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?

Follow or like this page:

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

Follow or like this page:

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?”

Follow or like this page:

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”

Follow or like this page:

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”

Follow or like this page:

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?”

Follow or like this page:

Service Improvement Book – In Progress

After a year or so working with a large, complex client and some time before that working on a startup, I’m back to writing the book I started a couple of years ago.

Three good things have come from this break:

  1. Both of the experiences have confirmed that the book needs to be written. What I have seen in the last two years has proven to me that there is a gap and this book will fill that gap
  2. Both of the experiences have provided more evidence about which tools and techniques work well
  3. From a personal perspective, the break has given me more motivation to complete the book

I expect to be publishing in 2016.

Follow or like this page:

Forthcoming Book on Improving Your Own Service

Some of you may already know, I’m in the process of writing a book on improving your own service.

Lean Service Improvement Book
write by followtheseinstructions under CC BY-SA 2.0

I’m aiming the book at the people who work the process themselves, e.g.:

  • nurses
  • social workers
  • claims adjusters
  • HR/OD staff
  • office managers
  • office administrators
  • hotel staff
  • and their managers
  • and change agents/analysts

As you can see, it’s not restricted to any industry, but will be most relevant to those working in service industries (whether from private, public and 3rd sector), so that should include:

  • public sector
  • health
  • finance
  • retail
  • leisure
  • legal

More accurately, the information in the book could be useful for any industry, however there already exist books for improving manufacturing production processes, so I have not covered them.

What’s the book about?

The focus is on improving a service without recourse to large consultancy fees and should work well on small changes locally within a team and managed changes with partner teams and organisations (e.g. suppliers and B2B clients). It’s heavily based on Lean concepts, using simple tools, but also includes a framework in which to manage the changes. I’ve borrowed from a number of methodologies and concepts to meld together a method that is suitable for the average worker and implementable in any service team.

Your Input

While I’m happy to write this book alone and for everyone to read, I really like the idea of the readers contributing their thoughts as I write it. This fits nicely with the Lean Startup model, so to accomplish this, I’ve listed the current table of contents below. Please have a read through the table of contents and let me know what you think. If you’re interested in this book, let me know what you want to learn from it.

Draft Table of Contents

Section I: Beginning
1    Introduction
2    Background
3    Where to Start?
Section II: Redesign
4    How to Redesign the Service
5    Detailed steps for How to Redesign a Service
Section III: Other Paths
6    Refocus service on customer
7    Only have today to make changes
8    Bottleneck Resolution
9    Reduce errors and improve service
10    Create a new service
11    Improve office layout
Section IV: Case Studies
12    A Real World Example: Capacity and Value Stream Owner
13    A Real World Example: Duty Role in Social Care
14    A Real World Example: Urgent Cases in Social Care
Section V: Extensions
15    Other sorting methods
16    Making it Happen
17    Managing the Change
Section VI: Continuing
18    Sustaining Change
Section VII: Reflections
19    Important Perspectives
20   Other Frameworks
21    A final piece of advice
Section VIII: Appendices
22    Appendix A: The Rules
23    Appendix B – Pocket Guide for Service Redesign
24    Appendix C – Indicators of Blocked Flow and Waste
25    Appendix D: Tools
26    Appendix E: References
27    Quotes

Follow or like this page:

What’s the Emotional Content of Your Customer Journey Maps?

I’ve previously discussed the inclusion of a dormant state and a return loop when reflecting on the fact that the Customer Journey Never Ends.

What's the emotional content of your customer journey maps?
Traffic Smileys by The Wolf under CC BY 2.0

You can include a further extension of the customer journey maps by showing proximity or emotional state.

Focus on the Emotional State

Typical customer journey maps (or diagrams) depict activities and results, maybe important events as well. These commonly use the terminology of the organisation rather the customer. By shifting that focus onto how engaged the customer feels at each stage, we see the journey from a different perspective; that of the customer.

Sales Funnels

Companies often use a sales funnel to monitor their sales process. Analysing the performance against the states in the sales funnels allows a company to redesign its sales process or to develop additional collateral. Some of the funnels focus on emotional state mixed with likelihood of buying. The customer journey map that displays emotional states can fit very well with the states defined in sales funnels. For example, the tables at the end of the superb Lean Entrepreneur book take the reader through the different levels of engagement that a customer experiences as they progress through the sales funnel:

  • Aware
  • Intrigued
  • Trusting
  • Convinced
  • Hopeful
  • Satisfied
  • Passionate

Extend the States

These funnel states would need to be extended to include less positive states commonly found as customers move away from your organisation, e.g.:

  • Apathetic
  • Disgruntled
  • Adversarial

There may be more states, but that will depend on your customers and what you understand about them.

How Can You Do This?

  1. Compile a complete list of emotional states for your customers
  2. Filter this list to create a simple, single list that reflects the combined understanding from marketing, sales and service/retention departments
  3. Develop the customer journey maps
    1. Take the list of states and apply them as an overlay to your existing customer journey maps or
    2. Take the list of states and create a new customer journey map

My preference would be to start afresh as thinking based on the emotional state is likely to produce a different picture of the journey than the model based on activities and results.

Customer Input

You may have noticed that I didn’t include asking the customer for their emotional state. I nearly always advocate gaining input from customers in the most appropriate manner. I only omitted it above for the fact that it’s often a step too far for a lot of organisations. However, if your organisation has the means to engage with customers at the right level, then collate the emotional content from your customers and use that to build your customer journey map.

Follow or like this page:

The Customer Journey Never Ends

I’m reminded of the phrase “a dog is for life, not just for Christmas”. Similarly, as soon as an organisation starts a relationship with a customer, they’re stuck with that relationship. Many organisations design customer journeys but think from their own perspective rather than that of the customer. That’s a mistake but one that can be simply rectified.

Customer Journey Never Ends
Signs by I Am Fry under by-nd 2.0

An exchange between customer and company lasts longer than the original transaction. For instance, if a customer buys a product, has a fault, then has to return it. That’s one set of interactions all about the one transaction. The fact that it can last longer is nothing new, what has changed is the proximity of the customer and company. Now, the customer can submit a complaint online, they can spread the word via social media or they can ask for assistance on an online forum. This makes the customer and company a lot closer than before. The implication is that even if the customer has stopped buying from you and now buys elsewhere, their opinion will count forever.

Even though the customer has finished their exchange with your organisation, they are a still a person with memories and experiences. When they next come to buy, will they use your company or another?

Additional Customer Journey States

A further implication is in how we can design customer journeys to be more comprehensive and reflective of what actually happens. A depiction of the overall customer journey should include a state where the relationship is dormant and a loop for repeat custom (whether repeat of the original purchase or of a new product). The journey could be extended further still to show some of the customers leaving your company, probably from that dormant state and buying from a competitor. Some of these will return, some not, but all of their opinions will count.

Hopefully these two ideas will help you handle the fact that the customer journey never ends, at least from the customer’s perspective.

Follow or like this page: