Image copyright: DoctorTac via Flickr

By the end of a sales call you should have a pretty good idea who you’re dealing with. I’d say most people will fit into one of five categories:

1. We don’t have a problem — some customers simply don’t have the problem your product or service is designed to solve. Some customers have the problem but are unable or unwilling to see it. The final possibility that sits here is that they know they have the problem, but they don’t believe your product can solve it.
2. We’ll wait for a major player — people buy from people that they know, like and trust. The wait-for-a-major category accept they have a problem and that you may even be able to solve it, but they’re unwilling to take a risk on a company they don’t know. It may be slightly unfair that they’ve invited you in when they’re too risk averse to buy from an unknown.
3. We’ll do it ourselves — I always hire someone to paint my house, the guy next door never would, ever. Some people, departments or even entire organisations are more like me, some are more like my neighbour and will try to do pretty much everything on their own. I’m sure they don’t invite people in just for the influx of ideas, but for some reason, when they see something new, they imagine it’s easier or cheaper to do it themselves.
4. Come back with version 2 or 3 or 4 — some people are always waiting for the next version, or until the price comes down, or for some other imagined improvement that they know is on the way. They might think you’re not yet ready for their particular situation yet, or that they’ll wait until other people have helped you iron out your kinks.
5. Looks good, what are the next steps?

Many people can be nudged from any of the first four categories into the final group. Many can’t.

Neatly filed under Making Promises on August 12, 2009

Image copyright: Corscri-Daje tutti! via Flickr

Inside any kind of organisation bigger than the land of Me & My Mate, you’re probably surrounded by people who do a job that’s completely different to yours.

What do all those people do?

I’ve been thinking about the doing part of that question lately, rather than the people part. The way I see it, no matter what the job title or department, the doing falls in to one of only five categories:

Making Promises – easiest to think of as all the things that happen in sales or marketing, some customer services and board functions. Anything that makes any kind of commitment on behalf of the company is a making promises action.

Keeping Promises – everything that even vaguely fits into operations: all the tasks that make the product, perform the service, look after customers, pick up, package or deliver the thing.

Measure and control – all the things involving numbers or making sure nothing gets out of hand.

Support – what gets done in order to make everything else function; what normally happens under the headings of IT or HR for instance.

Leadership and innovation – without getting bogged down in book style definitions, leadership is about direction setting and steering to the compass whilst innovation is all the processes that aim to improve things.

These are not departments, they’re functions, and whilst every person spends most of their time in one kind of role, they probably undertake processes in others, if not all. For example, a production worker is mainly employed to keep promises, but they probably also try to innovate to improve things, keep an eye on production rates and quality, put their arm around colleagues when they need it, and continually make commitments within and for their department.

Ok. So what? Is this anything other than yet another way of thinking about organisational structure?

If every process is about making, keeping, ensuring and supporting promises, or improving the way the whole thing gets done, then every job is about the customer.

So what do all those people do? Let’s hope they’re not wasting any time discussing, deciding or doing anything that doesn’t draw a straight line to improving the life of the customer.

Neatly filed under Innovating,Keeping Promises,Leading,Making Promises,Managing on June 3, 2009

When I went to see Jack Welch speak on management, I knew what I’d be getting – candour, leadership, persistence, values – no need to explain, no sales pitch required. You had me at the name.

When I’m looking for a coffee and comfort in an unfamiliar town, finding a Starbucks makes me smile.

A brand that I know, like and trust is a short cut to the top of my short list – very often, it’s a shortlist of one. Nothing new there, brands are important, let’s move on.

If brands are important, how do I get one? How to build a reputation people trust?

Make a promise people care about – or, put another way, build a fantastic product that people want. I know that sounds so obvious that it’s hardly worth the pixels it’s displayed upon but a) there’s loads of rubbish out there, and b) there’s plenty of products, particularly technology products, that nobody wants or cares about.

Tell them you exist, in a language they understand – or, put another way, talk like you care about the customer rather than about yourself. The language you use to talk about your thing internally may be the same language that your customer uses externally, but it’s probably not. Use customer language, not marketing/management/leading/essential speak.

Deliver, deliver, deliver – or, put another way, fulfil your promises. We buy from people we trust, prove you deserve it and we’ll buy again and tell our friends.

Reputations are built around happy customers. Customers are happy when we do what we say we’re going to do, and we do it brilliantly.

Neatly filed under Keeping Promises,Making Promises,Skippiness on May 25, 2009

I’ve been a fan of the Honda ads for a long time. The first one I remember getting all evangelical about, in 2006, featured the line, “It’s good to hate.” Officially about their new diesel engines, for me the ad was a call to arms – let’s change what is bad.

See what you think:

This morning I came across “Keep Doing.” Like the first, it was made by UK agency Wieden & Kennedy, voiced by Garrison Keillor, and riffs on the theme of sorting things out.

I can’t imagine playing Keep Doing for people whilst we wait to start a meeting – which I did countless times with the 2006 ad – but I can already feel this quote working its way into my world.

Doers do things, things to move us forward, to make stuff better.

Neatly filed under Making Promises on May 4, 2009

I’m involved in a couple of pricing conversations at the moment that both started, as they always do, with, “How much should I charge for …?”

There’s questions, and then there’s BIG questions? Charge too little, don’t make enough money, go out of business. Charge too much, don’t sell enough stuff, go out of business. So, how much?

For a question that’s been around for as long as business itself, you’d have thought there’d be a pretty good answer by now. Here’s the slightly scientific one,

• Forget sunk costs.
• Work out incremental costs – how much does it cost you to sell each additional unit, including the cost from you’re suppliers and everything you have to do before it gets sold?
• Work out the demand for your product (in units) at every price point you’re considering – this is called a demand curve.
• Find the point on the demand curve that produces maximum total profit (price minus costs times units sold).
• That’s it.

The problem comes in step three, working out how many units you’ll sell at any given price. It seems like a good idea but is, um, practically speaking anyway, most of the time, um, impossible. You can only really do it with actual paying customers (otherwise the data is extremely, by which I mean extreeemly unreliable), and then you need a sample of thousands to get a decent demand curve. And after all that, if you experiment with actual paying customers you run a distinct risk of pissing them off.

So, after all the maths behind all the models in all the books, we’re left with educated guesswork. I bet you knew that anyway.

Pricing for new products is low data. Accept that pricing is inexact and let your first few customers help you find the ball park. After that, work hard and listen hard.

This chart might help. Working from the bottom up, the left side shows that you buy things in from suppliers, add your own costs and sell at a premium over your combined costs, customers benefit more than they paid. The right side shows that your efforts should add value and allow you a healthy profit whilst leaving enough on the table for customers that they’ll be happy they got involved.

If you’re running a business in the pursuit of skippiness, figure out what price lets you reinvest in the organisation and the product whilst keeping shareholders skippy and customers keen to help. Charge that.

(Picture credit – I knocked it up but it leans VERY heavily on one I first found in Strategy Maps by Kaplan and Norton.)

(Whilst thinking about this question I was reminded of the fantastic Camels & Rubber Duckies post by Joel Spolsky on his blog, Joel On Software. Much longer, includes much more theory, really intended for a software audience but well worth the time for anyone struggling to come to terms with pricing.)

Neatly filed under Making Promises on April 28, 2009