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Customer Manufacturing Update |  |
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Dear Mitchell, Here is your November Customer Manufacturing Update. For the first time ever in our series of Updates, we have a guest author. All of our previous papers have been written by a member of our team, but this month we have a guest, Abe "Walking Bear" Sanchez who writes about one of his favorite subjects, "The Unlimited Alternative to Money."
If you have friends or colleagues who would
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Abe "Walking Bear" Sanchez, an internationally recognized expert in credit-based sales and A/R management, is an astute observer of the actual use of payment terms in facilitating commerce. His insights on the proper measurement and use of credit are unique, and this paper reflects some of his thinking. With Abe's gracious permission, in this month's white paper, we look at his ideas behind "The Unlimited Alternative to Money."
One of our local Starbucks posted their customer service ratings recently. The scores indicated that they need to process people a bit quicker and clean the store up a bit. We agree. Overall their scores were in the 50s-80s (5-8 on a 10 point scale). We have noticed similar scores in other Starbucks. Good thing they are not a car dealership or similar location where anything less than a 10 is cause for termination. So, given such "low" scores, compared to other companies that push for 10s, how is it that Starbucks has such a loyal following and profits? Perhaps because Starbucks wants the unvarnished truth from their customers so they can get better, not an artificial score they can brag about. Several years ago when Mitch's wife drove a BMW, they would call her for her feedback on their car. She would not talk to them, so he did. He told every single interviewer that if he bought her another BMW she would divorce him. This never elicited any follow-up from BMW, who we assume were looking for a 10. If you want to get better, get feedback, which can be a perfect use of a Lost Business Survey. On that note, if we can make this ezine more useful to you, let us know.
W.W. Grainger Inc. last Wednesday reported an 18% drop in second-quarter profit but said it was able to carve out market-share gains even as the economy is showing no signs of a rebound. Apple® announced financial results for its fiscal 2009 third quarter ended June 27, 2009. The Company posted revenue of $8.34 billion and a net quarterly profit of $1.23 billion. These results compare to revenue of $7.46 billion and net quarterly profit of $1.07 billion in the year-ago quarter. Gross margin was 36.3 percent, up from 34.8 percent in the year- ago quarter. "We're making our most innovative products ever and our customers are responding," said Steve Jobs, Apple's CEO. I spoke to a CEO a couple of weeks ago whose market is down 90%. His business is off 60%. Does that feel good? No way. Is that good? Better believe it. He is likely to survive this downturn, many of his competitors will not. In a downturn, focus on gaining market share. Grainger, Apple, Ford and others are gaining market share. Some, like Apple, are seeing an increase in sales most are not. But if you gain market share and keep your costs in line, when this recession is over, you will be on top while your former competitors are left wondering what happened.
The San Jose Mercury News ran an article recently on opening a business during a recession. The writer did a good job of profiling various businesses, especially retail businesses, that open during a recession and the thinking behind how and why the entrepreneur did what they did. A key emphasis in the article is the idea of the consumer's focus on value. Most articles that discuss so-called "value pricing" focus on the idea of low price (where the word value is a substitute for the word "low"). As we discussed in an article we wrote a while back on value pricing , why does value mean low priced? The value priced position has come to mean a low priced offering of "pretty good" products or services. Why is the term "value priced" defined this way? Does this really make sense? What if you are not value priced? What are you then, high priced, over- priced, cheap? This Mercury News article was refreshingly different (at least to some extent) in suggesting that value does not necessarily imply low price. The press and most writers today focus on the consumer's insistence on value in this economy. The truth is that consumers always want value, which is why so few companies have loyal customers. It's just that in this economy more customers are not going to use trial and error to find value. They just don't shop or buy if they can't be assured of value. Two that end, the Mercury had two short articles in last week's business section that drive that point home. The first was titled "Price cuts, new products boost P&G." The article noted that P&G "sees budget conscious consumers ... responding to price cuts and new products to give them more for their money." P&G reported better than expected 1Q results. They cut prices by about 10% across the board and saw sales fall about 6% thus suggesting an increase in unit sales. Profit was off 1%, but that was better than expected. Their CEO's stated goal was to win back market share and the increase in unit sales may suggest that is happening. The second article was focused on a P&G competitor, Colgate-Palmolive. The title of the article: "Price increases lift Colgate in Q3." The article started out noting that "...higher prices have continued to stick helping ...[the] company post an 18% higher 3Q profit." (To be clear the two companies are on different fiscal years but the time period of interest is the same.)
While Colgate may not be able to raise prices further,
which company do you think is doing better?
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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