This is a great ad for at least the following reasons:
Right to the point, eye-catching and no-nonsense. If they are for you, you will have to try them out.
Mitch
There is a relatively old expression that says “the customer is always right.” Everyone knows that’s not true, but the idea is to treat them as if they are right. I have suggested that the customer is usually wrong, but if you make it about right and wrong, you’re going to lose. The customer is always the customer, until one of you decides they aren’t anymore.
Much has been written in the last few years about “firing customers.” The idea being that spending too much time and resource with the wrong customers, will keep your company from having the time and resources to spend on the right customers. The key in many cases is to define “right customer” and “wrong customer.”
Many experts suggest you use profitability as the metric for right and wrong. That is, keep the profitable ones, and jettison the unprofitable ones; and maybe even the marginally profitable ones. The problem with that idea is most companies don’t have a clue which are their most profitable customers, or the metrics to really know.
Clearly a high margin customer that does a lot of business with you and is easy to serve is a profitable customer. Ditto, a low margin customer who does little business and requires a lot of “service” is likely an unprofitable customer. However, those two extremes are likely a tiny part of your customer-base. So how do you evaluate those in the large middle?
That is beyond the scope of a blog post, but it seem obvious (at least to me) that you need to create at least some simple metrics to sort your customers by value to you. Additionally, as my friend Ted Steinberg has taught for years, it’s not just how much business a customer does with you, but how much could they do with you? What is the real potential value of a customer, and how does that fit the “right” or “wrong” matrix? Over the years I have learned that most companies have no idea who their best potential customers are. At best they can rank their customers by current revenue and maybe also profit.
Nordstrom was famous for inviting the wrong customers to shop elsewhere, thus allowing their people the time to take great care of the right customers. Stanley Marcus tells the story of taking back a gold (yes really gold) dress that a customer had ruined because his son had not made sure the customer knew how to care for the dress. He noted that woman spent tens of thousands of dollars in his store after that.
There is no question that treating all customers the same is a mistake. The “trick” is to have a way to know who the right customer is; how to attract more of them; and when to cut loose of the “wrong’ ones.
How are you doing with this?
Mitch
Almost every day we hear about more closures of brick and mortar stores. Abercrombie is closing a bunch of stores, and Macy’s announced the closing of hundreds of stores. While we aren’t Abercrombie’s target customer, my wife had been (the operative word being the past tense “had”) a Macy’s customer until recently.
My wife was a loyal Macy’s shopper until a few years ago when she noticed a distinct change in their stores and their approach. I wrote about one of her store experiences a couple of years ago. She is also tired of going into stores that look like a tornado hit them and merchandise is all over the place, and no help can be found. While she still shopped Macy’s, it was no longer her “go to” store.
Now it is going to be her never go to store. Why?
To show how ineptitude is contagious and permeates an entire organization over time, the other morning my wife got a call from Macy’s credit to ding her for not having paid her bill for two months. She stated that she had not gotten a bill from them in over 6 months, because she didn’t shop Macy’s much anymore. The “collector” told her that she had purchased close to $3,000 in merchandise online. Stunned, my wife explained that was not possible. The “collector” cited what she had bought (my wife would never buy that kind of stuff at those prices) and asked her if she was still living in Miami. (We have never lived in Miami.) Not convinced this was a legitimate call, she told them to send her information to prove she had bought this stuff. (At no time did they suggest they cancel her card.)
A few calls later, it is clear that her card # was used fraudulently. They did decide to cancel her card and send her a new one, which is not going to be used. However, the hassle of dealing with the sales prevention department, that clearly does not have even rudimentary fraud prevention software (since all the purchases made over the two days did not fit anything my wife had ever bought), has caused her to decide Macy’s is not worth the hassle. She is done.
Of course, Macy’s management would blame this reduction in sales on “outside forces,” including changes in how people shop. Sure, they didn’t bill her for two months and don’t know why. They dun her for non-payment and she has to show them how fraud was committed by someone in Miami using her card. She has to complete a detailed fraud report to meet their needs. As she says, “who needs them.”
Meanwhile I got a defective item from amazon.com. I asked to return it, they sent me a new one, sent UPS to pick up the old one. No hassle.
Brick and mortar suicide continues. (And to be clear this is suicide.)
Mitch
Much has been written over decades on how to compensate sales people to achieve optimal results. The answers are all over the map. Daniel Pink’s best seller, Drive, advocated for intrinsic rewards not extrinsic, such as incentive pay. Those who like that idea jumped on his research and position. Trouble is, it is wrong in fact and by observation.
To be clear, it is wrong for most companies, except when it isn’t. Huh?
Most companies don’t have a lot of sales people. And, without question some good sales people are driven by extrinsic rewards (ie money) and some are more driven by intrinsic rewards (ie autonomy, purpose, etc.) If you create a reward system for your company that focuses on one or the other or some combination, you can likely attract enough good sales people for any approach. Ken Olsen, CEO of Digital Equipment, hated the idea of commission, and in an era when most of his competitors had highly commissioned sales people, he was successful without such a plan.
That being said, research also shows that Pink’s research was flawed when it comes to sales people. If one looks at the research cited in his book, it focused on short-term incentives, some as short as hours or minutes. Meta-analysis of well constructed research studies shows that longer term incentives (over 6 months) had a positive impact on sales people.
So what are the keys to effective sales compensation? We believe there are two:
Bottom line, as I was told when we took Lamaze classes when my son was to be born: choose the approach you like and find the book that supports it.
Or follow our advice and align compensation to your strategy and keep it consistent.
Mitch
We’ve all heard the mantra and depending on our age, we have heard it for decades. We know it’s true. Look at Netflix destroying Blockbuster, which had destroyed the independent video rental stores. Look at Amazon destroying the big book stores and now threatening other retailers. The list goes on and on. Nothing new.
The demise of the traditional movie theater has also been predicted for several years now as well. The actual number of screens in the U.S. has almost doubled since 1987 but has been about flat for the last few years. (As an aside, the number of drive in movies has dropped by 2/3’s in that same time frame.) What has kept indoor movie theaters from going the way of Blockbuster, et al?
Partially the continued protection of the channel by the movie producers who give them release preference. However, that would not be enough in the long-term as all it takes is a few studios to break the mold and it would be over. No the theaters have adapted.
I was reminded of that continued adaptation while visiting a Cineplex in Saskatoon (of all places). Almost all the movies being shown and most coming out are in 3-D. Can’t (yet) get that experience at home. Some of the theaters, here and elsewhere, offer reserved seating and in theater dining. Making it a real date night (with added revenue for the theater).
Cineplex here in Canada has a corporate sponsor on their theaters, ScotiaBank. I expect to see that in the US soon (and it may be there already, just nowhere I’ve been recently). They promoted a new 4-Dx feature coming in the near future to Cineplex theaters. What is 4-Dx? A feature designed to give the viewer true sensory involvement with the action. The seats will move to make the viewer part of the action in the movie. They are going to produce sensory effects including smell, water, snow, etc. Can’t get that at home.
Prior to the start of the movie they had the viewers use an app to play a game to win loyalty points. Getting attendee involvement. (Fortunately they still ask you to turn your phone off before the movie starts.) They have also created a service where you can download/stream the movies once they are released and if you want to buy the movie you are watching when it comes out that is available at a discount. (Going after Netflix directly.)
The channel/industry is successfully adapting. Take a cue and make sure you do too.
Mitch
To help prevent errors, a construct translated as “make doing the wrong thing hard” has been around informally for many decades. It was formalized as part of the Toyota Production System by Shigeo Shingo and called poka-yoke in Japanese. This replaced the original name, baka-yoke, which translates as “idiot proofing.”
Many Lean Thinking professionals teach and incorporate this construct into processes. It was originally implemented in production systems. You see it in situations where two hands are required to run a machine, even though one would clearly be enough. By making the operator use two hands one can be sure that neither hand will be cut off by the machine.
I was reminded of its value recently while dealing with Amazon. Several months ago I attempted to buy a Scott stamp catalog from Amazon. It was not yet available, but I could pre-order, and it would be shipped when it was available in a “few months.” While waiting for the “few months” to go by, I got confusing updates as to when it would or would not ship. Finally, I was alerted that it was available to ship, so I went online to see if it was still on order so I would be sure to get it. I did not see it in my order queue. I assumed it had been canceled before so I re-ordered it.
I got two of them. Only needing one, I returned the second one. Amazon, as they do, promptly refunded my money. Well not all of it I came to find out. They charged me a 50% restocking fee on a $130 item that had been unopened. I get restocking fees, but I have never seen a 50% restocking fee.
I called Amazon customer service and the rep was polite, investigated, found I had made the error and told me she could not reverse the restocking fee. The conversation with her caused me to realize how I had made the mistake. Amazon provides your order history anytime you want to see it, but it is in history order. Unshipped items are in the queue based on when ordered. As the catalog had been ordered a few months before, it was way down in my queue and I had failed to see it was still there. (As an Amazon Prime member I am sure to order lots of items from them so I get my money’s worth from free shipping.)
In talking with the customer service rep, I made the suggestion that Amazon change their queue to show unshipped items first. She said she would pass it on. All done … well not yet.
I remembered writing a blog post about how Jeff Bezos reads emails sent to him and passes them on for action. I decided that he should know about my idea to make doing the wrong thing hard, so I sent him an email. The next day I got a response. Unfortunately, the response only focused on the restocking fee, which they decided to remove, but did not address my real issue, which was to change the process to make doing the wrong thing hard.
I thanked the person for removing my restocking fee, and reminded him that my real point was to have them make doing the wrong thing hard. We shall see if they take my advice.
Mitch
Pepsi recently announced the “return” of Diet Pepsi with aspartame. This caused a big to do on a recent conference call. Aspartame was removed from many diet drinks due to consumer concern about health issues. However, as Pepsi CEO, Indra Nooyi, is quoted upon the return of the original product: “What we did not anticipate is that there’s a group of consumers that absolutely loved the original Diet Pepsi.”
That’s amusing to me since they pushed Coke into reformulating its product many years ago and then Coke had to backtrack and reintroduce Classic Coke, and finally kill ‘New” Coke. I realize this is not a simple situation, since, apparently, a significant number of consumers don’t want Aspartame in their drinks, while a large number want “original” Diet Pepsi taste. Ah the dilemma.
However, here is the “shocker’ for me. (Unfortunately, I am not really shocked. Even in this day of alleged customer-centricity, this situation is still largely true.) Ms. Nooyi, “also conceded that the company misread the attachment of some consumers to the aspartame version.” Seriously? And it’s not like having two versions of Diet Pepsi is that much of an issue for the company given the close to a dozen versions of Pepsi now on store shelves.
Customer-focus is easy to espouse on earnings calls. Harder to execute since the consumer often has a different viewpoint than the efficient one the company would prefer.
Mitch
