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Archive for August, 2012

Back to School and You

Thursday, August 23, 2012 by:David Zahn

As many of you are experiencing; this week and perhaps next are the weeks when students head back to school. While parents sending their kids off to college for the first time are experiencing the empty nest or having to “let go” of their progeny, the other sides of this life event is what the student undergoes and how schools approach it. However, there are lessons to be learned from how students and schools approach this time that can be applied to our business efforts.

Orientation and on-boarding are essential whenever there is a transition.

Student

Students (or new hires) are often eager to begin their new roles, but are uncertain about even the most basic facts:

Environmental – where is the copy machine, how do I get from one department to another, what controls do I have over the environment?
Expectations – what will I have to do, how will I be judged, how do I do what is expected to me (resources/tools/timing/etc.)?
Culture – how do I engage or interact with others, level of formality/informality, communication protocols, etc.

All of that is multiplied exponentially with the fear/excitement/enthusiasm that accompanies a new transition. Of course, it is with some trepidation and eagerness that the new school year is approached. The student looks to the new boss/organization to lead the way.

School

If we look at how Teachers (or colleges) approach each new year of school, we can see some key insights. Although, students are relatively familiar with the core requirements expected of them, each Teacher has a slightly different approach to how they prefer to conduct their class and spends at least the first couple of class sessions reviewing how s/he will manage the class.

Similarly, colleges conduct orientations for their students to review everything from key contacts on campus to meet and greet your fellow dorm-mates. All of it is designed to be a friendly welcoming to the new surroundings – but also to prevent future problems that may lead to transfers, drop-outs, difficulties in acclimating or adjusting to the new expectations.

Some of those initial experiences are social (come down to the Frat House and share a barbecue), and some of it is more academic (meet your professors and talk to an academic advisor), and still others are more administrative (meet your Resident Advisor and learn how to check-in to your room, find the mailbox, and navigate the security system in entering and leaving the dorms).

Business

With those things in mind; how well do our businesses do in orienting our new employees or newly promoted employees to assume new responsibilities? How well are we helping them adjust to ensure success?

All to often we leave the new employee to “figure it out by themself.” Or, we may have an experienced employee provide some quick overview of the job’s requirements (but who is to say that the experienced employee is a good “trainer?” How do we know that the experience of the employee translates to the ideal practice the business owner wants the new employee to implement? What incentive is there for the “trainer” to do a good job? How will the new employee be sure that they have learned correctly and are implementing appropriately?).

So, in the interest of the “back to school” season – maybe it is time for all of us to give some thought as to how we are doing on on-boarding, orienting, and establishing early successes for our new employees or recently promoted employees. Time is wasting, it is time for us to get back in class!

What can we Learn From Chad?

Friday, August 17, 2012 by:David Zahn

Over the past week, we have all seen the “train wreck” that is Chad Johnson (formerly known as OchoCinco for the number he wore on the back of his football uniform) do the following:

Swear uncontrollably during an interview that was broadcast on HBO
Promise (jokingly?) to get arrested over the weekend
In fact, get arrested for domestic violence when he is alleged to have head-butted his wife of approximately a month
Publically get fired by his boss (football coach, Joe Philbin)
Have his television series spotlighting his marriage canceled before the first showing
Get served with divorce papers from his wife.

So, it may seem that there is very little any of us would want to learn from someone with that series of events. However, there are lessons to be learned – and one does not need to look too hard for them.

You Represent Yourself and Your Organization

During an interview that was broadcast on the show, Hard Knocks, that allows HBO cameras into the locker room areas, offices, and other traditionally off-limits areas from public view, Chad Johnson repeatedly swore, used vulgarities, cursed and generally exhibited a very poor presence. Now, few people would be surprised to know that many adults do occasionally use words not suitable for publication in this newspaper. Further, it would be a bigger surprise if the words were not heard among men that are in the August heat, running full-speed into each other, and being subjected to criticism from their coaches. However, an interview done away from the field need not contain those words.

Further, Chad Johnson (for better or worse, fairly or unfairly) has a reputation for being a selfish player who is more interested in his own highlights than he is in the team’s performance. He had trouble even playing for his previous team where it was rumored he was not dedicated to learning the plays and so therefore was a liability on the field. The current team (Miami Dolphins) took a chance by bringing him in to their camp (albeit a small one, as he was not guaranteed a salary if he did not make the team) and had discussions about his behavior previously with him. Despite his promises to behave, he still managed to represent himself poorly within the first few sessions, and by reflection, the team. The lesson here is certanly to recall that your actions have a direct impact on how others view you and are indicative of the organziation you represent.

What You Say Counts

In the episode shown on tv, Chad Johnson also comments amid laughter that he plans on getting arrested over the weekend after practice is over on Friday. Now, aside from what passes as humor or not (and getting arrested just does not seem funny to most); to think that making that statement when he has been instructed to be on his best behavior is appropriate defies logic. Under no theory known is suggesting that being arrested would comply with his commitment to his organization that he is serious about remaining a good teammate and someone the organization will not fear bringing on-board. No matter what – people will hear what you say and will interpret it in ways you may not have intended if you think you are being flippant or funny (and if he wasn’t trying to be funny, then he needs to understand when it is best not to say anything).

Domestic Violence

No matter what the actual events that transpired, and regardless of who started the argument; being accused of striking your spouse is never a good outcome. By all reports; his wife of one month did need stitches across her forehead and her injuries do seem consistent with being head-butted as she claims. While some may want to claim that it is a matter that exists outside of his football playing performance and should not impact his worthiness on the team – there just cannot be blind acceptance that it is in any way allowable. It is a further distraction from his ability to do his job, from the team to create the culture they seek, and while there may or may not ultimately be a trial to prove his guilt or innocence – it has already been tried in the court of public opinion and the Miami Dolphins would have a real hard time explaining to their fans (male and female) how they did not take action when this occurred.

Here, it does not require any discussion of lessons to learn. It is evident.
Being Fired

His coach, Joe Philbin, was filmed sharing the news with Mr. Johnson that he was no longer going to be a part of the team. Given how volatile the situation was (it is never easy to conduct a firing), the Coach explained his point of view, Chad Johnson tried to apologize and beg for his job, and the Coach let him down easily – but firmly that the decision had been reached.

While it made for riveting television, it was also a very accurate look at both the impact on the boss and the employee during these moments. One could both feel righteous anger and sorrow for Chad Johnson as he received the news that he was being let go by the team. There quite a few lessons in this exchange:

The Coach handles himself professionally and compassionately without ever getting drawn into the drama
An employee can only take so many liberties before there is a consequence.
The good of the organization supersedes the individual’s abilities.

A moment dreaded by both boss and soon to be ex-employee.

Actions Have Repercussion

As if being fired from his job was not enough, he then suffers the further indignity of having his projected television show that was scheduled to air this Fall spotlighting his marriage canceled shortly after the news broke of the arrest. Like many athletes and famous people, Chad Johnson’s image (moreso than his performance as an athlete) accounts for endorsements, business opportunities, requests to speak or appear at functions, etc. By soiling the image by his actions, he has lost not only the income from playing professional football, but also the monies he stood to earn from ancillary opportunities. The lesson is that actions have reactions. There is very little that is not connected or inter-connected in our lives. Ruin one aspect and it often bleeds into others.

To the Surprise of No One

The final straw was when he was served with papers for divorce.

Crowd-Funding as a Source of Assets

Monday, August 13, 2012 by:David Zahn

The traditional way to raise funds for most businesses included:

Using one’s own funds (savings or the money the owner is able to generate and apply to the needs of the business
Relying on friends, neighbors, or family to either invest in the business, loan, or gift to the business owner
Going to banks or lending institutions for loans that often have restrictive re-payment plans
Selling stock in the company

However, there is an emerging approach to funding businesses that is gaining traction – Crowd-Funding. According to Wikipedia, crowd-funding is defined as: “the collective effort of individuals who network and pool their resources, usually via the Internet, to support efforts initiated by other people or organizations.” While the reason for funding can be anything from charitable activities to personal requests; crowd-funding as a way to generate money for business purposes is based on the strength of the idea or the belief in the owner to create a viable business. Some of the frequently sourced sites for crowd-funding are listed at http://www.practicalecommerce.com/articles/2853-13-Crowdfunding-Websites-to-Fund-Your-Business. The use of the internet allows funders and those seeking funding to connect with each other (often without having any personal contact or engagement outside of the websites).

Gumdrop Swap revisited

I recently connected with a business I have profiled previously, Gumdrop Swap (a retail business that puts a spin on consignment and focuses on maternity and children’s clothing & other necessities.) http://www.gumdropswap.com. As that business continues to grow, they have outgrown their current facility and are looking to move into a larger footprint. To allay some of the concerns around the costs of the move, the business has begun to investigate the worthiness of crowd-funding.

In a recent blog post written by the business owner some of the issues were surfaced http://gumdropswap.blogspot.com/2012/08/peerbackers-vs-indiegogo-for-crowd.html. Among the concerns mentioned were :

the fees associated with the use of the service (ranging from 3% up to 9%).
The restrictions on what can be funded (projects vs. “life” issues, business vs. personal, etc.).
the ease of use of the systems to incorporate graphics, be listed in web searches, or other “back-end” issues.
Whether the money raised is to be returned if targeted amounts are not reached or if it can be retained by the person/business seeking the funding.

Crowd-Funding allows business owners to connect with prospective investors to raise funds.

To participate in helping Gumdrop Swap reach their goal of raising funds to allow for the move to the new location in Bridgeport, you can contribute at link http://peerbackers.com/projects/help-gumdrop-swap-maternity-kids-boutique-finish-moving/. or at http://www.indiegogo.com/p/199621.

Caution is the Word

As with any investment, crowd-funding opportunities should be assessed and evaluated with regard to the success criteria used to determine the appropriateness and likelihood of any other expenditure. SCAM artists can seek to take advantage of unsuspecting investors and one should proceed with caution before making any investment. Although not essential, crowd funding often relies on local customers supporting their local businesses and so there is an element of familiarity and trust. However, it is still a business investment and should be viewed as such.

Negotiating Expert’s Advice on Discounting – Don’t (Part 2)

Monday, August 6, 2012 by:David Zahn

Part 2 of the discussion with Ron Hubsher, author, Consultant, and Sales Expert)

In the previous article, Ron Hubsher shared the importance of thinking in terms of value and not solely cost in determining whether to offer discounts (versus replacing price reductions with increasing value through services, support, or other means). In this article, Ron speaks to cultural differences in negotiation, buyer perceptions, and handling price squeezes).

When is the Right Time to Negotiate?

Ron Hubsher is very clear that negotiations should only occur AFTER the seller has established that s/he is the number one or preferred option being considered by the buyer. Trying to negotiate too soon will lead to an emphasis on features and price (both of which are easier for competitors to meet or even exceed), whereas value is harder to replicate. There can and will always be a cheaper option, but there may not be a total solution that can offer the same level of value.

In fact, Hubsher explains that, “I want to build credibility and build trust with my customer. By offering an initial price, and then discounting off of it over the course of the negotiation is tantamount to acknowledging that the first price was not real, and that it was only offered to see if the buyer is foolish enough to accept it. Obviously, the message is then that I can’t be trusted.”

Building trust is not possible through frequent discounting.

To ensure that the time is appropriate to enter into a negotiation, Hubsher relies on the following questions:

If price were not an issue, would me/my company be your first option?
If all things were equal cost-wise, which company are you inclined to go with at this point?

If the answer is a competitor, then Hubsher knows he needs to continue selling. If the answer is that his bundling of product/service is the preferred offer, he follows up with a simple question:

Why?

As the prospective customer shares all of the benefits and values being offered by Hubsher or Hubsher’s company, he takes note of all of the reasons why it is therefore worthy of a premium price (the prospect outlines what they place high value on and what distinguishes Hubsher’s offer from others).

What about the Squeeze?

Hubsher confides that he looks forward to the “squeeze” (when the prospect or customer tries to get the seller to drop price without relinquishing any part of the product/service solution offering.). It indicates an interest in moving forward and is a clear buying signal. However, he does have some suggestions to manage through the seemingly inevitable pressure:

Reflect on the value and the Return on Investment (ROI) By using the same considerations that the customer just provided on why the choice was made to choose to prefer Hubsher’s offer over competition, he can remind the buyer why it makes sense to move forward as the deal is constructed.
Offer value, not discount – provide additional training, support, or other aspects of the total solution that offer something of benefit – but allow for the maintenance of pricing.
Reinforce the unique competitive advantage the solution will provide to the customer
Address the risk equation by pointing out that if the seller’s company were to remove aspects of the deal (to “even out” the deal given the lower price point), it may impact the ability to generate the ROI being sought or it may increase the risk to achieve a successful outcome.

Buying Decision-making Questions

Before entering into negotiations, Hubsher likes to establish the answers to some difficult questions. Among the questions are:

Whose budget will this project impact? This question allows the seller to determine who is the real “buyer” and structure the negotiation to address that person(s) needs.
Who is involved in making the purchase decision? By identifying the key personnel and what their role is in the purchase decision, the seller can focus on the critical needs and opportunities.
What is the budget cycle? Often, a major capital purchase may require numerous months to close and it may stretch over multiple budget cycles. By knowing what pressures exist to use one year’s budget and when the next budget begins, Hubsher can leverage multiple years worth of budgets to accommodate a more expensive purchase.
Where else can budget be accessed from? Occasionally, a department’s budget may not cover the costs of a purchase. By asking what other budgets may be able to contribute or support a purchase, the customer can begin to link how the project will benefit the company more globally and identify other funding sources (and remove the possibility of costs later being used as a lever against the seller).

Cultural Differences

Finally, Hubsher acknowledges that there may be certain differences in the APPLICATION of the skills or “laws” identified in his book, “Closing Time: The 7 Immutable Laws of Sales Negotiations.” (available at www.salesog.com), he maintains that the foundation fo the process does not change. Just like the human body has 206 bones regardless of where people live, what language they speak, or what their cultural differences may be; the process is the same. What may change is the way that people accomplish the goals. One example he offers is, “in Western Countries, and specifically the United States, bigger is assumed to be better. So, mentions of market share, revenue, or client rosters are common. In Asian countries that might seem boastful. What would be more highly valued would be longevity. References to number of years in business would be received far better.” The need to build credibility and meet the customer’s needs or desires for working with a company they can “trust” remains. How trust is communicated is all that changes.

To learn more about Ron Hubsher’s 7 Immutable Laws, or to contact him to discuss how he has helped clients achieve their sales objectives, click on http://www.salesog.com.

The Missing Fifth P – Personalizing Merchant-dising in the Home

Thursday, August 2, 2012 by:David Zahn

Retailers and manufacturers alike are scratching their heads in befuddlement at the fact that what once worked for them is no longer effective. Tried and true tactics that were able to previously provide a boost to the bottom line are not delivering the anticipated results. Where in years gone by reliance on the ‘4P’s” (Price, Promotion, Placement, Product) could be relied upon to deliver results; that is becoming less effective over time and it is often commented by retailers and manufacturers that shoppers require larger discounts, more frequent promotions, multiple placement locations, etc. before they even seem to take notice or react. The “4P’s” also can only work if they are seen by the prospective shopper. Those that are not in the store cannot be reached and the” 4P’s” will have no impact on them. Further, to date; the work of Marketing Departments has been focused on “persuasion” (convincing the shopper that the manufacturer or the retailer have a better product or solution). However, the shopper is in search of the ability to make up his or her own mind about how to solve problems or meet future needs. For the shopper, being able to construct one’s own reality and control both the inputs and outcomes of actions has far more value than some level of “mass customization” that passes for marketing efforts currently.
Additionally, the efforts of the continuous improvement process brigade have zapped all of the steam out of those initiatives to guard against inefficiencies in our supply chains, operational efforts, and selling activities. However important those things are to manage and to monitor; you cannot save your way to growth. Growth can only occur from new consumption. So, the industry is at a crossroads as it confronts the following:

The Situation:

Open any industry publication or skim through any E-zine site devoted to CPG, Retailing, or related businesses and you will likely be presented articles, interviews, or opinion pieces on the state of the business that include mentions of these issues:

• Retailers are struggling to maintain/gain their share of visits as shoppers have exponentially more choices than ever before (from alternative classes of trade to internet options)
• Loyalty to outlets or banners is therefore down and efforts to stop the slide have not been universally successful
• Manufacturers are feeling constrained by store policies that limit the “in-store communication directed at shoppers” permitted in an effort to create a “shopping environment” conducive to the retailer’s strategy (clean aisle, assortment decisions, space constraints, location of category, what is co-located in the aisle, display challenges, packaging size constraints, etc.)
• Shoppers are frustrated by the mechanically designed shopping experiences – why can’t every store be as interesting to shop as those that commonly are cited for shopping experience differentiation: Whole Foods, Trader Joe’s, Stew Leonard’s?
• Shoppers are left feeling unfulfilled with the ability of their shopping trips to permit a connection with the retailer that is beyond transactional. Shoppers seek help in planning their shopping destinations, choosing ways of improving their lives through their choices and selections while shopping, and accomplishing the “job” they seek to meet (versus purchasing something that is merely adequate and marginally satisfying)

After all is said and done, is it any surprise that conversion is down and leakage is up, or that brand switching continues to grow? No one is happy in the current environment; not the retailer watching sales that used to be owned going to competitors, not the manufacturer who feels cost pressure on the one hand, and demands for more support on the other, and certainly not the shopper who has the vague (or not so vague) sense of missing out on something – and uses price differences as a club to make purchases since value cannot be differentiated often enough to matter.

The Response

The response has often been far more reactive than proactive. When in doubt, the standby is to throw money at the issue. Everyone upstream and downstream in the process subscribes to the belief that nothing speaks louder than money and it can drown out any other messaging or actions. However, the money being thrown around is in the form of discounts and is excused by the belief that, “if we don’t do it to get the sale, someone else will!” So, what we see are less effective activities being done better and better (to smaller and smaller returns):

• FSIs and circulars being stacked at the door to the lobby and rarely being opened or picked up
• Manufacturers relying upon advertisements, coupons, “pay to play” scenarios (TPR, Display, Features, etc.) and having to combat the effects of promotion fatigue among shoppers, growing distrust of everyday pricing, the trained responses among shoppers to wait for the next promotion (which is often imminent), etc.
• Frequent Shopper Cards that are thinly disguised as price discount cards that do little to advance the shopper’s experience of; planning, shopping, engaging, interacting, achieving, and accomplishing their jobs or goals. Rather, the entire experience feels derivative (why make me jump through hoops to get a discount that is only contingent on my carrying a key card and why aren’t I being marketed to in a way that makes sense for me?).
• Emails/texts bombard the shopper from all angles, but are interruptive and not aids to planning. They may be effective “when the shopper is in the moment” and have their place in guiding the shopper to a specific purchase when in the store; but they do little to advance the planning and strategizing that goes on IN THE HOME in deciding where to shop, what the goals or objectives of the shopping trip will be (FUTURE jobs to be accomplished), and how to prepare for the shopping occasion. They tend to be more of the same price discount/coupons being sent electronically that do not truly assist the shopper in the planning stages of purchases.
• Websites are filled with information, but the shopper must be tethered to the monitor (if using a laptop or desktop – IPADs and similar devices are beginning to change the mobility of the computer), but are still hard to navigate through or around (especially on the smaller screens provided with mobile computing phones and such). Therefore, the information sourced and collected from computers often has to be printed out and filed for later use or referral (as opposed to simply being saved online or electronically).

Solution/Competing with the Status Quo

To succeed at breaking through the fog or haze of what is currently standard operating practice in the industry, a look at merchandising through a new pair of eyes is needed. There needs to be a migration from the current “4P’s” communication protocols in place now to announce; assortment, price, promotion, product availability – to one that provides communication that shoppers need to help plan their shopping better. To accomplish that, there has to an awareness of the fifth P – Planning.
• Recognition that the shopping trip is PLANNED using information on PAPER (NOT electronic) the overwhelming percentage of times.
• Understanding HOW people plan their shopping trips and that it occurs at HOME – because that is where the paper is stored, filed, and accumulates.
• Appreciating that NEWS on PAPER is an essential tool to aiding in the planning of shopping
• Valuing the kinds of information that help shoppers to formulate plans in preparation for the shopping trip. As an example, at various times, the shopper may feel:
      o I’m stuck and need a helping hand
      o I feel like exploring and am curious where there may be treasures in the marketplace
      o I have a mission and am seeking a destination to go to in order to meet it
      o I have a vision, help me make it real or accomplish what I seek.

The table (Table 1) below allows for an easy comparison of how the solution would accomplish the stated objectives of; retailer, manufacturer, and most importantly, the shopper:

(Table 1: Comparison of 5 Fingers Model used in Job Theory to “4P’s” Model currently used)
Recommendations and a Vision of the Future

To accomplish the feat of reversing the spiral downward the industry is feeling, there is a solution that is right at our doorstep. It is the use of paper-based mail to operationalize the fifth P – Planning. While the party line among many is that mail has lost relevance in this electronic age, that thinking just does not stand up to scrutiny and analysis. In fact, paper-based mail is preferred as a planning tool over electronic communications because it is easier to navigate, assemble, disassemble, connect information presented, etc.

Shoppers are going to be driven to make choices from the planning they have done in anticipation of the shopping occasion. If the planning is to include paper-based resources, it only makes sense that retailers and manufacturers would be well-served to leverage that resource. In terms of how to do it effectively, the following will provide a good starting point:

• Differentiate the substrate (type of paper, size of paper, look and feel of the document) from other mailed pieces to help the recipient of the mail pieces (the shopper) to identify it as the “shopper’s assistant” mailed piece from local retailers.
• Create a template for this mail piece that helps the shopper improve their planning for shopping trips. In so doing, accomplish the following:
     o Building trust to work with the information
     o Answering shopper questions
     o Communicating value for the money – preliminary comparison shopping to aid in planning
     o Imagining outcomes, effect, or results (will it be worth it; could it work out for me?)
     o Providing testimonials from neighbors or others who have achieved results.

The payoff is contained within Table 2 below. The retailer is able to enter into and sustain a dialogue with the shopper, the manufacturer is able to better position products to meet shopper needs, and the shopper is able to feel in better control of her destiny:

Table 2: How the use of paper mail for planning impacts decision-making

The need to break through the conventional thinking is apparent. The industry is in a runaway car on a road heading downhill, and the driver’s seat is filled with those that are relying on the clouds and wireless magic to undo what they can’t rather than regaining control of the car and steering it where it needs to go.