Archive for Blogging

Leading Sales and Marketing – the CEOs role

Is Patience a Virtue (when a CEO gives direction)?

Do you have patience? In my last post, I shared my viewpoint on some key takeaways from “The Challenger Sale” by Dixon and Anderson; particularly the profile most likely to create a top performer, the Challenger, and the value of a top performer.

After reading the book, the authors seem to take a perspective the conversion to a challenger selling model is a problem to be solved within the confines of the sales department. They suggest it might take five years for some organizations to change their sales approach to challenger selling.

As a CEO-Owner-Founder coach, I cannot advise you to have five years of patience. Nor do I agree the issue is solely a sales department issue.

Setting Deadlines

A favorite mentor in my past once told me the test period for a general manager was about 18 months. At that point, you “would know what you have, whether the person was going to make it or not.”

Similarly, when a VC invests in a startup, the funds provided are typically expected to be spent in about 18 months. A founding CEO is expected to show significant results by the 12 month point, and then spend 6 months doing another round of fund raising using the evidence from the initial 12 months to justify continued investment.

I can personally attest, also. For over 30 years in my career, I either had a new boss or a new assignment … every 18 months.

There is something very familiar to me about the 18 month business-breathing-cycle.

I believe the same advice should apply to the transformation of your sales culture. You should be able to execute most of the meaningful changes in 18 months time.

Dixon and Anderson might be correct with their five-year viewpoint IF change is solely driven by the leadership of the sales team. What would be necessary to accelerate change? Read on.

Top Executive Leadership

As in all efforts to drive change in an organization, the role of the CEO, Owner, or Founder is crucial to success.

The first obligation for the top executive is to ensure their sales and marketing leadership positions are staffed with people intellectually and emotionally aligned with the direction the CEO wishes to pursue. The make-up of the team is the responsibility of the CEO. They are responsible to determine the selection of their next level reports and the retention of the same.

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The role of the top executive in driving change might be difficult, but it is not complicated.

Misalignment is a sure way to fail, a sure way for any initiative to fail.

The second obligation is to give public, persistent support to the sales and marketing leadership. As in raising children, there should be no daylight showing between the opinions of “mom and dad”.

There is always momentum to the way things have been done in the past. People in the organization will find ways to push back on change. Persistence is a way to succeed.

The top executive behavior which would most concern me is indifference to sales and marketing initiatives. I’ve worked in companies where the top executive remained personally passive to the efforts of their sales and marketing organizations.

I remember one situation where the new president of our company put his desk smack in the middle of the sales and marketing departments soon after he joined the company.

His predecessors treated sales and marketing passively and the sales and marketing teams were used to operating without direction from the top. It was a culture shock for them to learn the new president assumed the responsibility and authority to give direction to their organizations.

High-performing top executives know the power of demonstrated leadership.


pic 300x288 - Leading Sales and Marketing - the CEOs roleAbout the Author: Bob Kroon is a coach for high-performing Founders, CEO’s, and Owners. He founded Expeerious, LLC (expeerious.com) in 2015 to exclusively focus on coaching the success of Top Executives. For over 25 years, Bob served variously as CEO, COO, Division President, and Group Vice President.

The majority of his career was in manufacturing durable goods. Bob is an enthusiast and practitioner of Lean Thinking since 1986. He also has broad skills in M&A including financial modeling, deal structure, diligence, and post-close integration.

Bob’s current clients are diverse and include businesses in healthcare, agricultural products, robotics, luxury goods, and education.

To learn more about how Bob coaches and thinks, you can find over 200 questions he’s answered on Quora. Visit his website at: www.expeerious.com for additional blog posts.

Strategic Customer Experience – Two Case Studies

Customer experience defines your brand in an online world. In my last post, I suggested your messaging has both an external and an internal effect which can be valuable to many audiences.

Companies only survive and thrive when they meet the needs and solve the pain points of their customers.

The promise-makers in your organization, marketing and sales, and the promise-keepers in your organization, operations, must be in alignment. This is why the messaging you do, on your website and elsewhere, must radiate in all directions.

There was a time when customers knew your brand primarily from the marketing promises which were made. Today, there are too many ways potential customers can do diligence on the actual way you keep the promises you profess.

Yelp reviews, GlassDoor, Google, and a myriad of other sites allow people to review your performance. All of these matter because they represent your customer experience as reported by your customers.

What is customer experience? I see two ways to discuss the topic. There is operational customer experience and strategic customer experience.

Both aspects of customer experience are important. In your role as CEO, delegate the responsibility for operational customer experience improvement to a trusted subordinate so you can devote your time and resources to strategic customer experience improvement.

Strategic customer experience requires change and coordination across many functions in your business; a role for a CEO.

Operational Customer Experience

At one level, I’m sure you  recognize customer experience negatives; waiting in line, being put on hold, being misdirected to the wrong person, mistakes in billing, rude customer service, missing web page links, wrong phone numbers, not being able to talk to a real person, … almost too many ways to mention how bad experiences can occur.

One way to create good customer experience is to work on ways to eliminate bad customer experience.

I don’t wish to take anything away from these efforts to eliminate issues as they are important to your business. On the other hand, I view these as operational issues which should be addressed, but not as strategic customer experience initiatives.

Strategic Customer Experience

In this post, I will relate two cases studies which I believe were successful on a strategic level. I was personally involved in these and remember almost all the details as hundreds of hours were devoted to making these successful.

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Two Strategic Customer Experience Case Studies

 

Case Study #1: Competing with Short Lead-times

When I served as the President of the BPI Division for HNI Corporation, we had a business which marketed itself primarily to retail office furniture dealers. The company marketed and manufactured low-cost office furniture systems. Typically, retail dealers served small and medium size businesses in their local communities.

A retail dealer usually had a store with showroom and a few offices. Salespeople worked on the showroom floor and served customers as they came in the door. Some had warehou

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ses in a second location.

In contrast, a “contract dealer” had an outside sales team. Rather than wait for customers to come to the retail location, the contract salesperson would identify projects and pursue the architect, designer, or facility manager who most influenced the purchasing decision.

The value of the customer versus the cost of a sale meant most small businesses weren’t served by a contract salesperson.

Small businesses don’t always plan everything much in advance and might sign a lease for a new space and/or expansion of their business which involved hiring more people. Faced with a deadline for a move and perhaps already having a relationship with a dealer, the small business person would usually go to the nearest retail dealerships, explain their issue and ask what they could do and how soon could it be done.

This was our critical moment. We wanted the retail dealer to suggest our product line. This was the focal point of our strategy.

The first part of our solution was to offer our product line three different ways where the dealer could respond quickly without a long lead-time for the products.

Fast

The first way to buy products from us was to order “normally” where our lead-times from order to shipment were three weeks. Shipping typically took another week so a dealer could promise “four weeks” and be able to perform. About 40% of our business was ordered in this fashion. This was also the way to get the best price from us.

Faster

The second way a dealer could order was to request a “five-day” lead-time from order to shipment. Including delivery, a dealer could be ready to do an installation in two weeks. We charged more for this, at first about 5%. This was also about 40% of our business.

This gave us some operational heartburn. Orders didn’t necessarily flow in a constant manner and there were times where we took Monday off but worked Saturday in the same week.

We decided to raise the price for the five day lead-time to a 7% premium over the normal program to see if we could get business to align more with the three week delivery.

It didn’t work as we intended. There was no detectable shift in the way dealers ordered and no complaints. The extra charges simply went to the bottom line (unlucky, huh). To fully understand, consider that most businesses, ours included, strive to make about 10% profit. With the tweaking of one marketing program we increased our profits by 20%.

Fastest

The third way we established was to have most of our key products available through a wholesale channel of distribution. There were approximately 50 wholesale locations which carried our products in the USA. A dealer could buy from these wholesalers who would typically deliver in 48 hours or less. The downside was the wholesaler charged about 25-30% more than what a dealer would pay if they purchased directly from us.

This was fair. That was the value added by the wholesaler. This channel of distribution worked very well for us. There were many situations where products were needed in that time frame.

Things Which We Had to Do Well

We spent hundreds of hours changing our manufacturing processes to be “just-in-time”. We did factory process development projects to the point where we could manufacture any product in any color in any order with no set-ups and no cost for one-at-a-time production.

We didn’t accomplish this with work-in-process inventory. Instead we eliminated set-ups. Our work-in-process was so low the accountants counted it only once per year.

We also implemented daily factory scheduling. The previous method was to schedule everything once per week.

We Added More to Our Value Proposition.

We created a unique guarantee; “On-Time or On-Us”. What we meant by this was we would pay the freight for the customer if we didn’t ship on time.

We created “BPI University”. Dealers could send their operations people to a hands-on class where they could learn best practices in installation.

We became the first company in our industry in the US to create a library of products for CAD Space Planning, saving a dealer’s time in the specification process.

Creating a strategic customer experience is a complete team effort, not just something done by sales, marketing, and customer service departments.

Results

Our brand became associated with short-lead times. This was our reputation. I remember situations where we knew we were going to miss a shipment date because of a product quality issue. We reacted by air-freighting the shipment so as to not violate our promises.

The organization was well aware of the cost for doing this and it didn’t take long for internal business practices to evolve to the place where we never again had to do air freight.

For the dealers, our product line became their single highest-margin offering. In visits with dealers I would assert that fact, challenge them to dispute what I said. Not once did I get an argument.

Last, but not least … the division ultimately grew revenues five-fold.


Case Study #2: Competing on “Time to Market”

time to market 300x300 - Strategic Customer Experience - Two Case StudiesIn this case, I served as Division President for APW Enclosures, a division of APW Worldwide. My division made technical enclosures for OEMs such as IBM, HP, Cymer Laser, Applied Materials, Data General, Sun Microsystems, Qualcomm, Silicon Graphics, and several others. The technical OEMs made their widget; we made the cabinet which housed it. These were typically the size of a refrigerator or larger, high-value, low-volume, with many configurations.

In addition to the “box”, we installed power supplies, fan trays, cabling and harness, backplanes, and other items which were not the OEM widget. We also had an internal supply chain which could provide injection molded components, electronic assemblies, and machined parts. There was very little need for Tier 2 partners.

We coined a self-serving terminology. We referred to ourselves as a Level 5 Supplier as a way to communicate our value proposition. Level 1 competitors made metal parts, Level 2 competitors made assemblies, Level 3 competitors made cabinetry but just the box, and Level 4 competitors did some component integration.

As a Level 5 Supplier, we could do it all. There was no need for another Tier 1 supplier to serve the OEM.

I was quite pleased one day when an OEM used that terminology in a discussion with us. I knew the origins.

The industry we were in was fragmented. Before the formation of our company, to distribute around the world, OEMs had to find, qualify, and manage multiple suppliers for the same item. The business plan for us was to acquire suppliers in all key areas where the OEMs manufactured and become the first and only single source supplier.

The pain point we identified had to do with “time to market”. In the world of technical products, the first to market usually makes great profits, the second might do ok, but if you were slower to market, you almost never got sufficient traction to be a meaningful competitor.

To address this pain point, we needed to demonstrate that doing business with us was the most assured way of being first to market.

Our solution was to offer three ways we could serve an OEM. Or said another way, they could make choices about the “customer experience” they wished to have.

Shared Resources

For OEMs who did a small amount of business with us, typically less than $5M per year, we placed their business in a “shared resource” work cell. In this approach to serving them, their orders were manufactured using the same equipment and processes as other OEMs.

In this type of manufacturing, the first orders received are the first manufactured. In other words, an OEM’s order was placed in a queue.

Dedicated Facilities

For OEMs who could give us business from $5M to $15M, we would create a work cell dedicated solely to them. Dedicated work cells allowed us to create a “just-in-time” work flow.

When an OEM would place an order, we could ship it immediately. The work cell would be triggered by the shipment to create replacement products. This is also known as a “pull system”.

This was a much better customer experience. OEMs unfailingly made many shipments at the end of the quarter.

In the shared resource approach, the customer’s order triggered the creation of parts and pieces for their final assembly. This might take weeks to accomplish. With dedicated facilities, the pull system was able to continuously replace the final assembly.

Dedicated Facilities and Staff

The third customer experience was reserved for customers who would commit to more than $15M in annual purchases.

For these customers, we not only provided dedicated equipment, we added a dedicated staff. Our people became experts in our customers’ products.

This was clearly the choice most customers wanted to make.

Things We Had to Do Well

We had to be experts at designing and manufacturing cabinetry. The brightest engineers at a technical OEM wanted to be involved in the design, specification, and development of the OEM’s widget(s). Designing cabinets was not the best way to progress in your career at the OEM.

I recall one case where an OEM approached us to get “our drawings”, as chaos in their own engineering departments resulted in the loss of all the specifications. Our information became the restore point for re-creating their intellectual property.

Another way we facilitated the relationship was to have one “seat” of every major supplier of CAD software. We had our native system but did all the translation behind the scenes.

We also had to be good at implementing “revisions”. Technical OEM’s seldom freeze their designs.

To maintain our Level 5 status, we also did “bolt-on” acquisitions to the business for technical or geographic considerations. We acquired a facility in Austin, TX for example. By serving Applied Materials locally we were finally able to earn preferred supplier status.

To serve outdoor telecom customers, we acquired “thick” backplane capabilities. As customers included more sophisticated power supplies and other peripheral electronics, we acquired a company capable to produce the electronics.

We also had to become experts at “costing”. I recall a case where we produced a cabinet which sold for about $1,200. Our customer wanted us to purchase and install a $15,000 power supply. How to price this?

We developed a costing algorithm which took into account the inventory turns on a third-party item. If the third party could give us weekly deliveries, we could see 52 turns and be reasonable with our charges. If the lead-times were longer, our turns would be less and we would increase the amount of the handling charge for the item. It was a win-win approach.

Results

Our biggest facilities were in Southern California. Because of their location, cost structure and business practices, they became the highest profit factories in the corporation.

We also won the biggest contracts in the industry.

In Retrospect

Both of these case studies were the result of a strategic plan led from the top. They were not an accident. They didn’t just happen by themselves. Senior management gave direction to the efforts.align social media - Strategic Customer Experience - Two Case Studies

In both cases, I know there was also strong alignment amongst the senior management team. There was almost no second-guessing about the “big picture”.

In today’s world there would likely be other enhancements to the customer experiences. Collaborative project management tools in the cloud would be part of the program. Orders, receipts, billings, quality reports, and other paperwork would be done with Electronic Data Interchange applications.

If done today, our email marketing and social media content would center on the customer experience which was intended. We would discuss the value of competing on the basis of lead-times, the simplicity of doing business with us, and the practices our customers should do to take the best advantage of our services.

Perhaps the biggest difference in the current business environment would be a shift to some form of a subscription business model. Increasingly, customers are looking for suppliers who adapt to this.

All the products and affiliated services would be packaged into a single monthly fee. If you need an office, Fast-growing WeWork is probably the leading example of the way businesses acquire and use office space in a subscription-based model.

Similarly, people who use technical equipment are buying the services from a subscription supplier like a network operating center.

If you can conceive a way to sell your product or service in a subscription model, you should be actively executing on a plan to move in that direction. If you don’t, it may not be long before a startup in your industry will build their brand around the strategy.

When Do You Know You Have a Completed Plan?

No plan lasts forever. Don’t adopt the mindset you that you can reach a point where you have the ultimate “customer experience”.

There is no such thing as a “completed plan” in the sense you are finished with the design of your process. The better way to think about it is to see it as something which is ever-changing to be better. There will be changes in technology which enable you to do different things and adjustments by your competitors.

Make it clear to your organization you are promoting continuous improvement, not the “flavor of the month”.


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About the Author: Bob Kroon is a coach for high-performing Founders, CEO’s, and Owners. He founded Expeerious, LLC (expeerious.com) in 2015 to exclusively focus on coaching the success of Top Executives. For over 25 years, Bob served variously as CEO, COO, Division President, and Group Vice President.

The majority of his career was in manufacturing durable goods. Bob is an enthusiast and practitioner of Lean Thinking since 1986. He also has broad skills in M&A including financial modeling, deal structure, diligence, and post-close integration.

Bob’s current clients are diverse and include businesses in healthcare, agricultural products, robotics, luxury goods, and education.

To learn more about how Bob coaches and thinks, you can find over 200 questions he’s answered on Quora. Visit his website at: www.expeerious.com for additional blog posts.

Ten Audiences Which Matter to Your Value Proposition

Are you speaking just to customers when you discuss your value proposition?

In my last post, I discussed the importance of clearly articulating your value proposition. Many who are reading this series of posts will conclude that the message, your value proposition statement, is intended for potential customers to create demand.

This may be your first motivation, and it may be a good reason for clearly telling the story about your business.

I would like to suggest a broader view. There are other audiences who benefit from clear articulation by the leadership of the business.

value proposition circles - Ten Audiences Which Matter to Your Value Proposition

The audience for your value proposition message is more than just potential customers.

The Audience on the Inside

Begin with the inside of your business. If marketing, sales, and operations teams listen to and observe the way you present the company and the problems you solve for customers, they will mimic your behaviors.

This is not exactly a new concept.

Early in my career, I worked for the Maytag Company. At the time, the company invested heavily in national television advertising with ads that featured “Old Lonely”. Old Lonely was the Maytag Repairman who was bored because he had nothing to do. The point of the campaign was to emphasize the reliability and long life of the product.maytag repair man - Ten Audiences Which Matter to Your Value Proposition

“Old Lonely” was a marketing campaign which could have been a Don Draper idea in a script for “Mad Men.

Every month there was an after-work event for the “Management Club”; as in “Mad Men” an open bar, and Maytag Blue Cheese and crackers.

When a new version of the ad was created, it was part of the agenda. Everyone in the company knew we had to live up to that reputation in the way we made everyday decisions. The story was being told on national television.

You can be sure that any business proposal which threatened quality trumped any decision which might save cost or be associated with another motive. Quality was always the top of the pecking order when it came to considering change. Visitors saw the testing labs, the inspection processes, and the engineering effort which went into maintaining the reputation of the company.

Customers and potential customers will always interact with people on the inside of your business. The greater the alignment in messages and behaviors, the more they will build their trust.

Your employees on the inside will appreciate the efforts you put into clear articulation. In many companies where articulation is unclear, employees, especially salespeople, will develop their own ways to present your story. The result is confusion and perhaps even contradictory messages.

The message also has a role in employee retention. When your employees believe you “know what you are doing”, they will buld pride in their company. Everyone likes to be associated with a winner. Your articulate value propostion will enhance that image.

The Audience on the Outside

Where do outsiders learn about your value proposition? The number one way in today’s business world is through your website.

The public view of your company on the outside is a message which goes to more than just your potential customer segments.

Visitors to your website may also include competitors, investors and lenders, potential employees, suppliers, partners, and others in your community.

For a big part of my career, I was heavily involved in new product development. This may seem counter-intuitive, but I noticed the more a competitor knew about something we were developing, the more likely they were to avoid copying our efforts.

I will admit that the most of our efforts were not exceptionally unique and not patentable (or worth the time, money, and effort). Our product development goals relied on pushing the volume of new products.

What intrigued me was the competitive behavior. Most people who want to be creative try to be “different”. There’s no personal satisfaction for a creative person to be a copycat.

The competition knew our value proposition and wanted no part in confronting us in a battle where our company strengths were in play.

Investors and lenders also do their diligence on your company. I’ve seen a number of situations where analytically a company was a good candidate for investment, but emotionally not a good candidate. Sometimes an investor or lender simply makes a decision based on gut feel. If your value proposition is clear, they will have confidence you “know what you are doing”.

Potential employees also want to understand your company. They want to know what it is like to work there. Does management give clear direction? Is it obvious what it takes to advance? Will this assignment look good on my resume?

Suppliers and/or potential suppliers also study your company. If they have a new product or service which they believe could benefit your company, wouldn’t you want to hear their pitch? Clearly stating your value proposition makes it easy for them to find you. If they really have something valuable, you could benefit from being an early adopter.

There may also be potential partners who are looking for you. Maybe they see your company as a way to distribute their product or service and want to create a revenue stream for both of you. Or maybe they see you as a potential acquirer.

You also want a good reputation in your community. Suppose you need agency approvals for something you want to do with your company. If you can be seen as an asset to the community, your chances for success can rise.

Selling Involves Everybody

Having all your audiences work for you is much better than simply relying on your sales team to grow the business. Consensus about your company’s strategies and business plan should be an ultimate goal of your communications efforts.

When You Betray Your Brand

I feel I need to add a postscript to this post. The Maytag story unfortunately has a sad ending. For over four decades the brand was associated with reliability. I don’t have any inside knowledge about what their management was thinking but I can tell you from personal experience, it became very hard to be a customer.

The Energy Policy Act of 1992, which mandated significant reductions in energy use in consumer appliances, had a big impact in the appliance industry. This legislation made older designs obsolete.

Apparently, the leadership at Maytag wanted to be first to market with products which complied. They introduced the Neptune Line of Washers and Dryers. Maytag’s washing machines were the flagship products for the company.

The previous products were based on a design platform which was first introduced in 1949. Over the years, most of the product changes were cosmetic. The functional way the appliances performed was unchanged. The heart of the product, the mechanical “works”, was manufactured in a factory which had been built during WWII to build military tank tracks.

So it had been decades since there was a design change of this magnitude. The new design platform was rushed to market. The culture at the Maytag I knew would not introduce a new product unless it was substantially better than the competition. Maytag might take years between launches. The Maytag Dishwasher, for example, was clearly a cut above anything else even though Maytag was a latecomer to the market.

Until the Neptune launch, I personally owned a Maytag Laundry Pair for over 25 years. I purchased them from “service school” at Maytag (lonely hearts club) where they had been disassembled and reassemble over 300 times. They lasted another 25 years for me.

Confidently, I purchased a Neptune washer and dryer, as I thought I knew what to expect.

I was wrong.

In a matter of a few years, I had 13 service calls. One of the last issues I had was a situation where a bobby pin fell through the soap dispenser and lodged in the impeller in the pump of the washer.

This was the final straw for me. I decided I knew enough about Maytag’s assembly techniques, that I could find the offending issue.

And I did. But I had over 300 components on the floor around me. I reassembled everything and “voila”, it all worked again. But I was now over-the-top angry and embarrassed I had ever bragged about the company to anyone. I wrote a letter to the president of the company expressing my embarrassment, especially with a defect which was clearly avoidable.

He never responded; probably had too many letters. Rather than being top-rated, Consumer Reports now had Maytag as a bottom rated company. It was no surprise their financial results deteriorated. A few years later Whirlpool bought the carcass of the company and now it exists merely as a brand with little equity.

Had the brand been known for low cost or another attribute, the quality story might not have had the same impact as I might have different expectations. But the fact that a brand known for high quality delivered low quality was a death knell for me.

Maytag, RIP.



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About the Author: Bob Kroon is a coach for high-performing Founders, CEO’s, and Owners. He founded Expeerious, LLC (expeerious.com) in 2015 to exclusively focus on coaching the success of Top Executives. For over 25 years, Bob served variously as CEO, COO, Division President, and Group Vice President.

The majority of his career was in manufacturing durable goods. Bob is an enthusiast and practitioner of Lean Thinking since 1986. He also has broad skills in M&A including financial modeling, deal structure, diligence, and post-close integration.

Bob’s current clients are diverse and include businesses in healthcare, agricultural products, robotics, luxury goods, and education.

To learn more about how Bob coaches and thinks, you can find over 200 questions he’s answered on Quora. Visit his website at: www.expeerious.com for additional blog posts.

A Business Cost you can Influence

Are Costs of Customer Acquisition Controllable?

In the last two posts “Customer Acquisition when Revenue Growth is Stagnant” and “Two Important Metrics for Your Customer Acquisition Process”, I discussed the cost to acquire a customer. Should you consider this to be a fixed cost? Or is this a cost which you can reduce?

If you understand the importance of the ratio between the value of a customer and the cost to acquire a customer, then you realize that if you could reduce the cost of acquisition, you could grow your business by approaching smaller (i.e. lower value) target customers because you can maintain a reasonable ratio of value to cost.

In this post I would like to explore three factors which are underlying marketing drivers to your customer acquisition cost. These drivers interact and build upon each other. Furthermore, these are drivers you can influence, direct, and control in your business.

 

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Add to your Value Proposition

Many businesses struggle with the expression of their value proposition.

In brief, your value proposition is what you do for your customer compared to the next best alternative. For most businesses, the alternative is a competitor. For a few, the value proposition is something which compares to a manual process; automation versus labor for example.

Another way of understanding value proposition is to ask yourself how life is changed for your customer by doing business with you compared to what they were doing before.

The strongest value propositions are those which eliminate a pain point, remove a hassle, or stop an aggravation for your target customer.

Value propositions can be emotional. They can simply make your target customer feel good about doing business with you. Products or services which serve a social good, for example, have “value”.

To lower customer acquisition cost, you can look for ways to add more to your value proposition. What does your target customer do just before or just after they use your product or service? Who else do they need to call? How easy is it to do business with you?

Another useful exercise is to identify all the key elements of the competition’s value proposition. Is there anything they do which you could add to your business model to obviate an advantage they have?

Practice Your Process

If you can repeat the process for acquiring a customer, your skills will improve. Each time you execute the process, you learn something and you can make subtle but important changes to the way you deal with every potential customer.

Visualize their experience. If they visit your business, where do they park? How are they greeted? What is the first thing they see? Is the first impression a mess or a dirty lobby? Tired plastic plants?

Figuratively, if not actually, prepare customer interactions like you would a script.

I worked with a business where we picked up customers at the airport with a clean, shiny Mercedes. We dropped them at the front of the business. They were greeted and immediately ushered to a conference room with a view where there was a tablet, a pen, and a bottle of water. People from the business interacted with them the same way for every visit. Everyone involved from the business knew their role and their deliverable to the process. We had a very high close rate on these customers.

In contrast, I have a friend who once visited a company and the person picking him up was drunk! Good first impression, huh?

When everything is scripted, you tend to avoid misalignment in your message. You leave customers with the impression you know what you are doing, you’re confident, and ready to serve them.

If your target customer is an enterprise employee, the value proposition for them might be “promotion to a better paying position”. What they don’t want is a decision to do business with you which backfires on them. They need success to be promoted.

Control Your Reputation

In the world we live in today, your reputation is largely controlled by what is said online. When people consider doing business with you, especially strangers, their searches are likely to bring up postings to places like Yelp, GlassDoor, and many other places which solicit comments.

If you have satisfied customers, ask them to give you reviews. Most are pleased to help.

Be sure all the online places where a target customer does diligence are in alignment. Your website, company pages on LinkedIn and Facebook and others should all say similar things.

Likewise, your personal profiles and those of your employees should all serve to “sell” your company.

Online presence is not new, but its importance continues to grow. Those who don’t use it are typically Baby Boomers … and they are rapidly leaving the business world. The next generations are drawn to online tools.

I recently posted a Yelp review for one of my clients. Admittedly this client is in an industry where you can be almost certain that everyone considering doing business does online diligence. Nevertheless, I was astounded that my review generated over 400 views in the first month after it was posted.

The only conclusion I can make is you would be prudent to control what potential customers find, and give them a lot to find.

Enhance your reputation by actively demonstrating expertise in your business. Blogs are one way to do this. Sharing relevant content from others can build your reputation. Likewise, hosting a “lunch and learn” for a customer is a very effective tool.

The Other Choice is …

If you have a weak value proposition, a chaotic way you handle potential customers and little or bad online reputation, do you think it will be easy to get new customers?

 


pic 292x280 - A Business Cost you can InfluenceAbout the Author: Bob Kroon is a coach for high-performing Founders, CEO’s, and Owners. He founded Expeerious, LLC (expeerious.com) in 2015 to exclusively focus on coaching the success of Top Executives. For over 25 years, Bob served variously as CEO, COO, Division President, and Group Vice President.

The majority of his career was in manufacturing durable goods. Bob is an enthusiast and practitioner of Lean Thinking since 1986. He also has broad skills in M&A including financial modeling, deal structure, diligence, and post-close integration.

Bob’s current clients are diverse and include businesses in healthcare, agricultural products, robotics, luxury goods, and education.

To learn more about how Bob coaches and thinks, you can find over 200 questions he’s answered on Quora. Visit his website at: www.expeerious.com for additional blog posts.

Customer Acquisition when Revenue Growth is Stagnant

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Suppose you’ve been in business for a while but your revenues are not increasing. Or worse, your revenues are declining. In my last post, I discussed metrics for measuring the success of your process, assuming you were energized and creative enough to work towards a successful process.

In this post, I want to address a different type of situation; slow growth, stagnation, decline, inconsistency in your revenue streams. How should you examine your process?

Fix the Root Cause

If your business is mature and your revenues are stagnant or declining, what is the root cause if you see customer acquisition as a process?

My favorite way to get to root cause issues comes from Lean Thinking. In Lean Thinking, the approach is to ask the “Five Why’s” Below is an example of the five-why approach.

Bobs Blog 7 graphic two questions 448x280 - Customer Acquisition when Revenue Growth is StagnantShawn above is an example of a Five-Why approach to discover root cause issues. Typically, after the 5th “Why”, you can be very close to identifying a root cause.

Are there typical root causes?

If your revenue growth is stagnant, I would encourage you to question yourself and others in the business until you find your root cause(s).It is better to act than to accept your current state of affairs.

Are there patterns which repeat?

Here are some possibilities; I’ve witnessed all of these:

  1. Your customer acquisition process is valid, but you haven’t made the decision to spend more on customer acquisition. Have you budgeted enough? Is there an issue regarding resources, like hiring salespeople or spending on social media, for example.
  2. A corollary: maybe you aren’t confident your acquisition process is valid. Do you need to be prodded to act? When something is going wrong, it can be stressful. Some people react by doing nothing, unwilling to face the issue.
  3. Your acquisition process was previously valid, but something has changed. Is there a competitor doing something which changes the dynamics with your target customer segment?
  4. Organizational misalignment. If there are people in high places in your organization who are not buying in to the direction of the company, you may be sending mixed messages to your target companies. I can assure you target customers who are considering doing business with you are doing diligence. You do not want them to get the impression your company internally disagrees on strategy and tactics.
  5. Inarticulate Communication. Maybe there are good reasons target customers should do business with you, but the way you say it, the frequency with which you say it, and the emphasis you put on key points does not do justice to benefits of doing business with you.

A case study

I recently had the opportunity to review three years’ financials for a business which was being marketed for sale.

On the surface, the profitability of the business was steady. However, if you studied the details of the financial statements, you could see that the profits three years ago were generated by a business which was growing about 25% over the previous year. The payroll was larger and there were adequate and reasonable amounts spent on marketing.

In the following year, payroll was cut and marketing expenses reduced. The company made the same profits but there was no growth.

In the third year, payroll was further cut, and marketing essentially reduced to zero. Profits were still the same, but in my opinion, the business now looked more like a turnaround situation, even though the profits were still the same. I could not value the business in the third year as I would have in the first year.


pic 292x280 - Customer Acquisition when Revenue Growth is StagnantAbout the Author: Bob Kroon is a coach for high-performing Founders, CEO’s, and Owners. He founded Expeerious, LLC (expeerious.com) in 2015 to exclusively focus on coaching the success of Top Executives. For over 25 years, Bob served variously as CEO, COO, Division President, and Group Vice President.

The majority of his career was in manufacturing durable goods. Bob is an enthusiast and practitioner of Lean Thinking since 1986. He also has broad skills in M&A including financial modeling, deal structure, diligence, and post-close integration.

Bob’s current clients are diverse and include businesses in healthcare, agricultural products, robotics, luxury goods, and education.

To learn more about how Bob coaches and thinks, you can find over 200 questions he’s answered on Quora. Visit his website at: www.expeerious.com for additional blog posts.

Two Important Metrics for Your Customer Acquisition Process

In my last post, I discussed the importance of understanding the purchasing decision process typically used by your customer segment. In Lean Thinking terms, it is important not to waste time or resources pursuing the wrong decision makers with misaligned tactics.

Can You Improve the Customer Acquisition Process?

Can the cost be reduced? Are there ways to influence the process so it can be more effective?

I firmly believe there are ways to improve all processes so my answer is “yes”. When we see something as a process, we can reflect on the steps in the process and look for improvements or ways to eliminate steps.

To understand “improvement”, we need a way to measure the effectiveness of the process. In this post, I would like to discuss two important metrics for customer acquisition:

What is the Cost to Acquire a Customer? What is the Value of a Customer?

The cost to acquire a customer should include all marketing and selling expenses. This would include obvious expenditures and salaries plus benefits. Don’t forget costs of showrooms, collateral materials, mock-ups, and quoting expenses.

The value of a customer should be seen as the Present Value of future revenues. To calculate present value, I advise you use your cost of equity. If you don’t know your cost of capital, use 30% as your discount rate. Factor in your known or expected retention rate to account for attrition.

When Do the Customer Acquisition, Customer Value Metrics Matter?

First, here is the situation where they don’t matter; an early stage startup.

If your company is a startup, you will probably find this hard to calculate. You don’t yet know what your customers spend, what your retention rate is, or the cost of maintaining a customer (customer service, for example).

As a startup, if you haven’t done this calculation, don’t spend a lot of time attempting to be precise.

When you first start your business, it is more important to get customers at almost any cost than to worry about the cost of getting them. While you must acquire customers at almost any cost to make a startup succeed, you are really working towards a sustainable business model which creates profits which can repay your investors.

As your business matures past the startup stage, the ratio between the value of a customer and the cost of customer acquisition should be between 5/1 and 10/1. Said another way, sales and marketing expenses for most companies ranges between 10-20% of revenues (yes, there are exceptions).

question answer graphic 610x273 - Two Important Metrics for Your Customer Acquisition ProcessIn a more mature business, these metrics can be easily tracked by aggregating expenses properly in your chart of accounts. For some readers, this may be obvious, but I mention it as I’ve seen many financial statements which never bother to calculate the subtotal.

Business leaders should direct their accountants to create the appropriate categories in the chart of accounts. Without direction, most accountants will simply put salaries into a single account, not focusing on the need for operational measurements and controls.


pic 292x280 - Two Important Metrics for Your Customer Acquisition ProcessAbout the Author: Bob Kroon is a coach for high-performing Founders, CEO’s, and Owners. He founded Expeerious, LLC (expeerious.com) in 2015 to exclusively focus on coaching the success of Top Executives. For over 25 years, Bob served variously as CEO, COO, Division President, and Group Vice President.

The majority of his career was in manufacturing durable goods. Bob is an enthusiast and practitioner of Lean Thinking since 1986. He also has broad skills in M&A including financial modeling, deal structure, diligence, and post-close integration.

Bob’s current clients are diverse and include businesses in healthcare, agricultural products, robotics, luxury goods, and education.

To learn more about how Bob coaches and thinks, you can find over 200 questions he’s answered on Quora. Visit his website at: www.expeerious.com for additional blog posts.

Sales Tip: Know the Purchasing Decision Process of Your Potential Client

In my last post, I discussed possible ways for you to build trust with customers and encouraged you to be patient with the trust-building process.

You can control your behaviors, but your customer is responsible for their behaviors. Not you. Their behaviors may have as much to do with closing a sale as yours.

What is the Current Purchasing Decision Process?

If the cost for your product is relatively low, your target customer may be able to approve the purchase on their own authority. If the sale involves a high value purchase, the customer may need approvals from their superiors in the organization.

If you are selling a product or service, particularly to an enterprise company, this may be even more complex. In addition to approvals from higher levels of management, you may need approvals from multiple stakeholders from multiple departments who have different, sometimes conflicting pain points and buying determinants.

When the selling process is complex, you need a value proposition for every stakeholder. The other choice is to rely on one or a few stakeholders to champion the purchase despite any misgivings by other stakeholders. I believe this is a way to reduce your success rate.

In all likelihood, your selling process from customer to customer will not vary that much. Most organizations have similar authority levels and you will see a pattern to the way purchasing decisions are made.

This should also influence your marketing and trust-building processes. If you know beforehand the typical stakeholders in your sales process, your marketing processes and social media content should span everyone in the process.

Another Way to Rethink Complex Selling Processes

Many startups are finding success by creating business models based on recurring revenues rather than large transactions.

You’ve likely witnessed the practice. Almost all new software applications charge by the month with the software hosted on a server in the cloud. WeWork is selling office space and services by the month. Almost all manufacturing equipment companies now offer leasing options. Leasing is the fastest growing way to finance a car.

You can reduce the complexity of your selling process if you can reduce the authority level needed to make a purchasing decision.

This also influences who you consider to be a “lead”. If you are a B2B business and have a high transaction cost, you may need to target Vice Presidents or CxO’s. If the cost can be lower, maybe Managers and Directors can be decision makers. If you are a B2C business, the income levels you target can be lower.

In both cases, the universe of potential leads is expanded.

This can also be a higher margin way for you to market your products. Since the out-of-pocket costs are lower, you likely can ultimately create more revenue for yourself than you realized from a one-time transaction. Price resistance is lower for lower cost products and services.


pic 292x280 - Sales Tip: Know the Purchasing Decision Process of Your Potential Client

 

About the Author: Bob Kroon is a coach for high-performing Founders, CEO’s, and Owners. He founded Expeerious, LLC (expeerious.com) in 2015 to exclusively focus on coaching the success of Top Executives. For over 25 years, Bob served variously as CEO, COO, Division President, and Group Vice President.

 

The majority of his career was in manufacturing durable goods. Bob is an enthusiast and practitioner of Lean Thinking since 1986. He also has broad skills in M&A including financial modeling, deal structure, diligence, and post-close integration.

Bob’s current clients are diverse and include businesses in healthcare, agricultural products, robotics, luxury goods, and education.

To learn more about how Bob coaches and thinks, you can find over 200 questions he’s answered on Quora. Visit his website at: www.expeerious.com for additional blog posts.

Why and How to Clean Your LinkedIn Connections

If you’re like most early adopters of LinkedIn, you may have utilized the platform for your job search, recruiting or connecting with old coworkers. Over the years, the platform has changed quite a bit, evolving into a robust professional networking and social selling machine. You may find yourself connected to people that no longer serve you and your objectives. Examples include:

  • People you’ve worked with in the past that aren’t relevant to your current situation
  • Other people in the same industry that could be viewed as your competitors
  • Recruiters for an industry which you are no longer a part of
  • Colleagues, suppliers, partners or competitors from an industry that you are no longer a part of

Whatever the case is for you, in order for LinkedIn to be a valuable networking and selling tool for you, you’ll want your first level connections to be high quality and relevant to your objectives.

Here’s how to evaluate a connection to see if you should remain connected at the first level. Ask yourself:

  • Can I be of service to this individual from a professional networking standpoint which will benefit both parties?
  • Can he/she be of service to ME from a professional networking standpoint?
  • Do I compete with this person for business?
  • Does this person want to sell me something that I’m not interested in?
  • Do I want this person to see what I’m doing to market myself or my business on LinkedIn?
  • Can I learn from this connection and if so, what?
  • Can they introduce me to someone of value to my network and business?
  • Is there a personal reason why I want to stay connected to this person?

Answers to these questions will be the determining factor for your decision to remain connected or not. I suggest removing connections that are not serving your higher purpose. This is NOT personal. You can always connect with them on any of other social networks, such as Facebook, Twitter or Instagram. Always keep in mind that LinkedIn is for business networking, not socially hanging out.

Once you’ve cleaned your LinkedIn connection list, you can now build it with the type of network that WILL serve your higher purpose and help you grow your business.

To learn how to remove unwanted connections, watch this two minute video I made for you, and be sure to check out our LinkedIn Lead Generation services to help you generate more business! (link to LinkedIn services)

Six EASY Steps to Creating A Blog

Get Your Blog Up and Running with Six Easy Steps

Consider this:  companies that publish new blog posts just 1-2 times each month generate 70% more leads than companies that don’t blog at all (source: www.business2community.com).

If that doesn’t make you want to start blogging for your business, then you may as well not continue reading this BLOG post.

Blog question word cloud 300x253 - Six EASY Steps to Creating A Blog

But if it does interest you, then you may be wondering where you should start?  Here are six steps to help you get going.

1.    Determine Your Platform

There are ways to get a blog up and running with little or no cost.  How fancy you wish to make your blog is up to you.   There are free options, such as www.wordpress.com or www.blogger.com.  You can use a generic template and focus your efforts on the written material.

If you already have a website and someone to maintain it, then you could ask that person to add a blog feature.  Believe me, they will know what to do!

Or, if you are starting from scratch and want a full fledged website that includes a blog area, you may need to hire someone to create a WordPress site for you (ask us!).  Or you could learn how to do it yourself.

2. Create a Plan

While you are getting your blog set up, you should take some time to plan out your blogging topics and a schedule.

Before you begin, ask yourself the following questions:

  1. How often can you (or one of your team members) realistically write a blog article?
  2. Whom do you wish to reach?
  3. What do you wish to communicate?
  4. What does your target audience wish to know or hear about from you?

3. Create a List

Once you’ve answered these questions, brainstorm on article ideas. Brainstorm on as many ideas as you can during this phase.  You can always add or remove ideas as you go.

Break up your ideas into common topics.  For example, if you are an Insurance Agent, you could break the topics up the following ways:

  • Home Insurance
  • Auto Insurance
  • Health Insurance
  • Life Insurance
  • Disability Insurance
  • Long Term Care Insurance

Depending, of course, on which areas are your specialty.

A word of caution:  when you are writing your list of topics, steer away from those which are self-serving.  If you only write about your business and how awesome you are, your readers will not stay on your site long, nor will they be back.  Consider what your reader wants to know about, not what you want them to know about you.

4. Create a Schedule

Since you asked yourself how often you can realistically write, plot out the dates on the calendar and assign blog post topics to each entry.   If you’re worried about not getting around to it, also block out a couple of hours on your actual calendar that you will dedicate to writing your blog posts.  I find I am much more productive when I have a plan AND a schedule before I write one word!

5. Writing Blitz

It’s also helpful to block out a few hours each month to write 3 or 4 blog articles to publish during that month.  If you can write more, great!  But tackling several articles at one sitting checks it off the list until the next month.

Be sure to include your key words in your article titles so that you can rank higher in the search engines (SEO).  Also, by naturally using your key words throughout your blog post, you will rank higher.

6. Share it!

Now that you have a blog set up and you’ve begun writing, be sure to share it!  Even though you will get organic traffic to your blog post when people run a search on your key words, you still want to get it out to your audience.  Post a link on all of your social media sites.  Tweet about it and schedule additional tweets for the rest of the week.  If you belong to any groups on LinkedIn or Facebook, be sure to post a link to your article there as well.

Put sharing options on the actual blog so that others can share it too.  You can also set up an RSS feed whereby others can sign up to receive notification automatically whenever you write a new post.

Hopefully you can see that while maintaining a blog can be an effort, it is completely possible to break it down into 6 steps in order to get started.

Happy Blogging!

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