3 Reasons for Running Sales Campaigns

Context

A friend the other day suggested that he drop his prices for a few weeks and I questioned what the rationale was behind the intended price drop. I wanted to check that there was a valid reason and it wasn’t just a knee-jerk reaction that led to the idea of creating sales campaigns.

Sale on green
Sale on green

I only know of 3 reasons for sales. I’ll define sales as campaigns based on a short-term price reduction, such as end of season sales, January sales, etc. To be clear, I’m avoiding discounting and similar activities to keep specific customers happy and/or make the sale which I see as a different set of activities.

The 3 Reasons for Sales Campaigns

1: Due to Inaccurate Estimates

The provider chain (including the parts supplier, manufacturer, distributor and/or retailer and any combination of the above) has inaccurately estimated the amount that customers will buy at the RRP. So they need to shift stock rather than have it build up in the warehouses or showrooms. This sometimes occurs because a new model is coming out or because the weather was as predicted (and so not as much ice-cream was sold the week before). The answer could be that the MRP/RRP was always too high for the market and so the price drop is, in effect, a reduction to a more valid price that the market can sustain.

2: To Acquire Customers

Another reason for limited campaigns is as the basis for lead generation in terms of selling nearer to cost or at a loss to acquire new customers. A reduction during the campaign can lead to a long-buying customer that otherwise could have been tempted by competitor offers. The typical view is that a the price of the reduction is vastly outweighed by the long-term revenue from the customer. However this should be validated in your own organisation. In some sectors, customers are increasingly becoming used to jumping from competitor to competitor, getting the new deals available only to new customers.

On that subject, it is also worth considering the aspect on existing customer. Some may feel maligned or forgotten, depending on how important the price reduction would have been to them.

3: Short Boost

To create a boost in what customers are buying for a short period of time. This could be to alleviate a cashflow issue, e.g. to avoid company administration or pay annual tax bills, etc, or could be to alleviate another pressure, e.g. warehouse needing emergency repairs so some stock needs to be removed (and sold) rather than stored. In the case of cashflow, this could have been considered as a subset of (1), in the money is the resource. However considering many of the instances requiring short term boosts are unforeseeable, the boost is instead intended to be used as a stabilising factor.

4: Shift unused resources

In most industries, there are resources that do not generate revenue if not  being actively used, but the companies need them available in case of larger contracts. For instance, telcos provide ports to corporate customers, the number is static so spare, unused capacity could be packaged into a campaign. Similarly, larger consultancies operate a bench (usually quite lean) with consultants who are not actively being resold to clients. However this this is just another form of (1). Had the company planned better, then these resources wouldn’t be spare. So we remain with 3 reasons.

Further Thoughts

The better the company at predicting and responding to the future needs of its customers, the fewer sales campaigns it will require. This does require the company to act on those forecasts.

The issue with (1) is that while it makes sense, there should be an associated activity. This secondary activity should be to look at whether the assumptions in the original plan are accurate in hindsight and whether they should stand for future forecasts. For instance, if you’re reducing your price to meet the market expectations, then actually that’s your price, not your originally-inflated price.

So you’re about to run a sale, which reason are you using?

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Efficiency Through Motivation

Efficiency Through Motivation

I started an Instagram channel a while ago. I wanted to start generating an audience for my forthcoming course on Efficiency Through Motivation. I didn’t want to just post inspirational quotes; there are plenty of those channels already. What I wanted to do was to help people explore business architecture and strategy through asking questions of where they are at the moment. I’m using the images as the initial thought-provoker then writing related commentary, often in the form of prompting questions. Go have a look at EfficiencyThroughMotivation, does it work for you?

Actually, better than tell, how about you let me know what you think of the idea? Or even what stage of business you’re at at the moment, what are your struggles and how do you think you’ll be resolving them? You can reach me at Contact Us.

How many objectives do you set yourself each day and how many objectives do you set for your organisation? Are those objectives related?

A photo posted by EfficiencyThroughMotivation (@efficiencythroughmotivation) on

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Enterprise Architecture in Startups: Is it relevant?

Ludo Board for depicting strategy
Ludo Board

Practitioners of Customer Development, Lean Startup and Enterprise Architecture can all learn from each other. But they shouldn’t enforce their views on each other as there are some incompatibilities. Let’s see how enterprise architecture in startups can exist.

Background

The Startup culture and methods have largely been defined by Steve Blank who wrote The Startup Owners Handbook and later, by Eric Ries who wrote Lean Startup. Both of these consider how newly-created companies can grow quickly and in the right direction for their founders and customers. Many authors and speakers followed, but for this article, we’ll mainly focus on these two.

Enterprise Architecture (EA) functions can be found in many large, mature organisations that have a need to get a grip on their ICT* landscape. Continue reading “Enterprise Architecture in Startups: Is it relevant?”

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Stakeholder Analysis

This is just a brief introduction to a classic method for performing stakeholder analysis. It’s a simple concept and I’m including it since it’s another good example of a 4-box model.

To misquote Helmuth von Moltke the Elder:

No project survives contact with the customer

Background

Every change activity has to deal with people. Whatever you’re planning, you’ll affect some people more than others and some of those people you affect will have a greater opportunity to influence your progress.

Continue reading “Stakeholder Analysis”

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Using Four Box Models

What is a Four-box Model?

It’s a simplified graph, depicting two axes and the four boxes start at the corners of the graph. There’s an example further down below.

Why Use Four-box Models?

I love four box models. They’re simple and since they’re simple, they force you introduce clarity where there may have been confusion before. This makes the message easy to convey and simpler to isolate.

As such, all 4-box models provide a way of clarifying the problem space. Even if the solution you end up with doesn’t fit into the 4-box model, they’ll have been useful in clarifying the thinking within the group.

We’re going to see how they can be useful by looking at an example from CRM.

Customer Relationship Management

There are two similar models from Customer Relationship Management (CRM). The first model relates a customer’s historic spend with their predicted future spend. The concept here is to help you decide what to do with different segments of customers.

4-box CRM Model depicting historic spend against future spend
4-box CRM Model

The customers that everyone wants are those that have spent a lot in the past and are likely to spend a lot in future. Continue reading “Using Four Box Models”

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The Wrong Quick Wins

A few thoughts from me on quick wins and why we go for the wrong type.

Hands up if you’ve ever had a project sponsor say they needed quick wins? Usually, it’s about showing that you’re doing something to the company board so your project isn’t cancelled or it’s about showing you can make savings. Both of those indicate an immature organisation that’s ready to cancel change activities before they’re due to return results. Some changes take time, some can be done more quickly. The same change activity isn’t necessarily the right type of activity to achieve short and long-term changes. So if you’re on a long-term change project and you’re asked for quick wins, start to head off the question with looking at the original plan for when you’re due to complete your first phase. A better idea is to use quick wins to generate motivation within the users. They didn’t agree to the change plan, instead their managers signed-up to it. They have some inkling of what’s going to change, or in the case of many organisations, they’ve seen many change activities come and go with little result for them. So you’re on the back foot already. Quick wins should be about the users, such as front-line teams or field workers. Listen to their needs, hear their pain, uncover the activities giving them the most problem. And only after you’ve listened, start to generate a few quick solutions to their problems. These solutions are not intended to be long-term fixes. Instead, the quick wins are simple changes that can alleviate their pain. That’s how you get people to believe in you. At the same time, you can be addressing the longer-term fixes. The best thing is that quick wins, when approached from this perspective are usually easy, sometimes just a case of asking another team to respond differently or moving some office furniture around so people can work with less stress. Remember it’s not about achieving savings but making the working lives easier. What’s your experience and how do you approach quick wins? #changemanagement #motivation

A photo posted by Alan Ward (@awkward2006) on

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Innovation is not a Space

Image of grassI’m increasingly seeing clients with innovation spaces and I’m seeing more of them on social media/news channels where companies are outfitting office spaces with fun decorations and repurposed objects (e.g. tuk-tuks as meeting spaces). This concept of an innovation space has been introduced to change the way that employees generate solutions.

What’s the problem?

The problem with this is a belief that innovation is a space, i.e. create a non-conformist space and label it as your innovation. Then expect magic to happen. But the magic doesn’t happen.

Here’s the truth, you can introduce innovation in a windy portakabin. It’s not comfortable (and that breaks one of the rules I’ll mention later), but it can be done.

You don’t need fake grass carpets, slinky springs, koosh balls, nerf guns or whatever else is hip at the time your innovation designers come into your organisation. Those things could help, but they don’t guarantee innovation.

Where does innovation come from?

Innovation comes from within the collective mind. No, I’m not getting all new-age here, I referring to the effect you achieve when you put people in a room together, remove some boundaries, give them a task and prompt with them with different perspectives. Continue reading “Innovation is not a Space”

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The Rockstar Approach to Visual Management

Visual Management Done the Rockstar Way

Van_Halen_(_DLR_era) by MarioVHF under CCA-SA3.0
Van_Halen_(_DLR_era) by MarioVHF under CCA-SA3.0

Visual management can take the most unlikely of forms. Done well, it should show you enough details at a glance so you can decide whether to look further into the situation.

Background

Major bands get riders, often part of the contract stipulating what the venue will provide the band to make them comfortable on the road. This can be sofas, champagne, beer, food cooked to a certain standard or even a curry take-away flown in from a specific restaurant in Wales. Some of the items on the riders are tiny and we’d consider them petty, but major stars have lived up to their diva reputations by blowing full-scale tantrums at not having their riders met.

No Brown M&Ms

One of the most legendary of these was the American hard rock band Van Halen. As a rock band they had a reputation to uphold; raucous, fun-loving, tolerating no nonsense. They also through tantrums when their rider was met entirely even down to minuscule details. The most popular of these details was a requirement that they would be provided with a bowlful of M&Ms with all the brown ones removed. If they walked into their changing room and saw a brown M&M in the bowl, then tantrums ensued.

Analysis

Van Halen perform in Toronto on their 2007 reunion tour by De-fexxx666 under CCA-SA3.0
Van Halen perform in Toronto on their 2007 reunion tour by De-fexxx666 under CCA-SA3.0

The interesting thing for us is that the presence of brown M&Ms was a form of visual management. As mentioned by the band’s lead singer, Dave Lee Roth, they used a lot of equipment in their tour and they needed to know whether the requirements for the tour, e.g. a stage that could support the weight of the equipment would be available on the night, whether the electrical supply was to specification, etc. All of this was in the band’s contract with the venues. Buried amidst all these technical requirements was the brown M&M clause.

On walking into the dressing room, the band could immediately tell if the venue operators had read the details of the contract. That was visual management. If there was a brown M&M in the bowl, then there was a high probability that other more potentially dangerous omissions had been made in conforming to the contract. Those omissions could have risked the safety of the band, the crew, the audience and the venue itself. So a quick check of whether the venue’s organisers had read the contract and applied it was a useful point for the band’s management.

As for the rockstar tantrums in response, they were just keeping up appearances and it didn’t hurt their reputation. So having the band perform the check in a rockstar style was genius.

Snopes has a great overview of the rider and implications.

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When is the Right Time to Change Your Mind?

When is the Right Time to Change Your Mind?

Reflecting
Reflecting

You have many opportunities in life and business to change your mind. Each of us has many opportunities, but we don’t always take those opportunities. We may be conforming to social constraints and expectations or don’t want to risk appearing inconsistent by changing too often. Let’s look at a non-serious example and extract nuggets we can apply in a business context.

1) The Background

I’m in a situation right now where I’m having to re-evaluate my aims. Fortunately it’s not a serious situation and there are a few parallels to my professional life. I play guitar and I own a few guitar amplifiers. Each guitar and amp has its own tonal identity and quirks. I pick the right tools for the job; playing in a 60s Motown/soul band requires different guitars and amplifiers than playing in an 80s hair metal cover band.

At a gig at the beginning of Summer this year, I played using a very nice amplifier and it sounded awesome with the band. I really enjoyed how it sounded and I probably played better because I was comfortable that it did the right job.

2) The Hypothesis

I thought that I could use the same amplifier with a few changes in my set-up (i.e. a different effects pedal or two) and I would again have an awesome sounding rig, but this one would be suited to the 80s hair metal cover band I’m currently playing in.

Two things to learn from this: Continue reading “When is the Right Time to Change Your Mind?”

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The Cupcake Strategy – Business Strategy for a Startup Business

Introduction

Cupcake by zigazou75 CC-by-2.0
Cupcake by zigazou75 CC-by-2.0

I’m often talking business strategy and how it can apply to any business no matter how new or how small. Strategy should be applied to every business but it’s a shame that the closest many business owners get to it is a business plan for a bank loan. This is even worse when they may have need a lesser amount or even avoided the loan completely had they planned differently.

What I’ll Cover about Business Strategy

I can think of a few TV series where one of the characters set up a restaurant or a cupcake business. There’s something about that concept that must correlate with our desires. I see many new cake businesses, I know several people who have all separately and independently started into cake-making businesses. So based on that comes the new series of articles.

I’m going to review the current state of business strategy thinking and apply it to a hypothetical cupcake-making business. It’s a free series of articles and the majority of the lessons should be applicable to other industries. I’ve chosen cupcake-making because of its popularity and the ease of understanding.

Whether we want the job or not, it’s easy to put ourselves in the position of cupcake business owner. In its simplest form, we all know that you have to buy baking products, mix them according to a recipe, put them in an oven, remove them when cooked and sell the cakes. Over the series of articles, we’ll see how that simple concept could translate into a cupcake-making business.

What You’ll Learn about Business Strategy

  • How business strategy can be applied to small businesses, especially new and start-up small businesses.
  • What tools you can use to evaluate and validate your business ideas
  • What tools can help you to steer your business in a different direction
  • Some insight into how this can be applied to larger organisations and companies

Most importantly, you’ll be in a position to learn:

  • How to think analytically about your business idea and be more informed about the decisions you’ll make

Questions

Do you have a strategic idea that you’d like to see considered in this series, let me know. Either sign-up to the newsletter and ask there or contact me.

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