How does an enterprise create sustainable value? Through listening to customers and innovating products and services they want to buy? Or by creating a product and hoping the world beats a path to its door (or website) to buy it?
The better answer—listening to customers and innovating products and services accordingly—plays well in PowerPoint presentations under the Why We’re Customer-centric banner, but many truly smart people still don’t get it.
An article, The Innovation Illusion, by Sergio Zyman, contains a compelling real-world example. “While Sony was busy making colorful new versions of personal, portable CD players, Apple was out there redefining portable entertainment. Sony should have introduced iPods, not Apple. So what was the domain of Sony is now Apple’s forever.”
If Sony can find solace about squandering an opportunity it created almost 30 years ago, it’s in the fact they have plenty of company. In February, Polaroid Corporation announced it would cease manufacturing virtually all of its instant film, closing three plants in the process. Polaroid’s explanation: “marketplace conditions,” which is business-speak for “so few people want to buy our products that we can’t afford to produce them.”
If you were born before 1980, you’ll recognize these other not-seen-lately products to add to the dustbin: water beds, dustbusters, cigarette vending machines, mimeograph machines, and multi-media all-in-one stereo systems. The list goes on. The all-important wall-mounted pencil sharpeners that used to adorn almost every school and workplace? Made obsolete by computers and mechanical pencils. Many of the companies that were dominant suppliers are no longer in business. Marketplace conditions also likely claimed the financial stability of the ecosystems of people and companies that produced these products—parts suppliers, retailers, resellers and distributors, and sales forces.
So why do some companies closely tied to blockbuster successes like Polaroid Film and the Sony Walkman lose momentum while other companies perpetuate through other offerings? A new book, Think Two Products Ahead, by Ben Mack, explains why, making a case for understanding customer need and building brand equity to support it. Mr. Mack supports his point by describing how in the late 1800’s, Wells Fargo transitioned from a delivery company to a financial services company by understanding that trust was what their customers were really buying. “Trust is the essence of the Wells Fargo brand, more than its physical banks, checks, or even its name. The name became a symbol of this trust, but without this trust, the company would have evaporated when the government took over Wells Fargo’s express business. It was the customers’ willingness to do business with Wells Fargo that allowed it to continue when the business suddenly had to switch product offerings. It was the business managers leveraging Wells Fargo’s common thread that facilitated the company finding new business opportunities.”
What creates the success-failure chasm between companies like Wells Fargo and Sony and Polaroid? Could it be in the questions they ask—or not? Did Wells Fargo survive through astute introspection? Were senior managers from Sony and Polaroid so enamored with their own revolutionary technologies that they failed to later ask the same questions that ironically might have helped create their own breakthroughs? These questions include:
What does our next customer want to buy?
What emerging forces will impact our business?
Are there new business models or technologies that should be adapted to deliver radical improvements in the value we provide?
What proprietary advantages must we exploit to sustain or improve our market position?
Are there shifts in market power or industry fragmentation that create new sales opportunities?
A historical comparison will prove that asking questions such as these—and taking action on the answers—have played an important role in every successful product or business venture. Curiosity has great innovative power.
The next time I nostalgically remember a product or company made newly-extinct by marketplace conditions, I’ll just say “We bought one of those! It worked so great at the time.” But I won’t need to guess about what happened.
Tuesday, January 6, 2009
"Our Computers Don't Talk to Each other." No Kidding!
In May, my client told me they have a project for me in Tel Aviv. The bad news is I had to fly to get there.
About thirty days before my trip, Expedia sends my itinerary by email. The travel document shows a Delta flight number, and the carrier as "Delta, operated by: Air France.” (The airlines refer to this arrangement as “code sharing,” but a more accurate term is “code unsharing.” I will explain why in a moment.) It contains an Expedia Itinerary Number, an Airline ticket number, a Delta confirmation code, and an Air France confirmation code—all conveniently grouped in the upper left hand corner of the email.
Which company is responsible for delivering an excellent customer experience? I’m not sure, but the memorable scene in The Wizard of Oz in which the Scarecrow at once points to the left and to the right as the best way to reach Oz seems as good a way as any to describe the confusion.
“Code Unshared” Experience #1: My Expedia reservation doesn’t have seat assignments, meal requests, or my Delta SkyMiles number. Easy enough to fix, I think. I go online to make the needed changes. First to Delta’s website, where I enter my SkyMiles number. I use SeatGuru (www.seatguru.com) to help me find the best seats, but Delta’s website stubbornly won’t accept my seat request for the Paris to Tel Aviv leg. Security reasons maybe? The website offers no information.
So I try Air France’s website using their conformation code, and still no luck. Thinking the transaction might be best done by voice, I click around to find the Air France reservation phone number and reach a human after several minutes. “We can’t reserve a seat for you. You’ll have to do that when you check in at Washington Dulles in June,” I’m informed. When I realize that this seemingly-simple transaction has consumed over ninety minutes, involving the resources of (count them) four companies, I settle for a partial win.
“Code Unshared” Experience #2: June 12. My taxi drops me off at the Delta door at Washington Dulles Airport. I stride up to Delta’s self-service check in kiosk and slide my credit card into the reader. The system finds my reservation, but the display indicates that for a boarding pass, I must check in at Air France (recall that I have a Delta flight number). I look down the uncharacteristically empty terminal at Dulles and see about 100 people queued in front of one counter. That’s Air France.
“Code unshared” Experience #3: The check in procedure at Air France goes smoothly, and I make the long walk to Terminal B. As I’m heading up a long escalator, I glance at my seat assignment: 33E. Forging ahead toward the gate, I count on my fingers to “E.” Five! To my horror, I figure out this is not the aisle seat I painstakingly acquired online. It’s in the middle of the middle! I rush to the counter at the gate to get another seat, and to ask what happened. The agent can’t explain, but she kindly accommodates my request and immediately reissues my boarding pass with a better seat.
“Code Unshared” Experience #4: About an hour into the flight, the attendants push the meal carts through the aisles in coach and distribute trays of food to the passengers. As one is about to be dropped onto my tray table, I ask if it’s the vegetarian meal I requested. As if by rote, the flight attendant responds “Sir, you must request those at least twenty-four hours . . .” Cutting him off, I say “I requested the meal last month.” “What is your last name?” he asks. “Rudin,” I say, spelling it, just to make sure. He looks at his computer-generated list and shakes his head. “I’m sorry. We don’t have any record of your request,” he says with finality. With my patience waning, I say “This looks really stupid. Not you—but this whole situation. You can’t get anything right.” I show him the printout of my Expedia email with the four confirmation numbers. “Sometimes our computers don’t talk to each other,” he offers. It's an unnecessary attempt to explain what is already painfully obvious to a frustrated passenger.
I often hear road warriors share bad airline stories over drinks at the bar the same way cowboys used to tell yarns about the cattle drives around the campfire. But this story isn’t really about airlines. It’s about what happens when businesses “team” for marketing and sales purposes, but don’t put the right operations in place to execute on their promises—both stated and implicit. In the process, high customer expectations slam into voids created by disconnected services and systems. In information technology, website facades and user screens that have no infrastructure behind them are derisively termed “Hollywood Sets,” a metaphor which needs no explanation in terms of the customer experience.
In contrast, a great customer experience can be found in a transaction nobody wants—auto collision repair. A single call to an insurance company or agent creates a claim record that seamlessly flows between the insurance company, body shop, and rental car company. A single version of the information is available to all, and billing and funds transfers occur quickly and easily. Even more remarkable, compared to Delta and Air France, you couldn’t find three business operations more different than insurance, auto repair, and car rental—yet the process integration between the three, along with convenience for the customer, is astounding.
Whether you believe the excellent customer experience is intended—or simply a byproduct of a larger need for insurance companies to control payouts is the subject of another blog. But using that logic, in the name of Tight Security is it unreasonable to expect that even basic passenger information be shared between two carriers? Unfortunately, just the opposite is true.
Part of my work in Tel Aviv on Monday involves analysis of a telecomm business case as a way to help salespeople identify strategic business opportunities and operational gaps. One fact the participants will uncover is that the telecomm firm can’t meet its objectives because it lacks integrated IT systems. I think I’ll invite Expedia, Delta, and Air France to sit in.
About thirty days before my trip, Expedia sends my itinerary by email. The travel document shows a Delta flight number, and the carrier as "Delta, operated by: Air France.” (The airlines refer to this arrangement as “code sharing,” but a more accurate term is “code unsharing.” I will explain why in a moment.) It contains an Expedia Itinerary Number, an Airline ticket number, a Delta confirmation code, and an Air France confirmation code—all conveniently grouped in the upper left hand corner of the email.
Which company is responsible for delivering an excellent customer experience? I’m not sure, but the memorable scene in The Wizard of Oz in which the Scarecrow at once points to the left and to the right as the best way to reach Oz seems as good a way as any to describe the confusion.
“Code Unshared” Experience #1: My Expedia reservation doesn’t have seat assignments, meal requests, or my Delta SkyMiles number. Easy enough to fix, I think. I go online to make the needed changes. First to Delta’s website, where I enter my SkyMiles number. I use SeatGuru (www.seatguru.com) to help me find the best seats, but Delta’s website stubbornly won’t accept my seat request for the Paris to Tel Aviv leg. Security reasons maybe? The website offers no information.
So I try Air France’s website using their conformation code, and still no luck. Thinking the transaction might be best done by voice, I click around to find the Air France reservation phone number and reach a human after several minutes. “We can’t reserve a seat for you. You’ll have to do that when you check in at Washington Dulles in June,” I’m informed. When I realize that this seemingly-simple transaction has consumed over ninety minutes, involving the resources of (count them) four companies, I settle for a partial win.
“Code Unshared” Experience #2: June 12. My taxi drops me off at the Delta door at Washington Dulles Airport. I stride up to Delta’s self-service check in kiosk and slide my credit card into the reader. The system finds my reservation, but the display indicates that for a boarding pass, I must check in at Air France (recall that I have a Delta flight number). I look down the uncharacteristically empty terminal at Dulles and see about 100 people queued in front of one counter. That’s Air France.
“Code unshared” Experience #3: The check in procedure at Air France goes smoothly, and I make the long walk to Terminal B. As I’m heading up a long escalator, I glance at my seat assignment: 33E. Forging ahead toward the gate, I count on my fingers to “E.” Five! To my horror, I figure out this is not the aisle seat I painstakingly acquired online. It’s in the middle of the middle! I rush to the counter at the gate to get another seat, and to ask what happened. The agent can’t explain, but she kindly accommodates my request and immediately reissues my boarding pass with a better seat.
“Code Unshared” Experience #4: About an hour into the flight, the attendants push the meal carts through the aisles in coach and distribute trays of food to the passengers. As one is about to be dropped onto my tray table, I ask if it’s the vegetarian meal I requested. As if by rote, the flight attendant responds “Sir, you must request those at least twenty-four hours . . .” Cutting him off, I say “I requested the meal last month.” “What is your last name?” he asks. “Rudin,” I say, spelling it, just to make sure. He looks at his computer-generated list and shakes his head. “I’m sorry. We don’t have any record of your request,” he says with finality. With my patience waning, I say “This looks really stupid. Not you—but this whole situation. You can’t get anything right.” I show him the printout of my Expedia email with the four confirmation numbers. “Sometimes our computers don’t talk to each other,” he offers. It's an unnecessary attempt to explain what is already painfully obvious to a frustrated passenger.
I often hear road warriors share bad airline stories over drinks at the bar the same way cowboys used to tell yarns about the cattle drives around the campfire. But this story isn’t really about airlines. It’s about what happens when businesses “team” for marketing and sales purposes, but don’t put the right operations in place to execute on their promises—both stated and implicit. In the process, high customer expectations slam into voids created by disconnected services and systems. In information technology, website facades and user screens that have no infrastructure behind them are derisively termed “Hollywood Sets,” a metaphor which needs no explanation in terms of the customer experience.
In contrast, a great customer experience can be found in a transaction nobody wants—auto collision repair. A single call to an insurance company or agent creates a claim record that seamlessly flows between the insurance company, body shop, and rental car company. A single version of the information is available to all, and billing and funds transfers occur quickly and easily. Even more remarkable, compared to Delta and Air France, you couldn’t find three business operations more different than insurance, auto repair, and car rental—yet the process integration between the three, along with convenience for the customer, is astounding.
Whether you believe the excellent customer experience is intended—or simply a byproduct of a larger need for insurance companies to control payouts is the subject of another blog. But using that logic, in the name of Tight Security is it unreasonable to expect that even basic passenger information be shared between two carriers? Unfortunately, just the opposite is true.
Part of my work in Tel Aviv on Monday involves analysis of a telecomm business case as a way to help salespeople identify strategic business opportunities and operational gaps. One fact the participants will uncover is that the telecomm firm can’t meet its objectives because it lacks integrated IT systems. I think I’ll invite Expedia, Delta, and Air France to sit in.
How Do You Stop a Great Product from Drying Up?
What do community swimming pools and pencil sharpeners have in common?
In twenty years, both might be remembered as once-valuable products that are now in the scrap heap.
Pencil sharpeners, I understand. But Swimming pools? That rock-solid institution of suburban summer fun? What’s next? Fireworks?
In Swim Clubs Struggle to Stay Afloat (The Washington Post , June 24, 2008), the paper reported that “beneath the sparkling-blue surface of scores of the region’s neighborhood swim clubs is a troubling new reality: many of them are crumbling physically and financially. . . The choice is simple, many pool officials say: If the clubs don’t change, those icons of Washington’s once-thriving middle-class suburbs won’t survive.” The claims are supported with declining membership statistics over the past ten years. With plant and equipment built half a century ago, many clubs can’t adjust to changing customer preferences.
How many industries and companies can you name that are experiencing these same gut-wrenching changes? Even if you market a product or service that doesn’t involve wearing a swimsuit, it’s worth taking a moment to understand what’s happening. The cultural and social forces exerting pressure on pool clubs are a microcosm of the world.
Lack of leisure time. Because an increasing number of households are supported by two working parents or a single working parent, it’s harder to spend hours at the local pool.
Increased availability of alternative activities. (It’s sad to see the swimming at the local pool replaced by more sedentary, digitally-enabled pursuits, particularly for a person who grew up swimming in pools and lakes. For an excellent discussion on this topic, read Richard Louv’s book The Last Child in the Woods).
Changing demographics in established neighborhoods brought about by new immigrant populations. Not every culture values the recreational experiences developers envisioned when pool complexes were originally built.
Escalating membership fees to cover high fixed costs. Membership fees are out of reach to consumers in the local communities.
Collision of local tax rates and current market conditions. Local tax rates create financial burdens because they reflect operational conditions over thirty years ago, when pool clubs were more financially stable.
How to stem the declining membership trajectory for public pools isn’t just a public policy problem, a land-use problem, or a recreation problem. It’s a sales problem. It’s about how seemingly rock-solid institutions succumb to forces when they are either unable to see them coming, unable to change, or both. It’s about substitute products cannibalizing markets. It’s about assumptions—valid up until few years ago—which are now incorrect because of changing preferences. And it’s about using those now invalid assumptions to create new strategies and tactics that are inherently flawed.
But there is hope. Could local pools be one beneficiary of high gas prices, as consumers modify their recreational activities to favor local pursuits?
Fundamentally, swim clubs need to rethink what they are selling. Could it be that it’s no longer splashing in the water, swimming laps, and playing “Marco Polo?” Instead, what about the community pool as a resort escape that you can walk to?
Here’s what I recommend for several of the local clubs profiled in The Washington Post article:
Install large poolside plasma TV screens. They’re on the beach in Tel Aviv. (After all, what’s sunset over the Mediterranean without World Cup Soccer?)
Co-locate Starbucks. Have “Free Latte Wednesday nights.”
Offer free wireless access and a “business center” in the clubhouse for those who just want to feel tethered to the office.
Provide alcoholic beverages (in plastic cups) Served weekdays from 9 pm to 11 pm, and all day on the weekend!
Offer Massage and spa treatments as concessions.
Offer live meringue for Hispanic residents and other ethnic music for other immigrant groups.
Hold inner-tube races for kids and adults instead of just swim team for kids.
Partner with property managers who need amenities such as pools to make their products more appealing. Provide direct transportation services from underserved communities.
Given the consequences of inaction, no idea is too preposterous. On paper, Minnesota’s Mall of the Americas, or the TV series Hogan’s Heroes, probably appeared equally foolish. Thanks to the resolve of their creators and financial backers, their commercial success proved otherwise.
In twenty years, both might be remembered as once-valuable products that are now in the scrap heap.
Pencil sharpeners, I understand. But Swimming pools? That rock-solid institution of suburban summer fun? What’s next? Fireworks?
In Swim Clubs Struggle to Stay Afloat (The Washington Post , June 24, 2008), the paper reported that “beneath the sparkling-blue surface of scores of the region’s neighborhood swim clubs is a troubling new reality: many of them are crumbling physically and financially. . . The choice is simple, many pool officials say: If the clubs don’t change, those icons of Washington’s once-thriving middle-class suburbs won’t survive.” The claims are supported with declining membership statistics over the past ten years. With plant and equipment built half a century ago, many clubs can’t adjust to changing customer preferences.
How many industries and companies can you name that are experiencing these same gut-wrenching changes? Even if you market a product or service that doesn’t involve wearing a swimsuit, it’s worth taking a moment to understand what’s happening. The cultural and social forces exerting pressure on pool clubs are a microcosm of the world.
Lack of leisure time. Because an increasing number of households are supported by two working parents or a single working parent, it’s harder to spend hours at the local pool.
Increased availability of alternative activities. (It’s sad to see the swimming at the local pool replaced by more sedentary, digitally-enabled pursuits, particularly for a person who grew up swimming in pools and lakes. For an excellent discussion on this topic, read Richard Louv’s book The Last Child in the Woods).
Changing demographics in established neighborhoods brought about by new immigrant populations. Not every culture values the recreational experiences developers envisioned when pool complexes were originally built.
Escalating membership fees to cover high fixed costs. Membership fees are out of reach to consumers in the local communities.
Collision of local tax rates and current market conditions. Local tax rates create financial burdens because they reflect operational conditions over thirty years ago, when pool clubs were more financially stable.
How to stem the declining membership trajectory for public pools isn’t just a public policy problem, a land-use problem, or a recreation problem. It’s a sales problem. It’s about how seemingly rock-solid institutions succumb to forces when they are either unable to see them coming, unable to change, or both. It’s about substitute products cannibalizing markets. It’s about assumptions—valid up until few years ago—which are now incorrect because of changing preferences. And it’s about using those now invalid assumptions to create new strategies and tactics that are inherently flawed.
But there is hope. Could local pools be one beneficiary of high gas prices, as consumers modify their recreational activities to favor local pursuits?
Fundamentally, swim clubs need to rethink what they are selling. Could it be that it’s no longer splashing in the water, swimming laps, and playing “Marco Polo?” Instead, what about the community pool as a resort escape that you can walk to?
Here’s what I recommend for several of the local clubs profiled in The Washington Post article:
Install large poolside plasma TV screens. They’re on the beach in Tel Aviv. (After all, what’s sunset over the Mediterranean without World Cup Soccer?)
Co-locate Starbucks. Have “Free Latte Wednesday nights.”
Offer free wireless access and a “business center” in the clubhouse for those who just want to feel tethered to the office.
Provide alcoholic beverages (in plastic cups) Served weekdays from 9 pm to 11 pm, and all day on the weekend!
Offer Massage and spa treatments as concessions.
Offer live meringue for Hispanic residents and other ethnic music for other immigrant groups.
Hold inner-tube races for kids and adults instead of just swim team for kids.
Partner with property managers who need amenities such as pools to make their products more appealing. Provide direct transportation services from underserved communities.
Given the consequences of inaction, no idea is too preposterous. On paper, Minnesota’s Mall of the Americas, or the TV series Hogan’s Heroes, probably appeared equally foolish. Thanks to the resolve of their creators and financial backers, their commercial success proved otherwise.
Don't Bother Me With Social Media--I Have to Sell Something (Part II)
Can salespeople gain measurable business value from social media?
Reactions to Part I were mixed:
The skeptical:
“. . . we need real benefits, not hype,”
and
“We’re drowning in a Web2.0 sea of useless drivel.”
The visionary:
“Social media’s emergence today parallels the emergence of mass printing and mass literacy back in the early 1800’s . . .”
I wanted to find out which is correct. What I learned is that the jury is still out. In the meantime, it’s worth examining how companies have innovated using social media to solve some familiar, perennial sales problems.
1. Objection handling. In March, Mei Lin Fung wrote about how Dell used social media in You Can Learn From "Dell Hell." Dell Did when she examined why customer sentiment about Dell became negative. She writes, “What we arrived at was that what had changed was outside, not inside, the company.”
According to the article, “Dell’s approach paid off. Dell weathered the storm because Michael Dell has been personally involved in Dell's efforts to listen to its customers. One of those moves was to create a dedicated corporate blogger . . . (who) speaks to people ‘honestly and directly.’” She described how the blogger admitted the company's problems, and gave the company a “human voice.” The blogger “gave (the) customer respect and "got respect in return.”
2. Generating leads. Andy McCann of software company Radian6 shared a success story. When his client monitored online discussions about their company’s brand, they found 400 separate online conversations. But when they monitored their competitor’s brands, they found a huge opportunity: there were 4,100 conversations! Where do you think his client’s sales force went for new leads? Directly to the people that were talking about the competition! Not surprisingly, Andy uses online conversations for his own lead generation. As he tells it “I’ve never had to look up a lead at this company.”
3. Transferring knowledge. Salespeople crave proven techniques, but forums for sharing information can be prohibitively expensive for companies to build. Some salespeople use social media not only to share ideas, but to find out whether others have found those ideas effective. It’s similar for books, as Andy McCann shared. He searches online for subjects of interest and finds out who has written a book about the topic. Then through social networks, blogs, and reviews, he learns not only who has read the book, but who has found it influential, and why. Such precision has enabled him to glean valuable insight while investing little precious time.
4. Differentiating from the competition. Almost every company faces product commoditization as a strategic issue. Lee Erickson of Erickson Barnett described how her clients have blended social media and brand marketing to communicate a message to customers that very few companies have been successful duplicating: “We’re listening to you every day.” Blogs and other online resources enable her clients to do that. The assumption is that the trust created through listening is more correlated with customer loyalty than other attributes that often require much larger investments. So far, Erickson’s bets have paid off. Listening to customers through social media has spun off into other important differentiators, including reducing time to market for new products, and enabling the sales force to initiate discussions about the most relevant issues.
5. Monitoring the competition. In the past, many salespeople used readily-available competitor product specifications and compared “feeds and speeds.” But the value of that information was limited, at best. Spec sheets (as they were called) contain the manufacturer’s own data. And that information still didn’t uncover the answer to the far more valuable questions: How do customers like using [product X]? and What don’t they like about [product X]? That was then. This is now: Using Google Alerts and other tools, salespeople regularly mine blogs and product reviews to find out the answers to these questions. The result: salespeople have unprecedented power to position strengths against competitive weaknesses.
6. Finding the right people to call on. Developing a community of advocates and influential people within a client organization continues to challenge salespeople. But today, social networking tools such as LinkedIn have become so widely adopted among salespeople that many simply can’t perform their job without it. CRM software developers such as Salesforce.com and SalesCentric are keenly aware of this fact, and integrate to LinkedIn to tap the power of these already-built social networks.
Are these tools just more Management by Magazine flashes in the pan--or are the benefits significant and sustainable? How will managers know? Will traditional sales productivity measurements such as sales cycle time and conversion ratio be valuable for assessing the effectiveness of social media? Or do new selling models require redefining selling itself, and by extension, will they dictate new ways to measure productivity?
Those questions need to be considered as companies develop strategies and build sales models to achieve them.
Reactions to Part I were mixed:
The skeptical:
“. . . we need real benefits, not hype,”
and
“We’re drowning in a Web2.0 sea of useless drivel.”
The visionary:
“Social media’s emergence today parallels the emergence of mass printing and mass literacy back in the early 1800’s . . .”
I wanted to find out which is correct. What I learned is that the jury is still out. In the meantime, it’s worth examining how companies have innovated using social media to solve some familiar, perennial sales problems.
1. Objection handling. In March, Mei Lin Fung wrote about how Dell used social media in You Can Learn From "Dell Hell." Dell Did when she examined why customer sentiment about Dell became negative. She writes, “What we arrived at was that what had changed was outside, not inside, the company.”
According to the article, “Dell’s approach paid off. Dell weathered the storm because Michael Dell has been personally involved in Dell's efforts to listen to its customers. One of those moves was to create a dedicated corporate blogger . . . (who) speaks to people ‘honestly and directly.’” She described how the blogger admitted the company's problems, and gave the company a “human voice.” The blogger “gave (the) customer respect and "got respect in return.”
2. Generating leads. Andy McCann of software company Radian6 shared a success story. When his client monitored online discussions about their company’s brand, they found 400 separate online conversations. But when they monitored their competitor’s brands, they found a huge opportunity: there were 4,100 conversations! Where do you think his client’s sales force went for new leads? Directly to the people that were talking about the competition! Not surprisingly, Andy uses online conversations for his own lead generation. As he tells it “I’ve never had to look up a lead at this company.”
3. Transferring knowledge. Salespeople crave proven techniques, but forums for sharing information can be prohibitively expensive for companies to build. Some salespeople use social media not only to share ideas, but to find out whether others have found those ideas effective. It’s similar for books, as Andy McCann shared. He searches online for subjects of interest and finds out who has written a book about the topic. Then through social networks, blogs, and reviews, he learns not only who has read the book, but who has found it influential, and why. Such precision has enabled him to glean valuable insight while investing little precious time.
4. Differentiating from the competition. Almost every company faces product commoditization as a strategic issue. Lee Erickson of Erickson Barnett described how her clients have blended social media and brand marketing to communicate a message to customers that very few companies have been successful duplicating: “We’re listening to you every day.” Blogs and other online resources enable her clients to do that. The assumption is that the trust created through listening is more correlated with customer loyalty than other attributes that often require much larger investments. So far, Erickson’s bets have paid off. Listening to customers through social media has spun off into other important differentiators, including reducing time to market for new products, and enabling the sales force to initiate discussions about the most relevant issues.
5. Monitoring the competition. In the past, many salespeople used readily-available competitor product specifications and compared “feeds and speeds.” But the value of that information was limited, at best. Spec sheets (as they were called) contain the manufacturer’s own data. And that information still didn’t uncover the answer to the far more valuable questions: How do customers like using [product X]? and What don’t they like about [product X]? That was then. This is now: Using Google Alerts and other tools, salespeople regularly mine blogs and product reviews to find out the answers to these questions. The result: salespeople have unprecedented power to position strengths against competitive weaknesses.
6. Finding the right people to call on. Developing a community of advocates and influential people within a client organization continues to challenge salespeople. But today, social networking tools such as LinkedIn have become so widely adopted among salespeople that many simply can’t perform their job without it. CRM software developers such as Salesforce.com and SalesCentric are keenly aware of this fact, and integrate to LinkedIn to tap the power of these already-built social networks.
Are these tools just more Management by Magazine flashes in the pan--or are the benefits significant and sustainable? How will managers know? Will traditional sales productivity measurements such as sales cycle time and conversion ratio be valuable for assessing the effectiveness of social media? Or do new selling models require redefining selling itself, and by extension, will they dictate new ways to measure productivity?
Those questions need to be considered as companies develop strategies and build sales models to achieve them.
"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!
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!
In an Uncertain Economy, Sales Success Means Knowing When to Throw--and Catch--a Hot Potato
Sales risk has always been a business hot potato. It's more comfortable when someone else is holding it. In this economy, the risk potato has become scalding hot.
Salespeople can monitor thousands of conversations simultaneously and identify highly qualified opportunities.
As a sign of the times, one software client told me, "We're looking for a salesperson who will work on full commission." In other words, "We can't afford to invest anything in case he or she doesn't produce." My response: "If you find that person, don't forecast the revenue. Moving all of the risk to someone else's shoulders won't make your sales strategy successful." The problem is, in an uncertain economy, few companies want to absorb any more risk, and the trembling has become palpable.
My client's effort to avoid risk is not altogether wrong. Sane businesspeople don't seek risk; they manage it! But eliminating risk altogether is a zero-sum game. Without risk, there's no return. What are my client's options?
Disaggregate. Follow Henry Ford's lead. One hundred years ago, he recognized that production efficiencies were enabled by specialization of tasks. Some selling tasks, such as prospecting, are so inefficient that it's better for outside organizations to manage those processes. Many sales organizations cope by creating hybrid selling models that embed third-party prospecting and lead management resources. Can such a hybrid sales process appear seamless to customers?
Beth Schrager of Schrager and Associates, a Massachusetts-based outsourced sales provider, believes so. Her firm provides full-service outsourced sales solutions, and her record of long-term client retention corroborates her success. According to Schrager, "We bring to the table proven, tactical sales experience that enables companies to generate more revenue without increasing sales costs."
Not every outsourced provider works the same way. Further, keeping costs flat while increasing revenue reduces financial risks but creates new ones. Past assumptions are no longer certain. The salesperson we talk to might not be an employee of the company we buy from. Some outsourced firms impart that information with a subtle semantic hint, scripting salespeople to say "I'm calling on behalf of . . . " While some prospects might ignore the distinction, others find the disclaimer unsettling. Outsourced selling models require particular attention to how to disclose information because trust and rapport can be damaged when communications are not handled properly.
Listen first—then shout! Many organizations begin the selling process by spending mightily on broadcasting messages to prospects. That strategy means shouting first, then waiting for prospects to communicate interest. But there's great financial risk in that approach. Why? Because customers and prospects can block perceived noise using widely-available tools that are becoming increasingly sophisticated.
But thanks to social media and a fabulous online tool called alerts, a method has emerged that inverts the old model—lowering risk in the process. Through services such as Google Alerts, Yortify.com and Alerts.com, salespeople can monitor thousands of conversations simultaneously and identify highly qualified opportunities. My Aug. 19, 2008 CustomerThink blog post, Don't Bother Me With Social Media, described how one company converted its dominant sales tactic from shouting to online listening. Instead of producing mass-market e-newsletters and other lead-generation campaigns, the company's small sales staff looked for online conversations that mentioned competitors and identified a large universe of highly qualified prospects in the process. From there, a salesperson-initiated phone call began the direct communication.
Create sales intermediaries. Sales intermediaries, such as independent channel sales partners, enable producers to share selling risks and to extend market reach. But channel sales models don't fit every organization. Are you comfortable riding in the business-development passenger seat while someone else drives? If not, channel sales will bring you uncomfortable new risks. Selling your company's product might be your priority, but it's one that your channel partner might not share. On the other hand, recruiting, hiring, training, developing, managing and retaining a dedicated in-house sales force require financial resources that not every company can afford. Adopting a channel sales model offers a viable solution because the financial risks can be more easily absorbed if they are spread between multiple organizations.
Larry Bossidy and Ram Charan describe channel sales risk trade-offs this way in their book, Confronting Reality—Doing What Matters to Get Things Right (Crown Business, 2004):
Learning about end users is harder for companies that sell through intermediaries, and whose ultimate buyer may be several steps down a distribution chain. They generally don't have mechanisms designed to capture information about the customer and end user." But selling through intermediaries has benefits. "There may be steps that can be eliminated, cost reductions, or insights into how value is added (or subtracted) along the way. The result can be to make the entire chain not only more cost-competitive, but also more effective in delivering value.
In an uncertain economy, executives who look through a risk-reduction lens when creating sales strategies will make better decisions than those who look through a cost-reduction lens alone. Why? Because cost reduction skews decisions by failing to consider the financial impact of the concomitant risks. I'm talking about market risks, communication risks, hiring risks, sales cycle risks, ethical risks, brand-image risks—and yes, financial risks. You must fully consider each one.
What will my client do to achieve his sales objective? It's unclear. Given the economy, there are few guideposts and many forks in the road ahead. One thing is certain: When it comes to selling, to get the right results, you must provide effort. That requires the ability to catch the risk hot potato—not just the ability to throw it.
Salespeople can monitor thousands of conversations simultaneously and identify highly qualified opportunities.
As a sign of the times, one software client told me, "We're looking for a salesperson who will work on full commission." In other words, "We can't afford to invest anything in case he or she doesn't produce." My response: "If you find that person, don't forecast the revenue. Moving all of the risk to someone else's shoulders won't make your sales strategy successful." The problem is, in an uncertain economy, few companies want to absorb any more risk, and the trembling has become palpable.
My client's effort to avoid risk is not altogether wrong. Sane businesspeople don't seek risk; they manage it! But eliminating risk altogether is a zero-sum game. Without risk, there's no return. What are my client's options?
Disaggregate. Follow Henry Ford's lead. One hundred years ago, he recognized that production efficiencies were enabled by specialization of tasks. Some selling tasks, such as prospecting, are so inefficient that it's better for outside organizations to manage those processes. Many sales organizations cope by creating hybrid selling models that embed third-party prospecting and lead management resources. Can such a hybrid sales process appear seamless to customers?
Beth Schrager of Schrager and Associates, a Massachusetts-based outsourced sales provider, believes so. Her firm provides full-service outsourced sales solutions, and her record of long-term client retention corroborates her success. According to Schrager, "We bring to the table proven, tactical sales experience that enables companies to generate more revenue without increasing sales costs."
Not every outsourced provider works the same way. Further, keeping costs flat while increasing revenue reduces financial risks but creates new ones. Past assumptions are no longer certain. The salesperson we talk to might not be an employee of the company we buy from. Some outsourced firms impart that information with a subtle semantic hint, scripting salespeople to say "I'm calling on behalf of . . . " While some prospects might ignore the distinction, others find the disclaimer unsettling. Outsourced selling models require particular attention to how to disclose information because trust and rapport can be damaged when communications are not handled properly.
Listen first—then shout! Many organizations begin the selling process by spending mightily on broadcasting messages to prospects. That strategy means shouting first, then waiting for prospects to communicate interest. But there's great financial risk in that approach. Why? Because customers and prospects can block perceived noise using widely-available tools that are becoming increasingly sophisticated.
But thanks to social media and a fabulous online tool called alerts, a method has emerged that inverts the old model—lowering risk in the process. Through services such as Google Alerts, Yortify.com and Alerts.com, salespeople can monitor thousands of conversations simultaneously and identify highly qualified opportunities. My Aug. 19, 2008 CustomerThink blog post, Don't Bother Me With Social Media, described how one company converted its dominant sales tactic from shouting to online listening. Instead of producing mass-market e-newsletters and other lead-generation campaigns, the company's small sales staff looked for online conversations that mentioned competitors and identified a large universe of highly qualified prospects in the process. From there, a salesperson-initiated phone call began the direct communication.
Create sales intermediaries. Sales intermediaries, such as independent channel sales partners, enable producers to share selling risks and to extend market reach. But channel sales models don't fit every organization. Are you comfortable riding in the business-development passenger seat while someone else drives? If not, channel sales will bring you uncomfortable new risks. Selling your company's product might be your priority, but it's one that your channel partner might not share. On the other hand, recruiting, hiring, training, developing, managing and retaining a dedicated in-house sales force require financial resources that not every company can afford. Adopting a channel sales model offers a viable solution because the financial risks can be more easily absorbed if they are spread between multiple organizations.
Larry Bossidy and Ram Charan describe channel sales risk trade-offs this way in their book, Confronting Reality—Doing What Matters to Get Things Right (Crown Business, 2004):
Learning about end users is harder for companies that sell through intermediaries, and whose ultimate buyer may be several steps down a distribution chain. They generally don't have mechanisms designed to capture information about the customer and end user." But selling through intermediaries has benefits. "There may be steps that can be eliminated, cost reductions, or insights into how value is added (or subtracted) along the way. The result can be to make the entire chain not only more cost-competitive, but also more effective in delivering value.
In an uncertain economy, executives who look through a risk-reduction lens when creating sales strategies will make better decisions than those who look through a cost-reduction lens alone. Why? Because cost reduction skews decisions by failing to consider the financial impact of the concomitant risks. I'm talking about market risks, communication risks, hiring risks, sales cycle risks, ethical risks, brand-image risks—and yes, financial risks. You must fully consider each one.
What will my client do to achieve his sales objective? It's unclear. Given the economy, there are few guideposts and many forks in the road ahead. One thing is certain: When it comes to selling, to get the right results, you must provide effort. That requires the ability to catch the risk hot potato—not just the ability to throw it.
Wednesday, December 17, 2008
Will This Year's Sales Assumptions Work in 2009?
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.
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.
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