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Customer Manufacturing Update |  |
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Dear Mitchell, Here is your January Customer Manufacturing Update. Even in a downturn, or maybe especially in a downturn, great companies focus on innovation. Consistent innovation requires a culture that supports it. This month's white paper looks at proven methods to help you do just that.
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An organization's culture both determines and permeates all the activities in which it engages. Culture sets and provides the stage upon which an organization defines and pursues its mission and objectives, and the manner by which they are achieved. This is especially true iwth innovation. The role of culture in creating a consistently and appropriately, innovative comopany is the subject of this month's white paper, Innovation Culture.
This was shared with us recently. We are not sure of the original source, but we think the point is well made. It was autumn and an indigenous tribal group asked their chief if the winter was going to be mild or cold. Since he was a chief in a modern society, he couldn't tell what the weather was going to be. Nevertheless, to be on the safe side, he replied to his tribe that the winter was indeed going to be cold and that the members of the village should collect wood to be prepared. But, being a practical leader, after several days he got an idea. He went to the phone booth, called the weather service and asked, "Is the coming winter going to be cold?" "It looks like this winter is going to be quite cold indeed," the weather man responded. So the chief went back to his people and told them to collect even more wood. A week later, he called the weather service again. "Is it going to be a very cold winter?" "Yes," the man at the weather service again replied, "It's definitely going to be a very cold winter." The chief again went back to his people and ordered them to collect every scrap of wood they could find. Two weeks later, he called the weather service again. "Are you absolutely sure that the winter is going to be very cold?" "Absolutely, it's going to be one of the coldest winters ever," the man replied. "How can you be so sure," the chief asked. The weatherman replied, "The indigenous people are collecting wood like crazy."
The September 29, 2008 issue of Fortune Magazine published the results of a Miller Heiman/Fortune survey of sales people. One of the questions they published the results for was the classic: "When I lose the deals the primary reason is:" 42% of the respondents stated price. This would suggest that the low price leader wins 42% of the business in the market place ... at a minimum. This is patently not true. Yet, sales people continue to use price as their primary excuse for losing business. (The #2 reason is "relationship," which we interpret to mean that the customer likes the other sales person better, but maybe it means the customer is happy with their current supplier). Why is it that sales people continue to believe that "price" is the reason they lose business? Probably for two reasons:
We suggest that the real issue is simple. As Mitch discusses extensively in his book The Secret to Selling More: It's Not Where You've Been Looking-If It Were, You'd Have Found It Already, if the customer is unable to tell the difference between one product/service and the competition so the only thing left to do is buy on price. This is not a lost order based on price, it is a lost order based on a failure by the company to provide a compelling value proposition. That could be a failure of the sales person, or a failure by marketing to have created a value position to begin with.
While we often make fun of the airlines in these Updates, this is an example of really good marketing. It has to do with Southwest Airlines. If you do not fly them often or at all you probably think they still have the "cattle call" boarding process that rewards people who arrive at the airport hours early with the best seats on the plane. Actually it hasn't been that way since they began to allow Internet boarding passes. Today, you can get your boarding pass 24 hours in advance, and first come first served in terms of boarding priority based on when your boarding pass is issued, not when you get to the airport. With two exceptions and an additional benefit. (We'll get to the cool marketing idea soon, stay with us.) Boarding on Southwest is by boarding number, the lower the number, the earlier you board. And, now they have you line up by exact number so there is no need to stand in line at all until boarding starts. They actually now have the easiest boarding process in the industry. And it's still fast. (But we digress.) So, how else can you get a low number? Two ways: One is to fly them a lot. If you do, they reward you with a low number (usually below A-30) no matter when you get your boarding pass. The second way is to pay a Business Select fare. Usually about $15 more than full-fare and potentially a lot more than the lowest fare. The reward is a boarding number usually between A1- A15. Again, no matter when you get your boarding pass. So what's the cool marketing idea? Well it is actually the whole way in which you board and get your low number, but they have added a really good promotional idea. Now, when they announce boarding they call the "Business Select customers A1-A15." That way everyone knows that if you buy a Business Select fare you can be an early boarder. Free promotion every time they board a flight. We like it a lot.
We appreciate any feedback you can provide to help us make sure these Updates give you value each month. Feel free to respond to this e-mail with any comments or suggestions for future topics or ways we can make these Customer Manufacturing Updates more valuable to you.
Thank you for your interest, and if we can provide
any
additional assistance in sales, marketing, strategy, or
innovation to help you increase your sales,
let us know.
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