Category Archives: Sales & Marketing

Does It Still Make Sense to Off-Shore? Seven Suggestions

Situation: A company is investigating off-shoring to lower costs. Trends are confusing with some companies returning operations to local production and others continuing to offshore. In addition, options include partnering with an existing company with expertise, or developing off-shore resources themselves. Does it still make sense to off-shore?

Advice from the CEOs:

  • Instead of looking at broad trends, narrow your focus to what other companies in your industry or closely related industries are doing. You can get this from industry publications and trade associations, as well as from other companies with whom you have personal relationships. This will help to clarify trends that potentially impact you.
  • Consider whether there are complimentary objectives that will influence your decision. For example, do you want to expand your market presence abroad and would off-shoring operations help you accomplish this?
  • Look at other US locations – for example the Midwest. Midwestern moms working from home provide high quality customer service for Southwest Airlines. Part- or flex-timers may be less expensive than full-timers.
  • Make this move in steps. Consider breaking up your needs into distinct components and outsourcing each component from a different provider or vendor. This will help to preserve your “secret sauce” and corporate IP resources from those who might want to steal it if they saw the whole picture.
  • Good off-shore functions utilize as little management as possible. Distinct tasks are easier to off-shore than complex processes.
  • Look at scalability issues – based on your own past experience.
  • Tie the resources that you need to what is readily available in different geographies.

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When is “Good Enough” Enough? Five Factors

Situation: A company is about to launch a Beta version of their web-based software. The CEO strives for perfection. What is sufficient for launch, and can the company tolerate imperfections in Beta version? When is “good enough” enough?

Advice from the CEOs:

  • Many successful software companies – think Microsoft – have realized that finishing the last 10-20% of a new release can be as expensive and time consuming as the first 80-90%. The challenges are often greater and it’s difficult to prioritize the final pieces. So they release when the software is 80-90% complete, prioritize the final pieces based on user feedback, and focus on quick response to user feedback.
  • You really have no idea how users will experience a new web-based program until you hear it from them. They will tell you what does and does not need to be fixed. They may even be able to help you fix it! Craig’s list stinks from a pure GUI perspective, but is highly popular and successful.
  • Get the Beta program out ASAP. What you perceive as imperfections may not appear as problems to young Beta users, and may in a way add a quirky appeal to the user experience.
  • Find a customer or group of customers who will pay for the program. Only this proves its actual worth. There can be conditions for a Beta release and discounts, but if nobody is willing to pay, where is the value?
  • Consider releasing your Beta version in a college campus environment and invite both participation and feedback. College students are very web-savvy, more tolerant of Beta programs, and crave the opportunity to contribute.
    • As an additional bonus, when you are ready to launch, college students are great at helping you generate buzz and early adoption because they talk to so many of their friends from both college and high school.

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How Do You Tell a Client That They’re Wrong? Five Factors

Situation: A company’s client is furious at the service they received from the company, It turns out upon investigation that the source of the client’s difficulty arose from their own actions, not from anything done by the company or its employees. How do you tell a client that their assumptions are wrong?

Advice from the CEOs:

  • Ask open-ended questions in an attempt to “clarify your understanding” of what happened. You want the client to answer these questions so that they explain the situation to themselves. Always allow them to save face in this process. Some people are better at this technique than others.
  • Try to understand the client’s experience of the problem as opposed to focusing on the problem itself. This may reveal more deep-seated challenges facing the client that are just being expressed through the current situation.
  • Email communications often complicate these conversations. Call or visit to let the client know that you are responding personally to their concern. The best communication is person-to-person through conversation. Let them vent. Peel back the onion through questioning to reveal the core problem.
  • Be honest. Not negative but simply honest. Listen to gain understanding and repeat the facts, as stated by the client, to assure that you properly understand their perspective. If you need to present your own perspective, and it differs from the client’s, do this in a neutral, unemotional tone.
  • Sometimes you will find a win-win in these discussions, and sometimes you won’t.

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How Do You Mature an Ad Hoc Sales Effort? Four Factors

Situation: A company’s sales process is currently ad hoc with a 20% close rate and an unpredictable pipeline. The CEO wants to develop an organized sales effort. How do you mature from an ad hoc to an organized sales effort?

Advice from the CEOs:

  • Use the same discipline that you use to develop and bring new products to market to develop and engineer an organized sales effort. Start with a clean slate. Develop a full business plan and process to support your sales. Set projections and milestones, assign responsibility and accountability, and hold regular meetings to monitor progress and adjust your tactics.
  • Utilize the company’s knowledge of the market and your customer base to better understand your sales efforts to date. For example:
    • Look at your sales history, and look at the cases where you have closed business. Are there commonalities or patterns among clients with whom you have won new business?
    • Similarly, look for patterns in situations where you did not close new business.
    • Look for a sweet spot which characterizes business deals that you’ve won. If you find that in past efforts there is a segment where your close rate is higher – perhaps among clients of a particular size or in a particular industry – hire a sales executive who has a history of success in this segment of the market. This will improve your close rate and provide a base from which you can expand your sales efforts in a planned and orderly way.
  • Determine your most important market differentiation – what makes you special – and validate this with current and past customers. Make sure that your differentiation is as important to clients as it is to you. If it isn’t find out why clients chose you rather and your competition.
  • Is your sales process reactive or proactive? Until you truly understand your market, it is reactive. Once you understand where your sales efforts are most effective, improve your knowledge of this segment of the market and focus both your sales and marketing efforts here to boost your results.

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What Leads in Building Brand Focus? Five Factors

Situation: A company faces a question branding a new product – what should lead the branding focus: product design or product attributes that will be an eventual part of the branding strategy? Which should lead in building brand focus?

Advice from the CEOs:

  • There are two areas of focus – each an important part of the overall trademark and branding strategy:
    • A distinct name or symbol, for example Amazon.com or eBay, will gain the right kind of attention and be easy for potential customers to remember. The prime risk here is stepping on someone else’s mark.
    • Your overall branding strategy. The point here is not confusing your customers. Marketing people will advise you to KISS – Keep it Simple Stupid! One tack is simplifying the complexity of technology.
  • It is important to develop a consistent set of product attributes – one that you know through research will resonate with your client base – before your Alpha launch. It is dangerous to conduct an Alpha launch without clarity on this point. Subtleties of the eventual brand do not need to be finalized, but the overall framework of key product attributes should be consistent and clear from the beginning.
  • Design and the development of important product attributes ideally take place in synch with each other. Positioning will depend on your audience, and the unique needs and expectations of the audience.
  • The name itself could be important. Being clear and easy to spell may be important. Test alternative names for this trait.

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How Do You Respond to Market Changes? Three Options

Situation: A company has a successful product, but the market is changing. Previous customers were savvy, but the market is shifting to more naïve customers who don’t understand how to use the product. How so you respond when the market for your product changes?

  • What you are seeing is a typical market evolution. (See Clayton Christensen’s book Crossing the Chasm.)
    • When a new product is introduced, early adopters are typically savvy users who quickly grasp the utility of the product. They don’t mind some inconvenience provided the product is useful.
    • As the market matures and starts to attract mainstream customers, new users will not be as sophisticated and expect the product to be easy to use.
    • If you don’t adapt to these new customers your product will languish as new competitors enter the market with user-friendly adaptations.
  • The path is clear. Figure out how to make your product easy to use. If you use a GUI (graphic user interface) make the GUI intuitive. Allow customers to get what they need with as few choices or clicks as possible.
    • These changes may alienate more sophisticated customers, but they usually only represent a small segment of your potential market.
  • Add a customer-friendly service component. This builds a service income base around the product. You have different options.
    • Align the customer with appropriate level of resource – you may not require high level resources to assist the customer, particularly if the product is one where the service consultant only needs to be one page ahead of the user.
    • Outsource the service component to a partner or use independent contractors.
  • Consider a remote monitor system:
    • A dashboard interface with easy to read visuals or messages that tell the customer when service is needed. This will enable them to perform simple maintenance using your tools, or alert them when they need to contact you for service.
    • An example is Norton’s evolving system of products that enables an unsophisticated home computer user to either use Norton tools to perform routine maintenance, or directs them to the Norton web site for assistance or more sophisticated solutions.

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How Do You Identify New Customers? Four Alternatives

Situation: A company wants to expand its markets and customer base. Currently their business is dominated by a single customer. What best practices have you developed for identifying new customers and markets?

  • The key to getting new customers is to devote dedicated time to this task.
    • If your company is populated by engineer or software specialists, consider hiring a sales professional – a commission based hunter sales person who has experience landing big accounts in markets similar to yours. You may pay this person a good percentage of sales for brining in this business, but gaining the additional business can be worth it.
  • Much depends upon your relationship with your large customer. When a single client has rights over or ownership of the technology of the company but is not pursuing broader markets that the company is interested in, is it feasible to negotiate rights to pursue this business?
    • The larger client will pursue their own interests, not those of the smaller vendor. Perhaps a win-win deal can be worked out, but it may be difficult – particularly if the larger client is concerned that use of the technology in other markets could affect its interests in their primary markets.
    • Be very careful in this situation. The easiest tactic for the larger company to defend itself from a perceived threat is to sue and simply bury the smaller vendor through legal expenses. While the smaller company may be legally within its rights, deep pockets can beat shallow pockets through attrition.
  • In the case that the larger client simply continues to buy all capacity of the smaller company, an alternative is to raise rates, or perhaps to just say no.
  • Consider recreating the opportunity – create your own adjunct proprietary product with your own software or design talent and expand your horizons with this product.
    • Be aware, the large client can still sue if there is any appearance that your proprietary product impinges on their product rights. As in the case above, the larger company has the resources to bury the smaller company in legal expenses regardless of who is legally correct.

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How Do You Respond to a New Big Competitor? Four Strategies

Situation: A company has just learned that a new, much larger competitor is moving into their market. They are concerned that this may severely impact their growth and even their existence. How do you respond to new competition in your market niche from a much larger new entrant, particularly if the new player comes in with a low pricing strategy to buy market share?

Advice from the CEOs:

  • Take a lesson from those who survive a move by Walmart into their territory:
    • Boutiques and high service specialty stores survive Walmart – especially those that focus on personal service. Walmart does not provide the level of service that you find in one of these stores and doesn’t know their customers as individuals. Boutiques may lose some price conscious customers, but these are not the customers that provide good margin to them.
    • Use your personal knowledge of the marketplace and your long term relationships to your advantage – including your reputation with existing customers when going after new customers.
    • You may remain more profitable than the larger company, especially on a per transaction basis, based on your knowledge of the territory or business niche. Walmart can’t tell you the best product to perform a home repair.
  • Focus on your strengths in the market, and don’t assume that all large companies are Walmarts. Walmart has a unique set of talents and a tightly controlled process. This may not translate to other markets – especially services which are very personal.
  • Research the reputation and business practices of the new entrant in their other territories. What are they known for, and what are their weaknesses? You may be able to learn this by networking with their current competitors and customers.
  • If you are a multi-generation family business, consider promoting your “old world skill” and established reputation and expertise.

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How Do You Forecast Revenue for a New Technology? Three Ideas

Situation: The Board of a company has asked the CEO to generate to forecast of revenue for this year. Their primary technology is new and the company has just started receiving orders. An achievable revenue forecast my not please the Board. However, the company may lack manufacturing capacity to meet a higher level of demand. How do you forecast revenue for a new technology?

  • Be realistic in your forecast. While the Board may not like your number, the impact of setting the goal too far out of reach is potentially significant, including discouraging the team, and impairing credibility with the Board. However, if you aim realistically and significantly exceed the target you will be heroes.
  • How is it best to approach this in discussions with the leadership team?
    • Create a set of objectives and revenue targets and put probabilities around each. Also look at the obstacles to hitting the higher numbers, including manufacturing capacity and the cost of increasing capacity.
    • For examples if your most likely forecast is $X, then put probabilities around achievement of multiples of this number:
      • $X – 95%
      • .75X – 99%
      • 1.5X – 75%
      • 2X – 60%
    • Once your determine the objective, think through everything that must be covered to meet that goal, from sales to production, and start developing plans and contingencies to address these.
  • Share your probabilities with the board, as well as your plans and contingencies that may increase likelihood of reaching the higher targets. Ask for their input and assistance hitting the higher targets.

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How Do You Gain Commitment to Plan Revisions? Three Thoughts

Situation: A company goes through an annual strategic planning process followed by an annual business planning process. At mid-year they do a review and correction. The challenge is that if the company is behind plan, the management team does not take ownership of plan revisions – it becomes “the CEO’s Plan.” How do you gain commitment to revisions in the annual plan?

Advice from the CEOs:

  • Throw out your current process and start over.
    • The challenge is to gain more buy-in and accountability. This only comes if the targets come from those responsible for delivering them – both for the original plan and if any revisions need to be made.
    • Look at who you involve within the organization – can you drive involvement deeper to generate additional buy-in across the organization?
    • Hire an outside facilitator to guide you through the process instead of chairing the meeting yourself. This prevents the resulting plan from becoming “your” plan. It also changes the culture of the meeting as well as the buy-in.
  • If you use a bottom-up / top-down process, moderate the plan results with an eye to two realities:
    • Bottom-up input from the sales team is rarely more pessimistic than the CEO’s input. If it is ask what is happening.
    • Make sure that your top-down numbers are empirical and based on the best market research that you can obtain.
  • If your plans have consistently fallen short over recent years:
    • You may be baking the targets too high.
    • Consider building the revenue plan optimistically, but build the expense plan conservatively. This helps control expenses and attain profitability targets.
    • So that the two plans are not misaligned, review them more frequently – perhaps quarterly on a formal basis with monthly reviews – so that if your revenue plan is meeting targets you can adjust spending to support production and delivery.
    • It is common to have one set of numbers for sales and a different, more conservative, number for expenses. As long as you conduct frequent review and adjustment of the expense number to sales performance, this works. Many companies also use different targets for operations than what they present to the Board – with the more conservative numbers for the Board.

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