Sales Laundry

Posts Tagged ‘selling commodity products’

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

Q&A’s are excerpts of questions I have answered as part of Sales Laundry or other forums that I am apart of.  If there is a relevant sales message for the masses I post it here to share, gather feedback and discuss.

Q:  How important are relationships in selling? Are they the only reason people buy, a prerequisite or not that big of a deal?  I understand that some customer’s do make a buying decision in our favor, but is it the 80/20 rule or relationships?

A:  A relationship could be critical to your success or of absolutely no value.  In my opinion it depends on where the customer places value in a given situation.

For example, I have bought products from sales professionals that brought a lot of knowledge I valued, but did not like them or care to see them again.  The value of their knowledge drove the transaction, not the relationship.

 I have bought products from sales professionals that I had a great relationship with where the product was average to not as good, in retrospect, I suppose because I placed more value on extending the relationship than I did the product.

 I have also bought products that I was enamored with and placed so much value in having that I bought them regardless of the sales process/relationship or the professional.

 So, speaking just for myself, a strong enough desire for the product, or the value I place in that product, can render a relationship unimportant to me.  (Unless I think I am going to need support or handholding to get the full value out of the product.)

 Otherwise, the importance I place on a relationship is directly proportional to my perceived need for that relationship in finding, acquiring and implementing the end product or service.

 Hope that makes sense.  It makes my head hurt just thinking about it.

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.

As a young boy my mom would occasionally pick me up after school and take me back to her work until she was done for the day.

I looked forward to those days because once we got to her work I got to walk across the street to what was then a Ben Franklin store and pick out a new Hot Wheels car for $1.24 of my hard earned allowance and head back to moms office to burn some toy rubber.

When it came time to get something to drink, though, I had a lot of choices. I could get a can out of the Coke machine in the office, I could walk back across the street to Ben Franklin or I could walk to a nearby gas station.

Even though the same brand of soft drink was much closer and priced about the same, one being only a few steps away, almost without fail I chose the gas station as the place to make my drink purchase.

Why? Because the old man that owned that gas station found a way to add value to a commodity product like a soft drink that made his place of business my first choice.

The Coke was canned so he could not tinker with the formula, the quantity was the same, 12 ounces, and he did not treat me any better or worse than any other adult.

So what did he do different?

One thing. He kept his refrigerators set just right to keep the Coke as cold as possible, forming little ice crystals inside the can. A Coke from his refrigerator was worth the walk.

Are you selling a product that is fast becoming a commodity like a can of Coke? Are you selling your product like the commodity it is, or have you figured out a way to add your own spin?

If I could buy your product from three locations within walking distance, what are you doing different to make me choose you?

Think about it.

What I do not know is how I figured out the refrigerators were so cold at the old mans gas station to begin with. If you have found a way to add value to a commodity product, how are you informing customers about the difference?

Have you found a way to add value to a commodity that is giving you an advantage in the market? Tell me about it.