revenue generation is exchanged between individuals. As for subtraction, there are two major sources. If the outcome of collaborative activities provides neither productivity improvements nor cost reductions, then those activities are value-subtracting to an organization. Second, consistent negativity from even one employee can have a measurable, cascading impact on the value an organization produces. And the impact is magnified in organizations that depend on collaboration for executing strategy.
In a PowerPoint slide, Professor Cross illustrated a basic social network. When individuals in a large, multinational company were asked “who do you receive information from and provide information to,” the network’s visual similarity to a giant hairball was stunning. It's easy to get the impression that everybody talks to everybody. I would be challenged to explain to a CFO how that picture portends to drive value for his or her company.
But underneath that picture, communication silos exist. These silos are losing favor, particularly for business development operations. One symposium panelist, Tracy Cox, Director of Performance Consulting for Raytheon Corporation, debunked the idea that selling activities should be the exclusive domain of the sales department. He recommended that companies consider different collaborative routes to engage with high-potential prospects, noting that it’s important to “understand the key influencers and reputation holders in the customer community and how to leverage those connections for new business.” It’s myopic to think of the Account Executive as the focal point for facilitating those connections.
When more specific relationship questions are asked to produce the social network model, the lines in the amorphous hairball social network strip away, yielding valuable insight. Who energizes you in your business activities? Who do you go to in order to generate revenue? Who gives you a sense of purpose? When these connections are mapped, patterns emerge that are highly predictive in how real value is transferred within and between companies. Not surprisingly, for these questions, the best performing account teams not only had strong client connections, but also better networks into their own organizations.
In addition to the Raytheon panelist, two other panelists, Lisa Vertucci, Managing Director, Global Head of Talent Development of Lehman Brothers; and John Helferich, former Vice President of Masterfoods USA shared how their organizations have used social network modeling to create value through collaboration. The operational decisions they made began with asking these questions:
How can we make invisible value visible to our customers?
How can we create the most effective cross-boundary relationships?
How can we identify key new business opportunities?
How do we uncover which people provide greater than average value in cross-selling products and services?
What is the most expedient way to “grow the conversation” about an important topic?
As with forensic sleuthing for suspicious financial transactions, following the money path in a social network context provides a good starting point for figuring out what’s valuable—and what’s white space—in your customer relationships.
Age Verification Bypassed By Cashier
It all started with a half-case of Corona beer . . .
Amid the routine supermarket cacophony of bar code scanner beeps and crying babies, I almost miss a message that whirs onto the register’s colorful plasma display at my checkout station:
**Age verification bypassed by cashier**
The cashier barely looked up while scanning my items, but she had already made an age assessment. As the verification message scrolled up and off the screen, replaced by the odd character strings that comprise the retail shorthand for my purchases, I pondered how the cashier could have made such a hasty decision regarding my age, given the gravity of the consequences she faced had she been wrong.
What influenced her decision? I’m dressed in a black T-shirt, jeans, and running shoes. Was it a little gray hair? Slight balding at the temples? Crows feet around the eyes? Maybe I really do look fifty. In the name of Positive Customer Experience, couldn’t she have feigned a shred of age confusion, prompting her to ask me for an ID? But could my reaction of flattery be someone else’s annoyance over privacy invasion, or a twenty-something’s frustration that he doesn’t appear sufficiently old? Whatever the answer, could the enforcement of age verification be achieved without the ruthlessly cold message the Point-of-Sale system displayed?
Welcome to the murky world of personal profiling, and its collision with technology. Headline: A customer’s personal appearance is judged when managing a transaction. While web analytics enable companies selling products over the Internet to profile people at arms-length with clinical precision, face-to-face transactions require on-the-spot judgment and strong interpersonal skills. That’s a tall public relations order for anyone who must decide who to interrogate when selling alcohol or tobacco, allowing a senior-citizen discount, providing entrance into a bar, or pricing a kid's haircut (are you eight—or nine?). Jim Barnes described related pitfalls in his March 16th blog "The Tripping Point."
It’s not just age-related profiling that creates customer relationship problems. In 1994, Denny’s Restaurants paid a $54.4 million class action settlement to thousands of black customers who sued the chain for discrimination, alleging they were refused service or had to wait longer for service than white customers. And during a recent cab ride to the airport, I endured the driver’s diatribe about the bad tipping habits of a certain nationality (did he assume I had a different heritage?).
A recent article “Confessions of a Car Salesman,” by Chandler Phillips,
elucidates how institutionalized customer profiling infects the customer experience:
“Since I was still a "green pea" the other salesmen tried to push me to wait on undesirable ups — the undesirable customers who the salesmen thought wouldn't or couldn't qualify to buy a car. My manager had, at one point, described the different races and nationalities and what they were like as customers. It would be too inflammatory to repeat what he said here. But the gist of it was that the people of such-and-such nationality were "lie downs" (people who buy without negotiating), while the people of another race were "roaches" (they had bad credit), and people from that country were "mooches" (they tried to buy the car for invoice price).”
Data mining has freed many e-commerce companies from the burden of coaching employees on such sensitive issues. Sequestered in Spartan cubicles that could be anywhere in the world, analysts can look at a myriad of variables and target messages and tailor processes without offending customers. Amazon.com made business intelligence-generated recommendations famous with “Customers who bought this item also bought . . .”
The so-called statistical objectivity of analytics makes it possible to sell billions of dollars of products without customers taking umbrage. No value judgments, no offensive antecedents such as “People like you want . . . “ If a poor recommendation is made online, it’s an anomaly in the algorithm, and no one person is to blame. Most of all, no one makes a hurtful request based on how a person looks or thinks. In the cyber-world, psychographic judgments are deeply hidden in lines of code. In the bricks-and-mortar world, they're not.
It’s not that technology and analytics hasn’t brought new ugliness to the customer experience. When caller-ID technology became widespread, many feared that it would create a two-class customer service system by routing inbound calls differently, depending on the neighborhood a person happened to be calling from. And technology-enabled profiling made headlines again when civil libertarians debated the potential abuses resulting from embedding RFID chips into clothing.
But the fact remains that for all the heavy lifting carried by today’s e-commerce workflow engines, billions of face-to-face customer-relationship interactions are conducted every day, and managing them is a less-than-perfect science. Add to the equation that any judgment based on an individual’s appearance might be considered offensive, you quickly realize this is not a job for amateurs.
As with many issues that reside in the union of social mores, technology, and the law, there are more questions than answers. Given the sensitivities over personal profiling, how should companies enforce regulations for sales of certain products to underage consumers? What constitutes appropriate management of policies? How should an appropriate customer interaction be defined? How should employees be trained? What is the role of Customer Relationship Management (CRM) systems in supporting employees when profiling must be part of the transaction? What constitutes unethical physical profiling? What risks are associated with profiling?
Companies such as Disney have addressed some challenges by regarding customer-facing employees as actors and patrons as guests, and providing interpersonal skills coaching along the way. Other companies need to think further about how profiling impacts the customer’s experience. Unchecked, customer profiling mutates into dangerous “—ism’s:” racism, sexism, and ageism, to name a few. Has the car dealership referenced earlier already crossed a perilous threshold? It’s worth thinking about, since once the fuzzy line has been crossed, the issues discussed around the boardroom table relate to litigation and damage control.
But companies should not ignore the opportunities as well. When you’re buying beer at age fifty, life seems brighter when a cashier asks you for an ID. You can bet I would tell at least twenty people, after first telling my wife! Talk about evangelizing the customer experience!
Amid the routine supermarket cacophony of bar code scanner beeps and crying babies, I almost miss a message that whirs onto the register’s colorful plasma display at my checkout station:
**Age verification bypassed by cashier**
The cashier barely looked up while scanning my items, but she had already made an age assessment. As the verification message scrolled up and off the screen, replaced by the odd character strings that comprise the retail shorthand for my purchases, I pondered how the cashier could have made such a hasty decision regarding my age, given the gravity of the consequences she faced had she been wrong.
What influenced her decision? I’m dressed in a black T-shirt, jeans, and running shoes. Was it a little gray hair? Slight balding at the temples? Crows feet around the eyes? Maybe I really do look fifty. In the name of Positive Customer Experience, couldn’t she have feigned a shred of age confusion, prompting her to ask me for an ID? But could my reaction of flattery be someone else’s annoyance over privacy invasion, or a twenty-something’s frustration that he doesn’t appear sufficiently old? Whatever the answer, could the enforcement of age verification be achieved without the ruthlessly cold message the Point-of-Sale system displayed?
Welcome to the murky world of personal profiling, and its collision with technology. Headline: A customer’s personal appearance is judged when managing a transaction. While web analytics enable companies selling products over the Internet to profile people at arms-length with clinical precision, face-to-face transactions require on-the-spot judgment and strong interpersonal skills. That’s a tall public relations order for anyone who must decide who to interrogate when selling alcohol or tobacco, allowing a senior-citizen discount, providing entrance into a bar, or pricing a kid's haircut (are you eight—or nine?). Jim Barnes described related pitfalls in his March 16th blog "The Tripping Point."
It’s not just age-related profiling that creates customer relationship problems. In 1994, Denny’s Restaurants paid a $54.4 million class action settlement to thousands of black customers who sued the chain for discrimination, alleging they were refused service or had to wait longer for service than white customers. And during a recent cab ride to the airport, I endured the driver’s diatribe about the bad tipping habits of a certain nationality (did he assume I had a different heritage?).
A recent article “Confessions of a Car Salesman,” by Chandler Phillips,
elucidates how institutionalized customer profiling infects the customer experience:
“Since I was still a "green pea" the other salesmen tried to push me to wait on undesirable ups — the undesirable customers who the salesmen thought wouldn't or couldn't qualify to buy a car. My manager had, at one point, described the different races and nationalities and what they were like as customers. It would be too inflammatory to repeat what he said here. But the gist of it was that the people of such-and-such nationality were "lie downs" (people who buy without negotiating), while the people of another race were "roaches" (they had bad credit), and people from that country were "mooches" (they tried to buy the car for invoice price).”
Data mining has freed many e-commerce companies from the burden of coaching employees on such sensitive issues. Sequestered in Spartan cubicles that could be anywhere in the world, analysts can look at a myriad of variables and target messages and tailor processes without offending customers. Amazon.com made business intelligence-generated recommendations famous with “Customers who bought this item also bought . . .”
The so-called statistical objectivity of analytics makes it possible to sell billions of dollars of products without customers taking umbrage. No value judgments, no offensive antecedents such as “People like you want . . . “ If a poor recommendation is made online, it’s an anomaly in the algorithm, and no one person is to blame. Most of all, no one makes a hurtful request based on how a person looks or thinks. In the cyber-world, psychographic judgments are deeply hidden in lines of code. In the bricks-and-mortar world, they're not.
It’s not that technology and analytics hasn’t brought new ugliness to the customer experience. When caller-ID technology became widespread, many feared that it would create a two-class customer service system by routing inbound calls differently, depending on the neighborhood a person happened to be calling from. And technology-enabled profiling made headlines again when civil libertarians debated the potential abuses resulting from embedding RFID chips into clothing.
But the fact remains that for all the heavy lifting carried by today’s e-commerce workflow engines, billions of face-to-face customer-relationship interactions are conducted every day, and managing them is a less-than-perfect science. Add to the equation that any judgment based on an individual’s appearance might be considered offensive, you quickly realize this is not a job for amateurs.
As with many issues that reside in the union of social mores, technology, and the law, there are more questions than answers. Given the sensitivities over personal profiling, how should companies enforce regulations for sales of certain products to underage consumers? What constitutes appropriate management of policies? How should an appropriate customer interaction be defined? How should employees be trained? What is the role of Customer Relationship Management (CRM) systems in supporting employees when profiling must be part of the transaction? What constitutes unethical physical profiling? What risks are associated with profiling?
Companies such as Disney have addressed some challenges by regarding customer-facing employees as actors and patrons as guests, and providing interpersonal skills coaching along the way. Other companies need to think further about how profiling impacts the customer’s experience. Unchecked, customer profiling mutates into dangerous “—ism’s:” racism, sexism, and ageism, to name a few. Has the car dealership referenced earlier already crossed a perilous threshold? It’s worth thinking about, since once the fuzzy line has been crossed, the issues discussed around the boardroom table relate to litigation and damage control.
But companies should not ignore the opportunities as well. When you’re buying beer at age fifty, life seems brighter when a cashier asks you for an ID. You can bet I would tell at least twenty people, after first telling my wife! Talk about evangelizing the customer experience!
What Would Mark Twain Click On?
Imagine that you’re living in 1895. You’ve just sat down to dinner with your family when you’re interrupted by a knock on your front door. It’s a travelling salesperson holding a sample of a new book by Mark Twain. Would you listen to his pitch, or would you just close the door and mutter about annoying salespeople?
I recently learned that was how Mark Twain’s writings were originally sold. The hard sell was normal marketing for Twain’s books, and he was one of the first writers to trademark his name to promote sales. Although today we might appreciate Twain’s writing on literary merits, business considerations influenced what he wrote, and how he wrote it. He said that the money he could make from publishing a book “has a degree of importance for me which is almost beyond my comprehension.” Most of us would associate those words with the ambitions of a dyed-in-the-wool capitalist, but not an artist.
The financial calculus of book publishing drove Twain to innovate in other ways. He deployed a subscription sales model along with a dedicated sales force to cover a wide geography. (At the time, this itinerant sales force was one of the first to recruit women for jobs.) Using brand-name recognition common today, sales agents sold his books on the promise of the enjoyment the reader would get over time.
The salespeople engaged with customers by reading the publisher’s selling script, which included choreographed conversational details. Because the subscription sales model required selling some works that hadn’t yet been published, salespeople didn’t possess complete books. They sold entertainment, using samples that contained rich content at the time, including portions of text, pictures, page layouts, and choices for bindings.
Here’s the pitch you might have heard, quoting from an actual script: “I’ve got specimen pages of Mark Twain’s latest and greatest book! . . . there are nearly 700 pages in this book, and there’s a laugh on every page . . . The title of Mark Twain’s work (open the title page) is Following the Equator.” Even then, promoters and salespeople knew the importance of “controlling the conversation.”
Given Twain’s penchant for sales innovation, how might he exploit digital media if he were writing today? It’s interesting to think about what he might click on. In which formats would we discover and enjoy modern versions of Huck Finn and Tom Sawyer? Could their adventures be distributed through a series of two-minute YouTube videos or Podcasts? Would this presentation enhance—or detract from the enjoyment we’ve derived from Twain’s stories. Would his ideas be equally inspiring and memorable without the written word? Or, you might think that because no other packaging can eclipse the eloquence of Twain’s prose, we should consider ourselves fortunate that when Twain was alive, print publishing was the dominant vehicle for mass recording and sharing of thought.
I can’t help but wonder what we’re sacrificing as information technologies develop and converge, and we embrace digital media. With similar uncertainty, in his book The Big Switch, Nicholas Carr questions the eventual outcome from the actions we take when exchanging thoughts and ideas:
“The Internet turns everything, from news-gathering to community building, into a series of tiny transactions—expressed mainly through clicks on links—that are simple in isolation yet extraordinarily complicated in the aggregate. Each of us may make hundreds or even thousands of clicks a day, some deliberately, some impulsively, and with each one we are constructing our identity, shaping our influences, and creating our communities. As we spend more time and do more things online, our combined clicks will shape our economy, our culture, and our society.” Clearly, Carr is ambivalent about the outcome. His insight leaves it up the reader to determine whether the future impact will be sustaining or debilitating.
Jeffrey Bezos, quoted in The Wall Street Journal (“The Way We Read,” June 9, 2008) said, “Over some time horizon, books will be read on electronic devices. Physical books won’t completely go away, just as horses haven’t completely gone away. But there is no sinecure for any technology. If you think about books, it’s astonishing. It’s very hard to find a technology that has remained in mostly the same form for 500 years. And anything that has stubbornly resisted improvement for 500 years is going to be hard to improve. That is what we’re trying to do with Kindle. We see this as an effort to improve upon the book, even though it’s resisted change for 500 years.” He continued, “Over the last 20 years, most of the tools that we humans have invented have made it easier for us to be information snackers. If one of the outcomes of Kindle and other devices like it [is] making long-form reading more frictionless so that you end up doing more of it, I think that’s a good thing.” But is the trend toward “information snacking” a signal that we’re sliding toward an abyss that denies society literature on the level of Mark Twain’s creations?
Maybe not. Twain, who made his narratives intentionally long to fit the subscription distribution model he pioneered over a century ago, would have already sent an instant message to Mr. Bezos. “I have a great idea for a story! Let’s meet and we’ll talk about how we’ll both make money.” I applaud Mr. Bezos for his vision. I hope that 100 years from now we’ll look back, recognizing that Kindle—or something like it—facilitated a literary achievement on par with The Adventures of Huckleberry Finn.
I recently learned that was how Mark Twain’s writings were originally sold. The hard sell was normal marketing for Twain’s books, and he was one of the first writers to trademark his name to promote sales. Although today we might appreciate Twain’s writing on literary merits, business considerations influenced what he wrote, and how he wrote it. He said that the money he could make from publishing a book “has a degree of importance for me which is almost beyond my comprehension.” Most of us would associate those words with the ambitions of a dyed-in-the-wool capitalist, but not an artist.
The financial calculus of book publishing drove Twain to innovate in other ways. He deployed a subscription sales model along with a dedicated sales force to cover a wide geography. (At the time, this itinerant sales force was one of the first to recruit women for jobs.) Using brand-name recognition common today, sales agents sold his books on the promise of the enjoyment the reader would get over time.
The salespeople engaged with customers by reading the publisher’s selling script, which included choreographed conversational details. Because the subscription sales model required selling some works that hadn’t yet been published, salespeople didn’t possess complete books. They sold entertainment, using samples that contained rich content at the time, including portions of text, pictures, page layouts, and choices for bindings.
Here’s the pitch you might have heard, quoting from an actual script: “I’ve got specimen pages of Mark Twain’s latest and greatest book! . . . there are nearly 700 pages in this book, and there’s a laugh on every page . . . The title of Mark Twain’s work (open the title page) is Following the Equator.” Even then, promoters and salespeople knew the importance of “controlling the conversation.”
Given Twain’s penchant for sales innovation, how might he exploit digital media if he were writing today? It’s interesting to think about what he might click on. In which formats would we discover and enjoy modern versions of Huck Finn and Tom Sawyer? Could their adventures be distributed through a series of two-minute YouTube videos or Podcasts? Would this presentation enhance—or detract from the enjoyment we’ve derived from Twain’s stories. Would his ideas be equally inspiring and memorable without the written word? Or, you might think that because no other packaging can eclipse the eloquence of Twain’s prose, we should consider ourselves fortunate that when Twain was alive, print publishing was the dominant vehicle for mass recording and sharing of thought.
I can’t help but wonder what we’re sacrificing as information technologies develop and converge, and we embrace digital media. With similar uncertainty, in his book The Big Switch, Nicholas Carr questions the eventual outcome from the actions we take when exchanging thoughts and ideas:
“The Internet turns everything, from news-gathering to community building, into a series of tiny transactions—expressed mainly through clicks on links—that are simple in isolation yet extraordinarily complicated in the aggregate. Each of us may make hundreds or even thousands of clicks a day, some deliberately, some impulsively, and with each one we are constructing our identity, shaping our influences, and creating our communities. As we spend more time and do more things online, our combined clicks will shape our economy, our culture, and our society.” Clearly, Carr is ambivalent about the outcome. His insight leaves it up the reader to determine whether the future impact will be sustaining or debilitating.
Jeffrey Bezos, quoted in The Wall Street Journal (“The Way We Read,” June 9, 2008) said, “Over some time horizon, books will be read on electronic devices. Physical books won’t completely go away, just as horses haven’t completely gone away. But there is no sinecure for any technology. If you think about books, it’s astonishing. It’s very hard to find a technology that has remained in mostly the same form for 500 years. And anything that has stubbornly resisted improvement for 500 years is going to be hard to improve. That is what we’re trying to do with Kindle. We see this as an effort to improve upon the book, even though it’s resisted change for 500 years.” He continued, “Over the last 20 years, most of the tools that we humans have invented have made it easier for us to be information snackers. If one of the outcomes of Kindle and other devices like it [is] making long-form reading more frictionless so that you end up doing more of it, I think that’s a good thing.” But is the trend toward “information snacking” a signal that we’re sliding toward an abyss that denies society literature on the level of Mark Twain’s creations?
Maybe not. Twain, who made his narratives intentionally long to fit the subscription distribution model he pioneered over a century ago, would have already sent an instant message to Mr. Bezos. “I have a great idea for a story! Let’s meet and we’ll talk about how we’ll both make money.” I applaud Mr. Bezos for his vision. I hope that 100 years from now we’ll look back, recognizing that Kindle—or something like it—facilitated a literary achievement on par with The Adventures of Huckleberry Finn.
Why Do You Use an Umbrella?: The Best Sales Questions Dig Beyond the Obvious
By Andrew Rudin, Outside Technologies, Inc.
Why do people use umbrellas?
It’s not a trick question. But before you answer it, substitute your own product or service for the word “umbrellas.”
My client uses this Umbrella Question to help salespeople learn the importance of digging past biases when asking questions. Like all discovery, there are many pathways to the answer. Here’s one from a recent meeting:
“Why do people use umbrellas?”
“So they don’t get wet.”
“Why is it important for them not to get wet?”
“So they don’t catch a cold.”
“Why is it important for them not to catch a cold?”
“So they won’t get sick.”
“And why is it important for them not to get sick?”
“So they won’t die.”
Wow! Using an umbrella prolongs life!
The person who answered these questions had clear ideas about the connections between cause and effect. Whether or not you believe an umbrella will enable someone to live longer, the exercise underscores the importance of continuing the discovery past the obvious answer, “so they don’t get wet.”
An article I wrote, "The Right Sales Questions Will Get The Right Answers" describes a sales opportunity I lost by failing to do just that—to get beyond the obvious. It would have been great to know the Umbrella Question at the time.
The value of asking questions that dig beyond the obvious doesn’t just apply to sales calls. It applies to anyone who must understand needs, wants, desires, and motivations of the individuals who purchase from them. In a CRM scenario:
“Why do customers choose to call our contact center?”
“To place orders.”
“And why do they use the phone?”
“Because they’re uncomfortable using live chat.”
“Why are they uncomfortable using live chat?”
“Because they feel more at home communicating by talking to another individual.”
“And why do they prefer talking vs. typing?”
“Because they feel lonely.”
“And why do they feel lonely?”
Etc.
Think of how an organization might shape the Customer Experience by uncovering the root causes of customer preferences.
Whenever I buy pharmaceuticals for my dog, I place the orders through the call center of Drs. Foster Smith, a catalog retailer for pet supplies. The call center agents are invariably helpful and knowledgeable. Although I’ve never asked, I wonder how many pet stories they patiently endure as they guide callers through how to select the best squeaky toy for their dog.
Could the company already understand something that most companies don’t—that customers call them for reasons that go beyond one obvious answer—to place orders?
Why do people use umbrellas?
It’s not a trick question. But before you answer it, substitute your own product or service for the word “umbrellas.”
My client uses this Umbrella Question to help salespeople learn the importance of digging past biases when asking questions. Like all discovery, there are many pathways to the answer. Here’s one from a recent meeting:
“Why do people use umbrellas?”
“So they don’t get wet.”
“Why is it important for them not to get wet?”
“So they don’t catch a cold.”
“Why is it important for them not to catch a cold?”
“So they won’t get sick.”
“And why is it important for them not to get sick?”
“So they won’t die.”
Wow! Using an umbrella prolongs life!
The person who answered these questions had clear ideas about the connections between cause and effect. Whether or not you believe an umbrella will enable someone to live longer, the exercise underscores the importance of continuing the discovery past the obvious answer, “so they don’t get wet.”
An article I wrote, "The Right Sales Questions Will Get The Right Answers" describes a sales opportunity I lost by failing to do just that—to get beyond the obvious. It would have been great to know the Umbrella Question at the time.
The value of asking questions that dig beyond the obvious doesn’t just apply to sales calls. It applies to anyone who must understand needs, wants, desires, and motivations of the individuals who purchase from them. In a CRM scenario:
“Why do customers choose to call our contact center?”
“To place orders.”
“And why do they use the phone?”
“Because they’re uncomfortable using live chat.”
“Why are they uncomfortable using live chat?”
“Because they feel more at home communicating by talking to another individual.”
“And why do they prefer talking vs. typing?”
“Because they feel lonely.”
“And why do they feel lonely?”
Etc.
Think of how an organization might shape the Customer Experience by uncovering the root causes of customer preferences.
Whenever I buy pharmaceuticals for my dog, I place the orders through the call center of Drs. Foster Smith, a catalog retailer for pet supplies. The call center agents are invariably helpful and knowledgeable. Although I’ve never asked, I wonder how many pet stories they patiently endure as they guide callers through how to select the best squeaky toy for their dog.
Could the company already understand something that most companies don’t—that customers call them for reasons that go beyond one obvious answer—to place orders?
To An Octopus "50" Means Nothing: Why Empathy Matters
What qualities make a salesperson a top performer? Being young and energetic? Money-motivated? Aggressive? Outgoing and gregarious? Or having strong product knowledge? Experience selling big-ticket items?
None of these describes "Denise," a top-performing salesperson I interviewed recently. In fact, her resume probably wouldn't reach the inbox of most prospective employers. She's over 60, friendly but not outgoing and motivated by more than commissions as a measure of success. She has so little product knowledge that she emphasizes that fact when working with prospects (more about that in a moment). But if you met her, you'd be glad you didn't have to earn your living selling against her. She dominates her competitors.
Wondering what killer attribute she has? It's empathy. In a sales world in which her competitors are shouting in their own language, Denise learned a long time ago that, "to an octopus, 50 means nothing."
‘One question that should be at the top of the list: How does the world look through your customer's eyes?.’
When I saw how empathy creates sales success for Denise, I wondered if other sales professionals had similarly identified this essential competency. So I asked an experienced sales recruiter, Natalie Buford-Young of The Rainfield Group, whether empathy matters. I was surprised by her answer because she told me that she has never worked with an employer that has specified "empathy" as a candidate requirement. Not once. But Buford-Young's expertise enables her to fill the knowledge gap for her clients because she views empathy, along with ego, as the attributes that every salesperson must possess for success, and she carefully screens her candidates accordingly.
Buford-Young's straightforward answer belies the complexity of uncovering the empathetic behaviors of a great salesperson. While most sales managers eagerly focus on ego-related interview questions (How did you perform against quota in the last five years? What did you W-2 last year? What was the amount of your latest quota? What was your largest sale?), they are much less adept at uncovering empathy. One question that should be at the top of the list: How does the world look through your customer's eyes?
Here's how Denise became a top performer by imbuing that perspective in everything she does.
Outside-in viewpoint. According to Denise, "Before my (prospecting) phone call, I envision the person I'm calling in their office, along with what's in their surroundings. I think about what they are doing when my call comes in. I think about what they did five minutes before, what's on their calendar that day and what pressure they might be facing at home. From there, I think about what I'm going to ask and say. Then I make my call."
Common concern for the prospect's objectives and goals. Denise not only knows what motivates her customers, but also, she believes in the same principles. She described it this way: "My clients are cause-driven. I share the same interest in those causes." Shared values create a bond.
Meaningful discovery through asking the right questions. Here's where Denise's limited product knowledge serves her well. She eliminates the common trap of "showing but not selling." And because her ego enables her to know where she wants to lead her prospect, she guides the person there by asking the right questions. In fact, she has sold many software licenses by beginning with this caveat before a demo: "I've never run this function before, but let's step through this together and we can see how easy it is. Now, how would you start out with ... ?"
Insightful dialog. A conversation with Denise is a far cry from the cliché salesperson portrayed in Dan Ackroyd's famed Saturday Night Live Bass-o-Matic sales infomercials. Denise is soft-spoken and articulate. While her voice quality is pleasant, she commands attention because she is adept at sharing her insight about what her customer has said. Her conversations follow a self-supporting pattern: Ask a question. Listen. Restate the answer better than how she heard it. After hearing several of her customer calls, I could clearly see that in the course of going from Cold Call Telemarketer to Trusted Advisor, Denise is a Lamborghini.
Appropriate humility. Denise always walks a fine line where others fall off. She's intelligent without being pompous. Articulate but not highfalutin. Knowledgeable but not pedantic. Most important, she knows her customer's priorities and how the product she sells fits into that schema. She knows the daily pressures her customers face and how her interactions are perceived. These important aspects are often lost as salespeople pursue ever-higher quotas and sales goals. Compare Denise's approach with the get-around-the-gatekeeper-any-way-you-can mentality, and you'll recognize why most telemarketing voice mail messages never get heard and most emails hit the spam bucket, forever unread. In a statement that at first seems counter-intuitive, Denise attributes her high-close ratio to the fact that "there is no sales urgency in my voice."
Courtesy. Denise doesn't deny that some people she must work with can impede her, but she treats everyone with appropriate courtesy and respect. She believes that the same people her competitors may try to avoid can be of critical importance for gaining access to decision makers.
Knowledge of the world outside of business domain. Denise brings a broad view of the world to her sales relationships. She's well-read and very comfortable talking about complex issues that transcend geographic and topical boundaries. Think that's not important for a person who mainly uses the phone to complete sub-$10,000 sales? I listened intently as she spoke to an Indian-surnamed prospective client three time zones away in Atlanta about literacy issues in India and what those issues mean for that country's global competitiveness. She booked an appointment to talk with the client again the following week. A Lamborghini going from Cold Call Telemarketer to Trusted Advisor.
As Denise demonstrates, empathy is really an umbrella-term under which strategies, tactics and processes should be formulated. And because strategies are directional, the best sales results will be achieved when empathy is viewed as a guideline, not as a prescription. Empathy yields patterns of positive sales behaviors that don't need to be culled into neat checklists, micromanaged at every quarterly sales review. "Be courteous to the front desk receptionist," is a hollow admonition to a salesperson who doesn't understand what empathy means for building a valuable business relationship. Uncovering a salesperson's propensity for empathy will help identify a potential sales star. Nurturing empathetic behavior once it's found will be the next great management challenge.
None of these describes "Denise," a top-performing salesperson I interviewed recently. In fact, her resume probably wouldn't reach the inbox of most prospective employers. She's over 60, friendly but not outgoing and motivated by more than commissions as a measure of success. She has so little product knowledge that she emphasizes that fact when working with prospects (more about that in a moment). But if you met her, you'd be glad you didn't have to earn your living selling against her. She dominates her competitors.
Wondering what killer attribute she has? It's empathy. In a sales world in which her competitors are shouting in their own language, Denise learned a long time ago that, "to an octopus, 50 means nothing."
‘One question that should be at the top of the list: How does the world look through your customer's eyes?.’
When I saw how empathy creates sales success for Denise, I wondered if other sales professionals had similarly identified this essential competency. So I asked an experienced sales recruiter, Natalie Buford-Young of The Rainfield Group, whether empathy matters. I was surprised by her answer because she told me that she has never worked with an employer that has specified "empathy" as a candidate requirement. Not once. But Buford-Young's expertise enables her to fill the knowledge gap for her clients because she views empathy, along with ego, as the attributes that every salesperson must possess for success, and she carefully screens her candidates accordingly.
Buford-Young's straightforward answer belies the complexity of uncovering the empathetic behaviors of a great salesperson. While most sales managers eagerly focus on ego-related interview questions (How did you perform against quota in the last five years? What did you W-2 last year? What was the amount of your latest quota? What was your largest sale?), they are much less adept at uncovering empathy. One question that should be at the top of the list: How does the world look through your customer's eyes?
Here's how Denise became a top performer by imbuing that perspective in everything she does.
Outside-in viewpoint. According to Denise, "Before my (prospecting) phone call, I envision the person I'm calling in their office, along with what's in their surroundings. I think about what they are doing when my call comes in. I think about what they did five minutes before, what's on their calendar that day and what pressure they might be facing at home. From there, I think about what I'm going to ask and say. Then I make my call."
Common concern for the prospect's objectives and goals. Denise not only knows what motivates her customers, but also, she believes in the same principles. She described it this way: "My clients are cause-driven. I share the same interest in those causes." Shared values create a bond.
Meaningful discovery through asking the right questions. Here's where Denise's limited product knowledge serves her well. She eliminates the common trap of "showing but not selling." And because her ego enables her to know where she wants to lead her prospect, she guides the person there by asking the right questions. In fact, she has sold many software licenses by beginning with this caveat before a demo: "I've never run this function before, but let's step through this together and we can see how easy it is. Now, how would you start out with ... ?"
Insightful dialog. A conversation with Denise is a far cry from the cliché salesperson portrayed in Dan Ackroyd's famed Saturday Night Live Bass-o-Matic sales infomercials. Denise is soft-spoken and articulate. While her voice quality is pleasant, she commands attention because she is adept at sharing her insight about what her customer has said. Her conversations follow a self-supporting pattern: Ask a question. Listen. Restate the answer better than how she heard it. After hearing several of her customer calls, I could clearly see that in the course of going from Cold Call Telemarketer to Trusted Advisor, Denise is a Lamborghini.
Appropriate humility. Denise always walks a fine line where others fall off. She's intelligent without being pompous. Articulate but not highfalutin. Knowledgeable but not pedantic. Most important, she knows her customer's priorities and how the product she sells fits into that schema. She knows the daily pressures her customers face and how her interactions are perceived. These important aspects are often lost as salespeople pursue ever-higher quotas and sales goals. Compare Denise's approach with the get-around-the-gatekeeper-any-way-you-can mentality, and you'll recognize why most telemarketing voice mail messages never get heard and most emails hit the spam bucket, forever unread. In a statement that at first seems counter-intuitive, Denise attributes her high-close ratio to the fact that "there is no sales urgency in my voice."
Courtesy. Denise doesn't deny that some people she must work with can impede her, but she treats everyone with appropriate courtesy and respect. She believes that the same people her competitors may try to avoid can be of critical importance for gaining access to decision makers.
Knowledge of the world outside of business domain. Denise brings a broad view of the world to her sales relationships. She's well-read and very comfortable talking about complex issues that transcend geographic and topical boundaries. Think that's not important for a person who mainly uses the phone to complete sub-$10,000 sales? I listened intently as she spoke to an Indian-surnamed prospective client three time zones away in Atlanta about literacy issues in India and what those issues mean for that country's global competitiveness. She booked an appointment to talk with the client again the following week. A Lamborghini going from Cold Call Telemarketer to Trusted Advisor.
As Denise demonstrates, empathy is really an umbrella-term under which strategies, tactics and processes should be formulated. And because strategies are directional, the best sales results will be achieved when empathy is viewed as a guideline, not as a prescription. Empathy yields patterns of positive sales behaviors that don't need to be culled into neat checklists, micromanaged at every quarterly sales review. "Be courteous to the front desk receptionist," is a hollow admonition to a salesperson who doesn't understand what empathy means for building a valuable business relationship. Uncovering a salesperson's propensity for empathy will help identify a potential sales star. Nurturing empathetic behavior once it's found will be the next great management challenge.
Monday, November 24, 2008
Can Johnny Raise Money? How Public Schools Exploit Social Networks
Reading, writing, ‘rithmetic, and raising money. Today, for public education, building the latter competency has never been more important. Schools want your money and they are pushing harder than ever to get it. If you haven’t already felt the heat, you will soon.
This month, a strange envelope arrived in our postal mailbox at home. It looked like a bill, but different, because the envelope had three windows instead of the usual one, and because our name and address was scrawled in freehand. On closer inspection, I saw the handwritten name of our nephew above the printed name of his elementary school in Florida. (My wife and I live in Virginia.) I bit the curiosity bait and opened the letter.
It begins with a handwritten salutation: “Dear Aunt Barbara and Uncle Andy,” followed by preprinted text saying, “We’re hoping to raise much-needed funds through the sales of magazine subscriptions—either new ones or renewals!” At the bottom: our four-year-old nephew’s name—written in adult cursive. How’s that for bravado? And just the week before, we received a similarly-packaged solicitation from our niece (not related to our nephew) asking us to buy magazine subscriptions to benefit her school in California!
Both letters contained several pieces collateral, and a convenient postcard to send to our school-aged loved one informing him or her of our donation to the school. The postcard was thoughtfully pre-printed with the salutation “Dear,” a message, and amazingly, a closing sentiment, “Love,” followed by a blank line for me to fill in my name. (This technique of fundraising enables all parties to be equally perfunctory!)
Even stranger is what’s not included. The communication didn’t provide any information about how the proceeds will be used, or how our relatives will benefit. (Great American Opportunities, the marketing company that sent one of the solicitations, doesn’t provide an address or corporate website to learn more.) There isn’t a website listed for the school, or even a picture of the school (or of any school, for that matter!) to make a visual connection.
All of which leaves me feeling weirdly hollow about my role in a value chain that encompasses magazine publishers, marketing promotion companies, school districts, nieces and nephews—and finally, me. Here’s why:
1. Schools are part of the fabric of local communities. I support close family ties, but those bonds don’t mean I feel compelled to fund my niece and nephew’s schools. That’s the fiscal responsibility of their neighbors, and local government and businesses.
2. The marketing junctions don’t work. Family members making product pitches on behalf of big media companies ostensibly in support of vague school programs seems an odd and convoluted arrangement.
3. The charity request is utterly insincere.
4. The economics are flawed. One letter touts that “Forty percent of every dollar goes to our school.” Wouldn’t my niece or nephew’s school be twice as well off if I contributed 80% directly, and saved the remaining 20% percent myself? Clearly, the media companies are the primary beneficiaries of this marketing program.
The low-overhead appeal of this fundraising tactic is undeniable. Schools compete for the diminishing number of volunteer hours of time-strapped parents. So they ask parents to tap address books and dash off thirty or so letters to relatives and acquaintances, and voila! Money for the school! And no one even had to get off the sofa!
But what’s sacrificed in the process? For starters, sixty percent of every dollar spent. In addition, local communities are circumvented and kids lose the valuable experience of learning face-to-face sales—an important skill no matter what field they enter. Finally—as I can personally attest—away goes the goodwill of otherwise affectionate relatives who now get hit up for donations anytime and anywhere.
Maybe I’m wistful for a kinder, less harried time. When I was in elementary school, a fundraising drive meant hopping on my bike to get every neighbor on Oak Leaf Lane to buy one or more boxes of peanut brittle. That was before “working mom” became a mainstream term, before No Child Left Behind, before federal and state school budget cuts, before child predators, and yes, before big marketing companies salivated over how social networks and heartstrings promotions can stem declining sales for products like magazines in the age of the Internet.
Whether or not such promotions are successful, I find them degrading. If schools need to raise money, they might be better served to hire marketing specialists that understand the nuances of fundraising. In the meantime, my advice: don’t overlook appealing to local community. The most valuable social networks are just a bike ride away.
This month, a strange envelope arrived in our postal mailbox at home. It looked like a bill, but different, because the envelope had three windows instead of the usual one, and because our name and address was scrawled in freehand. On closer inspection, I saw the handwritten name of our nephew above the printed name of his elementary school in Florida. (My wife and I live in Virginia.) I bit the curiosity bait and opened the letter.
It begins with a handwritten salutation: “Dear Aunt Barbara and Uncle Andy,” followed by preprinted text saying, “We’re hoping to raise much-needed funds through the sales of magazine subscriptions—either new ones or renewals!” At the bottom: our four-year-old nephew’s name—written in adult cursive. How’s that for bravado? And just the week before, we received a similarly-packaged solicitation from our niece (not related to our nephew) asking us to buy magazine subscriptions to benefit her school in California!
Both letters contained several pieces collateral, and a convenient postcard to send to our school-aged loved one informing him or her of our donation to the school. The postcard was thoughtfully pre-printed with the salutation “Dear,” a message, and amazingly, a closing sentiment, “Love,” followed by a blank line for me to fill in my name. (This technique of fundraising enables all parties to be equally perfunctory!)
Even stranger is what’s not included. The communication didn’t provide any information about how the proceeds will be used, or how our relatives will benefit. (Great American Opportunities, the marketing company that sent one of the solicitations, doesn’t provide an address or corporate website to learn more.) There isn’t a website listed for the school, or even a picture of the school (or of any school, for that matter!) to make a visual connection.
All of which leaves me feeling weirdly hollow about my role in a value chain that encompasses magazine publishers, marketing promotion companies, school districts, nieces and nephews—and finally, me. Here’s why:
1. Schools are part of the fabric of local communities. I support close family ties, but those bonds don’t mean I feel compelled to fund my niece and nephew’s schools. That’s the fiscal responsibility of their neighbors, and local government and businesses.
2. The marketing junctions don’t work. Family members making product pitches on behalf of big media companies ostensibly in support of vague school programs seems an odd and convoluted arrangement.
3. The charity request is utterly insincere.
4. The economics are flawed. One letter touts that “Forty percent of every dollar goes to our school.” Wouldn’t my niece or nephew’s school be twice as well off if I contributed 80% directly, and saved the remaining 20% percent myself? Clearly, the media companies are the primary beneficiaries of this marketing program.
The low-overhead appeal of this fundraising tactic is undeniable. Schools compete for the diminishing number of volunteer hours of time-strapped parents. So they ask parents to tap address books and dash off thirty or so letters to relatives and acquaintances, and voila! Money for the school! And no one even had to get off the sofa!
But what’s sacrificed in the process? For starters, sixty percent of every dollar spent. In addition, local communities are circumvented and kids lose the valuable experience of learning face-to-face sales—an important skill no matter what field they enter. Finally—as I can personally attest—away goes the goodwill of otherwise affectionate relatives who now get hit up for donations anytime and anywhere.
Maybe I’m wistful for a kinder, less harried time. When I was in elementary school, a fundraising drive meant hopping on my bike to get every neighbor on Oak Leaf Lane to buy one or more boxes of peanut brittle. That was before “working mom” became a mainstream term, before No Child Left Behind, before federal and state school budget cuts, before child predators, and yes, before big marketing companies salivated over how social networks and heartstrings promotions can stem declining sales for products like magazines in the age of the Internet.
Whether or not such promotions are successful, I find them degrading. If schools need to raise money, they might be better served to hire marketing specialists that understand the nuances of fundraising. In the meantime, my advice: don’t overlook appealing to local community. The most valuable social networks are just a bike ride away.
Wednesday, October 22, 2008
The Two-edged Sword: Loyalty Decided versus Loyalty Divided
“No thanks. We are completely happy with our current provider.”
It’s a loyal sentiment that stops many sales conversations cold.
If my customers always swatted down every competitor’s sales overture that way, it would make me very happy. But when the ties that connect customers to vendors are under stress from every direction, it’s a Herculean task to preserve customer loyalty status quo. So, every day we strategize about how to undermine customer loyalty from our rivals, and our rivals focus on doing the same to us.
Today, ephemeral customer loyalty is reality for most firms, creating a contradiction of terms that should make perfect sense to those who sell for a living. In order to minimize the revenue valleys that occur when loyalty wanes, organizations commonly engineer a pseudo-loyalty, through switching costs—business-speak for the technological and financial handcuffs a vendor embeds into products. But such techniques make it impossible to discern where resistance to switching costs ends and loyalty begins. More than once, a prospective customer has told me “I’d throw every bit of this hardware out of here if it wouldn’t cost me so much to do it.” Based on that, does low customer churn equal high customer loyalty? Talk to Joe the Corporate Decision Maker, and you’ll know you can’t get to the answer by looking at churn rate alone.
But what makes a customer loyal, exactly? Whatever terms you use to describe loyal attachments, there’s one consistency: the more loyal the customer, the more closed-minded he or she is. Clearly, for customers to willingly shut off new ideas from competitors while remaining open to hearing new ideas from us requires an extraordinary combination of trust, commitment, great customer experiences, and more that marketers and academics continue to study and debate. In fact, this week on Amazon.com, my search on customer loyalty returned 8,993 results.
But are we deluding ourselves about what makes loyalty valuable—or whether it’s valuable? Do we really understand what our customers are loyal to? Does investing in customer loyalty programs always align with corporate objectives? Can high customer loyalty be counterproductive for sales? We make many assumptions about loyalty, and we should know whether we’re chasing a loyalty mirage. After all, do we really know if what we’re investing in customer loyalty is worth it?
Do we really understand what customers are loyal to? Is it our products or services? Our sales or support team? Our unique customer experience? Our brand? All of these? None of these? Rob Walker, author of Buying In, explains by citing a study in which consumers were asked “What are the things in your home which are special to you?. . . Part of what the authors found was that—not surprisingly—the most meaningful objects were rarely chosen on the basis of some intrinsic, rational property, like marketplace value, cutting-edge quality, simple aesthetic pleasure, or anything else that an economist might describe as ‘utility.’ They were chosen instead for connections to something else: family or social ties, a particular episode in the narrative of the subject’s life, perhaps religious faith or some other belief system affiliation. That is to say, their meaning tended to be a function of what the thing represented.”
This finding suggests that one object of customer loyalty might be as intangible as a meaning or idea, and that discovering what customers are actually loyal to will identify different pathways for creating and selling products to those customers. The book describes many modern examples in which companies have appealed to customers by “not . . . simply infusing some company’s material objects with fresh meaning, but creating meaning by creating objects—branded objects.”
Does investing in customer loyalty programs always align with corporate objectives? Not necessarily. David Corkindale debunks the loyalty yields value idea in his article Mistakes Marketers Make (The Wall Street Journal, October 20, 2008). “Studies have found that the individuals who are totally loyal buyers of a brand tend to make up only 10% of all buyers, and they buy it less frequently than others, too . . . A company that focuses on gaining and retaining such customers isn’t doing the smartest thing commercially.”
Can high customer loyalty be counterproductive for sales? Yes, when that loyalty is placed only on a physical product—as many salespeople responsible for upgrading products at installed accounts will attest. At one company I worked for, many customers maintained my company’s machines well beyond their useful, fully-depreciated life. Why? Because they were loyal to the equipment—so much so that they were close-minded to the economic benefits and other advantages of replacing it.
When it comes to customer loyalty—whether preserving your own, or undermining someone else’s—what’s the best strategy? First, understand how customer loyalty fits in the context of your company’s overall business strategy. Moving customers up the loyalty continuum might not be the best use of resources if there’s little or no strategic value. Although few will argue that having customer loyalty isn’t a useful or valuable outcome, Mr. Corkindale stresses that “there is really only one way for a company to achieve lasting growth in sales, and that is to increase its customer base, by either reaching new customers in existing markets or entering new markets. That doesn’t stop some marketers from trying to do the impossible.”
It’s a loyal sentiment that stops many sales conversations cold.
If my customers always swatted down every competitor’s sales overture that way, it would make me very happy. But when the ties that connect customers to vendors are under stress from every direction, it’s a Herculean task to preserve customer loyalty status quo. So, every day we strategize about how to undermine customer loyalty from our rivals, and our rivals focus on doing the same to us.
Today, ephemeral customer loyalty is reality for most firms, creating a contradiction of terms that should make perfect sense to those who sell for a living. In order to minimize the revenue valleys that occur when loyalty wanes, organizations commonly engineer a pseudo-loyalty, through switching costs—business-speak for the technological and financial handcuffs a vendor embeds into products. But such techniques make it impossible to discern where resistance to switching costs ends and loyalty begins. More than once, a prospective customer has told me “I’d throw every bit of this hardware out of here if it wouldn’t cost me so much to do it.” Based on that, does low customer churn equal high customer loyalty? Talk to Joe the Corporate Decision Maker, and you’ll know you can’t get to the answer by looking at churn rate alone.
But what makes a customer loyal, exactly? Whatever terms you use to describe loyal attachments, there’s one consistency: the more loyal the customer, the more closed-minded he or she is. Clearly, for customers to willingly shut off new ideas from competitors while remaining open to hearing new ideas from us requires an extraordinary combination of trust, commitment, great customer experiences, and more that marketers and academics continue to study and debate. In fact, this week on Amazon.com, my search on customer loyalty returned 8,993 results.
But are we deluding ourselves about what makes loyalty valuable—or whether it’s valuable? Do we really understand what our customers are loyal to? Does investing in customer loyalty programs always align with corporate objectives? Can high customer loyalty be counterproductive for sales? We make many assumptions about loyalty, and we should know whether we’re chasing a loyalty mirage. After all, do we really know if what we’re investing in customer loyalty is worth it?
Do we really understand what customers are loyal to? Is it our products or services? Our sales or support team? Our unique customer experience? Our brand? All of these? None of these? Rob Walker, author of Buying In, explains by citing a study in which consumers were asked “What are the things in your home which are special to you?. . . Part of what the authors found was that—not surprisingly—the most meaningful objects were rarely chosen on the basis of some intrinsic, rational property, like marketplace value, cutting-edge quality, simple aesthetic pleasure, or anything else that an economist might describe as ‘utility.’ They were chosen instead for connections to something else: family or social ties, a particular episode in the narrative of the subject’s life, perhaps religious faith or some other belief system affiliation. That is to say, their meaning tended to be a function of what the thing represented.”
This finding suggests that one object of customer loyalty might be as intangible as a meaning or idea, and that discovering what customers are actually loyal to will identify different pathways for creating and selling products to those customers. The book describes many modern examples in which companies have appealed to customers by “not . . . simply infusing some company’s material objects with fresh meaning, but creating meaning by creating objects—branded objects.”
Does investing in customer loyalty programs always align with corporate objectives? Not necessarily. David Corkindale debunks the loyalty yields value idea in his article Mistakes Marketers Make (The Wall Street Journal, October 20, 2008). “Studies have found that the individuals who are totally loyal buyers of a brand tend to make up only 10% of all buyers, and they buy it less frequently than others, too . . . A company that focuses on gaining and retaining such customers isn’t doing the smartest thing commercially.”
Can high customer loyalty be counterproductive for sales? Yes, when that loyalty is placed only on a physical product—as many salespeople responsible for upgrading products at installed accounts will attest. At one company I worked for, many customers maintained my company’s machines well beyond their useful, fully-depreciated life. Why? Because they were loyal to the equipment—so much so that they were close-minded to the economic benefits and other advantages of replacing it.
When it comes to customer loyalty—whether preserving your own, or undermining someone else’s—what’s the best strategy? First, understand how customer loyalty fits in the context of your company’s overall business strategy. Moving customers up the loyalty continuum might not be the best use of resources if there’s little or no strategic value. Although few will argue that having customer loyalty isn’t a useful or valuable outcome, Mr. Corkindale stresses that “there is really only one way for a company to achieve lasting growth in sales, and that is to increase its customer base, by either reaching new customers in existing markets or entering new markets. That doesn’t stop some marketers from trying to do the impossible.”
Wednesday, September 17, 2008
Can Sales Productivity, Ethics, and Shareholder Interests Coexist?
“I don’t care how you make your sales number, as long as you make it!”
Fifteen years ago, that was my Intermec sales manager’s guidance on how to achieve quota.
But my manager made assumptions that the sales team had the knowledge, motivation, and integrity to deliver the required results. He didn’t have the time or interest to micromanage anyone. At Intermec, many salespeople got fat, dumb, and happy under such laissez-faire management. Ultimately, sales suffered in the face of unrelenting competitive pressure, shareholder demands, and product commoditization.
Policies changed. Not only did management measure results, they began to scrutinize sales activities as well. Thousands of other sales organizations facing the same forces created measurement spotlights under which few could hide.
Today, business needs and technology have converged, causing the productivity-management pendulum to swing even further toward Total Management Control. Are purveyors and users of sales productivity software tools telling us that salespeople are too stupid to figure out how to be productive? Are their managers too lame to manage? Pete Reilly, a senior vice president at RedPrairie, developer of the Ann Taylor retail labor productivity system ATLAS (see my September 10th blog, Please Buy From Me! The New Ann Taylor Shopping Experience) said “the (ATLAS) system will allow you to push (productivity initiatives) too far, but at the end of the day, it is based on business principals and how I treat my employees. That is really up to the retailer.” His statement reveals his ambivalence. But it’s clear that financial success depends on how businesses deploy productivity tools, and no one should assume that they understand what they are doing.
The most insidious dangers aren't created by productivity rules based on flawed assumptions or incorrect information. They're created when managers detach from the gut-wrenching ethical and personal conflicts imposed on the employees who are measured and managed. Scott Knaul, director of store operations for Ann Taylor, described one misguided tactic when he was quoted in the Wall Street Journal (Retailers Reprogram Workers in Efficiency Push, September 10, 2008) saying “giving the (productivity) system a nickname, Atlas, was important because it gave a personality to the system so (employees) would hate the system and not us.”
What Mr. Knaul might be alluding to are torn emotions caused by Ann Taylor’s institutionalized sales conflicts of interest—all in the name of productivity. To mention a few possibilities: “If I’m honest with my customer, I could lose this order, and possibly my job.” “How do I spend time with my ailing parent and satisfy the minimum number of hours I must work to keep my time slot?” “As a single parent, how do I plan my weekly food purchases knowing my work schedule can be cut or changed at a moment’s notice?” These poignant struggles are frequently the other side of productivity-improvement equations, unmentioned when numbers are bandied about at the quarterly management retreat.
If laissez-faire management contributes to complacency, and overbearing rules are tantamount to wielding a stick without offering any carrot, what works? For insight, I consulted a local sales leader, Mark LaFleur, director of worldwide sales and channels for Arlington, Virginia-based software developer GroupLogic. He said “Understanding what causes sales to happen and managing metrics is critical to success, but sometimes it’s easy to get so caught up in metrics that you lose sight of the big picture . . . Effectively managing your team’s performance requires a balance between hard metrics and business instinct. I have found that there is no substitute for frequent, intensive one-on-one meetings with reps and sales managers, where you hold them accountable for understanding and articulating all aspects of their business and how they are tracking toward their revenue goals. Metrics are only one component of that discussion, and the key there is to develop practical metrics that really do lead to sales, communicate them clearly, and then hire disciplined sales people that are smart enough to understand their importance.”
When it comes to using metrics to improve sales productivity, Mark’s views are clearly nuanced compared to those of Ann Taylor’s managers. Still, it’s troubling to think about the future clash between productivity improvement, business value, and work-life balance. Managers like Mark recognize both the power and limitations of productivity measures, and that we have the opportunity today to build shareholder value without exploiting the people who help deliver the value we produce for our customers.
Fifteen years ago, that was my Intermec sales manager’s guidance on how to achieve quota.
But my manager made assumptions that the sales team had the knowledge, motivation, and integrity to deliver the required results. He didn’t have the time or interest to micromanage anyone. At Intermec, many salespeople got fat, dumb, and happy under such laissez-faire management. Ultimately, sales suffered in the face of unrelenting competitive pressure, shareholder demands, and product commoditization.
Policies changed. Not only did management measure results, they began to scrutinize sales activities as well. Thousands of other sales organizations facing the same forces created measurement spotlights under which few could hide.
Today, business needs and technology have converged, causing the productivity-management pendulum to swing even further toward Total Management Control. Are purveyors and users of sales productivity software tools telling us that salespeople are too stupid to figure out how to be productive? Are their managers too lame to manage? Pete Reilly, a senior vice president at RedPrairie, developer of the Ann Taylor retail labor productivity system ATLAS (see my September 10th blog, Please Buy From Me! The New Ann Taylor Shopping Experience) said “the (ATLAS) system will allow you to push (productivity initiatives) too far, but at the end of the day, it is based on business principals and how I treat my employees. That is really up to the retailer.” His statement reveals his ambivalence. But it’s clear that financial success depends on how businesses deploy productivity tools, and no one should assume that they understand what they are doing.
The most insidious dangers aren't created by productivity rules based on flawed assumptions or incorrect information. They're created when managers detach from the gut-wrenching ethical and personal conflicts imposed on the employees who are measured and managed. Scott Knaul, director of store operations for Ann Taylor, described one misguided tactic when he was quoted in the Wall Street Journal (Retailers Reprogram Workers in Efficiency Push, September 10, 2008) saying “giving the (productivity) system a nickname, Atlas, was important because it gave a personality to the system so (employees) would hate the system and not us.”
What Mr. Knaul might be alluding to are torn emotions caused by Ann Taylor’s institutionalized sales conflicts of interest—all in the name of productivity. To mention a few possibilities: “If I’m honest with my customer, I could lose this order, and possibly my job.” “How do I spend time with my ailing parent and satisfy the minimum number of hours I must work to keep my time slot?” “As a single parent, how do I plan my weekly food purchases knowing my work schedule can be cut or changed at a moment’s notice?” These poignant struggles are frequently the other side of productivity-improvement equations, unmentioned when numbers are bandied about at the quarterly management retreat.
If laissez-faire management contributes to complacency, and overbearing rules are tantamount to wielding a stick without offering any carrot, what works? For insight, I consulted a local sales leader, Mark LaFleur, director of worldwide sales and channels for Arlington, Virginia-based software developer GroupLogic. He said “Understanding what causes sales to happen and managing metrics is critical to success, but sometimes it’s easy to get so caught up in metrics that you lose sight of the big picture . . . Effectively managing your team’s performance requires a balance between hard metrics and business instinct. I have found that there is no substitute for frequent, intensive one-on-one meetings with reps and sales managers, where you hold them accountable for understanding and articulating all aspects of their business and how they are tracking toward their revenue goals. Metrics are only one component of that discussion, and the key there is to develop practical metrics that really do lead to sales, communicate them clearly, and then hire disciplined sales people that are smart enough to understand their importance.”
When it comes to using metrics to improve sales productivity, Mark’s views are clearly nuanced compared to those of Ann Taylor’s managers. Still, it’s troubling to think about the future clash between productivity improvement, business value, and work-life balance. Managers like Mark recognize both the power and limitations of productivity measures, and that we have the opportunity today to build shareholder value without exploiting the people who help deliver the value we produce for our customers.
Friday, September 12, 2008
Asking to Send Literature is not Lead Qualification
Some people collect stamps, some collect coins. The salespeople I spoke to at a recent technology trade show must think I collect PowerPoint presentations and Adobe attachments. In every initial follow up phone call I received—bar none—the contact center representative offered to send me sales literature. When were they planning to ask me about my product need?
I don’t know the answer, but it’s odd that even the most basic qualification questions aren’t asked in the first call. Here’s a typical exchange:
Caller: Hi. This is Joe Jones from XYZ Technologies. I’m following up because you stopped by our booth at the FOSE Trade Show in Washington last month.
Me: Yes I did. I remember a little about your product. It’s a tool for searching databases for specific text information. I visited with a number of companies—I don’t remember much else about XYZ.
Caller: Well, we wanted to know if there’s any additional information you would like. We have some case studies we can email to you. Also, we’re holding a Web seminar next week about our just-released Optimized Search Algorithm. I can send you a link so you can sign up.
Me: I can’t think of a specific need right away, but if you want to send me an email with your company’s website information, I’ll look at your site. If there’s a specific need that matches up, I can get in touch.
Caller: Sure. I’ll include the link. Once you receive it, if you have any questions, please don’t hesitate to call me.
We sign off the call and I go on my way, and Joe goes on his. As promised, he sends his email that day. It’s still unopened in my inbox.
The lost opportunity? Even though Joe took the time to reach me, he still has no idea whether his company is valuable to me—or whether I’m valuable to his company. Is there an unwritten rule in Contact-center Land that it’s uncouth to broach the “Q-word”—am I qualified? Or, are humans simply wired to offer marketing material without expecting anything in return?
I’ve worked with more than a few companies that describe a qualified lead in broad terms. Everything from a trade show attendee who signs up for a web seminar, to a prospect with whom they have held an in-depth discussion, and whose needs they think they can fulfill. That’s a wide strike zone, and if I were on the sales force, I’d be understandably jaded every time an email message with “URGENT—New Lead” on the subject line vibrated into my Blackberry.
Why don’t companies capture qualification information early in the contact cycle? Is it because the contact center is measured on how many calls are made, how quickly they’re made, and how many “qualified” opportunities contact center reps pass to Sales? Or is it because what makes a prospect qualified is murky or poorly understood to begin with? Nicholas Carr, in his excellent book The Big Switch quotes George Dyson, a technology historian, as saying “finding an answer is easier than defining the question. It’s easier to draw something that looks like a cat, for instance, than to describe what, exactly, makes something look like a cat.”
Similarly, is it easier to slog down a pothole-filled sales road with a prospect, rather than understanding what, exactly, makes a prospect qualified? Whatever the answers, companies that don’t qualify leads early risk valuable resources on activities that are unlikely to bear fruit. Conversely, the companies that are adept at discovering a prospect “diamond in the rough” possess a huge advantage over competitors standing around the “we’ll-send-you-some-literature” starting gate. Why? They have lower sales risk and faster speed of sales execution. Better lead qualification enables a sales organization to step on the sales process accelerator.
What does qualified mean to me? Here are my top questions:
Solution fit: Does my solution provide an outcome that my prospect values?
Access: Am I able to hold a dialog with people who are influential and have the ability to decide whether to purchase my product?
Financial Resources: Does my prospect have the capability to pay me what I am likely to charge for my product or service?
Timeframe: Is my prospect motivated to purchase from me within a timeframe that matches my planning horizon?
I know. If your product or service is complex, these can be deep questions for a first-time follow-up call. The answers—if you can get them—often aren’t easy to populate into CRM system check boxes, and some believe that it still takes the judgment of an experienced salesperson to understand the qualification nuances. But even if it’s difficult to uncover definite “yes” answers to these questions, isn’t it valuable to at least uncover definite “no’s”? For example, what would it mean if you could subtract from your lead pipeline all prospects that definitely don’t need your solution?
A contact center won’t be able to uncover every risk, but unless sending marketing literature is its primary goal, the point of first contact is the best place to begin the vetting process.
I don’t know the answer, but it’s odd that even the most basic qualification questions aren’t asked in the first call. Here’s a typical exchange:
Caller: Hi. This is Joe Jones from XYZ Technologies. I’m following up because you stopped by our booth at the FOSE Trade Show in Washington last month.
Me: Yes I did. I remember a little about your product. It’s a tool for searching databases for specific text information. I visited with a number of companies—I don’t remember much else about XYZ.
Caller: Well, we wanted to know if there’s any additional information you would like. We have some case studies we can email to you. Also, we’re holding a Web seminar next week about our just-released Optimized Search Algorithm. I can send you a link so you can sign up.
Me: I can’t think of a specific need right away, but if you want to send me an email with your company’s website information, I’ll look at your site. If there’s a specific need that matches up, I can get in touch.
Caller: Sure. I’ll include the link. Once you receive it, if you have any questions, please don’t hesitate to call me.
We sign off the call and I go on my way, and Joe goes on his. As promised, he sends his email that day. It’s still unopened in my inbox.
The lost opportunity? Even though Joe took the time to reach me, he still has no idea whether his company is valuable to me—or whether I’m valuable to his company. Is there an unwritten rule in Contact-center Land that it’s uncouth to broach the “Q-word”—am I qualified? Or, are humans simply wired to offer marketing material without expecting anything in return?
I’ve worked with more than a few companies that describe a qualified lead in broad terms. Everything from a trade show attendee who signs up for a web seminar, to a prospect with whom they have held an in-depth discussion, and whose needs they think they can fulfill. That’s a wide strike zone, and if I were on the sales force, I’d be understandably jaded every time an email message with “URGENT—New Lead” on the subject line vibrated into my Blackberry.
Why don’t companies capture qualification information early in the contact cycle? Is it because the contact center is measured on how many calls are made, how quickly they’re made, and how many “qualified” opportunities contact center reps pass to Sales? Or is it because what makes a prospect qualified is murky or poorly understood to begin with? Nicholas Carr, in his excellent book The Big Switch quotes George Dyson, a technology historian, as saying “finding an answer is easier than defining the question. It’s easier to draw something that looks like a cat, for instance, than to describe what, exactly, makes something look like a cat.”
Similarly, is it easier to slog down a pothole-filled sales road with a prospect, rather than understanding what, exactly, makes a prospect qualified? Whatever the answers, companies that don’t qualify leads early risk valuable resources on activities that are unlikely to bear fruit. Conversely, the companies that are adept at discovering a prospect “diamond in the rough” possess a huge advantage over competitors standing around the “we’ll-send-you-some-literature” starting gate. Why? They have lower sales risk and faster speed of sales execution. Better lead qualification enables a sales organization to step on the sales process accelerator.
What does qualified mean to me? Here are my top questions:
Solution fit: Does my solution provide an outcome that my prospect values?
Access: Am I able to hold a dialog with people who are influential and have the ability to decide whether to purchase my product?
Financial Resources: Does my prospect have the capability to pay me what I am likely to charge for my product or service?
Timeframe: Is my prospect motivated to purchase from me within a timeframe that matches my planning horizon?
I know. If your product or service is complex, these can be deep questions for a first-time follow-up call. The answers—if you can get them—often aren’t easy to populate into CRM system check boxes, and some believe that it still takes the judgment of an experienced salesperson to understand the qualification nuances. But even if it’s difficult to uncover definite “yes” answers to these questions, isn’t it valuable to at least uncover definite “no’s”? For example, what would it mean if you could subtract from your lead pipeline all prospects that definitely don’t need your solution?
A contact center won’t be able to uncover every risk, but unless sending marketing literature is its primary goal, the point of first contact is the best place to begin the vetting process.
Thursday, September 11, 2008
PLEASE Buy From Me--The New Ann Taylor Shopping Experience
Get ready for a new low in customer experience, brought to you by Ann Taylor and their new Ann Taylor Labor Allocation System, or ATLAS.
Reported in today’s Wall Street Journal “Retailers Reprogram Workers in Efficiency Push,” the article states “because the system awards more-productive salespeople with favorable hours, it gives employees an incentive to persuade shoppers to buy things.”
Among the article’s more chilling quotes, consider this one from Scott Knaul, Ann Taylor’s Director of Store Operations: “Giving the system a nickname, Atlas, was important because it gave personality to the system, so (employees) hate the system and not us.” Enamored with the insight ATLAS has helped Ann Taylor glean, Mr. Knaul said “If we know that it takes five minutes to work with a client when they walk in the store, we won’t go over five minutes.” (Mr. Knaul, if you're reading this, please share which business thought leaders have inspired you lately.)
One Ann Taylor saleswoman shared her concerns. “The new system, Ms. Houser says, doesn’t reward her style of selling. It no longer pays to spend time developing relationships with shoppers who might not buy anything on a particular visit, she says. ‘My client (contact) book is fatter than anybody else’s in the store,’ she says. ‘Does that mean I will get a bigger raise next time? No. Not if my (average sales) numbers don’t reflect that.’”
Quoted in the article, Carl Steidtmann, Chief Economist at Deloitte, said “Because few retail workers belong to unions, it is easier for employers to ‘move people around.’” Hmmm. How do you spell "exploitation?"
I began to wonder who would enlist to work under the ATLAS culture. To help Ann Taylor find the best candidates, I formulated this brief employment questionnaire, along with the desirable responses below.
1) Oh no! Your Aunt Etta fell and she's in the hospital with a broken hip. She needs you to help her complete her Medicare forms. But it's the end of the month, and your store manager says if you miss any time, you'll risk being demoted. Which of the following BEST describes the action you would take?
a) Come in to the store and focus on making my sales number. I'll visit Aunt Etta later.
b) Visit Aunt Etta and see if I can persuade my manager not to demote me.
c) I'd have to think about it.
2) In sales, ethics
a) includes doing what is right for the customer
b) can probably be found in the dictionary somewhere
c) not sure why I would need to know this
3) You’re behind in achieving your weekly sales number. You have a customer who wants a dress and some accessories, but she only has $150 to spend. She likes a dress that’s on sale. You should
a) find out the credit limit on her Visa and steer her toward more expensive merchandise.
b) help her find a suitable combination, even if it means she spends less than $150.
c) tell her that your recommendations are motivated by making your weekly sales quota.
4) Two women enter the store at the same time. One is unkempt and has a fussy toddler in tow. The other one is by herself, holding a Nordstrom shopping bag and a Kate Spade purse. To meet your expected productivity goals, how many seconds should it take you to greet the woman holding the Nordstrom bag?
a) 1 second
b) 30 seconds
c) about a minute
d) don't know. Shouldn't she have time to browse?
5) Essay question: I'm all for offering honest information to customers, except ____________________________ . (use additional pages, if needed)
Correct answers: 1-A; 2-C; 3-A; 4-a
ATLAS is a euphemism for Employee Manipulation. Its use portends some eyebrow-raising sales behaviors. As far as productivity gains for Ann Taylor, a note of caution: be careful what you wish for, you might get it!
Reported in today’s Wall Street Journal “Retailers Reprogram Workers in Efficiency Push,” the article states “because the system awards more-productive salespeople with favorable hours, it gives employees an incentive to persuade shoppers to buy things.”
Among the article’s more chilling quotes, consider this one from Scott Knaul, Ann Taylor’s Director of Store Operations: “Giving the system a nickname, Atlas, was important because it gave personality to the system, so (employees) hate the system and not us.” Enamored with the insight ATLAS has helped Ann Taylor glean, Mr. Knaul said “If we know that it takes five minutes to work with a client when they walk in the store, we won’t go over five minutes.” (Mr. Knaul, if you're reading this, please share which business thought leaders have inspired you lately.)
One Ann Taylor saleswoman shared her concerns. “The new system, Ms. Houser says, doesn’t reward her style of selling. It no longer pays to spend time developing relationships with shoppers who might not buy anything on a particular visit, she says. ‘My client (contact) book is fatter than anybody else’s in the store,’ she says. ‘Does that mean I will get a bigger raise next time? No. Not if my (average sales) numbers don’t reflect that.’”
Quoted in the article, Carl Steidtmann, Chief Economist at Deloitte, said “Because few retail workers belong to unions, it is easier for employers to ‘move people around.’” Hmmm. How do you spell "exploitation?"
I began to wonder who would enlist to work under the ATLAS culture. To help Ann Taylor find the best candidates, I formulated this brief employment questionnaire, along with the desirable responses below.
1) Oh no! Your Aunt Etta fell and she's in the hospital with a broken hip. She needs you to help her complete her Medicare forms. But it's the end of the month, and your store manager says if you miss any time, you'll risk being demoted. Which of the following BEST describes the action you would take?
a) Come in to the store and focus on making my sales number. I'll visit Aunt Etta later.
b) Visit Aunt Etta and see if I can persuade my manager not to demote me.
c) I'd have to think about it.
2) In sales, ethics
a) includes doing what is right for the customer
b) can probably be found in the dictionary somewhere
c) not sure why I would need to know this
3) You’re behind in achieving your weekly sales number. You have a customer who wants a dress and some accessories, but she only has $150 to spend. She likes a dress that’s on sale. You should
a) find out the credit limit on her Visa and steer her toward more expensive merchandise.
b) help her find a suitable combination, even if it means she spends less than $150.
c) tell her that your recommendations are motivated by making your weekly sales quota.
4) Two women enter the store at the same time. One is unkempt and has a fussy toddler in tow. The other one is by herself, holding a Nordstrom shopping bag and a Kate Spade purse. To meet your expected productivity goals, how many seconds should it take you to greet the woman holding the Nordstrom bag?
a) 1 second
b) 30 seconds
c) about a minute
d) don't know. Shouldn't she have time to browse?
5) Essay question: I'm all for offering honest information to customers, except ____________________________ . (use additional pages, if needed)
Correct answers: 1-A; 2-C; 3-A; 4-a
ATLAS is a euphemism for Employee Manipulation. Its use portends some eyebrow-raising sales behaviors. As far as productivity gains for Ann Taylor, a note of caution: be careful what you wish for, you might get it!
Tuesday, September 9, 2008
The Right Sales Answers Are the Result of Asking the Right Questions
What happens when we make assumptions? The movie, The Return of the Pink Panther, provides a great lesson. Peter Sellers, playing the immortal character, Inspector Clouseau, sees a hotel clerk holding a dog on a leash and asks, "Does your dog bite?"
The clerk responds "no," and Clouseau reaches to pet the dog, which immediately bites his hand.
‘Ka-ching! I hit what-keeps-me-up-at-night pay dirt!’
"I thought you said your dog did not bite!" he exclaims. To which, the clerk replies, "That is not my dog."
In sales, how do we know if our prospective customers are answering the questions we think we're asking? How do we know if we're asking the best questions—or even the right questions? The Pink Panther vignette illustrates both humorously and poignantly what can happen if we take actions when there are incongruities between questions and perceived answers. I can relate to Clouseau's not-entirely-self-induced folly, and I wondered whether sales questions I've used could be similarly entertaining fodder—or, at the very least, instructive. So I reflected on my inventory of sales calls over 20 years and came up with two examples—one showing failure, the other success—that illustrate what can happen when you're asking questions in selling. My conclusion: Getting to the right answers requires careful thought and constant practice. There aren't any shortcuts, but there are some best practices.
A failure
I worked for several weeks to secure an appointment with the vice president of operations for a large national chain of dollar retail stores, which I'll call Stuff for a Buck. My company's product was a suite of bar code scanning hardware, software, label printers and services. To prepare, I studied the dollar chain's distribution, logistics and competitive challenges. I was ready for The Meeting at Stuff for a Buck.
After asking mostly ordinary empirical questions such as: "How many trucks? How many warehouses? How many shipments per day? And how many stores by region?" I moved to the pain part. (I was told early in my career that a big part of selling is to "find out what keeps the customer up at night.")
"What goes wrong in your daily operations?" I asked. The VP responded, "It's quite common to put the wrong load on the trailer. For example, the truck going to Charlotte might actually be carrying the inventory that's supposed to go to Wilmington. It happens quite often throughout our distribution network. We haven't found a way to prevent it."
Ka-ching! I hit what-keeps-me-up-at-night pay dirt! My supposedly keen industry insight caused me to extend his answer into the downstream logistics migraines that Stuff for a Buck must experience: heavy trailer loads of goods shipped in error all over the country. Goods in transit out of control and arriving in unintended locations. Stock outages. Customer service issues. After collecting some more data from the VP and offering him the hope that my proposal would eliminate his problems, we exchanged pleasantries about kids and golf, and I departed his office.
Using what he'd told me, I developed a proposal for a real-time, multi-warehouse inventory control system, including 200 handheld and mobile terminals and dozens of radio frequency access points. Inventory movement would be efficiently and accurately recorded with the simple pull of a scanner trigger. No more mistakes. No more manual data entry. No more paper. All this for $300,000—an excellent value considering the multimillion-dollar scale of the company's inventory and transportation costs. Of course, I forecast my sales opportunity to close in the current fiscal year and received kudos from my district and region managers for having uncovered such a valuable lead. High fives were given all around, and we believed we couldn't lose. I sent the sales proposal to my prospect and awaited the affirmative response, which never arrived.
Why? The major reason was because I hadn't explored or understood the problem's impact on the enterprise. As the VP later explained, "We sell everything for a dollar. Our customers don't expect to see specific items in stock, so it's not a headache if the wrong truckload backs up to the store's receiving dock. They'll unload it and put it out for sale. We don't like it, but it doesn't really matter to us in terms of our financial performance." End of story. My opportunity was lost. My prospect eventually became someone's customer. But not mine.
What did I learn? First, that the VP had answered my question as he heard it. I had asked, "What goes wrong?" when I thought I was asking, "What goes wrong that matters to you?" I misconstrued the gravity of the problem because it was the first one the VP mentioned.
Second, my industry knowledge had mutated into myopia, which prevented me from asking the right follow-on questions. Had I been a little more curious, I would have asked questions that would have helped me gain more insight, such as: "What is the consequence when the wrong goods show up in Charlotte? What does this problem cost per occurrence and annually? What impact do those costs have on overall financial objectives? How will this problem affect strategic goals if unabated?
Third, by tackling the first problem the VP described, I failed to complete the picture. I didn't ask, "What else?" followed by questions that would have not only exposed problems far more consequential to the organization but also provided me with a broader perspective on its operational issues.
Finally, my discovery process should not have been limited to talking with just one individual. I should have taken the time to ask networking questions, by which I could expand my contacts and gain a breadth of opinions and information—like a wiki model in which the value of the answer increases with multiple viewpoints.
A success
At a different company, I sold Oracle integration services to firms in the mid-Atlantic area. Our short-term objective was to sell services for installing the next version of Oracle's operating system, but my company's California-based staff and lack of local references made that challenging. Yet our consulting practice leaders were resolute on promoting such high-dollar, long-term projects. Consequently, my initial prospect-qualification questions centered on whether the prospect planned to upgrade to Oracle 11i in the next 12 months. Most didn't. After a few weeks of cold calling, I finally obtained an appointment with the IT manager of a distributor I'll call XYZ Healthcare Products, though he was reluctant to talk about upgrading.
When I arrived at XYZ, I learned that the IT manager had invited eight colleagues from other departments to join our meeting. We began our discussion about whether there was a business case to upgrade to 11i. The more questions I asked about upgrading, the clearer it became that it wasn't necessary. The conversation began to trail off as people looked at their cell phones and watches. Was it time to end the meeting and check my Blackberry for the Next Opportunity on the way to my car?
I didn't because something piqued my curiosity: Why were there were eight people assembled to discuss something that appeared all but decided? Although I didn't ask that question, I decided to ask a different one: "Assuming that technology and finances posed no constraints, what would you change right now about your business processes and operations?" The IT manager shared that a significant unsolved problem was that the company needed to produce a customer-ready invoice that could be placed in the shipment box during final packing, and Oracle's "vanilla" software couldn't provide that capability, causing XYZ to delay invoicing. His response surprised me because superficially the problem seemed minor, but his comment elicited nods from his colleagues.
That answer meant that the massive consulting project I needed to close had just devolved into a few billable hours to provide this seemingly-prosaic modification. Considering how insistent my practice managers were about selling upgrade work, I could have lost my sales resolve. Instead, I wanted to know more. What was it about this issue that created such visceral pain among these managers? As my mind filled with questions, I asked, "What does this limitation mean for your operations?" Their answers exposed issues ranging from customer service to logistics to receivables administration.
Probing the receivables challenges yielded insight into perhaps the greatest strategic challenge XYZ faced. The invoicing delay caused significant cash-flow problems. "Why haven't you fixed this already?" I asked. "We thought it couldn't be done, and, up to now, no one has taken the time to come here to meet with us." I explained that providing the change they requested was not complicated. XYZ's president was then called to join the meeting, and he excitedly corroborated what his managers had told me. The company signed a contract for the modification and became a client.
What did I learn? First, my central qualification question, "Do you plan to upgrade to 11i in the next 12 months?" was based only on what I wanted to sell; it risked missing opportunities because it ignored uncovering the outcomes my prospects required. By asking the right questions, I was able to learn that the immediate burning issue could be located in an unexpected place, and by providing a solution to address that issue, I could create a new sales path toward my higher-dollar work: the 11i upgrade service package.
Second, by removing constraints from the possible answers, I was able to eliminate boundaries that prospective customers often impose on themselves. Similar to vendors, prospective clients develop myopia based on perceived technical, financial or resource limits. Gathering requirements information that is unbound by those limits is important early in the sales process because discovering what the prospective customer wants is more valuable than discovering what he thinks he can get. Both questions must be asked, however, because the answers matter—and are often different.
How can salespeople improve discovery skills? The president of a large local real estate company recently told me that he views asking questions as the single most important selling skill—and that few agents do it. Extrapolate that problem to other industries, and it's no wonder that many companies suffer from low sales productivity.
What are the key habits for success?:
Bring an insatiable curiosity to your appointments.
Don't assume you know the answers to your most important questions.
Endeavor to see the world through your client's eyes. This empathetic view requires one to ask questions.
Listen for unexpected answers, probe further and have the agility to capitalize on the resulting opportunities.
In August, I performed a nationwide survey of sales professionals about how they use questions to discover customer needs. The answers revealed a wide range of patterns, techniques and favorite questions, suggesting that there are many pathways to successful discovery. The best idea I received was this one: "If I'm unclear about who, what, when, where and why, I keep asking questions."
The clerk responds "no," and Clouseau reaches to pet the dog, which immediately bites his hand.
‘Ka-ching! I hit what-keeps-me-up-at-night pay dirt!’
"I thought you said your dog did not bite!" he exclaims. To which, the clerk replies, "That is not my dog."
In sales, how do we know if our prospective customers are answering the questions we think we're asking? How do we know if we're asking the best questions—or even the right questions? The Pink Panther vignette illustrates both humorously and poignantly what can happen if we take actions when there are incongruities between questions and perceived answers. I can relate to Clouseau's not-entirely-self-induced folly, and I wondered whether sales questions I've used could be similarly entertaining fodder—or, at the very least, instructive. So I reflected on my inventory of sales calls over 20 years and came up with two examples—one showing failure, the other success—that illustrate what can happen when you're asking questions in selling. My conclusion: Getting to the right answers requires careful thought and constant practice. There aren't any shortcuts, but there are some best practices.
A failure
I worked for several weeks to secure an appointment with the vice president of operations for a large national chain of dollar retail stores, which I'll call Stuff for a Buck. My company's product was a suite of bar code scanning hardware, software, label printers and services. To prepare, I studied the dollar chain's distribution, logistics and competitive challenges. I was ready for The Meeting at Stuff for a Buck.
After asking mostly ordinary empirical questions such as: "How many trucks? How many warehouses? How many shipments per day? And how many stores by region?" I moved to the pain part. (I was told early in my career that a big part of selling is to "find out what keeps the customer up at night.")
"What goes wrong in your daily operations?" I asked. The VP responded, "It's quite common to put the wrong load on the trailer. For example, the truck going to Charlotte might actually be carrying the inventory that's supposed to go to Wilmington. It happens quite often throughout our distribution network. We haven't found a way to prevent it."
Ka-ching! I hit what-keeps-me-up-at-night pay dirt! My supposedly keen industry insight caused me to extend his answer into the downstream logistics migraines that Stuff for a Buck must experience: heavy trailer loads of goods shipped in error all over the country. Goods in transit out of control and arriving in unintended locations. Stock outages. Customer service issues. After collecting some more data from the VP and offering him the hope that my proposal would eliminate his problems, we exchanged pleasantries about kids and golf, and I departed his office.
Using what he'd told me, I developed a proposal for a real-time, multi-warehouse inventory control system, including 200 handheld and mobile terminals and dozens of radio frequency access points. Inventory movement would be efficiently and accurately recorded with the simple pull of a scanner trigger. No more mistakes. No more manual data entry. No more paper. All this for $300,000—an excellent value considering the multimillion-dollar scale of the company's inventory and transportation costs. Of course, I forecast my sales opportunity to close in the current fiscal year and received kudos from my district and region managers for having uncovered such a valuable lead. High fives were given all around, and we believed we couldn't lose. I sent the sales proposal to my prospect and awaited the affirmative response, which never arrived.
Why? The major reason was because I hadn't explored or understood the problem's impact on the enterprise. As the VP later explained, "We sell everything for a dollar. Our customers don't expect to see specific items in stock, so it's not a headache if the wrong truckload backs up to the store's receiving dock. They'll unload it and put it out for sale. We don't like it, but it doesn't really matter to us in terms of our financial performance." End of story. My opportunity was lost. My prospect eventually became someone's customer. But not mine.
What did I learn? First, that the VP had answered my question as he heard it. I had asked, "What goes wrong?" when I thought I was asking, "What goes wrong that matters to you?" I misconstrued the gravity of the problem because it was the first one the VP mentioned.
Second, my industry knowledge had mutated into myopia, which prevented me from asking the right follow-on questions. Had I been a little more curious, I would have asked questions that would have helped me gain more insight, such as: "What is the consequence when the wrong goods show up in Charlotte? What does this problem cost per occurrence and annually? What impact do those costs have on overall financial objectives? How will this problem affect strategic goals if unabated?
Third, by tackling the first problem the VP described, I failed to complete the picture. I didn't ask, "What else?" followed by questions that would have not only exposed problems far more consequential to the organization but also provided me with a broader perspective on its operational issues.
Finally, my discovery process should not have been limited to talking with just one individual. I should have taken the time to ask networking questions, by which I could expand my contacts and gain a breadth of opinions and information—like a wiki model in which the value of the answer increases with multiple viewpoints.
A success
At a different company, I sold Oracle integration services to firms in the mid-Atlantic area. Our short-term objective was to sell services for installing the next version of Oracle's operating system, but my company's California-based staff and lack of local references made that challenging. Yet our consulting practice leaders were resolute on promoting such high-dollar, long-term projects. Consequently, my initial prospect-qualification questions centered on whether the prospect planned to upgrade to Oracle 11i in the next 12 months. Most didn't. After a few weeks of cold calling, I finally obtained an appointment with the IT manager of a distributor I'll call XYZ Healthcare Products, though he was reluctant to talk about upgrading.
When I arrived at XYZ, I learned that the IT manager had invited eight colleagues from other departments to join our meeting. We began our discussion about whether there was a business case to upgrade to 11i. The more questions I asked about upgrading, the clearer it became that it wasn't necessary. The conversation began to trail off as people looked at their cell phones and watches. Was it time to end the meeting and check my Blackberry for the Next Opportunity on the way to my car?
I didn't because something piqued my curiosity: Why were there were eight people assembled to discuss something that appeared all but decided? Although I didn't ask that question, I decided to ask a different one: "Assuming that technology and finances posed no constraints, what would you change right now about your business processes and operations?" The IT manager shared that a significant unsolved problem was that the company needed to produce a customer-ready invoice that could be placed in the shipment box during final packing, and Oracle's "vanilla" software couldn't provide that capability, causing XYZ to delay invoicing. His response surprised me because superficially the problem seemed minor, but his comment elicited nods from his colleagues.
That answer meant that the massive consulting project I needed to close had just devolved into a few billable hours to provide this seemingly-prosaic modification. Considering how insistent my practice managers were about selling upgrade work, I could have lost my sales resolve. Instead, I wanted to know more. What was it about this issue that created such visceral pain among these managers? As my mind filled with questions, I asked, "What does this limitation mean for your operations?" Their answers exposed issues ranging from customer service to logistics to receivables administration.
Probing the receivables challenges yielded insight into perhaps the greatest strategic challenge XYZ faced. The invoicing delay caused significant cash-flow problems. "Why haven't you fixed this already?" I asked. "We thought it couldn't be done, and, up to now, no one has taken the time to come here to meet with us." I explained that providing the change they requested was not complicated. XYZ's president was then called to join the meeting, and he excitedly corroborated what his managers had told me. The company signed a contract for the modification and became a client.
What did I learn? First, my central qualification question, "Do you plan to upgrade to 11i in the next 12 months?" was based only on what I wanted to sell; it risked missing opportunities because it ignored uncovering the outcomes my prospects required. By asking the right questions, I was able to learn that the immediate burning issue could be located in an unexpected place, and by providing a solution to address that issue, I could create a new sales path toward my higher-dollar work: the 11i upgrade service package.
Second, by removing constraints from the possible answers, I was able to eliminate boundaries that prospective customers often impose on themselves. Similar to vendors, prospective clients develop myopia based on perceived technical, financial or resource limits. Gathering requirements information that is unbound by those limits is important early in the sales process because discovering what the prospective customer wants is more valuable than discovering what he thinks he can get. Both questions must be asked, however, because the answers matter—and are often different.
How can salespeople improve discovery skills? The president of a large local real estate company recently told me that he views asking questions as the single most important selling skill—and that few agents do it. Extrapolate that problem to other industries, and it's no wonder that many companies suffer from low sales productivity.
What are the key habits for success?:
Bring an insatiable curiosity to your appointments.
Don't assume you know the answers to your most important questions.
Endeavor to see the world through your client's eyes. This empathetic view requires one to ask questions.
Listen for unexpected answers, probe further and have the agility to capitalize on the resulting opportunities.
In August, I performed a nationwide survey of sales professionals about how they use questions to discover customer needs. The answers revealed a wide range of patterns, techniques and favorite questions, suggesting that there are many pathways to successful discovery. The best idea I received was this one: "If I'm unclear about who, what, when, where and why, I keep asking questions."
Monday, September 8, 2008
The Winner's Curse: Sometimes It's Better to Lose a Sale
The happiest event in a salesperson's life is winning a major sale against an archrival competitor. The second happiest is losing a sale to your competitor—and learning that the prospect became your competitor's worst support nightmare. We call it the Winner's Curse.
I know. I've been on both sides.
Having a customer engagement you'd have been better off without is more demoralizing than losing a coveted opportunity. For the also-ran sales teams, buyer remorse over a rival's product can provide a windfall boost to sales—without investing penny in marketing, product development or additional sales expenses. And no one can ever accuse a salesperson of mudslinging when he or she shares a bona fide negative reference about a competitor.
‘Worst of all, a new competitor had the opportunity to become a hero.’
A company I worked for many years ago was a premier systems provider to manufacturers and distributors but had little presence in the healthcare market. My employer wanted a beachhead account in this important and growing market. I won a substantial contract to supply a records management solution to the radiology department of a large, multi-site healthcare client I'll call Mega Health Services or MHS.
MHS wanted its new system to record an admission, print a barcode label, scan the label and track an X-ray jacket. Every admission. On demand. Thousands of times per day. We placed the order, and the barcode equipment was delivered and set up in every MHS radiology center.
That's when things started to go wrong. The printers started to jam. Many times. In many locations. Calls from upset radiology technicians and nurses poured into my cell phone. "My printer is jammed! It needs to be fixed! Now!" In a face-to-face meeting I can't describe as cordial, the corporate radiology manager spelled out her expectations to me: "Delivering the highest level of service to our patients is paramount to our organization. We expect our vendors to enable that. Period."
No one's fault
My local service manager offered no relief. "There's not much I can do," he told me. "Next time one of the printers jams, have them bring it in (to the service center)."
"You don't understand," I said. "They can't do that."
The service manager had fulfilled his forensic obligations—at least according to his job description. The situation worsened. More printers failed, and the phone calls I received became shriller.
Eventually, a manager in my company's consumables division told me the jamming problem might be related to a series of quality incidents at our manufacturing plant. He said that the thousands of labels I sold to MHS were wound too tightly onto the paper cores. That problem cascaded. The over-tightened labels had small amounts of oozing adhesive. At MHS, that adhesive adhered to the print heads as the labels passed through the machines. The labels peeled inside the printers and got stuck. To free the stuck labels, harried employees used whatever they could find—including metal implements, which caused the electrically-conductive print heads to short out. My company's warranty didn't cover that problem.
"Fiasco" doesn't come close to describing the outcome. The concomitant problems took months to sort out, and MHS eventually replaced my company's equipment with a competitor's. The label revenue? Gone, too. Worst of all, a new competitor had the opportunity to become a hero, without incurring prospecting expenses, engineering costs and proof-of-concept costs. I had underwritten all of that, as part of the initial system sale.
What cauldron of issues created this Winner's Curse?
The general ledger account silos. When it came to revenue and expense accounting, my company didn't share anything between departments. In this Winner's Curse scenario, only one department received revenue credit for equipment: sales. The service manager's revenue came from service contracts, and he believed that warranty support was an expense to be controlled and minimized. And because support expenses weren't costed to sales, I had little incentive to reduce the risks. The Consumables division? It didn't receive credit for hardware sales or service contracts, even though its revenue was dependent. What kind of experiences do these accounting silos create? Just ask MHS's corporate radiology manager.
Prospect qualification. This focused on getting the sale, instead of gaining a valuable customer. My investigation traded off asking other valuable questions, including "will this prospect become a valuable customer for our organization?" or: "Can this prospect implement our solution?"
Poor customer expectation management. In client meetings during the sales process, we didn't discuss risks and minimized MHS' obligations. Many Winner's Curses begin when a vendor over-promises and under-delivers—instead of the other way around.
Lack of coordination and performance measurement. Quality control problems at the label plant. Equipment failures. Viscerally unhappy customers. Was anyone watching these not-so-disparate events and preparing a coordinated response? Each department had a separate set of performance measurements, none of which mitigated the risk that the customer might be completely dissatisfied.
By any analysis, this Winner's Curse was my company's self-inflicted debacle. But in many situations, customers are complicit because they fail to see beyond their own self interest. They don't recognize that a valuable business relationship provides mutual benefits. Customers benefit from what a product provides—and vendors must make a meaningful profit providing it.
Some sales engagements aren't worth winning. How can you know? There are two keys. First, have a clear picture of what a Winner's Curse looks like and what it means for your organization. Second, ask the right questions to expose the risks. Those questions must be asked not only at the beginning but also throughout the customer relationship.
I know. I've been on both sides.
Having a customer engagement you'd have been better off without is more demoralizing than losing a coveted opportunity. For the also-ran sales teams, buyer remorse over a rival's product can provide a windfall boost to sales—without investing penny in marketing, product development or additional sales expenses. And no one can ever accuse a salesperson of mudslinging when he or she shares a bona fide negative reference about a competitor.
‘Worst of all, a new competitor had the opportunity to become a hero.’
A company I worked for many years ago was a premier systems provider to manufacturers and distributors but had little presence in the healthcare market. My employer wanted a beachhead account in this important and growing market. I won a substantial contract to supply a records management solution to the radiology department of a large, multi-site healthcare client I'll call Mega Health Services or MHS.
MHS wanted its new system to record an admission, print a barcode label, scan the label and track an X-ray jacket. Every admission. On demand. Thousands of times per day. We placed the order, and the barcode equipment was delivered and set up in every MHS radiology center.
That's when things started to go wrong. The printers started to jam. Many times. In many locations. Calls from upset radiology technicians and nurses poured into my cell phone. "My printer is jammed! It needs to be fixed! Now!" In a face-to-face meeting I can't describe as cordial, the corporate radiology manager spelled out her expectations to me: "Delivering the highest level of service to our patients is paramount to our organization. We expect our vendors to enable that. Period."
No one's fault
My local service manager offered no relief. "There's not much I can do," he told me. "Next time one of the printers jams, have them bring it in (to the service center)."
"You don't understand," I said. "They can't do that."
The service manager had fulfilled his forensic obligations—at least according to his job description. The situation worsened. More printers failed, and the phone calls I received became shriller.
Eventually, a manager in my company's consumables division told me the jamming problem might be related to a series of quality incidents at our manufacturing plant. He said that the thousands of labels I sold to MHS were wound too tightly onto the paper cores. That problem cascaded. The over-tightened labels had small amounts of oozing adhesive. At MHS, that adhesive adhered to the print heads as the labels passed through the machines. The labels peeled inside the printers and got stuck. To free the stuck labels, harried employees used whatever they could find—including metal implements, which caused the electrically-conductive print heads to short out. My company's warranty didn't cover that problem.
"Fiasco" doesn't come close to describing the outcome. The concomitant problems took months to sort out, and MHS eventually replaced my company's equipment with a competitor's. The label revenue? Gone, too. Worst of all, a new competitor had the opportunity to become a hero, without incurring prospecting expenses, engineering costs and proof-of-concept costs. I had underwritten all of that, as part of the initial system sale.
What cauldron of issues created this Winner's Curse?
The general ledger account silos. When it came to revenue and expense accounting, my company didn't share anything between departments. In this Winner's Curse scenario, only one department received revenue credit for equipment: sales. The service manager's revenue came from service contracts, and he believed that warranty support was an expense to be controlled and minimized. And because support expenses weren't costed to sales, I had little incentive to reduce the risks. The Consumables division? It didn't receive credit for hardware sales or service contracts, even though its revenue was dependent. What kind of experiences do these accounting silos create? Just ask MHS's corporate radiology manager.
Prospect qualification. This focused on getting the sale, instead of gaining a valuable customer. My investigation traded off asking other valuable questions, including "will this prospect become a valuable customer for our organization?" or: "Can this prospect implement our solution?"
Poor customer expectation management. In client meetings during the sales process, we didn't discuss risks and minimized MHS' obligations. Many Winner's Curses begin when a vendor over-promises and under-delivers—instead of the other way around.
Lack of coordination and performance measurement. Quality control problems at the label plant. Equipment failures. Viscerally unhappy customers. Was anyone watching these not-so-disparate events and preparing a coordinated response? Each department had a separate set of performance measurements, none of which mitigated the risk that the customer might be completely dissatisfied.
By any analysis, this Winner's Curse was my company's self-inflicted debacle. But in many situations, customers are complicit because they fail to see beyond their own self interest. They don't recognize that a valuable business relationship provides mutual benefits. Customers benefit from what a product provides—and vendors must make a meaningful profit providing it.
Some sales engagements aren't worth winning. How can you know? There are two keys. First, have a clear picture of what a Winner's Curse looks like and what it means for your organization. Second, ask the right questions to expose the risks. Those questions must be asked not only at the beginning but also throughout the customer relationship.
Wednesday, September 3, 2008
"That's not our policy--and no, we don't want to hear from you!"
How’s this for a conundrum?
Help the customer or Enforce company policy. Enforce policy or help the customer.
Office Depot’s management created this very quandary when my friend Elena visited their brand, spanking new store in Albuquerque last week.
She wanted a copy of a two-page color document, but she was told she had to wait because the store’s policy was to service register customers first. Watching customer after customer enter the store and leave with a purchase, she gave up waiting after one hour. The manager overseeing the few overworked employees could hardly have been less contrite. After she complained about the long wait, he offered “you can come back later this afternoon and pick up your copy.” How’s that for service?
What could have been the outcome if the store manager wasn’t conflicted in his goals? What if he were empowered (to use a now-popular term) to offer to courier Elena’s document to her or to ship it overnight? Instead, the policy shackles at Office Depot prevailed, to everyone’s detriment.
During Elena’s wait, she purchased a few items, and decided to voice her complaint via the website printed on her receipt, which helpfully shared how much Office Depot values her opinion. After carefully crafting an informative message about her poor Office Depot experience, her transmission was promptly rejected. Why? She declined to include her gender and annual household income among the information she submitted. Clearly, any mantra espousing customer centricity isn’t mounted in a frame at the home office.
My friend Elena left Office Depot without her color copies, and without Office Depot learning about her experience. She won’t visit the store again. And yes, she will tell twenty people about her experience.
Office Depot, are you listening? Maybe Staples will!
Friday, August 15, 2008
Don't Bother Me With Social Media Strategy--I Have to Sell Something
By Andrew Rudin, Outside Technologies, Inc.
It’s old-school thinking, but I hear it all the time:
“If we can just get our product in front of the right people, it sells itself.” Or “we just need to get our foot in the door!”
To carry out that mission, does the image of a money-motivated, aggressive salesperson jump into your mind? Maybe a salesperson who “has the right contacts?”—codespeak for someone with a shortcut to a decision maker, obviating the need to perform other sales and marketing fundamentals.
What fundamentals am I talking about? Knowing where your company’s voice must heard, and developing strategies to get in the conversations.
Until just a few years ago, we assumed conversations meant face-to-face communication. In a group setting, we needed a few drinks along with great icebreaker patter to help us get into a dialog.
We don't make those assumptions anymore. With Web 2.0, or Social Media, conversations aren’t just face-to-face. Technology plays a big role, and it means everything to salespeople who can’t afford to wait for an invitation to join in.
For salespeople, why has participation in Social Media conversations become so important? First, through online conversations, people discuss problems well in advance of the salesperson’s first call. In Social Media conversations, as with face-to-face conversations, questions are raised. Insight develops and becomes shared. Social connections are made inside and outside of organizational boundaries. Patterns of influence are established. Issues are aired and ideas are exchanged. What’s different from face-to-face conversations is that in many cases, the discourse is completely open and public! In a metaphorical sense, as a salesperson, at what point would you want to pop a breath mint and sidle up to enter the conversation? If you said “when I’m telemarketing from a prospect list,” you might want to examine how your strategy pits against your social-media savvy competitor, who has participated in the discussion since it was a wee, little thought.
Second, today’s social-media conversations are larger than we ever imagined—called a network effect, according to John Todor, an expert in using Social Media for business strategies. In one example he mentions, “over 50,000 people (sites) have RSS feeds to ezinearticles.com and many of these sites re-post content and are picked up by thousands of others through their RSS feeds.” You’d need to shake hands very fast to make that many contacts at your next business council meeting.
What does this mean? Three things. First, companies must re-think the boundaries of their sales process. Those that have defined the process as beginning before the salesperson’s first call have a healthy advantage over those stuck using the old-school paradigm in which selling begins with the first prospecting call. Second, salespeople—not just Marketing—must adopt technology tools that provide the Internet equivalent of joining a conversation. Reciprocally, Marketing must recognize that the “one-to-many” vs. “one-to-one” delineation of Marketing vs. Sales blurs with Social Media. It’s not heresy for salespeople to initiate and manage one-to-many conversations. Third, Social Media shifts control of conversations outside of selling organizations. Salespeople must learn how to manage when that control is relinquished. They must learn new ways to use Social Media conversations to gain insight and exposure. What change could be more profound for those of us who grew up selling when we owned the information and were constantly coached in better ways to direct discussions?
Building sales and marketing organizations ready for this challenge requires shifting energy away from leading discussions through features and benefits messages to ones in which meaningful questions are asked. Social Media’s power can be fully harnessed when organizations discover how to exploit signals from these conversations for new strategic or tactical directions.
When it comes competing more effectively on today’s sales gridiron, which emerging Social Media technology tools can salespeople take into their own hands and use? Stay tuned. That’s the subject of my next blog
It’s old-school thinking, but I hear it all the time:
“If we can just get our product in front of the right people, it sells itself.” Or “we just need to get our foot in the door!”
To carry out that mission, does the image of a money-motivated, aggressive salesperson jump into your mind? Maybe a salesperson who “has the right contacts?”—codespeak for someone with a shortcut to a decision maker, obviating the need to perform other sales and marketing fundamentals.
What fundamentals am I talking about? Knowing where your company’s voice must heard, and developing strategies to get in the conversations.
Until just a few years ago, we assumed conversations meant face-to-face communication. In a group setting, we needed a few drinks along with great icebreaker patter to help us get into a dialog.
We don't make those assumptions anymore. With Web 2.0, or Social Media, conversations aren’t just face-to-face. Technology plays a big role, and it means everything to salespeople who can’t afford to wait for an invitation to join in.
For salespeople, why has participation in Social Media conversations become so important? First, through online conversations, people discuss problems well in advance of the salesperson’s first call. In Social Media conversations, as with face-to-face conversations, questions are raised. Insight develops and becomes shared. Social connections are made inside and outside of organizational boundaries. Patterns of influence are established. Issues are aired and ideas are exchanged. What’s different from face-to-face conversations is that in many cases, the discourse is completely open and public! In a metaphorical sense, as a salesperson, at what point would you want to pop a breath mint and sidle up to enter the conversation? If you said “when I’m telemarketing from a prospect list,” you might want to examine how your strategy pits against your social-media savvy competitor, who has participated in the discussion since it was a wee, little thought.
Second, today’s social-media conversations are larger than we ever imagined—called a network effect, according to John Todor, an expert in using Social Media for business strategies. In one example he mentions, “over 50,000 people (sites) have RSS feeds to ezinearticles.com and many of these sites re-post content and are picked up by thousands of others through their RSS feeds.” You’d need to shake hands very fast to make that many contacts at your next business council meeting.
What does this mean? Three things. First, companies must re-think the boundaries of their sales process. Those that have defined the process as beginning before the salesperson’s first call have a healthy advantage over those stuck using the old-school paradigm in which selling begins with the first prospecting call. Second, salespeople—not just Marketing—must adopt technology tools that provide the Internet equivalent of joining a conversation. Reciprocally, Marketing must recognize that the “one-to-many” vs. “one-to-one” delineation of Marketing vs. Sales blurs with Social Media. It’s not heresy for salespeople to initiate and manage one-to-many conversations. Third, Social Media shifts control of conversations outside of selling organizations. Salespeople must learn how to manage when that control is relinquished. They must learn new ways to use Social Media conversations to gain insight and exposure. What change could be more profound for those of us who grew up selling when we owned the information and were constantly coached in better ways to direct discussions?
Building sales and marketing organizations ready for this challenge requires shifting energy away from leading discussions through features and benefits messages to ones in which meaningful questions are asked. Social Media’s power can be fully harnessed when organizations discover how to exploit signals from these conversations for new strategic or tactical directions.
When it comes competing more effectively on today’s sales gridiron, which emerging Social Media technology tools can salespeople take into their own hands and use? Stay tuned. That’s the subject of my next blog
Friday, May 23, 2008
Asking to Send Literature is not Lead Qualification
Here's a link to my latest blog on CustomerThink:
http://www.customerthink.com/blog/asking_send_literature_not_lead_qualification
http://www.customerthink.com/blog/asking_send_literature_not_lead_qualification
A Telecom's CRM System Shouldn't Add Static to the Contact Center
Here's my latest article on CustomerThink:
http://www.customerthink.com/article/dont_add_static_contact_center
http://www.customerthink.com/article/dont_add_static_contact_center
Friday, May 2, 2008
Is There "White Space" in Your Customer Relationships
When managing sales relationships with major accounts, is it better to have more points of contact between vendor and customer—or fewer?
The answer depends on whether value is added to or subtracted from those sales interactions, according to Rob Cross, an author and expert in social networking, who led a symposium I attended last week, “Leading in a Connected World.”
More than "fuzzwords," social network value added and value subtracted are measurable and meaningful in financial terms. Yet C-Level executives don’t think that way when creating CRM processes, account teams, and collaborative sales models. Oddly, the same companies that routinely scrutinize the cost of airline tickets don’t track efficiency of collaborative activities—a potentially far greater expense. That irony was underscored when the majority of the symposium attendees indicated that well over half of their time was undocumented, and spent in internal meetings, on the phone, or answering email.
Ever since the words “social” and “networking” were joined to mean informal channels of communication, CRM practitioners have offered conflicting ideas about how to make collaboration more effective. One Symposium insight: sometimes, “less is more.” This is because not every interaction produces value. Which interactions are the most valuable? According to Professor Cross, the best opportunities for value-producing collaboration are best-practice knowledge transfers, innovation, and revenue generation activities. The absence of those value-producing activities might be considered “white space” in the customer relationship. In Professor Cross’s words, effective collaboration doesn’t mean “everyone in the woods singing Cum By Ya to each other.” By uncovering where value is added or subtracted in collaboration, companies can garner the right resources, manage staffing, and organize teams.
So where is collaborative value added and where is it subtracted? Value is added when tacit knowledge for best practices, innovation, and revenue generation is exchanged between individuals. As for subtraction, there are two major sources. If the outcome of collaborative activities provides neither productivity improvements nor cost reductions, then those activities are value-subtracting to an organization. Second, consistent negativity from even one employee can have a measurable, cascading impact on the value an organization produces. And the impact is magnified in organizations that depend on collaboration for executing strategy.
In a PowerPoint slide, Professor Cross illustrated a basic social network. When individuals in a large, multinational company were asked the question “who do you receive information from and provide information to,” the network’s visual similarity to a giant hairball was stunning. From that picture, it’s easy to get the impression that everybody talks to everybody. I would be challenged to explain to a CFO how that picture portends to drive value for his or her company.
But underneath that picture, communication silos exist. These silos are losing favor, particularly for business development operations. One symposium panelist, Tracy Cox, Director of Performance Consulting for Raytheon Corporation, debunked the idea that selling activities should be the exclusive domain of the sales department. He recommended that companies consider different collaborative routes to engage with high-potential prospects, noting that it’s important to “understand the key influencers and reputation holders in the customer community and how to leverage those connections for new business.” It’s myopic to think of the Account Executive as the focal point for facilitating those connections.
When more specific relationship questions are asked to produce the social network model, the lines in the amorphous hairball social network strip away, yielding valuable insight. Who energizes you in your business activities? Who do you go to in order to generate revenue? Who gives you a sense of purpose? When these connections are mapped, patterns emerge that are highly predictive in how real value is transferred within and between companies. Not surprisingly, for these questions, the best performing account teams not only had strong client connections, but also better networks into their own organizations.
In addition to the Raytheon panelist, two other panelists, Lisa Vertucci, Managing Director, Global Head of Talent Development of Lehman Brothers; and John Helferich, former Vice President of Masterfoods USA shared how their organizations have used social network modeling to create value through collaboration. The operational decisions they made began with asking these questions:
How can we make invisible value visible to our customers?
How can we create the most effective cross-boundary relationships?
How can we identify key new business opportunities?
How do we uncover which people provide greater than average value in cross-selling products and services?
What is the most expedient way to “grow the conversation” about an important topic?
As with forensic sleuthing for suspicious financial transactions, following the money path in a social network context provides a good starting point for figuring out what’s valuable—and what’s white space—in your customer relationships.
The answer depends on whether value is added to or subtracted from those sales interactions, according to Rob Cross, an author and expert in social networking, who led a symposium I attended last week, “Leading in a Connected World.”
More than "fuzzwords," social network value added and value subtracted are measurable and meaningful in financial terms. Yet C-Level executives don’t think that way when creating CRM processes, account teams, and collaborative sales models. Oddly, the same companies that routinely scrutinize the cost of airline tickets don’t track efficiency of collaborative activities—a potentially far greater expense. That irony was underscored when the majority of the symposium attendees indicated that well over half of their time was undocumented, and spent in internal meetings, on the phone, or answering email.
Ever since the words “social” and “networking” were joined to mean informal channels of communication, CRM practitioners have offered conflicting ideas about how to make collaboration more effective. One Symposium insight: sometimes, “less is more.” This is because not every interaction produces value. Which interactions are the most valuable? According to Professor Cross, the best opportunities for value-producing collaboration are best-practice knowledge transfers, innovation, and revenue generation activities. The absence of those value-producing activities might be considered “white space” in the customer relationship. In Professor Cross’s words, effective collaboration doesn’t mean “everyone in the woods singing Cum By Ya to each other.” By uncovering where value is added or subtracted in collaboration, companies can garner the right resources, manage staffing, and organize teams.
So where is collaborative value added and where is it subtracted? Value is added when tacit knowledge for best practices, innovation, and revenue generation is exchanged between individuals. As for subtraction, there are two major sources. If the outcome of collaborative activities provides neither productivity improvements nor cost reductions, then those activities are value-subtracting to an organization. Second, consistent negativity from even one employee can have a measurable, cascading impact on the value an organization produces. And the impact is magnified in organizations that depend on collaboration for executing strategy.
In a PowerPoint slide, Professor Cross illustrated a basic social network. When individuals in a large, multinational company were asked the question “who do you receive information from and provide information to,” the network’s visual similarity to a giant hairball was stunning. From that picture, it’s easy to get the impression that everybody talks to everybody. I would be challenged to explain to a CFO how that picture portends to drive value for his or her company.
But underneath that picture, communication silos exist. These silos are losing favor, particularly for business development operations. One symposium panelist, Tracy Cox, Director of Performance Consulting for Raytheon Corporation, debunked the idea that selling activities should be the exclusive domain of the sales department. He recommended that companies consider different collaborative routes to engage with high-potential prospects, noting that it’s important to “understand the key influencers and reputation holders in the customer community and how to leverage those connections for new business.” It’s myopic to think of the Account Executive as the focal point for facilitating those connections.
When more specific relationship questions are asked to produce the social network model, the lines in the amorphous hairball social network strip away, yielding valuable insight. Who energizes you in your business activities? Who do you go to in order to generate revenue? Who gives you a sense of purpose? When these connections are mapped, patterns emerge that are highly predictive in how real value is transferred within and between companies. Not surprisingly, for these questions, the best performing account teams not only had strong client connections, but also better networks into their own organizations.
In addition to the Raytheon panelist, two other panelists, Lisa Vertucci, Managing Director, Global Head of Talent Development of Lehman Brothers; and John Helferich, former Vice President of Masterfoods USA shared how their organizations have used social network modeling to create value through collaboration. The operational decisions they made began with asking these questions:
How can we make invisible value visible to our customers?
How can we create the most effective cross-boundary relationships?
How can we identify key new business opportunities?
How do we uncover which people provide greater than average value in cross-selling products and services?
What is the most expedient way to “grow the conversation” about an important topic?
As with forensic sleuthing for suspicious financial transactions, following the money path in a social network context provides a good starting point for figuring out what’s valuable—and what’s white space—in your customer relationships.
Thursday, April 24, 2008
Does Your Company Differentiate by Offering Good Products With Virtue?
If you want to become wealthy, “create good products with virtue.” The man who made that recommendation, Ted Leonsis, should know. As co-founder of America Online, he has repeatedly used that idea to build a financial empire.
But today’s world is so full of non-virtuous products and customer experiences that there are websites, blogs, and government agencies dedicated to sharing information about the perpetrators. Given that, could simply creating good products with virtue provide a major differentiator for a high-performance brand?
As Mr. Leonsis observes, with the unparalleled amount of customer sentiment available to producers today, “there is no reason to have bad products or services.” If only it were so easy. Companies spend many billions of dollars in pursuit silver bullets in the name of Sustainable Differentiation—often with little results to show for the effort. So whenever I uncover a “good product with virtue,” it seems awesomely different.
Do we chronically have examples of non-virtuous products because managers and investors don’t care about having virtuous ones? Because companies don’t know how to produce good products? Because many really smart people simply talk too much? What makes a product “good and virtuous” in the first place? And how can an enterprise exploit such differentiation through its sales and operational strategies?
An example provides help toward answering these questions. I thought back—before Web 2.0, viral marketing, email, data warehouses, even before Internet itself—and remembered how a grocery retailer, Giant Food Corporation of Maryland—deployed “good and virtuous” as a formidable competitive weapon for over thirty years. What differentiated the company? Consistent delivery of quality, value, and service to every customer. More than mere words, these differentiators created complex operational challenges in a demanding, highly competitive business serving a wide demographic.
One highly-effective resource the company used was a Consumer Board, a low-technology tool that was radical and controversial during the early ‘80’s, when I served as a board member for two years. As remarkable as it was at the time for a retailer to provide consumers a voice, I learned what was more significant was how Giant delivered its “good and virtuous” differentiation, gaining the largest share of the grocery market in the Washington DC area in the process.
Four important tactics stand out most in my mind:
1. Bring the consumer’s voice to the executive suite. Before any of its rivals did so, Giant not only recognized the primacy of the consumer, but organized its management and operations accordingly. The Giant consumer executive at the time, Odonna Mathews, had the authority to enact recommendations that the board made. Other boards simply provided information to a corporate representative who lacked decision-making authority.
2. Direct senior management involvement with consumers. Izzy Cohen, the Giant CEO at the time, regularly attended our meetings.
3. Tight focus on the needs of individuals and communities. In creating “good and virtuous” differentiation, Giant understood that short-term profits were worth exchanging for customer loyalty. One prominent example was the Consumer Board’s recommendation for Giant to offer tabloid- and candy-free checkout lines, which the chain implemented well before the rest of the industry.
4. Independence between quality initiatives and store-level financial performance measurements. For example, if an ailing freezer needed replacement, the store’s manager wasn’t penalized with the cost of the equipment. Giant’s expenses toward quality differentiation never impacted a store’s profitability. Internal conflicts were eliminated.
The esteem that Giant Food held in the communities it served cannot be overstated. The most compelling story occurred during the riots in Washington, DC following the assassination of Martin Luther King Jr. When hundreds of other businesses were destroyed or damaged, community activists protected the Giant Food stores, all of which survived unscathed. That relationship and commitment could not have been achieved without creating “good products with virtue.” The financial rewards speak for themselves.
But today’s world is so full of non-virtuous products and customer experiences that there are websites, blogs, and government agencies dedicated to sharing information about the perpetrators. Given that, could simply creating good products with virtue provide a major differentiator for a high-performance brand?
As Mr. Leonsis observes, with the unparalleled amount of customer sentiment available to producers today, “there is no reason to have bad products or services.” If only it were so easy. Companies spend many billions of dollars in pursuit silver bullets in the name of Sustainable Differentiation—often with little results to show for the effort. So whenever I uncover a “good product with virtue,” it seems awesomely different.
Do we chronically have examples of non-virtuous products because managers and investors don’t care about having virtuous ones? Because companies don’t know how to produce good products? Because many really smart people simply talk too much? What makes a product “good and virtuous” in the first place? And how can an enterprise exploit such differentiation through its sales and operational strategies?
An example provides help toward answering these questions. I thought back—before Web 2.0, viral marketing, email, data warehouses, even before Internet itself—and remembered how a grocery retailer, Giant Food Corporation of Maryland—deployed “good and virtuous” as a formidable competitive weapon for over thirty years. What differentiated the company? Consistent delivery of quality, value, and service to every customer. More than mere words, these differentiators created complex operational challenges in a demanding, highly competitive business serving a wide demographic.
One highly-effective resource the company used was a Consumer Board, a low-technology tool that was radical and controversial during the early ‘80’s, when I served as a board member for two years. As remarkable as it was at the time for a retailer to provide consumers a voice, I learned what was more significant was how Giant delivered its “good and virtuous” differentiation, gaining the largest share of the grocery market in the Washington DC area in the process.
Four important tactics stand out most in my mind:
1. Bring the consumer’s voice to the executive suite. Before any of its rivals did so, Giant not only recognized the primacy of the consumer, but organized its management and operations accordingly. The Giant consumer executive at the time, Odonna Mathews, had the authority to enact recommendations that the board made. Other boards simply provided information to a corporate representative who lacked decision-making authority.
2. Direct senior management involvement with consumers. Izzy Cohen, the Giant CEO at the time, regularly attended our meetings.
3. Tight focus on the needs of individuals and communities. In creating “good and virtuous” differentiation, Giant understood that short-term profits were worth exchanging for customer loyalty. One prominent example was the Consumer Board’s recommendation for Giant to offer tabloid- and candy-free checkout lines, which the chain implemented well before the rest of the industry.
4. Independence between quality initiatives and store-level financial performance measurements. For example, if an ailing freezer needed replacement, the store’s manager wasn’t penalized with the cost of the equipment. Giant’s expenses toward quality differentiation never impacted a store’s profitability. Internal conflicts were eliminated.
The esteem that Giant Food held in the communities it served cannot be overstated. The most compelling story occurred during the riots in Washington, DC following the assassination of Martin Luther King Jr. When hundreds of other businesses were destroyed or damaged, community activists protected the Giant Food stores, all of which survived unscathed. That relationship and commitment could not have been achieved without creating “good products with virtue.” The financial rewards speak for themselves.
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