Sales Laundry

Posts Tagged ‘competitive advantage’

Yesterday I wrote about looking at what you sell with new eyes and finding ways to simplify the buying process for your customer.  To spur your creativity I am going to tell you what another company is doing to simplify a process they invented.

For years, I have written off Domino’s pizza as “college pizza” or the pizza you order when you are too broke to order anything else.  After looking online for pizza delivery one night, I decided to give Domino’s a shot for nostalgia purposes alone.

 What I found on their site was an evolution of Domino’s original pizza delivery model, making plain old pizza delivery arguably more personal, more consistent and flat out easier on the buyer.  I got my pizza and another great example of making buying easy all in 30 minutes or less and I am happy to say their idea was more innovative than finding a new place to stuff cheese.

Domino’s pioneered pizza delivery and in the process brought about the age old process of keeping a stack of expired pizza coupons in the drawer by the telephone, scouring the coupon sections of telephone books, calling in and asking about the specials, placing your order and getting the standard 40 minutes to an hour estimated delivery time.  Domino’s changed all that by integrating online ordering like their competitors, but unlike their competitors, they developed the “Pizza Tracker” (see image.)  

Click Thumbnail for Full Size Image

 I was able to build my pizza with a simple graphic interface; my coupon was automatically deducted from my purchase price, I confirmed my order and paid in less than two minutes.  It was an easy process that started delivering unexpected value for me as soon as the “Pizza Tracker” loaded up.

 The “Pizza Tracker” tells me that Li is doing the prep work on my pizza and shows my pizza moving from the Prep phase through the Bake phase and Box phase.  At 5:21 Li hands my pizza off to Scott who departs the store at 5:23 and arriving at my house at 5:33 with a ring of the doorbell.  

•  No more calling. 
• No more errors relaying the order. 
• No more coupons to track.
• No more wondering where your pizza is.
• No more calling back an hour later realizing they forgot your order or made it carry out by mistake.
• As a bonus, you get the names of the people that are working to make and deliver your pizza.

 The pizza met my expectations, it was the easiest order I have ever placed, and I got unexpected value out of the “Pizza Tracker” feature that was just part of the transaction.  Getting to see my order processed in real time by real people made me feel more confident that my order was going to be correct, and get to me on time.   More importantly, I will likely be back to order again.

Not resting on their success, Domino’s has found yet another way to simplify the pizza purchase process.  Forget the computer, that is so 400 words ago, now all I need is a remote and my TiVo.

 If Domino’s can improve the art of pizza delivery, how can you improve the process of buying your product for your customer?  Can you make a change that brings a measurable competitive advantage and wins additional loyalty from your customer base?

 *Domino’s Pizza is the world’s largest pizza delivery company with 19% of the domestic pizza delivery market, inventing the pizza delivery category.  Pizza Hut, largest company by sales, holds 17% of the domestic pizza delivery market, Papa John’s nails down third with a comfortable 10%.  Source: Domino’s Investor Presentation – April 2008

I found myself in Walmart today finishing up some pre-Easter shopping and as I was waiting behind a lady with 27 items in the 20 item checkout lane I started thinking.

 Walmart is still making money and growing when the majority of their competitors’ sales are down by double digit percentages.

 What immediately comes to mind is the fact that they are the perceived “low price leader.”  That can’t be right though, because I have long accepted as fact that a strategy of being the “low price leader” is not a strategy that can sustain a business in the long run because low price strategies only hold up until the next guy shows up with a lower price.

 She still has 15 items in her basket.  How did she cram so much stuff in that little carry around basket?  No barcode on the Easter apple cover looking thing… 

 Walmart uses a host of strategies to be sure, but there are at least two that came to mind that are worth copying, and neither involve cutting your prices and praying for volume sales.

 1.  Walmart puts a relentless focus on finding any efficiency they can to get a product from the manufacturer to their distribution centers and ultimately their stores.  (They forced the issue with Electronic Data Interchange, or EDI, now an industry standard, and have recently nudged cereal companies to make smaller boxes that hold the same volume to reduce shelf space and paper waste among other things.)  As a result, it costs Walmart less to get a product on their shelves than it does their competitors, so an item for sale for $9.95 at Walmart and X Brand stores will likely have a lower true cost at Walmart.

Where competitors cut their price and profit to get in line with Walmart prices, Walmart cuts their cost, sells it for less and still makes more money doing it.

 
2.  When Walmart began, Sam Walton had a radical idea of putting stores in towns that were deemed too small for other major retailers, effectively going where the national competition was not willing to go.  This strategy continues to pay off even today as major retailers fight it out in every major metropolitan market, including Walmart, but Walmart has hundreds of stores in markets where there is no real competition and where future major competition is unlikely. 

 She has 7 items left in the basket, looks like egg dye, bubbles…

 Where can your costs be cut or efficiencies found between the idea stage and final sales/delivery? 

 Can you buy from your manufacturer/distributor differently to garner some savings?  Can you consolidate to a single distributor or is it time to see how hungry your distributor’s competitors are?  Maybe join a larger buying group?  Partner up to buy bigger shipments to get to the next break in tier pricing?

How many hands have to touch the products you sell or the orders for those products?  Is there an opportunity to negotiate, automate or eliminate some duplication?

 Look at your Cost of Sales.  Without damaging customer service, what is the most efficient, least time consuming way to sell each of your products?  Now, how are you selling each of your products?  Any appreciable room for improvement?  What admin tasks could you off load from your sales team to get them more customer face time?  Click here if you would like to go a little bit deeper discussing Cost of Sales.

 2 items left.  Why do they always put the slow Checkers on the Express lane?

 How can you follow Walmart’s example of having a presence where there is no real competition? 

 Is there a niche where you can plant your flag, dominate, and protect your margins?  Can you create that niche by building a rabid referral customer base like Joe Girard did?

 She is helping the Checker sack her goodies.  Finally.  At least she is helping sack the items.  There should be a faster way to check out when you only have a handful of things.

*beep*  *beep* *beep* Scanned, paid and done.

 “Sir, next time you could use one of the self check out stations if you are in a hurry.”  My Checker said.

 Guess that is a sales lesson I won’t be blogging about.  Too busy thinking.

 “Thank you for shopping at Walmart!”

Image courtesy of RichSellsHomes

I got some great responses on both the article and the survey at the end of the “How to get Referrals & get Them to Work for You” article, so I decided to share one more story that should motivate you to get moving.  This story is particularly interesting because this story takes place in economic conditions like we are seeing today.

 Salesman Joe Girard is our main character.  Many of you may have heard of him, but for those that have not, listen up.

 Joe never finished high school and bounced around from job to job until he ended up in Michigan begging a Sales Manager of a Chevrolet car dealership for a sales job.  Joe got the job and sold his first car that day and borrowed $10 from his Sales Manager to buy groceries on his way home.  The dealership owner fired him two months later after having sold an amazing 18 cars because the other salesmen complained he was being too aggressive.

 Based on his new found success, Joe found employment at Merollis Chevrolet and began a legendary career that would put him in the Guinness Book of World records and earn himself a spot in the Automotive Hall of Fame in 2001.   He is the only sales representative in the Hall of Fame.

 Joe Girard, according to the Guinness Book, sold more new cars and trucks on a one-to-one basis (that is retail, to people like you and me, not wholesale or fleet cars) than any other sales representative in the world, and then repeated that feat 12 consecutive times.

 Over 15 years he sold 13,001 cars or roughly 17 cars every week for 750+ weeks.  In his best year he sold 1,425 cars, or between 5 and 6 cars a day, depending on how many days he worked a given week.

Here is the best part.

 In 1974, during a major recession, unemployment at 9% (today it is hovering around 8%,) oil was in short supply, gas being rationed, not sold, (see picture) the consensus was you could not sell cars.  Joe only sold 1,376 that year, or roughly 27 cars a week!

 How did Joe sell so many cars?

 As you might have guessed, primarily by referrals.  Long before email and the personal computer Joe sent a handwritten card to every single person on his list, every month, just to let people know he was still out there selling cars and thinking about them.  No promotions, no advertisements, just hand written cards.

 Joe referral system was so successful he personally hired two assistants to help him pre-screen his customers, manage his appointment-only sales schedule, and assist him in writing 500+ cards every day.

 One simple idea, staying in touch with people and letting them know you care about them executed by mailing each person one card a month put a sales representative named Joe in the Guinness Book of World Records as the best car salesman of all time.

 Imagine what Joe could do with the technology we have today.  Better yet, imagine what you can do, and then do it.  What one simple step can you take to start building a referral generation system for your business?  It does not have to be impressive, worst case just send a card.

 Let me know what you come up with.

•  Want to see what the stock market in 1974 looked like compared to 2008, see the graphs here.
• Learn more about the best car salesman in the world, Joe Girard.
• Cartoon image courtesy of http://www.automation.com
• Gas coupon image courtesy of Wikimedia

When sales are difficult to come by, there is, I believe, a natural gut instinct to nudge a company toward broadening its services in hopes of reaching a wider swath of potential customers.  You typically have to look no further than the existing Sales Managers and Account Executives to find the source of this internal “Scope Creep.”

 While this idea may sound good bouncing around your head, in practical application this seemingly small leap in logic can very well destroy a company.

In electing to follow this strategy you are in essence trading some of your market depth for market breadth, and your competitors will love you for it. 

 Lose some focus on what you are best at and you run the risk of alienating some of your current customer base.  Experience any reduction in quality or service while your eye is off the ball and you just make it that much more difficult for a prospective customer to differentiate between you and a close competitor.

 Lacking depth and experience in you new expanded area of focus, you risk never establishing a customer base.

Lacking a specialization or something to hang your hat on, it is very easy for a company to succumb to “death by being average.”  Look no further than the recent death of Circuit City.

This is not to say a company cannot expand successfully.  They can and do every day with planning and new infrastructure to support the growth.

 In most instances, the better answer is to narrow your focus to what you are absolutely best at and where you hold the maximum competitive advantage.  Mine existing sales, established relationships and references to build sales leverage, making each new sale easier than the last.

If you are not known for something you will be known for nothing.

I have talked, er, typed before about asking you to look for ways to add value to your product or brand by digging into the problems your clients are facing.  Dig deeper, that is, than the problems  solved by your present value statement.

Look for the the fundamental issues that might be preventing your customer from honestly even considering the problems your product solves, that may well be lower down the priority list.  Uncovering these problems, even if they are way beyond the traditional scope of benefits your product offers, and creatively solving them can lead to a competitive advantage, more business and a more loyal customer.

That is what the boys making Mini-Wheats are thinking, and I agree.

What problem does a Frosted Mini-Wheat solve?  Hunger.

What is the Frosted Mini-Wheat value statement?

“A fast, nutritious breakfast that you can feel good about that will keep your child full and focused on the day ahead.”

That is my take on their message, anyway.

So what bigger problems could a Frosted Mini-Wheat possibly solve to endear the product to its customers?

Frosted Mini-Wheats, with MSN.com has developed Moms Homeroom  

Moms Homeroom is a site featuring four mothers giving their thoughts on all aspect of educating children, similar to “The View” in that they are all piled up on a couch providing opinion and personal tips in a custom built community with polls, video clips, and most importantly, interaction with other real mothers and fathers (and the ones most likely to purchase the Frosted Mini-Wheats) out there asking questions, doing their best to raise smart, educated children.

The new Frosted Mini-Wheat value statement is “Frosted Mini-Wheats help your kid succeed in school.”

It is a unique move in the wake of smaller cereal boxes, reduced cereal quantities for the same price, or higher prices that Kellogg, the manufacturer of Frosted Mini-Wheats, and other cereal manufacturers are moving toward.

It is a bold, offensive move trying to partner Mini-Wheats with parents in their quest to seek a better education for their children.  Will it work?  It is already working on me, I have already forgotten about the other frosted shredded wheat products out there. 

If I buy Frosted Mini-Wheats I am helping support an organization that is providing a resource for parents to communicate, collaborate, and help their kids succeed in school. 

If I buy one of the other brands I am just buying, well…  cereal.

  Look at your own value statement.  Are you trying to sell me by solving a small problem of mine with milk covered cold wads of sugar coated wheat, or are you addressing a larger issue in my life of greater concern to me than which box I pick up at the supermarket?

Is your value statement solving what could be considered a “fluff issue” in these more challenging times, or are you refocused on solving some of my bigger problems that I might need to solve before I can even consider your original value statement or the thought of buying your product in the first place?

Help me solve my problems as a customer so I can be in position to help you solve yours.

Hyundai has a problem shared by every car manufacturer; we are not buying new cars. 

 Sales are down 30%+ across the industry and GM, once the pride of American manufacturing is on the verge of being delisted from the stock exchange as shares trade under $1.00.

 The difference is Hyundai gets it.  Instead of gutting their value and defensively dropping their shorts on price, rebates and financing, they are on the offensive, effectively saying “Mr. customer, I dare you to lose your job.”

 they are on the offensive, effectively saying 

“Mr. customer, I dare you to lose your job.”

Hyundai already has a sales strategy and marketing message that I would think would play well in this economic environment.

 That message being “We build stylish high quality, inexpensive cars, and we back it up with a strong warranty” which was designed to solve the problem of “I don’t have a lot of money, but I need a car that is better than what I am driving now.”

 That message has a lot of appeal, but apparently not enough to keep sales from falling off of a cliff. 

 Hyundai took a deeper look at why business was slumping and thought way outside of the box for ways to solve a problem weighing much heavier on the minds of their prospect than the problem their current value statement was solving.

 That deeper problem being “What happens if I lose my job and cannot pay my bills?”

 The answer until now has been “The car gets repossessed.  I lose my transportation.  It would be harder to find a new job.  My credit gets ruined, and I won’t be in a position to buy a car on credit when I do get back on my feet.”

 Final decision:  “A new car would be nice, but there is just too much downside right now to justify it.  I will keep my old car; at least it is paid for.”

 So what did Hyundai do?

 Hyundai Assurance Plus:  If you lose your income, we will make your payments for 3 months.  If that is not enough time to work things out, you can still bring the car back within a year.  By the way, you still get the 10yr warranty.

 I have no idea how this strategy is going to play out for them, though I assume it will be fantastic as long as legal did not pack the contract with too many outs.  I can, however, tell you how it makes me feel as a consumer.

 I feel like Hyundai is a company that gets it.  That they understand and they are offering up a legitimate “bail out” for the little guy if it becomes necessary.  More importantly, I feel like Hyundai cares.  Hyundai is willing to step in and help out if life’s challenges get a little too big for a while.

 Hyundai is going to earn some respect and get a look by a segment of the market that would not have looked at a Hyundai before and Hyundai is going to win a deep loyalty from the customers they end up helping out.

 More sales today, more happy customers and more market share tomorrow.

It is an aggressive move in a market that finds most of their competitors retreating to a defensive position of low price.

 Ask yourself, does your present value statement carry the same weight it once did?  Is there a bigger problem in your customers mind than the one you are presently solving?

Identify that problem, find the solution, and then figure out how your company can help deliver that solution alone or with strategic partnerships.

 If I were an independent car dealer right now I would be calling my financial partners to see if we could put a “Hyundai Solution” in place for my dealerships.

 What is the creative solution for your industry?  Get it right and you will be the one rewarded with customer loyalty and market share. 

I am looking forward to reading your thoughts.

What is your competitive advantage?

I love that question because it gives me an immediate understanding of a sales reps grasp of their own offerings and provides a small perspective into their understanding of their competitors.

The answer to that question can be key in some cases in determining the reasons for the success or failure of an individual sales rep or an entire sales team.

Let’s take an example from the oft in the news automobile industry. I will qualify all of this by saying I do not and have not ever sold cars. This is an example to illustrate a point.

If I only sold new Ford F150 pickups I would consider it critical to my success to understand everything I could about feature packages, engine choices, trim levels and available options so I could match the needs of my prospective client with the best combination of features that would serve his needs and what I had on the lot.

I would also want to understand what I had in inventory, what my competitors have, and what I could get my hands on in a reasonable amount of time to satisfy a customer request.

Next, for me, would be to talk to my service department and get an understanding of the vehicle from a service perspective. What parts tend to break more often? What should my client keep an eye on to avoid costly repairs? Are there any specific problems with certain engines, transmissions or trim levels?

I would also study the commercials to understand what the Ford marketing department is hanging its hat on when trying to entice the consumer to buy their trucks. Where it makes sense, I would blend their message with mine to leverage the ground work Ford has already done.

I would also need to know why my new F150 and the depreciation it would take as soon as it rolled off the lot was a better value for my customer than last years model, or any other used Ford truck still on the road. If I only sell new Ford trucks then a used Ford F150 is every bit as strong a competitor as a Chevrolet, Toyota, Nissan or GMC.

Where, when and why is my new F150 a better value than my competitors’ vehicles. To understand that, I would need as much knowledge about my competitors new trucks as I know about my own, including their used models as well.

Amassing and internalizing all of this information amounts to what could be a strong value add for my prospective truck customer. Even the ones showing up fully armed with internet research.

The more information I have at my disposal to answer questions and eliminate the need for my client to go look somewhere else, the more likely I am to sell a truck.

There are several other factors that go into being a successful rep that I glossed over. Here I am speaking specifically about leveraging what you know into dough.

I ask again, what is your competitive advantage?

Why should I buy your product over your competitors? What value do YOU bring as the representative? Why should I buy my widget from you instead of number one sales guy Dave over there?

Make it easy for me to buy, help me understand the value you bring, and why I should buy from you vs. your competitor and odds are, assuming I believe you and recognize your value, I will buy from you, all other things being equal.

Chinese general Sun Tzu, living some 2,400 years ago, give or take, put it a little differently…

If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.
- Sun Tzu

Or perhaps more concisely put…

Keep your friends close, and your enemies closer.
- Sun-Tzu

image provided by theblogentrepreneur.com