Reflections
I have been fortunate enough to have travelled a lot in the last month and I have been able to think about the real differences between the different entrepreneurial scenes in different places.
In the last three weeks, I have carried out some training in Winnipeg, Halifax and of course stunning Cape Town.
The first thing that struck me as odd was the demographics of the groups I was dealing with. My time in Cape Town was the first time I had spent in Africa and although I interacted with around 100 or so people in the ten days I was there, I only came across three black people. The strange this was that one of them was from Kenya and one of them was from Dallas!
When I recanted this to my friends in Canada and in the UK, they immediately jumped to the conclusion that this was racism. They were right, but not in the way that they thought. The government of South Africa through its black empowerment policies has instigated race related economic policies which guarantees low participation rates for the white population in employment and therefore forces them to pursue a path in entrepreneurship.
As it happens, I think this will be a very interesting business and social experiment – and it will be good to see the results in a few years. What does happen to the business prospects of a country when much of its talent is forced into entrepreneurship?
Can you imagine if in the UK or in places like Nova Scotia, talented people were prevented from taking jobs in government or large businesses and had to start their own business? Interesting.
Halifax is my second home (The Prince George Hotel at least!). And it really is an awesome place. You do notice that there are almost too many initiatives and organizations in the ‘entrepreneur’ space. As an entrepreneur you have to be very careful about whose advice you take and you should always really judge the people that are trying to judge you.
Much of my credibility came from being a mentor at Seedcamp in London – and the feedback that came from that. But as a trained salesperson, I know that I am only as good as my last business deal, or coaching interaction or talk.
Lessons from Sandwiches
I was recently coaching a great digital business based out of Halifax and we were looking at the issue of menu costs. The business theory is very simple; minimize choices on offer. By doing this, you reduce the inventory cost and the business becomes simpler.
He had tried this with his business and found that the revenues went down. I then remembered lessons I had learned from my experience at Amano (still miss you terribly Johnny RIP).
Consumers in our sandwich shop would always choose one of three sandwiches – and 80% of the time, they would have just one sandwich. But if you only offered the consumer the three sandwiches they want, they will really not like the lack of choice and go somewhere else.
This is very odd but it is a real phenomena. How would we feel about going to supermarket that didn’t allow us to ‘browse’? I know I don’t want to buy biscuits, but I want to see them there either to satisfy my sadomasochistic instincts or to congratulate myself on not buying them!
Most people feel the same way. Hence, you must avoid the temptation of only giving consumers what they want to buy? What they want to see and what they want to buy is not the same thing.
I also learned last week (during a fantastic pitching event in Winnipeg, Manitoba) that most consumers use the same formula to choose a bottle of wine at a restaurant. They will choose the second least expensive in any given category. Amazing and yet – they want choice. One of the whole points of a wine list is to be able to browse and choose thereby looking cultured.
This is not the same as ‘confusion marketing’ which mobile phone companies shamelessly use. This is where you deliberately confuse the consumer with too many choices and confusing ones, so that they choose one which is not the best for them.
Websites suffer from the same problem and Alan Sugar (whom I have to say really impressed me with his Biography) has always used menu pricing to help consumers feel they have choice in what they want to buy.
So the lesson; theory is great and just because you are doing something very clever in the digital world; basic rules of psychology still have to be understood and applied.
Alignment
There is nothing better than helping a client through the provision of a service that you just know is going to really help them. It is a case of all the interests being aligned. I remember watching a movie “In Good Company” (to be fair not a brilliant movie, but a great sales scene).
In the movie Denis Quaid is the senior sales person teaching a young up-start how to sell. They get a really good sale and Denis seems very pleased because he customer has got a good deal. “You really believe in this, don’t you?” asks the young up-start. “Of course, why else would you do it?” replies a slightly startled Denis.
There is a real truth in this and yet we all come across businesses and sales people where you sense the objective is just to make money rather than seeing making money as a by-product of providing a really useful service that adds value.
The business I have recently started up and am now focusing much of my attention on is www.springleads.com and I do not mean for this blog to come across as an advert for this business, but I want to use it to explain exactly what I mean by alignment.
My background is in sales and my career break came through my cold-calling efforts at PricewaterhouseCoopers. I was very good at it and went around the country training others across the firm on cold calling. It is something that I enjoy enormously and have a passion for.
With all of the mentoring I have done recently, I know that the big issue many start ups face is having to make many cold calls just to find the few customers that would be interested in talking to them. The most effective sales person in a start up tends to be the CEO, and yet the most precious resource they have is their time. Cold-calling for them is not a good use of their time.
www.springleads.com provides that service for them and for any other company that needs a large number of calls being made. So how did we set about differentiating between other call centres? Again through understanding the pain that start ups have, we were able to realise that having a set up fee and a minimum order number of hours acted as a barrier to many cash-strapped start ups. As such we set up a cost structure where there would be no set up fee and a flat £15 per hour.
Of course this is a plug for the business, but I hope it illustrates that when you are starting a business, it is important that you have (or you rapidly acquire) knowledge about the problem you claim to be solving. The other lesson is that you have to make money from the activity whilst still providing an enhanced service. So your cost structure has to demonstrate not just the needs you have – but also the needs of your client.
Ensure your personality and experience are aligned with your business and that most critically your business structure is aligned with the needs of your customers.
Noise v Message
One of the curious observations I had, when I was at Duracell as a salesperson was that every time our competitor, Energizer advertised on television, our sales went up significantly.
In the last couple of weeks, many of the companies I have come across could do well to remember this. You should always have a clear message which is also intelligent rather than generates lots of noise. This is particular true of many internet based businesses.
The key to a successful campaign is to get your distribution right. Companies like Unilever, Mars, Coke, Kellogg’s etc, can get good return on advertising investment because they have excellent distribution. If an advert makes you want to purchase one of their products the chances are if you live in a city, you are less than 300 meters from a store stocking the product.
Whenever Energizer advertised, they reminded people that they needed to buy batteries, or that they should stock up. However, as Duracell had won the battle for distribution, when the consumer went to the store, they would find only Duracell available.
I suffered the opposite problem when I worked for Fujifilm, we were playing second fiddle to Kodak and as an ‘impulse’ category, it did not make sense for convenience stores to stock both brands.
So, when a start up tells me of the very clever PR plan or marketing strategy that they have in place for their start up – I get very nervous, as I tend to ask questions about the distribution – which will ultimately determine the effectiveness of the marketing plan.
I always like asking people the difference between sales and marketing, and you are guaranteed to hear a lot of MBAesque answers. The best one I have ever heard (again from Duracell) is.
“A sales person’s job is to make sure the product is on the shelves, the marketing person’s job is to make sure it does not stay there”.
Are you getting your sales and marketing efforts the right way around?
Anything but sales
There is a curious behaviour that I have observed in many start ups over the last 10 years or so. It takes a great deal of effort and persistence to get a business idea shaped into a plan and a working business model and then launch. It is a Herculean effort and I have nothing but the utmost admiration for entrepreneurs who get to that stage.
However, it is at this stage that this curious thing that I have observed takes place; sales do not happen. Most entrepreneurs feel comfortable doing an elevator pitch about their business but not about their solution or their product. They really hate the idea of a customer saying no. This is of course understandable. No one wants to hear that the idea that they have sweated blood and tears over gets rejected.
As a result I have noticed people doing everything other than be engaged in sales. It reminds me of exam time at school. Many of my class mates (including me) were busy drawing up the perfect timetable for revision instead of revising. I guess sales has the same effect.
Many activities fall under the category sales; but in my humble opinion only being in front of the customer (or speaking to them via a Cold Call) asking for an order (or forming an order) is true sales activity. And yet again I am amazed at how much time people (and even sales people) will spend on stuff other than sales.
I have come across companies where sales people have one admin day a week! (A blog about that next). My point is ask yourself why you are not engaged in selling?
It is not because of a lack of knowledge. You know that sales is the only way to make a success of your enterprise. And yet something else is stopping you. In the next blog I will try and suggest some useful tips for overcoming sales inertia.